UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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| ¨ | Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12 |
Kavilco Incorporated
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notes:
[Kavilco Incorporated Letterhead]
October 4, 20105, 2012
Re: Annual Meeting
Dear Shareholder,
You are invited to attend Kavilco’s 37th39th Annual Meeting to be held on November 6, 20103, 2012 at Cape Fox Lodge in Ketchikan, Alaska. Details about the meeting are described in the enclosed Notice of Annual Meeting and Proxy Statement.
We strongly encourage you to attend the Annual Meeting. Attendance at our shareholder meetings helps to maintain good communication and understanding. Chief Financial Officer Scott Burns and I will be there to report on current operations and discuss future plans. We will also provide time for your questions and comments.
Voting is one of your most important rights as a shareholder and I encourage you to exercise your right to vote in this election. Even if you plan to attend the Annual Meeting, we urge you to vote your proxy as soon as possible.
We believe that Kavilco's Board and management have avoided the pitfalls of other Southeast Native corporations and major economic events over the past two decades because of independent thinking and research. We have established a tradition of integrity, insight and vision. Your Board has made decisions that we believe are conservative and protective of your financial portfolio in keeping with our mission statement, "To honor the vision and unselfish actions of our Kasaan Haida ancestors and elders, the goals of Kavilco Incorporated are to provide dividends and to preserve the assets for all generations."
The Board of Directors recommends your strong support for your Corporation is respectfully requested.the Board-approved Management proxy. By voting with the enclosed BLUE PROXY BALLOT and returning it in the prepaid envelope provided, you will help assure our continued success.
Sincerely,
/s/ Louis A. Thompson
Louis A. Thompson
President/Chief Executive Officer
Enclosures
Board Members for Re-Election on the Management Proxy
Louis Jones, Sr.
I spent 27 years working in the engine room on various vessels of the Alaska Marine Highway before retiring as a Chief Engineer, the highest attainable position in that department. As such, I became the first Alaskan Native to start at the bottom as a wiper and work to the top and retire from that position. One of the philosophies I came away with is "if it ain't broke, don't fix it!" I believe this same philosophy applies to Kavilco. I have been a Board member for many years and as such, bring much experience to the table. I am extremely proud of what Kavilco has done in the past, I am excited about where Kavilco is today, and at the direction Kavilco is headed. I would like to continue being a part of that and would appreciate your support on the proxy to vote for re-election of the Directors to the Board.
John Campbell, Raven-Brown Bear/Taas Laa Naas
To introduce myself in a traditional Haida manner I would like to start by telling you my mother is Roberta Young, my grandmother Eliza McAlpin and grandfather was Robert Young. Kavilco is one of the most successful small village corporations and the only Native investment corporation in Alaska and it is my honor to be part of that success with you. I am proud of where we have been and I am excited about the direction Kavilco and the Kasaan Haida Heritage Foundation are heading. The restoration of the Naay I'waans (Chief Son-i-Hat Whale House) and our elder's language and cultural preservation show dedication in the continuation of a cultural heritage. I have served many years in law enforcement protecting communities but have had more years protecting the financial well-being, natural resources and cultural treasures of our people. I would appreciate your proxy support for re-election on the Kavilco Board of Directors and I hope to hear from you at raven_flying@hotmail.com or (206) 941-7772.
Kenneth Gordon
My name is Kenneth Edwin Gordon Jr., my mom is Eleanor Carol Young, my grandfather was Robert Philip Young and my grandmother was Eliza McAlpin. I am Raven-Brown Bear Clan of Taas Laa Naas. I have served Kavilco and you, the shareholder, as a director through the bond market crash of 1994, the recession of 1999, the 2000 stock market crash, and the 2008 collapse of the housing bubble. Because of what I believe was our conservative trading philosophies, we avoided tremendous losses that many other investment managers experienced from investments in collateralized debt obligations and derivatives, the collapse of insurance and banking industries, historically low interest rates and the current stagnant economy. As you can see, we've experienced some significant difficulties and yet Kavilco remains one of the most successful small village corporations in Alaska. As we strive to keep our portfolio and get you the most yearly distributions as possible, we also continue to work with the Kasaan Haida Heritage Foundation, City of Kasaan and Organized Village of Kasaan to preserve our cultural heritage, as evidence of this, our documentaries, Kasaan Haida Elders Speak (Ga'saa'an Xaadaas Guusuu), Surviving Sounds of Haida, and the beginning of the restoration of the Naay I'waans (Chief Son-i-Hat Whale House.) Your current Board is working hard for you; I believe we work like a well-oiled machine together for you, and for the generations to come. It has been an honor to serve as your board member and I thank you in advance for your continued support.
Mission Statement
"To honor the vision and unselfish actions of our Kasaan Haida ancestors and elders, the goals of Kavilco Incorporated are to provide dividends and to preserve the assets for all generations."
