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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Pederson v. Arctic Slope Regional Corp (8/8/2014) sp-6939

Pederson v. Arctic Slope Regional Corp (8/8/2014) sp-6939

                 THE SUPREME COURT OF THE STATE OF ALASKA 



RODNEY S . PEDERSON,                            ) 

                                                )       Supreme Court No. S- 15056 

                        Appellant,              ) 

                                                )       Superior Court No. 3AN -09- 10971 CI 

        v.                                      ) 

                                                )       O P I N I O N 

ARCTIC SLOPE REGIONAL                           ) 

CORPORATION , and MARY                          )      No. 6939 - August 8, 2014 

ELLEN AHMAOGAK, in her                          ) 

capacity as Corporate Secretary,                ) 

                                                ) 

                        Appellees.              ) 

                                                ) 



                Appeal from the Superior Court of the State of Alaska, Third 

                Judicial District, Anchorage, Sen K . Tan, Judge. 



                Appearances :    Rodney  S.  Pederson,  pro  se,  Anchorage, 

                Appellant.      Susan   Orlansky   and   Jeffrey   M .   Feldman, 

                Feldman Orlansky & Sanders, Anchorage, for Appellees. 



                Before:  Fabe, Chief Justice, Winfree, Stowers, Maassen, and 

                Bolger, Justices. 



                FABE, Chief Justice. 



I.      INTRODUCTION 



                A shareholder of Arctic Slope Regional Corporation sought to exercise his 



statutory  right  to  inspect  books  and  records  of  account  and  minutes  of  board  and 



committee meetings relating to executive compensation and an alleged transfer of equity 



in corporate subsidiaries to executives.  The Corporation claimed that the materials were 


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

confidential and sought to negotiate a confidentiality agreement prior to release of any 



documents.    When  the  shareholder  ultimately  reje cted  the  proffered  confidentiality 



agreement, the Corporation released to the shareholder only the annual reports and proxy 



statements  of  the  Corporation  and  the  minutes  describing  the  subj ects  discussed and 



actions   taken   at   the   meetings.      The   shareholder   did   not   receive   the   detailed, 



individualized compensation information he sought.  



                The  shareholder  brought  suit,  claiming  that  the  Corporation  withheld 



information that it was required to release under A S 10.06.430 and that the Corporation 



improperly insisted on a confidentiality agreement prior to releasing any of the requested 



documents.  The superior court ruled that electronically maintained accounting records 



are  not  within  the  statutory  category  of  "books  and  records  of  account";  that  the 



Corporation satisfied the requirement to disclose "books and records of account" when 



it disclosed only annual reports and proxy statements; and that the Corporation satisfied 



the requirement to disclose meeting minutes.  It further concluded that the Corporation 



could demand a confidentiality agreement prior to release of any information, and that 



the terms of the particular confidentiality agreement offered in this case were reasonable. 



The shareholder appeals, arguing that the statutory right of inspection encompasses more 



than what the Corporation provided and that the Corporation had no right to demand the 



confidentiality agreement in this case.   



                This appeal presents several issues of first impression in Alaska.  We hold 



that  ( 1)  the  statutory  phrase  "books  and  records  of  account"  includes  electronically 



maintained books and records of account; (2) the statutory phrase also goes beyond mere 



annual reports and proxy statements; and (3) the statutory phrase at least encompasses 



monthly   financial   statements,   records   of   receipts,   disbursements   and   payments, 



accounting  ledgers,  and  other  financial  accounting  documents,  including  records  of 



individual  executive  compensation  and  transfers  of  corporate  assets  or  interests  to 



                                                 -2-                                              6939 


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

executives.    W e  further  hold  that  (4)  the  statutory  category  "minutes"  does  not 



encompass all presentations or reports made to the board but rather merely requires a 



record of the items addressed and actions taken at the meeting, as have been faithfully 



recorded  after  the  meeting.    Finally,  we  hold  that  (5)  a  corporation  may  request  a 



confidentiality   agreement   as   a   prerequisite   to   distributing   otherwise-inspectable 



documents provided that the agreement reasonably defines the scope of confidential 



information subject to the agreement and contains confidentiality provisions that are not 



unreasonably   restrictive   in   light   of   the   shareholder 's   proper   purpose   and   the 



corporation 's legitimate confidentiality concerns.  We conclude that the Corporation 's 



proffered confidentiality agreement in this case was not sufficiently tailored or limited 



in  scope  and  thus  Pederson 's refu sal  to  sign  it  could  not  serve  as  a  legal  basis  for 



avoiding liability for denying his inspection claims.   



II.     FACTS AND PROCEEDINGS 



        A.      The Parties 



                Arctic   Slope   Regional   Corporation   is   an   Alaska   Native   Regional 



                                                                                                  1 

Corporation      organized   under   the       Alaska    Native     Claims    Settlement      Act    and 



A S 10.06.960 and incorporated under the Alaska Corporations Code, A S 10.06.  At the 



time of trial, the Corporation took in about $2 .5 billion in revenue each year, employed 



about 10,000 people, and had operations across the country and around the world.  The 



                                                                2 

Corporation had about 1 1,000 shareholders in 20 12,  about 6,000 of whom were adults 



holding voting shares. 



        1       43 U .S.C.  1601-29 (2006). 



        2       GOVERNMENT   ACCOUNTABILITY   OFFICE,   REGIONAL   ALASKA   NATIVE 



CORP ORAT ION S :      STA TU S     40   YEA R S     AFTER     ESTABLISHMENT ,          AN D    FUTUR E 

CON SIDERATION S 53 (20 12), available at http ://www .gao.gov/assets/660/650857.pdf.  



                                                   -3-                                                6939 


----------------------- Page 4-----------------------

                Rodney Pederson is an original shareholder of the Corporation, holding 100 



Class A shares.  An attorney and a member of the Alaska bar, Pederson worked as 



assistant corporate counsel to the Corporation and later as an executive for one of the 



Corporation's subsidiaries.  The employment relationship soured.  Since then Pederson 



has unsuccessfully sought election to the Corporation 's board and at the time of trial in 



this case had filed three lawsuits against the Corporation, as well as a counterclaim in a 



suit brought by the Corporation against Pederson. 



        B.      Pederson's       Request       For    Detailed,      Individual      Compensation 

                Information For Executives And Board M embers Contained Within 

                "Books      And     Records       Of    Account"       And     "Minutes"        Under 

                AS 10.06.430's Shareholder Inspection Right 



                On June 17, 2009, Pederson sent three letters to the Corporation seeking to 



                                                                             3 

exercise his shareholder inspection right under AS 10.06.430(b).   He sought "to inspect 



and   copy   the   books,   records   of   account   and   minutes   of   proceedings   of   the 



[Corporation's] Board of Directors and Committees of the [Corporation's] Board of 



        3       As relevant in this case, A S  10.06.430(a) requires Alaska corporations to 



"keep  correct  and  complete  books  and  records  of  account"  as  well  as  "minutes  of 

proceedings of its shareholders, board, and committees of the board."  A S 10.06.430(b) 

requires Alaska corporations to 



                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. 



                                                  -4-                                               6939 


----------------------- Page 5-----------------------

Directors"   that   were   "in   any   way   related   to,   discussing,   considering,   making 



recommendations in regard to, funding, and approv[ing]" four different actions related 



to compensation of and transfer of Corporate interests to executives, board members, and 



                       4 

Corporate officers.   



                Pederson 's  demand  letters  stated  that  the  purpose  of  his  request  for 



inspection was " [t]o obtain true and accurate information and records regarding" the four 



Corporate actions listed above .  The letters went on to clarify that the information he 



obtained would be used only to persuade his fellow shareholders to adopt two specific 

changes to the Corporation 's governing documents.5 



        4       Specifically, Pederson sought information relating to ( 1) "the purchase of 



the  9.5%  minority  interest  in  the  A SRC  Federal  Holdings,  Inc .  subsidiary  of  [the 

Corporation] referenced and discussed in the [Corporation's] Annual report package 

mailed in 2009"; (2) "the transfer of, conveying, selling  and/or granting of stock or 

shares,  or  any  other  interest  in  the  A SRC  Federal  Holdings,  Inc .  subsidiary  of  [the 

Corporation] to Officers or Executives of [the subsidiary] or any other subsidiary owned 

or majority owned by [the Corporation]"; (3) "[the] purchase of annuities and approval 

by the [Corporation's] Board of Directors of the Supplemental  Executive Retirement 

Plan  referenced in the [Corporation's] Annual Report package mailed in 2009"; and 

(4) "Officer and Executive compensation packages, including, but not limited to, base 

salaries, bonuses, incentive programs, performance incentives, deferred compensation, 

retirement  plans  or  contributions  other  than  for  plans  available  to  all  employees, 

recommended for approval by [the Corporation's] Board Committees and approved by 

the [Corporation 's] Board of Directors during the past five (5) most recent fiscal years." 



        5       Specifically, Pederson sought: ( 1) "to prohibit the granting, transfer, or 



conveyance  of  stock,  shares  or  other  interest  in  [Corporate]  subsidiaries to O fficers, 

Executives, or Board members of subsidiaries (unless the officer or executive sold the 

company  to  [the  Corporation])  without  the  prior  approval  of  a  maj ority  of  [the 

Corporation 's] Shareholders or shares voting," and (2) "to prohibit current [Corporate] 

Board Members from also serving as, being elected, or being appointed as compensated 

Corporate  Officers  (other  than  normal  Board  member  compensation  or  retainer)  or 

Senior Executives of [the Corporation], unless they resign from the Board of Directors 

                                                                                         (continued...) 



