ALUMINUM CO OF AMERICA, DEF 14A, 1998-03-13

ALUMINUM CO OF AMERICA
DEF 14A, 1998-03-13
PRIMARY PRODUCTION OF ALUMINUM

Previous: SUNBEAM CORP/FL/, PRE 14A, 1998-03-13

Next: ALUMINUM CO OF AMERICA, SC 14D1, 1998-03-13

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant / x /
Filed by a Party other than the Registrant / /
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e) (2))
/ x / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or
240.14a-12

Aluminum Company of America
(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement if other than
Registrant)

Payment of Filing Fee (Check the appropriate box):
/ x / No fee required.
/ / Fee computed on table below per Exchange Act
Rules 14a-6(i) (4) and 0-11.

1) Title of each class of securities to which
transaction applies:

-------------------------------------------------
-------------------------------------------------
2) Aggregate number of securities to which transaction
applies:

-------------------------------------------------
-------------------------------------------------
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11 (Set forth in the amount on which the
filing fee is calculated and state how it was
determined):

-------------------------------------------------
-------------------------------------------------
4) Proposed maximum aggregate value of transaction:

-------------------------------------------------
-------------------------------------------------
5) Total fee paid:

-------------------------------------------------
-------------------------------------------------

/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule
and the date of its filing.

1) Amount Previously Paid:

-------------------------------------------------
2) Form, Schedule or Registration Statement No.:

-------------------------------------------------
3) Filing Party:

-------------------------------------------------
4) Date Filed:

-------------------------------------------------

1998
Notice of Annual Meeting and
Proxy Statement

TO ALCOA SHAREHOLDERS:

It is my privilege to invite you to the 1998 annual meeting
of Alcoa shareholders.

The meeting is on Friday, May 8, 1998 at 9:30 a.m. in
the Westin William Penn Hotel, Pittsburgh, Pennsylvania. The
hotel is fully accessible to disabled persons and headsets
will be available for the hearing-impaired.

I hope you will participate in this review of your
company's business and operations. This proxy statement
describes the items we will vote on at the meeting. In
addition to those items, we will review the major
developments of 1997 and answer your questions.

If you plan to attend, you will need an admission
ticket. For registered shareholders, there is an admission
ticket attached to the enclosed proxy (voting) card.
Shareholders and others also may obtain tickets by contacting
the corporate secretary.

Whether or not you plan to attend the meeting, please
sign and date the enclosed proxy card and return it promptly.

Sincerely,

/s/Paul H. O'Neill

Paul H. O'Neill
Chairman of the Board and
Chief Executive Officer

March 11, 1998

Alcoa
425 Sixth Avenue
Pittsburgh, Pennsylvania
15219-1850

Notice of 1998 Annual Meeting

March 11, 1998

Alcoa's annual meeting of shareholders will take place on
Friday, May 8, 1998 beginning at 9:30 a.m. We will meet in
the William Penn Ballroom of the Westin William Penn Hotel in
Pittsburgh, Pennsylvania. Owners of common stock of record
at the close of business on February 9, 1998 will be entitled
to vote at the meeting.

At the meeting, we plan to:

- elect three directors for a term of three years,

- approve an amendment to Alcoa's Articles to increase
the number of authorized shares of common stock,

- approve an amendment to Alcoa's Long Term Stock
Incentive Plan under which stock options are granted,

- vote on a proposal submitted by a shareholder on the
topic of charitable contributions, and

- consider any other matters that may properly come before
the meeting.

A quorum is required to conduct business at the meeting.
This requirement will be satisfied if the holders of a
majority of the shares entitled to vote are present, either
in person or by proxy. If a quorum is not present, the
shareholders in attendance may adjourn the meeting and decide
on another time and place to meet. The shareholders present
at the following meeting will constitute a quorum for
electing directors and, if the adjourned meeting is held at
least 15 days after the scheduled annual meeting date, will
constitute a quorum for acting on all other matters being
voted on.

On behalf of Alcoa's Board of Directors,

/s/Denis A. Demblowski

Denis A. Demblowski
Secretary

CONTENTS

5 The Annual Meeting and Voting

6 Alcoa Common Stock Ownership

Owners of More Than 5%

Director and Executive Officer Stock Ownership

Section 16(a) Beneficial Ownership Reporting Compliance

Stock Performance Graph

7 PROPOSAL 1-ELECTION OF DIRECTORS

The Board of Directors

Directors' Compensation

Transactions with Directors' Companies

Committees and Meetings of the Board

13 Compensation of Executive Officers

Report of the Compensation Committee

Summary Compensation Table

Option Grants in 1997

1997 Aggregate Option Exercises and Year-End Option
Values

Pension Plans

Pension Plan Table

20 PROPOSAL 2 - APPROVE AN AMENDMENT TO ALCOA'S ARTICLES
INCREASING AUTHORIZED COMMON STOCK

21 PROPOSAL 3 - APPROVE AN AMENDMENT TO THE LONG TERM
STOCK INCENTIVE PLAN

22 PROPOSAL 4 - SHAREHOLDER PROPOSAL REGARDING
CHARITABLE CONTRIBUTIONS

23 Other Information

Relationship with Independent Accountants

Shareholder Proposals for the 1999 Meeting

Other Matters

24 Appendix A-Description of Long Term Stock Incentive Plan

26 Glossary

27 Alcoa's Visions and Values

The Annual Meeting and Voting

We have sent you this booklet and proxy card because Alcoa's
Board of Directors is soliciting your proxy to vote at the
company's 1998 annual meeting of shareholders on May 8, 1998.
This booklet contains information about the items being voted
on at the annual meeting.

Who Is Entitled to Vote?
Alcoa common stock holders of record at the close of business
on February 9, 1998 are entitled to vote. Shareholders have
one vote per share on each matter being voted on.

How Do I Vote by Proxy?
When you sign and return the enclosed proxy card, your shares
will be voted in accordance with your directions. If you do
not mark any selections, your shares will be voted as
recommended by the Board of Directors. You may vote in
person if you attend the meeting, but whether you plan to
attend or not, we urge you to return the proxy card promptly.

May I Change My Vote?
You may revoke your proxy at any time before it is voted at
the meeting in several ways: by sending in a revised proxy
dated later than the first; by voting in person at the
meeting; or by notifying Alcoa's secretary in writing that
you have revoked your proxy.

Quorum and Voting Information
As of the record date, 168,100,787 shares of Alcoa common
stock were issued and outstanding. A majority of the
outstanding shares, present in person or represented by
proxy, constitutes a quorum, which is required to conduct
business at the annual meeting. You are considered part of
the quorum if you have submitted a properly signed proxy
card. Abstentions, broker non-votes* and votes withheld from
director nominees are included in the count to determine a
quorum. However, abstentions and broker non-votes are not
counted in the voting results. If a quorum is present,
director candidates receiving the highest number of votes
will be elected; each other matter being voted on will be
approved if it receives a majority of the votes cast by
shareholders.

If you are a shareholder of record or participate in Alcoa's
Dividend Reinvestment and Stock Purchase Plan or employee
savings plans, you will receive a proxy card indicating all
shares of common stock held in or credited to your accounts
as of the record date, if the account registrations are the
same. You will receive a separate mailing for accounts with
different registrations.

Shares held in Alcoa's employee savings plans are voted by
the plans' independent trustee in accordance with voting
instructions received from plan participants using the
enclosed proxy card. The plans direct the trustee to vote
shares for which no instructions are received in the same
proportion (for, against and abstain) indicated by the voting
instructions given by participants in all plans.

Is My Vote Confidential?
Yes. Proxy cards, ballots and voting tabulations that
identify shareholders are kept confidential. There are
exceptions for contested proxy solicitations or where
necessary to meet legal requirements. Corporate Election
Services, Inc., an independent proxy tabulator used by the
company, has been appointed judge of election for the
meeting.

