The leadership of Sealaska, the Native corporation for Southeast Alaska, is asking its shareholders to approve the creation of a type of tax shelter called a trust. Sealaska says it wants to take advantage of the 2017 tax overhaul passed by Congress that allows corporations to offer tax-free payments to shareholders.
“Sealaska’s philosophy around investments has always been one based on our Native values,” Sealaska’s chief executive Anthony Mallott says during a two-minute video produced by the corporation. “You will get the same dividend you otherwise would have gotten from Sealaska from the settlement trust, and that dividend will be non-taxable.”
But some shareholders say they see red flags in Sealaska’s 14-page proposal. That’s because it would give the board — acting as the trustees — unconstrained authority to decide the amount of future payouts, as well as who would receive them.
Settlement trusts are a tool used by big companies, and in this case, Sealaska’s board of directors would also serve as the trustees who would control how any money transferred into the trust would be shared and spent.
More than 20,000 Sealaska shareholders receive regular dividend payments based on the corporation’s financial performance. Those same shareholders have final say over this plan, which is being put to a vote as a resolution in June.
Sealaska shareholder Joan Dangeli notes that section 3.1 of the proposal says “The trustees may distribute some, all, or none of the net income, accumulated net income or principal of the trust to the beneficiaries.” Dangeli has been outspoken in her skepticism of the settlement trust.
The same section, she notes, explicitly states that no distributions are required, nor would payments for one year have any bearing on future years — the trustees would have maximum flexibility to pay out as much or as little as they choose.
“This is a really big issue,” Dangeli told CoastAlaska. “The language not is matching the kind words about what’s going to continue.”
Shareholder Vicki Soboleff worked for Sealaska as a financial officer for more than a decade. Now she’s running for the board of directors as an independent candidate. She says she’s on the fence about whether she’ll vote in favor of the resolution.
“I feel that there are a lot of positive aspects, potentially with passage of the trust,” she told CoastAlaska. “Also, there are many questions related to the trust.”
She added: “And I don’t feel, after speaking with shareholders, that they are comfortable voting ‘Yes.’”
Sealaska notes that other Alaska Native corporations have established settlement trusts “using similar structures,” including Goldbelt, Inc. a Juneau-based Native corporation.
Goldbelt’s settlement trust — established in 2019 — defines specific programs like scholarships that are paid out by its trust. But Sealaska’s proposal leaves the trustees to decide how that would be worked out in the future. And that lack of detail worries Dangeli, who says future boards would be unconstrained to follow through on the corporation’s assurances.
“I couldn’t find consistent language matching what they’re verbally telling us,” Dangeli said.
Nor is Soboleff fully convinced by the corporation’s arguments. She says she’s still doing her homework on what the full implications would be for individual shareholders.
“Again, I feel there are a lot of positive aspects possible with the trust,” she said. “But the information provided has been limited.”
Sealaska has tightly managed its information flow to shareholders for the upcoming election. Its management declined interview requests and has only fielded questions from shareholders that are typed into a chat window during virtual meetings with senior executives and financial advisors.
“Every decision Sealaska makes is with our shareholders in mind,” the Juneau-based Native corporation wrote in a statement to CoastAlaska. “This is good for our shareholders as the Sealaska Settlement Trust will allow shareholders to keep more money from their dividends. Currently, shareholders are required to pay appropriate taxes on dividends. The settlement trust would ease that burden. This decision is in the hands of shareholders, and our board believes it will serve to benefit shareholders both now and into the future.”
Shareholders are already voting, with the final tally to be calculated at their June 26 annual meeting. The corporation says it will only require a simple majority of those voting for the resolution to pass. That’s a lower bar than two shareholder resolutions the board opposes that would reform how elections are run.
Sealaska is a significant economic player in Southeast Alaska. The Native-owned corporation is a major landowner with a portfolio invested in real estate, fisheries and services. It reported nearly $700 million in annual revenue with more than $55 million in net profits last year, according to its most recent annual report.
It’s one of the original 13 regional Native corporations established nearly 50 years ago by the Alaska Native Claims Settlement Act. The landmark legislation distributed corporate shares to Alaska’s indigenous people based on ties to their traditional homelands.
Jacob Resneck is CoastAlaska's regional news director in Juneau.
