Regional Alaska Native Corporations: Status 40 Years after Establishment, and Future Considerations
Published: 2012-12-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 1971, the Alaska Native Claims Settlement Act was enacted to resolve long-standing aboriginal land claims and to foster economic development for Alaska Natives. This federal law directed that corporations be created under Alaska state law, which were to be the vehicles for distributing the settlement. As directed by the act, 12 for-profit regional corporations were established, representing geographical regions in the state. Later, a 13th regional corporation was formed to represent Alaska Natives residing outside of Alaska. Eligible Alaska Native applicants who were alive on December 18, 1971, became shareholders in the corporations. The Settlement Act, as amended, authorizes the corporations to provide benefits to shareholders and to other Alaska Natives.
GAO was asked to review these corporations. This report examines (1) governance practices of the regional Alaska Native corporations, (2) requirements for and oversight of the corporations' financial reporting practices, (3) benefits provided by the corporations to their shareholders and other Alaska Natives, and (4) questions to consider for the future. GAO reviewed relevant federal and state laws and regulations, as well as the corporations' annual reports, proxy materials, and other documents. GAO interviewed representatives from each of the 13 regional corporations and visited seven of the Alaskan regions.
section_title: What GAO Found
paragraphs: Incorporated under Alaska state law, regional Alaska Native corporations share fundamental characteristics, although they have chosen a variety of governance practices. Like other Alaska corporations, the regional corporations are subject to the state's corporate laws (with limited exceptions) and are run by an elected board of directors. Nevertheless, each regional corporation has chosen its own organization and governance approach in terms of board operations, executive and board compensation, board elections, and shareholder involvement.
Alaska Native corporations are subject to some financial reporting requirements under federal and state law, but oversight of the reporting is limited. The Alaska Native Claims Settlement Act generally exempts the corporations from complying with federal securities laws while requiring them to annually provide a report to their shareholders that contains "substantially all the information" required to be included in an annual report to shareholders by U.S. Securities and Exchange Commission registrants. The Settlement Act does not provide for a federal role to monitor the corporations' compliance with this requirement, and oversight by the state of Alaska is generally limited to enforcement of state securities laws and proxy regulations.
GAO found that the corporations provide a wide variety of monetary and nonmonetary benefits to their shareholders and other Alaska Natives. Monetary benefits include shareholder dividends, elder benefits, scholarships, memorial benefits, shareholders' equity, and charitable donations. Nonmonetary benefits-- often offered in partnership with village corporations, tribal organizations, and nonprofit organizations within the region--include employment opportunities, cultural preservation, land management, economic development, and advocacy on behalf of Alaska Natives and their communities.
During this review, GAO identified three questions regarding the ambiguity of existing federal financial reporting requirements, the role of the federal government in maintaining the corporations' solvency, and the implications of defining who is eligible to be a shareholder. These questions may warrant consideration and discussion by the federal government, the state, the regional corporations, shareholders, or a combination of these entities.
Should the "substantially all" federal reporting requirement be clarified and overseen? GAO was unable to determine whether the corporations are meeting the "substantially all" requirement in the Settlement Act because the phrase is not defined.
What is the appropriate role of the federal government in maintaining the solvency of Alaska Native corporations? The federal government has intervened in the past to help maintain the financial solvency of the corporations. The 13th Regional Corporation has been insolvent since 2007.
Who should be a shareholder? As authorized by amendments to the Settlement Act, shareholders of 5 of the 13 regional corporations have voted to issue shares to Alaska Natives born after December 18, 1971, who meet certain criteria. In deciding to offer new shares to more people, corporations and shareholders face a number of considerations such as, potential effects on dividends and shareholder involvement.
section_title: What GAO Recommends
paragraphs: GAO is making no recommendations in this report. Responses provided on behalf of the corporations made several points about their financial reporting and operations that are more fully discussed in the report.

section_title: Letter
paragraphs: On December 18, 1971, the Alaska Native Claims Settlement Act was  enacted to resolve long-standing aboriginal land claims and to foster  economic development for Alaska Natives. This federal law directed that  corporations be created under Alaska state law, which were to be the  vehicles for distributing the settlement’s land and monetary benefits to  Alaska Natives. The Settlement Act permitted the conveyance of about  44 million acres of land to the corporations, along with cash payments of  almost $1 billion, in exchange for extinguishing aboriginal land claims in  Alaska. As directed by the act, 12 for-profit regional corporations were  established representing geographical regions in the state, with each  region composed as far as practicable of Alaska Natives who have a  common heritage and share common interests. In addition, a 13th  regional Alaska Native corporation was subsequently formed to represent  those Alaska Natives residing outside of Alaska.
The Settlement Act was intended to conform “with the real economic and  social needs” of Alaska Natives, without establishing any permanent  racially defined institutions and without creating a reservation system,  among other aims.enacted, entitled certain Alaska Natives to be shareholders in the  corporations and prohibited sales of the corporations’ stock for 20 years.  Subsequent amendments, however, have authorized issuance of stock to  other Alaska Natives and their descendants, extended the prohibition on  the sale of stock, and generally exempted the corporations from  regulation by the U.S. Securities and Exchange Commission (SEC).  Under the Settlement Act and state law, the corporations are required to  provide certain information to shareholders, such as annual reports  including the corporations’ audited financial statements. The Settlement  Act, as amended, also authorizes but does not require corporations to  provide benefits to their shareholders and other Alaska Natives to  promote their health, education, or welfare.
Toward these ends, the Settlement Act, as originally  To inform your understanding of the financial information being reported  by the regional Alaska Native corporations and how these corporations  are addressing the needs of Alaska Natives, you asked us to describe  various corporate practices. This report examines (1) governance  practices of the regional Alaska Native corporations, (2) requirements for  and oversight of the corporations’ financial reporting practices,  (3) benefits provided by the corporations to their shareholders and other  Alaska Natives, and (4) questions to consider for the future.
To conduct this work, we reviewed the Alaska Native Claims Settlement  Act, as amended; the Alaska Corporations Code; and other federal and  state laws and regulations relevant to corporate governance and financial  reporting by regional Alaska Native corporations. We examined the  corporations’ annual shareholder reports from 2010 and proxy materials  from 2011(the most recent years for which consistent information was  available across the corporations). We also asked SEC staff to provide  observations on the corporations’ 2010 annual shareholder reports. In this  report, we define an SEC registrant as a corporation subject to the  registration and reporting requirements of the Securities Exchange Act of  1934. We reviewed documentation provided by the regional corporations  on their governance practices and on monetary and nonmonetary  benefits provided to shareholders and others. Throughout this report, we  refer to the corporations’ 2010 reporting period to describe each  corporation’s fiscal year corresponding most closely to calendar year  2010. We report all dollar amounts as they were reported to us by the  corporations for the period in question; none have been adjusted for  inflation. We interviewed representatives from all 13 regional corporations  and visited multiple locations across 7 of the 12 Alaskan regions. During  our site visits, we met with corporate executives and board directors,  tribal officials, representatives from nongovernmental organizations, and  shareholders to discuss their perspectives on the regional corporations  and benefits provided. In addition, from the Alaska State Division of  Banking and Securities, we obtained information on inquiries and  complaints received by the division, and steps the division took to  investigate and act on these claims, including administrative orders  issued by the state. Appendix I describes our scope and methodology in  greater detail.
We conducted this performance audit from October 2011 to December  2012 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The Alaska Native Claims Settlement Act required the Secretary of the  Interior to divide Alaska into 12 geographic regions, with each region, as  far as practicable, composed of Alaska Natives having a common   The Secretary of the  heritage and sharing common interests (see fig. 1).Interior was also required to enroll into a region every Alaska Native alive  when the Settlement Act was enacted on December 18, 1971, generally  according to residence. As defined by the Settlement Act, an Alaska  Native is a person with 25 percent or more of Alaska Indian, Eskimo, or  Aleut blood or combination thereof (called a blood quantum requirement).  Each region in the 1970s established a regional corporation as directed  by the Settlement Act, and the Alaska Natives enrolled into the region  became its shareholders. Certain Alaska Native villages were also eligible  to form village corporations under state law. In addition, Alaska Natives  who were not residing in Alaska could elect to enroll in a 13th region.  Such a corporation, referred to as the 13th Regional Corporation, was  established by a vote of nonresidents, and only those nonresident Alaska  Natives who voted for the 13th Regional Corporation’s formation were  enrolled in that region and became its shareholders (nonresidents who  did not vote for it were enrolled in another region and became  shareholders of that regional corporation). Enrolled Alaska Natives  received no more than 100 shares of their regional corporation’s stock  and, if they were enrolled in a village, no more than 100 shares of their  village corporation’s stock. Under the original Settlement Act, shares  could be inherited upon a shareholder’s death, but inherited shares  entitled the new shareholder to vote only if the shareholder was an Alaska  Native with a blood quantum of 25 percent or more.
The corporations established under the Settlement Act were to receive  title to about 44 million acres of land in exchange for the extinguishment  of Alaska Native aboriginal land claims. Specifically, the 12 regional  corporations received rights to the subsurface and some surface lands,  and certain village corporations received title to surface lands. Under the  act, the 13th Regional Corporation is not entitled to any land or  subsurface rights. Under section 7(i) of the act, 70 percent of all revenues  annually received by each regional corporation from the timber and  subsurface resources conveyed to them under the Settlement Act is then  divided among the 12 regional corporations according to the number of  Alaska Natives enrolled in each region.does not share in this natural resource revenue, known as the 7(i)  distribution.
