Legislature(1995 - 1996)
03/27/1995 03:10 PM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR & COMMERCE STANDING COMMITTEE
March 27, 1995
3:10 p.m.
MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Norman Rokeberg, Vice Chairman
Representative Kim Elton
Representative Gene Kubina
Representative Brian Porter
MEMBERS ABSENT
Representative Beverly Masek
Representative Jerry Sanders
COMMITTEE CALENDAR
HB 224: "An Act relating to the state plumbing code."
HEARD AND HELD
*HB 251: "An Act relating to Native corporations."
HEARD AND HELD
(* First public hearing)
WITNESS REGISTER
REPRESENTATIVE CARL E. MOSES
Alaska State Legislature
State Capitol, Room 204
Juneau, AK 99801
Telephone: (907) 465-2214
POSITION STATEMENT: Sponsor of HB 251
ROY HUHNDORF
Chairman and Chief Executive Officer
Cook Inlet Region, Incorporated
P.O. Box 93330
Anchorage, AK 99509
Telephone:
POSITION STATEMENT: Testified in support of HB 251
MARK KROLOFF, General Counsel
Cook Inlet Region, Incorporated
P.O. Box 93330
Anchorage, AK 99509
Telephone:
POSITION STATEMENT: Answered questions on HB 251.
TIM BENINTENDI, Legislative Assistant
to Representative Carl E. Moses
Alaska State Legislature
State Capitol, Room 204
Juneau, AK 99801
Telephone: (907) 465-2214
POSITION STATEMENT: Explained CSHB 251(L&C), Version G.
CHARLES WHEATON, Shareholder
Sealaska Native Corporation; and
Goldbelt Native Corporation
P.O. Box 21662
Juneau, AK 99801
Telephone: 586-2794
POSITION STATEMENT: Testified against HB 251
DOROTHY ZURA, Representative
Shareholders for Shareholders
2140 Lawson Creek
Douglas, AK 99824
Telephone: 364-3898
POSITION STATEMENT: Testified against HB 251
DELICE ALEXANDER-CALCOTE, Shareholder
Cook Inlet Region, Incorporated
205 East Dimond, Number 326
Anchorage, AK 99515
Telephone: (907) 349-1546
POSITION STATEMENT: Testified on HB 251.
JUDITH KALKINS, Shareholder
Cook Inlet Region, Incorporated
3723 East 66th Avenue
Anchorage, AK 99503
Telephone: (907) 349-7648
POSITION STATEMENT: Testified against HB 251
BOBBIE OSKOLOFF
P.O. Box 266
Kenai, AK 99611
Telephone: (907) 283-7748
POSITION STATEMENT: Testified against HB 251
IKE CROPLEY, Shareholder
Sealaska Native Corporation; and
Goldbelt Native Corporation
4104 Birch Lane
Juneau, AK 99801
Telephone: (907) 789-0858
POSITION STATEMENT: Testified against HB 251
KATHY POLK
P.O. Box 32677
Juneau, AK 99803
Telephone: (907) 789-0438
POSITION STATEMENT: Testified against HB 251
SONYA SMITH
General Delivery
Juneau, AK
Telephone: (907) 586-3914
POSITION STATEMENT: Testified against HB 251
JANE IGTANLOC, Chairperson
Shareholders for Goldbelt
3258 Montpeleir Court
Anchorage, AK 99503
Telephone: (907) 563-7917
POSITION STATEMENT: Testified against HB 251
HAROLD RUDOLPH, Shareholder
Cook Inlet Region, Incorporated
635 "B" Bliss Street
Anchorage, AK 99508
Telephone: (907) 338-2507
POSITION STATEMENT: Testified against HB 251
SHARON KAY, Shareholder
Cook Inlet Region, Incorporated
17400 Spain Drive
Anchorage, AK 99516
Telephone: (907) 345-7848
POSITION STATEMENT: Testified against HB 251
JOAN MANTEI, Shareholder
Sealaska Corporation
Box 34711
Juneau, AK 99803-4711
Telephone: (907) 463-7351
POSITION STATEMENT: Testified against HB 251
BERNICE TREGO, Shareholder
Sealaska Corporation
Yak-Tat Kwaan Tlingit Corporation
9464 Brady Place
Juneau, AK 99801
POSITION STATEMENT: Testified against HB 251
EDWARD DALE CASEY
4003 Minnesota Drive, Number 36
Anchorage, AK 99503
Telephone: (907) 561-6542
POSITION STATEMENT: Testified against HB 251
JIMMIE D. HARTLEY, Shareholder
Cook Inlet Region, Incorporated
4501 Parson, A
Anchorage, AK 99508
Telephone: (907) 272-3095
POSITION STATEMENT: Testified against HB 251
HELEN HARTLEY, Elder
Cook Inlet Region, Incorporated
3710 B, Raudolph Street
Anchorage, AK 99508
Telephone: (907) 596-0001
POSITION STATEMENT: Testified against HB 251
BERTHA HORTON, Shareholder
Sealaska Native Corporation; and
Goldbelt Native Corporation
Box 20505
Juneau, AK 99802
Telephone: Not available
POSITION STATEMENT: Testified against HB 251
PAT SIERRA, Shareholder
Sealaska Native Corporation; and
Goldbelt Native Corporation
P.O. Box 34711
Juneau, AK 99803
Telephone: (907) 789-0815
POSITION STATEMENT: Testified against HB 251
ADA PATTERSON, Shareholder
Sealaska Native Corporation
P.O. Box 020508
Juneau, AK 99802
790-2890
POSITION STATEMENT: Testified against HB 251
GAIL ANAGICK SCHUBERT
Shareholder, Unalakeet Native Corporation; and
Shareholder, Member, Board of Directors
Bering Straits Native Corporation
Address and telephone number not available
POSITION STATEMENT: Testified in support of HB 251
GLORIA SARABIA, Shareholder
Sealaska Native Corporation; and
Goldbelt Native Corporation
P.O. Box 32751
Juneau, AK 99801
Telephone: (907) 789-5597
POSITION STATEMENT: Testified against HB 251
CATHERINE PRICE, Shareholder
Sealaska Native Corporation
P.O. Box 33796
Juneau, AK 99801
Telephone: (907) 790-2163
POSITION STATEMENT: Commented on HB 251
PREVIOUS ACTION
BILL: HB 251
SHORT TITLE: NATIVE CORPORATIONS
SPONSOR(S): REPRESENTATIVE(S) MOSES, MacLean, Williams
JRN-DATE JRN-PG ACTION
03/15/95 741 (H) READ THE FIRST TIME - REFERRAL(S)
03/15/95 741 (H) LABOR & COMMERCE
03/27/95 (H) L&C AT 03:00 PM CAPITOL 17
ACTION NARRATIVE
TAPE 95-24, SIDE A
Number 000
The House Labor and Commerce Standing Committee meeting was
called to order by Representative Pete Kott at 3:10 p.m. Members
present at the call to order were Representatives Kott, Elton and
Rokeberg. Members absent were Representatives Porter, Kubina,
Masek, and Sanders. CHAIRMAN PETE KOTT asked that the record
reflect that Representatives Masek and Sanders were excused
absences. He also asked that the record reflect that a quorum
wasn't present so action couldn't be taken on legislation. He
said testimony would be taken because many people in attendance
had come to Juneau from other locations of the state.
HB 224 - STATE PLUMBING CODE
CHAIRMAN KOTT asked that the subcommittee chairman,
Representative Rokeberg, give an overview of the single wall
exchanger and the rewrite of the plumbing code relating to HB
224.
REPRESENTATIVE NORMAN ROKEBERG explained the subcommittee is in
the process of redrafting a committee substitute (CS) or an
amendment to HB 224 to accommodate the adoption of the 1991
plumbing code. He noted it has not been amended since the early
70s. The bill turned over responsibility of code adoption and
regulation to the Department of Labor (DOL). As part of the CS,
the subcommittee will be asking that an exception be made for the
single wall heat exchangers. He noted they are also going to
adopt a two year sunset provision on Wednesday, if that is the
will of the committee. The documentation and testimony should be
ready for the committee meeting on Wednesday.
