About the www.Alaskool.org project and its developers

One Day in the Life of a Native Corporate Leader

Byron I. Mallott

September 1985

Sealaska Plaza comes to life each day with clockwork regularity. Early morning thoughts are ended by the abrupt incessant ring of phones. The daily schedule is reviewed. The in-basket grows by inches and the first meeting awaits.

I've received next year's operating plans from Sealaska's subsidiary companies. Today begins with seemingly endless analyses. Ultimately, the individual plans fit overall corporate objectives and goals. I think of the Alaska Native Claims Settlement Act's goals and wonder whether these corporations can ever meet the expectations of Native shareholders and other Alaskans.

The first meeting ends, officers scatter to other duties and I return to my office and phone calls. An executive visiting Juneau to meet legislators calls to say hello. He informs me that there seems to be an anti-Native feeling among some legislators. It is not racial, at least we hope not. He feels the resentment is related to the belief that Natives and those in rural areas have fared well in the legislature and with the benefits of the Alaska Native Claims Settlement Act. Now I hang up and reflect upon a proposal before the legislature to provide state assistance to the NANA/ Cominco Red Dog Mine project. At a time of shrinking state oil revenues this proposal may be causing some pent-up legislative frustration, with Natives generally being the target.

In return a call to a shareholder about to lose I his seine boat and possibly his home in order to satisfy a state loan which financed his boat during better times. Now the boat's value is far less than the amount of the loan due to a serious decline in the fishing industry. I inform him that Sealaska cannot provide financial assistance, but I do assure him that after talking with the president of our subsidiary, Ocean Beauty Seafoods, every effort will be made to make a company fishing boat available to him provided that he does not also lose his valuable seine fishing permit. I can give him no guarantees however, and the phone call ends on an unsettled and frustrated note. The fisherman is over 65. After a life of hard work he had been looking forward to retirement.

Before there is time to collect my thoughts another shareholder call is put through. The caller wants to know if I can help put pressure on a federal agency which, as a result of budget cuts, is renegotiating many social service contracts, with his organization among them. In the process, he has not been paid for two months and his creditors are becoming concerned. I will do what I can to see that the contract is approved, but the necessary paperwork will result in a long delay. I hope the caller can wait.

I take another call. This one from a shareholder, a friend I have known for many years. He is a good, hard-working family man. Like the earlier caller, this man is the victim of federal budget cuts and informs me that he may lose his home if he doesn't find work soon, but that is not why he called. He wants to chat about rumors that his village corporation had taken out large loans for timber development several years ago during a stronger timber market. Today the value of timber has fallen and his village corporation may be faced with the prospect of defaulting on those loans.

He is concerned that all of the lands the village corporation received from ANCSA may be lost and wants my opinion. I have heard the same rumors and tell him that Native lands, if held as security by a lending institution, can be foreclosed if the loan or loans to which they are pledged are not repaid. I mentally kick myself, for lapsing into incomprehensible business jargon which conveniently removes the real horror of the meaning.

I pause and consider. Between village corporations and Sealaska, tens of millions of dollars have been invested in Southeast timber development in the past five years. In some instances, a large debt was incurred to finance start-up and operating costs, with ANCSA timber lands pledged as collateral.

The timber market has deteriorated substantially in the intervening years. Some corporations harvest timber only to meet debt payments as their lenders watch the declining market reduce the value of the timberlands held as security.

This totally private infusion of capital and resources into the economy of Southeast has created more than 1,000 jobs, and the ripple effect of those jobs and dollars in the region's economy has been noticeable. But for all of that, the future for some corporations is uncertain and shareholders ask why and wonder about their own future and the lands.

It is mid-morning and an officer wants to discuss a shareholder employee problem at one of our subsidiaries. The shareholder, one of a handful in a company heavily unionized with little permanent employee turnover, has been fired for allegedly causing an accident that damaged company property. The shareholder claims discrimination and will appeal.

Sealaska has a strong shareholder hire policy, but most jobs are seasonal and temporary. Also, our subsidiaries other than our timber company were purchased as ongoing businesses and employee turnover has been low, a statistic to be proud of, but do employee turnover rates not hasten opportunities for employing shareholders? Still, in each of our companies the number of shareholder employees increases each year. We are sensitive to shareholder grievances. A full investigation of this one is ordered.

Before lunch, a meeting with representatives of a foreign firm promoting new salmon farming technology sets me to thinking of Sealaska's involvement in the seafood industry.

I recall the enthusiasm of the board of directors when we purchased Ocean Beauty Seafoods in 1980. The decision had not been hasty. Ownership of such a company would allow Sealaska to be involved in an industry important to the livelihood of many of our shareholders. We would be in a business which was historically a major pillar of the Southeast Alaska economy. Ocean Beauty could provide jobs for share, holders, purchase their catches and strengthen the village and regional economy.

