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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Henrichs v. Chugach Alaska Corporation (8/26/2011) sp-6593

Henrichs v. Chugach Alaska Corporation (8/26/2011) sp-6593, 260 P3d 1036

        Notice:   This opinion is subject to correction before publication in the PACIFIC REPORTER. 
        Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 303 
        K   Street,   Anchorage,   Alaska   99501,   phone   (907)   264-0608,   fax   (907)   264-0878,   email 


ROBERT J. HENRICHS, DERENTY                     ) 
TABIOS, and ROBERT E. BURK,                      )       Supreme Court No. S-12878 
                Appellants,                     )        Superior Court No. 3AN-05-11014 CI 
        v.                                      )        O P I N I O N 
CHUGACH ALASKA                                   )       No. 6593 - August 26, 2011 
CORPORATION,                                    ) 
                Appellee.                       ) 

                Appeal from the Superior Court of the State of Alaska, Third 
                Judicial District, Anchorage, Craig F. Stowers, Judge. 

                Appearances:        Fred W. Triem, Petersburg, for Appellants. 
                Robert     H.   Hume,     Jr.,  Landye    Bennett    Blumstein      LLP, 
                Anchorage, for Appellee. 

                Before:       Carpeneti,      Chief   Justice,   Fabe,   Winfree,    and 
                Christen, Justices, and Bolger, Justice pro tem.* 

                BOLGER, Justice pro tem. 

        *       Sitting by assignment made pursuant to article IV, section 16 of the Alaska 


----------------------- Page 2-----------------------


                Robert J. Henrichs, Derenty Tabios, and Robert E. Burk are shareholders 

and former directors of Chugach Alaska Corporation who ran for election to the Chugach 

board in 2005. These former directors sued Chugach because their names were excluded 

from the board's corporate proxy materials and because Chugach did not provide them 

with shareholder information for their own proxy campaigns within the time frame they 

demanded. The superior court granted Chugach summary judgment on all claims and the 

former directors now appeal. We affirmbecause Chugach was not required to deliver the 

information the former directors demanded and because Chugach's conduct did not 

otherwise violate their rights as board candidates. 


                Chugach is a corporation organized under Alaska law; its principal place 

of   business   is   in   Anchorage. Chugach's   governing   body   is   a   nine-person   board   of 

directors whose members serve staggered, three-year terms. The shareholders nominate 

and elect three directors each October at Chugach's annual shareholders' meeting. 

                For   each   annual   meeting,   Chugach   uses   a   proxy   system   that   allows 

shareholders   to   vote   for   board   directors   without   attending   the   meeting   in   person. 

Shareholders send written proxies to Chugach's Inspector of Elections, giving the proxy 

committee the authority to vote the shareholders' shares on their behalf.  On the proxy, 

a shareholder indicates the candidate or candidates for which the shareholder wants to 


                Prior to each meeting, Chugach's board of directors solicits proxies from 

the shareholders. Each shareholder receives from the board a proxy statement explaining 

the proxy system, a voter's guide providing information about candidates, and a proxy 

form. The proxy form gives the shareholder the option to vote for a board-endorsed slate 

of   candidates   or   to   allocate   votes   among  candidates   of   the   shareholder's   choice. 

                                                  -2-                                           6593

----------------------- Page 3-----------------------

Submitting an eligible and timely proxy typically makes a shareholder eligible for cash 


                 The proxy committee of Chugach's board, composed of the directors not 

running for reelection, reviews the applications of candidates who wish to be endorsed 

by the board and included in the proxy materials.  It then recommends candidates to the 

board, which decides whether to endorse the candidates in the proxy materials. 

                Henrichs and Tabios were members of Chugach's board of directors leading 

up to the October 15, 2005 shareholders' meeting, at which time their seats were set to 

expire.   Each sought reelection.   Burk had previously served as a director for Chugach, 

and he also ran for election. 

                All three men applied to be board-endorsed candidates. The board rejected 

their   applications   and   informed   them   that   their   names   would   not   be   included   in 

Chugach's corporate proxy material.  The board also informed them that they could run 

as independent candidates and distribute their own proxy materials. 