Kavilco is working for the Shareholder and working to preserve our Haida heritage.
The shareholders voted to make land and dividends the top priority of the Corporation. Kavilco Incorporated is becoming a leading Native Corporation in Alaska and in the Country. We are on the right track with the financial management that is in place and we are doing this while focusing on our heritage.
This approach started when Kavilco selected land that included the Totem House and Old Kasaan property to work to preserve our important Haida heritage. Kavilco, The Kasaan Haida Heritage Foundation and the Organized Village of Kasaan also work together to restore the most cherished symbol of Kasaan's history: Chief Son-I-Hat's Whale House and Totem Park. By forming the Kasaan Haida Heritage Foundation we are able to apply for grants enabling us to (among other things,) record Haida history and to record the history of Kasaan.
Some of the other projects that Kavilco has worked on to directly benefit the community of Kasaan range from the powerhouse lease; the bulk fuel lease; the water easement & amendments lease; the road system to the shareholders subdivision and the tie to the Prince of Wales road system; lots issued to shareholders in 1987; the easement to the State for a boat harbor; space for a helicopter landing site for medical emergencies; lease to AP&T for a cell tower; 15 year lease to the Organized Village of Kasaan for office space in the Red Bunkhouse at $1 per year; solid waste site (garbage dump) and the building and operation of the sawmill for local employment.
Kavilco is working for the shareholders to preserve our community and Haida heritage while making land and dividends the top priority of the Corporation.
The Board of Director's are privileged to be working hard on behalf of the Shareholders.
Kavilco Incorporated
600 University Street, Suite 3010
Seattle, WA 98101-1129
NOTICE OF 37th39th ANNUAL MEETING
| DATE: | November | |
| REGISTRATION: | 11:00 a.m. - 12 noon | |
| MEETING BEGINS: | 1:00 p.m. | |
| PLACE: | Cape Fox Lodge, 800 Venetia Way, Ketchikan, Alaska | |
| ITEMS OF BUSINESS: | (1)To elect three (3) Directors to Class | |
| (2)To ratify the Company's selection of independent accountants. | ||
| (3)To consider such other business as may properly come before the meeting or any adjournments thereof. | ||
| RECORD DATE: | You are entitled to vote if you were a shareholder at the close of business on October | |
| VOTING BY PROXY: | Promptly complete, sign and return the enclosed | |
| meeting even though you have previuosly signed and mailed a proxy. |
THIS PROXY STATEMENT AND BLUE PROXY CARD ARE BEING DISTRIBUTED ON OR ABOUT OCTOBER 4, 2010.5, 2012.
By order of the Board of Directors,
/s/ John Campbell
John Campbell
Secretary
Kavilco Incorporated
600 University Street, Suite 3010
Seattle, WA 98101-1129
PROXY STATEMENT
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALSANNUAL MEETING AND THE ANNUAL MEETINGPROXY
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WHY AM I RECEIVING THESE MATERIALS? IF I FILL OUT THE PROXY THEN DECIDE TO ATTEND THE MEETING, CAN I TAKE MY PROXY BACK AND PLACE MY OWN VOTES AT THE MEETING? Shareholders are encouraged to attend the meeting and place their own vote(s), and shareholders are also encouraged to complete and mail the PROXY, even if they plan to attend the meeting, to help ensure a quorum. WHO IS ENTITLED TO VOTE? WHAT IS THE QUORUM REQUIREMENT OF THE MEETING? WHY IS DISCRETIONARY VOTING AN OPTION ON THE PROXY? WHAT IS THE VOTE REQUIREMENT TO APPROVE EACH OF THE PROPOSALS? In proposal 2, Ratification of Peterson Sullivan LLP as Independent Public Accountants will be approved if it receives more affirmative votes than negative votes. WHAT DO ABSTAIN AND WITHHOLD MEAN ON THE PROXY BALLOT? WHO WILL COUNT THE VOTE? WHO WILL BEAR THE COST OF SOLICITING VOTES AND SEC COMPLIANCE FOR THE MEETING? | ||
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Pursuant to regulations, this proxy and accompnaying materials have been submitted to the Securities and Exchange commissionCommission for reviewreview.
MAY I PROPOSE ACTIONS FOR CONSIDERATION AT THE NEXT ANNUAL MEETING?
In order for a shareholder to make a proposal at the next Annual Meeting, the written proposal must be receivedby the Secretary no sooner than July 7, 2013 and no later than August 5, 2013. These proposals must be in conjunctionwriting and sent to: Kavilco Incorporated, 600 University Street, Suite 3010, Seattle, Washington 98101-1129. These proposals will need to comply with thisKavilco's Bylaws and the Securities and Exchange Commission regulations regarding the inclusion of shareholder proposals in Company-sponsored proxy materials.