                                                   -5-                                                6939 


----------------------- Page 6-----------------------

        C.      The  Corporation  Demands  A  Confidentiality  Agreement  Prior  To 

                Release Of Any Documents; Pederson Negotiates But Then Rejects 

                Any Confidentiality Agreement. 



                Mary Ellen Ahmaogak, the Corporation 's Corporate Secretary, replied to 



Pederson 's  initial  demand  letters  on  July  28,  2009,  proposing  to  give  Pederson  the 



records he had requested "to the extent they consist of copies of the relevant portions of 



the minutes of [the Corporation's] board and committee meetings and copies of the 



relevant portions of [the Corporation's] regularly maintained accounting records."  The 



Corporation notified Pederson of its view that " [t]he bulk of the records responsive to 



your request consist of annual reports and proxy  statements for  [the Corporation] and 



reports made to [the Corporation 's] Compensation Committee by the Hay Group," an 



independent executive-compensation consultancy.  The Corporation also asserted that 



"[t]he  books  and  records  you  have  requested  contain  trade  secrets  and  confidential 



information" and insisted that prior to its release of the records, Pederson must "sign a 



confidentiality agreement regarding these books and records to ensure they will not be 



disclosed other than to people entitled to see them ." 



                The  Corporation 's  first  proffered  confidentiality  agreement  stated  that 



        6 

"[a]ll"  of the information to be released was "Confidential Information" subject to the 



        5(...continued) 



of  [the  Corporation],  prior  to  election,  appointment  or  service  as  a  compensated 

Corporate Officer or Senior Executive of [the Corporation]." 



        6       The Corporation 's assistant in-house counsel at the time testified at trial that 



"we responded with the confidentiality agreement because of the fact that there were 

documents that he was requesting that were beyond what we thought we were legally 

required  to  produce,"  and  that  some  of  the  excess  was  information  the  Corporation 

preferred to keep confidential.  But the confidentiality agreement did not distinguish 

between confidential and non-confidential information or information required to be 

disclosed under the statute and information that would be disclosed gratuitously.   



                                                   -6-                                               6939 


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

                                                                                                  7 

terms of the agreement despite being inspectable "pursuant to A S  10.06.430."   The 



agreement would permit disclosure "to other shareholders" and their agents but would 



make  Pederson  liable  to  the  Corporation  for  unauthorized  disclosure  by  those  third 



parties. 



                Pederson responded on August 6, 2009, suggesting specific additions and 



subtractions  to the Corporation 's first proffered confidentiality agreement.  But Pederson 



soon changed his  mind  and reje cted the notion that he had to sign a confidentiality 



agreement  as  a  prerequisite  to  obtaining  the  materials  he  had  requested  pursuant  to 



A S 10.06.430.  He stated in a letter dated August 12, 2009, that nothing in the statute 



would require him to sign such an agreement, and he pledged in lieu of an agreement "to 



do [his] best to ensure that any information [he] prepare [d] for [his] fellow Shareholders 



based  on  any  actual  confidential  information  contained  in  the  records  [he]  ha [d] 



requested  [would]  not  [be]  available  to  the  public."  He  proposed  to  "prepar [e]  the 



information in a manner that minimizes the disclosure of actual confidential information, 



while still allowing [Pederson] to provide enough information to Shareholders to make 



persuasive      arguments      for   updating     [the   Corporation 's]      corporate     governance 



documents." 



                After receiving Pederson 's suggested edits to the confidentiality agreement, 



the Corporation sent him a responsive letter dated August 2 1, 2009, agreeing "to almost 



all of the modifications [Pederson] proposed."  But the Corporation made one significant 



addition to the newest draft of the agreement:  After accepting Pederson 's request to omit 



language subjecting him to personal liability for disclosures of confidential information 



by third parties with whom he would be permitted to share confidential information, the 



        7       The agreement also attempted to include in the definition of Confidential 



Information information "gathered by the Shareholder, and all reports, studies, analyses 

and documents based thereupon which are prepared by the Shareholder ." 



                                                   -7-                                                6939 


----------------------- Page 8-----------------------

Corporation  inserted  a  new  requirement  that  Pederson  "obtain  .  .  .  a  confidentiality 



agreement . . . that subjects [the person to whom Pederson seeks to disclose confidential 



information] to the same restrictions imposed on [Pederson] in this Agreement."   



               In a letter dated August 24, 2009, after receiving the Corporation's second 



proffered confidentiality agreement, Pederson reje cted the new draft and reiterated his 



rej ection of any confidentiality agreement.  He stated his view that he was "already 



legally  entitled"  to  the  documents  he  requested,  regardless  of  the  existence  of  a 



confidentiality  agreement.    He  further  objected  to  the  scope  of  the  definition  of 



"Confidential Information" in the draft agreement, to the potential liability to which it 



subjected  him,  and  to  the  "extremely  onerous  requirement  that  [he]  obtain  signed 



agreements  from  every  shareholder  with  whom  [he]  share[d]  the  information ."    He 



reiterated his offer to "take reasonable measures to limit access by the public to certain 



information that is actually confidential or a trade secret, but management must point out 



what that information is ." 



       D.      The Corporation Releases Som e Information. 



               The Corporation's in-house and outside counsel attempted to determine the 



scope of the information that the Corporation  had  to  release under AS 10.06.430.  It 



appeared  that  the  Corporation  had  never  had  any  shareholder  requests  to  inspect 



corporate books and records of account and minutes until Pederson's initial demand 



letters  of  June  17,  2009,  and  that  the  Corporation  had  no  established  procedure  for 



responding to such requests.  Similarly, no cases from this court defined the scope of 



"minutes" or "books and records of account."  The Corporation eventually determined 



that "books and records of account" included only the Corporation's annual reports and 



proxy statements and that the Corporation possessed no other "books and records of 



account" within the meaning of the statute.  It also concluded that "minutes," as used in 



the statute, included the concise descriptions of what happens in board meetings that are 



                                               -8-                                           6939 


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

prepared after the meetings but did not include presentations made to the board, handouts 



provided to the board, or other sensitive confidential or proprietary information that may 



have been omitted from the typed minutes for variou s reasons.  The Corporation went 



on  to  identify  other  materials  such  as  reports  and  presentations  to  the  board  that  it 



concluded were not part of the minutes or books and records of account, and thus not 



covered by the statute, but were relevant for Pederson 's stated purposes. 



               On August 27, 2009, three days after the date of Pederson 's second letter 



rej ecting any confidentiality agreement, the Corporation informed Pederson that it was 



delivering to him "all of the material that you requested that can be made available, in 



the  absence  of  protections  safeguarding  confidentiality."    Later,  the  Corporation 



explained  that  it  redacted  "specific  salary  and  benefits  information  of  individual 



employees."  The Corporation 's assistant corporate counsel testified at trial that he had 



reviewed all of the corporate minutes as well as the books and records of account, as he 



had defined these terms, compiled all information in those sources related to Pederson's 



stated interests, and transmitted all of those required documents - without redaction of 



relevant information - to Pederson 's attorney.  The assistant corporate counsel also 



testified  that  he  identified  a  number  of  reports  to  the  board  that  were  relevant  to 



Pederson 's interest but not part of the "minutes" or "books and records of account" as 



he  had  defined  those  terms;  he  produced  those  reports  for  Pederson  "[a]s  an 



accommodation"  after redacting information that the Corporation was not willing to 



share  voluntarily  without  the  sort  of  confidentiality  agreement  that  Pederson  had 



rej ected. 



        E.     Pre-Trial Proceedings 



               Pederson brought suit against the Corporation and Mary Ellen Ahmaogak, 



in her capacity as Corporate Secretary (collectively, "the Corporation").  He claimed that 



he  had  submitted  a  written  demand  stating  with  particularity  a  proper  purpose  for 



                                                -9-                                             6939 


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

inspecting    minutes     and    books    and    records    of   account,    as   required    under 



A S 10.06.430(b), and that the Corporation had sought to impose unreasonable conditions 



on  release  of  the  information  he  sought  and  later  improperly  denied  his  request  by 



releasing less than what was required under the statute.  He sought a money judgment 



as permitted under A S 10.06.430(c), including punitive damages, and a court order as 



permitted under A S 10.06.430(d) compelling production of all minutes and books and 



records of  account relevant to the proper purpose stated in his demand letters but not 



produced by the Corporation. 



                Pederson and the Corporation both moved for summary judgment.  The 



Corporation stipulated "[f]or purposes of the summary judgment cross-motions" that it 



"does not dispute that, in his correspondence, Pederson stated legally proper purposes 



for his requests."  Thus, in the view of the parties, the only issues remaining in the case 



were the legal issues of the scope of the inspection right under A S 10.06.430 and the 



Corporation's ability to demand a confidentiality agreement prior to its release of any 



information. 



                The  superior  court  initially  denied  summary  judgment  to  both  parties 



because  of  three  remaining  factual  disputes:    ( 1)  whether  the  omitted portions of the 



disclosed documents were truly unrelated to Pederson 's requests; (2) whether additional 



responsive  documents  were  never  disclosed  at  all;  and  (3)  whether  the  Corporation 



produced required documents within a "reasonable time." 



                The Corporation moved for reconsideration, arguing that the only factual 



disputes as to which documents had been disclosed and whether the redactions included 



inspectable information could be resolved through in  camera review of the disclosed 



documents and the originals.  Pederson did not oppose the Corporation's motion for 



reconsideration .  He reasoned that the in camera review process would dispose of all 



remaining   factual   disputes   and   that   the   other   remaining   issues   relating   to   the 



                                                - 10-                                            6939 


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

confidentiality  agreement  were  legal  issues.    And  in  Pederson's  view,  the  factual 



questions would be relevant only if the superior court were to address the initial legal 



question  whether  a  corporation  can  demand  a  confidentiality  agreement  prior  to 



disclosing statutorily required information. 