                On August 21, 2005, Henrichs sent a letter to Chugach requesting a list of 

shareholder addresses and the number of shares owned by each shareholder.  Burk and 

Tabios also sent letters to Chugach requesting the shareholder list. On September 1, after 

receiving no reply, Henrichs filed suit in the superior court, claiming AS 10.06.430 and 

AS 10.06.450(d) required Chugach to provide the shareholder information he sought. 

Tabios joined the suit as a plaintiff five days later on September 6. 

                On    September      7  Chugach     emailed    to   Henrichs,    Tabios,   and   Burk 

shareholder lists that included the names, the number of shares held, and the addresses 

for   all  shareholders.    The    emails   explained    that  the  record   date   -   the  date   for 

determining the shareholders entitled to vote at the 2005 annual meeting - was the 

previous day, and that the shareholder lists were finalized at that time. 

                                                  -3-                                           6593

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               Chugach made its first motion for summary judgment on September 9, 

claiming it had provided all of the information that Henrichs and Tabios requested. 

               In the meantime, Chugach proceeded with preparations for the 2005 annual 

meeting.   On September 9 Chugach sent out its proxy materials, which did not include 

the   information    for  Henrichs,   Tabios,   or  Burk.    The    three  men   ran  independent 

campaigns:  Henrichs and Tabios sent out joint proxy materials; Burk sent out his own. 

None of the three was elected at the annual shareholders' meeting.             The day after the 

annual meeting, Henrichs and Burk wrote letters to the election inspector asking to 

inspect the ballots cast at the annual meeting, but the inspector declined, citing the proxy 

rules that required board approval to inspect the ballots after the adjournment of the 


               In December 2005 the former directors filed an amended complaint adding 

Burk as a plaintiff and adding various challenges to the 2005 election. 

               The following year, Burk and Henrichs requested shareholder information 

for   the  2006   annual   meeting.    Their    letters  requested   that  Chugach     provide   the 

shareholder lists in an electronic file, including each shareholder's telephone number and 

email   address.   In   response,   Chugach   emailed   to   Burk   and   Henrichs   an   electronic 

spreadsheet containing the names, mailing addresses, number of shares, and voting status 

of   all   shareholders.  But   Chugach   declined   to   provide   the   shareholders'   telephone 

numbers and email addresses. 

               At an August 2006 hearing, the superior court granted Chugach's first 

motion for summary judgment.           It ruled that Chugach provided the shareholder lists 

within a reasonable amount of time and that the former directors had not attempted to 

inspect the shareholder list at the corporation's registered office or principal place of 

business as required.     The superior court also accepted the former directors' amended 

complaint.    The former directors then filed another amended complaint, adding claims 

                                                -4-                                           6593

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relating to Chugach's refusal to provide the shareholders' email addresses and phone 

numbers in 2006. 

              On November 17, 2006, Chugach filed a motion to dismiss all but two of 

the former directors' claims.  Chugach attached thirteen exhibits to the memorandum in 

support of the motion.  The superior court granted the former directors three extensions 

of time to file their response. But eventually, the superior court granted the motion - 

about two months after the third deadline passed without any response and more than a 

month after Chugach notified the court that the motion was ripe. 

              The court's order dismissed all of the former directors' claims with the 

exception of one relating to Chugach's "early bird prize" for prompt proxy returns and 

another relating to Chugach's election rule requiring that proxies be separately returned 

by mail.  The court later clarified that it had treated the motion "as a summary judgment 

motion" even though the motion was labeled as a motion to dismiss. Three days after the 

motion was granted, the former directors filed a late opposition, attaching 25 exhibits. 

They also requested reconsideration of the order dismissing their claims, which the court 


              The court later granted Chugach summary judgment on the two remaining 

claims and entered a final judgment against the former directors.  The former directors 

now appeal. 