Costs of This Proxy Solicitation
Alcoa pays the cost of soliciting proxies. We have hired
Morrow & Company, Inc. to assist in the solicitation process
for a fee of $11,500 plus reasonable out-of-pocket expenses.
Alcoa officers and employees also may solicit proxies in
person, by telephone or by fax. Alcoa will request that
persons who hold shares for others, such as banks, brokerage
firms and trustees, obtain voting instructions from the
beneficial owners* of the shares. The company will reimburse
these persons for their reasonable expenses in providing
proxy materials to beneficial owners and obtaining voting
instructions.

How Do I Comment on Company Business?
There is space for comments on the proxy card or you may send
them to us in care of the corporate secretary. Although it
is not possible to respond to each individual, your ideas
help us to better understand your concerns and answer
shareholders' needs.

*See glossary for definition

Alcoa Common Stock Ownership

The following table shows shareholders who reported to the
Securities and Exchange Commission (SEC) beneficial ownership
of more than 5% of Alcoa common stock as of December 31,
1997.

OWNERS OF MORE THAN 5%

Number
of shares Percent
Name and address of beneficial owner Owned of class
- ------------------------------------ --------- --------

<S> <C> <C>
The Capital Group Companies, Inc. (1) 10,709,790 6.2
333 South Hope Street
Los Angeles, California 90071

Loomis, Sayles & Company, L.P. (2) 11,301,464 6.15
One Financial Center
Boston, Massachusetts 02111

Wellington Management Company, LLP (3) 14,068,894 8.16
75 State Street
Boston, Massachusetts 02109

<FN>
(1) Affiliates include Capital Research and Management
Company, Capital Guardian Trust Company, Capital
International, Inc. and other investment management
companies. This shareholder reported that it had sole
power to dispose of all shares and sole power to vote
3,139,290 of the shares owned.

(2) The shareholder is an investment advisor, reporting
shared power to dispose of all shares and sole power to
vote 8,400 of the shares owned.

(3) Wellington reported these amounts in its capacity as
an investment advisor; the shares are held of record by
its clients. Wellington reported that it had sole power
to dispose of all shares and shared power to vote
2,034,570 of the shares shown.

</TABLE>

DIRECTOR AND EXECUTIVE OFFICER
STOCK OWNERSHIP

The table below shows beneficial ownership of Alcoa common
stock by directors, nominees for director and executive
officers,* as of December 31, 1997. The five named executive
officers are the chief executive officer (CEO) and the four
officers who were the highest paid in 1997. No individual
director, nominee or executive officer owned more than 1% of
this class of stock. The total ownership shown for directors
and executive officers as a group represents less than 2% of
outstanding shares.

BENEFICIAL OWNERSHIP TABLE

Name Exercisable Number Number of
stock of shares deferred
options (1) owned share
equivalent
units (2)
- ------------------------------------------------------------------

<S> <C> <C> <C>
Kenneth W. Dam 0 2,700 1,330
Joseph T. Gorman 0 2,245 1,838
Judith M. Gueron 0 2,917 1,330
Sir Ronald Hampel 0 1,807 0
Hugh M. Morgan (3) 0 100 0
John P. Mulroney 0 3,050 1,322
Paul H. O'Neill 859,211 215,505 4,947
Sir Arvi Parbo 0 3,579 2,625
Henry B. Schacht 0 2,521 2,645
Forrest N. Shumway 0 9,200 0
Franklin A. Thomas 0 3,121 4,735
Marina v.N. Whitman 0 1,900 1,330
Alain J. P. Belda 327,497 71,360 2,368
George E. Bergeron 184,988 35,999 1,488
Richard L. Fischer 254,718 40,254 3,312
Ronald R. Hoffman 244,238 37,564 1,916
Directors and
executive officers 2,595,625 586,691 35,622
as a group (24
individuals)

<FN>
(1) Shares the officers had a right to acquire within 60
days through exercise of employee stock options.

(2) Share-equivalent units credited to an individual's
account under deferred fee or deferred compensation plans.

(3) Information on Mr. Morgan, a nominee for director, is
given as of February 20, 1998.

</TABLE>

SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires
our directors and executive officers to file reports of Alcoa
share ownership and changes in ownership. All directors and
executive officers complied with these requirements in 1997.

*See glossary for definition

STOCK PERFORMANCE GRAPH

The following graph compares the most recent five-year
performance of Alcoa common stock with the S&P 500 Index and
a peer group index. It assumes an investment of $100 on
December 31, 1992 and the reinvestment of all dividends.

The peer group index, which is weighted for market
capitalization,* includes Alcan Aluminium Limited and
Reynolds Metals Company. The peer group index is used
instead of the S&P Aluminum Industry Index, which includes
Alcoa as well as Alcan and Reynolds, since Alcoa's heavy
market capitalization weighting would distort a comparison
with the full index.

Comparison of five-year cumulative total return

December 31
-----------

1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C>
Alcoa $100.00 $ 99.08 $126.23 $156.95 $193.57 $216.58

S&P 500 100.00 110.08 111.53 153.45 188.68 251.63

Peer Group 100.00 105.32 125.06 153.15 164.19 151.79

</TABLE>

Over the five-year period, your $100 investment in Alcoa
common stock would have grown to $216.58 by the end of 1997.
This compares with $251.63 for the S&P 500 Index and $151.79
for the peer group index.

PROPOSAL 1 - ELECTION OF
DIRECTORS

The Board of Directors

Alcoa's Board of Directors has 11 members. The Board is
divided into three classes whose terms of office end in
successive years.

Two current Alcoa directors, Sir Arvi Parbo and Forrest N.
Shumway, are retiring from the Board. Sir Arvi has served as
a director since 1980, and Mr. Shumway was first elected to
the Alcoa Board in 1982. The Board extends its best wishes
to them for long and happy retirements. Their sound
judgment, wise counsel and good humor will be greatly missed.

Henry B. Schacht and Franklin A. Thomas, two directors whose
terms of office are expiring, have been nominated to serve
for new terms ending in 2001. In addition, Hugh M. Morgan,
managing director and chief executive officer of WMC Limited
in Australia, has been nominated to serve as a director for a
three-year term starting at the May 1998 meeting.

Your proxy will be voted for the election of these nominees
unless you withhold authority to vote for any one or more of
them. In the event that any nominee is unable or unwilling
to stand for election (which is not anticipated), the Board
may provide for a lesser number of directors or designate a
substitute.

*See glossary for definition

Nominees to serve for a three-year term expiring in 2001

Hugh M. Morgan

Age: 57

Principal occupation: Managing Director and Chief
Executive Officer, WMC Limited,
an Australian mining and
minerals processing company.

Recent business experience: Mr. Morgan has been Managing
Director of WMC since 1986 and
its Chief Executive Officer since
1990. He was Executive Director
of WMC from 1976 to 1986. He has
been a director of Alcoa of
Australia Limited since 1977.

Other directorships: Reserve Bank of Australia and a
number of industry, business,
trade and international associa-
tions and advisory groups.

Henry B. Schacht

Age: 63

Director since: 1994

Principal occupation: Director and Senior Advisor,
Lucent Technologies Inc., a commu-
nications systems and technology
company.

Recent business experience: Mr. Schacht was Chairman of Lucent
Technologies from February 1996 to
February 1998 and its Chief Execu-
tive Officer from February 1996 to
October 1997. He was Chairman of
Cummins Engine Company, Inc. from
1977 to 1995 and its Chief
Executive Officer from 1973 to
1994.

Other directorships: Cummins Engine Company, Inc., The
Chase Manhattan Corporation, The
Chase Manhattan Bank, Johnson &
Johnson and Lucent Technologies.

Franklin A. Thomas

Age: 63

Director since: 1977

Principal occupation: Consultant, TFF Study Group, a
nonprofit institution focusing on
South Africa.

Recent business experience: From 1979 until 1996, Mr. Thomas
was President of the Ford
Foundation. He was President and
Chief Executive Officer of Bedford
Stuyvesant Restoration Corpora-
tion from its founding in 1967
until 1977.