               The  superior  court  granted  the  motion  for  reconsideration,  and  the 



Corporation  provided  the  superior  court  with  copies  of  the  documents  provided  to 



Pederson as well as unredacted copies of the original documents.  In order to confirm the 



authenticity of the documents provided to the superior court, Pederson was permitted to 



compare the redacted documents provided to the court with the documents he already 



po ssessed.  Due to the allegedly sensitive nature of their contents, the unredacted original 



documents were provided to the court ex parte; Pederson was not permitted to view 



them.  After comparing  the documents in his possession to the redacted copies to be 



submitted to the court, Pederson filed an affidavit stating that there were documents in 



the pile to be submitted to the court that he had not received in the Corporation's prior 



disclosure, including the 2008 Annual Report, a board resolution, and several pages of 



committee minutes corresponding to missing pages.  



               On February 4, 2011, the superior court ruled on reconsideration that the 



Corporation was entitled to partial summary judgment.  The superior court concluded 



that the statutory requirement that a corporation allow inspection of "books and records 



of  account"  was  satisfied  in  this  case  by  the  release  of  annual  reports  and  proxy 



statements, which "contain independent accounting audits of [the Corporation], including 



overall  and  averaged  information  about  executive  compensation"  but  not  "detailed 



accounts  of  compensation  for  individual  executives."    Similarly,  the  superior  court 



implicitly  ruled  that  the  Corporation  satisfied  the  statutory  requirement  to  allow 



inspection of "minutes" by providing the typed post-meeting notes and by withholding 



more-detailed reports presented at the meetings. 



                                              - 11-                                         6939 


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

                 Pederson  moved  for  reconsideration  of  the  partial  grant  of  summary 



ju dgment.  He argued that the superior court had overlooked a regulation applicable to 



Alaska  Native  Regional  Corporations  which  states  that  the  corporations'  proxy 



solicitations must include "a statement of all current remuneration distributed or accrued 



and of all future remuneration contributed during the corporation's last fiscal year on 



behalf of . . . each of the five most highly compensated directors or  officers for his 



services  in  all  capacities  to  the  corporation  and  its  subsidiaries,  naming  each  such 



           8 

person."   Pederson maintained that  regardless of the superior court 's holding in the 



partial grant of summary judgment, the statutory inspection right extends to classes of 



documents beyond what the Corporation gave him in this case.   The  superior court 



denied Pederson's motion for reconsideration, stating that it would deal with this issue 



at trial since full summary judgment had been denied.  



         F.      Trial Proceedings 



                 On September 1 8, 20 12, the superior  court held a one-day bench trial. 



Although the pre-trial orders purported to resolve many questions of fact and law , the 



                                         9 

superior court ultimately allowed  Pederson to argue de novo that "books and records of 



account," as used in the statute, "should clearly include the detail, the electronic records 



of accounts, monthly financial statements, budget documents, ledgers, and even check 



registers  that  form  the  basis  of  the  financial  records  of  the  corporation ."    He  also 



         8       3 Alaska Administrative Code (AAC) 08.345(b)(2)(A) (2014). 



         9       The superior court said, "I 'm going to make this easy.  I'm going to let Mr. 



Pederson put on his case."  During closing argument at trial, the superior court reiterated, 

"[P]lease argue anything you wish," including questions of law previously settled at 

summary judgment.  The Corporation's counsel stated in opening arguments that the 

Corporation would "let it play out" and  "make objections if we think that he's astray 

from what we think the issues are."  The Corporation never objected to the broadening 

of issues during trial. 



                                                    - 12-                                               6939 


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

maintained  that  "just  because  [the  records  were]  in  electronic  form  shouldn 't  be  an 



excuse  for  excluding  them  from  inspection ."    Pederson  also  testified  that  in  his 



experience working for the Corporation, the company maintained an electronic record- 



keeping system that makes all detailed financial transaction information "easily and 



quickly" accessible and available at corporate headquarters.  The Corporation 's counsel 



stipulated to the fact that "obviously there are financial records, and it is possible for 



someone to query the system" with little effort to determine, for example, "how much 



did we spend on paper clips in  June."    Pederson maintained that he has never been 



provided the "actual books and records of account of the company," as defined above, 



but rather just the annual financial reports contained within the annual reports and proxy 



statements, which had "no detail in them."  (Emphasis added.)  Pederson also argued that 



"minutes," as used in the statute, include reports and presentations made to the board and 



its committees even if not typed up in the post-meeting descriptions. 



               Regarding  the  confidentiality  agreement,  Pederson  argued  that  he  was 



entitled to access " [a]ll  the books and records directly connected to [his] demands," 



without redaction, even if he refused to sign a confidentiality agreement.  He further 



argued  that  even  if  a  corporation  may  request  a  confidentiality  agreement,  the 



confidentiality agreement in this case was initially overbroad because it encompassed 



more than what was strictly confidential and was overly restrictive in its requirement that 



he obtain confidentiality agreements from all potential recipients of information .  He 



specifically argued that because of the proxy disclosure regulations, 3 AAC 08.345, the 



Corporation can claim no confidentiality with respect to compensation information for 



at least the top five most highly compensated executives and possibly others who could 



potentially be on that list if the existing disclosures were incorrect. 



               The Corporation maintained its position that it possessed no  "books and 



records  of  account" because  it  maintained  electronic  accounting  records  and  that the 



                                              - 13-                                          6939 


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

annual reports and proxy statements were adequate substitutes  to  satisfy Pederson's 



requests.  The Corporation also argued that "minutes" include the concise descriptions 



of what happens in board and committee meetings that are prepared after the meetings 



but do not include presentations and reports made in those meetings .  The Corporation 



asserted  that  the confidentiality agreement was "a bit of a sideshow" because it had 



released everything required under its interpretation of the statute  and the proffered 



confidentiality  agreement  was  to  apply  only  to  any  additional,  voluntarily  supplied 



information. 



        G.     The Superior Court's Findings Of Fact And Conclusions Of Law 



               After trial concluded, the superior court issued written findings of fact and 



conclusions of law and entered final judgment for the Corporation. 



               On the legal issues related to the scope of inspection under A S 10.06.430, 



the  superior  court  "adhere[d]"  to  its  determination  at  summary  judgment  that  the 



statutory requirement to disclose " 'books and records of account ' . . . does not require 



a  corporation  to  disclose  to  a  shareholder  on  request  all  of  its  financial  statements, 



including monthly financial statements, budget documents, records of disbursement, 



check  registers,  payments  to  executives  and  employees,  and  electronic  records  of 



account."    (Emphasis  in  original.)    Rather,  "providing  the  annual  certified  financial 



statements  satisfied  the  statutory  obligation  .  .  .  particularly  where  a  corporation 



establishes that it has no traditional accounting  ledger and its electronic records are 



extraordinarily  voluminous ."    The  superior  court  concluded  that  the  Corporation 



established that factual predicate and  that  release of annual reports thus satisfied the 



requirements of the statute in this case.  



               The  superior  court  rej ected  Pederson's  argument  that  3  AAC  08 .345's 



proxy-disclosure rules broadened the scope of the inspection right under A S 10.06.430 



in order to verify the truth of the disclosures.  " [Alaska Statute] 10.06.430 [does not] 



                                                - 14-                                           6939 


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

require[]  an  Alaska  Native  Corporation  to  provide  its  shareholders,  upon  request, 



different documents than any other corporation covered by A S 10.06.430." 



               On  the  specific  factual  dispute  whether  Pederson  had  received  all  the 



materials that the Corporation claimed it had delivered to him, the superior court found 



that  Pederson  had  received  the  disputed  documents,  reasoning  that  "Pederson's 



testimony  [is]  not  credible"  and  accepting  instead  the  testimony  of  a  paralegal  who 



prepared the documents.  The superior court thus stood by its finding at partial summary 



j udgment  that  Pederson  had  received  all  relevant  information,  without  omission  or 



redaction, within the "minutes" and "books and records of account" as the superior court 



defined those terms. 



               The superior court further concluded that a corporation could demand a 



reasonable  confidentiality  agreement  before  releasing  inspectable  documents  and 



determined  that  the  confidentiality  agreement  requested  by  the  Corporation  was 



"reasonable" because  it  "agreed to all  of Mr. Pederson 's requests except the one that 



would essentially vitiate the confidentiality agreement and reduce it to a nullity" by 



permitting Pederson to disclose information to other shareholders without first obtaining 



a confidentiality agreement from those other shareholders.  The superior court never 



addressed  whether  it  was  permissible  for  the  Corporation  to  label  all  information 



requested in Pederson's demand letters "Confidential Information" subject to the terms 



of the agreement.  



               Finally, the superior court determined that "there was no delay" and that 



"the time it took to produce the documents was reasonable" because " [m]ost of the time 



was taken up with negotiations of a confidentiality agreement between the parties that 



failed."  The superior court also found that after negotiations over the confidentiality 



agreement "collapsed," the Corporation 's assistant corporate counsel "moved as quickly 



as he could to assemble and provide to Pederson in August 2009 all the documents that 



                                              - 15-                                         6939 


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

he  understood  the  corporation  was  statutorily  obligated  to  provide,"  plus  additional 



documents provided gratuitously. 



               Pederson appeals. 



