<PAGE>
April 29, 1997
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Kaiser Aluminum Corporation (the "Company"); Definitive
Proxy Materials
Ladies and Gentlemen:
On behalf of the Company and pursuant to Rule 14a-6(b)
promulgated under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), please find attached the
Definitive Proxy Statement with respect to the 1997 Annual
Meeting of Stockholders, including the Notice of 1997 Annual
Meeting, and form of Proxy. It is intended that these
materials will be released to the Company's stockholders
commencing on or about April 29, 1997.
A hard copy of the actual performance graph has been
provided via Federal Express to Charles A. Sjoquist, Branch
Chief, under our cover dated April 28, 1997.
Please be advised that by copy of this letter, six (6)
copies of such materials are being delivered the New York
Stock Exchange.
Please contact the undersigned at (510) 847-5882 with
any questions or comments you may have.
Sincerely,
/s/ John M. Donnan
John M. Donnan
General Attorney
cc: w/ Enclosures
VIA FEDERAL EXPRESS
Mr. Hugh O'Brien
New York Stock Exchange
20 Broad Street, 18th Floor
New York, New York 10005
<PAGE>
<PAGE>
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /x /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(As permitted by Rule 14(a)-6(e)(2))
/x / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
Kaiser Aluminum & Chemical Corporation
- - - --------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Kaiser Aluminum & Chemical Corporation
- - - --------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:
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2) Aggregate number of securities to which transaction
applies:
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3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (Set
forth the amount on which the filing fee is calculated and
state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Table of Contents
Notice of Annual Meeting of Stockholders
Proxy Statement
Election of Directors . . . . . . 2
The Board of Directors
and its Committees. . . . . . . . 2
Approval of the
Kaiser 1997 Omnibus Stock
Incentive Plan. . . . . . . . . . 4
Executive Officers and
Directors . . . . . . . . . . . . 9
Principal Stockholders. . . . . . 14
Executive Compensation. . . . . . 16
Report of the Compensation
Committees on Executive
Compensation. . . . . . . . . . . 20
Certain Transactions. . . . . . . 24
Compliance with Section
16(a) of the Exchange
Act . . . . . . . . . . . . . . . 24
Other Matters . . . . . . . . . . 25
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[KACC Logo]
-------------------------
Notice of 1997 Annual
Meeting
and
Proxy Statement
-------------------------
Important
Please sign and date your
proxy card and promptly
return it in the enclosed
envelope.
Printed on recycled paper.
<PAGE>
[KACC Logo]
April 30, 1997
To Our Stockholders:
You are cordially invited to attend the Annual Meeting
of Stockholders (the "Annual Meeting") of Kaiser Aluminum &
Chemical Corporation (the "Company") to be held at 10:00
a.m. on Wednesday, June 4, 1997, at 5847 San Felipe, 26th
Floor, (Board of Directors Meeting Room), Houston, Texas.
At the Annual Meeting, the holders of the Company's
common stock, par value $.33-1/3 per share, Cumulative (1985
Series A) Preference Stock and Cumulative (1985 Series B)
Preference Stock (all such holders being collectively
referred to as the "Stockholders") will consider and vote,
as a single class, (i) in the election of directors, (ii)
upon a proposal to approve the Kaiser 1997 Omnibus Stock
Incentive Plan, and (iii) upon such other business as may
properly be presented to the Annual Meeting or any
adjournments or postponements thereof.
Each Stockholder of record at the close of business on
April 30, 1997, is entitled to receive notice of and to vote
at the Annual Meeting and is urged to attend. Whether or
not you intend to be present at the Annual Meeting, we urge
you to complete, date, sign and promptly return the enclosed
proxy card.
We look forward to seeing as many of you as possible at
the Annual Meeting.
GEORGE T. HAYMAKER, JR.
Chairman of the Board, President and
Chief Executive Officer
<PAGE>
<PAGE>
KAISER ALUMINUM & CHEMICAL CORPORATION
--------------------------------------
6177 Sunol Boulevard
--------------------
Pleasanton, California 94566-7769
----------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------------------------------
To Be Held June 4, 1997
------------------------
The Annual Meeting of Stockholders (the "Annual Meeting")
of Kaiser Aluminum & Chemical Corporation (the "Company") will
be held at 5847 San Felipe, 26th Floor, (Board of Directors
Meeting Room), Houston, Texas, on Wednesday, June 4, 1997, at
10:00 a.m., Houston time, for the following purposes:
1. To elect six (6) directors to hold office until the
Company's 1998 Annual Meeting of Stockholders or until
their respective successors are elected and qualified;
2. To consider and vote upon a proposal to approve the
Kaiser 1997 Omnibus Stock Incentive Plan; and
3. To consider and transact such other business as may
properly be presented to the Annual Meeting or any
adjournments or postponements thereof.
Holders of record of the Company's common stock, par
value $.33 per share, Cumulative (1985 Series A)
Preference Stock and Cumulative (1985 Series B) Preference
Stock (all such holders being collectively referred to as
the "Stockholders") as of the close of business on April 30,
1997 are entitled to notice of and to vote at the Annual
Meeting. All Stockholders will vote as a single class at
the Annual Meeting. Stockholder lists will be available
commencing May 23, 1997, and may be inspected for purposes
germane to the Annual Meeting during normal business hours
prior to the Annual Meeting at the offices of the Company,
5847 San Felipe, Suite 2600, Houston, Texas.
By Order of the Board of Directors
BYRON L. WADE
Secretary
April 30, 1997
IMPORTANT
Please complete, date and sign the enclosed proxy card
and return it promptly in the enclosed envelope provided for
your convenience and which requires no postage if mailed in
the United States. Any Stockholder who attends the Annual
Meeting may vote personally on all matters brought before
the Annual Meeting and, in that event, his or her proxy will
not be used. <PAGE>
<PAGE>
KAISER ALUMINUM & CHEMICAL CORPORATION
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 4, 1997
This proxy statement (the "Proxy Statement") is furnished
to Stockholders (as defined below) in connection with the
solicitation of proxies on behalf of the Board of Directors
of Kaiser Aluminum & Chemical Corporation (the "Company"), a
Delaware corporation, to be voted at the Company's Annual
Meeting of Stockholders (the "Annual Meeting") to be held on
June 4, 1997, and any adjournments or postponements thereof,
at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. The
principal executive offices of the Company are located at
6177 Sunol Boulevard, Pleasanton, California 94566-7769,
telephone (510) 462-1122.
This Proxy Statement, the accompanying proxy card, and
the Notice of Annual Meeting are being mailed, commencing on
or about May 1, 1997, to the record holders as of the close
of business on April 30, 1997, of the Company's common
stock, par value $.33 per share (the "Common Stock"),
Cumulative (1985 Series A) Preference Stock ("1985 Series A
Stock") and Cumulative (1985 Series B) Preference Stock
("1985 Series B Stock"), all such holders being collectively
referred to as the "Stockholders"). The Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1996, is being mailed to Stockholders together with, but is
not part of, this Proxy Statement and other proxy materials.
We cordially invite you to attend the Annual Meeting.
Whether or not you plan to attend, please complete, date,
sign and promptly return your proxy card in the enclosed
envelope. The persons authorized to act as proxies at the
Annual Meeting, individually or jointly, as listed on the
proxy cards are E. Bruce Butler, John T. La Duc and John Wm.