Other directorships: Citicorp/Citibank, N.A., Cummins
Engine Company, Inc., Lucent
Technologies Inc. and
PepsiCo, Inc.

Directors whose terms expire in 2000

Kenneth W. Dam

Age: 65

Director since: 1987

Principal occupation: Max Pam Professor of American and
Foreign Law, University of Chicago
Law School.

Recent business experience: Mr. Dam served as President and
Chief Executive Officer for
United Way of America in 1992,
Vice President for Law and
External Relations of IBM Corpo-
ration from 1985 to 1992, Deputy
Secretary of State from 1982 to
1985 and Provost of the Univer-
sity of Chicago from 1980 to 1982.

Other directorships: Council on Foreign Relations, the
Brookings Institution and a number
of nonprofit organizations.

Judith M. Gueron

Age: 56

Director since: 1988

Principal occupation: President, Manpower Demonstration
Research Corporation (MDRC), a
nonprofit research organization.

Recent business experience: Dr. Gueron has been President of
MDRC since 1986. She was MDRC's
Executive Vice President for
research and evaluation from 1978
to 1986. Dr. Gueron was director
of special projects and studies
and a consultant for the New York
City Human Resources Administration
before joining MDRC.

Paul H. O'Neill

Age: 62

Director since: 1986

Principal occupation: Chairman of the Board and Chief
Executive Officer of Alcoa since
June 1987.

Recent business experience: From 1985 to 1987, Mr. O'Neill
was President and a director of
International Paper Company.

Other directorships: Gerald R. Ford Foundation, Eastman
Kodak Company, Lucent Technologies
Inc., Manpower Demonstration
Research Corporation, National
Association of Securities Dealers,
Inc. and The RAND Corporation.

Directors whose terms expire in 1999

Joseph T. Gorman

Age: 60

Director since: 1991

Principal occupation: Chairman and Chief Executive
Officer, TRW Inc., a global
company serving the automotive,
space and defense markets.

Recent business experience: Mr. Gorman was TRW's President
from 1985 to 1991 and Chief
Operating Officer from 1985 to
1988. He has served as Chairman
and Chief Executive Officer of
TRW since 1988.

Other directorships: In addition to serving as a
director of TRW, Mr. Gorman is a
director of The Procter & Gamble
Company and a member of the BP
America Inc. Advisory Board.

Sir Ronald Hampel

Age: 65

Director since: 1995

Principal occupation: Chairman, Imperial Chemical
Industries PLC, a diversified
chemicals manufacturer, since 1995.

Recent business experience: Sir Ronald was Deputy Chairman and
Chief Executive of Imperial Chemi-
cal Industries from 1993 to 1995
and Chief Operating Officer from
1991 to 1993. He has been an ICI
director since 1985. He is a
member of the Listed Companies
Advisory Committee of the London
Stock Exchange and the Nominating
Committee of the New York Stock
Exchange and Chairman of the UK
Committee on Corporate
Governance.

Other directorships: British Aerospace PLC.

John P. Mulroney

Age: 62

Director since: 1987

Principal occupation: President and Chief Operating
Officer, Rohm and Haas Company, a
specialty chemicals manufacturer.

Recent business experience: Mr. Mulroney has served as
President and Chief Operating
Officer of Rohm and Haas Company
since 1986. He has been a
director of Rohm and Haas since
1982.

Other directorships: In addition to Rohm and Haas,
Mr. Mulroney also is a director
of Teradyne, Inc.

Marina v.N. Whitman

Age: 62

Director since: 1994

Principal occupation: Professor of Business Administra-
tion and Public Policy, School of
Business Administration and the
School of Public Policy at the
University of Michigan.

Recent business experience: Dr. Whitman was Vice President and
Group Executive, Public Affairs
and Marketing Staffs of General
Motors Corporation from 1985 to
1992 and Vice President and Chief
Economist from 1979 to 1985. She
was a member of the President's
Council of Economic Advisers from
1972 to 1973.

Other directorships: Browning-Ferris Industries, Inc.,
The Chase Manhattan Corporation,
The Procter & Gamble Company and
Unocal Corporation.

Directors' Compensation

Alcoa pays each director who is not an Alcoa employee an
annual cash retainer of $85,000. No additional fees, such as
meeting or committee fees, are paid.

Directors may elect to defer some or all cash fees, and they
are encouraged to defer the maximum amount that their
individual circumstances allow. All fee deferrals are
credited to an Alcoa stock investment account, except that
deferrals exceeding 50% of the annual retainer fee may be
invested in other investment options under the directors'
deferred fee plan. Deferred accounts are credited with
investment results comparable with those of the investment
options under Alcoa's principal savings plan for salaried
employees. Changes among investment options are permitted
once each month, except that no transfers may be made from
the Alcoa stock investment option. Directors' deferred
accounts are not funded and are paid out in cash from general
funds of the company after Board service ends.

Transactions with Directors' Companies

In the course of ordinary business, Alcoa and its
subsidiaries may have transactions with corporations whose
executive officers are also Alcoa directors. None of these
transactions exceeded 5% of the gross revenues of either
Alcoa or the other corporation.

Committees and Meetings of the Board

The Board met six times in 1997. Overall attendance by
directors at Board and committee meetings averaged over 95%.
All directors attended at least 75% of the meetings. The
Board has several standing committees, five of which are
described below.

The Audit Committee reviews Alcoa's auditing, financial
reporting and internal control functions and recommends the
firm that Alcoa should retain as its independent accountant.
It also reviews the company's environmental audits and
monitors compliance with Alcoa business conduct policies.
The independent accountants, Vice President - Audit and
internal auditors have access to the committee without
management's presence. Members include Directors Dam,
Gueron, Schacht (chairman), Shumway, Thomas and Whitman. The
committee met eight times in 1997.

The Executive Committee has authority to act on behalf of the
Board. It meets when specific action must be taken between
Board meetings. Members include Directors Dam, O'Neill
(chairman) and Thomas. This committee met once in 1997.

The Nominating Committee considers and recommends nominees
for election as directors and reviews the performance of
incumbent directors. The committee reviews the names and
qualifications of nominees that shareholders submit in
writing to the company secretary. Members include Directors
Gorman, Hampel, Mulroney (chairman), Parbo and Thomas. This
committee met twice in 1997.

The Pension and Savings Plan Investment Committee reviews and
approves the investment management of Alcoa's retirement
plans and principal savings plans. Members include Directors
Gorman, Gueron, Hampel, Shumway (chairman), Thomas and
Whitman. This committee met twice in 1997.

The Compensation Committee determines the salary and bonus
for Alcoa executive officers, approves

post-termination contracts and performs other functions
specified by the company's compensation plans. The committee
reviews the participation of officers in other benefit
programs for salaried employees. Members include Directors
Dam, Gorman, Mulroney, Parbo and Thomas (chairman). The
committee met five times in 1997. A subcommittee, comprised
of Directors Dam, Parbo and Thomas, administers Alcoa's Long
Term Stock Incentive Plan.

Compensation of Executive Officers

The Compensation Committee determines pay and incentives for
Alcoa executive officers. The members of this committee are
required to be independent directors who have never been
Alcoa employees. No member of this committee receives
compensation from the company in any capacity other than as a
director. The committee's report for 1997 follows.

REPORT OF THE COMPENSATION COMMITTEE

Alcoa's Compensation Philosophy - The purpose of Alcoa's
total compensation policy is to hire, retain and motivate
high-performing employees worldwide. In determining
compensation, we use the following principles:

- - Pay for performance - both individual and team performance
- - Competitive total compensation compared with leading
industrial companies
- - Total compensation that is highly leveraged to financial
and nonfinancial business performance.

Alcoa's total compensation program includes four components:
annual salary, cash incentives, long-term, stock-based
incentives and employee benefits.