III.    STANDARD OF REVIEW 

               "We review a trial court 's legal analysis de novo."10  Under the de novo 



standard of review , we use our independent ju dgment,11 and our "duty is to adopt the rule 



of  law  that  is  most  persuasive  in  light  of  precedent,  reason,  and  policy."12    When 



interpreting a statute, we have frequently elaborated that "we must consider its language, 



its purpose, and its legislative history, in an attempt to give effect to the legislature's 

intent, with due regard for the meaning the statutory language conveys to others."13 



IV.     DISCUSSION 



               The right of shareholder inspection is an important method for monitoring 



agent performance and enhancing principal control over corporate agents.  According 



to a leading treatise, "the basis for the shareholder 's right to inspection is found in the 

ownership of shares in the corporation and the necessity of self-protection ."14  Not only 



does a shareholder have "a fundamental right to be intelligently informed about corporate 



        10     D an v. Dan, 28 8 P.3d 480, 482 (Alaska 20 12). 



        11     E.g. , State, Dep' t of Health & Soc. Servs. v. Planned Parenthood of Alaska, 



Inc. , 28 P.3d 904, 90 8 (Alaska 2001). 



        12     E.g. , Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979) (first announcing 



this verbal formulation);  Casey  K.  v. State, Dep' t of Health & Soc. Servs., Off ice of 

Children 's Servs., 31 1 P.3d 637, 643 (Alaska 20 13). 



        13     E.g. , Alaska Nat 'l Ins. Co. v. Nw. Cedar Structures, Inc., 153 P.3d 336, 339 



(Alaska 2007) (internal citations and quotation marks omitted). 



        14     5A WILLIAM MEADE FLETCHER ,  FLETCHER CYCLOPEDIA OF THE LAW OF 



CORPORATION S  2213, at 24 1 (2012). 



                                               - 16-                                           6939 


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

affairs,"15 but the shareholder also must have a tool to ensure that the management and 



board of directors are "discharging their duties" in "good faith" rather than "deliberately 



keep[ing]  the  shareholders  in  ignorance  or  under  misapprehension  as  to  the  true 

condition  of  affairs."16    Thus,  the  shareholder  inspection  right  regulates  the  agency 



relationship  between  corporate  shareholders  and  those  whose  job  it  is  to  represent 



shareholders' interests at the helm of the corporation. 



               All   corporations   suffer   from   inherent   principal-agent   tensions,   and 



shareholders need adequate tools to obtain information in order to protect their interests 

against predation by wayward agents.17  On the other side of the balance, shareholders 



have a countervailing interest in permitting the efficient operation of the corporation free 



from  improper  meddling  and  forced  disclosure  of  information  that  might  harm  the 

shareholders.18  Corporate law governing shareholder access to information balances 



both interests.19 



        15     Id. 



        16     Id. at 243-44. 



        17     See, e.g. , Frank H . Easterbrook & Daniel R. Fischel,  Corpor ate Control 



Transactions, 91 YALE L.J. 698, 70 1 (1982). 



        18     See generally id. at 701-02 (noting the costs of shareholder monitoring of 



corporate governance and hypothesizing an optimal balance). 



        19     See 5A FLETCHER , sup ra note 14,  2214, at 246-49.  The legislative history 



accompanying Alaska's statutory inspection right states that the statute aims to balance 

"the  tension  .  .  .  between  the  right  of  a  shareholder  to  gain  access  to  proof  of 

mismanagement or other wrongdoing and the possibility that a shareholder could use this 

right to vex or harass incumbent management."  Legislative Counsel, Sectional Analysis 

of Proposed Code Revision Bills Revising the Corporations Code, 15th Leg., 1st Sess. 

at 87 (May 7, 1987), available in 1987 House-Senate Joint Journal Supp. 



                                                - 17-                                           6939 


----------------------- Page 18-----------------------

                Several mechanisms have been developed for providing shareholders access 

to corporate information, including unilateral reporting requirements20 and the common 



law and statutory rights of shareholders to  inspect certain corporate documents.  Today, 



shareholders in every state have the right to inspect certain corporate documents, whether 

under statute, the common law , or both.21   



               This appeal raises three important groups of issues of first impression in 

Alaska regarding the scope of the statutory22 inspection right created by A S 10.06.430: 



( 1) What is the scope of the statutory right for shareholders to inspect "books and records 



        20     See, e.g. , A S 10.06.433 (mandating that corporations issue an annual report 



containing certain financial information); 3 AAC 08.345(b)(2)(A) (mandating disclosure 

of five most highly compensated corporate officers in Native corporations' annual proxy 

solicitations). 



        21      5A FLETCHER , sup ra note 14,  2213, at 240. 



        22     Because w e reverse and remand on these statutory grounds, we need not 



address  the  existence  or  nature  of  a  common-law  right  of  shareholder  inspection  in 

Alaska.   



               We note that long before statutory inspection rights, "the courts of king 's 

bench and chancery from an early day" recognized a common-law right "to inspect the 

books  and  papers  of  the  corporation,  for  a  proper  purpose  and  under  reasonable 

circumstances."  In re Steinway, 53 N .E. 1103, 1 105 (N .Y. 1899); see also id. at 1105-06 

(collecting  English  common-law  cases).    That  traditional  common-law  right  was 

recognized by virtually all American jurisdictions to have addressed the issue.  Guthrie 

v. Harkness, 199 U .S. 148,  153  (1905) ("There can be no question that the decisive 

weight of American authority recognizes the common-law right of the shareholder, for 

proper purposes  and under reasonable regulations as to place and time, to inspect the 

books of the corporation of which he is a member.").  Whether A S 10.06.430 affirmed 

and  declared  or  partially  or  fully  replaced  or  abrogated  the  common-law  right  of 

inspection  is  a  question  left  for  a  future  case.    See  generally  5A  FLETCHER ,  sup ra 

note  14,    2214,  at  250-51  (discussing  the  treatment  of  this  question  in  other 

j urisdictions); Browning Jeffries, Shareholder A ccess to Corporate Books and Records: 

The Abrogation Debate, 59 DRAKE L. REV . 1087 (20 11) (same).  



                                               - 18-                                           6939 


----------------------- Page 19-----------------------

of account"?  Does that right extend beyond annual reports and proxy statements already 



submitted to the shareholders each year, and does it include electronically maintained 



books and records of account?  And does the right extend to individual compensation 



information for corporate executives and board members? (2) What is the scope of the 



statutory right for shareholders to inspect "minutes"?  Does that right extend beyond 



concise descriptions of the topics discussed and actions taken and include presentations 



and reports made during  the  meeting? (3) Under what circumstances, if any, may a 



corporation condition release of documents on receipt of a confidentiality agreement? 



What  scope  and  confidentiality  protections  are  reasonable  in  such  a  confidentiality 



agreement?   



               The  superior court erred in its treatment of the first and third issues but 



correctly decided the second question. 



       A.      The Superior Court Interpreted The Scope Of "Books And Records Of 

               Account" In AS 10.06.430 Too Narrowly. 



               Alaska Statute 10.06.430(a) requires a corporation to "keep correct and 



complete books and records of account . . . in written form or in any other form capable 



of  being    converted    into  written   form    within   a  reasonable    time."     Alaska 



Statute  10.06.430(b)  directs  a  corporation  to  make  those  "books  and  records  of 



account . . . reasonably available for inspection and copying at the registered office or 



principal place of business  .  .  . by a shareholder of the corporation . . . at a reasonable 



time  and  for  a  proper  purpose,"  upon  "written  demand  stating  with  reasonable 



particularity the purpose of the inspection."  Alaska Statute 10.06.430(b) further clarifies 



that " [o]nly books and records of account [and] minutes . . . directly connected to the 



stated purpose of the inspection may be inspected or copied." 



               The superior court ruled that the statutory requirement to disclose books 



and records of account "does not require a corporation to disclose to a shareholder on 



                                             - 19-                                         6939 


----------------------- Page 20-----------------------

request  all  of  its  financial  statements  [relevant  to  the  inspection  request],  including 



monthly  financial  statements,  budget  documents,  records  of  disbursement,  check 



registers, payments to executives  and employees, and electronic records of account." 



(Emphasis in original.)  Rather, the superior court reasoned that "providing the annual 



certified financial statements satisfied the statutory obligation . . . , particularly where a 



corporation establishes that it has no traditional accounting ledger and its electronic 



records are extraordinarily voluminous." 



               On appeal, Pederson argues that the Corporation violated the statute by 



failing  to  disclose  financial  records  encompassed  within  the  statutory  definition  of 



"books and records of account" and instead substituting less-detailed annual financial 



reports.    Pederson  defines  "books  and  records  of  account"  as  encompassing  "all 



corporate financial books and records," including electronically maintained financial 



records, and he argues that it was error for the superior court to substitute "annual reports 



in lieu of an actual inspection of [the Corporation 's] books and records of account." 



               The Corporation responds that "books and records of account" should be 



defined "narrowly"  because of the Corporation 's "interest in being protected against 



harassment,"   its   interest   in   guarding   against   the   dissemination   of   confidential 



information, and the need to distinguish the shareholder inspection right from the broader 

inspection right of directors.23  The Corporation j ustifies the superior court's ruling that 



annual reports and proxy solicitation statements satisfied the production requirement for 



"books and records of account" because the Corporation "maintains no literal 'books and 



records of account '; all of its financial records are maintained electronically ."  Because 



the  inspection  statute  "cannot  possibly  intend  to  require  corporations  to  provide 



        23     A S 10.06.450(d) ("A director has the absolute right at a reasonable time to 



inspect and copy all books, records, and documents of every kind . . . ."). 