REPRESENTATIVE KOTT said the measure will be discharged from the
subcommittee back to the committee for consideration of the CS.
He requested that a teleconference be set up as well.
HB 251 - NATIVE CORPORATIONS
Number 070
The next order of business was HB 251, "An Act relating to Native
corporations."
REPRESENTATIVE CARL E. MOSES, sponsor of HB 251, explained he
introduced the bill to address problems dealing with special
shareholder meetings and petition actions within Native
corporations in Alaska. The objective of HB 251 is to try to
bring more balance between needs of the shareholders to
responsibly petition for change, and management's need to pursue
the objectives of the corporation without undue attention to the
continual repetitive and unsuccessful actions of shareholder
groups. Recognizing the rights of petition for shareholders, we
must also realize the considerable drain on the financial
resources of the corporations that many of these efforts
generate.
REPRESENTATIVE MOSES explained there is information in the
committee packets which shows that this bill provides for filing
procedures for shareholder petitions, penalties for the willful
distribution of false or misleading information, 90 days for
securing signatures an increase from 10 percent to 25 percent of
the eligible shares needed to insure a successful petition, and
promoting for a two year wait for the revival of an unsuccessful
petition attempt. Many conditions exist for Native corporations
in Alaska. Concern for minority shareholder rights and actions
must be tempered with a regard for the financial health,
stability and survival of the corporation. He said he believes
HB 251 achieves such a balance.
REPRESENTATIVE MOSES said he would answer questions the committee
may have. There were no questions.
CHAIRMAN KOTT said the bill is scheduled for a teleconference
which will begin at 3:30 p.m. He asked Mr. Roy Huhndorf to come
to the table. He noted Representative Kubina joined the meeting
at 3:15 p.m.
ROY HUHNDORF, Chairman and Chief Executive Officer, Cook Inlet
Region, Incorporated (CIRI), read his statement into the record:
"As you know, CIRI is one of the 12 Alaska regional corporations
formed pursuant to the Alaska Native Claims Settlement Act
(ANCSA). The legislation you are considering today, House Bill
251, is the result of careful consideration over a long period of
time by the regional corporations and a number of ANCSA village
corporations, of problems posed for them by the Alaska
Corporations Code. This bill has broad support among the Native
corporations, and I am privileged to speak to you not only on
behalf of CIRI, but on behalf of the many regional village
corporations supporting this bill.
"Our general counsel, Mark Kroloff who is with us today, has
already submitted detailed written testimony regarding the
specific provisions of HB 251. My purpose today will not be to
repeat that more detailed, technical testimony, but instead to
touch briefly on some of the policy considerations that support
passage of this bill.
"As you may know, ANCSA called for all regional and village
corporations to be chartered as corporations under Alaska law.
Regional corporations were required to be chartered as for-profit
corporations. Village corporations could opt to be chartered as
for-profit or non-profit corporations; most chose for-profit
status. Therefore, all regional corporations and most village
corporations are governed by the general corporations law of
Alaska found in part 10.06 of the Alaska Corporations Code.
"What many people do not realize is that Native corporations are
preeminent among the businesses most affected by the Alaska
Corporations Code. Most of the state's largest businesses, such
as the oil companies, communications companies, timber companies,
oil field service companies, and others, are not incorporated
under the laws of the state of Alaska, but are incorporated under
the laws of Delaware or other states that attract incorporation.
Thus, Alaska Native corporations are among the most economically
significant corporations governed by the Alaska Corporations
Code.
"Yet, in 1989 when the Corporations Code was broadly rewritten by
a California law professor hired at that time to advise the
state, the re-write largely ignored important issues of state
corporate law that affect Native corporations. As a result, the
legislature has amended the Corporations Code on more than one
occasion since 1989, to enact specific provisions dealing with
Native corporations. Most of these amendments are contained in
section 10.06.960 of the code, which is a separate section
dealing with Native corporations and which is the section that
would be further amended by HB 251.
"Most of the Native corporation amendments have been designed for
two purposes: First, to address problems unique to the way
Native corporations operate; and second, to more closely
reconcile provisions of the Corporations Code with provisions of
ANCSA. The legislation before you today seeks to do both.
"We are all familiar with the series of petition drives and
special meeting requests that are sweeping across the state, from
Goldbelt and Sealaska in Southeast to Arctic Slope Regional
Corporation on the North Slope. In these petition drives, small
groups of shareholders, in some cases encouraged by a group of
non-shareholder advisors who have moved from region to region,
are demanding that Native corporations hold special meetings of
shareholders to consider a variety of resolutions. Most of these
resolutions, while addressing matters that shareholders may be
interested in, are of an advisory nature only.
"On its face there is nothing wrong with the petition process.
If a significant number of shareholders would like their
corporation to call a meeting, and if they have honestly and with
full disclosure presented to their fellow shareholders all of the
facts surrounding the matters to be addressed at the meeting, we
would have no objection to the process.
"But that is not what is happening under current law for two
important reasons. First, these petition groups have been using
false and misleading information on their petition drives in
every region of the state. The securities administrator has done
nothing to stop this false and misleading information, because it
is uncertain, in his view, whether a petition for the purpose of
calling a special meeting is the same as a proxy and, therefore,
subject to the truthfulness requirements of Alaska's proxy rules.
This legislation makes clear that it is, and requires the
administrator to act to stop the spread of false and misleading
information in these petition drives.
"Second, this legislation would change the threshold for calling
a special meeting from 10 percent to 25 percent of the
shareholders, to make it more consistent with the petition
provisions of ANCSA. This is an important protection mechanism
for the vast majority of shareholders who support conducting the
corporation's business at its regular annual meeting, and who see
the corporation's money wasted when it has to conduct repeated
special meetings at the behest of a small minority.
"ANCSA has not dictated petition requirements for every corporate
issue affecting Native corporations. But on perhaps the single
most important issue--the alienability restrictions governing
ANCSA stock--Congress provided that 25 percent of the
shareholders sign a petition before the corporation can be
required to call a special meeting.
"What is the purpose of a higher, 25 percent threshold: To
ensure that a proposition has some significant level of support,
even if it is a minority, before the corporation can be required
to undergo the expense and disruption of a meeting.
"If you pass this legislation, will shareholders be deprived of
their rights to bring resolutions before their corporations? No.
First of all, shareholders can always bring resolutions before
the corporation at the company's annual meeting, which by statute
is required to be held every year. HB 251 addresses special
meetings only and does not affect that right.
"Secondly, any time there is significant support for a special
meeting, even if it is only supported by a minority, 25 percent
of the shareholders will be able to call for such a meeting.
"What this legislation will do is protect the vast majority of
shareholders from the manipulation that can come when people use
false and misleading information in a petition drive. It will
also ensure that a petition that has only a very limited amount
of support cannot be used to repeatedly subject the corporation
to the expense and disruption of a special meeting. In addition,
the legislation contains a provision conforming Alaska law to the
majority of state corporations law, including Delaware, by
providing that where a corporation has a classified or
`staggered' board of directors, the recall provisions of the
Corporations Code do not apply.
"In conclusion, I would like to point out that CIRI has taken a
leading role in improving the lives of our shareholders and
helping empower our shareholders to control their own destiny.
Our efforts include one of the state's most aggressive native
hire programs; numerous social and cultural programs such as the
Alaska Native Heritage Park, the Alaska Native Justice Center,
Koahnic Broadcasting Corporation, and other programs; and special
stock buy-back legislation for CIRI shareholders to vote on to
provide a middle-ground between restriction and un-restriction of
CIRI stock. The many other Native corporations supporting this
bill also support some of these, and other important programs, in
their areas. We see this bill as a means to further protect to
empower our shareholders, by requiring a petition process that is
truthful, accurate, and supported by at least a relatively
significant minority of shareholders.
"In closing, I would like to thank you once again for the
opportunity to speak to you today and I'd be happy to answer any
questions that you may have."
Representative Porter joined the meeting at 3:20 p.m.
Number 272
CHAIRMAN KOTT referred to there being 12 regional corporations in
the state and asked Mr. Huhndorf if he would give an idea how
large they are and how much variation there are between
membership and shareholders.