Our committee places less emphasis on high base salaries in
favor of at-risk, short-term and long-term incentives based
on performance. Stock-based incentives are an important
element because they help to assure that executives focus on
increasing shareholder value.

Annual Cash Compensation - Each year we review comparative
market compensation information prepared by outside
consultants, who also help analyze and interpret compensation
practices. The comparison group, which is surveyed for both
total cash compensation and long-term incentives, includes
leading manufacturing companies with whom Alcoa competes for
talent. These companies are among the largest and best
performing in a broad range of industries and serve as a
sample of the larger market. In addition to compensation, we
also compare a position's level of responsibility within
these companies.

Total annual cash compensation for Alcoa senior managers
includes base salary and cash incentive awards. The targets
for the sum of base salary and cash incentives are set above
the median of high-performing industrial companies. When
performance measures of excellence are met, this provides a
very competitive level of cash compensation. In order to tie
annual cash compensation more closely to performance, we set
base salaries below the median and annual cash incentive
targets above it.

Annual Cash Incentives - Targets for cash incentive awards
vary by position and are established as a percentage of base
salary. Our committee may make adjustments in payout to
recognize and reward individual performance. For most
executive officers, annual incentive targets are based on the
total performance of all business units compared with planned
goals. The maximum payout, before any adjustment for
individual performance, is 150% of the target. We increased
the maximum payout to 200% of target beginning in 1998. The
new maximum will apply, however, only for years when
shareholders become entitled to a bonus dividend due to Alcoa
earnings exceeding a threshold per share amount (currently,
that threshold is $3.00 per share).

Alcoa's cash incentive programs were revised in 1992 to
provide more consistent performance measures for both
executives and, under a performance-based pay plan, for most
other U.S. employees.

Business unit employees are measured according to the goals
of their individual units. Annual cash incentive payouts for
executive officers are based on

the achievement of business plan goals by all of the
company's business units. About 40% of these goals are
nonfinancial. They may include measurements for
environmental, health and safety performance, customer
satisfaction, product innovation, on-time delivery,
manufacturing excellence, reduced cycle time, inventory
reduction and product quality improvements. The company
believes that if managers focus on the achievement of
excellence in those areas within their control, long-term
growth in shareholder value will result.

Long-Term Incentives - A goal of our committee is to closely
align management's interests with those of the shareholders.
In order to encourage stock ownership among Alcoa executives,
the company's long-term incentives are entirely stock-based.

Alcoa grants annual long-term awards in the form of stock
options. The stock option program allows us to provide
awards that are competitive with the sample of leading
industrial companies. The actual amount earned is determined
by the stock's performance.

The guidelines used to establish the size of a stock option
award include a position's level of responsibility, the size
of prior grants and comparative award information.
Individual grants typically follow the guideline amounts.

Compensation paid as the result of option exercises under the
shareholder-approved Long Term Stock Incentive Plan is
deductible by Alcoa. The company may not deduct portions
of salary, bonus and other cash and non-cash compensation in
excess of $1 million paid to a named executive officer.

Stock Option Reload Feature - In 1989 the plan was amended to
add a stock option reload feature to encourage increased
stock ownership not only for executive officers, but for all
optionees who are active employees (currently about 850
individuals). This feature promotes the early exercise of
options and the retention of Alcoa shares.

The reload feature of the plan permits previously granted
options to be exercised for additional shares, along with a
new reload option grant for fewer shares that is priced at
current fair market value.* One-half of the shares received
on option exercise cannot be sold or transferred until after
employment ends. These shares may be used to exercise
additional options after a minimum six-month holding period.

Share ownership by executive officers and other optionees has
increased significantly in the last several years because of
the reload feature.

In 1997 we approved a dividend equivalent compensation plan
under which cash dividend equivalents are paid, when approved
by the Board, on a portion of the exercisable options held by
active employees.

Compensation of Executive Officers in 1997 - Our committee
increased 1997 salary and annual cash incentive targets from
1996, reflecting similar increases in the comparison group.
Annual incentive payouts to executive officers averaged about
105% of target in 1997.

January 1997 stock option grants to executive officers were
made at full levels for these positions, in accordance with
the guidelines. The majority of stock option exercises in
1997 by executive officers involved the grant of reload
options.

*See glossary for definition

Compensation of the Chief Executive Officer - The chief
executive officer's compensation is based on the same
philosophy and policies for all executive officers, and
includes base salary, annual cash incentives and stock option
awards.

Our committee meets annually without the CEO and evaluates
his performance compared with previously established
financial and nonfinancial goals. We reach a consensus as a
committee and make the appropriate compensation adjustments.
Finally, we report in full to the other members of the
Board for their consideration and agreement. This
meeting is an executive session of nonemployee directors only.

In 1997, Mr. O'Neill's base salary was $850,020. By design,
Mr. O'Neill's salary remains below the median for the
comparison group. In January 1998, Mr. O'Neill was awarded a
bonus of $1,250,000, which was 122.5% of his target
incentive award for 1997. The amount was based partly on total
business unit results compared with plan goals, and partly in
recognition, by our committee and the executive session of
the Board, of Mr. O'Neill's outstanding leadership during
1997. Mr. O'Neill's 1997 annual stock option award grant was
made at the guideline number of shares for his position, as
established by the committee in November 1996.

This committee believes that the company's compensation
programs help to maintain Alcoa's leadership position among
global industrial companies.

The Compensation Committee

Franklin A. Thomas, Chairman
Kenneth W. Dam
Joseph T. Gorman
John P. Mulroney
Sir Arvi Parbo

SUMMARY COMPENSATION TABLE

The following table shows the compensation for the company's
CEO and four other executive officers who were the highest
paid in the fiscal year ended December 31, 1997.

Long Term
Annual Compensation Compensation
------------------- ------------
Number of
Securities
Underlying All Other
Name and Option Compen-
Principal Position (1) Year Salary (2) Bonus Grants(3) sation (4)
- ---------------------- ---- ---------- ----- --------- ----------

<S> <C> <C> <C> <C> <C>
Paul H. O'Neill 1997 $850,020 $1,250,000 324,584 $171,206
Chairman of the Board and 1996 750,000 810,000 693,027 172,062
Chief Executive Officer 1995 750,000 1,250,000 587,250 174,759

Alain J. P. Belda 1997 610,200 850,000 304,354 195,781
President and Chief 1996 540,600 525,000 120,304 100,670
Operating Officer 1995 446,823 600,000 65,000 90,809

George E. Bergeron 1997 368,577 381,300 144,314 77,754
Vice President and Pres- 1996 339,200 245,000 205,406 77,867
ident, Alcoa Rigid Packaging 1995 316,800 363,000 176,618 73,449

Richard L. Fischer 1997 395,200 500,000 179,199 68,186
Executive Vice President - 1996 370,200 345,000 255,657 69,188
Chairman's Counsel 1995 366,900 400,000 275,736 69,945

Ronald R. Hoffman 1997 395,200 400,000 170,052 73,208
Executive Vice President - 1996 370,200 345,000 271,073 74,642
Human Resources and 1995 366,900 400,000 305,686 72,335
Communications

<FN>
(1) Effective January 1, 1998, Mr. Bergeron was elected an
Executive Vice President, and Mr. Hoffman became Special
Assistant to the Chairman. Mr. Hoffman has announced that
he will retire in August 1998.

(2) The most highly-compensated executive officers are
those with the highest annual salary and bonus for 1997. In
addition to base salary, the salary column includes, when
selected by the employee, an extra week's pay in lieu of
vacation for employees with 25 or more years of service.

(3) New option grants made in 1997 totaled 175,000 for
Mr. O'Neill, 125,000 for Mr. Belda, 46,000 for Mr. Bergeron,
65,000 for Mr. Fischer and 60,000 for Mr. Hoffman. All of
these options were granted at 100% of the fair market value
of Alcoa common stock on the grant date. The other option
awards relate to previous years' option grants and the use of
the reload feature described earlier in the Report of the
Compensation Committee. See also the Option Grants in 1997
table on the next page.