                                               -20-                                            6939 


----------------------- Page 21-----------------------

shareholders access to a computer so that they may browse the corporation 's electronic 



financial  records,"  the  Corporation  asks  this  court  to  conclude  that  the  Corporation 



"reasonably   used   [annual   and   proxy   solicitation   statements]   that   were   readily 

available."24 



               Pederson replies that the Corporation 's primary argument for affirmance 



- that electronic accounting records are voluminous and do not fall within the meaning 



of "books and records of account" - is "a ludicrous proposition" because " [v]irtually 



every  corporation  maintains  records  electronically,"  and  such  a  rule  would  "leave 



shareholders  with  virtually  no  right  of  inspection  of  financial  information  of  the 



Corporation that they own."  He also notes that "the inspection statute contemplates that 



records  will  be  kept  in  other  than  written  form  and  requires  that  they  be  easily 



        24     The Corporation also argues that because Pederson argued in the superior 



court that he was entitled to "all relevant documents," regardless of the meaning of 

"books and records of account," Pederson should be held to have waived for appeal any 

claim  to  defining  a  smaller  subset  of  documents  to  which  he  is  entitled  within  the 

statutory category .  The Corporation 's forfeiture argument is unavailing for two reasons. 

First,  Pederson  argued  at  trial  for  a  narrower  definition  of  "books  and  records  of 

account" that would reveal all financial documents without entitling Pederson to all of 

the Corporation's documents.  Second, even if Pederson had advanced only the argument 

that  he  was  entitled  to  all  relevant  documents  of  the  Corporation  regardless  of  the 

independent limitation of the category of "books and records of account,"  he would not 

have thereby forfeited his narrower claim for appeal because the narrower argument is 

fairly contained within the broader argument.   See An chorage Chrysler Ctr., Inc. v. 

D aimlerChry sler Motors Corp. , 22 1 P.3d 977, 985 (Alaska 2009) ("We have adopted 

a liberal approach towards determining whether an issue or theory of a case was raised 

in a lower court proceeding . . . and will consider new arguments on appeal if they are 

closely related to the trial court arguments and 'could have been gleaned from [the] 

pleadings .'  Key words or phrases do not need to appear in the pleadings in order for us 

to find that an argument was raised prior to the appeal." (alteration in original) (citations 

omitted)). 



                                              -21-                                           6939 


----------------------- Page 22-----------------------

convertible into written form for inspection."  Pederson reasons that if the inspection 



statute allows management "to simply 're-give ' annual reports," then it is a nullity. 



               1.      "Books and records of account" includes electronic records. 



               We rej ect the Corporation's argument that it "maintains no literal 'books 



and  records  of  account'  "  within  the  meaning  of  AS  10.06.430  because  "all  of  its 



financial records are maintained electronically ."  Alaska Statute 10.06.430(a) specifically 



contemplates electronic storage of inspectable records, requiring a corporation to "keep 



correct and complete books and records of account . . . in written form or in any other 



form  capable  of  being  converted  into  written  form  within  a  reasonable  time."    It  is 



manifest that electronic records are included within the statutory definition of "books and 



records of account."  



               The Corporation argues that we should avoid this holding for fear that "the 



statute [would] require corporations to provide shareholders access to a computer so that 



they may browse the corporation 's electronic financial records."  But Pederson never 



asked to use a computer to browse the Corporation's accounting software.  Rather, he 



asked for copies of documents containing specific information, copies that could be (and, 



under the statute, must be capable of being) printed in writing. 



               The  Corporation  also  argues  that  the  scope  of  "books  and  records  of 



account" should be narrowly construed to protect corporate interests in confidentiality. 



But we decline to override clear statutory text, which includes electronic documents in 



"books and records of account," on such policy grounds, especially when other avenues 

exist for protecting legitimate confidentiality interests.25  Finally, the Corporation argues 



that electronic financial records are somehow less accessible than printed ledgers and that 



this alleged fact is legally relevant to the issue of what is included in "books and records 



        25     See inf ra section IV .C. 



                                               -22-                                           6939 


----------------------- Page 23-----------------------

of account."  But the Corporation stipulated at trial to the fact that its electronic system 



of financial recordkeeping "obviously [contains] . . . financial records, and it is possible 



for someone to query the system" with little effort to determine, for example, "how much 



did we spend on paper clips in June." And even if electronic accounting records were 



somehow less accessible than traditional printed ledgers, the inaccessibility of documents 



is not relevant to the legal determination of what documents fall  within "books and 



records of account," because, as a leading treatise notes, "the corporation cannot fail to 

keep books and thus avoid the statutory penalty."26   



               Alaska Statute 10.06.430(a) directs that corporations "shall keep correct and 



complete books and records of account."  The Corporation does so, electronically .  We 



conclude that the electronic nature of the Corporation 's books has no bearing on the legal 



issue in this case: the scope of "books and records of account" under A S 10.06.430.  If 



the Corporation is correct that Pederson was entitled to only annual and proxy reports 



along with the minutes, then it must find support on alternative grounds. 



               2.      "Books  and records  of  account" goes  beyond the information 

                       contained in annual reports and proxy solicitation statements. 



               The phrase "books and records of account" used in A S 10.06.430 must 



extend beyond mere annual reports in order to give meaning to the statutory language 



and  avoid  statutory  surplusage.    A  separate  provision  in  the  corporations  code, 



A S 10.06.433(a), already requires that corporations send shareholders an "annual report" 



that  "must  contain  a  balance  sheet  as  of  the  end  of  the  fiscal  year  and  an  income 



        26     5A FLETCHER , sup ra note 14,  2257, at 459; see also id.  2239, at 380-81 



("Where  a  statute  requires  a  corporation  to  keep  books  showing  certain  matters  for 

inspection of shareholders, a shareholder cannot be deprived of the right to inspect them 

because they are kept in a particular way or because they contain, besides the information 

to which the shareholder is entitled, other information that the shareholder has no right 

to demand."). 



                                               -23-                                           6939 


----------------------- Page 24-----------------------

statement and statement of changes in financial position for the fiscal year, accompanied 



by a report on the fiscal year by independent accountants or, if there is no such report, 



the  certificate  of  an  authorized  officer  of  the  corporation  that  the  statements  were 



prepared without audit from the books and records of the  corporation."  To interpret 



A S 10.06.430(b) to require no more than what is already required by AS 10.06.433(a) 



would be to violate the presumption " 'that the legislature intended every word, sentence, 



or provision of a statute to have some purpose, force, and effect, and that no words or 

provisions are superfluous .' "27  It is especially clear that the legislature intended for the 



shareholder inspection requirement of A S 10.06.430(b) to have effect beyond the annual- 



reporting requirement of A S 10.06.433(a) because both requirements were part of the 

same statutory section in the original 1957 statute.28   



               If the provision of annual reports could satisfy a demand to inspect "books 



and record s of account," several statutory limitations on the scope of a shareholder's 



inspection demand would make little sense, including the statutory requirements that the 



shareholder 's  request  state  a  "proper  purpose"  and  that  only  documents  "directly 

connected to [that] purpose" will be inspectable.29  Those limitations make sense only if 



the scope of inspectable documents within "books and records of account" goes beyond 



        27     Kodiak Island Borough v. Exxon Corp. , 991 P.2d 757, 761 (Alaska 1999) 



(quoting Ry dwell v. Anchorag e Sch. Dist., 864 P .2d 526, 530-31 (Alaska 1993)). 



        28     See Ch. 126,  46, SLA 1957 (codified at former A S 10.06.240) (including 



the original shareholder-inspection provision as well as the following provision:  "Upon 

the written request of any shareholder of a corporation, the corporation shall mail to such 

shareholder its most recent financial statements showing in reasonable detail its assets 

and liabilities and the results of its operations."). 



        29     A S 10.06.430(b). 



                                               -24-                                           6939 


----------------------- Page 25-----------------------

mere annual reports and proxy statements, which are released to all shareholders each 



year. 



               For these reasons, at least two other jurisdictions have recognized that the 



shareholder right to inspect "books and records of account" extends well beyond the 

distinct  statutory  right  to  receive  annual  reports.30    Similarly,  we  conclude  that 



Pederson 's statutory right of inspection of "books and records of account" extended 



beyond the annual reports and proxy statements provided by the Corporation in this case. 



And Pederson 's statutory right of inspection was not satisfied by offering annual reports 



and  proxy  statements  as  sub stitute  documents  when  his  right  reached  beyond  those 

documents.31  "Where the right of inspection exists, refusal of it cannot be justified by 



proffering the shareholders a substitute . . . ."32  



               The superior court, in holding that the annual reports and proxy statements 



sufficed under A S 10.06.430(b), relied entirely on the fact that the Corporation "has no 



traditional accounting ledger and its electronic records are extraordinarily voluminous," 



concluding that it therefore should be excused from actually producing its accounting 



records.  But as we conclude above, the electronic nature of the documents is entirely 



irrelevant  to  whether  documents  are  inspectable  "books  and  records  of  account." 



        30     See Jara v. Suprem a Meats, Inc., 18 Cal. Rptr.  3d  187, 206 (Cal. App. 



2004); M organ v. McLeod, 253 S.E.2d 339, 342-43 (N .C. App . 1979). 



        31     See Mo ore v. Rock  Creek  Oil Corp. , 59 S.W .2d 815, 819 (Tex. Comm 'n 



App . 1933) ("Defendants in error are not entitled to defeat plaintiffs in error's statutory 

right of inspection by offering them the substitute of financial statements issued by the 

company  or  an  auditor's  report  made  at  its  instance.  .  .  .  [Shareholders]  cannot  be 

required to accept a substitute in the way of financial statements and auditor 's reports 

which may be believed by the corporation 's officers to be j ust as good as the statutory 

right of examination."). 