       A.     Standard Of Review 

              "We review the grant of a summary judgment motion de novo, affirming 

if the record presents no genuine issue of material fact and if the movant is entitled to 
judgment as a matter of law."1   This de novo standard applies even when the motion is 

       1      Beegan v. State, Dep't of Transp. & Pub. Facilities, 195 P.3d 134, 138 


                                            -5-                                       6593 

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not opposed in the trial court.2      "The interpretation of a statute is a question of law to 

which we apply our independent judgment, interpreting the statute according to reason, 

practicality, and common sense, considering the meaning of the statute's language, its 
legislative history, and its purpose."3 

        B.	     The     Superior     Court    Did    Not   Err   When      It  Granted     Summary 
                Judgment To Chugach. 

                The   former   directors   do   not   identify   any   disputed   issues   of   fact   that 

precluded summary judgment; instead, they advance numerous legal theories for why 

Chugach's conduct surrounding the 2005 and 2006 elections violated their rights.  The 

former directors also argue that the superior court erred in treating Chugach's motion to 

dismiss as a summary judgment motion without giving them notice, and in "taking a 

default against" them because the motion was unopposed. 

                1.	     General principles of corporate law 

                The former directors argue that by favoring the board candidates, Chugach 
violated fundamental democratic principles established by public election cases4 and 

rules of equity that promote  fair shareholders' meetings.5             But we conclude that we 


(Alaska 2008) (citingMatanuska Elec. Ass'n v. Chugach Elec. Ass'n, 152 P.3d 460, 465 
(Alaska 2007)). 

        2	      Newton v. Magill, 872 P.2d 1213, 1215 (Alaska 1994). 

        3       Parson   v.   State,   Dep't   of   Revenue,   Alaska   Hous.   Fin.   Corp.,   189   P.3d 

1032,1036 (Alaska 2008) (citing Grimm v. Wagoner, 77 P.3d 423, 427 (Alaska 2003)). 

        4       See, e.g., Red Lion Broad. Co. v. FCC, 395 U.S. 367 (1969) (holding that 

the regulation of broadcasters under the fairness doctrine enhanced the broadcasters' 
right to free expression). 

        5       See, e.g., Revised Model Bus. Corp. Act  7.08(c) (2005) ("Any rules 


                                                  -6-	                                             6593 

----------------------- Page 7-----------------------

should refer to the Alaska statutes and regulations, and corporate bylaws that more 

directly relate to the questions raised in this appeal. 

                 The bylaws of a corporation may contain any provision "not in conflict with 

law or the articles of incorporation," including "the time, place, and manner of calling, 

conducting and giving notice of" shareholders' meetings and "the manner of execution, 
revocation, and use of proxies."6           Article II of Chugach's bylaws gives the board of 

directors     the  authority    to  conduct     shareholders'     meetings     and   to  adopt    rules  for 

shareholder      meetings,     the   election   of  directors,    and   "the   solicitation,   filing,  and 

examination of proxies." 

                 A   director   of   a   corporation   such   as   Chugach   generally   must   exercise 

corporate duties "in good faith, in a manner the director reasonably believes to be in the 

best interests of the corporation, and with the care, including reasonable inquiry, that an 
ordinarily prudent person in a like position would use under similar circumstances."7 

                 2.      Shareholder list issues 

                 The former directors argue that Chugach failed to provide the shareholder 

information   they   sought   in   2005   within   a   reasonable   time,   violating   their   right   to 
information   as   directors   under   AS   10.06.450(d)8         and   their   right   to   information   as 


adopted for, and the conduct of, the meeting shall be fair to shareholders."). 

        6        AS 10.06.230(e). 

        7        AS 10.06.450(b). 

        8        AS 10.06.450(d) provides in relevant part: 

                 A   director   has   the   absolute   right   at   a   reasonable   time   to 
                 inspect and copy all books, records, and documents of every 
                 kind and to inspect the physical properties of the corporation 

                                                    -7-                                                 6593 

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shareholders under AS 10.06.430(b).9           Chugach argues that it provided the information 

within a reasonable time, two days before it mailed out its own proxy statement and the 

notice of the annual meeting. The superior court rejected the former directors' arguments 

and granted summary judgment to Chugach on two alternative theories: (1) It concluded 

that Chugach provided the information within a reasonable amount of time; and (2) it 

concluded that the former directors had not "follow[ed] through on their stated intention 

. . . to seek to inspect the shareholder list at the place of the registered office or principal 

place of business." 