Niemand II. You may revoke your proxy at any time prior to
its exercise at the Annual Meeting by giving notice to the
Company's Secretary, by filing a later-dated proxy or, if
you attend the Annual Meeting, by voting your shares in
person. Proxies will be voted in accordance with the
directions specified thereon or, in the absence of
instructions, "FOR" the election of the directors and "FOR"
the approval of the Kaiser 1997 Omnibus Stock Incentive Plan
as set forth in this Proxy Statement. The presence, in
person or by proxy, of the holders of shares of the
Company's capital stock entitled to cast a majority of the
votes entitled to be cast at the Annual Meeting is required
to constitute a quorum for the transaction of business at
the Annual Meeting. Abstentions and broker non-votes are
counted for purposes of determining the presence or absence
of a quorum for the transaction of business. A plurality of
the votes present, in person or by proxy, is necessary for
the election of directors. With regard to the election of
directors, votes may be cast in favor or withheld; votes
that are withheld will be excluded entirely from the vote
and will have no effect on the outcome. Abstentions may not
be specified on the election of directors. Under applicable
Delaware law, abstentions and broker non-votes will have the
same effect as a vote "AGAINST" the proposal to approve the
Kaiser 1997 Omnibus Stock Incentive Plan.
The Company's Common Stock is 100% owned by Kaiser
Aluminum Corporation ("KAC"). There is no established
public trading market for the Common Stock. The holders of
record of approximately 89% of the 1985 Series A Stock and
approximately 51% of the 1985 Series B Stock are the
trustees under the Trust Agreement of the Company's USWA
Employee Stock Ownership Plan and the Trust Agreement of the
Company's Salaried Employee Stock Ownership Plan,
respectively. The trustees have agreed to vote the shares
of the 1985 Series A Stock and 1985 Series B Stock held by
them as directed by the beneficial owners of such shares, or
with respect to shares of such stock as to which no voting
instructions are received, in the same proportions as the
shares as to which instructions are received are voted. As
of April 29, 1997, there were 46,171,365 shares of Common
Stock, 535,432 shares of 1985 Series A Stock and 68,467
shares of Series B Stock outstanding.<PAGE>
<PAGE>
ELECTION OF DIRECTORS
At the Annual Meeting, six directors will be elected by
the Stockholders to serve until the 1998 Annual Meeting or
until their respective successors are duly elected and
qualified. The six nominees receiving the highest number of
votes will be elected.
The six persons nominated for election to the Board of
Directors at the Annual Meeting are Robert J. Cruikshank,
George T. Haymaker, Jr., Charles E. Hurwitz, Ezra G. Levin,
Robert Marcus and Robert J. Petris. All of such nominees
are currently members of the Board of Directors. See,
"Executive Officers and Directors" and "Principal
Stockholders" for information concerning each of the
nominees, including the dates on which they first became
directors, their business experience during the past five
years, and the number of shares of the Company's capital
stock owned beneficially by each of them as of April 1,
1997. Each of the nominees has consented to serve as a
member of the Board of Directors if elected.
The persons named in the proxies will vote the shares
represented thereby for the election of the foregoing named
nominees except where authority has been withheld as to a
particular nominee or as to all such nominees. Should any
nominee decline or be unable to serve as a director of the
Company, which is not anticipated, the persons named in the
proxies will vote for the election in his stead of such
other person as the Board of Directors may recommend.
The Board of Directors recommends a vote "FOR" the
--------------------------------------------------
election of all nominees for director of the Company.
- - - ----------------------------------------------------
THE BOARD OF DIRECTORS AND ITS COMMITTEES
-----------------------------------------
The Board of Directors of the Company (sometimes referred
to herein as the "Board") held four meetings and acted by
written consent on ten occasions during 1996. In addition,
management confers frequently with its directors on an
informal basis to discuss Company affairs. During 1996, no
director attended fewer than 75% of the aggregate of the
meetings of the Board and all committees of the Board on
which he served.
The Board currently has four standing committees. These
committees consist of the Executive, Audit, Compensation
Policy, and Section 162(m) Compensation Committees.
The Executive Committee meets on call and has authority
to act on most matters during the intervals between meetings
of the entire Board of Directors. The current members are
Messrs. Haymaker and Hurwitz (Chairman). The Executive
Committee held one meeting and acted by written consent one
time during 1996.
The current members of the Audit Committee are Messrs.
Levin, Marcus (Chairman) and Petris. The Audit Committee
meets with appropriate Company financial and legal
personnel, internal auditors and independent public
accountants and reviews the internal controls of the Company
and the objectivity and appropriateness of its financial
reporting. The Audit Committee recommends to the Board the
appointment and retention of the independent public
accountants to serve as auditors in examining the corporate
accounts of the Company and also has the authority to
supervise and direct the financial reporting, affairs,
policies and procedures of the Company, limited only by
restrictions imposed by applicable law, rule or regulation.
The independent public accountants periodically meet
privately with the Audit Committee and have access to the
Audit Committee at any time. The Audit Committee met on one
occasion during 1996.
The Compensation Policy Committee and the Section 162(m)
Compensation Committee replaced the Company's Compensation
Committee on June 5, 1996. Prior to its replacement, the
Compensation Committee reviewed and advised management, made
recommendations to the Board, and reviewed proposals
regarding the
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<PAGE>
establishment or change of benefits plans, salaries or
compensation afforded the executive officers and other
employees of the Company. Messrs. Cruikshank, Levin
(Chairman) and Marcus served as members of the Compensation
Committee. The Compensation Committee met on four occasions
and acted by written consent two times during 1996 before
being replaced.
The Compensation Policy Committee reviews and approves
proposals concerning or related to the establishment or
change of benefits plans, or material amendments to any
existing benefit plan, salaries or other compensation
including, but not limited to, payments awarded pursuant to
bonus and benefit plans maintained by the Company and its
subsidiaries, except to the extent that (i) such authority
has been delegated by the Board to the Section 162(m)
Compensation Committee or (ii) such plans are governed by a
plan committee, a subsidiary board of directors, or are
covered by a collective bargaining arrangement or other
binding contract of the Board. Notwithstanding the
foregoing, the Compensation Policy Committee also supervises
plan committees other than the Section 162(m) Compensation
Committee and may delegate the administration and investment
decisions concerning plans to committees established for
those purposes. Messrs. Cruikshank, Levin (Chairman) and
Marcus currently serve as members of the Compensation Policy
Committee. The Compensation Policy Committee met on four
occasions and acted by written consent one time during 1996.
The Section 162(m) Compensation Committee administers and
approves amendments to the Company's plans or programs
which are intended to comply with the provisions of Section
162(m) of the Internal Revenue Code of 1986, as it may be
amended from time to time (the "Code"). The Section 162(m)
Compensation Committee also establishes the criteria to be
used in determining awards to be made pursuant to such plans
and programs. Messrs. Cruikshank and Marcus (Chairman)
currently serve as members of the Section 162(m)
Compensation Committee. The Section 162(m) Compensation
Committee met on four occasions during 1996 and did not act
by written consent.
The Board of Directors of the Company does not have a
standing nominating committee nor does it have any committee
performing a similar function.
Director Compensation
- - - ---------------------
Directors who were not employees of the Company or KAC,
received a base fee of $30,000 for the 1996 calendar year.
Non-employee directors of the Company who were also
non-employee directors of MAXXAM Inc. ("MAXXAM"), KAC's
parent, received director or committee fees for serving as a
director of the Company and/or KAC in addition to the fees
received from MAXXAM. In addition, the Chairman of each of
the committees was paid a fee of $3,000 per year, or $750
per quarter, for services as Chairman. All committee
members received a fee of $1,500 per day per committee
meeting held in person on a date other than a Board meeting
date and $500 per formal telephonic committee meeting. In
respect of 1996, Messrs. Cruikshank, Levin, Marcus and
Petris received an aggregate of $35,000, $38,000, $44,330
and $31,500, respectively, in such director and committee
fees from the Company and KAC.