        32      5A FLETCHER , sup ra note 14,  2249, at 412. 



                                               -25-                                           6939 


----------------------- Page 26-----------------------

Accordingly, we conclude that provision of annual reports and proxy statements did not 



provide an adequate substitute to furnishing the actual books and records of account 



inspectable pursuant to Pederson 's demand letters. 



               3.      "Books and records  of  account" includes detailed accounting 

                       documents,       including     individual     executive     compensation 

                       information. 



               The statutory phrase "books and records of account" encompasses monthly 



financial  statements,  records  of  receipts,  disbursements  and  payments,  accounting 



ledgers,  and  other  financial  accounting  documents,  including  records  of  individual 



executive compensation and transfers of corporate assets or interests to executives.  Such 



information is crucial to the shareholders' ability to monitor the performance of their 

corporate agents and protect their interests as shareholders.33   



               At least five of our sister states have interpreted their inspection rights to 

run to individual executive compensation information.34  The Corporation identifies no 



        33     See sup ra text accompanying notes 14- 19 (discussing the policy interests 



animating the right of shareholder inspection). 



        34     See Schluter v. Merritt Chap man & Scott, No. 4828, 4 Del. J . Corp. L. 234 



(Del.  Ch.  Nov.  20,  1975)  (holding  that  shareholder  request  for  books  and  records 

"dealing with . . . [t]he salary or other compensation being paid the corporation 's officers 

and directors," id. at 235, was valid and ordering production of the information, id. at 

236); Weige l v. O 'Connor, 373 N.E.2d 42 1 (Ill. App . 1978) (holding that shareholder's 

request to inspect records that would allow the shareholder "to determine the amount and 

kind  of  compensation  paid  to  corporate  officers  and  directors"  in  order  "to  allow 

informed voting by minority shareholders at future meetings," id. at 424, was valid and 

that  after  a  proper  purpose  was  shown  the  trial  court  erred  by  limiting  the  right  of 

inspection to exclude such information, id. at 428); Winger v. Richards- Wilcox Mf g. Co., 

178  N.E.2d  659  (Ill.  App .  1961)  (holding  that  a  shareholder's  request  to  inspect 

"officers' and directors' salaries, bonuses, retirement plans and expense accounts" to 

determine their legality and reasonableness, id. at 663, was "proper," id. at 665, granting 

summary  judgment  in  the  shareholder 's  favor  and  declaring  that  the  shareholder  is 

                                                                                    (continued...) 



                                                -26-                                            6939 


----------------------- Page 27-----------------------

cases from other ju risdictions holding that individual compensation information is not 



inspectable as "books and records of account."  The Corporation attempts to undermine 



the persuasive value of the cases holding compensation information to be inspectable by 



complaining that " [f]ew [of these cases] are modern" and observing that some "date from 



the 1930s."  But no modern cases seem to cut in the other direction.  And these seminal 



cases interpret  statutes in other states that closely resemble Alaska's  current statute. 



Indeed, we find it particularly persuasive that the Illinois courts have held that individual 

executive  compensation  information  is  inspectable  pursuant  to  its  statute35  because 



Illinois's inspection statute and  the  case law interpreting it formed the basis for the 

Model Business Corporations Act that Alaska adopted in 1957.36  



        34(...continued) 



"entitled  to  the  writ  of  mandamus"  to  view  the  requested  information,  id.  at  666); 

Cooke v. Outland,  144 S.E.2d 835, 837 (N .C. 1965) (assuming that "books and records 

of account" as used in the statute, or the common-law right of inspection, could include 

deposit  accounts  and  loans  between  bank  and  its  officers,  managers,  and  directors, 

notwithstanding confidentiality concerns); M eyer v. Ford Indus., Inc., 53 8 P.2d 353 (Or. 

1975)  (holding  that  shareholder's  request  for  documents  detailing  corporation 's 

contributions to retirement plan, purchase agreements for shares in other corporations, 

and specific compensation information for a former employee, id. at 354-55, was valid 

and that the shareholder "had the right . . . to  inspect all of such items,"  id. at 35 8); 

D onna  v.  A bbotts  Dairies,  Inc.,  161  A .2d  13  (Pa.  1960)  (holding  that  corporation 

complied with  its  obligations under the statute,  id. at 17, when it offered books and 

records of account "insofar as they show such matters as . . . [c]ompensation to officers 

and  counsel"  and  " [d]isbursements  by  the  company  in  connection  with  any  matters 

mentioned in [the shareholder's] letter," id. at 16). 



        35     See  Weigel , 373 N .E.2d at 424; Winger, 178 N .E.2d at 663. 



        36     The Model Bu siness Corporations Act, first drafted in 1946, was based 



largely on a preexisting statute in Illinois with which the Model Act's drafters were 

intimately  familiar  as  practitioners.    M eyer,  53 8  P.2d  at  355-56  &  n.7.    Oregon 's 

Supreme Court has held that "upon the adoption of that Model Act the Oregon legislature 

                                                                                   (continued...) 



                                               -27-                                           6939 


----------------------- Page 28-----------------------

               Accordingly, we reverse the superior court 's contrary conclusions regarding 



the scope of "books and records of account" and  remand  for further proceedings in 



accordance  with  this  opinion .    We  note  that  our  holding  does  not  depend  on  the 



Corporation 's  status  as  an  Alaska  N ative  corporation  or  Pederson 's  status  as  a 



shareholder of an Alaska N ative corporation.  Pederson may be correct that regulations 



promulgated      by    the   State   and    applying     to   Alaska     Native    corporations, 

3 AAC 08.345(b)(2)(A),37 provide him with an additional proper purpose for inspection 



not available in the same way to shareholders of other corporations.  But the Corporation 



does not dispute Pederson's proper purpose on appeal.  The scope of "books and records 



of account" relies on nothing unique to the factual circumstances of this case. 



        B.     The Superior Court Correctly Interpreted The Meaning Of "Minutes" 

               In AS 10.06.430. 



               Alaska Statute 10.06.430(a) also requires a corporation to keep "correct and 



complete . . . minutes of proceedings of its shareholders, board, and committees of the 



board."  Alaska Statute 10.06.430(b) conveys to shareholders the right to inspect those 



        36(...continued) 



intended that this provision of that Act  should be interpreted and applied in the same 

manner as intended by the drafters of that Model Act."  Id. at 35 8.  Alaska's legislature 

created the statutory inspection right in 1957, see ch. 126,  46, SLA 1957 (codified at 

former  AS  10.05.240),  and  based  it  on  the  Model  Business  Corporations  Act,  see 

Legislative Counsel, Sectional Analysis of Proposed Code Revision Bills Revising the 

Corporations Code, 15th Leg., 1st Sess. at 89 (May 7, 1987), available in 19 87 House- 

Senate Joint Journal Supp .  



        37     "The  solicitation of proxies on behalf of the board [of an Alaska Native 



corporation]  must  be  preceded  or  accompanied  by  a  dated,  written  proxy  statement 

including . . . a statement of all current remuneration distributed or accrued and of all 

future remuneration contributed during the corporation 's last fiscal year on behalf of . . . 

each  of  the  five  most  highly  compensated  directors  or  officers  for  the  director's  or 

officer's services in all capacities to the corporation and its sub sidiaries, naming each 

such person . . . ." 



                                               -28-                                           6939 


----------------------- Page 29-----------------------

minutes under the same conditions as it grants the right to inspect "books and records of 



account."   



               The  superior  court  implicitly  concluded  that  the  Corporation 's  duty  to 



disclose "minutes" was satisfied in this case when the Corporation provided Pederson 



with the post hoc descriptions of what was discussed and decided in board meetings but 



withheld presentations and reports made to the board.  On appeal in this court, Pederson 



and the Corporation primarily focus on the meaning of "books and records of account," 



addressing the meaning of "minutes" only briefly .  Pederson argues that "minutes" must 



include "all of the documents contained in the minute books of the Corporation," which 



must include "any contracts or agreements approved, or documents or reports used to 



reach  a  decision."    Specifically,  Pederson  claims  that  the  actual  terms  of  a  deal 



transferring "millions of dollars worth of stock to two executives" must be part of the 



minutes in this case and that the Corporation cannot provide merely "a brief reference 



to the Board discussing [the deal]."  The Corporation responds that the term "minutes" 



"is commonly understood to mean 'the written record of an official proceeding ' " and 



that minutes "generally do not encompass documents distributed to committee members 



before or at the meeting or copies of presentations made at meetings." 



               We find no support for Pederson's expansive definition of "minutes" in the 



relevant authorities.  B lack's Law Dictionary defines "minutes" and "minutes book" as 

including notes of the proceedings of a meeting and actions taken therein.38  A prominent 



treatise states that  



        38     BLACK 'S LAW DICTIONARY 10 87 (9th ed. 2009) (defining "[m]inutes" as 



"[m]emoranda or notes of a transaction, proceeding, or meeting"); id. (defining " [m]inute 

book" as "[a] record of the subj ects discussed and actions taken at a corporate directors' 

or stockholders' meeting"). 