In addition, each of the regional and village corporations established  under the Settlement Act received a portion of the nearly $1 billion  monetary settlement (see table 1). The portion of the settlement money  given to each regional corporation was based on the relative number of  Alaska Natives enrolled in the region. The 12 regional corporations in  Alaska were required to distribute to shareholders each year until 1976  not less than 10 percent of the settlement money and all other net  income, including the 7(i) distribution. After 1976, the regional  corporations must distribute 50 percent of funds from such sources  among the village corporations in the region and regional corporation  shareholders who are not residents of those villages.Corporation was required to distribute to its shareholders not less than  50 percent of its settlement money. As a House committee report  accompanying the Settlement Act stated, the money provided by the  settlement was intended to provide the capital necessary to raise the   The 13th Regional  standard of living of Alaska Natives—many lived in extreme poverty and  underprivileged status—through their own efforts.
Although the Settlement Act’s basic structure has not changed in the last  40 years, the act has been amended several times. Some of the  amendments pertain to the expansion of eligible shareholders, extended  restrictions on the sales of stock, exemptions from federal securities laws,  and participation in the Small Business Administration’s 8(a) program, as  follows:
Expansion of eligible shareholders. The Settlement Act was amended  in 1988 to permit the addition of new shareholders under certain  circumstances. Specifically, corporation shareholders could vote to  amend the articles of incorporation to authorize the issuance of  additional shares to (1) eligible Alaska Natives who missed  enrollment, (2) Alaska Natives born after the Settlement Act’s  enactment, or both. A subsequent amendment in 1992 also  permitted corporation shareholders to vote on amending the articles of  incorporation to authorize the issuance of additional shares to  descendants of Alaska Natives born after December 18, 1971. This  provision allows corporations to issue stock to descendants of its  original shareholders without regard to blood quantum—as long as  shareholders vote to amend the articles of incorporation to authorize  such action.
Restrictions on sales of stock. The 1988 amendments also extended  the prohibition on sales of stock unless and until the shareholders of  the corporation decide to allow them. The Senate committee report  accompanying the amendments recognized that by the end of 1991— the date when stock could be sold under the original act—many  Alaska Native shareholders would not have acquired sufficient  experience dealing with corporate activities to sell their stock on the  open market without risking the loss of continued Alaska Native  corporate ownership.vote to amend the articles of incorporation to lift restrictions on stock  sales.
Investment Company Act of 1940, 54 Stat. 789, codified as amended at 15 U.S.C.  §§ 80a-1 to 80a-64.
Small Business Administration’s (SBA) 8(a) program participation. In  1988, the Settlement Act was amended to designate Alaska Native  corporations as minority and economically disadvantaged business  enterprises owned and controlled by Alaska Natives if Alaska Natives  and descendant shareholders represent a majority of both the  corporation’s total equity (shares) and voting power. Furthermore, the  amendment designated any direct and indirect subsidiary  corporations, joint ventures, or partnerships of these Alaska Native  corporations as minority and economically disadvantaged business  enterprises if Alaska Natives and descendant shareholders represent  a majority of both the total equity and voting power of the subsidiaries,  joint ventures, or partnerships. Alaska Native corporations’ qualifying  subsidiaries, joint ventures, or partnerships are eligible to participate  in the SBA’s 8(a) program—one of the federal government’s primary  means for developing small businesses owned by socially and  economically disadvantaged individuals. Under the 8(a) program,  Alaska Native corporations, along with other tribal entities, have been  afforded special advantages, which have come under congressional  scrutiny in recent years.a high percentage of their revenues from their subsidiaries’  participation in the 8(a) program.
subsections: section_title: Regional Corporation Organization
paragraphs: The regional corporations are organized as for-profit corporations under  Alaska state law and are separate and distinct from the Alaska Native  tribal governments recognized by the federal government as Indian  tribes. Incorporated under Alaska state law, regional corporations share  fundamental characteristics with other corporations in Alaska. For  instance, to form a for-profit corporation, articles of incorporation—which  contain basic information about the corporation and its structure—must  be filed with the state and a fee paid. The articles of incorporation specify,  for instance, how many shares the corporation is authorized to issue,  whether the shares will be divided into classes, who is eligible to receive  shares, and who serves on the initial board of directors. Corporations  are required to submit biennial reports to the state containing information  about the current board of directors, number of shares issued, and other  related information. The state can dissolve corporations involuntarily for  several reasons, such as failure to file required biennial reports or pay a  biennial corporation tax.
The Settlement Act confirms that management of the regional  corporations is the responsibility of their boards of directors and generally  subjects the Alaska Native regional corporations to state law, although  the state does not have a role in overseeing any corporations’ corporate  governance or business decisions. According to the Settlement Act’s  legislative history, board members and officers were expected to avoid  abuses of the act’s intent; any unreasonable staff, officer, board member,  consultant, attorney, or other salaries, expenses, and fees; and  expenditure of funds for purposes other than those reasonably necessary   State corporate law does not authorize  in ordinary business operations.the state to oversee such actions of any corporations’ directors, and the  act did not establish any oversight mechanism for the regional  corporations.
Under state corporate law, a corporation’s board of directors—who are  fiduciaries of the corporation and owe it the duties of good faith, care, and  loyalty—manages the corporation and makes business decisions. The  board hires and monitors corporate officers, such as president and  secretary. In contrast to the board of directors’ role, shareholders have  limited power to participate in management and control of a corporation.  Shareholders do not make business decisions for the corporation, but  they are responsible for electing the directors who do. Except for the  initial board, directors are elected by shareholders at an annual meeting.  The elections are usually conducted by an independent third party, such  as an accounting firm. In order for a shareholder election (or other action)  to be valid, a certain number of shares—specified in state law or the  articles of incorporation and known as a quorum—must be voted in  person or by proxy at the meeting. Voting by proxy means that a  shareholder who cannot attend the annual meeting in person directs  someone else—a proxy holder—to vote his or her shares. Shareholders  and the corporation can solicit shareholders to serve as their proxy  holders in what is known as a proxy solicitation. Proxy solicitations from a  corporation generally consist of an annual report to shareholders, a proxy  statement containing information on nominees for the board, and a proxy  form, among other things. In addition, shareholders must vote to approve  any amendments to the articles of incorporation and certain other actions  proposed by the board. Shareholders can also make recommendations to  the board on various matters by presenting and voting on resolutions at  annual meetings.
section_title: Overview of the Regional Corporations
paragraphs: Over the past 40 years, the 12 regional corporations in Alaska have  grown into diverse and often large businesses, important to Alaska’s  economy. Although many of the corporations struggled financially when  they were first created and into the 1980s and 1990s—with at least  2 declaring bankruptcy—by 2011, the 12 corporations were ranked as top  businesses in Alaska. For example, in October 2011, Alaska Business  Monthly reported that the 12 regional corporations were ranked within the  top 25 Alaska-owned businesses in Alaska on the basis of 2010  revenues. Furthermore, the Arctic Slope Regional Corporation has been  ranked as the number one Alaska-owned corporation for 17 consecutive  years, with gross revenues of $2.3 billion in 2010. Collectively, the  12 regional corporations’ revenues in 2010 reached almost $8.2 billion,  and the corporations have extensive operations both within Alaska and  around the world. For example, NANA Regional Corporation owns the  land on which one of the world’s largest zinc-lead mines is situated, and  the Arctic Slope Regional Corporation is a major producer of oil on  Alaska’s North Slope. The regional corporations have multiple  subsidiaries operating in Alaska, the lower 48 states, and several other  countries. Specifically, the corporations reported to us that they  collectively operate more than 330 wholly owned subsidiaries, ranging  from fewer than 10 at one regional corporation to more than  50 subsidiaries at another.corporations ranged from more than 500 at one corporation to almost  11,000 at another. Table 2 summarizes the regional corporations’ major  business operations, gross revenues, and net incomes.
section_title: The Corporations Have Adopted a Variety of Governance Practices
paragraphs: Incorporated under Alaska state law, regional corporations share  fundamental characteristics, although they have chosen a variety of  governance practices. Like any other Alaska corporation, the regional  corporations are subject to the state’s corporate laws, with a few limited  exceptions, and are run by a board of directors elected by shareholders.  Nevertheless, as allowed under state law, each of the regional  corporations has adopted its own set of governance practices. In  reviewing these practices for the regional corporations, we found a range  of similarities and differences in terms of board composition and  operation, executive and board compensation, board elections, and  shareholder involvement; we did not review governance practices of the  13th Regional Corporation because it has largely been inactive since  2007.
subsections: section_title: Board Composition and Operation
paragraphs: Under the Settlement Act, all regional corporation board directors must be  shareholders of their corporations and over the age of 18, but otherwise  the corporations have taken various approaches in composing and  operating their boards. For instance, board sizes range from 9 to 23  directors, and the corporations have established differing restrictions  relating to the directors’ employment with the corporation or their  subsidiary companies. A few corporations specify that directors may not  be employed by the corporation or any of its subsidiaries, while others  specify that directors may not be employed by the corporation but may be  employed by certain subsidiary companies. In contrast, several  corporations do not restrict director employment with the corporation, but  one restricts certain director involvement with entities that may compete  with the corporation, and yet another requires that the position of  corporate president be filled by a director. For those corporations that do  not restrict director employment, we found several instances where board  directors were also employed by the corporation or its subsidiaries.