MAY I NOMINATE INDIVIDUALS TO SERVE AS DIRECTORS AT THE NEXT ANNUAL MEETING?
In order for a shareholder to nominate one or more persons for election as director(s) at the next Annual Meeting the nomination(s) must be received by the Secretary no sooner than July 8, 2013 and no later than August 5, 2013. The nomination(s) must be in writing and sent to: Kavilco Incorporated, 600 University Street, Suite 3010, Seattle, Washington 98101-1129. The nomination(s) and each nominee will need to comply with Kavilco's Bylaws and the Securities and Exchange Commission regulations regarding proxy solicitations and does not grant any shareholder a right to have any nominee included in the Company's proxy statement. Independent nominees must submit separate proxies.
WHAT MATTERS WOULD NOT BE CONSIDERED FOR VOTING AT THE MEETING?
Some items that would not be considered are, but are not limited to: (a) Motions from the floor on substantive matters that could have been included in the Notice of Meeting and Proxy Statement. (b) Matters that have already been voted on. (c) Matters that are within the discretion of the Chairman of the Board of Directors, and not proper for a shareholder vote. (d) Matters that have been ruled out of order.
DOES KAVILCO PROVIDE SPACE FOR WRITE-IN VOTING?
Kavilco does not provide a space for write-in voting because we are subject to an S.E.C. approved management proxy.
HOW MANY VOTING SHARES DOES KAVILCO CURRENTLY HAVE?
Kavilco currently has 11,482.83 shares outstanding of Class A stock. Kavilco knows of no person to be the beneficial owner of more than 5% of the outstanding shares of the Company.
HOW DO I GET AN ADDITIONAL COPY OF THE AUDITED FINANCIAL STATEMENTS?
The audited financial statements were mailed to you on February 24, 2012. Additional audited financial statements can be provided to you at no cost. Contact the Corporate Secretary for Kavilco Incorporated at 1-800-786-9574 and a copy of the audited financial statements will be sent to you within three business days of your request.
WHAT SHOULD I DO IF I RECEIVE OTHER PROXY CARDS?
The Board is not responsible for the accuracy or legality of any other proxy except the Kavilco management-approved blue proxy card. To ensure stockholders have Kavilco's latest proxy information and materials to vote, the company may conduct multiple mailings prior to the annual meeting. To vote as your Board of Director's recommend, use the BLUE PROXY CARD. Only the latest dated proxy card you vote will be counted. Photocopied or electronically transmitted copies of proxy cards will not be counted.
PROPOSALS TO BE VOTED ON
(1)Proposal 1. Election of Directors
Kavilco's bylaws provide that the corporation shall be managed by a Board of Directors composed of nine (9) members elected in three (3) classes, each consisting of three (3) members. The election of directors is staggered so that only three (3) directors are elected each year. The Board of Directors recommends the election of the three (3) nominees listed below, all of whom are presently Board members, to serve a three- (3-)three (3) year term and until their successors are elected and qualified:
Laird A.John Campbell
Kenneth Gordon
Louis Jones,
Melanie Locklear
Louis A. Thompson
Sr.
Unless otherwise instructed, the proxy holders will vote proxies received by them on the BLUE PROXY CARD for these nominees. The proxy holders may utilize cumulative voting with respect to the nominees and may allocate their votes among each nominee in their sole discretion. Each nominee has advised the Company that he or she will serve as a director if elected. In the event any nominee should not be available for election, the discretionary authority provided in the proxy will be exercised to vote for such other person(s) as may be designated by the present Board of Directors.
Board Structure and Compensation
The Board officers as defined by the corporate by-laws are President/Chairman, Vice President, Secretary and Treasurer. However, Kavilco does not currently have a Treasurer, butand instead employs a Chief Financial Officer. The Board President/Chairman also is employed as Chief Executive Officer. The Board of Directors recommends that each shareholder vote FORthe election of the Class IIIII incumbents: Laird A., Louis Jones, Melanie LocklearSr., Kenneth Gordon and Louis A. Thompson.John Campbell.
All cash compensation paid by the Company for the year ended December 31, 2009, to each of the most highly paid Executive Officers, whose cash compensation exceeds $60,000.00, and to all executive officers as a group, is as shown in the following table:
Cash Compensation Table | |||
|---|---|---|---|
| (A) | (B) | (C) | |
Name of Individual or Number in Group | Capacities in Which Served | Cash Compensation | |
| Louis A. Thompson | Chief Executive Officer, Chairman and President | $ | 90,826 |
| Scott Burns | Chief Financial Officer | $ | 130,690 |
| All the executive officers as a group (2 persons) | $ | 221,516 | |
Compensation Pursuant to Plans
The Company has a retirement plan for its employees that is a defined contribution plan with the annual contribution being equal to 20% of the participant's salary. All contributions are pooled in a brokerage trust account held at Charles Schwab.