Ocean Beauty has fueled Sealaska's enthusiasm, but not at the pace or at the levels envisioned at the outset. We predict it will do more in the future. However, this is no consolation to shareholders who expected more. For many, the sight of nonshareholders employed by their company brings bitterness. Many shareholders go without work. My attention slowly returns to our visiting representatives who are enthusiastically extolling the wonderful, technically advanced seafood industry of the future.

The meeting ends after discussion of a proposal to study the feasibility of pen-rearing salmon in Southeast Alaska. Pen-reared salmon from Norway are flooding U.S. fresh fish markets in growing volumes and other nations are following Norway's lead. If properly done, pen-rearing salmon could bring jobs and economic benefits to Southeast villages. I think of possible opposition to this by commercial fisherman and the governmental bureaucracy to be dealt with. I remember the early morning call cautioning me to be careful when dealing with Native issues before the legislature. Pen-rearing has a long way to go.

Today I look forward to lunch. My guest will be a young shareholder who participates in the Big Brothers/Big Sisters Program. I have been informed by an official of the program that many Native children from single parent homes are on the waiting list and she hopes that more Native adults will volunteer to serve as big sisters or brothers. This is "friend raising" week and I am to be a "celebrity" Big Brother.

My guest arrives, with a bright smile. He's not shy, but a bit reserved. We walk to the restaurant with Sealaska's chief financial officer who joins us for lunch. Chosen from a menu of many grown-up delights, lunch consists of cheeseburgers and fries all around. Our talk is of school, summer fishing, and camping. Congressman Don Young and his wife Lu stop by our table to say hello. I introduce my guests. The chief financial officer is visibly impressed, the young shareholder merely smiles.

After the boy leaves, I close my door for awhile. I think about how my young guest was born after ANCSA was signed into law. Therefore he is not a Sealaska shareholder. Emotionally I consider him one. He has three sisters who along with him may or may not be included in their father's will of 100 shares.

During the debates about ANCSA, the lengthy negotiations, the congressional hearings and mark-up sessions, Native people emphasized that retaining ownership of land was the key to their survival. The corporations and the money came almost as an after-thought to Native people. Many did not sense that in the volumes of testimony, the ever changing legislative language and the growing numbers of pages in one of the most complex laws ever passed, were planted, or so it seems to many, the seeds of their destruction.

The law made the land a corporate asset with value only for economic use. Now land can be used as security for loans, can be sold, or valued in dollars. No longer can land be measured for its value to the soul, psyche and sustenance of Native people.

Regional boundaries, which once denoted an expanse and expression of time, history, culture, and spiritual and temporal sustenance, were not legal boundaries that separated people from one another and the land.

Each Native person was given shares of stock which, according to the law, would have economic value only. Before, the land held the value. The individual relied on and, at the same time, helped support the family, the extended family, the community and the tribe.

Today, Native institutions and individuals, that promote land and communalism as vital necessities for the survival of Native people, as culturally rich, racially proud and fully contributing members of the larger society, are scoffed at or at least viewed with annoyance by many, including Native people. Today, the business corporations over-.shadow other Native organizations and institutions as instruments of the Native future. Today, more and more Native people view their corporate stock with confusion, fear and frustration. They say this cannot be what Native people wanted in ANCSA. Today other Native people say, "I am Poor and have had no real opportunity in this society, let me take what economic value these shares hold to try to make a life for myself."' Other say, "I can be a Native person in my soul and do not feel guilty for wanting to gain economic value from my shares, even if it means selling the land."

I shake my head to clear it and emerge once again to the day's reality with one thought remaining. My young friend, while I have called him a shareholder and think of him as a shareholder because he is Native, is not a shareholder. ANCSA decreed that, because he was born too late, he is not. The money, the land, the corporation, all the largess of his aboriginal ownership of this great land do not in any way belong to him. The law treats us differently, but it can't erase or let me escape from the fact that I have something that so rightfully belongs to him. One day he will know that.

It is now early afternoon. Just as I rise to open my office door the phone rings at my desk. It is the Alaska Chamber of Commerce calling to extend an invitation to be a speaker at a Pacific Rim business symposium. The symposium will be featuring Alaska and will be held in California several months from now. I check my calendar, which is usually full months in advance. I find the date free and agree to attend. The subject I am asked to address is Native corporations and their contribution to the Alaska economy.

I am in no hurry to open my office door now. I take a few moments to think.