(4) Company matching contributions to 401(k) and excess
savings plans for 1997 were: Mr. O'Neill, $51,001; Mr.
Belda, $35,500; Mr. Bergeron, $21,720; and Messrs. Fischer
and Hoffman, $23,712 each. The present value costs of the
company's portion of 1997 premiums for split-dollar life
insurance, above the term coverage level provided generally
to salaried employees, were: Mr. O'Neill, $120,205; Mr.
Belda, $159,831; Mr. Bergeron, $56,034; Mr. Fischer, $44,474;
and Mr. Hoffman, $49,496. The 1997 amount for Mr. Belda also
includes $450 of unused health care credits received as cash.

</TABLE>

OPTION GRANTS IN 1997

Individual Grants
-----------------

% of Total
Number of Options
Securities Granted to Exercise
Underlying Employees or Base Grant Date
Options in Fiscal Price Present
Name Granted (1) Year ($/Sh) Expiration Date Value(2)
- ---- ----------- ---------- -------- --------------- ----------

<S> <C> <C> <C> <C> <C>
Paul H. O'Neill 175,000 2.74% $70.7500 January 13, 2007 $2,529,126
13,499 0.21% 74.3828 January 15, 2003 121,268
41,958 0.66% 74.3828 January 20, 2002 376,928
22,406 0.35% 74.3828 January 23, 2001 201,284
23,574 0.37% 74.3828 January 22, 2000 211,776
22,963 0.36% 74.3828 May 4, 1999 206,287
25,184 0.39% 74.3828 July 21, 1998 226,240

Alain J. P. Belda 125,000 1.96% 70.7500 January 13, 2007 1,806,518
78,614 1.23% 82.0312 January 11, 2006 778,844
49,899 0.78% 76.1875 January 13, 2005 459,142
20,598 0.32% 76.3750 January 14, 2004 189,997
15,029 0.24% 73.1875 January 15, 2003 132,843
2,380 0.04% 88.6250 January 15, 2003 25,474
10,482 0.16% 68.2500 January 20, 2002 86,401
2,352 0.04% 88.6250 January 23, 2001 25,175

George E. Bergeron 46,000 0.72% 70.7500 January 13, 2007 664,799
43,834 0.69% 71.2500 January 11, 2006 377,196
20,528 0.32% 72.7500 January 13, 2005 180,365
11,238 0.18% 69.7812 January 13, 2005 94,711
19,097 0.30% 69.7812 January 14, 2004 160,944
550 0.01% 69.7812 January 15, 2003 4,635
422 0.01% 69.7812 January 22, 2000 3,556
2,645 0.04% 84.3125 July 21, 1998 26,933

Richard L. Fischer 65,000 1.02% 70.7500 January 13, 2007 939,390
44,979 0.70% 68.8750 January 11, 2006 374,148
4,452 0.07% 88.6250 January 13, 2005 47,652
35,409 0.55% 70.5625 January 13, 2005 301,758
10,528 0.17% 72.6875 January 14, 2004 92,422
2,158 0.03% 72.6875 January 15, 2003 18,944
3,209 0.05% 72.6875 January 22, 2000 28,171
8,137 0.13% 72.6875 May 4, 1999 71,432
5,327 0.08% 72.6875 July 21, 1998 46,764

Individual Grants

<S> <C> <C> <C> <C> <C>
Ronald R. Hoffman 60,000 0.94% $70.7500 January 13, 2007 867,129
45,452 0.71% 67.4375 January 11, 2006 370,191
29,452 0.46% 73.1875 January 13, 2005 260,329
4,340 0.07% 88.2500 January 13, 2005 46,257
5,119 0.08% 69.4687 January 13, 2005 42,948
25,596 0.40% 69.4687 January 14, 2004 214,750
93 0.00% 69.4687 January 15, 2003 780

<FN>
(1) Annual option grants (the first grant listed for
each officer) are currently made in January and become
exercisable one year after the grant date. All other
grants are reload option grants, which become exercisable
after six months. Optionees may use shares they own to pay
the exercise price and may have shares withheld for payment
of required taxes. The exercise price of all options is
100% of the fair market value of Alcoa stock on the grant
date.

(2) The Black-Scholes option pricing model is used to
estimate Grant Date Present Value. Our use of this model is
not an endorsement of the model's accuracy in valuing
options. All stock option models require a prediction about
future stock prices. We used the following assumptions in
calculating Grant Date Present Value: volatility - 25%;
average risk-free rate of return - 6.10%; dividend yield -
1.30%; expected life, annual grants - 2.5 years, expected
life, reload grants - 1 year. The real value of the options
in this table depends on the actual performance of Alcoa
stock and the timing of exercises.

</TABLE>

1997 AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES

This chart shows the number and value of stock options, both
exercised and unexercised, for the named executive officers
during 1997. Value of unexercised options is calculated
using the difference between the option exercise price and
the year-end stock price of $70.375 per share, multiplied by
the number of shares underlying the option.

Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired on Value Options at Fiscal Year-End at Fiscal Year-End
-------------------------- ------------------
Name Exercise (1) Realized (2) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ ----------- ------------- ----------- -------------

<S> <C> <C> <C> <C> <C> <C>
Paul H. O'Neill 227,274 $2,713,350 684,211 175,000 $10,298,907 $0
Alain J. P. Belda 240,497 8,112,881 119,151 208,346 562,970 0
George E. Bergeron 115,981 1,756,194 105,036 79,952 686,451 18,590
Richard L. Fischer 133,497 1,847,543 149,851 104,861 685,017 0
Ronald R. Hoffman 136,174 2,060,108 149,090 95,148 688,717 27,921

<FN>
(1) The net number of shares issued to these five
officers was 172,010. The table shows the gross shares
underlying option exercises, as required by SEC rules.
However, most of the shares were not issued, since in a
majority of exercises by these officers, shares were
used to pay the exercise price and shares were withheld
for taxes.

(2) Values were realized in shares and are shown before
withholding for taxes. Most of the shares received
after taxes (all for Mr. O'Neill) are still owned by the
officers.

</TABLE>

PENSION PLANS

Alcoa's pension plans cover a majority of salaried employees.
Alcoa pays the full cost of these plans, which include both
tax-qualified and non tax-qualified excess plans. This table
shows the annual benefits payable at executive compensation
levels.

PENSION PLAN TABLE

Annual Benefits for Years of Service Indicated
----------------------------------------------------------------
Average Annual
Compensation 15 20 25 30 35 40
- ------------ -- -- -- -- -- --

<S> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 20,740 $ 27,650 $ 34,560 $ 41,480 $ 48,000 $ 56,950
300,000 59,530 79,370 99,210 119,060 134,350 150,470
500,000 94,460 125,950 157,440 188,930 213,130 238,150
700,000 132,460 176,610 220,760 264,920 298,800 333,510
900,000 169,940 226,590 283,240 339,890 383,330 427,590
1,100,000 206,660 275,550 344,440 413,330 466,130 519,750
1,300,000 242,110 322,810 403,510 484,220 546,050 608,710
1,500,000 277,300 369,730 462,160 554,600 625,400 697,030
1,700,000 311,600 415,460 519,330 623,190 702,740 783,110
1,900,000 348,700 464,930 581,160 697,400 786,400 876,230

</TABLE>

The amount of pension is based upon the employee's average
compensation for the highest five years in the last ten years
of service. For the executive level, covered compensation
includes base salary and 50% of annual cash bonus. Amounts
in the table are calculated using salary at target and bonus
at target. Payments are made as a straight life annuity,
reduced by 5% when a surviving spouse pension is taken. The
table shows benefits at age 65, before any reduction for
surviving spouse coverage. At March 1, 1998, pension service
for the named officers was: Mr. Belda, 29 years; Mr.
Bergeron, 29 years; Mr. Fischer, 32 years; Mr. Hoffman, 43
years; and Mr. O'Neill, 24 years, reflecting an employment
contract that provides somewhat more than double credit for
his years with the company. The resulting pension is offset
by pension payments from his previous employer.