We also found that the age, sex, professional business experience, and  board tenure of the corporations’ boards varied. Very few directors were  younger than 40, although directors’ ages ranged from 29 to 82 years.  Males made up a majority of all directors, but some boards were more  evenly divided by gender than others (see table 4). The professional  business experiences listed by the directors represented diverse fields  and professions, including commercial fishermen, construction operators,  medical doctors, school teachers and university professors, and business  managers and executives. Similarly, a director’s tenure on a board  ranged considerably across and within the corporations, from less than  1 year to 39 years.
In terms of board operations, the corporations’ boards are led by a chair  and have designated committees, often with written charters spelling out  their operating rules and procedures, although the types of committees  and authority granted to each committee vary among corporations.  Eleven of the corporations’ boards have audit committees to oversee the  corporation’s financial reporting practices. Other common committees  include executive, lands, compensation, and shareholder relations. In  some instances, committee membership is determined by a vote of the  board, while in others, committee members are appointed by the board  chair. Depending on the specific corporation and board committee, a  particular committee’s authority may be advisory, or it may have some  decision-making authority granted by the board.
In addition, almost all of the corporations’ boards have written codes of  ethics outlining the directors’ responsibilities, including legal duties and  business practices, restricted activities (such as restrictions relating to  individual contributions to political campaigns), and the avoidance or  disclosure of potential conflicts of interest. Many of the corporations’  codes of ethics discuss how conflicts of interest or the appearance of  conflicts of interest should be avoided and what information is to be  disclosed to the board in case of a potential conflict, such as when the  corporation may be considering a business transaction with a member of  a director’s family. Additionally, in their annual proxy statements, the  corporations generally disclose the family relationships of directors, board  nominees, or executive officers of the corporation and its subsidiaries and  certain financial transactions by the corporation with a director or  director’s family, as required by state regulation.
section_title: Executive and Board Compensation
paragraphs: The regional corporations report compensation information for certain  corporate officers and board directors, although the type of information  reported varies. Under Alaska state regulation, boards’ proxy statements  must contain certain information on compensation distributed to or  accrued by corporate officers and directors over the previous fiscal year,  although the regulation does not prescribe the specific format to be used  or require information to be included about the methods used to  determine compensation. We heard concerns from several  shareholders that clear information about executive or director  compensation was lacking.corporations’ proxy statements provide varying levels of detail on  compensation amounts and methods used to determine compensation.
Our review showed that the regional  For the regional corporations’ 2010 reporting period, all the corporations  reported in their proxy statements the total remuneration paid or accrued  to their five most highly compensated officers or directors for services to  the corporation and any subsidiaries, as required by state regulation.  The top reported compensation amount for any one officer or director  ranged from $137,578 to $2,514,961. For seven of the corporations,  corporate officers were generally the five most highly compensated  individuals, while at the other five, officers of subsidiaries were commonly  the five most highly compensated. Some corporations provided annual  salary, bonus, or pension amounts, whereas others reported a total  without specifying what made up the total or what amounts were  distributed versus accrued during the time period.
Similarly, state regulation requires the corporations to report the total  remuneration paid to or accrued by all their officers and directors as a  group, as well as the number of persons in the group; the regulation does  not, however, specify whether this group is to include officers and  directors of any of the corporations’ subsidiaries. For the corporations’ 2010 reporting period, total reported compensation ranged from  $1.4 million for 14 officers and directors to $19 million for 115 officers and  directors. Five corporations indicated that corporate and subsidiary  officers and directors were included in their totals; two indicated they  included corporate officers and directors only; and for the five others, it  was not clear whether the totals included officers and directors of  subsidiaries.
In addition, for their boards of directors, the regional corporations reported  in their annual proxy statements general information on the fees directors  were paid for their service on the board and the types of expenses for  which they could be reimbursed. The way compensation was reported  varied by corporation; the regulations do not specify a format for  reporting. Three corporations provided the total amount they paid to each  director for the reporting period (amounts reported ranged from less than  $17,000 to more than $49,000). Five reported monthly or annual salaries  for the directors, along with a description of other expenses for which  directors could be reimbursed, such as travel and technology expenses.  At these five corporations, salaries reported ranged from $1,500 per  month to $48,000 per year. The other four corporations reported director  compensation per day or per half day for attending board meetings  (sometimes in addition to a monthly or annual fee), along with a  description of expenses for which they could be reimbursed. These  corporations did not report the total number of days the directors spent in  meetings, however, making it difficult to estimate total compensation for  the directors. Further, several corporations reported that directors serving  as board chair, as chair of board committees, or on subsidiary board  committees received additional compensation in varying amounts,  depending on the corporation.
Although not required to by state regulation, several regional corporations  provide additional information in their proxy statements about their  executive pay practices. In the wake of public concern, executive  compensation at private and publicly traded companies has received  considerable scrutiny in recent years, and we heard similar concerns from  several regional corporation shareholders, particularly about the  transparency of compensation amounts or methods for determining such  amounts as reported to shareholders.corporations detailed the process they used to make executive  compensation decisions in their proxy statements, including how the  corporations evaluated management performance. For example,  one corporation reported in its 2011 proxy statement that its  compensation committee recommended a compensation plan after  reviewing national independent labor market studies of compensation  paid by comparable companies, including other regional corporations.  This corporation reported that it used independent compensation  consultants to assist its compensation committee in developing a  performance-based executive compensation plan, which included a base  salary plus potential additional performance-based compensation. In  contrast, although the other corporations did not include detailed  information in their proxy statements, when we asked the corporations to  describe their executive compensation policies, many of them reported  that they rely on outside corporate salary surveys and studies; a few  reported that they strive to set their compensation levels near the  midpoint of the market for comparable positions. Similarly, several  corporations reported that they had detailed methods in place to monitor  and evaluate the performance of their executive officers and described  incentive plans or bonuses available for meeting specific performance  targets.
section_title: Board Elections
paragraphs: For each of the regional corporations, board directors’ terms are 3 years  and staggered, so that generally one-third of the director positions are up  for election every year. Five corporations also require representation on  their boards from specific geographic areas within the region  (see table 5). For example, one corporation requires that at least one  director come from each of the region’s villages, whereas another  established units corresponding to certain villages or communities and  specified a minimum number of directors who must come from each unit.  In addition, the corporations have varied in how they evaluate and  recommend candidates and conduct their elections. For instance, about  half the corporations’ boards have nominating committees to assess  potential candidates and develop or recommend to the board a slate of  nominees. These corporations often pay campaign expenses for their  board slate, but most of them also provide information in their proxy  statements on other candidates, known as independent candidates, and  include the independents’ names on their proxy at no cost to the  candidates. Independent candidates may also run for election using their  own proxy solicitations. Successful independent candidates may or may  not be reimbursed by the corporation for their campaign expenses,  depending on the corporation.
In contrast to those corporations with a board slate, five corporations’  boards do not develop a board slate but, rather, generally include in their  proxy statements all interested and qualifying candidates, as long as the  candidates submit certain required information, such as biographical and  conflict-of-interest information and, in the case of one corporation, petition  signatures by at least 10 voting shareholders other than the candidate.  These corporations pay for the proxy solicitations, but similar to those  corporations with board slates, candidates may or may not be reimbursed  by the corporation for other campaign expenses. A few shareholders we  heard from said it is expensive to run for a board position. For example,  they said, sending campaign information through the mail to all  shareholders could cost thousands of dollars, given the shareholders’  dispersed and often remote locations. We heard from a few shareholders  that the corporations will share only mailing addresses and campaigning  via e-mail or other electronic means may therefore not be an option for  interested candidates. Several corporate officials we spoke with noted  that their corporations do not use e-mail to solicit proxy solicitations and  that they provide only shareholder mailing addresses to interested  independent candidates because the corporations solicit proxies by mail.
All of the corporations use cumulative voting for their elections of  directors. Cumulative voting means that each shareholder has a number  of votes equal to the number of shares he or she owns multiplied by the  number of directors to be elected. For example, if a shareholder owned  100 shares and four directors were up for election, the shareholder would  have 400 votes and could cast all 400 votes for one candidate or divide  his or her votes among the candidates. In addition, nine corporations  allow their shareholders to return a discretionary proxy, meaning that  shareholders may grant the board or other specified proxy holders  discretion to cast their votes as the proxy holders see fit; for the  three corporations that do not solicit discretionary proxies, any votes that  are not directed to a particular candidate are counted only toward  reaching a quorum.
Several corporations indicated that achieving a quorum for their annual  elections can be challenging, but they have been successful over the last  several years in obtaining the required participation of shareholders to  elect directors for the board. To have a valid election, a quorum of  shareholders must be represented at the meeting in person or by proxy.  Four corporations’ quorum is one-third of voting shares, and the other  eight corporations’ quorum is a majority of voting shares. To encourage  shareholders to vote, all 12 corporations offer monetary prizes or other  incentives to shareholders voting in the annual election of directors.  Seven corporations also allow shareholders to vote online; a few  corporations said they have considered online voting but determined it  may not be feasible or worthwhile, because, for example, many of their  shareholders live in remote locations where Internet access is limited.