Information as to Nominees and Continuing Directors
On the Record Date, there were 11,576.8311,482.83 shares of Class A Stock"A" stock of the Company outstanding. The following table shows the beneficial ownership of the officers and directors of the Company, individually and as a group, of Class A"A" stock as of October 4, 2010:5, 2012:
| Name | Positions & Offices with the Company | Class | Term Office as Director Expires | Director Since | Principal Occupation & Employment During Past Five Years | Amount of Beneficial Ownership/% of Class A on 10/04/10 |
|---|---|---|---|---|---|---|
| Louis A. Thompson, Age 74 | President/CEO | III | 2010 | 1972 | Chief Executive Officer | 137 / 1.18% |
| Louis Jones, Sr., Age 72 | Director/Vice President | II | 2012 | 1979 | Retired Chief Engineer Alaska Marine Highway | 120 / 1.04% |
| John Campbell, Age 41 | Director/Secretary | II | 2012 | 1994 | Police Officer | 162 / 1.39% |
| Jeane Breinig, Age 55 | Director | I | 2011 | 1993 | English Professor University of Alaska | 130 / 1.08% |
| Kenneth Gordon, Age 50 | Director | II | 2012 | 1994 | Realtor | 100 / 0.86 % |
| Ramona Hamar, Age 67 | Director | I | 2011 | 1973 | Office Manager for a Dentist's Office | 150 / 1.29% |
| Laird A. Jones, Age 55 | Director | III | 2010 | 1994 | Manager Vocational Training & Resource Center | 109 / 0.94 % |
| Melanie Locklear, Age 41 | Director | III | 2010 | 1997 | Sign Shop Owner | 100 / 0.86% |
| Marie Miller, Age 45 | Director | I | 2011 | 2003 | Human Resources Manager | 100 / 0.86% |
| Scott Burns, Age 64 | Chief Financial Officer | Chief Financial Officer for Kavilco | - 0 - / - 0 -% | |||
Independent Directors & Officers | |||||||
Name/Age/Address | Positions & Offices with the Company | Class | Term Office as Director Expires | Director Since | Principal Occupation & Employment During Past Five Years | Amount of Beneficial Ownership/% of Class A on 10/5/12 | Other Directorships Held by Director or Nominee for Director |
Jeane Breinig, PhD**, 57 | Director | I | 2014 | 1993 | Associate Dean, University of Alaska
| 130/1.08% | Kasaan Haida Heritage Foundation, Alaska Humanities Forum, Sealaska Heritage Institute, University of Alaska Press |
Kenneth Gordon**, 52 | Nominee, Director | II | 2012 | 1994 | Realtor, Exit Real Estate Professionals
| 100 | Alano Club |
Laird A. Jones, MBA**, 57 | Director | III | 2013 | 1994 | Manager Vocational Training & Resource Center, Central Council Tlingit & Haida Indian Tribes of Alaska (CCTHITA)
| 100/0.94% | Kasaan Haida Heritage Foundation |
Melanie Locklear***, 43 | Director | III | 2013 | 1997 | Family Services Specialist, Women in Safe Housing (WISH)
| 100/0.86% | None |
Marie K. Miller***, 47 | Director | I | 2014 | 2003 | Human Resources Manager, City of Ketchikan | 100/0.86% | None |
Scott Burns, 66 | Chief Financial Officer / Chief Compliance Officer |
|
|
| Chief Financial Officer/Chief Compliance Officer for Kavilco | 0/0.00% | None |
Interested Directors & Officers | |||||||
Name/Age/Address | Positions & Offices with the Company | Class | Term Office as Director Expires | Director Since | Principal Occupation & Employment During Past Five Years | Amount of Beneficial Ownership/% of Class A on 10/5/12 | Other Directorships Held by Director or Nominee for Director |
Louis A. Thompson, 76 | President / CEO Chairman of the Board | III | 2013 | 1972 | Chief Executive Officer, Kavilco Inc. | 137/1.18% | None |
Louis Jones, Sr., 74 | Nominee, Vice President, Director | II | 2012 | 1979 | Retired, Chief Engineer, Alaska Marine Hwy. | 120/1.04% | None |
John Campbell, 43 | Nominee, Secretary, Director | II | 2012 | 1994 | Police Officer, Tulalip Police Department | 162/1.39% | Kasaan Haida Heritage Foundation |
Ramona Hamar, 69 | Director | I | 2014 | 1973 | Administrative Support, South Central Foundation Dental | 150/1.29% | None |
The address for each director is the Company's office at 600 University Street, Suite 3010, Seattle, Washington 98101-1129. | |||||||
Family Relationships"Interested" Director Explanation
Interested Director | Reason they are "Interested" |
Louis A. Thompson | Corporate Officer |
Louis Jones, Sr. | Corporate Officer |
John Campbell | Corporate Officer |
Ramona Hamar | Sister of Louis Jones, Sr., Corporate Officer |
Director's Experience | ||
Jeane Breinig, PhD: | Jeane Breinig, PhD has been a director during the following events: Biggest bond market crash in 1994, the recession of 1999, 2000 stock market crash, 2008 collapse of the housing bubble, avoided collateralized debt obligations, collapse of insurance and banking industries, interest rates near 0% and the current stagnant economy. | |