MR. HUHNDORF explained CIRI ranks fifth among the 12 and has
about 6,700 shareholders. Sealaska is number 1 in terms of
population and has approximately 20,000 shareholders. Calista is
next in rank and has approximately 16,000 shareholders. The
smallest has about 3,500 shareholders.
Number 285
REPRESENTATIVE ROKEBERG referred to the village corporations that
are chartered under the state code and asked if they would also
be affected by the legislation.
MR. HUHNDORF said as he recalls, from his reading of the statute,
those with more than 500 shareholders would be affected.
Number 310
MARK KROLOFF, GENERAL COUNSEL, CIRI, indicated that is correct.
MR. HUHNDORF stated a vast majority of the villages are under 500
and wouldn't be affected by these changes
REPRESENTATIVE ROKEBERG asked if that is 500 shareholders.
MR. HUHNDORF said that is 500 shareholders.
CHAIRMAN KOTT said as he understands the measure, the Alaska
Corporation Code would be amended with respect to calling special
meetings by shareholders. He said it is also being done in a way
that we're dealing specifically with Natives. He asked if anyone
has looked into the possibility that Natives may be treated
differently. He asked if that could be in violation of the equal
protection clause in the U.S. Constitution.
REPRESENTATIVE ROKEBERG said he believes the Code, as it would
apply to all corporations that are incorporated in Alaska, is
being amended. He asked MR. KROLOFF if that is not true.
MR. KROLOFF explained there would be no particular reason that
the legislation couldn't apply to all corporations. As it
currently stands, the CS addresses only Native corporations and
is intended to be (indisc.) in the way Native corporations are
regulated by the Corporations Code. The most prominent of what
is currently in there for Native corporations that differs from
other corporations is a more lenient ability, under the code, for
Native corporations to pay dividends in circumstances where other
corporations might not have the retained earnings that would
otherwise be required. Mr. Kroloff said the question is an
interesting question. He suspects that there would be sufficient
grounds for justifying unique treatment of Native corporations to
address the unique problems of those corporations should that be
the legislature's desire. He noted that has been done on a
number of occasions. Dividends are the most prominent because he
believes the legislature recognized the importance of Native
corporation dividends even in circumstances where other
corporations might not be permitted by law to pay them. This
would be analyzed the same way. Mr. Kroloff said he doesn't
believe the legislature would be doing any injustice to any other
corporations should it be decided that the provision be broadly
applicable. To his knowledge most of the other major
corporations that would be incorporated in Alaska, such as Carrs
or the National Bank of Alaska (NBA), are regulated in a
considerably different manner and really face these issues.
Legislation that affected them technically wouldn't affect them
practically in one way or another.
Number 344
REPRESENTATIVE ROKEBERG asked if the 10 percent or the 25 percent
provision would apply to all corporations.
MR. KROLOFF said currently it would not. It wouldn't affect NBA
or First National Bank one way or another. If you wanted to take
that approach and make it broadly applicable, he doubts it would
have any practical affect on them because there are controlling
blocks of stock in those companies that allow those controlling
parties to call or not call meetings as they see fit.
CHAIRMAN KOTT indicated there is a proposed committee substitute
in the committee member's packets and asked staff for
Representative Moses wanted to address the proposed CS.
Number 367
TIM BENINTENDI, Legislative Assistant to Representative Moses,
Alaska State Legislature, explained Representative Moses had a
CS drafted based on some people who came into his office late the
previous week. The CS makes the bill more responsive to their
objectives. Mr. Benintendi said the CS clarifies the title by
including the words "shareholder proposals and removal of
directors" to indicate which subjects, within the area of Native
corporation matters, that are being addressed with the bill. He
said on page 3, lines 4 and 5, of the proposed CS a clause was
added starting with "or if the corporation is allowed." He said
that basically provided for Native corporations whose bylaws
account for their classification of directors as opposed to the
Articles of Incorporation. Since 1989, most corporations either
formed or who have done (indisc.) revised the bylaws have
provided for their directorships to classified within the
Articles of Incorporation. Mr. Benintendi explained there are
Native corporations in Alaska that still have those provisions in
the bylaws. The CS cleans up the original subsection (n) that
didn't make that distinction. He noted those are the only two
changes in the CS.
Number 390
REPRESENTATIVE BRIAN PORTER moved to adopt CS for HB 251, Version
G, dated 3/24/95, as the committee's working document.
CHAIRMAN KOTT said there is a motion to adopt CS for HB 251,
dated 3/24/95, Bannister, Version G. He asked if there was an
objection. Hearing none, CSHB 251(L&C) was adopted. Chairman
Kott welcomed people listening via teleconference. Chairman Kott
asked Charles Wheaten to give testimony.
Number 419
CHARLES WHEATON, Shareholder, Sealaska Native Corporation; and
Goldbelt Native Corporation, said he received a copy of HB 251
the previous Friday. He said he really doesn't understand a lot
of it and really doesn't agree with it. Mr. Wheaton explained he
has been through a few recalls and the most recent was with
Goldbelt. He said he feels there are a lot of things in the bill
that just aren't true. He said a lot of the corporations might
be having trouble from shareholders, but if the bill does pass,
it is going to affect all corporations from what he understands.
Mr. Wheaton said Goldbelt did a complete 120 percent turnaround
after it was faced with recalls. He said he is now proud to be a
Goldbelt shareholder. Mr. Wheaton noted he doesn't know how many
corporations want the bill to pass. He said he doesn't feel it
should be passed and he is very much against it. He noted most
recently people have been fighting over net operating losses
(NOLs). Mr. Wheaten referred to 1971 when the Alaska Native Land
Claims Settlement Act was passed, and said he was 17 years old.
He is now 39 and is raising a family. He explained he really
didn't understand what the 1971 act meant when he was 17, and he
still doesn't. Mr. Wheaten said at one time he was looking
forward to having and building on his own land, but the
corporations are holding a lot of people back. Many of the
shareholders don't like fighting the corporations. He said he
feels sad that the corporations have to come to the legislature
and ask for bills like HB 251 to make it more difficult for poor
people like him to come in and speak. Mr. Wheaten said he feels
the corporations don't have any business getting into politics,
especially Sealaska.
MR. WHEATEN said he didn't vote for Tony Knowles. When a fund
raiser was held for Governor Knowels, he called Sealaska to hold
a fund raiser for Jim Campbell and they hung up the phone on him.
Mr. Wheaten said in an issue of the Juneau Empire, it was said
that Southeast Alaska Natives are voting for Tony Knowles. That
wasn't true. He said he is a Native of Southeast Alaska and he
belongs to Sealaska. When the corporations tell him who he is
voting for, he feels that is wrong and its really unjust. Mr.
Wheaten said he doesn't feel that corporations should be running
to the legislature and asking for help in introducing bill such
as HB 251. Recalls are a last attempt at trying to get changes
within corporations. He urged that the bill not be allowed to
pass.
Number 465
DOROTHY ZURA, Representative, Shareholders for Shareholders, said
he is very opposed to HB 251. She said Representative Elton
knows of how the shareholders are being treated. Ms. Zura said
she is full Tlingit and her grandmother is still alive and sat in
front of people like the committee members to win the settlement.
HB 251 was introduced as she sees as 501, but 501 was tabled.
She said it isn't the people who want HB 251, it is lawyers and
consultants that wrote the bill. She referred to Mr. Wheaten and
said he read the bill and couldn't understand it. She noted she
semi understood the bill as she has been into this type of
political outfit before. She referred to Roy Huhndorf and said
when they ask for balance and needs, there is no balance and
needs in her corporation. The people are poor. The old balance
and needs is the board of directors, lawyers and consultants.
When they talk about more fairness with 10 to 25 percent, it is
dictatorship. They are making it so hard to fight. She
discussed going to the board of directors and asking them what
they are going to do in 1991, as they would be lifted from
Congress. She said they are now at the mercy of the state of
Alaska. How dare them. Now they are at no mercy, because if HB
251 is passed, there is going to be an uprising. Ms. Zura
discussed how she has lived through two Goldbelt recalls and how
they threatened elderly people. Ms. Zura continued to give
testimony against HB 251 by saying this has become ownership.
