Purpose of shareholder request to inspect records must be derived from the totality of the written request. Suspecting �shenanigans� may be sufficient proper purpose. So is auditing executive compensation.
This appeal arises out of a longstanding dispute[1] between Rodney Pederson and the Arctic Slope Regional Corporation (ASRC).[2] Pederson is an original shareholder of ASRC, possessing 100 Class A Shares.[3] He was employed as in-house counsel to ASRV, and later as an executive for one of its subsidiaries, until the employment relationship soured.[4] Pederson has since sued ASRC and sought election to its board.[5]In June 2009 Pederson sent a letter seeking to exercise his shareholder right to inspect ASRC’s “books, records of account and minutes” under AS 10.06.430(b).[6] The letter enclosed three separate requests for information relating to (1) an alleged purchase of a minority interest in an ASRC subsidiary and potential transfers of that interest to executives, (2) the executive retirement plan, and (3) the process for setting executive compensation. In the letter Pederson explained that his goal was to use the information to create “an educational website recommending needed updates to the ASRC articles and/or bylaws.” Pederson stressed that he wanted to “ensure any information included is true and accurate, and not false or misleading.”Pederson also accused some executives of putting their own interests before shareholders. He described his belief that officer and executive compensation should be reviewed by shareholders “in light of recent dramatic increases in officer and executive compensation packages, and in my opinion, the transfer of corporate assets to executives…Someone has to step-up [sic] and do something to…place[] limits on management’s ability to enrich themselves…at the expense of the Shareholders.” Tying his concerns to the requested information, he wrote:
Shapes what shareholders can realistically compel in audits, disclosures, and access to information�core to accountability.