Kenneth Gordon, Nomimee: | Kenneth Gordon has been a director during the following events: Biggest bond market crash in 1994, the recession of 1999, 2000 stock market crash, 2008 collapse of the housing bubble, avoided collateralized debt obligations, collapse of insurance and banking industries, interest rates near 0% and the current stagnant economy. | |
Laird A. Jones, MBA: | Laird A. Jones has been a director during the following events: Biggest bond market crash in 1994, the recession of 1999, 2000 stock market crash, 2008 collapse of the housing bubble, avoided collateralized debt obligations, collapse of insurance and banking industries, interest rates near 0% and the current stagnant economy. | |
Melanie Locklear: | has been a director during the following events: 2008 collapse of the housing bubble, avoided collateralized debt obligations, collapse of insurance and banking industries, interest rates near 0% and the current stagnant economy. | |
Marie K. Miller: | has been a director during the following events: 2008 collapse of the housing bubble, avoided collateralized debt obligations, collapse of insurance and banking industries, interest rates near 0% and the current stagnant economy. | |
Louis A. Thompson: | Louis A. Thompson has been a director during the following major economic events: Timber sale to ITT Rayonier for $25 million, recessions of 1980 and 1982, sale of Net Operating Loss to Drexel, Burnham and Lambert, Group Inc., 1987 stock market crash, Internal Revenue Service audit on the Net Operating Loss, oversight on the process to become a Registered Investment Company, biggest bond market crash in 1994, the recession of 1999, 2000 stock market crash, 2008 collapse of the housing bubble, avoided collateralized debt obligations, collapse of insurance and banking industries, interest rates near 0% and the current stagnant economy. | |
Louis Jones, Sr, Nominee.: | Louis Jones, SR. has been a director during the following major economic events: Timber sale to ITT Rayonier for $25 million, recessions of 1980 and 1982, sale of Net Operating Loss to Drexel, Burnham and Lambert, Group Inc., 1987 stock market crash, Internal Revenue Service audit on the Net Operating Loss, oversight on the process to become a Registered Investment Company, biggest bond market crash in 1994, the recession of 1999, 2000 stock market crash, 2008 collapse of the housing bubble, avoided collateralized debt obligations, collapse of insurance and banking industries, interest rates near 0% and the current stagnant economy. | |
John Campbell, Nominee: | John Campbell has been a director during the following events: Biggest bond market crash in 1994, the recession of 1999, 2000 stock market crash, 2008 collapse of the housing bubble, avoided collateralized debt obligations, collapse of insurance and banking industries, interest rates near 0% and the current stagnant economy. | |
Ramona Hamar: | Ramona Hamar has been a director during the following major economic events: Timber sale to ITT Rayonier for $25 million, recessions of 1980 and 1982, sale of Net Operating Loss to Drexel, Burnham and Lambert, Group Inc., 1987 stock market crash, Internal Revenue Service audit on the Net Operating Loss, oversight on the process to become a Registered Investment Company, biggest bond market crash in 1994, the recession of 1999, 2000 stock market crash, 2008 collapse of the housing bubble, avoided collateralized debt obligations, collapse of insurance and banking industries, interest rates near 0% and the current stagnant economy. | |
Family Relationships | ||
Board Member | Relationship | |
Louis A. Thompson, President/CEO | No relationship to any Board Members | |
Louis Jones, Sr., Vice President | 1st Cousin to Laird Jones and Jeane Breinig; Brother to Ramona Hamar | |
John Campbell, Secretary | 1st Cousin to Kenneth Gordon | |
Jeane Breinig, Director | 1st Cousin to Laird Jones, Ramona Hamar and Louis Jones, Sr. | |
Kenneth Gordon, Director | 1st Cousin to John Campbell | |
Ramona Hamar, Director | 1st Cousin to Laird Jones and Jeane Breinig; Sister to Louis Jones, Sr. | |
Laird A. Jones, Director | 1st Cousin to Jeane Breinig, Ramona Hamar and Louis Jones, Sr. | |
Melanie Locklear, Director | Sister to Marie Miller | |
Marie Miller, Director | Sister to Melanie Locklear | |
Although the Company's shares are not listed on the NASDAQ Stock Market, the Board uses the NASDAQ standard for determining the independence of board members. Under Rule 5605 of the NASDAQ Marketplace Rules, all of the Company's directors are independent except Mr. Thompson, the Company's President and Chief Executive Officer.