In reviewing the regional corporations’ election outcomes during the  10-year period from 2001 to 2011, we found that more board-endorsed  candidates or incumbents have won elections than independent  candidates but that board director positions have also changed hands  numerous times. Some shareholders we spoke with said that their  corporation’s use of a board slate and discretionary voting has made it  difficult to elect independent candidates. We found that for the  corporations with board slates, elections were won mostly by board slate  nominees. We also found, however, that at least one independent  candidate was elected during the 10-year period at all but one of these  corporations; one corporation elected no independent candidates.  Similarly, for the corporations without board slates, we found that  incumbent directors who ran for reelection largely won, but it was not  uncommon for at least one incumbent candidate to be unseated across  these corporations during any one election cycle. In addition, in most  elections across the 10-year period, candidates outnumbered the  available seats on the board of directors, although we found that for the  corporations with village-specific or other geographical restrictions on  certain board seats, a specific seat went uncontested in several elections.  Across the 12 corporations, director positions have turned over several  times during the last 10-year period. Roughly half or fewer of the directors  who were serving in 2001 were still serving in 2011 (see table 5).  Turnover has occurred for a variety of reasons, including resignations,  deaths, nominating committees not selecting incumbent board directors  for reelection, and incumbents losing board elections.
section_title: Shareholder Involvement
paragraphs: Legally, the role of shareholders in a corporation is limited, although the  regional corporations have developed a number of methods to seek  feedback from and encourage the involvement of their shareholders. For  instance, in addition to annual shareholder meetings, most regional  corporations annually hold informational meetings in all or a portion of the  villages located in their region and in other locations where significant  numbers of shareholders reside, such as Anchorage or the Pacific  Northwest. For these meetings, corporate officials or board directors  travel to communities to update shareholders on the corporation’s  business activities and finances and to enable shareholders to ask  questions, raise concerns, and offer comments and suggestions. The  corporations also provide news, updates, and other information to their  shareholders via corporate websites, electronic or printed monthly or  quarterly newsletters, and online social media like Facebook. In addition,  nine regional corporations stream their annual meetings online, allowing  shareholders to participate remotely. Several corporations reported that  they have received good online participation, allowing some shareholders  to participate who might not otherwise be able to attend. For instance,  one corporation reported to us that shareholders could view its 2012  annual meeting via webcast for the first time, and approximately  400 shareholders participated.
Three corporations have established shareholder advisory committees  comprising volunteer shareholders—representing shareholders living both  within and outside of Alaska—to learn about what matters to  shareholders, hear how the corporations can improve communications  and interactions with shareholders, and educate shareholders about  corporate policies and procedures, among other things. For example, one  corporation has established three shareholder committees to represent  shareholders living (1) in Anchorage, (2) in Alaska but outside Anchorage,  and (3) in the lower 48 states. Each committee consists of nine members  who are chosen by a random drawing from the names of those who  indicated interest in serving on the committee; chosen members serve  3-year terms. Two current directors from this corporation previously  served on the shareholder advisory committee, one of whom told us that  it was a great opportunity to learn more about the corporation and  become interested in serving on the board.
Further, six of the corporations open at least a portion of their regular  board meetings to shareholders. In a few instances, a request to attend  must be made in advance; in others, any interested shareholders may  attend. A few other corporations said they offered limited instances when  shareholders are invited to attend specific board meetings, such as when  the board may be meeting with visiting dignitaries or discussing a cultural  artifact. Additionally, many corporate officials we spoke with said they  have an “open door” policy, whereby shareholders can call or come to  their corporate offices to directly express concerns or obtain information.  Corporate officials also noted that many of the directors live in villages in  their region, and they receive feedback on corporate matters from  shareholders on a daily basis because their families, neighbors, and  coworkers are also shareholders.
We found that most regional corporations have surveyed their  shareholders for feedback over the past several years, although obtaining  a high survey response rate has been a challenge. All but two  corporations reported to us that they have surveyed their shareholders; a  few reported that they survey their shareholders on a regular basis, such  as every other year. Regional corporations have surveyed their  shareholders to gauge their general satisfaction with the corporation or to  obtain their views on specific topics, such as opening enrollment to  Alaska Natives or descendants born after the law was enacted in  December 1971, training or employment preferences, or special  payments to elders. In the survey results we reviewed for the handful of  corporations that shared them with us, the corporations reported that  most shareholders expressed satisfaction with their corporation. For  example, in a survey conducted in 2008, 67 percent of shareholder  respondents for one corporation expressed positive “overall feelings  toward” their corporation, and 62 percent of the respondents said the  corporation did a good job of telling shareholders what the company was  doing. We also noted, however, that in many instances survey response  rates were fairly low, ranging from 6 to 46 percent. A few corporate  officials we spoke with acknowledged the participation challenge and said  they typically offer incentives, such as prize drawings, to improve the  response rate. We also spoke to several shareholders, who said they  were generally satisfied with their regional corporation and stayed abreast  of corporate activities by regularly reading corporate reports. On the other  hand, we also heard concerns from several other shareholders that  access to meaningful corporate information was lacking or that some  shareholders do not participate in surveys or other corporate activities  because they were frustrated or disappointed with the corporation.
In addition to participating in meetings and surveys, shareholders may  submit resolutions for inclusion in a board proxy solicitation regarding  corporate matters for a shareholder vote. Many corporations have specific  requirements for including proposed resolutions, such as setting time  frames for submission or limiting the number of resolutions that can be  submitted during any one year, and shareholder resolutions have often  been advisory. We found that from 2001 through 2011, shareholders from  five corporations submitted 1 or more resolutions during any one year (for a total of 14 resolutions across the five corporations during this period).Examples of submitted shareholder resolutions included limiting terms for  the board of directors to two consecutive terms, designating a specific  location for the corporation’s next annual meeting, and establishing a  settlement trust.
Another option available to shareholders if they are dissatisfied with  corporate policies or activities is to file a lawsuit against the corporation.  During our review, we identified several lawsuits that shareholders  brought against regional corporations, including challenges to the  corporation’s denial of shareholder access to corporate books and  records, the settlement agreement governing the 7(i) distribution, and  payments to elders made through a settlement trust or elder benefits  program. Shareholders lost the lawsuits we identified except one case  that settled out of court and two cases that, as of this report, were still  pending. Nevertheless, in a few of these cases, neither federal nor state  law authorized shareholders to bring lawsuits challenging the  corporation’s action, and under state law, successfully challenging a  corporate board’s business judgment is difficult. A few shareholders we  heard from expressed frustration that filing a lawsuit was their only  recourse, which can be very costly.
section_title: The Corporations Are Subject to Some Federal and State Financial Reporting Requirements and Limited State Oversight
paragraphs: The regional corporations are subject to some financial reporting  requirements under federal and state law, although oversight of the  reporting is limited. The Settlement Act generally exempts the  corporations from complying with federal securities laws while requiring  them to annually transmit a report to their shareholders that contains  “substantially all the information” required to be included in an SEC  registrant’s annual report to shareholders. The act does not provide a  federal role for monitoring the corporations’ compliance with this  requirement, and the state’s oversight is generally limited to enforcement  of state securities laws and proxy regulations.
subsections: section_title: Federal and State Financial Reporting Requirements for Alaska Native Corporations
paragraphs: Under federal law and state securities laws and regulations, the regional  corporations are subject to some financial reporting requirements. At the  federal level, the Settlement Act generally exempts the corporations from  complying with federal securities laws. As explained in a House  committee report accompanying an amendment to the Settlement Act,  this exemption was based on the understanding that federal regulation of  the corporations was not necessary to protect Alaska Native shareholders  or the public during the period when Alaska Native-owned stock could not  be sold. The report also noted, however, that if this assumption proved  invalid in light of experience, the committee was prepared to reimpose  provisions of federal securities laws as necessary and that the 20-year  exemption should be viewed by the Alaska Natives as an experiment  which would be stopped if abused. In 1988, the act was amended to  extend the exemption from securities law until after a corporation issued  shares of its stock to the public, shareholders voted to terminate the  restriction on sales, or the corporation registered with the SEC. As of this  report, none of these events had occurred, and the 13 regional  corporations therefore continue to be exempt from federal securities laws.
In discussing the federal securities exemption, the House committee  report recognized that the Securities Exchange Act of 1934 was designed  to inform the investing public about securities and also provided useful  information to shareholders. amended to require Alaska Native corporations to annually transmit a  report to their shareholders that contains “substantially all the information”  required to be included in an SEC registrant’s annual report to  shareholders. In addition, the Settlement Act required that the accounts of  the regional corporations be audited annually in accordance with  generally accepted auditing standards and that the corporations provide  shareholders with a copy, or a fair and reasonably detailed summary, of  the audit report.
H.R. Rep. No. 94-729 at 19 (1975).
See http://www.sec.gov/answers/annrep.htm. registrants must provide in their annual reports to shareholders.annual reports are to include, among other things, detailed information  about the financial performance of the corporation, audited consolidated  financial statements for the corporation and its subsidiaries, and a  presentation of selected financial data highlighting certain significant  trends in the company’s financial condition and results of operations for  each of the last 5 fiscal years. A management discussion and analysis of  the corporation’s financial condition and results of operations are also  required. The SEC describes the management discussion and analysis  as an opportunity for management to help shareholders see the  corporation’s financial performance through the eyes of management; to  provide context within which the financial statements should be analyzed;  and to provide information about the quality of, and potential variability of,  a company’s earnings and cash flow, so that investors can ascertain the  likelihood that past performance is indicative of future performance.
At the state level, regional corporations are subject to financial reporting  requirements included in the Alaska Securities Act and its implementing  regulations. This act requires that copies of all materials related to a proxy  solicitation must be filed concurrently with the state’s Division of Banking  and Securities if the solicitation has been made available to at least  30 Alaska resident shareholders of an Alaska Native corporation with  500 or more shareholders and total assets exceeding $1 million. Documents related to a proxy solicitation that must be filed with the state  include annual reports to shareholders, proxy statements, proxies that are  mailed to shareholders, as well as materials distributed by other means  such as e-mail or websites. Proxy solicitation materials filed with the state  are available for public review, although the state maintains only printed  and not online copies.