Subject to the approval of the Chairman of the Board,
directors may also be paid additional ad hoc fees for
extraordinary services in the amount of $750 per one-half
day or $1,500 per day. In 1996, Mr. Marcus received fees in
the amount of $13,500 for extraordinary services performed
during 1996 when requested to travel to China to review the
Company's activities there. Directors are reimbursed for
travel and other disbursements relating to Board and
committee meetings. Fees to directors who are also
employees of the Company or MAXXAM are deemed to be included
in their salary. Directors of the Company were also
directors of KAC and received the foregoing compensation for
acting in both capacities.
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<PAGE>
APPROVAL OF THE KAISER 1997 OMNIBUS STOCK INCENTIVE PLAN
--------------------------------------------------------
The Kaiser 1997 Stock Incentive Plan (the "1997 Plan")
was recommended by the Company's Compensation Policy
Committee and Section 162(m) Compensation Committee, and
adopted by the Board of Directors in April 1997, subject to
approval by the stockholders of the Company and KAC, and is
hereby submitted to the Stockholders of the Company for
approval. If approved, the 1997 Plan will increase the
number of shares of Common Stock available for issuance
pursuant to the Company's compensation programs and permit
the grant of awards to non-employee directors who were not
otherwise eligible to receive awards under the Kaiser 1993
Omnibus Stock Incentive Plan (the "1993 Omnibus Plan"). In
addition, the 1997 Plan will facilitate the Company's
ability to reward individuals responsible for implementing
the steps necessary to accomplish the Company's objectives.
During 1996, the Company's management developed a
strategic path to improve the Company's performance against
specific objectives. This path calls for significant change
in the following three areas: (i) achieving better profit
performance from the Company's existing assets and
businesses, including a goal of annual profit enhancements and
pre-tax cost reductions of $120 million to take full
effect in 1998, as measured against 1996 results; (ii)
increasing the earnings of the Company through growth in
targeted areas of the Company's portfolio, both by internal
investment and by acquisition; and (iii) reducing the
Company's leverage and improving its financial ratios in
order to reduce interest costs and increase the Company's
access to financing on more favorable terms. The 1997 Plan
is designed to reward participants instrumental in
accomplishing changes in these areas.
The 1997 Plan will supplement and eventually replace the
1993 Omnibus Plan and the Kaiser 1995 Executive Incentive
Compensation Program (the "Executive Program"). The 1993
Omnibus Plan has available approximately 525,000 of the
original 2,500,000 shares of the Common Stock of KAC, par
value $.01 per share ("KAC Common Stock"), reserved for
awards or for payment of rights granted under the 1993
Omnibus Plan. These remaining shares will largely be used
for any awards for long-term performance periods beginning
on or before January 1, 1997, under the Executive Program
and the Kaiser 1995 Employee Incentive Program
(individually, the "Employee Program" and, collectively, the
"Incentive Programs") more fully described in the Report of
the Compensation Committees on Executive Compensation
contained in this Proxy Statement. Any shares remaining
available under the 1993 Omnibus Plan will be rolled into
the shares available for issuance under the 1997 Plan. The
1993 Omnibus Plan will remain in existence and awards
relating to performance periods beginning on or before
January 1, 1997, will generally continue to be governed by
the provisions of the 1993 Omnibus Plan.
Summary Description of the 1997 Plan. The following
summary of the terms of the 1997 Plan is qualified in its
entirety by reference to the full text of the plan. Copies
of the 1997 Plan, as filed with the Securities and Exchange
Commission (the "SEC"), may be obtained without charge by
writing to the Company at 5847 San Felipe, Suite 2600,
Houston, Texas 77057, Attention: Coordinator of Shareholder
Services, telephone number: (713) 267-3675. If adopted by
the stockholders of the Company and KAC, the 1997 Plan will
be effective as of April 1, 1997.
Administration. Administration of the 1997 Plan has been
delegated by the Boards of the Company and KAC to their
respective Compensation Policy Committees, with the
exception of awards to non-employee directors, which will be
administered by the respective Boards of the Company and
KAC, and awards intended to comply with Section 162(m) of
the Code ("Section 162(m)"), which will be administered by
the Section 162(m) Compensation Committees of the Company
and KAC. As used in the following description of the 1997
Plan, "Committee" shall mean the Boards of Directors,
Section 162(m) Compensation Committees or the Compensation
Policy Committees of the Company and KAC, as appropriate.
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Eligibility. While all employees of the Company and KAC,
and the non-employee directors of the Company, KAC and their
subsidiaries and affiliates are eligible to participate in
the 1997 Plan subject to the broad discretion of the
Committee in selecting participants, less than 150 persons,
including five non-employee directors, are expected to
participate in the 1997 Plan. Neither the benefits that
will be received under the 1997 Plan in the future, nor the
benefits that would have been received for 1996 if the 1997
Plan had been in effect, are determinable at this time.
Stock Available for Issuance Through the 1997 Plan. In
addition to cash-based awards, the 1997 Plan provides for
stock-based compensation in a number of forms. Up to
5,500,000 shares of KAC Common Stock are authorized for
issuance through the 1997 Plan, no more than 1,800,000 of
which may be issued in the form of restricted stock.
Assuming the conversion of each outstanding share of KAC's
8.255% PRIDES sm, Convertible Preferred Stock, par value
$.05 per share (the "PRIDES"), into one share of KAC Common
Stock and the issuance of all of the shares authorized for
issuance through the 1997 Plan, the shares issued through
the plan would constitute approximately 6.4% of the issued
and outstanding shares of the KAC Common Stock.
Provisions in the 1997 Plan permit the reuse or
reissuance of shares underlying canceled, expired, or
forfeited awards of stock-based compensation, as well as
shares tendered in payment of a stock option exercise price
or withheld by the Company to pay taxes on an award, subject
to restrictions imposed under the SEC's short-swing trading
rules. On April 21, 1997, the closing price of KAC Common
Stock was $10.50 per share.
Description of Awards Under the 1997 Plan. The Committee
may award incentive and nonqualified stock options, stock
appreciation rights, restricted stock, performance
units/performance shares, and cash-based awards. As
separately described under "Performance Measures," the
Committee may also grant awards subject to satisfaction of
specific performance goals. Awards under the 1997 Plan will
be used for annual incentives and long-term incentives. The
forms of awards are described in greater detail below.
Stock Options. The Committee will have discretion to
award incentive stock options ("ISOs"), which are intended
to comply with Section 422 of the Code, or nonqualified
stock options ("NQSOs"), which are not intended to comply
with Section 422 of the Code. Non-employee directors are
ineligible to receive ISOs under the Code. Each option
issued under the 1997 Plan must be exercised within a period
of ten years from the date of grant, and the exercise price
of an option may not be less than the fair market value of
the underlying shares of KAC Common Stock on the date of
grant. If an award of stock options is intended to qualify
as performance-based compensation under Section 162(m), the
maximum number of shares which may be granted in the form of
stock options in any fiscal year to any one participant is
500,000. In this case, the option price will be at or above
the fair market value of such shares as of the date of the
grant. Subject to the specific terms of the 1997 Plan, the
Committee will have discretion to set such additional
limitations on option grants as it deems appropriate.
Options granted to employees under the 1997 Plan will
expire at such times as the Committee determines at the time
of the grant subject to the ten year limitation described
above and each option award agreement will set forth the
extent to which the participant will have the right to
exercise the option following termination of employment.