Board Leadership Structure
Five of the Company's nine directors are not "interested persons" as defined by the Investment Company Act of 1940. However, regardless of classification ("independent" or "interested" directors) all directors have an equal say as to management of the Company. The Company is internally-managed and has no outside investment advisor. Louis Thompson, President and CEO of Kavilco is an "Interested person"
The SecuritiesBoard does not have an independent person as the Lead Director. The Company does not need a Lead Director. The Company does not have any committees, and Exchange Commission Section 8.08[3][b] requires "if any ofall decisions are made by the persons listed are related by blood, marriage or adoption (up through first cousins), the relationship must be explained."
Laird A. Jones, John Campbell and Jeane Breinig also serve on thefull Board of Directors, including employment contracts, leases, and investment policies. The Chairman of Kasaan Haida Heritage Foundation. Nonethe Board is also the Chief Executive Officer and is responsible for all land issues in the State of Kavilco's other Directors hold directorships anywhere else.Alaska and the special circumstances of an Alaska Native Village Corporation. The CEO is in contact with the Chief Financial Officer at least twice a week to be updated on all business and portfolio issues.
Board's Oversight of Risk Management
The Board's role in risk management of the Company is that of oversight. The staff of the Company is responsible for the day-to-day management of the Company including risk management. As part of its oversight, the Board, acting at its scheduled bi-monthly meetings, receives externally generated analytical and written reports on the state of the economy and compliance with applicable SEC regulations. Also, an in depth review is conducted on the approved portfolio strategies and investment performance. The Board's role in risk oversight does not affect its leadership structure.
Audit, Nominating and Compensation Committees
The Company does not have an auditing,audit, nominating or compensation committee. However, the Board of Directors reviews annually the auditor's independence letter, management letter, statement of auditing standards letter and internal control memo. The Board of Directors selects nominees from incumbent Directors of the Company. Company and does not have a formal policy regarding the consideration of diversity in identifying Board candidates.
The Board of Directors has not established a compensation committee. Given that there are only two executive officers and that the Company does not have equity compensation plans, the Board believes that it is capable of evaluating the performance of the executive officers and reviewing compensation levels. The Board does review employees'employees compensation every three years and occasionally reviews per diem and fees, the last review and subsequent employee increase took place in March 2007.
January 2012.
The Board of Directors held six regular bimonthly meetings for the year ended December 31, 2009.2011. Each director attended all six meetings.
The Board of Directors does not have a policy regarding attendance at the Annual Meeting. All directors were in attendance at the 2011 annual meeting of shareholders.
Compensation of Directors
Each officer and director receives $1,100 in fees and $500 in per diem for each meeting they attend. In 2011, each director attended all six Board meetings and received $6,600 in compensation. In addition the Company pays for up to four (4) days of travel and hotel expenses to attend the meetings. SeveralThe Company also pays medical insurance premiums or reimbursement of out-of-pocket medical expenses for directors.
Summary Compensation Table
All compensation paid by the Company for the year ended December 31, 2011 to each of the Directors also participateand Executive Officers:
Summary Compensation Table for Directors and Officers Aggregate compensation for Board members included a yearly fee of $6,600 plus medical and/or dental if received. The CEO and CFO receive salary, plus medical and dental. | ||
| Board Member | Year | Aggregate Compensation from the Fund |
| Jeane Breinig, Director | 2011 | $11,139 |
| Kenneth Gordon, Director | 2011 | $26,481 |
| Ramona Hamar, Director | 2011 | $7,276 |
| Laird A. Jones, Director | 2011 | $8,683 |
| Melanie Locklear, Director | 2011 | $20,884 |
| Marie K. Miller, Director | 2011 | $8,683 |
| John Campbell, Secretary | 2011 | $12,447 |
| Louie Jones, Sr., Vice President | 2011 | $6,600 |
| Louis A. Thompson, CEO/President | 2011 | $108,991 |
| Scott Burns, CFO | 2011 | $163,397 |
1. The Company has a retirement plan for its salaried employees. It is a defined contribution plan with the annual contribution being equal to 20% of the participant's salary. All contributions are pooled in a brokerage trust account held at Charles Schwab.
Mr. Thompson and Mr. Burns have employment agreements with the Company medical insurance program.that may be terminated by the Company for cause, which includes conviction of a felony, physical or mental disability which makes it impossible to carry out his duties or responsibilities, or any illegal, immoral or dishonest act or omission by the employee, which omission results in material damage to the Company; or willful failure of the employee to discharge the duties required under the agreement. In the event of termination, Mr. Thompson or Mr. Burns shall be entitled to accrued salary, accrued vacation and/or sick leave and a pro rata portion of the Company's contribution to the employee's defined contribution account.
