As Native regional corporations face increasing scrutiny for the lucrative benefits they receive under a federal contracting program, compensation at some of those corporations continue to rise -- but not as much as some critics may think.
Seven top executives, including five with a single regional corporation, earned more than $1 million in salaries, bonuses and other benefits in 2010 -- an amount that's surely jaw-dropping for many Alaskans, who pocketed $41,000 in per capita income last year.
But while the 12 active Native regional corporations have generally enjoyed blistering growth -- thanks largely to the U.S. Small Business Administration's 8(a) program that gives Native companies a bidding advantage -- top executive compensation at those corporations haven't necessarily risen as quickly, according to an analysis of corporate records filed with the state.
In some cases, overall compensation of the five highest-paid executives -- which Native corporations must report to the state -- slid between 2007 and 2010.
In other cases, though, they rose spectacularly.
Compensation at Koniag, which primarily represents Native shareholders from Kodiak Island, soared from $1 million in 2006 (2007 figures were not available at the state Division of Banking and Securities) to $4.3 million.
Bill Gormley led the way. Head of Washington Management Group and Fed Sources, former Koniag subsidiaries providing federal contracting services, Gormley took in $2.4 million last year. Koniag announced the sale of those subsidiaries earlier this year. Koniag's operating revenues moved from $128 million five years to $147 million last year.
Most of Gormley's compensation was a one-time payment, not his executive salary. The compensation was part of an contract that included an incentive for Gormley to stay with Washington Management Group and grow the value of the company. When Koniag eventually sold the company, its value had increased by $20 million.
Top compensation at the Arctic Slope Regional Corp. have also grown. At least five of its highest paid executives earned more than $1 million in 2010, but a university professor whose teaching includes business ethics said their compensation isn't "exorbitant."
Roberta Quintavell, the company's chief executive until last year, led the way with $2.5 million. Mark Nelson, chief executive at ASRC Energy Services Inc. until last year, earned $1.9 million. Kristin Mellinger, executive vice president and chief financial officer at ASRC, earned $1.4 million.
Total payouts for the top ASRC execs totaled $8.2 million last year. That compares to $5 million four years earlier. ASRC has been Alaska's highest earning corporation for 17 years.
Revenues have risen steadily, reaching $2.3 billion last year. That's up from $1.8 billion in 2007.
Those executive compensation at ASRC don't sound huge relative to other similar-sized corporations, said George Geistauts, a professor of business administration at the University of Alaska Anchorage. "Given the gross revenues of ASRC, I wouldn't consider $1 million or $2 million to be that exorbitant," he said. "Think about it in percent terms."
Some members of Congress have hammered Alaska Native corporations that have won multi-billion-dollar federal contracts through the 8(a) program. The late U.S. Sen. Ted Stevens pushed the program through Congress, giving Alaska Native corporations access to no-bid federal contracts of unlimited size. Other minority and disadvantaged businesses in the program cannot win sole-source contracts worth more than $6.5 million. Critics call the Native benefits unfair and say it opens the door to fraud and waste.
Geistauts sees the program as another example of Native corporations’ success. "They had a big learning curve, and they learned well," he said. "Looking for help here and there is part of the process of running a corporation. “You take any other major company, say IBM, and their lobbyists are out there in Washington, D.C., making sure laws are passed to help them or at least negative regulations aren't passed."
Alaska's Native regional corporations were created four decades ago in the Alaska Native Claims Settlement Act to provide Native shareholders with dividends, jobs and other benefits. Seen as an alternative to the Indian reservations that dot the Lower 48, they were seeded with nearly $1 billion and 44 million acres of land. Because of their unique role, they've enjoyed unusual protections while becoming some of Alaska's most powerful businesses.
Two of those regional corporations collectively paid their top executives less between 2007 and 2010.
Aleut Corp.'s total slipped $100,000 to $1.2 million. The company notes in its latest annual report that the controversy surrounding the 8(a) program has made federal contracts harder to come by, a factor that hurt the company's performance in 2010. Revenues fell from $154 million to $143 million.
Compensation for Chugach Alaska Corp.'s top executives fell from $3.3 million to $2.9 million. President Barney Uhart earned $987,000 last year, less than in previous years, though he also received deferred compensation of $250,000 payable in 2014.
Regional corporations that also saw rapid growth in their top executive compensation include Bristol Bay Native Corp. and Calista Corp.
Top compensation at some corporations rose more moderately, including Ahtna Inc., Bering Straits Native Corp. and Doyon, Ltd. Top compensation at CIRI, NANA and Sealaska didn't see much growth at all -- even though CIRI and NANA, in particular, saw huge revenue growth.
Contact Alex DeMarban at alex(at)alaskadispatch.com
CLARIFICATION: Story updated to clarify the compensation of Bill Gormley of a Koniag subsidiary.