The termination provisions will be determined within the
discretion of the Committee, may not be uniform among all
participants and may reflect distinctions based on the
reasons for termination of employment.
Upon the exercise of an option granted under the 1997
Plan, the option price is payable in full to the Company,
either: (i) in cash or its equivalent; (ii) by tendering
shares having a fair market value at the time of exercise
equal to the total option price (provided such shares have
been held for at least six months prior to their tender); or
(iii) if permitted in the participant's award agreement, a
combination of (i) and (ii). If permitted in the
participant's award agreement, the option exercise price may
also be paid through a cashless exercise as permitted under
the Federal Reserve Board's Regulation T.
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<PAGE>
Stock Appreciation Rights. The Committee may also award
stock appreciation rights ("SARs") under the 1997 Plan in
tandem with, or apart from, stock options, upon such terms
and conditions as it shall establish. The grant price of a
freestanding SAR shall equal the fair market value of a
share of KAC Common Stock while the grant price of a tandem
SAR issued in connection with a stock option shall equal the
option price of the related option. If an award of SARs is
intended to qualify as performance-based compensation under
Section 162(m), the maximum number of shares which may be
granted in the form of SARs in any one fiscal year to any
one participant is 500,000. In this case, the option price
will be at or above the fair market value of such shares as
of the date of the grant.
Restricted Stock. The Committee will also be authorized
to award shares of restricted KAC Common Stock under the
1997 Plan, up to the overall plan maximum, upon such terms
and conditions as it shall establish. If an award of
restricted stock is intended to qualify as performance-based
compensation under Section 162(m), the maximum number of
shares which may be granted in the form of restricted stock
in any one fiscal year to any one participant is 200,000.
The award agreement will specify the period(s) of
restriction, the number of shares granted, restrictions
based upon achievement of specific performance objectives
and/or restrictions under applicable federal or state
securities laws. Although recipients may have the right to
vote these shares from the date of grant, they will not have
the right to sell or otherwise transfer the shares during
the applicable period of restriction or until earlier
satisfaction of other conditions imposed by the Committee in
its sole discretion. Notwithstanding the expiration of the
applicable period of restriction or the satisfaction of
conditions imposed by the Committee, shares issued to
directors or certain executive officers of the Company or
KAC will remain subject to the restrictions imposed by Rule
144 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Participants may receive dividends on
their shares of restricted stock and the Committee, in its
discretion, will determine if and how dividends on
restricted shares are to be paid.
Each award agreement for restricted stock will set forth
the extent to which the participant will have the right to
retain unvested restricted stock following termination of
the participant's employment. These provisions will be
determined in the sole discretion of the Committee, need not
be uniform among all shares of restricted stock issued
pursuant to the 1997 Plan and may reflect distinctions based
on reasons for termination of employment. Except in the
case of terminations by reason of death or disability, the
vesting of restricted stock which qualifies for
performance-based compensation under Section 162(m) and
held by "covered employees" under Section 162(m) shall
occur at the time it otherwise would have, but for the
employment termination.
Performance Units/Shares and Cash-Based Awards. The
Committee will also have the discretion to award performance
units, performance shares, and cash-based awards under the
1997 Plan upon such terms and conditions as it shall
establish. If a cash-based award or an award of performance
units or performance shares is intended to qualify as
performance-based compensation under Section 162(m), the
maximum aggregate payout with respect to such awards which
may be granted in any one fiscal year to any one participant
shall be the value of 300,000 shares of KAC Common Stock.
Performance units will have an initial value as determined
by the Committee while each performance share will have an
initial value equal to one share of KAC Common Stock. The
payout on the number and value of the performance units,
performance shares, and cash-based awards will be a function
of the extent to which corresponding performance goals are
met.
Performance Measures. The Committee may grant awards
under the 1997 Plan to participants subject to attaining
certain specified performance measures. The number of
performance-based awards granted to any participant in any
year is determined by the Committee in its sole discretion,
and the value of each performance-based award will be
determined solely upon achieving certain pre-established
objective performance goals during each performance period.
The duration of a performance period is set by the
Committee. A new performance period may begin every year,
or at more frequent or less frequent intervals, as
determined by the Committee.
-6-
<PAGE>
<PAGE>
The Committee will establish written objective
performance goals applicable to the valuation of
performance-based awards granted in each performance period,
the performance measures which will be used to determine the
achievement of those performance goals, and any formulas or
methods to be used to determine the value of the
performance-based awards. The value of performance-based
awards may be based on absolute measures or on a comparison
of the Company's financial measures during a performance
period to the financial measures of a group of competitors.
The performance measures authorized by the 1997 Plan consist
of earnings per share, net income (before or after taxes),
return measures (including, but not limited to, return on
assets, equity, or sales), cash flow return on investments
which equals net cash flows divided by owner's equity,
earnings before or after taxes, measures of gross sales,
gross revenues, or growth in sales or revenues, share price
(including, but not limited to, growth measures and total
shareholder return), and operating measures (including, but
not limited to, operating margins and operating costs).
Following the end of a performance period, the Committee
will determine the value of the performance-based awards
granted for the period. The Committee shall also have
discretion to reduce (but not to increase) the value of a
performance-based award. In addition, the Committee will
certify that the award is based on the degree to which the
pre-established performance goals were obtained. As soon as
practicable thereafter, payment of the awards to
participants, if any, shall be made in accordance with the
guidelines established by the Committee.
Adjustment and Amendments. The 1997 Plan provides for
appropriate adjustments in the number of shares of the KAC
Common Stock subject to awards and available for future
awards in the event of changes in the outstanding KAC Common
Stock by reason of a merger, stock split, recapitalization
or certain other events. In addition, the 1997 Plan may be
modified or amended by the Board of Directors at any time
and for any purpose which the Board deems appropriate.
However, no such amendment shall adversely affect any
outstanding awards without the affected holder's consent.
Stockholder approval of an amendment will be sought if
necessary under regulations promulgated by the Internal
Revenue Service or SEC, the rules of the New York Stock
Exchange or any applicable law.
Nontransferability. No derivative security (including,
without limitation, options) granted pursuant to, and no
right to payment under, the 1997 Plan shall be assignable or
transferable by a plan participant except by will or by the
laws of descent and distribution or as otherwise required by
law, and any option or similar right shall be exercisable
during a participant's lifetime only by the participant or
by the participant's guardian or legal representative.
These limitations may be waived by the Committee, subject to
restrictions imposed under the SEC's short-swing trading
rules and federal tax requirements relating to incentive
stock options.
Duration of the Plan. The 1997 Plan will remain in
effect until all options and rights granted thereunder have
been satisfied or terminated pursuant to the terms of the
plan, and all performance periods for performance-based
awards granted thereunder have been completed. However, in
no event will any awards be granted under the 1997 Plan
after March 31, 2007.
Certain Tax Consequences of the Issuance and Exercise of
Options. With respect to options which qualify as ISOs, a
participant in the 1997 Plan will not recognize income for
federal income tax purposes at the time options are granted
or exercised. If the participant disposes of shares
acquired by exercise of an ISO either before the expiration
of two years from the date the options are granted or within
one year after the issuance of shares upon exercise of the
ISO (the "holding periods"), the participant will recognize
in the year of disposition: (i) ordinary income, to the
extent that the lesser of either (a) the fair market value
of the shares on the date of option exercise, or (b) the
amount realized on disposition, exceeds the option price;
and (ii) capital gain, to the extent the amount realized on
disposition exceeds the fair market value of the shares on
the date of option exercise. If the shares are sold after
expiration of the holding periods, the participant generally
will recognize capital gain or loss equal to the difference
between the amount realized on disposition and the option
price.