Code of Ethics
The Company has adopted a written Code of Ethics that applies to all of the Company's directors, officers and employees, including its principal executive officer and principal financial officer. The Code of Ethics sets expectations for the exercise of sound judgment and sets high ethical standards in all Company and customer matters. It is designed to promote honest and ethical conduct including in the filing of required financial information and related disclosures, as well as in compliance with laws and regulations. The Code of Ethics mandates accountability for adherence to the Code of Ethics, while a variety of procedures are available to facilitate prompt internal reporting of violations to appropriate persons. The Board is mindful that the success of the Company depends on the ongoing competence, honesty and integrity of its human resources to build relationships of trust with customers and shareholders, and believes the Code of Ethics reasonably deters wrongdoing by directors, officers and employees. The Code of Ethics includes sections on matters such as conflicts of interest, confidentiality, trading practices, and personal conduct. The Code of Ethics is posted on the Company's website at www.kavilco.com. In addition, any waivers of the Code o Ethics for the Board or executive officers of the Company will be disclosed in a report on Form 8-K.
Compliance with Section 16(A) of the Exchange Act
Based solely upon the Company's review of the copies of the filings that it received with respect to the fiscal year ended December 31, 2011, and written representations from certain reporting persons that no other reports were required, during fiscal year 2011 all of its officers, directors and 10% shareholders complied with all applicable Section 16(a) filing requirements.
Report of the Board of Directors
In fulfilling its oversight responsibility of reviewing the services performed by the Company's auditor, the Board of Directors carefully reviewed the policies and procedures for the engagement of the independent auditor. The Board also discussed with Peterson Sullivan LLP, the Company's independent auditor, the overall scope and plans for the audit and the results of its audit, including the matters required for discussion by Statement of Auditing Standards No. 61. The Board reviewed the written disclosures regarding the independence of Moss Adams LLP, contained in its letter to the Board of Directors as required by applicable requirements of the Public Company Accounting Oversight Board. The Board determined the compensation of the independent auditor and followed the established policy for pre-approval of all services, audit and non-audit related, provided by the independent auditor. The Board has concluded that the provision of non-audit related services described in "Audit and Non-Audit Fees" is compatible with maintenance of the independence of the independent auditor.
This report is submitted by the Company's Board of Directors consisting of Louis A. Thompson, Louis Jones, Sr., John Campbell, Jeane Breinig, Kenneth Gordon, Ramona Hamar, Laird A. Jones, Melanie Locklear and Marie K. Miller.
(2)Proposal 2 Ratification of Independent Public Accountants
The formal approval of the selection of Moss AdamsPeterson Sullivan LLP as independent public accountants of the Company iswas voted on by the Board of Directors at their Board Meetingmeeting prior to the Annual Meeting.annual meeting of shareholders. Shareholders are asked to approve or ratify this selection. Unless the proxy holders are instructed otherwise, proxies will vote for the selection of Moss AdamsPeterson Sullivan LLP as independent public accountants. If this selection is not approved, the Board of Directors intends to take the matter under advisement. No representative of Moss AdamsPeterson Sullivan LLP is expected to be present at the Annual Meeting.
The Board of Directors of Kavilco Incorporated received an unsolicited proposal from Peterson Sullivan LLP to perform audit and tax work for the December 31, 2012 financial statements. The proposed fees were substantially less than the fees paid to Moss Adam LLP for similar services. Mr. Burns, the company's Chief Financial Officer, stated that Moss Adams has provided exemplary services, however; fees have been climbing over the past five years. Kavilco dismissed Moss Adams on June 7, 2012.
The Board interviewed representatives from Peterson Sullivan LLP and received a commitment that there would be no escalation of fees for three years. In addition, the Board was impressed with the level of experience and knowledge of Registered Investment Companies and various provisions of the Alaska Native Claims Act (Kavilco is an Alaska Native Corporation and is subject to various regulations that require additional audit and compliance procedures.) By unanimous vote, the Board approved Peterson Sullivan LLP to be our audit firm.
Peterson Sullivan conducted interviews and reviewed the work papers of Moss Adams and reported to the Quality Control Committed that they did not note any ethical, internal control or accounting issues with Kavilco. Kavilco paid has always received an unqualified opinion from Moss Adams. In addition, there were no disagreements with the accounting firm over accounting principles or practices, financial statements, or the scope of the audit.
Audit and Non-Audit Fees
Moss Adams LLP $4,000.00 for income tax preparation and $37,162.50 for audit servicesserved as the Company's independent auditors for the fiscal year ended December 31, 20092011. The Board of Directors pre-approved all of the audit related services, tax services and other services provided by Moss Adams LLP in 2011.