                Under AS 10.06.430(a), Chugach was required to keep "a record of its 

shareholders, containing the names and addresses of all shareholders and the number and 

class of the shares held by each."        And under AS 10.06.430(b), Chugach was required 

to make that record "reasonably available for inspection and copying" at the corporate 

office by a shareholder "upon written demand stating with reasonable particularity the 


                or   a  domestic     or  foreign   subsidiary    of  the   corporation. 
                Inspection by a director may be made in person or by agent 
                or attorney and the right of inspection includes the right to 
                copy and make extracts. 

        9       AS 10.06.430(b) provides: 

                A corporation organized under this chapter shall make its 
                books and records of account, or certified copies of them, 
                reasonably      available    for  inspection    and   copying     at  the 
                registered office or principal place of business in the state by 
                a shareholder of the corporation. Shareholder inspection shall 
                be upon written demand stating with reasonable particularity 
                the   purpose   of   the   inspection.   The   inspection   may   be   in 
                person or by agent or attorney, at a reasonable time and for a 
                proper purpose. Only books and records of account, minutes, 
                and the record of shareholders directly connected to the stated 
                purpose of the inspection may be inspected or copied. 

                                                  -8-                                             6593

----------------------- Page 9-----------------------

purpose of the inspection."  Also, under AS 10.06.450(d), any director of Chugach had 

"the absolute right at a reasonable time to inspect and copy all books, records, and 

documents of every kind." Both AS 10.06.430(b) and 10.06.450(d) allow for inspection 

"in person or by agent or attorney." 

                As the superior court noted, the former directors did not seek to inspect the 
shareholder information at Chugach's corporate office.10  The former directors argue that 

AS   10.06.430(b)   and   10.06.450(d)   require   the   corporation   to   actively   deliver   the 

shareholder records to directors or shareholders who request them. 

                "[T]he threshold question in ascertaining the correct interpretation of a 
statute is whether the language of the statute is clear or arguably ambiguous."11               The 

language of these statutes is clearly contrary to the former directors' position.            Under 

AS 10.06.450(d), directors have only the right to "inspect and copy" books, records, and 

documents. And AS 10.06.430(b) provides shareholders with a right only to "inspection 

and copying."   There is no mention in either statute of a right to have books, records, or 

documents delivered - electronically, by mail, or otherwise.  The statutes require only 

that corporations permit directors and shareholders to inspect and copy the records in 

        10      Henrichs expressed his desire "to examine the shareholders['] addresses and 

make copies of them" in Chugach's office in an August 2005 letter, but there is no 
indication in the record, or from the former directors, that Henrichs followed up on this 

        11     FDIC v. Laidlaw Transit, Inc., 21 P.3d 344, 351 (Alaska 2001) (quoting K 

Mart Corp. v. Cartier, Inc., 486 U.S. 281, 293 n.4 (1988)) (alteration in original). 

        12      Both statutes provide that the right to inspect can be exercised "by agent or 

attorney," so there is no reason to interpret them as implying a right to delivery for a 
director or shareholder who is unable to be physically present to inspect the records. 

                                                 -9-                                           6593

----------------------- Page 10-----------------------

                We therefore do not need to reach the issue of whether the time frame 

within which Chugach provided the former directors the shareholder information was 

reasonable. We hold that summary judgment was appropriate on the claims made under 

AS 10.06.430(b) and 10.06.450(d) because the former directors did not attempt to inspect 

and copy the 2005 shareholder records as required by these statutes. 

                The former directors also argue that these statutes required Chugach to 

provide the shareholders' phone numbers and email addresses in 2006. Our holding that 

these statutes only require corporations to permit inspection of corporate records disposes 

of this argument.      But we also note that none of the former directors was a Chugach 

director in 2006, and that they therefore had no rights under AS 10.06.450(d) at that time. 