PROPOSAL 2 - APPROVE AN
AMENDMENT TO
ALCOA'S ARTICLES
INCREASING
AUTHORIZED
COMMON STOCK

Alcoa's Board of Directors has proposed an amendment to
Article FIFTH of the Articles of the company. This amendment
would increase the company's authorized common stock from 300
million shares to 600 million shares.

The company has no specific plans for the issuance of these
additional shares. However, the Board of Directors believes
that the proposed increase is desirable so that, as the need
may arise, the company will have more financial flexibility
and be able to issue additional shares of common stock
without the expense and delay associated with a special
shareholders' meeting, except where shareholder approval is
required by applicable law or stock exchange regulations.
The additional common shares might be used, for example, in
connection with an expansion of Alcoa's business through
investments or acquisitions, sold in a financing transaction
or issued under an employee stock option, savings or other
benefit plan or in a stock split or dividend to shareholders.
The Board does not intend to issue any shares except on terms
that it considers to be in the best interests of the company
and its shareholders.

The additional shares of common stock for which authorization
is sought would be a part of the existing class of common
stock. If and when issued, these shares would have the same
rights and privileges as the shares of common stock presently
outstanding. No holder of common stock has any preemptive
rights to acquire additional shares of the common stock.

On February 9, 1998, 168,100,787 shares of Alcoa common stock
were outstanding, and approximately 23.6 million shares were
reserved for issuance under various benefit plans of the
company.

The issuance of additional shares could reduce existing
shareholders' percentage ownership and voting power

in Alcoa and, depending on the transaction in which they are
issued, could affect the per share book value or other per
share financial measures.

Text of Proposed Articles Amendment

The first paragraph of Article FIFTH of the Articles of the
company is proposed to be amended to read as follows:

"FIFTH. The authorized capital stock of the corporation
shall be 660,000 shares of Serial Preferred Stock of the par
value of $100 per share, 10,000,000 shares of Class B Serial
Preferred Stock of the par value of $1.00 per share and
600,000,000 shares of Common Stock of the par value of $1.00
per share."

Vote Required for Approval

For this amendment to be approved, a majority of the votes
cast by shareholders must be voted for approval.

Alcoa's Board of Directors recommends that the shareholders
vote FOR adoption of the proposed amendment to Alcoa's
Articles.

PROPOSAL 3 - APPROVE AN
AMENDMENT TO
THE LONG TERM
STOCK INCENTIVE PLAN

The Long Term Stock Incentive Plan (formerly the Employees'
Stock Option Plan) has been in effect since 1965. The Plan
is designed to provide long-term incentives based on Alcoa
common stock to key employees who may contribute to the
company's continued growth and profitability. These
incentives encourage participating employees to manage the
company's business to promote its long-term growth and
success, as measured by Alcoa's stock price, and thus create
an identity of interest with Alcoa's shareholders.

Proposed Plan Amendment

Periodically, shareholders are asked to approve additional
shares for use in the Plan. The Board has adopted an
amendment to the Plan that will replenish and increase the
shares available for issuance in certain instances without
further shareholder action. The amendment will become
effective only if approved by shareholders.

The proposed amendment provides that the number of shares
available for issuance under the Plan will be increased
automatically by the number of shares that Alcoa purchases or
acquires with the cash proceeds of option exercises after
January 1, 1998. The shares so acquired would be added to
the number of shares available for issuance under the Plan
without further shareholder approval. In 1997, Alcoa
purchased approximately 8.1 million shares of its common
stock in the open market. Of this number, approximately
2.7 million shares were acquired for an aggregate price equal
to the cash proceeds received by Alcoa in 1997 from employee
stock option exercises. If this amendment had been in effect
in 1997, these 2.7 million shares would have been added to
the Plan's share reserve.

Shares issued in settlement of Plan awards result in some
dilution to shareholders' interests, since more shares are
subsequently outstanding. This dilutive effect is reduced
when the proceeds of the stock option exercises are used to
reacquire outstanding shares. If the amendment is approved,
the reacquired shares would be used in the Plan.

The major features of the Plan are summarized in Appendix A
to this proxy statement and are incorporated by reference in
this section. Shareholders are encouraged to read Appendix A
for a full understanding of the Plan, its purposes and
operation.

Vote Required for Approval

For this amendment to be approved, a majority of the votes
cast by shareholders must be voted for approval.

Alcoa's Board of Directors recommends that the shareholders
vote FOR approval of this amendment to the company's Long
Term Stock Incentive Plan.

PROPOSAL 4 - SHAREHOLDER
PROPOSAL REGARDING
CHARITABLE
CONTRIBUTIONS

Mrs. Frances Phillips, 822 Wilfred Avenue, Dayton, Ohio
45410, custodian for her minor daughter who owns 40 shares of
Alcoa common stock, has written that she intends to introduce
the following resolution at the meeting:

"Whereas, corporate charitable contributions should serve to
enhance shareholder value.

Therefore be it resolved that the Shareholders request the
Board of Directors of the corporation to refrain from making
any charitable contributions. Money normally allocated for
such purposes could be distributed in a special `charitable'
dividend payable to the individual owners of the company. It
could be suggested they give it to the charity of their
choice."

Supporting Statement
"Charitable giving is most beneficial to society when it is
done by individuals and not by corporate entities or the
federal government. Shareholders entrust their money to
Alcoa to get a good return, not to see it given to someone
else's favorite charity. Let's hear it for choice - the
choice of the individual shareholders to decide where their
money should be given."

Board Statement in Response to the Proposal

Alcoa makes, on average, only a modest number and amount of
charitable contributions annually. In 1996, for instance,
Alcoa's charitable contributions were less than $250,000.
Alcoa is not in business to make charitable contributions and
cannot commit the time and resources necessary to properly
evaluate the many requests for assistance that most corporate
employers receive from well-meaning and valued social and
educational groups.

These reasons led Alcoa over 45 years ago to establish Alcoa
Foundation, a non-profit organization whose sole purpose is
to engage in philanthropic activities. Alcoa Foundation
makes grants principally in the areas of education, health
and human services, civic and community development, youth
organizations and cultural activities, particularly in areas
in which Alcoa facilities are located. Alcoa Foundation is a
separate legal entity that is separately funded. The proposal
mistakenly assumes that the Foundation's assets would be
available for distributions to Alcoa's shareholders if not
used for philanthropic purposes.

The Board believes it to be in Alcoa's best interests to
continue to make limited corporate contributions to
charitable organizations and to sponsor Alcoa Foundation's
broader philanthropic purposes.

Vote Required for Approval

For this proposal to be approved, a majority of the votes
cast must be voted for approval.

Alcoa's Board of Directors recommends that shareholders vote
AGAINST approval of this proposal.

Other Information

RELATIONSHIP WITH INDEPENDENT
ACCOUNTANTS

Since 1950 Coopers & Lybrand L.L.P. has been the independent
accounting firm that audits the financial statements of Alcoa
and most of its subsidiaries. In accordance with standing
policy, Coopers & Lybrand personnel who work on the audit are
changed periodically.

During 1997, Coopers & Lybrand reviewed Alcoa's filings with
the SEC, prepared or reviewed financial and audit reports to
lenders, including governmental agencies, conducted audits
and due diligence reviews for acquisitions and evaluated the
effects of various accounting issues, information systems and
cost reduction opportunities.

They also helped in tax planning and the preparation of tax
returns for expatriate employees, executives and various
foreign locations of the company.

The Audit Committee of Alcoa's Board reviews summaries of the
audit and non-audit services rendered by Coopers & Lybrand
and the related fees.

On recommendation of the Audit Committee, the Board has
reappointed Coopers & Lybrand to audit the 1998 financial
statements. Representatives will be present at the annual
meeting to make a statement, if they choose, and answer
questions you may have.