For many ANCSA corporations, there has been little success, and the land which attracts the greatest attention from the public and business community is a subject of strong internal debate among ANCSA shareholders. Can Native corporations, other than a few of the very successful, survive over time as strong business entities? Will they contribute significantly to the economic future of the state? I look to the past and see reason for grave concern.

ANCSA, when signed into law in 1971, promised great opportunities, or so everyone thought, but not received and most of the 962 million dollars was distributed until the late 1970's, after a period of high inflation. That meant the investment value of ANCSA dollars was seriously diminished by the time they were received. Although the state of Alaska prepaid a significant amount of its share, high inflation in 1979, continuing through the early 1980's, eroded its value quickly. High inflation also prompted the stringent anti-inflationary policies of the government, which produced the worst U.S. economic recession since the Great Depression. Natural resource and export industries were hardest hit and have not yet recovered. Today these same industries are faced with a strong U.S. dollar abroad and continuous weakening markets.

ANCSA corporations began their business existence during this period, and many have been hard hit. In this business environment, only the strong, experienced, and the competitive survive. ANCSA corporations are babes in the woods. Given the excruciatingly complex litigious and costly implementation of ANCSA, the lack of corporate experience among Alaska Natives and the disastrous economic times, odds were against ANCSA corporations from the beginning.

To have believed that ANCSA corporations would keep the land from risk, operate profitably from the start and change the economic status of their shareholders was wishful thinking. Yet Native people believed it; certainly Congress seemed to have believed it along with much of the general public. Among those who knew better are a significant number ready and willing to take advantage of this unique time and circumstance, adding to the overall difficulty. To dwell on these matters allows for excuse-making. I shift my reverie to the bright side for these thoughts are depressing me. It is heartening to realize that, despite these years of difficulty, Native corporations still own the land. There are notable business successes among the corporations and many gain strength and profitability with each passing year. I resolve to go to California and give an upbeat assessment of the business future of ANCSA corporations.

My secretary opens the office door and I glance out the window at the mountains surrounding Juneau. I wish for old -fashioned windows that open and the chance for a long breath of fresh air. I am reminded that the president of Sealaska Heritage Foundation is here.

We discuss the foundation's programs, including a Tlingit language computer program, which will hopefully be of great assistance in teaching language in schools. We also cover Sealaska's shareholder scholarship program, funded by Sealaska and administered by the foundation. Hundreds of shareholders have been awarded scholarships. Coupled with our shareholder intern program and shareholder hire policies, the corporation has provided educational and career opportunities that would not otherwise have been available

from the business community.

Our conversation is enthusiastic as we discuss plans for the third celebration of southeast Native culture and heritage. The first two celebrations brought together hundreds of Native dancers, historians, linguists and clan leaders from throughout Tlingit, Haida and Tsimshian country. The celebrations were broadcast statewide and have been credited for a significant increase in level of interest, understanding and appreciation of Native life in Alaska. The meeting concludes with our mutual promise to stay in touch. We both recognize that the pressures of corporate business are making it more and more difficult to do so.

The afternoon proceeds and the in-basket recedes as the out-basket grows. The reading stack hasn't diminished much though, neither has my on, going frustration at not being able to keep up with all the periodicals, newspapers, magazines and trade journals. They all seem to be important for staying informed.

After meeting with Sealaska's senior executives, our chief operating officer, chief financial officer and vice president of administration, I am able to keep up with what is happening throughout Sealaska today. I find it remarkable that all of us are together in the office at the same time, since corporate officers and staff often spend a lot of time on the road among the subsidiaries.

It is late in the day and my thoughts return to ANCSA. A number of amendments to ANCSA are being developed by the Alaska Federation of Natives for submission to Congress. At the same time the Interior Department is completing a required review of ANCSA for submission to Congress, and Justice Thomas Berger is finalizing a report of his exhaustive review of ANCSA done for the Inuit Circumpolar Conference.

Once again, Congress will have to determine the nature of its relationship with Alaska's Native people. Congress must decide what is just and fair. Many Natives as well as non-Natives, will argue that ANCSA is an inviolate agreement, which cannot be changer;. Others will argue that ANCSA must be changed, otherwise fair, ness and justice for Native people will not have been achieved. There will be ideologues and demagogues, and thoughtful and reasonable viewpoints. There will be confusion and frustration, but ultimately there will have to be some accommodation. Congress will have to act.

As one knowledgeable U.S. Senator has said, and I paraphrase, the concerns of Native people must be addressed, for if there is not justice, then the next generation of Native people will come before Congress seeking the justice that was denied.

Throughout all of this, the corporation must be sustained and nurtured. Are my obligations to the corporation and its shareholders, as the chief executive officer of a business corporation and as the Native chief executive officer of a Native business corporation, in each case different? This is a nagging question, but pragmatically and practically a simple answer seems sufficient. Unless the corporation is profitable over time, the question is pointless. In order to be profitable, the corporation's management must concentrate almost all its effort on the corporation's business survival.