-7-
<PAGE>
<PAGE>
With respect to NQSOs, the participant will recognize no
income upon grant of the option, and, upon exercise, will
recognize ordinary income to the extent of the excess of the
fair market value of the shares on the date of option
exercise over the amount paid by the participant for the
shares. Upon a subsequent disposition of the shares
received under the option, the participant generally will
recognize capital gain or loss to the extent of the
difference between the fair market value of the shares at
the time of exercise and the amount realized on the
disposition.
In general, the Company will receive an income tax
deduction at the same time the participant recognizes
income, and in the same amount as the amount which is
taxable to the participant as ordinary income, except as
provided below under "Section 162(m)". To the extent a
participant recognizes capital gains, as described above,
the Company will not be entitled to any deduction for
federal income tax purposes.
Section 162(m). Under Section 162(m), compensation paid
by the Company in excess of $1 million for any taxable year
to "covered employees" generally is deductible by the
Company or its affiliates for federal income tax purposes if
it is based on the performance of the Company, is paid
pursuant to a plan approved by stockholders of the Company,
and meets certain other requirements. In this regard, the
Company is presenting the 1997 Plan for Stockholder
approval. Generally, "covered employees" under Section
162(m) means the chief executive officer and the four other
highest paid executive officers of the Company as of the
last day of the taxable year. Within 90 days of the
beginning of each fiscal year, the Section 162(m)
Compensation Committees of the Company and KAC must
establish one or more objective performance goals that must
be reached for a covered executive to receive an award under
the 1997 Plan and the amount of the award to be paid if the
goals are achieved. While these awards may be reduced, they
may not be increased.
The Section 162(m) Compensation Committee of the Company
and KAC believe that the 1997 Plan allows for the grant of
awards that are performance based and that such awards
thereunder in excess of $1 million for any taxable year
after 1997 should be tax deductible under Section 162(m).
It is presently anticipated that the Section 162(m)
Compensation Committees will at all times consist of
"outside directors" as required for purposes of Section
162(m), and that the committees will take the effect of
Section 162(m) into consideration in structuring 1997 Plan
awards and take all reasonable steps to maintain the 1997
Plan based on performance-based standards.
Approval of the 1997 Plan requires the affirmative vote
-------------------------------------------------------
of the holders of a majority of the Company's capital stock
- - - -----------------------------------------------------------
represented at the Annual Meeting. The Board of Directors
- - - ----------------------------------------------------------
recommends a vote "FOR" approving the 1997 Plan.
- - - -----------------------------------------------
-8-
<PAGE>
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
--------------------------------
The following table sets forth certain information, as of
April 1, 1997, with respect to the executive officers and
directors of the Company. All officers and directors hold
office until their respective successors are elected and
qualified or until their earlier resignation or removal.
Name Positions and Offices with the
Company
---- -------------------------------
George T. Haymaker, Jr. Chairman of the Board,
President, Chief Executive
Officer and Director
Joseph A. Bonn Vice President, Planning and
Development
E. Bruce Butler Vice President and General
Counsel
Robert E. Cole Vice President, Government
Affairs
John E. Daniel Vice President, and President of
Kaiser Primary Aluminum
Products
Jack A. Hockema Vice President, and President of
Kaiser Engineered Products
John T. La Duc Vice President and Chief
Financial Officer
Alan G. Longmuir Vice President, Research and
Development
Raymond J. Milchovich Vice President, and President of
Kaiser Flat-Rolled Products
Geoffrey W. Smith Vice President, and President of
Kaiser Aluminum Commodities
Kris S. Vasan Vice President, Financial Risk
Management
Byron L. Wade Vice President, Secretary and
Deputy General Counsel
Lawrence L. Watts Vice President, Administration
and President of Kaiser Aluminum
International
Arthur S. Donaldson Controller
Karen A. Twitchell Treasurer
Robert J. Cruikshank Director
Charles E. Hurwitz Director and Vice Chairman
Ezra G. Levin Director
Robert Marcus Director
Robert J. Petris Director
George T. Haymaker, Jr. Mr. Haymaker, age 59, was
elected to the positions of Chairman of the Board and Chief
Executive Officer of KAC and the Company effective January
1, 1994, and has served as President of KAC and President of
the Company since May 1996 and June 1996, respectively.
From May 1993 to December 1993, Mr. Haymaker served as
President and Chief Operating Officer of KAC and the
Company. Mr. Haymaker became a director of KAC in May 1993,
and a director of the Company in June 1993. From 1987 to
April 1993, Mr. Haymaker was a partner in a partnership
which acquired, redirected and operated small- to medium-
size companies in the metals industry. Since July 1987, Mr.
Haymaker has been a director of Midamerica Holdings, Inc. or
its predecessor, Metalmark Corporation ("Midamerica"), of
which he was President from February 1992 through March
1993. Midamerica is in the business of semi-fabrication of
aluminum extrusions. From May 1986 until February 1993, he
also served as President of West Coast Sales Corp., which
provides management and acquisition services. Mr. Haymaker
also served as Chief Executive Officer and a director of
Amarlite Architectural Products, Inc., a producer of
architectural curtain wall and entrance products, from
August 1990 to April 1992 and from April 1989 to February
1993, respectively. He was a director of American Powdered
Metals Company, which is engaged in the manufacture of
powdered metal components, from August 1988 to March 1993,
and Hayken Metals Asia Limited, which represents
manufacturers of aluminum and metal products, from January
1988 to April 1993. From 1984 to 1986, Mr. Haymaker served
as Executive Vice President Aluminum Operations of Alumax
Inc., responsible for all primary aluminum and
semifabricating activities.
-9-
<PAGE>
<PAGE>
Joseph A. Bonn. Mr. Bonn, age 53, became Vice President,
Planning and Development of KAC and the Company, effective
March 1997. From February 1992 to March 1997 and July 1989
to March 1997, Mr. Bonn served as Vice President,
Administration of KAC and the Company, respectively. Mr.
Bonn has served as a Vice President of the Company since
April 1987 and served as Senior Vice President-
Administration of MAXXAM from September 1991 through
December 1992. He was also the Company's Director of
Strategic Planning from April 1987 until July 1989. From
September 1982 to April 1987, Mr. Bonn served as General
Manager of various aluminum fabricating divisions of the
Company.
E. Bruce Butler. Mr. Butler, age 57, became Vice
President and General Counsel of KAC and the Company in
March 1997. Prior to becoming Vice President and General
Counsel of both companies, Mr. Butler served as Assistant
General Counsel Kaiser International of the Company from
August 1996. Immediately prior to joining KAC and the
Company, Mr. Butler practiced in the Los Angeles office of
Arter & Hadden. Prior to joining Arter & Hadden, Mr. Butler
served as Vice President and General Counsel of Allied
Signal Aerospace Company from 1988 to 1994 and International
Counsel of Allied Signal, Inc. from 1984 through 1987. From
1971 through 1984, Mr. Butler practiced with Patton, Boggs &
Blow, where he became a partner in 1977 and served as the
Resident Partner in the firm's London office.
Robert E. Cole. Mr. Cole, age 50, has been a Vice
President of the Company since March 1981. Since September
1990, Mr. Cole also has served as Vice President Federal
Government Affairs of MAXXAM, MAXXAM Group Inc. ("MGI"), an
indirect subsidiary of MAXXAM engaged in forest products
operations, and The Pacific Lumber Company ("Pacific
Lumber"), an indirect subsidiary of MAXXAM engaged in forest
products operations. Mr. Cole is currently Chairman of the
United States Auto Parts Advisory Committee established by
the United States Congress.
