Descendant dilemma looms for Alaska Native corporations

Nome, a gold gold rush community in Western Alaska, is betting big on geothermal in hopes of finally figuring out the riddle of high energy costs that plagues many off-the-road-system communities in the state.(Gabriel Bouys / AFP)
Nome, a gold gold rush community in Western Alaska. Calista Corporation, which represents the Nome region, is the latest Alaska Native corporation to agree to expand shareholder rolls. (Gabriel Bouys / AFP)
The Alaska Native corporation for the Nome region will analyze the idea of enrolling descendants while sister corporations keep such efforts alive on a back burner, suggesting that the Calista Corporation in Southwest Alaska won’t be the last to expand its shareholder rolls.

Yet it may be some time before another regional Native corporation takes a similar step.

The 12 land-based entities, created by federal law in 1971, have become financial powerhouses in the 49th state, earning $8.5 billion and distributing $205 million in dividends in 2013.

Those earnings have helped benefits such as scholarships, internships, and hiring preferences flow to thousands of descendants born after the law passed.

But in part out of fears that future dividend payouts will be diluted, six corporations have not agreed to issue new shares to children and grandchildren of original shareholders.

Generational imbalance

Expansion supporters say that’s often left an imbalance between those who own 100 original shares and those who own no shares or perhaps a small number — obtained through gifts or inheritance — a situation that can limit descendant voting power and voice in corporate decisions.

In the last quarter-century, ASRC, Doyon, NANA, Sealaska, Ahtna, and recently Calista have all agreed to expand shareholder rolls.

Officials with three of the six remaining corporations — the Aleut Corp., Bristol Bay Native Corp. and Cook Inlet Regional Inc. — said recent surveys have found that shareholders favor the idea of expanding rolls. But that support erodes when those same respondents are asked if they’d also support diluted shares.

Jason Metrokin, chief executive of Bristol Bay Native Corp., said the corporation for that Southwest Alaska region has increased dividend payouts every year since 1978. Continuing to do so would be difficult if the company added descendants, doubling membership from 10,000 shareholders today to an estimated 20,000.

Diluted shares?

In a 2014 survey, 69 percent of respondents supported expansion. But in a follow-up question, those shareholders said they didn’t want their shares diluted, leading BBNC to conclude that it will continue analyzing shareholder sentiment until the time is right for expansion.

“We’re just not there yet, and neither are our shareholders,” Metrokin said.

Officials at Aleut Corp. and CIRI also said they’re not planning an expansion, but will continue to gauge shareholder opinion. Native corporations also encourage gifting of shares to family and promoting the creation of wills that name future share recipients.

Officials with Chugach Alaska and Koniag did not return phone calls for this article.

Financial and practical concerns

Bering Straits Native Corp., representing 7,100 shareholders with roots in the Nome region in Western Alaska, plans to dive deeper into the question than it has in the past, conducting a shareholder survey later this year in part to learn basic information, such as the number of descendants, officials said.

“It will help us determine whether it’s possible from a financial and practical standpoint,” said Matt Ganley, the company’s vice president of external affairs.

Ganley said the planned Bering Straits survey stems from shareholder interest, not from Calista’s recent decision to expand its rolls.

Calista early this week certified the results of its shareholder vote last weekend to roughly triple its rolls from 13,000 shareholders to as many as 43,000.

Mike Williams, 62 and an original Calista shareholder, said he had long advocated for the corporation to expand, in part so his children would have a greater stake in corporate affairs.

“It’s a huge step in the right direction,” he said.

Pressure to grow revenues

The expansion will give Calista, representing the Bethel region — and the poorest region in Alaska — the largest shareholder base by far of any Alaska Native corporation. That will present a huge challenge as the company struggles to keep up with needs for larger dividends that often help pay for basic items like fuel and food, as well as demand for more scholarships, training and jobs.

“I’m cautiously happy,” said Maver Carey, an original Calista shareholder.

The good news is her two daughters, 17 and 12, will become shareholders. But Calista will face greater pressure to grow revenues, Carey said.

“Trust me, it’s a huge weight on your shoulders knowing you have to continue to grow financially,” Carey said.

Carey is chief executive of The Kuskokwim Corp., a consortium of Native village corporations that like the regional corporations were also created by the 1971 law. The company agreed to add up to 2,000 descendants about five years ago.

But it did so only after ensuring it could sustain benefits, something made possible in part by TKC’s success in creating new subsidiaries and securing federal contracts under the Small Business Administration’s controversial 8(a) program.

“When you grow financially you can provide more cultural benefits, more scholarships and other benefits, and you have to be committed to those as well (as dividends),” Carey said.

Looking for new opportunities

Calista’s chairman, Willie Kasayulie, said Calista continues to move away from 8(a) contracting because of reduced opportunities from the Small Business Administration program. He said Calista is aware of the pressure to grow and employees are diligently looking for new opportunities.

Calista chief executive Andrew Guy said in a prepared statement that Calista’s basic objectives — financial success and improving socio-economic conditions for shareholders — will continue. Part of the equation will be keeping costs under control.

“Revenue growth is one channel for businesses, but more critical is profitable growth,” he said. “That requires constant cost management as operations change.”

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Norway: Alarming situation for indigenous peoples in Russia, Barents Observer

Russia: Russia to give indigenous peoples priority in Barents chairmanship, Barents Observer

Sweden: UN report critical of Sweden’s treatment of the Sami, Radio Sweden

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