Still, more questions are raised. Are corporation's diverting the Native leadership and focus away from fundamental issues that affect the future of Native people? If the corporations maintain Native owner, ship and control, will they be the appropriate vehicles for providing the kind of long-term survival Native people seek?

The irony strikes me that in the "Lower 48," In, than reservations exist with the land largely protected, but in many instances with little economic enterprise. For Alaska Natives, the land is totally at risk and economic enterprises now account for most Native organization and activity.

Sealaska, like most corporations, has both business and strategic plans. We spend much of our time planning. I have developed a Sealaska concept of the future which helps to sort through the thicket of issues and questions.

First, I believe that in 1991 the requirement that ANCSA corporations go public should be changed to give corporations the option of going public if and when their shareholders choose.

This is only good business and good public policy. Shareholders will get a raw deal if the market place knows precisely when a private company is to go public and has a long period of time to plan. Any price setting and negotiation favors the buyer not the seller in this circumstance. From a public policy viewpoint, why should Congress have required that the Native corporations go public at any time unless their shareholders decide to?

Shareholders have already overwhelmingly approved a proposition from the board of directors that would allow Sealaska to recommend to its share, holders which corporate lands should be protected from the risks of the ongoing business of Sealaska.

The corporation would then have only those lands best suited for economic use. Sealaska would still be a corporation with substantial assets and ongoing business enterprises in building materials, seafood and forest products with potential opportunities for mineral and tourism development.

The corporation should then concentrate its efforts totally on being an effective, efficient, profitable enterprise, which would still include being sensitive to the employment and other social and economic desires of shareholders.

However, the major responsibility for the social and cultural advancement of shareholders would rest with the Alaska Native Brotherhood and Sisterhood, the Tlingit-Haida Central Council, the Sealaska Heritage Foundation, local Native organizations, and the Alaska Federation of Natives. Sealaska, like any business, would set aside funds for corporate contributions and would make financial assistance to these organizations the primary focus of its corporate giving.

In the relationships among Native organizations, the business corporation over time should diminish in real importance so long as it is profitable and economically responsive to shareholders. Other Native organizations should provide the most important Native leadership.

At a time when it makes good business sense, Sealaska could choose to go public. Sealaska shareholders could also choose not to give themselves the opportunity to sell their stock. Instead, Sealaska would sell more stock to other investors and raise equity capital for more business growth. There should not be great concern about taking the corporation public if the selected Native corporate lands are protected and the corporation is profitable. Another

important factor in this decision is the stipulation that Native leadership in the other Native organizations also be successful. If that decision to go public is a good one, share values are likely to increase both for those who choose to sell and those who choose to in, vest and stay in the corporation for a longer term.

I recognize that the decision to make a Native corporation public will be complex and in most in, stances traumatic. For many corporations, there may be countless reasons, including good sound business ones, to stay completely Native-owned, but for other Native companies, going public to raise capital could benefit all shareholders. Going public need not mean that Native control will be lost, even if stock owner, ship is increased.

I recognize too that these corporate decisions will not be made in a vacuum. The social relationships between Native people and other Alaskans; our general economic status; how public policy treats Native people: all these and more will help shape our corporate decisions.

It has been a long day and I leave for home. Several officers and staff members are still at their desk taking advantage of the relatively quiet after-business hours to do some reflecting of their own.

I am pleased and thankful that, for all the critical decisions yet to be made by Native Alaskans, there is strength and wisdom in our people and opportunity in our institutions.

Byron I. Mallot, 42, is president and chief executive Officer of Sealaska Corporation, the regional Native corporation for southeast Alaska. He was appointed CEO in 1982, and has been a member of Sealaska's board of directors since 1972.

Sealaska has more than 15,000 shareholders and is headquartered in Juneau. Among its major business investments are its subsidiaries: Alaska Brick Company, headquartered in Anchorage with operations also in the Matanuska Valley and Fairbanks; Ocean Beauty Seafoods, based in Seattle, with more than a dozen plants and offices scattered from Bristol Bay to San Francisco and overseas in Tokyo; Pacific Western Lines, which operates its tug and barge service from Seattle and Anchorage; and Sealaska Timber Corporation with offices in Ketchikan and Seattle, and operations throughout southeastern Alaska. During the peak season, some 2,000 people are employed in all the companies, and in 1984, twenty-one percent of those employees were shareholders. A headquarters staff of less than forty, and an eighteen-member board of directors provide direction, support, and oversight.

This article, reprinted courtesy of Alaska Native Magazine, reflects a typical day for a corporate Native leader.