John E. Daniel. Mr. Daniel, age 61, has been a Vice
President of the Company since January 1992, President of
Kaiser Primary Aluminum Products since June 1995, and has
been the General Manager of the Company's primary aluminum
products business unit since November 1990. From November
1990 to January 1992, he was Divisional Vice President of
the Company's primary aluminum products business unit. From
December 1989 to November 1990, Mr. Daniel was Reduction
Plant Manager of the Company's Tacoma, Washington plant and
from July 1986 to December 1989, he was Reduction Plant
Manager of the Company's formerly owned Ravenswood, West
Virginia plant.
Jack A. Hockema. Mr. Hockema, age 50, became Vice
President, and President of Engineered Products, of the
Company effective March 1997. From September 1996 to March
1997 Mr. Hockema served as a Vice President of the Company,
President of Kaiser Extruded Products of the Company and
President of Kaiser Engineered Components of the Company. He
had been a consultant to the Company since September 1995,
serving as acting President of Kaiser Engineered Components
of the Company. Mr. Hockema was an employee of the Company
from 1977 to 1982, working at the Company's Trentwood
facility and serving as plant manager of its former Union
City, California, can plant and as operations manager for
Kaiser Extruded Products. Mr. Hockema left the Company to
become Vice President and General Manager of Bohn Extruded
Products, a division of Gulf+Western, and later served as
Group Vice President of American Brass Specialty Products
until June 1992. From June 1992 until September 1996, Mr.
Hockema provided consulting and investment advisory services
to individuals and companies in the metals industry.
-10-
<PAGE>
<PAGE>
John T. La Duc. Mr. La Duc, age 54, has been Vice
President and Chief Financial Officer of KAC since June 1989
and May 1990, respectively, and was Treasurer of KAC from
August 1995 until February 1996 and from January 1993 until
April 1993. He was also Treasurer of the Company from June
1995 until February 1996, and has been Chief Financial
Officer of the Company since January 1990 and a Vice
President of the Company since June 1989. Since September
1990, Mr. La Duc has served as Senior Vice President of
MAXXAM. Mr. La Duc also serves as a Vice President and a
director of MAXXAM Group Holdings Inc., a wholly owned
subsidiary of MAXXAM and MGI's parent ("MGHI"), MGI, Pacific
Lumber, and Pacific Lumber's subsidiary, Scotia Pacific
Holding Company ("Scotia Pacific"). He previously served as
Chief Financial Officer of MAXXAM and MGI from September
1990 until December 1994 and February 1995, respectively,
and of Pacific Lumber from October 1990 and Scotia Pacific
from November 1992 until February 1995.
Alan G. Longmuir. Mr. Longmuir, age 56, has been Vice
President Research and Development of the Company since
June 1995, and previously was Divisional Vice
President Research and Development of the Company since
October 1988. Mr. Longmuir served as the Company's Director
of Manufacturing Systems from January 1985 to October 1988.
From September 1982 to January 1985 he acted as the
Company's Manager Automated Systems and Electrical
Engineering; and from January 1978 to September 1982 was the
Company's Manager Metals Automation.
Raymond J. Milchovich. Mr. Milchovich, age 47, has been
Vice President President of Kaiser Flat-Rolled Products, of
the Company since June 1995. From July 1986 to June 1995,
Mr. Milchovich served as Divisional Vice President of the
Company's Flat-Rolled Products business unit and Works
Manager of the Company's Trentwood facility in Spokane,
Washington.
Geoffrey W. Smith. Mr. Smith, age 50, has been a Vice
President of the Company since January 1992, and President
of Kaiser Aluminum Commodities of the Company since June
1996. From June 1995 to June 1996, Mr. Smith was President
of Kaiser Alumina of the Company. From December 1994 until
June 1995, Mr. Smith was General Manager of the Company's
alumina business unit. Mr. Smith previously served as
Co-General Manager of the Company's alumina business unit from
September 1991 through December 1994. From September 1990
to January 1992, Mr. Smith was Divisional Vice President of
the Company's alumina business unit. From August 1988
through August 1990, Mr. Smith was Director of Business
Development for the alumina business unit, and from 1982 to
August 1988, he was Operations/Technical Manager for the
Company's Gramercy, Louisiana facility.
Kris S. Vasan. Mr. Vasan, age 47, has been Vice
President, Financial Risk Management, of the Company since
June 1995. Mr. Vasan previously served as Treasurer of KAC
from April 1993 until August 1995 and as Treasurer of the
Company from April 1993 until June 1995. Prior to that, Mr.
Vasan served KAC and the Company as Corporate Director of
Financial Planning and Analysis from June 1990 until April
1993. From October 1987 until June 1990, he served as
Associate Director of Financial Planning and Analysis.
Byron L. Wade. Mr. Wade, age 50, has served as Vice
President and Secretary of KAC and the Company since January
1992, and Deputy General Counsel of KAC and the Company
since May and June 1992, respectively. Mr. Wade has also
served as Vice President and Deputy General Counsel of
MAXXAM since May 1990, and Secretary of MAXXAM since October
1988. He previously served as Assistant Secretary and
Assistant General Counsel of MAXXAM from November 1987 to
October 1988 and May 1990, respectively. In addition, Mr.
Wade has served since May 1993 as a Vice President and
Secretary of SHRP General Partner, Inc. ("SHRP"), the
current managing general partner of Sam Houston Race Park,
Ltd., a Texas limited partnership and subsidiary of MAXXAM
which operates a horse racing facility in Texas ("SHRP,
Ltd."). Mr. Wade has served as Vice President, Secretary
and Deputy General Counsel of Pacific Lumber and Scotia
Pacific since June 1990 and November 1992, respectively, and
as Vice President, Secretary and Deputy General Counsel of
MGHI and MGI since November 1996 and July 1990,
respectively. He had previously served since
-11-
<PAGE>
<PAGE>
1983 as Vice President, Secretary and General Counsel of MCO
Resources, Inc., a publicly traded oil and gas company,
which was majority owned by MAXXAM.
Lawrence L. Watts. Mr. Watts, age 50, became Vice
President, Administration, of the Company effective March
1997. Mr. Watts has been a Vice President of the Company
since January 1992 and President of Kaiser Aluminum
International of the Company since June 1995. From April
1994 until June 1995, Mr. Watts was General Manager-
International Development of the Company. Mr. Watts
previously served as Co-General Manager of the Company's
alumina business unit from September 1991 until December
1994. From June 1989 to January 1992, Mr. Watts was
Divisional Vice President, Governmental Affairs and Human
Resources, for the alumina business unit, and from July 1988
to June 1989, he was Divisional Vice President, Public
Relations and Governmental Relations, for the alumina
business unit. From September 1984 to July 1988, Mr. Watts
was Manager, Human Resources for the alumina business unit.
Arthur S. Donaldson. Mr. Donaldson, age 54, became
Controller of KAC and the Company effective February 1996.
Mr. Donaldson previously served as Assistant Controller of
KAC and the Company since September 1992. From January 1985
to September 1992, Mr. Donaldson was Manager of External
Reporting for KAC.
Karen A. Twitchell. Ms. Twitchell, age 41, became
Treasurer of KAC and the Company effective February 1996.
Prior to joining KAC, Ms. Twitchell was Vice President and
Treasurer of Southdown, Inc., a Houston-based company
specializing in portland and masonry cement, since April
1994 and Treasurer since 1989.
Robert J. Cruikshank. Mr. Cruikshank, age 66, has served
as a director of KAC and the Company since January 1994. In
addition, he has been a director of MAXXAM since May 1993.