Alaska Stat. § 45.55.139. This provision applies only to Alaska Native corporations.  Although other corporations incorporated in Alaska are not required to file their proxy  solicitations with the state, state regulations govern their issuance of securities.
Alaska Native corporations that meet the threshold requirement for filing  proxy solicitation materials are also subject to specific state regulations  governing the content of and process for proxy solicitation. State  documentation describes these regulations as intended to protect both  the corporations and shareholders from “unscrupulous individuals,” by  promoting transparency in the solicitation process and the fairness of  elections. The regulations prohibit proxy solicitations from containing  material misrepresentations—generally defined as a statement that is  false or misleading with respect to a material fact or that omits a material  fact necessary to make a statement not false or misleading—and also  provide guidance and examples of what might constitute false or  misleading statements. In addition, the regulations require proxy  solicitations to be preceded or accompanied by a written proxy statement  including certain information. What information is required depends on  whether the solicitation comes from the boards of the regional  corporations or someone else, such as an independent candidate running  for a seat on the board, although the requirements overlap considerably.  For example, both types of proxy solicitations must be preceded or  accompanied by background information on board of director nominees,  such as involvement in any adverse legal proceedings with the  corporation, along with certain financial transactions between the  corporation and any entity in which the nominee, a board director, or a  member of the nominee’s or director’s family is employed or has an  ownership interest. Proxy solicitations from a regional corporation’s board  of directors must also contain detailed information about the corporation’s  current directors and committees, among other information.
section_title: Federal and State Oversight of Alaska Native Corporations’ Financial Reporting
paragraphs: The Settlement Act does not provide a federal role in ensuring that the  regional corporations comply with the act’s reporting requirements; there  is limited oversight of the regional corporations’ financial reporting carried  out at the state level. Although the Settlement Act requires the regional  corporations to annually provide their shareholders with a report that  contains “substantially all the information” required to be included in an  SEC registrant’s annual report to shareholders, the act does not define  what “substantially all” means. In addition, the act does not authorize any  federal entity to monitor whether corporations are complying with this  reporting requirement. Although annual reports to shareholders are not  required to be filed with or reviewed by the SEC, a House committee  report indicated that Alaska Native leadership would comply fully with the  intent of this provision and submit annual reports to their shareholders  which are as effective in disclosing corporate activities as those prepared  by SEC registrants, and that Alaska law would provide protection for  Native shareholders from any corporate mismanagement and  misrepresentations or omissions in connection with sales of securities.
Because regional corporations are required to provide “substantially all”  the information required of SEC registrants in their annual shareholder  reports, we asked staff of the SEC to provide observations on the extent  to which the corporations’ 2010 annual shareholder reports include the  information required to be disclosed by SEC registrants. The SEC staff’s  observations were subject to a number of limitations, as follows:
SEC staff did not evaluate the merits of any of the regional  corporations’ investments or determine whether an investment was  appropriate for any investor, consistent with the scope of its disclosure  review program of publicly reporting companies.
SEC staff did not interpret the Settlement Act’s requirement that  regional corporations’ annual shareholder reports contain  “substantially all the information” found in an SEC registrant’s annual  report. Instead, in providing its observations, SEC staff assumed that  the regional corporations were required to include all of the  information required to be provided in an SEC registrant’s annual  report to shareholders.
SEC staff did not consider any information outside of what was  contained in the annual reports or engage in a dialogue with corporate  officials about any of their observations, as they normally would in  their regular disclosure review program. According to SEC staff, this  additional information would have further informed their observations.  Accordingly, SEC staff noted that they were unable to determine  whether certain observations did in fact represent deficiencies or  noncompliant accounting or disclosures or whether they were able to  identify all material issues in providing us with their observations.
Nevertheless, SEC staff made a number of observations and raised  several questions where the information contained in the regional  corporations’ annual shareholder reports differed from what they would  have expected to see in an SEC registrant’s annual report. For example,  SEC staff noted that the management discussion and analysis  disclosures in most of the corporations’ annual reports did not fully  explain material uncertainties reasonably likely to affect future trends and  prospects, as they would have expected to see in an SEC registrant’s  report. SEC staff also noted that it was not clear to what extent certain  generally accepted accounting principles applied to the regional  corporations’ preparation of their financial statements. SEC registrants  are generally considered “public” and must follow accounting standards  for public corporations, whereas nonpublic corporations may not have to  follow certain accounting standards required for public companies. Since  the regional corporations are exempt from SEC regulation but are  required to produce annual shareholder reports containing “substantially  all the information” found in a report prepared by an SEC registrant, SEC  staff noted that it is unclear in some circumstances which accounting  standards and disclosures the corporations should follow.
Under state securities law, the state has the authority to regulate various  issues related to the regional corporations, primarily oversight of proxy  solicitations. According to state officials, the state has received a number  of inquiries about proxy solicitations from both shareholders and regional  corporations over the years. For instance, according to state officials, the  state received 59 inquiries about regional corporations—questions  relating to proxy materials filed with the state—from July 2011 through  June 2012. The inquiries covered a range of topics, including questions  from shareholders on how to file proxy materials or what materials,  including communications via social media, are considered to be proxy  solicitations, as well as questions from corporate officials seeking  clarification of the proxy solicitation regulations’ requirements. The state  also received inquiries about areas outside its jurisdiction, such as a  shareholder contesting the results of an election, in which case the state  advised the individual to seek legal counsel. According to state officials,  they were able to respond to and resolve all the inquiries within their  jurisdiction during this time period, and no further action was necessary.
The state has the authority to review all proxy solicitations but largely  reviews only those solicitations for which a corporation or a corporation’s  shareholder has filed a complaint (i.e., a written request for the state to  investigate). Specifically, the state does not investigate to determine  whether all Alaska Native corporations meeting the threshold  requirements for filing proxy solicitations with the state actually do so, but,  rather, the state relies on self-reporting by the corporations. In addition,  state officials we spoke with said they do not automatically review the  proxy materials submitted by the regional corporations or their  shareholders because they do not have the resources to routinely review  proxy filings to assess compliance with the requirements. Instead, the  state mostly relies on the corporations or their shareholders to monitor  filed proxy materials and to submit complaints if concerns of violations  surface, such as proxy materials containing materially false and  misleading statements.
According to information provided by state officials, from January 2010  through June 2012, the state received nine complaints involving four  regional corporations. Of these, one was filed against a shareholder of a  regional corporation by a corporate officer, seven were complaints filed  against a regional corporation by a shareholder, and the other was an  investigation initiated by the state into a regional corporation’s use of  social media. The state determined that four complaints involved matters  outside the state’s jurisdiction, and the state declined to open an  investigation into two others because the complaints included allegations  that were part of ongoing litigation between the parties; state officials told  us that to the extent that litigation may occur over an issue for which they  have also received a complaint, the state generally does not pursue its  own investigation but instead defers to the courts. The state opened an  investigation for the three other complaints but closed them without taking  further action.
For investigations where the state determines that a violation has  occurred, it has the authority to issue an administrative order to parties  found to be in violation. According to information provided to us by the  state, from 1978 through 2011, the state issued administrative orders in at  least 29 investigations of a regional corporation’s or a regional  corporation shareholder’s compliance with the state’s proxy regulations.  Six of the investigations involved a regional corporation’s board  solicitation, and 22 were related to shareholder solicitations.  Administrative orders issued have generally found one or more of the  following violations:
Failure to file with the state proxy material that meets the  requirements for filing.
Failure to include in proxy material information required by the proxy  regulations, the omission of which might also be materially false and  misleading.
Inclusion in proxy material of materially false and misleading  statements. For example, the state found a solicitation to be false and  misleading because it stated that the proxy holder was engaged in a  lawsuit against the corporation involving the corporation’s failure to  provide a shareholder list in a timely fashion, even though at the time  the solicitation was disseminated, the court had already ruled that the  corporation had timely provided the list.
In almost all orders, the state ordered the violator to cease the violation;  in many instances, the state ordered that any future proxy solicitations,  either indefinitely or for a specified time period, be filed with the state  before distribution to shareholders, and in some instances, the state  imposed a fine on the violator, with most fines set at $500.