We also note that AS 10.06.430(a) does not require a corporation to keep phone numbers 

and   email   addresses   in   its   shareholder   record,   so   AS   10.06.430(b)   does   not   require 

corporations to permit shareholder inspection of that information. 

                3.	     Conversion of the motion to dismiss into a motion for summary 

                After the superior court had entered summary judgment on the shareholder 

list   issues,   Chugach   filed   a   motion   asking   the   court   to   dismiss   all   but   two   of   the 

remaining claims.  The motion was labeled as a motion to dismiss, but it was supported 

by 13 exhibits. The critical exhibits were duplicates of exhibits that had been filed by the 

former directors in support of their motion for partial summary judgment the previous 

January.     These exhibits included Chugach's articles of incorporation, its bylaws, its 

proxy rules, the notice of the 2005 annual meeting, the 2005 voter's guide, Chugach's 

2005 proxy form, its 2004 annual report, and the former directors' requests to inspect the 
election ballots.13 

        13      The motion was also supported by the former directors' proxy statements, 


                                                  -10-	                                              6593 

----------------------- Page 11-----------------------

                 The    arguments      in  the   motion    to  dismiss    relied   on   these   apparently 

uncontested exhibits.         The essence of Chugach's arguments was that the legal rules 

embodied in these corporate documents authorized the board's actions with respect to the 

shareholders' meetings discussed above. The memorandum attached to the motion noted 

that Alaska Civil Rule 12(b) permitted the court to treat the motion as one for summary 

judgment, and stated that summary judgment should be entered in favor of Chugach if 

there   was   no   genuine   issue   as   to   any   material   fact   and   if   Chugach   was   entitled   to 

judgment as a matter of law. 

                 Several months passed.  The former directors submitted three motions for 

extension of time, but they filed no response to the motion even two months after the 

deadline they suggested in their final request.  On March 27, 2007, the court granted the 

motion to dismiss on the form provided by Chugach. 

                 Three   days   after   the   order   of   dismissal,   the   former   directors   filed   an 

untimely response.        Their response referred to the 25 exhibits that they had filed in 

January   2006,   including   the   main   exhibits   that   Chugach   relied   on   in   its   motion   to 

dismiss.    The former directors also submitted 25 additional exhibits, enclosed with a 

cover notice that indicated that the exhibits were submitted pursuant to Alaska Civil Rule 


                 In   the   untimely   opposition,   the   former   directors   objected   to   summary 

judgment and requested additional discovery , but they gave no indication about exactly 

what discovery they were requesting, nor did they explain what steps they had already 


a letter from Henrichs, a timeline regarding the proxy filing deadline, and minutes of a 
board meeting amending the 2005 deadline for filing proxies. 

                                                    -11-                                                6593 

----------------------- Page 12-----------------------

taken to conduct discovery.14        The text of their argument depended on exhibits - the 

exhibits   attached   to   Chugach's   motion   and   those   attached   to   the   former   directors' 

response.       The   response   did   not   include   any   indication   that   the   former   directors 

controverted the facts stated in the exhibits attached to Chugach's motion; in fact, the 

former directors asked the court to consider the exhibits they had filed in January 2006 

because they "provide[d] a factual basis for denying the pending motion to dismiss." 

                The former directors now argue that the superior court erred in treating 

Chugach's motion to dismiss as a summary judgment motion without giving them prior 

notice,   and   in   "taking   a   default   against"   them   because   the   motion   was   unopposed. 

Chugach argues that the former directors had adequate notice that the motion to dismiss 

would      be  treated   as   a  summary      judgment    motion,     and   that  the   superior    court 

appropriately considered the motion's merits rather than granting it simply by default. 

                Alaska Civil Rule 12(b) provides that, on a motion to dismiss, if "matters 

outside the pleading are presented to and not excluded by the court, the motion shall be 

treated as one for summary judgment and disposed of as provided in Rule 56."  It further 

provides that if a motion to dismiss is treated as a summary judgment motion, "all parties 

shall be given reasonable opportunity to present all material made pertinent to such a 

motion by Rule 56." 