SHAREHOLDER PROPOSALS FOR
THE 1999 MEETING

Alcoa's 1999 annual meeting of shareholders will be held on
May 7, 1999. If you wish to submit a proposal to be included
in the 1999 proxy statement, it must be received by the
corporate secretary by November 11, 1998.

OTHER MATTERS

The Board knows of no other proposals for the May 8, 1998
meeting. Should another arise, however, the proxy committee
will vote proxies according to its best judgment.

Appendix A - Description of
Long Term Stock Incentive Plan

Purpose - The purposes of the Plan are to motivate key
employees, to permit them to share in Alcoa's long-term
growth and financial success by giving them an increased
incentive to promote its well-being and to link the interest
of key employees to the long-term interests of Alcoa's
shareholders.

Administration - The Plan is administered by a subcommittee
of the Compensation Committee of the Board. Board members
who administer the Plan must not have been eligible to
participate in the Plan for at least 12 months. No member of
the subcommittee is a current or former officer or employee,
and none receive any compensation from Alcoa in any capacity
other than as a director. The Plan permits delegation of
certain authority to senior officers in limited instances.

Term - The Plan has no fixed expiration date; however, no new
awards may be granted under the Plan after January 1, 2002.

Types of Awards - Awards under the Plan are in the form of
stock option grants. Stock option awards entitle an optionee
to purchase shares of the company's common stock at a fixed
price during the option term.

Participation - Participation in the Plan is limited to
employees who have a key role in the management, operation,
growth or protection of a part or all of the business of the
company and who are selected from time to time by the
committee administering the Plan. About 1,000 current and
former employees hold stock options.

1998 Awards - In January 1998, 876 employees were awarded
stock options. The January 1998 options covered 3,605,600
shares at an exercise price of $66.125 per share. Awards to
the named executive officers were: Mr. O'Neill, 175,000
shares; Mr. Belda, 105,000 shares; Messrs. Bergeron, Fischer
and Hoffman, 52,800 shares each; and all executive officers
as a group (13 individuals), 728,600 shares.

Limitation on Awards - No individual may be granted options
for more than one million shares in a calendar year.

Option Price - The option price is determined under a formula
set by the subcommittee. This price is generally 100% of the
fair market value of Alcoa stock on the grant date.

Duration of Options - The option period is generally limited
to a maximum of 10 years. A small number of outstanding
earnout options expire five years after the end of the
optionee's Alcoa career. If the optionee dies during
employment or retires, existing options must be exercised
within five years. Shorter periods, generally three months,
apply following most other terminations of employment. The
Plan authorizes the subcommittee to establish other rules
regarding the treatment of options upon termination of
employment by reason of death, disability, retirement or
other approved reason. The subcommittee may shorten the
period of any option if the optionee takes any action that is
not in Alcoa's best interests.

Transferability - Effective with option grants beginning
January 1997, options may be transferred to immediate family
members or trusts for their benefit. No other transfers are
permitted. This feature, if elected, affords optionees an
estate-planning opportunity. There is no appreciable
additional cost to the company for this feature. Transferees
are not eligible to elect the reload grant feature.

Exercise - The option price must be paid in full upon
exercise. The optionee may pay the price in cash, by
surrendering shares of Alcoa common stock that were owned for
a certain minimum period and whose value equals the option
price or by a combination of cash and shares.

Reload Options - Reload options are designed to increase
ownership of Alcoa shares by encouraging early exercise of
options and retention of the shares. An employee exercising
an option may elect reload treatment if the appreciation is
at least $2.50 per share and if the exercise price is paid
using already-owned shares or, where annual grant options are
being exercised, using shares or cash. With a reload

election, a new option is granted at the market price at the
time of exercise and with the same expiration date as the
option being exercised. The reload option covers the number
of shares exercised less the net number of "profit" shares
delivered to the optionee after withholding for taxes. Half
of the profit shares are restricted - they are not
transferable for the optionee's remaining career with Alcoa.
A reload stock option may not be exercised for six months
after it is granted.

Employment Obligation - The optionee must agree to remain in
employment for at least one year or until retirement at least
six months after the granting of the option. An option is
not exercisable unless this obligation is met. This
obligation does not apply to reload options.

Plan Amendments - The Board may amend, modify, suspend or
terminate the Plan, but no such action (1) may impair,
without the optionee's consent, any outstanding option or
(2) will be taken without shareholder approval under certain
circumstances. Under the Plan, shareholder approval is
required for any action that would materially increase the
benefits accruing to participants, materially increase the
maximum number of shares that may be issued under the Plan or
materially modify the Plan's eligibility requirements.

Shares Available - On January 1, 1998, there were 19,447,255
shares of Alcoa common stock reserved for issuance under the
Plan. Outstanding options covered 10,548,725 of those
shares. Thus, 8,898,530 shares were then available for the
future granting of stock option awards. In addition, except
as otherwise determined by the subcommittee, shares used upon
option exercise to pay required withholding taxes and/or
shares delivered in payment of the option exercise price will
be available for issuance under the Plan. Future grants
under the Plan also may cover shares that cease to be covered
by awards by reason of total or partial expiration,
termination or voluntary surrender of an option or failure to
earn an award. The Plan also provides for adjustment of
awards and the share reserve in the event of stock splits and
other changes in stock.

The proposed amendment provides that shares available for use
under the Plan will be increased by the number of shares
purchased or acquired by the company with an aggregate price
no greater than the cash proceeds received by Alcoa after
January 1, 1998 from the exercise of stock options granted
under the Plan.

Recent Share Price - On February 9, 1998 (the record date for
the annual meeting), the closing market price for Alcoa
common stock was $75.25 per share.

Tax Consequences - The grant of a stock option under the Plan
has no U.S. federal income tax consequences for the optionee
or the company. Upon exercise of a stock option, the company
is entitled to a tax deduction, and the optionee realizes
ordinary income. The amount of such deduction and income is
equal to the difference between the option price and the fair
market value of the shares on the date of exercise. The
subcommittee may permit the use of Alcoa shares to pay the
required withholding taxes.

Glossary

beneficial owner. The owner of a security registered in
another's name, such as that of a brokerage or trust fund.

broker non-votes. Under New York Stock Exchange rules,
brokers who hold your shares in their names are permitted to
vote your shares at their discretion on some matters (called
"discretionary" items) unless you indicate a contrary vote.
For matters that are not considered discretionary under the
rules, your failure to give voting instructions means that
your shares will not be voted; these non-voted shares are
referred to as broker non-votes.

executive officer. This is an SEC-defined term, used to
identify the senior policy-making officers of the corporation
and officers in charge of principal business units.

fair market value. Under the company's Long Term Stock
Incentive Plan, fair market value of a share of Alcoa common
stock on any particular day is calculated as the average of
the high and low trading prices of the stock on the New York
Stock Exchange for that day (or if the Stock Exchange is not
open that day for trading, on the last prior date on which it
was open for trading).

market capitalization. The value of all outstanding shares,
calculated by multiplying the market price per share by the
total number of shares outstanding.

Alcoa's Vision

Alcoa is a growing worldwide company dedicated to excellence
through quality - creating value for customers, employees and
shareholders through innovation, technology, and operational
expertise. Alcoa will be the best aluminum company in the
world, and a leader in other businesses in which we choose to
compete.

Alcoa's Values

INTEGRITY

Alcoa's foundation is the integrity of its people. We will
be honest and responsible in dealing with customers,
suppliers, co-workers, shareholders, and the communities
where we have an impact.

ENVIRONMENT, HEALTH AND SAFETY

We will work safely in a manner that promotes the health and
well-being of the individual and the environment.

QUALITY AND EXCELLENCE

We will provide products and services that meet or exceed the
needs of our customers. We will relentlessly pursue
continuous improvement and innovation in everything we do to
create significant competitive advantage compared to world
standards.

PEOPLE

People are the key to Alcoa's success. Every Alcoan will
have equal opportunity in an environment that fosters
communications and involvement while providing reward and
recognition for team and individual achievement.