In addition, corporations or shareholders may file a lawsuit over their  concerns about a proxy solicitation. During our review, we identified a few  lawsuits brought by shareholders alleging that proxy solicitations  distributed by their regional corporations violated the law or regulations.  We also identified a number of lawsuits brought by regional corporations  alleging that shareholder solicitations contained false and misleading  statements. In the cases we identified brought by shareholders—who  alleged that the corporations’ proxy solicitation did not include required  information, contained false and misleading statements, or both—the  courts ruled in favor of the corporations, that is, that the corporations’  solicitations were not false or misleading, although two cases were still  pending as of this report, and one settled out of court. In contrast, in the  cases we identified brought by regional corporations, the courts ruled that  the shareholder solicitations contained false and misleading statements,  although one case was still pending in an appellate court as of this report,  and one settled out of court. For example, in one case, the court ruled  that a shareholder’s solicitation, which claimed that board directors  appointed themselves to top executive positions regardless of  qualifications, was false and misleading.
section_title: The Corporations Provide Diverse Monetary and Nonmonetary Benefits to Their Shareholders and Other Alaska Natives
paragraphs: The regional corporations provide a wide variety of benefits to their  shareholders and other Alaska Natives. Under the Settlement Act, the  corporations are authorized to provide benefits to promote the health,  education, or welfare of shareholders and other Alaska Natives, but they  are not required to do so. As diverse as they are themselves, the  corporations provide an equally diverse array of benefits depending in  part on their financial means and on priorities related to shareholder   The articles of incorporation and mission statements of the  needs.regional corporations establish their intent to provide economic, cultural,  social, or all three types of benefits, which the corporations have chosen  to do in both monetary and nonmonetary forms; benefits go to  shareholders, shareholders’ descendants, and others. We do not include  the 13th Regional Corporation in our discussion because, without  operating revenues, it has not provided tangible benefits to its  shareholders for many years.
subsections: section_title: Monetary Benefits
paragraphs: The 12 regional corporations provide a variety of monetary benefits to  their shareholders and others, including dividends, elder benefits,  scholarships, memorial benefits, shareholders’ equity, and charitable  donations, as follows:
Dividends. The most broadly dispersed monetary benefit consists of  cash dividends paid per share to shareholders. Shareholders and  officials from several regional corporations told us that dividends are  often considered the most important benefit shareholders receive from  the corporations. We heard from several corporations that dividend  payments to shareholders provide a critical source of income to help  defray living expenses, such as high heating costs during the winter.  The total dividends per share paid by each of the 12 regional  corporations during the 2010 reporting period varied considerably,  ranging from $2.35 per share at one corporation to $64.26 at another  (see table 6). The regional corporations’ boards annually determine  and approve dividend amounts on the basis of factors including the  corporations’ financial performance, and some have established  formulas, such as a targeted percentage of net income, or a  permanent fund out of which dividends are to be paid.
In analyzing the corporations’ financial data for the 10-year period  from 2001 through the 2010 reporting period, we found that not all  corporations provided dividends every year. Each of the  12 corporations paid dividends in recent years, but a handful of  corporations did not provide dividend payments in the early 2000s;  some corporations struggled financially or declared bankruptcy in the  past. Our analysis showed that for the 10-year period, the  cumulative total in dividends per share ranged from $5.50 per share to  over $600 per share; for half the corporations, the cumulative total  amounted to approximately $34 to $100 per share over the period.  Thus, a shareholder owning 100 shares could have received from  $550 to as much as $60,000 over the period; typically, however,  shareholders would have received about $3,400 to $10,000.
Elder benefits. In addition to dividends, almost all the regional  corporations provide monetary payments to elder shareholders.  Specifically, 11 corporations make cash payments, often quarterly or  annually, to their elder shareholders, starting at age 60, 62, or 65,  depending on the corporation. The regional corporations provide  these payments—which ranged from $300 to $4,000 per individual  during the 2010 reporting period—through various mechanisms,  including from designated trusts, as a separate class of shares, or in  cash payments authorized by the corporations’ boards. Several  corporate officials we spoke with commented that these payments   often constitute an important source of income for elder shareholders,  who may not otherwise have a retirement income.
Scholarships. The 12 regional corporations support a variety of  educational scholarships to their shareholders and, in some cases, to  descendants of shareholders. In general, the corporations provide  funding to closely affiliated nonprofit organizations, such as  foundations endowed by the corporations, which then award  scholarships to qualifying undergraduate, graduate, or vocational  students. During the corporations’ 2010 reporting period, each of the  12 corporations reported to us that they provided funding to support  individual scholarship awards made by the nonprofit organizations, in  amounts varying by corporation and by type of scholarship award  (see table 7). In some cases, scholarships are competitive; in other  cases, corporate officials said they try to provide funding to as many  eligible applicants as possible.
Memorial benefits. Most regional corporations provide financial  assistance to their shareholders and, in some cases, to shareholder  descendants or other family members to help with funeral-related  expenses related to the death of a shareholder, spouse, or  descendant. Financial assistance can be used for burial or funeral- related expenses, including travel by family members, which may  allow shareholders to maintain Alaska Native burial traditions and help  offset the high costs of travel in Alaska. Most corporations reported  that they set a cap on the amount of financial assistance available per  individual or family, ranging from $500 to $3,000, depending on the  corporation.
Shareholders’ equity. Shareholders’ equity has been described by  some of the regional corporations as a benefit, but because  shareholders cannot currently sell their shares for a monetary return,  they may not view such equity as a benefit. Shareholders’ equity is  the net assets of the company, that is, the value of a company’s  assets minus its liabilities. According to a Department of the Interior  study on Alaska Native corporations, the values of the regional  corporations are difficult to estimate in the absence of a market for  their shares. Moreover, absent a market value, shareholders cannot  in effect express confidence or lack of confidence in the corporation’s  management of the shareholders’ assets by buying or selling their  shares. Nevertheless, in their 2010 reporting period, the 12 regional  corporations reported total shareholders’ equity values ranging from  $15 million to about $1.1 billion (6 regional corporations reported  equity per share, which ranged from about $83 to nearly $1,000 per  share). In contrast to the corporations’ view, a number of shareholders  we heard from said that shareholders’ equity has little real value to  them since they cannot sell shares for a tangible monetary benefit.
Charitable donations. The regional corporations each make a variety  of charitable monetary and in-kind donations to regional nonprofit  organizations and other entities that offer services to corporation  shareholders and others in the communities. For instance, most of the  corporations reported that they provide funding or other support to  housing authorities, health organizations, or vocational schools  located in their regions. One corporation, for example, provides  funding to a flight school that trains private and commercial pilots, a  particularly useful skill given that many Alaska Native villages are  accessible only by plane (see fig. 2). Flight school officials told us that  a local airline hires nearly all of the school’s graduates. Another  corporation provides funding to a vocational facility in the region,  which offers junior and high school students varied training, such as  driver’s education, metal welding, and small-engine repair.  Representatives at some of the nonprofit organizations we visited  stressed the importance of the regional corporations’ support in  maintaining their operations and programs. The corporations also  make in-kind donations, such as firewood for winter heating, including   delivery to elders and others unable to haul it themselves, or gravel  for village infrastructure from corporation-owned gravel pits.
Nonmonetary benefits offered by the regional corporations—often in  partnership with village corporations, tribal organizations, and nonprofit  organizations within the region—include employment opportunities;  cultural preservation; land management; economic development; and  advocacy on behalf of Alaska Natives and their communities. Specific  benefits may include, but are not limited to, the following:
Employment and related opportunities. The 12 regional corporations  or their subsidiaries may employ Alaska Native shareholders in  preference over others (see table 8). They may also offer  internships and other employment support. Some regional corporation  officials told us that employing shareholders is an important priority to  them, and they actively train and employ shareholders in their  businesses. For example, according to one regional corporation,  55 percent of the employees at its zinc-lead mine are shareholders.  According to corporation officials, employment opportunities for  shareholders living within the region were an important consideration  in initially determining whether to develop the mine. Officials from a  few other regional corporations, in contrast, told us that their  corporations have not emphasized creating employment opportunities  because it has not been a high priority for their shareholder base or  that business and employment opportunities may not be readily  available where shareholders reside. In addition to hiring shareholders  and other Alaska Natives directly, the corporations have internship  programs for shareholders and, in some cases, for shareholder  descendants or spouses. Internships vary from 6- to 12-week summer  internships to longer internships or apprenticeships that can lead to a  permanent position with a regional corporation. Several corporations  also offer other employment support to their shareholders, such as  providing career counseling, job fairs, and leadership training to retain  shareholders as managers and leaders within the corporation.
Cultural preservation. The regional corporations have supported  numerous cultural activities focused on preserving and maintaining  Alaska Native traditions and heritage. Nearly all of the corporations  have established nonprofit organizations or heritage centers, many  with the express purpose of administering cultural and educational  programs to preserve and honor unique Native cultures. Cultural  activities supported by regional corporations include programs for  youth and elders, Alaska Native community events, and language and  artifact preservation. For example, several corporations sponsor  youth-elder camps, featuring activities such as language learning and  gathering and preparing subsistence foods that help transmit Native  traditions from one generation to the next. Other corporations support  groups or events centered on traditional art forms and languages,  such as crafts, Native songs and dances, and the development of a  compact disc teaching an Alaska Native language. Still other  corporations have focused on protecting sacred and historical sites  and Native artifacts. For example, one corporation helps protect more  than 80 sacred historical sites located throughout the region on behalf  of tribal entities that are the traditional owners of the sites, which  include historical burial grounds, forts, petroglyphs, and villages.
Land management. The regional corporations actively manage their  surface lands for subsistence and recreation by their shareholders  and other Alaska Natives, as well as for natural resource use and  protection. Many corporations indicated that subsistence—which  plays a key role in Alaska Natives’ livelihoods and traditional culture— is often a primary or highest-priority use of their lands; subsistence  activities include hunting, trapping, fishing, and food gathering and  camps associated with these activities. Natural resource use and  protection include a wide variety of activities such as working with  research partners to study topics related to sustainable management  of corporate natural resources, including timber, wildlife, and  renewable energy potential; harvesting and marketing of corporate  natural resources; managing property leases, and easements;  developing strategies to promote outdoor tourism; and patrolling  corporate lands against trespassing, particularly for those  corporations with road systems in the regions.
Economic development. With their size and relative profitability, the  regional corporations take actions to foster economic development in  their regions, typically working in partnership with other regional or  community organizations. For example, one corporation is working  with a regional Native health association to build a 33,000-square-foot  multidisciplinary health facility on corporation-owned land (which is  leased to the association for 50 years at $1 per year). The facility is to  house dental and health clinics, as well as behavioral health, tribal  community, and environmental health services. Another corporation  has established a joint business venture with a village corporation to  bring an out-of-use seafood plant back into production. The regional  corporations are also involved in various ways—such as seeking  funding or procuring physical resources—in infrastructure or energy  development. Several regional corporation officials told us that energy  development is a high priority for them, to help reduce the high costs  of energy in Alaska Native villages. These corporations, for example,  are exploring renewable energy development opportunities, including  wind power generation on varying scales, and others are exploring or  investing in other alternative heating sources, such as solar power,  geothermal heat, or wood pellet heating.