                                               -29-                                            6939 


----------------------- Page 30-----------------------

                [t]he   minutes   should   clearly   and   certainly   record   the 

                transactions and proceedings as they actually occurred and 

                should definitely and positively show what action was taken 

                by  the  corporation  in  the  matters  that  they  purport  to 

                memorialize.  As a general rule, they should show the date 

                when the  meetings were held and those present.  It is not 

                necessary to show the vote by which a matter was adopted; 

                a  recital  that  the  matter  was  adopted  is  sufficient.    It  is 

                ordinarily not essential for contracts entered into pursuant to 

                a resolution duly adopted and recorded as such in the minutes 

                to  also  be  copied  into  the  minutes.    A  secretary  is  not 

                obligated to include everything that is said in the minutes as 

                long as the secretary accurately transcribes what has taken 

                place.[39] 



                We therefore hold that the statutory category "minutes" does not ordinarily 



encompass presentations or reports made to the board but rather merely requires a record 



of the subje cts discussed and actions taken at the meeting, which must be faithfully 

recorded.40    Accordingly,  we  affirm  the  superior  court's  implicit  definition  of  the 



meaning of "minutes" in A S 10.06.430. 



        39      5A FLETCHER , sup ra note 14,  2 190, at 163-64 (citations omitted). 



        40      We do not mean to foreclose the po ssibility that a party may also be entitled 



to  inspect  a  specific  attachment  that  has  been  incorporated  into  or  attached  to  the 

minutes.  W e also note that contrary to the testimony  of  the Corporation's assistant 

corporate counsel at trial, the content of "minutes" is not at the sole discretion of the 

corporation based on what it chooses to type up after a meeting.  A corporation could 

not, for example, fail to record an action of the board or a subject discussed at a board 

meeting  simply  because  it  decided  in  its  discretion  not  to  include  it  in  the  minutes 

following the meeting. 



                                                 -30-                                             6939 


----------------------- Page 31-----------------------

        C.     A Corporation May Not Demand A Confidentiality Agreement That 

               Is Unreasonably Broad In Defining The Scope Of What Is Confidential 

               Or Contains Unreasonably Restrictive Confidentiality Provisions. 



               Some books and records of account and other categories of inspectable 



documents directly relevant to a shareholder 's demand stating a proper purpose could, 



if released to the general public, harm the interests of the shareholders.  Several tools 



exist  in  the  law  to protect  sensitive  information within  the  bounds  of  the inspection 



statute.  But shareholders who have established a right to inspect corporate information 



ordinarily may not be denied that right merely because "the information sought is of a 

confidential nature."41  And here, the Corporation demanded that Pederson accede to an 



unreasonable confidentiality agreement.  It therefore constructively denied his inspection 



right to any information that he would have otherwise been entitled to receive under the 



statute. 



               Two tools  for protecting  against the  detrimental  distribution of sensitive 



information  are  particularly  well  established  in  the  law.    First,  a  corporation  can 



challenge the inspectability of the information in the first place, such as by challenging 



the  shareholder 's  proper  purpose,  challenging  the  assertion  that  the  information  is 



directly connected to the proper purpose, or challenging the inclusion of the information 



within  the  category  of  inspectable  books  or  records  of  account.    In  particular,  the 



        41     Nationwide Corp.  v. Nw. Nat 'l Lif e Ins. Co., 87 N .W .2d 671, 679 (Minn. 



1958); see also Fears v. Cattlemen's Inv. Co., 4 83 P .2d 724, 730 (Okla. 197 1) ("We 

agree with the holding of the Supreme Court of Minnesota, in [Nationwide,] . . . that the 

fact  that  the  information  sought  by  a  stockholder  under  the  statute  involved  is  of  a 

confidential nature is not enough, in itself, to deny the statutory right of examination of 

records and making extracts or abstracts therefrom."). 



                                               -31-                                            6939 


----------------------- Page 32-----------------------

statutory  requirement  that  a  shareholder  have  a  "proper  purpose"  for  inspecting  the 

requested documents42 functions as a confidentiality protection .   



                Confidential information is subje ct to inspection only insofar as it directly 



relates to the shareholder's proper purpose as a shareholder.  A respected treatise notes 



that  shareholders  "are  not  entitled  to  possession  of  trade  secrets  and  confidential 



communications unless that information affects the financial status or value of their stock 

in  some  way."43    Thus,  "analyses  or  tentative  studies  in  the  nature  of  confidential 



interoffice  communications"  are  generally  not  within  the  scope  of  a  shareholder's 



inspection  right  because  a  shareholder  would  generally  have  no  proper  purpose  in 

inspecting  them  related  to  the  shareholder 's  interests  as  a  shareholder .44    This 



proper-purpose  protection  for  confidential  information  helps  to  ensure  that  "the 



information will not be used to the detriment of the corporation or to give a competitor 

an unfair advantage."45  For example, we find it hard to imagine the proper purpose that 



a shareholder would have, as a shareholder, to inspect the secret formula for Coca-Cola. 

Where  a  corporation  has  good  cause  to  doubt  a  shareholder 's  proper  purpose,46  the 



        42      A S 10.06.430(b). 



        43      5A FLETCHER , sup ra note 14,  2239. 10, at 381. 



        44     Id. at 382. 



        45     Id. at 382-83; see also, e.g. , K eeneland Ass 'n v. Pessin, 484 S.W .2d 849, 



852 (Ky. App. 1972) ("We do not believe that an intent to destroy a corporation, to bring 

vexatious suits, or to take unfair advantage for competition reasons could be included in 

the phrase 'proper corporate purpose.' "). 



        46      "The  possibility  of  the  abuse  of  a  legal  right  affords  no  ground  for  its 



denial."  Guthrie v. Harkness,  199 U .S.  148,  156 ( 1905).  Accordingly, the corporation 

must  show  something  more  than  the  mere  possibility  of  abuse  in  order  to  deny  the 

inspection request on those grounds. 



                                                -32-                                             6939 


----------------------- Page 33-----------------------

corporation may refuse to honor the shareholder 's inspection request on that ground and 



may raise the lack of a proper purpose as a defense to a shareholder 's claim under the 



statute.  Or the corporation may seek declaratory relief as to the shareholder's improper 



purpose and lack of entitlement to inspection. 



               A   second   well-established   tool   for   protecting   against   the   adverse 



dissemination of sensitive information is the ability of a court to condition the remedy 



of compelled disclosure of documents on reasonable confidentiality provisions.  In the 



course  of resolving a lawsuit about what information is subje ct to inspection, a court, 



exercising  its  discretion  in  granting  the  remedy  of  mandamus  and  compelling  the 



production of records, may include reasonable protective orders safeguarding the use and 



dissemination  of  sensitive  information  to  ensure  that  the  information  to  which  a 



shareholder has a right is used only for the shareholder's proper purpose as a shareholder 

and does not do damage to the company .47  For example, a court considering whether to 



issue a writ of mandamus might order that a neutral third party conduct the inspection 



        47     5A FLETCHER , sup ra note 14,  2255, at 449 ("In awarding the writ, it is 



proper to impose such restrictions upon the exercise of the right as may seem necessary 

for the protection of the interests of the parties, and to safeguard the books  and their 

contents."); id.  2220, at 286 ("If the court is concerned that the shareholder may abuse 

the  inspection  rights,  it  can  place  any  reasonable  restrictions  or  limitations  on  the 

exercise  of the rights that it deems proper ."); MODEL BU SIN ESS  CORPORATION S ACT 

 16.04(d) ("If the court orders inspection and copying of the records demanded, it may 

impose reasonable restrictions on the use or distribution of the records by the demanding 

shareholder ."); Pershing Square, L.P. v. Ceridian Corp. , 923 A.2d 8 10, 820 (Del. Ch. 

2007)  ("In  determining  stockholder  inspection  rights  .  .  .  ,  this  Court  may  'in  its 

discretion, prescribe any limitations or conditions' that it deems necessary to 'protect the 

corporation 's legitimate interests and prevent po ssible abuse.'  One such condition has 

become common.  ' [I]t is customary for any final order . . . to be conditioned upon a 

[reasonable] confidentiality [agreement].' " (alterations in original) (internal citations and 

footnotes omitted)). 



                                               -33-                                           6939 


----------------------- Page 34-----------------------

of sensitive information,48 include in the order terms "necessary to prevent a disclosure 



of the corporation's trade or business secrets to its competitors,"49 or provide that the 



parties "shall enter into such reasonable confidentiality agreement as [the corporation] 

may request."50   In  some  states, such as Delaware, there is even a presumption that a 



court will as a matter of course condition its order mandating production of confidential 

information on reasonable confidentiality protections.51  But some courts, including the 



Delaware  Court  of  Chancery ,  recognize  that  shareholders  must  be  able  to  publicly 



disclose confidential information in at least some circumstances in order to effectuate 



their  proper  purposes,  such  as  suing  the  corporation  or  its  directors  or  officers  for 

mismanagement, violation of disclosure rules, or for breach of a fiduciary duty.52  



               This case does not involve either of these two confidentiality protections.53 



Rather, it presents the questions when and whether a corporation may make use of a third 



tool:  unilaterally demanding that the shareholder accede to a confidentiality agreement 



        48     See, e.g. , N ews-Journal Corp. v. State ex rel. Gore, 187 So. 27 1, 272 (Fla. 



1939); Thornton ex rel. Laneco Constr. Sys.,  Inc. v. Lanehart, 723 So. 2d 1113, 1117 

(La. App . 1998). 



        49     E.g. , D rake v. Newton Amusement Corp. , 9 A .2d 636, 63 8 (N.J. 1939); see 



also Nationwide Corp.  v. Nw. Nat 'l Lif e Ins. Co.,  87 N .W .2d  67 1,  682 (Minn . 1958); 

Dyer v. Indium Corp . of  Am., 770 N.Y .S.2d 184, 185 (N.Y . App . Div. 2003). 