                In   other   words,   the   superior   court   should   give   the   non-moving   party 

advance notice that a motion to dismiss has been converted to a motion for summary 
judgment so that the party can file an appropriate response.15  When the superior court 

        14      To receive a Rule 56(f) continuance, a party "must not have been dilatory 

during discovery" and "must provide adequate reasons why additional time is needed." 
Mitchell v. Teck Cominco Alaska Inc., 193 P.3d 751, 758 (Alaska 2008) (citing Hymes 
v. DeRamus, 119 P.3d 963, 965 (Alaska 2005)). 

        15      See Demmert v. Kootznoowoo, Inc., 960 P.2d 606, 609-10 (Alaska 1998); 


                                                  -12-                                               6593 

----------------------- Page 13-----------------------

decides a motion under Rule 12(b)(6) without stating whether it is considering attached 

materials,   this   court   has   three   options:   "[W]e   may   reverse   and   remand   for   proper 

consideration,   or   we   may   review   the   superior   court's   decision   as   if   the   motion   for 

dismissal   had   been   granted   after   exclusion   of   outside   materials,   or   as   if   summary 

judgment   had   been   granted   after   conversion   of   the   motion   to   dismiss   into   one   for 
summary judgment."16 

                 In this case, the superior court did not give the former directors any prior 

notice that it was converting the motion to dismiss into a motion for summary judgment. 

We must then determine whether that lack of notice prejudiced the former directors when 

they   responded   to   the   motion   to   dismiss.    The   critical   issue   is   whether   the   former 

directors, as the non-moving party, "could have availed themselves of the opportunity 

to present evidence to oppose [the] motion if the superior court had expressly invited 
them to do so."17 

                  As noted above, the former directors told the court they "ha[d] not yet had 

their discovery" and argued that the court had to give them "an adequate opportunity . . . 

to   submit   additional   proofs."      But   the   former   directors   filed   their   own   motion   for 

summary judgment on all of their claims - even those disposed of by the superior 

court's March 2007 order - in late July 2007, months after they filed their untimely 

response.      The July 2007 motion relied upon the same exhibits they attached to their 

untimely response to Chugach's motion to dismiss, including the exhibits they had filed 


see also Douglas v. Glacier State Tel. Co., 615 P.2d 580, 592 n.28 (Alaska 1980); Martin 
v. Mears, 602 P.2d 421, 426 n.10 (Alaska 1979). 

         16      Kaiser v. Umialik Ins., 108 P.3d 876, 879(Alaska 2005) (quoting Reed v. 

Municipality of Anchorage, 741 P.2d 1181, 1184 (Alaska 1987)). 

         17      Douglas, 615 P.2d at 592. 

                                                    -13-                                              6593

----------------------- Page 14-----------------------

in January 2006.   In other words, they produced no new evidence even after they had a 

full opportunity to conduct discovery.  From this we conclude that the former directors 

would not have submitted additional evidence, even if they had been given an express 
opportunity to do so.18 

                In this appeal, the former directors have asked us to review substantively 

most of the issues that the superior court decided in the converted motion to dismiss.  As 

we   determine   these   issues,   we   consider   all   of   the   exhibits   that   the   former   directors 

submitted,   including   those   filed   after   the   superior   court   entered   its   order   granting 

Chugach's motion to dismiss.          None of these exhibits raises any material issues of fact 

precluding   summary   judgment.         Because   we   conclude   that   summary   judgment   was 

properly granted, the former directors suffered no prejudice from the conversion. 

                The former directors also argue that the superior court's written addendum 

showed that the court entered summary judgment by default because of their failure to 

file a timely response to Chugach's motion. Summary judgment should never be granted 

by default: A motion for summary judgment may be granted only if it is "otherwise 
appropriate" under Civil Rule 56(c).19   But the superior court explained that it did not 

grant the motion by default; the court was convinced that there were no genuine issues 

of fact and that Chugach was entitled to judgment as a matter of law.  We agree with the 

superior court's conclusion. 