Mr. Cruikshank was a Senior Partner in the international
public accounting firm of Deloitte & Touche from December
1989 until his retirement in March 1993. Prior to its
merger with Touche Ross & Co. in December 1989, Mr.
Cruikshank served as Managing Partner of the Houston office
of Deloitte Haskins & Sells from June 1974 until the merger,
and served on such firm's board of directors from 1981 to
1985. Mr. Cruikshank also serves as a director and on the
Compensation Committee of Houston Industries Incorporated, a
public utility holding company with interests in electric
utilities, coal and transportation businesses; a director of
Texas Biotechnology Incorporated; a director of American
Residential Services, Inc.; and as Advisory Director of
Compass Bank Houston.
Charles E. Hurwitz. Mr. Hurwitz, age 56, was appointed
Vice Chairman of the Company in December 1994 and has served
as a director of KAC and the Company since October and
November 1988, respectively. Mr. Hurwitz has also served as
a member of the Board of Directors and the Executive
Committee of MAXXAM since August 1978 and was elected
Chairman of the Board and Chief Executive Officer of MAXXAM
in March 1980. Since May 1982, Mr. Hurwitz has been
Chairman of the Board and Chief Executive Officer of MGI.
Since January 1993, Mr. Hurwitz has also served MAXXAM and
MGI as President. From May 1986 until February 1993, Mr.
Hurwitz served as a director of Pacific Lumber. Mr. Hurwitz
has also served as Chairman of the Board, President and
Chief Executive Officer of MGHI since November 1996. Mr.
Hurwitz has been, since January 1974, Chairman of the Board
and Chief Executive Officer of Federated Development Company
("Federated"), a New York business trust primarily engaged
in the management of real estate investments, and a
principal stockholder of MAXXAM. Mr. Hurwitz has also
served SHRP as a director since May 1993, Chairman of the
Board since October 1995, and President from May 1993 until
April 1996.
Ezra G. Levin. Mr. Levin, age 63, has been a director of
KAC since July 1991. He has been a director of the Company
since November 1988, and a director of MAXXAM since May
1978. Mr. Levin also served as a director of KAC from April
1988 to May 1990, and as a director of MGI from May 1982
through December 1993. Mr. Levin is a partner in the law
firm of Kramer, Levin, Naftalis & Frankel. He also serves
as a director of Pacific Lumber and Scotia Pacific.
-12-
<PAGE>
<PAGE>
Robert Marcus. Mr. Marcus, age 72, has been a director of
KAC and the Company since September 1991. From 1987 to
January 1992, Mr. Marcus was a partner in American
Industrial Partners, a San Francisco and New York based firm
specializing in private equity investments in industrial
companies. From 1983 to 1991, Mr. Marcus was a director of
Domtar Inc., a Canadian resource-based multi-business
corporation. From 1982 to 1987, Mr. Marcus served as
President and Chief Executive Officer of Alumax Inc., an
integrated aluminum company.
Robert J. Petris. Mr. Petris, age 71, has been a director
of KAC since May 1995 and the Company since June 1995. He
became Special Assistant to the International President of
the United Steelworkers of America (the "USWA") in June
1995. From 1977 to 1997, Mr. Petris was a member of the
International Union Executive Board and Director of District
38, where he was exposed to a wide range of issues and
problems in the aluminum, steel, container and non-ferrous
metals industries. Mr. Petris retired from the USWA in
January 1997.
-13-
<PAGE>
<PAGE>
PRINCIPAL STOCKHOLDERS
----------------------
The following tables contain information with
respect to persons known to the Company to be the beneficial
owners of more than 5% of the Common Stock, the 1985 Series
A Stock and the 1985 Series B Stock as of April 1, 1997.
For the purposes of these disclosures and the disclosure of
ownership of shares by executive officers and directors
below, shares are considered to be "beneficially" owned if
the person has or shares the power to vote or direct the
voting for the securities, the power to dispose of or direct
the disposition of the securities, or the right to acquire
beneficial ownership within 60 days.
Ownership of Certain Beneficial Owners-Common Stock
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class(1)
------------------- -------------------- -----------
Kaiser Aluminum Corporation 46,171,365 shares 100%
5847 San Felipe, Suite 2600
Houston, Texas 77057
Ownership of Certain Beneficial Owners-Cumulative (1985 Series A)
Preference Stock
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class(1)
------------------- -------------------- -----------
Kaiser Aluminum USWA 478,733 shares 89.4%
Employee Stock Ownership Plan(2)
c/o Mellon Bank, N.A.
Pittsburgh, Pennsylvania
Ownership of Certain Beneficial Owners-Cumulative (1985 Series B)
Preference Stock
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class(1)
------------------- -------------------- -----------
Kaiser Aluminum Salaried 35,351 shares 51.6%
Employee Stock Ownership Plan(2)
c/o Mellon Bank, N.A.
Pittsburgh, Pennsylvania
- - - ----------------------
(1) The "Percent of Class" is computed using the shares
outstanding on April 1, 1997.
(2) Individual participants in such plan may direct such
plan's Trustee how to vote their shares; undirected
shares are voted by the Trustee in the same
proportion as shares voted upon participant
direction.
Ownership of Management-Cumulative (1985 Series B) Preference
Stock
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class(1)
------------------- -------------------- -----------
All directors and executive 47.6208 shares *
officers of the Company as
a group (20 persons)
- - - -------------------------
* Less than 1%.
(1) The "Percent of Class" is computed using the shares
outstanding on April 1, 1997.
-14-
<PAGE>
<PAGE>
Ownership of Parent of the Company
- - - ----------------------------------
As of April 1, 1997, MAXXAM owned, directly and
indirectly, approximately 62% of the issued and outstanding
capital stock of KAC, assuming conversion of each
outstanding share of PRIDES into one share of KAC Common
Stock. The following table sets forth, as of April 1, 1997,
the beneficial ownership of the Common Stock and Class A
$.05 Non-Cumulative Participating Convertible Preferred
Stock ("Class A Preferred Stock") of MAXXAM by the directors
of the Company, and by the directors and executive officers
of the Company as a group:
<TABLE>
<CAPTION>
% of
Combined
Name of Voting
Beneficial Owner Title of Class # of Shares(1) % of Class Power(2)
- - - ---------------- -------------- -------------- ---------- ---------
<S> <C> <C> <C> <C>
Charles E. Hurwitz Common Stock 2,733,542(3)(4)(5) 31.4 61.4
Class A Preferred Stock 684,941(6)(7) 99.1
Ezra G. Levin Common Stock 1,600(4)(5)(8) * *
Robert J. Cruikshank Common Stock 1,600(8) * *
All directors and Common Stock 2,742,208(3)(4)(9) 31.5
executive officers 61.4
of the Company Class A Preferred Stock 684,941(6)(7) 99.1
as a group
(20 persons)
</TABLE>
- - - -------------------
* Less than 1%.
(1) Unless otherwise indicated, beneficial owners have
sole voting and investment power with respect to the
shares listed. Includes the number of shares (i) such
persons would have received on April 1, 1997, if any,
for their exercisable SARs (excluding SARs payable in
cash only) exercisable within 60 days of such date if
such rights had been paid solely in shares of MAXXAM
common stock, and (ii) of MAXXAM common stock credited
to such person's stock fund account under MAXXAM's
401(k) savings plan as of February 28, 1997.
(2) MAXXAM Class A Preferred Stock is generally entitled
to ten votes per share.
(3) Includes 1,669,451 shares of MAXXAM common stock owned
by Federated Development Inc., a wholly owned
subsidiary of Federated ("FDI"), as to which Mr.