        50     E.g. , N o-Burn, Inc. v. Murati, No. 24577, 2009 WL 5 174077, at *2 (Ohio 



App . Dec. 3 1, 2009); see also Panitz v. F. Perlman & Co., Inc., 173 S.W .3d 421, 431 

(Tenn. App. 2004) (reviewing the reasonableness of a confidentiality agreement the court 

ordered the parties to agree to). 



        51     D isney  v. Walt Disney  Co., 857 A.2d 444, 447-48 (Del. Ch . 2004). 



        52     Id. at 448-49. 



        53     The Corporation stipulated to Pederson's proper purpose to inspect the 



documents and did not seek court-ordered confidentiality protections. 



                                               -34-                                            6939 


----------------------- Page 35-----------------------

before the corporation releases information.  The Corporation in this case demanded, as 



a  precondition  to  release  of  any  documents,  that  Pederson  accede  to  confidentiality 



agreements that would (1) cover all of the information to be released, and (2) either hold 



Pederson liable for improper disclosures made by other shareholders with whom he 



might  share the information or require Pederson to obtain confidentiality agreements 



with each shareholder with whom he intended to share the information.  The Corporation 



argues that it is entitled to require such a confidentiality agreement before producing 



otherwise-inspectable documents.  Pederson argues that the proper-purpose requirement 



and court-imposed remedial conditions are the only ways in which a corporation may 



protect sensitive information from inspection and that a corporation may not sua sponte 



demand a confidentiality agreement ex ante and wield refusal to accede as a shield to 



liability.  The superior court held that the Corporation "could request a confidentiality 



agreement  if  sensitive  materials  were  requested"  so  long  as  the  terms  thereof  were 



"reasonable" and that "the requested confidentiality agreement [was] reasonable." 



               It  may  be  appropriate  for  a  corporation  to  demand  a  confidentiality 



agreement  provided  that  it  (1)  reasonably  defines  the  scope  of  what  is  confidential 



information subject to the agreement and (2) contains confidentiality provisions that are 



not  unreasonably  restrictive  in  light  of  the  shareholder 's  proper  purpose  and  the 

corporation's legitimate confidentiality concerns .54  If the shareholder refuses to sign 



        54     N either Pederson nor the Corporation identifies any cases from our sister 



ju risdictions supporting their positions about the ability or inability of a corporation to 

unilaterally demand a reasonable confidentiality agreement.   Rather, the litigants cite 

inapposite cases regarding the irrelevant and uncontroversial proposition that a court may 

condition its remedial order on the imposition of reasonable confidentiality protections. 

The leading treatise, 5A FLETCHER , sup ra note  14, does not address this question .  We 

conclude  that  a  corporation  may  unilaterally  demand  a  reasonable  confidentiality 

agreement because there is no indication that A S 10.06.430 prohibits such a demand. 

                                                                                 (continued...) 



                                              -35-                                          6939 


----------------------- Page 36-----------------------

such a confidentiality agreement, the corporation may then refuse to release confidential 



information and either institute a declaratory  action seeking a court order containing 

reasonable  confidentiality  protections55  or  await  the  shareholder's  exercise  of  legal 



options.  And if, as in this case, the shareholder believes that the corporation 's proffered 



confidentiality agreement is not reasonable, the shareholder may refuse to sign and may 



bring an action against the corporation alleging that the imposition of an unreasonable 



confidentiality agreement was a constructive denial of an otherwise-proper shareholder 

inspection demand.56 



               We  conclude  that  the  Corporation's  proffered  agreements  were  not 



reasonable as to the scope of application and the breadth of confidentiality protections. 



               First, the proffered confidentiality agreements purported to subje ct " [a]ll" 



of the information to be released to the terms of the confidentiality agreement, without 



any attempt to differentiate between confidential and non-confidential information .  We 



        54(...continued) 



Indeed, the legislative history indicates that the legislature may have intended to give 

corporations just such a tool.  See Legislative Counsel, Sectional Analysis of Proposed 

Code Revision Bills Revising the Corporations Code, 15th Leg., 1st Sess. at 88 (May 7, 

1987), available in 1987 House-Senate Joint Journal Supp .  ("Prior to acceding to the 

[inspection] demand , the corporation has a right to demand and receive assurances that 

the information disclosed is not used for the purpose of inju ring corporate business . . . ." 

(citation omitted)). 



        55     See,  e.g. ,  Bank  of  H eflin  v.  Miles,  318  So.  2d  697,  699  (Ala.  1975) 



(involving  a  corporation  bringing  a  declaratory  action  to  clarify  the  scope  of  the 

inspection right in a given case and condition remedy on appropriate confidentiality 

protections). 



        56     A corporation's unreasonable delay in providing inspection is constructive 



denial of the inspection right.  5A FLETCHER , sup ra note 14,  2248, at 405 ("[R]efusal 

may . . . be implied from conduct or evasion.  Frustration or evasion of the demand may, 

in effect, be equivalent to the refusal of a demand made."). 



                                              -36-                                           6939 


----------------------- Page 37-----------------------

conclude that it is unreasonable to designate as confidential all information subject to an 



inspection  request  without  differentiating  between  confidential  and  non-confidential 



portions of the requested information or explaining why the corporation has good cause 



to  believe  that  all  of  the  information  sought  is  confidential.    There  are  many  cases 



interpreting  the  meaning  of  "confidential  information"  in  the  context  of  a  court 's 



remedial  orders  pursuant  to  a  shareholder's  inspection  demand.    In  those  cases, 



"confidential information" may include those documents that are "candid" in the sense 

of being prepared by the corporation with a reasonable expectation of confidentiality;57 



documents that reveal preliminary deliberations, assessments, or speculation rather than 

final action, decisions, or outcomes;58 and documents whose confidentiality has actually 



been maintained.59  "Confidential information" may exclude at least that information that 



the shareholder already knew , developed independently, acquired from a third party not 

under an obligation not to disclose the information, or acquired from the public domain.60 



Because the Corporation's proffered confidentiality agreements in this case made no 



attempt to differentiate confidential from non-confidential information on a reasonable 



basis, we hold that the scope of the agreements was unreasonably broad.  In particular, 



it would be difficult for the Corporation to argue that it has a confidentiality interest in 



        57     Pershing Square, L.P. v. Ceridian Corp. , 923 A .2d 810, 821 (Del. Ch. 



2007); D isney v.  Walt Disney  Co., 857 A .2d 444, 448 (Del. Ch . 2004) ("There is little 

doubt that those who participated in these communications had a reasonable expectation 

that they would remain private unless disclosed in the course of litigation or pursuant to 

some other legal requirement.").  



        58     See D isney, 857 A .2d at 448. 



        59     See Pershing, 923 A .2d at 822-23. 



        60     Panitz v. F. Perlman & Co., Inc.,  173 S.W .3d 421, 422, 431 (Tenn. App. 



2004). 



                                               -37-                                            6939 


----------------------- Page 38-----------------------

the compensation it pays to its five most highly compensated officials in light of the 

mandatory disclosure requirements of the pertinent state regulation.61 



               Second, the proffered confidentiality agreements contained unreasonably 



restrictive  confidentiality  protections.    The  first  proposed  agreement  would  have 



permitted  disclosure  "to  other  shareholders"  and  their  agents  but  would  have  made 



Pederson liable to the Corporation for unauthorized disclosure by those  third parties. 



The second proposed agreement would have permitted disclosure to proper third parties 



but would have required Pederson to "obtain . . . a confidentiality  agreement . . . that 



subjects [the person to whom Pederson seeks to disclose confidential information] to the 



same  restrictions  imposed  on  [Pederson]  in  this  Agreement."    The  superior  court 



concluded  that  it  was  reasonable  for  the  Corporation 's  final  draft  confidentiality 



agreement  to  require  Pederson  to  obtain  a  confidentiality  agreement  from  each 



shareholder before disseminating confidential information to that shareholder, reasoning 



that without such protections, the confidentiality agreement would be "a nullity."  But 



Pederson maintains that the confidentiality restrictions in both drafts were unreasonably 



restrictive of his proper purpose of organizing his fellow shareholders to alter corporate 



governance to restrict the transactions that he alleges have occurred.  



              We conclude that the confidentiality provisions in both the first and second 



proffered  confidentiality  agreements  were  unreasonably  restrictive,  at  least  as  they 



related to executive compensation  and stock interests, and they would have placed a 



great burden on Pederson 's exercise of his proper purpose of making use of disclosed 



information to organize his fellow shareholders to restrict those types of transactions. 



The marginal benefits of the confidentiality restrictions to the Corporation 's interests in 



maintaining confidentiality regarding executive compensation did not outweigh those 



       61      3 AAC 08.345(b)(2)(A). 



                                             -38-                                         6939 


----------------------- Page 39-----------------------

harms.62    Again,  this  is  particularly  true  given  the  state  regulation  that  requires  the 



corporation   to   disclose  the   compensation   of   its  five   most   highly   compensated 

executives.63 



                Accordingly, we reverse the superior court 's contrary findings of fact and 



conclusions of law regarding the reasonableness of the confidentiality agreements in this 



case and remand for further proceedings in accordance with this opinion. 



V.      CONCLUSION 



                For these reasons, we REVERSE the superior court 's judgment, VACATE 



the superior court's findings of fact and conclusions of law, and REMAND for further 



proceedings consistent with this opinion .  



        62      See Pershing, 923 A.2d at 82 1 (determining the reasonableness of a court 's 



remedial confidentiality order by balancing the marginal benefits of the confidentiality 

provision  to  the  shareholders'  interests  against  the  marginal  costs  in  terms  of  the 

shareholder's ability to make use of information to which she is entitled). 



        63      3 AAC 08.345(b)(2)(A). 



                                                 -39-                                              6939 

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