ANCSA was won on the Alaska Native Brotherhood and Sisterhood and
it is now in the hands of lawyers and consultants. She discussed
the difficulty in doing petitions. Ms. Zura continued to express
her opposition and urged the committee to vote against HB 251.
Number 572
CHAIRMAN KOTT pointed out that the meeting was noticed the
previous Wednesday, in accordance with statutory and legal
requirements. The bill was noticed appropriately. Chairman Kott
said he would take testimony via teleconference from Anchorage.
Number 590
DELICE ALEXANDER-CALCOTE, Shareholder, Cook Inlet Region,
Incorporated, was next to testify on HB 251, via teleconference.
Ms. Alexander-Calcote said she is currently serving as the ad hoc
chairperson for Shareholders for CIRI's Future. She referred to
two petitions relating to NOLs and the most recent on recalling
CIRI's entire board. She said she has been told the petitions
are valid for a year and HB 251 has some ramifications. She
referred to petitions that are currently out there relating to
recalls or NOL money and asked if they would still be able
operate under what they have been approved to operate under.
They are still continuing to gather signatures and are very
concerned about the bill. Ms. Alexander-Calcote said
corporations are pushing state and federal legislation that the
shareholders don't even hear about until after it has already
been submitted. The corporations are the shareholder's
corporations and shareholders should be informed. The board
members and officers are the shareholders' employees. The
shareholders, as the owners, should be told of legislation that
exists to alienate the shareholders or (indisc.) stock. She
discussed the process of filing petitions and said everything has
to be filed in a timely manner. They must work with the state of
Alaska. They have an attorney and consultants. Ms. Alexander-
Calcote explained they have been communicating with other
corporations that have (indisc.) been successful and they are
very appreciative of what the Goldbelt Board has done as they
have completely turned around and are working with their
shareholders. She said they want positive changes in their lives
and if they have positive changes, the rest of the people in the
country are also going to be impacted in a positive manner. She
said shareholders don't want to be on unemployment or AFDC. They
want jobs and changes. Ms. Alexander-Calcote explained they
would rather vote by ballot rather than proxies. She noted a lot
of shareholders have degrees and are very talented people. They
want to have open elections for whoever wants to run for the
board. She thanked the committee for listening to her.
Number 634
JUDY KALKINS, Shareholder, Cook Inlet Region, Incorporated,
referred to CIRI's 1994 annual meeting and said CIRI's president
was asked if CIRI was going to distribute any NOL money to the
shareholders. The president answered "no," and said shareholders
already received their share of NOLs through their dividends.
CIRI's president told the shareholders the NOL funds were going
to be used for investments and to buy back stock for CIRI
shareholders. Ms. Kalkins stated she didn't like the president's
answer then and still doesn't because (indisc.) CIRI proxy
statements that he would pay nearly $2.8 million from 1987
through 1993 and (indisc.) was paid based on requiring CIRI NOL
money as revenue.
TAPE 95-24, SIDE B
MS. KALKINS continued... which he himself said 70 percent was
(indisc.) quality level couldn't get a fair share. Refusal to
give NOLs to the shareholders lead to the formation of
Shareholders for CIRI's Future. Ms. Kalkins explained the group
(indisc.) handed out flyers then it passed out petitions that
called for CIRI to distribute 50 percent of its NOLs. When there
were enough signatures to call a special meeting, they contacted
both CIRI and the state's attorney's office. The shareholders
didn't want a special meeting nor did they want to do a proxy
campaign. All they wanted was to have the voice of the people
heard. CIRI management spent a large amount of money to oppose
the shareholder's resolutions. She noted shareholders donated
supplies such as envelopes, paper, money, etc. After the
signatures were turned in, CIRI's management called a meeting
with 20 days notice. They set up the deadline for (indisc.) on
Veteran's Day. There was only nine days to mail proxies and get
them back from rural Alaska, the U.S.A. and foreign countries.
Over 525 shareholders were disenfranchised by CIRI's move.
Neither CIRI's management nor the group received an (indisc.)
vote on the resolutions that were presented at CIRI's meeting.
CIRI's management also changed the shareholder's resolution and
presented (indisc.). Ms. Kalkins said she believes HB 251 is
legislation that discriminates against Native stockholders and
asked the committee to kill the bill.
Number 065
CHAIRMAN KOTT referred to Ms. Alexander-Calcote indicating that
there are some ongoing recall petitions and said the effective
date of the bill would be 90 days after the Governor signs it.
He asked if it would be retroactive.
REPRESENTATIVE MOSES stated there is no intent to make the bill
retroactive.
CHAIRMAN KOTT asked if the bill wouldn't intervene with existing
petitions.
REPRESENTATIVE MOSES said he isn't an attorney but he doesn't
think it does intervene.
REPRESENTATIVE PORTER said it has been his experience that
without a retroactive clause in the bill, the bill would not
affect anything in process. It would only affect filings and
actions that began after the effective date of the bill.
The next person to testify was Bobbie Oskolkoff.
Number 102
BOBBIE OSKOLKOFF, representing herself, testified via
teleconference from Kenai. She explained her village, Ninilchik,
other villagers and shareholders were not informed of HB 251,
which affects about 70,000 Alaska Natives. Ms. Oskolkoff stated
she has a problem with a bill being introduced before everyone is
completely and totally notified, and what the contents of the
bill are. She explained she is currently working on a petition
asking for NOL money. She referred to petitions being done in a
timely manner and passed at annual meetings and said the bill is
assurance that if there is a technical error, a legal
technicality, or anything that may happen, they could still
reintroduce their bill, under HB 251, and would have to wait two
years. The bill is discriminatory against Alaska Natives to have
25 percent of signatures, when state law for other corporations
is 10 percent. Ms. Oskolkoff said they are asking for another
resolution that they be included in participation and litigation
(indisc.). She said the shareholders don't feel they are being
allowed participation because they have a discretionary vote. If
they fail, they shouldn't have to wait two years to reintroduce
anything. Ms. Oskoloff said she feels that she doesn't want to
personally do anything called (indisc.) for her corporation, but
she does feel that any time the board of directors is completely
and totally out of line, then a recall might be necessary. It
keeps the board in line. To take this right away is really
wrong. She thanked the committee for listening to her.
Number 168
CHAIRMAN KOTT referred to legislation and said any idea can be
drafted at any point in time without consulting members of the
public. There is no requirement to bring in the public during
the drafting process and anyone can introduce it. Once it is
introduced, and there is the first hearing, the public then
becomes involved. He announced the next person to testify was
Ike Cropley from Juneau.
Number 180
IKE CROPLEY, Shareholder, Sealaska Native Corporation and
Goldbelt Native Corporation, explained that he was born and
raised in Juneau. He said he has been helping with a recall
effort against Sealaska. As a shareholder, he would like to say
Shareholders for Shareholders stand united against HB 251. Their
rights as shareholders are being taken away by the bill. He
asked why shareholders in Juneau weren't notified about HB 251
and about the current hearing. He referred to the Sealaska
recall and said he would like to explain some of the reasons they
are having a recall. First, the reason shareholders are
protesting and calling for a recall of Sealaska directors, by
petition signed by shareholders, is to end corrupt leadership who
has not accounted for $310 million of Native funds and $900
million lost in timber revenue. The source of those figures is
from the Forrest Service and the Sealaska Annual Reports.
Shareholders protest leadership who vote themselves elaborate
salaries, $3,000 per month, and who allow the minority to rule
over Native corporations with unfair election practices. With
the help of the state of Alaska and the U.S. government, they
spend millions of dollars of Native corporation monies to fight
off honest attempts by a majority who want to reclaim their
Native company. Shareholders for Shareholders stand united
against HB 251. He thanked the committee.
Number 223
CHAIRMAN KOTT announced that the next person to testify was Kathy
Polk.
KATHY POLK was next to testify from Juneau. She informed the
committee that last year she was chairperson for Shareholders for
Goldbelt's Future. She said they had a lot of concerns that
affected shareholders and the reason that they had joined forces
together was because the directors weren't listening to them.