        18      See Douglas, 615 P.2d at 592-93. 

        19      Martinez v. Ha, 12 P.3d 1159, 1162 (Alaska 2000) (quoting Newton v. 

Magill, 872 P.2d 1213, 1215 (Alaska 1994)). 

                                                  -14-                                               6593 

----------------------- Page 15-----------------------

                4.      Proxy statement issues 

                The former directors make a number of arguments about the propriety of 

Chugach's 2005 proxy statements.  They argue that Chugach failed to disclose that the 

election was contested and omitted the former directors' names in its proxy materials, 

thereby violating Alaska law.        Chugach argues that it was not required to include the 

former directors' names in its proxy literature. 

                As    a  corporation     under   the   Alaska    Native   Claims     Settlement    Act 
(ANCSA),20 Chugach is subject to Alaska's proxy regulations for ANCSA corporations21 

but not federal proxy regulations. Under the state regulations a proxy statement may not 
contain any material misrepresentations.22          Also, a corporate board's proxy statement 

must include "a description of each nominee of the board . . . and of each director whose 
term of office will continue after the shareholders' meeting."23 

                 Chugach was not required to include the former directors in the proxy 

statement because the board did not nominate them.  And although Henrichs and Tabios 

were incumbent directors, Chugach was not required to include their names because their 

terms were scheduled to expire and therefore would not "continue after the shareholders' 


                The former directors also argue that Chugach's 2005 proxy statement did 

not   disclose   the   compensation   for   the   chairman   and   directors   and   other   financial 

information about the corporation.  The proxy regulations do require a statement of the 

        20      43 U.S.C.  1602 (2000); 43 U.S.C.  1606 (2008). 

        21      3 Alaska Administrative Code (AAC) 08.315-.365 (1988). 

        22      3 AAC 08.315(a). 

        23      3 AAC 08.345(b)(1) (emphasis added); see also 3 AAC 08.335(e)(1). 

                                                 -15-                                           6593

----------------------- Page 16-----------------------

individual compensation for the five most highly compensated officers.24  But Chugach's 

2005 proxy statement complied with this regulation, listing the compensation for the 

corporation's president and chief executive officer, its chief financial officer, its vice 

president, its controller, and its director of government services. 

                The   proxy   regulations   also   require   a   statement   of   remuneration   for   all 
officers   and   directors   as  a   group   "without   naming   them."25     Chugach's   2005   proxy 

statement complied with this regulation, stating the "total remuneration distributed or 

accrued to the 27 officers and directors of [Chugach] and its subsidiaries during the fiscal 


                The former directors also argue that the proxy statement did not state the 

net value per share of stock.       But a statement of value per share is not required by the 
proxy regulations.26     Nonetheless, Chugach provided equivalent information: The proxy 

statement provided the number of shares outstanding, and the annual report stated the 

total value of the shareholders' equity.  In summary, the proxy statement complied with 

all   of   the   applicable   proxy   regulations regarding   notice   of   compensation   and   other 

financial data. 

                The former directors also argue that Chugach acted illegally when it offered 

eligibility for early-bird prizes to shareholders who returned their proxies for "any proxy 
holder or candidate" by September 23, 2005.27  They argue that this incentive is an illegal 

"distribution" in violation of various sections of the corporations code that discourage 

        24      3 AAC 08.345(b)(2)(A). 

        25      3 AAC 08.345(b)(2)(B). 

        26      See 3 AAC 08.345(a)-(b). 

        27      This early-bird issue is not affected by the conversion issue discussed in 

section III.B.3 above. The superior court granted summary judgment on the early-bird 
issue in response to a separate motion. 

                                                  -16-                                             6593

----------------------- Page 17-----------------------

discrimination between holders of shares of the same class and series of stock.28                    They 

also argue that the prizes were "vote buying" and that the deadline for eligibility was 


                 A shareholder "distribution" is defined as "the transfer of cash or property 
. . . without consideration, whether by way of dividend or otherwise."29   The prizes are 

not "distributions" under this definition because eligibility for the prizes was granted in 
exchange for consideration: the early return of a valid proxy.30 

                 Chugach's bylaws authorize this type of incentive (and the corresponding 

deadline) under the board's authority to adopt rules for the solicitation of proxies, and 

the incentive did not favor any candidate. 