PROFITABILITY

We are dedicated to earning a return on assets that will
enable growth and enhance shareholder value.

ACCOUNTABILITY

We are accountable - individually and in teams - for our
actions and results.

Alcoa
425 Sixth Avenue
Pittsburgh, Pennsylvania 15219-1850

Graphics Appendix List

Page Where
Graphic Appears Description of Graphic or Cross-Reference

page 8 Photograph of Hugh M. Morgan, Nominee for
Director
page 8 Photograph of Henry B. Schacht, Nominee for
Director
page 8 Photograph of Franklin A. Thomas, Nominee
for Director
page 9 Photograph of Kenneth W. Dam, Continuing
Director
page 9 Photograph of Judith M. Gueron, Continuing
Director
page 9 Photograph of Paul H. O'Neill, Continuing
Director
page 10 Photograph of Joseph T. Gorman, Continuing
Director
page 10 Photograph of Sir Ronald Hampel, Continuing
Director
page 11 Photograph of John P. Mulroney, Continuing
Director
page 11 Photograph of Marina v.N. Whitman, Continuing
Director

March 13, 1998

Dear Alcoa Shareholder:

Many of you may know about our recent announcement to
acquire Alumax Inc. We will purchase Alumax for a
combination of cash and shares of Alcoa common stock,
subject to the terms of the acquisition agreement. This
transaction was announced after the enclosed proxy statement
was printed but before it was mailed to shareholders.

In light of this announcement, we are modifying Proposal No.
2, found on pages 20 and 21 of the enclosed proxy statement,
to include information about this transaction. The revised
Proposal No. 2 is on the back of this letter.

Shareholders are not being asked to vote on the Alumax
transaction and no proxy is being solicited for that
purpose.

Very truly yours,

/s/Paul H. O'Neill
Paul H. O'Neill

PROPOSAL 2 - APPROVE AN
AMENDMENT TO
ALCOA'S ARTICLES
INCREASING
AUTHORIZED
COMMON STOCK

Alcoa's Board of Directors has proposed an amendment to
Article FIFTH of the Articles of the company. This
amendment would increase the company's authorized common
stock from 300 million shares to 600 million shares.

On March 9, 1998, Alcoa announced that it would acquire all
of the outstanding common stock of Alumax Inc. for a
combination of cash and stock. Alcoa will commence the
transaction with a cash tender offer for one-half the
outstanding Alumax shares at $50.00 per share. The second
step will be a merger in which each remaining outstanding
Alumax share will be converted into 0.6975 of a share of
Alcoa common stock. On March 9, 1998, 168,134,196 shares of
Alcoa common stock were outstanding, and approximately 23.6
million shares were reserved for issuance under various
benefit plans of the company. Alcoa anticipates that
approximately 20 million shares of Alcoa stock will be
issued in the merger with Alumax, and additional shares may
be used in connection with financing the cash tender offer.
Alcoa currently has more than 100 million shares of
unissued and unreserved common stock available to use in
this transaction, which is more than sufficient for this
purpose.

Except for the Alumax transaction and shares reserved for
benefit plan purposes, the company has no other
plans or commitments to issue additional shares. In
particular, Alcoa has no plans for the issuance of the
increased number of authorized shares that is the subject of
this proposal. However, the Board of Directors believes
that the proposed increase is desirable so that, as the need
may arise, the company will have more financial flexibility
and be able to issue additional shares of common stock
without the expense and delay associated with a special
shareholders' meeting, except where shareholder approval is
required by applicable law or stock exchange regulations.
The additional common shares might be used, for example, in
connection with an expansion of Alcoa's business through
investments or additional acquisitions, sold in a financing
transaction or issued under an employee stock option,
savings or other benefit plan or in a stock split or
dividend to shareholders. The Board does not intend to
issue any shares except on terms that it considers to be in
the best interests of the company and its shareholders.

The additional shares of common stock for which
authorization is sought would be a part of the existing
class of common stock. If and when issued, these shares
would have the same rights and privileges as the shares of
common stock presently outstanding. No holder of common
stock has any preemptive rights to acquire additional shares
of the common stock.

The issuance of additional shares could reduce existing
shareholders' percentage ownership and voting power in Alcoa
and, depending on the transaction in which they are issued,
could affect the per share book value or other per share
financial measures.

Text of Proposed Articles Amendment

The first paragraph of Article FIFTH of the Articles of the
company is proposed to be amended to read as follows:

Vote Required for Approval

For this amendment to be approved, a majority of the votes
cast by shareholders must be voted for approval.

Alcoa's Board of Directors recommends that the shareholders
vote FOR adoption of the proposed amendment to Alcoa's
Articles.

To Fellow Alcoa Shareholders:

Your 1998 Alcoa proxy card is attached below. Please read
both sides of the card, and vote, sign and date it. Then
detach and return it promptly using the enclosed envelope. We
urge you to vote your shares.

You are invited to attend the annual meeting of shareholders
on Friday, May 8, at 9:30 a.m. in the William Penn Ballroom of
the Westin William Penn Hotel in Pittsburgh, Pennsylvania.

If you plan to attend the meeting, please check the
appropriate box on the proxy card. Then detach and retain
the admission ticket which is required for admission to the
meeting.

Thank you in advance for voting.

Denis A. Demblowski
Secretary

Shareholder comments about any aspect of company business are
welcome. Although comments are not answered on an individual
basis, they do assist Alcoa management in determining and
responding to the needs of shareholders.

----------------------------------------------------

(If you have comments, please detach and return with your
proxy card in the enclosed envelope)

Alcoa
425 Sixth Avenue
Pittsburgh, PA 15219-1850

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.

The undersigned shareholder hereby authorizes Earnest J.
Edwards, Russell W. Porter, Jr. and Robert G. Wennemer,
or any one or more of them, with power of substitution to
each, to represent the undersigned at the annual meeting
of shareholders of Aluminum Company of America scheduled
for Friday, May 8, 1998, and any adjournment of the
meeting, and to vote the shares of stock which the
undersigned would be entitled to vote if attending the
meeting, upon the matters referred to on the reverse side
of this card and in accordance with the best judgment of
such persons upon other matters as may properly come
before the meeting or any adjournment of the meeting.

As described more fully in the proxy statement, this card
votes or provides voting instructions for shares of
common stock held under the same registration in any one
or more of the following manners: as a shareholder of
record, in the Alcoa Dividend Reinvestment and Stock
Purchase Plan and in Alcoa's employee savings plans.

If you plan to attend the annual meeting, please check
the box below.

/ / I will attend the annual meeting

(continued on the other side)

(continued from the other side)

(detach and return in the enclosed envelope)
PROXY

Please specify your choices by clearly marking the
appropriate boxes. Unless specified, this proxy will be
voted FOR items 1, 2 and 3 and AGAINST item 4.

Directors recommend a vote FOR this item (#1)
1. Election of Directors for a three-year term:

Nominees are: Henry B. Schacht and Franklin A.
Thomas

/ / FOR all listed nominees

/ / WITHHOLD vote for all listed nominees

/ / WITHHOLD vote only from
------------------

Directors recommend a vote FOR this item (#2)
2. Proposal 2 - Amendment to Articles Increasing Authorized
Common Stock

/ / Vote FOR / / Vote AGAINST / / ABSTAIN

Directors recommend a vote FOR this item (#3)
3. Proposal 3 - Amendment to Long Term Stock Incentive Plan

/ / Vote FOR / / Vote AGAINST / / ABSTAIN

Directors recommend a vote AGAINST this item (#4)
4. Proposal 4 - Shareholder Proposal regarding Charitable
Contributions

/ / Vote FOR / / Vote AGAINST / / ABSTAIN

PLEASE VOTE, SIGN, DATE AND RETURN

Date 1998
- -------------------------------- ------------------
(Sign exactly as name appears above, indicating position or
representative capacity, where applicable)