Ms. Polk said they tried to get in touch with people in the U.S.
government to help them. Native corporations are protected
within themselves. After 1991, the board of directors wouldn't
listen to the shareholders. When there was the first recall,
they were turning off the microphone and wouldn't listen to the
shareholders. Theoretically, the shareholders won by majority on
the recall, but because of the way the law is written, you had to
have 50 percent, plus 1, in order to win. Ms. Polk said it has
been a known fact that you don't have that many shareholders vote
within the elections for the board of directors. One of the
problems with the recall is they, the board, hired proxy workers
to work for them and paid them $75 a proxy. There are 2,700
shareholders and they were picking up their proxies. She said
they didn't know if they won. From the records she had, she knew
that they won, but the board said they didn't. She indicated the
shareholders didn't want to have the recall. You cannot recall
just one person, you have to recall the whole board in order to
be effective the way the law is written.
MS. POLK said they had a problem with the chairman of the board
of the corporation and a few people that were behind him. They
wouldn't listen to the shareholder's concerns. She said the
president was fired and he was paid a large amount of money and
then hired another president. What happened is they ended up
paying double the amount for a president for one year. The board
gave the shareholders 20 days for a special meeting from the time
the petition was submitted. She said the proxy material couldn't
be printed up until the board had given the date. The board had
their material printed and then they immediately mailed it as
soon as they announced the date of the meeting. She noted she
spent $5 thousand out of her own pocket on this effort. Ms. Polk
informed the committee the shareholders put together a platform.
She stated that the system with elections is such that the board
can take discretionary votes and use them to manipulate the
votes. She indicated that shareholders have been threatened.
Ms. Polk suggested the committee should be looking at changing
the election rules in the Division of Banking, Securities and
Corporations statutes for corporations.
MS. POLK said when NOL monies become available, they want a board
that will give the shareholders the right to decide how their
money will be handled and to vote for or against 100 percent
distribution, and when it becomes available, to vote for or
against a permanent fund. Ms. Polk said they wanted a board of
directors that was in favor of election reform. She asked that
the little which is left that the shareholders have to fight with
not be taken away. The state or the government doesn't give the
Native shareholders much rope to fight. Recall is just about the
only way to do it. She asked the committee to give consideration
to the shareholders.
Number 329
CHAIRMAN KOTT referred to Ms. Polk mentioning that the only way
to effectively cause change is to recall the entire board of
directors. He said it would seem that if they got rid of every
director, there would be a lot of disruption and disharmony
within the corporation.
MS. POLK said that came up during the recall. She said she was
not in favor of recalling the whole board. There were some
people that shouldn't be there. She said, in speaking with the
Division of Banking, Securities and Corporations, the way the
situation is such that it makes more sense to recall the whole
board. She said she doesn't really know what the answer is
except that she knows shareholders have very little rights within
the Native corporations. The corporations are run by legal
counsel and whoever the majority is on the board of directors.
It is run by the majority. She noted that Goldbelt has had two
recalls because they try to trick the shareholders the first
time, and they didn't give enough time. Ms. Polk urged that
there be unity with the shareholders and within the corporation.
Number 390
SONYA SMITH was next to testify. She noted that she is
originally from Kake, Alaska. She stated that she was informed
about HB 251 at the last minute and was surprised and angered.
Ms. Smith said she doesn't approve of the bill. She stated she
comes from a very cultural family and the whole purpose for the
corporations is to have cultural representation. Ms. Smith said
she supports previous testimony against the bill. She is very
upset, and she doesn't think that it is fair, right or proper.
Ms. Smith said that when you are dealing with people with a past,
you can only poke those people long enough before you get a
reaction. Ms. Smith said she hasn't participated much in the
voting process because of the result and outcome of what they are
dealing with here. She said that this isn't the way her people
were taught to deal with problems. She referred to not
participating in the voting process and said it is mainly because
she doesn't agree with the process. Sealaska has done a lot of
hard work but there is a gap there between the leadership and the
shareholders. She questioned why the bill was written and said
she has many concerns and doesn't believe any of it can be dealt
with in the committee because of the last minute approach that
was taken. The process of the petitions should actually be a
warning to the Sealaska Board of Directors. She said she doesn't
agree with HB 251 at all. She indicated she will do her best to
see that a lot of the shareholders are informed about this whole
thing.
Number 458
JANE IGTANLOC, Chairperson, Shareholders for Goldbelt, was next
to testify from Anchorage. (A lot of Ms. Igtanloc's testimony
was indiscernible due to taping difficulties) She discussed
language on page 1, line 8, starting with, "A director who votes
for or assents to a distribution to the corporation's
shareholders contrary to the provisions..." She discussed how
she is against having an increase in signatures on a petition
from 10 percent to 25 percent. Ms. Igtanloc said it seems to her
that HB 251 is written for management and not for the
shareholders. She referred to wording in the bill where it says,
"A corporation that is organized under this act is not required
to consider or to submit to a vote of the shareholders a
shareholder proposal that deals substantially with the same
subject matter as a proposal that was submitted to a vote of the
shareholders within the preceding two years." Ms. Igtanloc
indicated that the language takes away the shareholders
constitutional right of freedom of speech. She said they have
every right to petition and HB 251 takes away the right to
petition. Ms. Igtanloc continued to give testimony against HB
251.
Number 512
HAROLD RUDOLPH, Shareholder, Cook Inlet Region, Incorporated,
testified via teleconference from Anchorage. He said as a CIRI
shareholder, he is totally opposed to HB 251. If the bill passes
there would be great deprivation to all children of all
corporations. He said no white man's corporation would allow
such a bill. Mr. Rudolph said he wonders why the bill is before
the legislature and 70,000 Natives haven't heard about the bill.
The bill shouldn't even go to the floor. He referred to a
November 17th, CIRI meeting and said it was uncalled for. The
shareholders don't know how much money the corporation spent
against simple advisory resolutions. The corporation promised to
tell them how much they spent but haven't done so yet. It seems
to him the directors are supposed to be running the corporations,
not the officers. He said he would be happy to answer questions.
CHAIRMAN KOTT noted that HB 251 was read across on the House
floor nearly two weeks ago and had been noticed for a hearing in
the House Labor and Commerce Committee five days ago.
Number 558
SHARON KAY, Shareholder, Cook Inlet Region, Incorporated,
testified via teleconference from Anchorage. She said she faxed
a letter to Representative Masek's office earlier in the day with
approximately 80 signatures. She noted that it was one evening
of gathering signatures. Ms. Kay said she was really sad that
some of her fellow Alaskan Native shareholders were hesitant to
sign the petition against HB 251, even after she explained the
consequences to shareholders. If HB 251 passes, it will
negatively affect thousands of Alaska Native shareholders who
don't know anything about the bill. Ms. Kay said she spoke to a
CIRI board member about HB 251. That board member was really
concerned and didn't have any knowledge of the bill. HB 251
deals with Chapter AS 45.55, Chapter 55 of the Alaska Securities
(indisc.) Ms. Kay asked why Native corporations are exempted
from the Securities Exchange Act, and therefore, she inquired how
are they to abide by laws from which they are exempted. She said
the bill is another political ploy to further shut the
shareholders out of their own corporations. It is
discriminatory. Ms. Kay urged the committee to vote against HB
251.
REPRESENTATIVE GENE KUBINA said the current debate is an
interesting debate, as he has never listened in on how Native
Corporations are run. He said he has a lot of questions and he
would like to know more about how the corporations are run.
Representative Kubina said he would like someone from the
department to give an overview of what things are currently like
and what the bill would do.
CHAIRMAN KOTT said he also has some questions. He noted that Mr.
Kirkpatrick from the Division of Banking, Securities and
Corporations, Department of Commerce and Economic Development,
was in attendance. He also said the committee might want to get
an opinion from Legislative Legal.
