It is a privilege to deliver the news that, with the September dividend distribution, CIRI’s cumulative dividends paid to shareholders since the company’s inception will surpass the $1 billion mark. This is an accomplishment that we can all be proud of and it reinforces CIRI’s commitment to fulfill its mission statement to “promote the economic and social well-being and Alaska Native heritage of our shareholders.”
No other Alaska Native corporation has achieved such an impressive record of giving back to shareholders. This commitment began decades ago, even before the first dividend was paid, and while there have been changes among the Board members and executive team over the years – the commitment has remained the same.
As this milestone approached, I reflected back on the time when CIRI issued its first dividend. It was in 1980 and it wasn’t a very large dividend, but the event itself was significant. It was interesting to read the President’s Message in the March 1980 CIRI shareholder newsletter. At the time, Roy Huhndorf was CIRI’s president and his message described how the board grappled with finding the right balance between economic benefits for shareholders and ensuring the company had the capital necessary to invest and grow so future shareholders could also benefit. He wrote:
“The decision to begin paying dividends involves a crucial judgment on the part of the Board of Directors affecting the long-term welfare of the corporation and its shareholders. They must decide the proper balance between the amount of dividends to be distributed and the need to retain cash for future corporate expansion if the payment of dividends is to be continued year after year.”
That was 33 years ago and CIRI was a very different company back then. However, the fundamental premise of finding the right balance between shareholder dividends and funding future growth remains as relevant today as it did 33 years ago.
Throughout our history as a corporation, CIRI shareholders have benefited from Board members who have taken this balancing act seriously – combining a real desire to deliver meaningful and consistent monetary returns to shareholders while always being mindful of the need to make the necessary investments that will keep CIRI on a trajectory of growth.
Nearly a decade ago, CIRI gave out large, special distributions to shareholders, following windfall profits from investments. While those distributions certainly helped CIRI achieve the $1 billion threshold, as the corporation said at the time, the special distributions were not sustainable.
The current dividend policy, put in place by the Board of Directors four years ago, seeks to strike the right balance between shareholder benefits and future growth. It allocates 3.5 percent of the previous year’s shareholders’ equity to be distributed as dividends. This year, nearly $22 million in quarterly dividends will be distributed to shareholders.
The policy gives the CIRI Board of Directors and management a tangible objective for managing its investments – to grow shareholders’ equity. This is primarily achieved by increasing our profits. More importantly, the policy aligns the interests of either end of the spectrum – those wanting larger dividends and those seeking more capital to invest and grow the company to ensure continued growth of dividends. Sustaining a larger dividend for shareholders requires greater profits, and for CIRI to boost its profits, it needs the capital to make the investments that will generate a greater return to CIRI.
CIRI has a solid track record of delivering strong financial returns and, in turn, significant shareholder dividends. It is important to remember that, despite the best attempts to forecast economic conditions, business can be unpredictable. There are good years and bad. However, in our 40-plus year history, we have benefited from the many CIRI leaders who wisely managed our investments and carefully balanced the economic rewards of today with the responsibility to benefit the shareholders of tomorrow.