The following table sets forth the aggregate fees for a totalservices by the independent auditors for the years ended December 31, 2011 and 2010:
| 2011 | 2010 |
Audit fees | $44,741 | $40,293 |
Tax fees | $4,000 | $9,425 |
Total Fees | $48,741 | $49,718 |
Audit Fees: The audit fees are related to the audit of $41,162.50.the Company's annual consolidated financial statements for the years ended December 31, 2011 and 2010.
Tax Fees: The tax fees included services related to preparation of the Company's tax returns in 2011 and 2010.
Pre-Approval Policies and Procedures
The Board of Directors is responsible for assuring the independence of the independent auditor, including considering whether provision of non-audit related services is compatible with maintaining the independence of the independent auditor. Any non-audit services provided by the auditor must be pre-approved by the Board of Directors.
Other Matters
The Board of Directors knows of no matters, other than those mentioned in the proxy, to be brought before the meeting. However, if other matters do properly come before the meeting, it is the intention of the proxy holders to vote proxies according to their best judgment.
By Order of the Board of Directors
/s/ Louis A. Thompson
Louis A. Thompson
President
Seattle, Washington
October 4, 20105, 2012
KAVILCO INCORPORATED PROXY
PROXY
Solicitation by the Board of Directors for the 20102012 Annual Meeting of Shareholders
HowThe undersigned shareholder hereby grants voting authority to Vote Your Proxy
As to matters 1Jeane Breinig, Ramona Hamar and 2, discretionary authority is hereby grantedMarie Miller, all with full power of substitution, to any such matter as to whichwhere discretionary voting is requested or where no choice is indicated. Discretionary authority is hereby granted as toindicated for the proposal, and in any other matters that may lawfully come before the meeting. Management knows of no other matters to be considered by the Shareholders.shareholder. For further information on the proposals below, please consult the enclosed proxy statement.
Proposal 1. Election of Directors
THE BOARD RECOMMENDS that you CHECK BOX (A) OR (B)If you choose (A) to VOTE DISCRETIONARY and your shares will be voted by the three appointed proxy holders at their discretion. Do not allocate your votes below.below if you are voting discretionary.
If you choose to check box (B) you need to specify the Directors you will be voting for. Write the number of votes you wish to give each nominee next to that nominee'snominee’s name. See your total # of votes to cast below.
(B) [ ] TO VOTE DIRECTED in the manner set forth below for the election of the Nominees below for the Board of Directors of the Corporation for three-year terms ending in 2015.
Name: Joe Shareholder | ||||
# of Shares: | 100 X 3 votes per share | |||
Total # of votes to cast: | ||||
300 | ||||
FOR WITHHOLD ABSTAIN
John Campbell ________________________________________
Kenneth Gordon ________________________________________
Louis Jones Sr. ________________________________________
You mustProposal 2. Ratification of Peterson Sullivan LLP as independent public accountants.
THE BOARD RECOMMENDS that you vote on Item (2), either FOR ratification of Peterson Sullivan LLP as independent public accountants.
[ ] FOR [ ] AGAINST or[ ] ABSTAIN
The Board of Directors makes the foregoing proposalssolicits this proxy and the Proxy is solicited by the Board of Directors andit will be voted as specified.
PLEASE SIGN, DATE AND REUTRN THIS PROXY PROMPTLY IN THE POSTAGE PAID ENVELOPE PROVIDED.Shareholder:Sign your name as it appears in the box above. This proxy must be dated and signed in order for your vote to be counted.
Name:Class:# of SharesDate:_________________ , 2012 Signature:______________________________________________
Date ___________________________________________________, 2010
SIGNATURE __________________________________________________Sign here exactly as name appears to the left
As custodian for: ____________________________________________________________________________________________________________________(Minor'sPrint minor's name if applicable)
applicable.
When signing as custodian for a minor, or as executor, administrator, attorney, trustee or guardian, please write
your full title as such. If your name appears as "John A. Smith, Sr., as custodian for John A. Smith, Jr.," sign"John "John A. Smith, Sr., as custodian for John A. Smith, Jr."
A Stamped Return-Envelope Has Been Provided For Your Convenience.
Please remember to DATE and SIGN above. Thank you.
Prizes
Mail in Your Proxy - Early Bird Special $350
$350 for 2 winners
Mail must be postmarked on or before October 19, 2012 to be eligible.
You do not have to be present to win.
Attend the Annual Meeting - 4 Proxy Drawings for $100 each
$100 Prize Drawing for 4 winners
Board members are not eligible for these drawings.
You must be present to win.
All Returned Proxies are Eligible for This Prize!
$200 Prize for 2 winners
You do not have to be present to win.
In order to insure a quorum, all legally approved proxies, including those solicited by other shareholders, will be eligible for all the drawings.
All Winners will be announced at the Annual Meeting on November 3, 2012 and in the Kavilco Newsletter.