Number 610
JOAN MANTEI, Shareholder, Sealaska Corporation, was next to
testify in Juneau. She said her grandmother was a full blooded
Athabascan-Tsimshian Indian Sealaska shareholder. She referred
to the bill being introduced without people knowing about it and
said they had three days to inform people. Ms. Mantei referred
to people in outlying villages and said she wonders how much
notice was really given to them. She referred to Section 6(a)
and said it mentions stockholders having to take on the burden of
proof that they didn't know a regulation existed on misleading
information. She said she is concerned because a lot of the
shareholders are very old. They don't understand the issue and
are not technical people. She said they do wonder, including her
grandmother, where their Indian land is, as they never received
any through the Claims Act; yet, they believed they were going to
receive land. Ms. Mantei said she has a feeling they're not
going to be allowed to challenge why they didn't get any Indian
land from Sealaska Corporation or the corporations that haven't
given any yet. She referred to a bill introduced last year, HB
510, and said it was 9 pages long. She said there were some
errors in it. She spoke to Klukwan's attorney and the Division
of Banking, Securities and Corporations, and saw what was
mistaken and what was not. Ms. Mantei explained that Sealaska
didn't give them an opportunity to understand the bill. There
weren't educational classes; nor were any Indians contacted.
TAPE 95-25, SIDE A
MS. MANTEI said HB 251 affects every Native in Alaska, there is a
moral responsibility to allow each and every one of them insight
as to how the legislation will affect them. It is their right as
stock owners and Native people. She said she feels that when the
board feels that the shareholders are stating something that
imposes on them, they can throw scary circumstances out such as
$25,000 fines, indictments, felonies, etc. Ms. Mantei explained
many Indians got only Sealaska as a corporation. They have no
land or economic base to continue the Indian way of life. She
said bills such as HB 251 further prove to her that they cannot
get through the corporate Berlin wall that Sealaska has been
steadfastly encroaching to incapacitate the shareholders.
MS. MANTEI explained that there is a 90 day regulations period
being proposed in Section 2(m), page 2, for petitions to be
turned in. The cost for stockholders to turn in these petitions
would be about $25,000 to $30,000 under the increase in petition
signatures that the legislation calls for. What the legislation
is stating is that you must have about 3,000 signatures and
$30,000, and you have 90 days from the date you began the
petition to accomplish it all. She said Indian people are poor
and you'll never see it. An Indian will never be heard again.
Ms. Mantei asked the committee to kill the bill. She asked that
the committee remain sensitive to the needs of the old Indian
people.
Number 091
BERNICE TREGO, Shareholder, Sealaska Corporation; and Yak-Tat
Kwaan Tlingit Corporation, said she is opposed the HB 251. She
explained that she sat back believing her corporation was there
to help all these years. There wouldn't be the petitions for the
distribution of the NOLs or the recall for the board of directors
if they were doing what they were elected into office for. She
said she wouldn't have elected the directors into office if she
knew they were going to introduce HB 251. She asked what
corporations fine their shareholders serious fines. She asked if
she should be fined for something that she doesn't fully
understand. She asked about their freedom of speech. Ms. Trego
asked the committee members not to pass HB 251.
EDWARD DALE CASEY was next to testify via teleconference from
Anchorage. He said he opposes HB 251 as he believes the bill
will further (indisc.) between our corporation and our
shareholders. Mr. Casey again said he is against the passage of
HB 251.
Number 134
JIMMIE D. HARTLEY, Shareholder, Cook Inlet Region, Incorporated,
testified via teleconference from Anchorage. He said he would
like to remind everybody that we still live under a democracy.
HB 251 is one in a series of special interest legislation
sponsored by CIRI. This signals the desperation and intention of
CIRI's leadership which doesn't have the support of the majority
(indisc.) It attacks the shareholder and director's basic
freedoms of speech. Already (indisc.) by legislation, politician
have been lobbied at considerable expense and is causing severe
public ridicule for their efforts and will probably lose their
political tenure and voting support. He asked that the
legislators not allow themselves as to be used as innocent pawns
to (indisc.) any dictatorship. Mr. Hartley said currently 10
percent of the CIRI shareholders have petitioned for change and
have followed all of the legal guidelines for this change. He
said if committee members support and vote for HB 251, it is
another form of the KGB and the (indisc.) and the constitution of
the U.S. might as well be thrown out. He said HB 251 is the
grossest form of special interest legislation CIRI has sponsored
to date. The issues will not go away but will only intensify.
Mr. Hartley thanked the committee for listening to his testimony.
Number 164
HELEN HARTLEY, Elder, Cook Inlet Region, Incorporated, testified
via teleconference from Anchorage. She said she is 75 years old,
is an elder of CIRI, and is against HB 251.
Number 187
BERTHA HORTON, Shareholder, Sealaska Native Corporation; and
Goldbelt Native Corporation, testified in Juneau. She said when
the ANCSA came about in 1971, she was ten years old. She said
her mother believed that they would be rich some day and the
corporations were for the Natives. Ms. Horton said HB 251 tells
her that the shareholders don't have a voice if they have
concerns about the management of corporations. She stated she
doesn't agree with HB 251.
Number 208
PAT SIERRA, Shareholder, Sealaska Native Corporation Goldbelt
Native Corporation, testified in Juneau. She said if HB 251 is
passed without the knowledge of its existence to the entire
population of nearly 75,000 Native stockholders enrolled in the
ANCSA corporations that it affects, it can be compared to the
blankets filled with smallpox germs that were handed out to wipe
out unknowing and unsuspecting groups of Indians. HB 251 will
wipe out rights of a minority group of stockholders that are
slowly becoming a majority. She suggested that instead of
passing laws against the stockholders who are supposed to be the
owners of the corporation, stiffer laws should be passed against
the directors who do not conform to corporate laws already in
existence. She explained that at no one time in Sealaska's
corporate history have the shareholders been asked about assets
affecting the corporation like buying and selling major assets,
and as she understands under corporate law, this is a major issue
that must come before the stockholders before it can be dealt
with. Ms. Sierra said they are breaking the law and asked why
they are getting away with it. She said not one recall attempt
has ever succeeded due to the voting laws under state statutes.
HB 251 will not benefit everyone but will benefit present
management and directors. It would secure what they currently
have to ensure their future as they are the only ones benefiting
from the corporation. ANCSA was the shareholder's grandparents
dream and has now become a nightmare.
MS. SIERRA said instead of passing HB 251, the legislature should
take a look at what is going on in corporations today. She said,
"Find out why there are so many recall attempts with almost all
the corporations." She said, "Compare it to what was supposed to
happen when ANCSA was passed." Not only is HB 251 unnecessary,
it discriminates against the Native people. She asked where are
the equal rights as guaranteed in the U.S. Constitution. Black
people were freed from slavery a long time ago, but the Indians
are still wards of the government. Ms. Sierra said it is time
that they are granted some freedoms like the freedom to have a
say in their corporations. If HB 251 is passed without full
knowledge disclosed to everyone it affects, it will be time to
ask for a congressional hearing. She stated that the legislature
was elected to serve the people and to listen to them.
Therefore, as a Native and taxpayer, Ms. Sierra said she is
asking the committee to table the bill until hearings in every
city, town and village can be held to make every Native
stockholder aware of the bill and listen to what they have to
say. Then the committee members will be able to say, "I've done
my job well, I've listened to the people." She thanked the
committee.
Number 282
ADA PATTERSON, Shareholder, Sealaska Native Corporation,
testified in Juneau. She explained that during one recall, she
passed out fliers against Sealaska. Ms. Patterson explained the
main question in the flier was where was the interest earned on
the permanent fund. This really disrupted the management, and
within a month, they had $12 million put into the permanent fund
because of that one question. That shows there is a lot of
"crap" going on. She said there is previous management such as
Byron Mallott who retired at $160,000 per year for life.
Shareholders get a few bucks here and there. If the legislature
takes away their rights, it will be extremely hard to process
petitions and come up with a slate. It is hard to raise money to
get new independent candidates into the corporation.
Shareholders should have a right in the corporations and should
have the right to have the freedom to do what needs to be done in
order to keep the corporation up to par to their needs. She
continued to give testimony urging the committee not to pass HB
251.