                 5.      Other shareholders' meeting claims 

                 The former directors also make a number of arguments in connection with 

the 2005 shareholders' meeting.  They argue that the staggered terms for Chugach board 

members were illegal. But staggered terms are expressly permitted by AS 10.06.455(a). 

        28       See, e.g., AS 10.06.305(b), .313, .542. 

        29       AS 10.06.990(17). 

        30       See Demmert v. Kootznoowoo, Inc., 45 P.3d 1208, 1212 (Alaska 2002) 

(corporate encouragement for shareholder employment including transportation costs was 
not a discriminatory "distribution"). 

        31       AS 10.06.455(a) provides in pertinent part: 

                 If the board consists of three or more members, the articles of 
                 incorporation   may   provide   that   instead   of   electing   all   the 
                 directors annually the directors be divided into either two or 
                 three classes, each class to be as nearly equal in number as 
                 possible, with the term of office of directors of the first class 
                 to expire at the first annual meeting of shareholders after their 
                 election,   that   of   the   second   class   to   expire   at   the   second 

                                                   -17-                                                 6593 

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                The former directors argue that Chugach "delays its annual meeting so far 

after the close of its fiscal year that shareholders do not have current financial data with 

which to evaluate the incumbents."           But there is nothing in the record indicating that 
Chugach violated the requirements for distribution of its annual report.32   And the law 

dealing with the scheduling of shareholders' meetings provides only that meetings "shall 
be held at the time as provided in the bylaws."33             Chugach's bylaws provide that the 

annual meeting will be held on the "second Saturday in October of each year," and that 

is when the meeting was held in 2005. 

                 The former directors argue that their right to inspect corporate records 

included a right to review and inspect the ballots from the election held at the 2005 

annual   meeting,   and   that   Chugach   violated   that   right.    But   Chugach's   proxy   rules 

provided that "after adjournment of the annual meeting" the inspector was required to 

maintain the ballots and to prohibit inspection "except upon written authorization from 

the Corporation in the form [of] a certified board resolution."  This rule falls within the 
board's authority to provide for the election of directors.34  Henrichs and Burk each wrote 

letters to the election inspector requesting to inspect the ballots cast at the meeting, but 

neither sought authorization from the board. 

                The motion to dismiss we discuss in section III.B.3 above included two 

claims that the former directors did not separately address in their appeal brief - claims 


                annual meeting after their election, and that of the third class, 
                if   any,   to   expire   at   the   third   annual   meeting   after   their 

        32      See AS 10.06.411(a), .433(a). 

        33      AS 10.06.405(b). 

        34      AS 10.06.230(e). 

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related   to  a  one-day   change   in  the  proxy   deadline   and  assertions   in  Chugach's 

supplemental proxy statement. We see noprejudice in the conversion of the motion with 

respect to these issues.    The proxy rules expressly permitted the board of directors to 

change the time by which proxies were due.  The former directors suffered no prejudice 

from the change in the proxy deadline because the new date conformed to the deadline 

printed on their own proxy statements. 

               With respect to the supplemental proxy statement, the former directors 

alleged in their amended complaint that the statement cast their lawsuit in an unfair light. 

But in their untimely response to the motion to dismiss, they failed to discuss this issue 

at all.   We have independently reviewed the record and find no issue of fact precluding 

summary judgment on this claim. 

               The   former   directors   make   various   other   complaints   about   Chugach's 

conduct regarding the annual meeting.  But none of these complaints appears to involve 

misconduct that violated any provision of Alaska law or the corporate bylaws. 


               For   these  reasons   we   AFFIRM      the superior   court's   orders  granting 

summary judgment and dismissing the former directors' claims against Chugach Alaska 


                                              -19-                                         6593
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