Advocacy. Officials from several regional corporations said they serve  as advocates for Alaska Natives and the communities they live in,  partly because they have lobbying resources and legal expertise that  local populations may not. The regional corporations may lobby  state and federal legislatures directly on behalf of their shareholders,  or they may work through other Alaska Native advocacy  organizations. One corporation, for example, successfully lobbied the  Alaska state legislature to pass a bill in support of a commercial  oyster industry in its region, which established a loan program for  entrepreneurs wishing to engage in this industry. Officials from  another corporation routinely attend meetings with the Alaska  Department of Fish and Game to represent village interests in  subsistence fishing and hunting rights. In addition, each of the  regional corporations is a member of the Alaska Federation of  Natives, the largest statewide Native organization in Alaska. The  organization’s mission includes, among other goals, advocating for  Alaska Native people, fostering and encouraging preservation of  Alaska Native cultures, promoting understanding of Alaska Natives’  economic needs, and encouraging development consistent with those  needs.
section_title: Questions to Consider for the Future
paragraphs: Over the last 40 years, the regional corporations have evolved along with  the Alaska Native Claims Settlement Act, which has been amended  several times. Given the evolution and growth of the regional  corporations, we identified three questions that may warrant consideration  and discussion by the federal government, the state, the regional  corporations, shareholders, or a combination of these entities, as the  corporations move into the future. We identified questions regarding the  ambiguity of existing federal financial reporting requirements for the  corporations, the role of the federal government in maintaining the  corporations’ solvency, and the implications of defining who is eligible to  be a shareholder—this last question specifically for the corporations and  their shareholders to consider. We pose these questions only for  consideration and discussion and not to advocate a particular response or  outcome.
subsections: section_title: Should the “Substantially All” Federal Reporting Requirement Be Clarified and Overseen?
paragraphs: Under the original Settlement Act, the corporations were to remain  exclusively Native owned for a period of 20 years, and after a 1976  amendment, they were to be exempt from federal securities laws while  they were Native owned. The 1988 amendments extended the Settlement  Act’s prohibition on sales of stock and continued the corporations’  exemption from federal securities laws until certain events occurred.  Nevertheless, the corporations are required to annually transmit a report  to their shareholders that contains “substantially all the information”  required to be included in an SEC’s registrant’s annual report to  shareholders. We were unable to determine whether the corporations are  complying with this reporting requirement because the phrase  “substantially all” is not defined. As a result, it is not clear which  information is required or the extent to which any required information  must be included in regional corporations’ annual reports. Furthermore,  the Settlement Act does not establish a mechanism for federal oversight  of the corporations’ reporting.
Corporate officials we spoke with acknowledged that “substantially all” is  not defined in the Settlement Act and that the phrase could be clarified.  They also stated that they do not believe they should have to comply with  all of the reporting requirements for SEC registrants because many of the  requirements are not relevant to Alaska Native corporations. Specifically,  corporate officials said, many SEC requirements are directed toward  providing information to potential investors, which is not directly relevant  to regional corporations as long as the corporations remain Native owned  and closed to outside investors. However, in their observations about the  corporations’ annual shareholder reports, SEC staff noted that additional  information in the annual reports could inform shareholder voting on  directors and resolutions and allow shareholders to better understand the  regional corporations’ financial performance.
section_title: What Is the Appropriate Role of the Federal Government in Maintaining the Solvency of Alaska Native Corporations?
paragraphs: Over the past 40 years, some regional corporations have experienced  periods of financial crisis, and legislation has been enacted to help ensure  their continued financial solvency. For example, in the 1980s the  corporations were authorized to sell their net operating losses, even  though other corporations were generally prohibited from doing so, and  more recently they were provided with special contracting advantages  under the SBA’s 8(a) program—advantages that have come under  congressional scrutiny in recent years.corporations in Alaska are on relatively sound financial footing, and they  also have both land holdings and natural resource revenue sharing  through the 7(i) distribution to help contribute to their revenues. If,  however, one of these 12 regional corporations became insolvent, it is not  clear what would happen to its land holdings and shareholders.
At this time, the 12 regional  On the other hand, given the insolvency of the 13th Regional Corporation,  its advocates have sought assistance from the Department of the Interior  and the Congress. Specifically, the Alaska Federation of Natives on  behalf of the 13th Regional Corporation requested accounting, legal, and  administrative assistance from the Department of the Interior’s Bureau of  Indian Affairs, as well as funding to assist the corporation in its efforts to  reorganize, prepare for new elections, and pursue land claims. In  response to questions about Interior’s responsibility to shareholders of the  Alaska Native corporations and specifically to shareholders of the 13th  Regional Corporation, Interior’s Assistant Secretary for Indian Affairs  stated that the Bureau of Indian Affairs currently has neither a statutory  nor a regulatory responsibility to Alaska Native corporations. The  Assistant Secretary further stated that the bureau has no responsibility to  ensure that Alaska Native corporations are meeting their legal obligations  and that it does not have the authority to assist the 13th Regional  Corporation (or any other Alaska Native corporation) in any  reorganization efforts.
In addition, advocates for the 13th Regional Corporation have also sought  assistance through Congress. Specifically, legislation was proposed in  2006 and 2008 that would have authorized the conveyance of over  1 million acres of land in Alaska to the 13th Regional Corporation for it to  manage and required that it share a portion of natural resource revenue  derived from the land with the other regional corporations. More  recently, representatives from the 13th Regional Corporation have  promoted an alternative proposal they would like to see as a bill  introduced in Congress. Under this proposal, the 13th Regional  Corporation would receive over 1 million acres of land, which the other  regional corporations would manage and share a larger portion of that  land’s associated natural resource revenue. As of this report, however,  this proposal had not been acted upon.
Also, several shareholders we spoke with suggested that the 13th  Regional Corporation’s shareholders be allowed to become shareholders  of one of the other 12 regional corporations. Amendments to the  Settlement Act, however, would be necessary to authorize such an  action. The debate about the future of the 13th Regional Corporation  raises the question as to what role, if any, the federal government is to  play in addressing solvency issues for Alaska Native corporations.
section_title: Who Should Be a Shareholder?
paragraphs: A question specifically for the regional corporations and their  shareholders to consider is who should be a shareholder in the future,  particularly given the implications that shareholder ownership of the  corporations has on the corporations’ future operations, benefits, and  direction. Shareholder eligibility criteria have changed since the  corporations were established and may continue to change under the  1988 and 1992 amendments to the Settlement Act. Under the original act,  only those Alaska Natives with at least a 25 percent blood quantum who  were alive on December 18, 1971, were eligible to become shareholders,  and these restrictions were to end in 1991. The 1988 amendments,  however, extended these restrictions until and unless a majority of a  corporation’s shareholders voted to lift them and allow sales of stock to  the public. As of this report, none of the corporations had voted to lift the  restrictions on the sale of stock, and many of the corporate officials we  spoke with expressed their strong desire to remain Alaska Native  owned.
In addition, amendments to the Settlement Act allowed the corporations’  shareholders to vote to amend the articles of incorporation to authorize  the issuance of shares to Alaska Natives born after December 18, 1971,  or to descendants of Alaska Natives; to eligible Alaska Natives who  missed enrollment; or to Alaska Native shareholders who are 65 years old  or older. Shareholders of 6 of the 13 corporations have voted to issue  shares to some or all of these classes of shareholders, although who is  eligible to receive the shares varies considerably among the corporations  (see table 9). Some of the other corporations are still studying the issue of  opening enrollment. For example, in 2011, Calista’s shareholders  approved a resolution calling on the corporation to “examine, formulate,  and recommend for shareholders a program for approval of the issuance  of a new class of stock to descendents of shareholders born after  December 18, 1971.” As result, the corporation has embarked on a 20- to  26-month process to examine, formulate, and recommend such a  program. If the proposed timetable is adhered to, the recommendation  could be voted on in 2013.
In evaluating the decision whether to offer new shares in the corporation  to more people, the corporations and their shareholders face a number of  considerations and potential future challenges, including the following:
Reduced dividends. Executives with several corporations told us that  their shareholders have been reluctant to issue shares to new  shareholders partly of out of concern that, with more shareholders in  total, each shareholder’s dividend amount would be smaller.
Disenfranchising those born after December 18, 1971. Some  shareholders are concerned about disenfranchising the younger  population by excluding those born after December 18, 1971. Others  counter that issuing new shares is unnecessary because existing  shares can already be passed through gifts or inheritance to those  born after this date.
Decline in overall number of shareholders in each corporation. Other  shareholders we spoke with expressed concern that if shares were  not issued to new shareholders, then over time fewer people would  qualify as voting shareholders, and participation and engagement in  the corporation might suffer.