Number 334
GAIL ANAGICK SCHUBERT, Shareholder, Unalakeet Native Corporation;
and Shareholder, Member, Board of Directors, Bering Straits
Native Corporation, testified in Juneau. She said she would like
to speak out in support of HB 251. There have been a number of
recall and other petitions that have occurred over the past
several years by minority or dissident shareholders. One of the
complaints that she has heard is that shareholders who have an
opinion that differs from the directors, don't have a chance to
be heard. Her argument has always been that when you have an
election, even if you have a board slate, shareholders are
entitled to vote whoever they want to on or off the board slate.
She said she ran as an independent and noted there was a board
slate. Ms. Schubert said she was elected because there were
enough shareholders who voted for her. Shareholders can have a
voice in how the corporations are managed and what happens. The
amount of time and money that goes into recalls or other
activities could be better spent elsewhere. When the regional
Native corporations were set up, they went forward very quickly
into the twentieth century. Ms. Schubert said some of the
original leaders that are currently being attacked have done a
lot of good for Natives. She said HB 251 makes sense and should
be passed.
Number 372
REPRESENTATIVE MOSES asked Ms. Schubert if it is her observation
that the more successful Native corporations are the ones that
are having the most problems.
MS. SCHUBERT said that is correct. If you look at Sealaska and
CIRI, those are the two corporations that she has heard have the
most problems. If you look at the annual reports, you'll see
they have been the most successful. She said that is why she
doesn't really understand why this is going on. It is the people
who have done very well and have been successful who are being
attacked. Ms. Schubert said she doesn't understand it.
Number 385
REPRESENTATIVE KUBINA said what he is feeling from this, there is
a lot of "some who have and some who have not." He said he sees
it in the room and when we see people representing the
corporations, they really seem to be the Natives that can dress
better, can have more material things. He asked if the Native
corporations are not working to help spread the wealth to all
Native groups.
MS. SCHUBERT said she disagrees with Representative Kubina's
observation.
REPRESENTATIVE KUBINA said to take it as a whole, the dissidents
really do seem to be the poorer group.
MS. SCHUBERT said she doesn't know the answer to that. She said
she doesn't know enough about the population base of the regional
corporations that are experiencing these problems. Ms. Schubert
informed Representative Kubina that she was born and raised in
Unalakeet and was one of nine children. She said she comes from
a fairly well educated family. She indicated they were very poor
as they had no running water or electricity. When her father was
hospitalized for six months with tuberculosis, her mother didn't
want to go and ask for support to feed her children. On
Thanksgiving, her mother sent her children to the church with a
bowl to get some reindeer stew. Ms. Schubert said she and
several of her sisters got an education. Because of that
education, she has options available to her. She noted those
options are available to everyone. Anyone else in the committee
room could have the same options available to them.
REPRESENTATIVE KUBINA said he is looking for a reason why there
are so many problems, and why those who aren't involved with
Native corporation see so much and feel so much emotion. He said
it seemed very split. He said he is trying to figure out if
something has gone wrong and if there is a way the legislature
can help make it better so that the corporations can succeed in
their goals to somehow bring everybody together.
MS. SCHUBERT said if you look at who is being attacked, it is the
corporations that have been really successful. It is her
understanding that HB 251 comports state law to federal law. She
noted she isn't a securities expert, so she isn't absolutely
sure. Ms. Schubert said she doesn't think it is up to any
legislative body to dictate to any management team how they
should or should not run their corporations. These people in
charge know what it is that they have to do to make the
corporation grow. She said it would be great for her personally
to receive a huge $5,000 or $10,000 dividend out of a
corporation, but her concern is in ensuring that the corporation
is healthy, stays healthy, continues to grow, and is there to
protect her interest, her children's interest and her
grandchildren's interest into the future. Ms. Schubert explained
she doesn't favor seeing huge pay outs that might damage the
corporate structures. There is a desire to share the wealth, but
by the same token it is necessary to ensure that the corporation
remains viable.
Number 450
GLORIA SARABIA, Shareholder, Sealaska Native Corporation; and
Goldbelt Native Corporation, testified in Juneau. Referring to
Ms. Schubert she said if she is really for the shareholders, she
shouldn't wear her $500 suit. She said her clothes were on
special at K Mart. She said everything comes from clearance
racks from K Mart, Costco, etc. She said she can't afford nice
clothing. Ms. Sarabia said she has 30 years of service with the
state of Alaska. She said Ms. Schubert almost insulted her
intelligence when she asked if the board were to be recalled,
wouldn't it be disruptive. We have an awful lot of intelligent
people. The board of directors hold the shareholders in bondage.
She urged the committee to table the bill or at least vote
against it. Ms. Sarabia said she has worked as hard as anybody
with a degree. She may not have gone to college. She is the
oldest of eight kids and not one has been to college except her
brother and he is the only state Indian coordinator in the U.S,
in the state of Connecticut. Ms. Sarabia said her entire family
is against HB 251.
Number 478
CHAIRMAN KOTT said if he has insulted anyone's intelligence, that
wasn't his intent. He said he is trying to seek answers and
understand the issues. Chairman Kott noted he is not a member of
a Native corporation and never has been. He said he is trying to
understand the whole concept.
MS. SARABIA said Sealaska started 25 years ago with people who
knew nothing. People know a lot today.
Number 491
CATHERINE PRICE, Shareholder, Sealaska Native Corporation, said
she learned about HB 251 earlier in the day. She referred to the
legality of the legislation, and asked that the committee
thoroughly do the research and find out if it truly is legal to
make these kinds of changes. Ms. Price asked the committee to
please do the research before any decisions are made.
Number 504
MS. SCHUBERT said she meant no insult to anyone sitting in the
committee room. She referred to her clothing and said she
doesn't owe any of it to her Native corporations. She said she
owes her coat to the fact that she went to school for 21 years.
She is an attorney, is proud of it, and worked very hard. She
said she isn't going to make excuses for how she dresses and she
certainly owe it to the Native corporations.
CHAIRMAN KOTT stated is isn't his intent to move HB 251 out of
the committee today. There are a lot of questions that need to
be answered. He said he believes the committee has a number of
questions that relate to the legal aspects of the bill. Chairman
Kott asked Mr. Huhndorf to come back before the committee
Number 513
REPRESENTATIVE ROKEBERG asked Mr. Huhndorf if he has any
questions or statements he would like to make.
MR. HUHNDORF said there has been a lot of testimony that has been
sharply conflicting in terms of people being very pro or very con
of what is being proposed in HB 251. He said he would submit
that this is about dividend and distribution policy. Some of the
corporations have become quite successful and have increased
their net worth, cash flows and their net income substantially.
He said CIRI has a policy of distributing about 50 percent of
their net profits in dividends to the shareholders. He said they
have been coming under a lot of pressure from a minority of
shareholders to distribute more. The board is caught on one side
of the question with their duty to the corporation to be prudent
in terms of the distributions they make and the liquidity that
they maintain in the company. On the other hand, they know that
the people asking for more money need money. In many cases they
are desperately poor and they want more money. Mr. Huhndorf said
it is really hard to explain why you have to keep the corporation
alive and put some net profits back into the growth of the
company in order for the company to be around and alive for
generations to come. He said there are no good or bad guys. The
irony is that as the corporations grow and become more liquid,
there is an increase demand by people who are not very well off
to want more of that money, and all of a sudden, there are
accusations flying back and forth. Mr. Huhndorf said it is
really a question of money, and that is why there is the
disruption in the Native community in recent months. He said
CIRI has grown, for example, from $34 million in 1971, to a
corporation with a net worth of about $435 million. There was
nearly a 20 percent a year growth.
MR. HUHNDORF explained dividends have increased each year. In
one year CIRI distributed 62 percent of their net income. He
said the corporations obviously can not conduct business if
they're perpetually holding special meetings. He said to hold a
special meeting, you can get 10 percent of the signatures on a
petition in just a few days. He said the tragedy is that the
special meetings are advisory in nature mostly because state law
prohibit shareholders from voting themselves dividends or for
making major policy changes in the fiscal management of the
company. State law simply does not allow it and it only becomes
advisory to a board who then becomes or feels threatened. They
then go into a siege mentality about what they should or
shouldn't do. They are threatened by being told they are going
to lose their board seats, and of course, nobody likes to be
fired.