Deciding whether to make changes to shareholder eligibility criteria will  have implications for each corporation’s future operations and direction.
section_title: Agency and Third- Party Comments and Our Evaluation
paragraphs: We provided the Department of the Interior, SBA, SEC, the state of  Alaska, the ANCSA Regional Association, and volunteers for the 13th  Regional Corporation a draft of this report for review and comment. The  federal agencies and the state of Alaska responded that they had no  comments. The ANCSA Regional Association provided written comments  (reproduced in app. II) on behalf of the 12 regional corporations in Alaska.  Volunteers for the 13th Regional Corporation also provided written  comments, which are reproduced in appendix III. The ANCSA Regional  Association also provided technical comments, which we incorporated  into the report as appropriate. In addition, the Cook Inlet Region, Inc.,  provided separate technical comments, which we also incorporated into  the report as appropriate.
In its written comments, the ANCSA Regional Association made a  number of points, including that our report gives “some voice to the  suggestion to end the exemption from SEC oversight” and stating that the  corporations do not feel an end to the exemption is warranted. We did  not, however, review any advantages or disadvantages of the  corporations’ SEC exemption from federal securities laws, and as the  association noted, we are not making any recommendations in our report.
The ANCSA Regional Association went on to say that the corporations  believe they are meeting “not only the ‘substantially all’ requirement,” but  also the “spirit and intent of .” In particular, the  association states, the corporations have chosen to adopt accounting  policies and disclosures that “generally are the same” as those required  of publicly traded companies (i.e., SEC registrants) by SEC regulations.  The association also states that the corporations determined that they  would provide the most relevant information that they have, given the  nature of their shareholders. Our report notes, however, that because the  “substantially all” reporting requirement in the Settlement Act, as  amended, is not defined or overseen, it is not clear what information must  be included in the regional corporations’ annual reports to shareholders.  As a result, we could not determine whether the corporations are  complying with the Settlement Act’s reporting requirement.
In addition, the association wrote that, under section 1606(o) of the  Settlement Act, the corporations’ financial statements are audited and  certified by independent public accountants. Section 1606(o) of the  Settlement Act requires the regional corporations’ accounts to be audited  in accordance with generally accepted auditing standards. Under the  Sarbanes-Oxley Act, however, SEC registrants are required to be audited  in accordance with other standards, which differ, and may continue to  differ, from the generally accepted auditing standards that previously  applied to SEC registrants and that section 1606(o) requires the  corporations to use. According to SEC staff, at present, the generally  accepted auditing standards and the standards SEC registrants are  required to use are not contradictory but the standards for SEC  registrants have some additional or supplemental requirements. These  standards may continue to diverge more in the future, and, if so, the  corporations’ practices may also diverge more from what is required for  SEC registrants.
The ANCSA Regional Association also raised concerns with the scope of  the report, stating that three of our “questions to consider for the future”  were beyond what we were asked to review. In our report, we state that  we were asked to describe various corporate practices of the regional  Alaska Native corporations. We added our questions to consider on the  basis of the work we did during our review and believe the discussion  provides information to Congress and the public about issues that may  warrant consideration and discussion by the federal government, the  state, the regional corporations, shareholders, or a combination of these  entities. We chose to include a wide breadth of issues to be as  comprehensive and informative as possible.
Written comments from volunteers for the 13th Regional Corporation  focused on the question posed in our report regarding the appropriate  role of the federal government in maintaining the solvency of Alaska  Native corporations. They stated that the 13th Regional Corporation did  not receive a fair and just settlement under the Alaska Native Claims  Settlement Act and requested that Congress take action to address the  issue.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the Secretary of the  Interior, the Administrator of the Small Business Administration, the  Chairman of the U.S. Securities and Exchange Commission, the  Governor of the state of Alaska, the ANCSA Regional Association,  volunteers for the 13th Regional Corporation, the appropriate  congressional committees, and other interested parties. In addition, the  report will be available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff members have any questions about this report, please  contact me at (202) 512-3841 or fennella@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. Key contributors to this report are listed in  appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report examines (1) governance practices of the regional Alaska  Native corporations, (2) requirements for and oversight of the  corporations’ financial reporting practices, (3) benefits provided by the  corporations to their shareholders and other Alaska Natives, and  (4) questions to consider for the future.
To conduct our work, we interviewed officials from all 13 regional  corporations by phone and in person. We also visited multiple  communities, villages, and cultural or historical sites across seven of the  regions (see table 10). We selected these locations on the basis of  various factors, including the size of the regional corporation shareholder  base; geographic location and number of villages in the region;  characteristics of the regional corporations such as gross revenue, net  income, and whether they have opened enrollment to those born after  December 18, 1971; and regional corporations’ availability. During our  site visits, we met with corporate officials and board directors,  shareholders, tribal officials, representatives from regional and community  nongovernmental organizations, and others to obtain information about  the regional corporations. We also visited a number of villages and  cultural sites to identify the type of work undertaken by the corporation for  the benefit of shareholders and others in the communities and to gain  shareholder perspectives. In addition, we attended a shareholder  information meeting held by one corporation in the Pacific Northwest. We  assessed the reliability of the information provided to us by the  corporations by interviewing corporate officials and cross-checking  information across various sources; we determined that the information  was sufficiently reliable for the purposes of our report. We report all dollar  amounts as they were reported to us by the corporations for the period in  question; none have been adjusted for inflation. We also researched and  analyzed issues raised in private litigation between the regional  corporations and their shareholders that we identified during the course of  our review.
We interviewed officials from the Department of the Interior’s Bureau of  Indian Affairs and from the Small Business Administration. We also  interviewed representatives from various organizations with interests in  Alaska Natives, including the Alaska Federation of Natives, ANCSA  Regional Association, First Alaskans Institute, Native American Rights  Fund, and attended the October 2011 conference of the National  Congress of American Indians. To obtain shareholder perspectives  beyond those obtained through our site visits, we conducted phone  interviews with shareholders who contacted us or whom we contacted on  the basis of referrals, set up an e-mail “Alaska Native corporation  feedback mailbox,” and reviewed corporate or shareholder social media  websites and other news sources. The views we received from  shareholders are anecdotal and not generalizable to all shareholders.
Throughout this report, we refer to the corporations’ 2010 reporting  period, which was the most recent year for which consistent information  was available across the corporations. Because the corporations’ fiscal  years do not all begin or end on the same dates, we refer to the  corporations’ 2010 reporting period as each corporation’s fiscal year  corresponding most closely to calendar year 2010 (see table 11).
To examine the governance practices of the regional Alaska Native  corporations, we reviewed the Alaska Native Claims Settlement Act, as  amended; the Alaska Corporations Code; other relevant federal and state  laws and regulations; the regional corporations’ articles of incorporation,  bylaws, and corporate proxy statements provided to shareholders during  2011 (the most recent year for which consistent information was available  across the corporations); and other documentation from the corporations  on their board composition and operations, executive and board  compensation, board elections, and methods for involving shareholders.  To further examine and describe board of director elections and  shareholder resolutions, we analyzed corporate proxy statements  provided to shareholders from 2001 through 2011.
To examine the requirements for and oversight of the regional  corporations’ financial reporting practices, we reviewed relevant federal  and state laws and regulations, focusing primarily on the Alaska Native  Claims Settlement Act and federal and state securities laws. Because of  the “substantially all” federal financial reporting requirement, we asked  staff from the U.S. Securities and Exchange Commission’s (SEC) Division  of Corporation Finance to provide observations on the extent to which the  corporations’ 2010 annual shareholder reports included information  expected from a corporation subject to the Securities Exchange Act of  1934 (we refer to such corporations as SEC registrants). We interviewed  SEC staff about their work and analyzed the written observations they  provided for each corporation, as well as a summary of recurring themes.
We also interviewed officials from the Division of Banking and Securities  within Alaska’s Department of Commerce, Community, and Economic  Development to determine any actions they take to monitor and enforce  state financial reporting requirements. We obtained from the state of  Alaska summary information on inquiries and complaints relating to proxy  materials received by the state from the regional corporations from July  2011 through June 2012 and January 2010 through June 2012,  respectively. In addition, the state provided administrative orders issued  by the state from 1978 through 2011. We assessed the reliability of the  inquiry, complaint, and administrative order information by interviewing  state officials about their record-tracking system and determined that this  information was sufficiently reliable for the purposes of our report.
To determine the benefits provided by the regional corporations to their  shareholders and other Alaska Natives, we reviewed the corporations’  articles of incorporation, mission statements, annual shareholder reports  for the 2010 reporting period, and newsletters and other documentation  from the corporations describing monetary and nonmonetary benefits.  Specifically, to obtain financial information—including the corporations’  gross revenues, net income, and dividends—we reviewed the regional  corporations’ audited financial statements from their annual reports for  2001 through the 2010 reporting period. In addition, we analyzed  documentation from the corporations on other benefits, including benefits  provided through trusts or permanent funds, and we identified other  benefits through our interviews and site visits with the regional  corporations, shareholders, tribal officials, and representatives from  nongovernmental organizations.
Finally, on the basis of our analysis of federal and state laws and  regulations; interviews with federal and state officials, regional corporation  officials, and shareholders; and past congressional actions and bills  addressing Alaska Native corporation issues, we developed questions  that may warrant consideration and discussion by the federal  government, the state, the regional corporations, shareholders, or a  combination of these entities.
We conducted this performance audit from October 2011 to December  2012 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Comments on Behalf of the 12 Regional Alaska Native Corporations
section_title: Appendix III: Comments from Volunteers for the 13th Regional Corporation
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Jeffery D. Malcolm, Assistant  Director; Ellen W. Chu; Clayton Clark; Emily Eischen; Cody Goebel; Ryan  Guthrie;, Alyssa M. Hundrup; Michael Meleady; Anu K. Mittal; Danny  Royer; Jeanette Soares; Andrew Stavisky; and Tatiana Winger made key  contributions to this report.