MR. HUHNDORF said the board thought they were doing a lot of
right things, but it ended up, he believes, that the shareholders
weren't asked to participate in the planning and recommend some
of the policies that resulted in some of the things that were
done.
Number 583
REPRESENTATIVE ROKEBERG said from his personal knowledge, it
seems to him that Mr. Huhndorf was probably the most underpaid
executive in North America during the 70s and 80s. He also asked
if it isn't true that the solid decision making by the board of
directors of CIRI in the land selections and the ability to
acquire assets, which are probably one of the most important
sources of income for appropriations under the 7I provisions.
MR. HUHNDORF said that is true statement in that to an extent
they were able to select lands that had oil and gas bearing
potential. CIRI was able to do that and generate revenues under
Section 7 of ANCSA, which requires a sharing with other regions
in that a producing region must share 70 percent with other
regions. Mr. Huhndorf said as he recalls, since CIRI came into
existence, they have shared in excess of $200 million with other
regions.
MR. HUHNDORF explained that one of the things corporations try to
do that has a sense and continuity of management is to try to pay
market levels of salaries. So when a person looks at his/her
salary, it is either above or below the middle of the market.
That is what they strive to do in CIRI. It is important that
managers don't have reasons to quit or look for new jobs. If
they are paid under the market consistently, even though they
like their job, they will eventually feel used and put upon and
will look for a new job which pays more. He said they try to pay
at the middle of the market. That may be high because the
corporation is large and it is compared to other corporations in
America that do similar things. He explained they try to follow
paying the middle of the market and that causes some problems.
REPRESENTATIVE ROKEBERG asked if it wasn't true that CIRI didn't
have a retirement program for the first 12 years of their
existence.
MR. HUHNDORF explained they currently don't have a retirement
program. They have a full "1K" and a small profit sharing
program that builds some annuity. He noted some companies have
retirement plans and stock options.
TAPE 95-25, SIDE B
CHAIRMAN KOTT asked Mr. Kroloff to come back before the
committee. He referred to the sponsor statement saying the 10
percent requirement would be adjusted to the 25 percent, which
would bring Alaska's law into conformity with federal statute.
He asked Mr. Kroloff if he could specifically sight what federal
statute is addressed.
MR. KROLOFF explained as ANCSA was originally passed in 1971, it
provided that the stock that the Native shareholders would
receive would be subject to very strict alienability limitations
where the stock could not be sold, pledged or seized in
foreclosure. Those restrictions were to end 20 years from the
passage of ANCSA or in 1991. In 1988, ANCSA was amended by
congress in a way that dealt with alienability restrictions. The
rule was essentially changed so rather than the restrictions
expiring automatically in 1991, they stayed in place
automatically unless 50 percent plus 1 of the shares voted to
lift them. So rather than having the restrictions expire,
congress, in essence, gave authority to the shareholders to make
that decision for themselves. It also provided a mechanism for
shareholders to bring that decision before the corporation.
There are two ways that can come about. The board of directors
can bring before the shareholders its own motion, in essence, or
resolution to lift the restrictions or shareholders may petition
the company for a vote to lift the restrictions. It is that
provision of ANCSA that set the petition level at 25 percent.
The argument that has been made to the committee by people
testifying earlier in the meeting can be summarized. Mr. Kroloff
said congress did not mandate that every petition be 25 percent.
The state would not be required to make everything a 25 percent
threshold. The argument being made is that when congress
considered what is probably the most important subject that
shareholders could bring before their corporation for a vote,
which is to retain or to remove the restrictions on alienability
of Native corporation stock. Congress set 25 percent as the
threshold and the reason it did that is so there would have to be
a relatively significant level of support for the petition. Even
if it was not majority support at the time it was brought, it had
to at least be a significant minority. Mr. Kroloff explained the
argument being made today is if that every important question
requires such a threshold. The proponents of the bill feel that
these kinds of questions that are not of the same significance,
largely because they are of an advisory nature only, shall
require a similar threshold. Corporations should not be
subjected to repeated calls for meetings on matters that are of
lessor significance and are advisory only, with a lessor minority
of shareholder supporting.
Number 094
CHAIRMAN KOTT said he assumes Mr. Kroloff worked on the
legislation with the bill sponsor. He referred to the 90 day
period to gain the required number of signatures on petitions,
and noted shareholders are mobil and scattered. He asked if it
was reasonable to place the 90 day restriction in order to gain
the required number of signatures.
MR. KROLOFF said he thinks it is reasonable. He stated that
state law currently provides for a proxy campaign for an annual
meeting to elect directors. The requirement is as low as 20 and
no longer than 60 days and that those who support or disagree
with management have to contact all the shareholders to submit
their proxies and to cast them at the meeting. These meetings
have happened for 20 years. Mr. Kroloff referred to previous
testimony where there were complaints that shareholders thought
20 days was too short. The whole point of the bill is to treat
the petitions like proxies, which in essence is what they're
like. It provides a longer period than you would have to solicit
votes for a director which is considerably more significant act.
MR. KROLOFF said there were some calls for modeling Native
corporations governance on SCC Rules. He said he believes the
SCC has the same or a more stringent requirement.
Number 138
CHAIRMAN KOTT said HB 251 would make it a criminal offense to
solicit support for a request for a special meeting without first
notifying the corporation. He asked Mr. Kroloff if he could
comment on the reasonable "miss that" aspect of it. He asked if
it perhaps infringes on the shareholders rights of free
expression.
MR. KROLOFF asked if there should be criminal penalties. He said
he doesn't think CIRI has a particular view in favor of criminal
penalties. He said he believes that is in the bill because he
thinks the bill just incorporates the proxy votes, already in
law, for willful violations of the proxy rules. Mr. Kroloff said
if the committee didn't feel comfortable with that, he doesn't
think CIRI would care. He referred to the question relating to
violating people's free speech rights and said he doesn't think
so as a legal matter. This is because free speech rights are
between a citizen and a government and not between a shareholder
and a corporation. He noted even between a citizen and the
government, the government can impose reasonable time, place and
manner restrictions on them.
Number 160
REPRESENTATIVE ROKEBERG referred to earlier testimony that
indicated there currently is a year or an unlimited period for
petitioning. He asked if there currently was a time frame.
MR. KROLOFF said he isn't familiar enough with that to know.
An unidentified speaker indicated there isn't a limit.
Number 174
CHAIRMAN KOTT said the penalty would be a felony of not less than
one year and not more than five.
Number 181
REPRESENTATIVE KIM ELTON said he wasn't sure what the chairman's
plan is for the bill. He said as a dissident Democrat in the
legislative body dominated by a majority of Republicans, there
are questions that have come up that need answers. He said he
would doubt that the questions can be answered in the next 20
minutes. He noted Mr. Kirkpatrick is in attendance, but
indicated he thinks it would be good for the committee to have
Mr. Kirkpatrick come back at a point in time where there is
enough time for questions for him from other members of the body.
He said a lot of people have shown up to testify and he believes
it would be fair to have those people leave their names and
telephone numbers to they can be contacted when HB 251 does come
up again. Representative Elton said he will need his energy for
later in the evening when the House goes back into session. He
said he would move for recess or adjournment.
CHAIRMAN KOTT objected for the purpose of inviting Mr.
Kirkpatrick to the table for a very brief dialogue. He asked Mr.
Kirkpatrick to provide a very brief synopsis of the bill as he
sees it. He explained the bill would be held over until the
following Wednesday and he would invite Mr. Kirkpatrick back to
cover some of the more intricate matters.
REPRESENTATIVE PORTER said if the bill is going to be back before
the committee, he would prefer that Mr. Kirkpatrick give his
testimony at one time. It is unfortunate that the timing is off.
He said he would like to also have someone from the Department of
Law that deals with securities and corporation matters as well.
CHAIRMAN KOTT agreed with Representative Porter.
ADJOURNMENT
CHAIRMAN KOTT adjourned the House Labor and Commerce meeting.
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