Hurwitz indirectly possesses voting and investment
power. Mr. Hurwitz serves as a trustee of Federated,
and together with members of his immediate family and
trusts for the benefit thereof, owns all of the voting
shares of Federated. Also includes (a) 20,892 shares
of MAXXAM common stock separately owned by Mr.
Hurwitz's spouse and as to which Mr. Hurwitz disclaims
beneficial ownership, (b) 46,500 shares of MAXXAM
common stock owned by a limited partnership controlled
by Mr. Hurwitz and his spouse, 23,250 of which shares
were separately owned by Mr. Hurwitz's spouse prior to
their transfer to such limited partnership and as to
which Mr. Hurwitz disclaims beneficial ownership, (c)
119,832 shares of MAXXAM common stock owned by the
1992 Hurwitz Investment Partnership, L.P., of which
59,916 shares are owned by Mr. Hurwitz's spouse as
separate property and as to which Mr. Hurwitz
disclaims beneficial ownership, (d) 805,692 shares of
MAXXAM common stock held directly by Mr. Hurwitz, and
(e) 71,175 shares of MAXXAM common stock that FDI may
acquire in exchange for 7% Cumulative Exchangeable
Preferred Stock of MCO Properties Inc., a wholly owned
subsidiary of MAXXAM.
(4) In addition, FDI, Federated, Messrs. Hurwitz and
Levin, and Mr. James H. Paulin, Jr., Secretary and
Treasurer of Federated, may be deemed a "group" (the
"Stockholder Group") within the meaning of Section
13(d) of the Exchange Act. As of April 1, 1997, in
the aggregate, the Stockholder Group beneficially
owned 2,735,494 shares of MAXXAM common stock and
685,074 shares of Class A Preferred Stock, aggregating
approximately 61.4% of the total voting power of
MAXXAM. By reason of the foregoing and their
relationship with the members of the Stockholder
Group, Messrs. Hurwitz and Levin may be deemed to
possess shared voting and investment power with
respect to the shares held by the Stockholder Group.
(5) Does not include shares owned by other members of the
Stockholder Group.
(6) Includes 661,377 shares owned by FDI and 1,064 shares
owned directly.
(7) Includes options exercisable within 60 days of April
1, 1997, to acquire 22,500 shares of Class A Preferred
Stock.
(8) Includes options exercisable within 60 days of April
1, 1997, to purchase 600 shares of MAXXAM common
stock.
(9) Includes (i) options exercisable within 60 days of
April 1, 1997, to acquire 1,200 shares of MAXXAM
common stock, and 4,577 shares of MAXXAM common stock,
which is the number of shares Mr. Wade would have
received on April 1, 1997, for SARs exercisable within
60 days of such date on 13,000 shares of MAXXAM common
stock, if such SARs had been paid solely in shares of
such common stock.
-15-
<PAGE>
<PAGE>
As of April 1, 1997, 27,938,250 shares of KAC's Common
Stock owned by MGHI, a wholly owned subsidiary of MAXXAM,
were pledged as security for two debt issues of MGI
consisting of $100.0 million aggregate principal amount of
11-1/4% Senior Secured Notes due 2003 and $125.7 million
aggregate principal amount of 12-1/4% Senior Discount Notes
due 2003.
EXECUTIVE COMPENSATION
-----------------------
Summary Compensation Table
- - - --------------------------
The following table sets forth compensation
information, cash and non-cash, for each of the Company's
last three completed fiscal years with respect to the Chief
Executive Officer and the four most highly compensated
executive officers of the Company (collectively referred to
as the "named executive officers") for the fiscal year ended
December 31, 1996:
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------
Annual Compensation Awards Payouts
------------ ------- ------ -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted All Other
Annual Stock Options/ LTIP Compensa-
Name and Salary Bonus Compensation Awards(s) SARs Payouts ion
Principal Position Year ($) ($) ($)(1) ($) (#) ($) ($)
- - - ------------------ ---- ------ ----- ------------ ---------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George T. Haymaker, 1996 487,000 71,638 --- -0- -0- -0- 9,740(3)
Jr., 1995 465,000 225,000 --- -0- -0- -0- 23,250(3)
Chairman, President 1994 450,000 100,000 --- -0- 26,700 -0- 2,079(4)
and Chief Executive
Officer
John T. La Duc, 1996 260,000 83,200(5) --- -0- -0- -0-(2) 5,200(3)
Vice President and 1995 248,333 130,000(5) --- -0- -0- -0- 12,417(3)
Chief Financial 1994 240,000 103,000(5) --- -0- 9,200 -0- 4,800(3)
Officer
Geoffrey W. Smith, 1996 246,250 38,000 --- -0-(6) -0- -0-(2) 33,550(3)(4)
Vice President 1995 211,171 84,000 --- -0- -0- -0- 10,559(3)
and President of 1994 175,004 26,000 --- 500,000(7) 7,100 -0- 3,500(3)
Kaiser Aluminum
Commodities
Lawrence L. Watts, 1996 234,000 37,000 --- -0-(6) -0- -0-(2) 24,180(3)(4)
Vice President 1995 211,171 105,000 --- -0- -0- -0- 10,559(3)
Administration, 1994 172,004 26,000 --- 500,000(7) 7,100 -0- 3,440(3)
and President of
Kaiser Aluminum
International
Raymond J. Milchovich, 1996 223,750 42,700 --- -0- -0- -0-(2) 77,158(3)(4)
Vice President, and 1995 183,000 70,000 --- -0- -0- -0- 9,150(3)
President of Kaiser 1994 145,500 21,000 --- -0- 7,200 -0- 2,910(3)
Flat-Rolled Products
</TABLE>
- - - --------------------
(1) Excludes perquisites and other personal benefits
because the aggregate amount of such compensation is
the lesser of either $50,000 or 10% of the total of
annual salary and bonus reported for the named
executive officer.
(2) In 1995, the Company implemented an unfunded incentive
compensation program more fully described in the Report
of the Compensation Committees on Executive
Compensation contained in this Proxy Statement. The
long-term component of the program provides incentive
compensation based on performance against goals over
rolling three-year periods. Payments under the
long-term component of the program are made 57% in shares
of KAC Common Stock and 43% in cash and are
paid in two installments, the first installment during
the year following the end of the three-year period and
the second installment during the second year following
the end of the three-year period. In each case, such
payments are conditioned on the continued employment of
the participant. As a result, if a participant
voluntarily terminates his or her employment for any
reason other than death, disability or retirement prior
to the beginning of the fiscal year the payment is to
be made, any unmade payments are forfeited. The total
awards for the 1994-1996 period for Messrs. Haymaker,
La Duc, Smith, Watts and
-16-
<PAGE>
<PAGE>
Milchovich were $230,000, $84,000, $129,600, $112,000
and $40,280, respectively. The first installment was
paid in March 1997.
(3) Includes contributions by the Company of $5,200,
$12,417, and $4,800 for Mr. La Duc; $4,925, $10,559 and
$3,500 for Mr. Smith; $4,680, $10,559 and $3,440 for
Mr. Watts; and $4,475, $9,150 and $2,910 for Mr.
Milchovich, under the Kaiser Savings Plan (as defined
below) for 1996, 1995 and 1994, respectively, and
$9,740 and $23,250, for 1996 and 1995, respectively,
for Mr. Haymaker.
(4) Includes moving-related items of $28,625 for Mr. Smith,
$19,500 for Mr. Watts, and $72,683 for Mr. Milchovich
in 1996; and $2,079 for Mr. Haymaker in 1994.
(5) Includes $50,000 (to be paid over a two-year period),
$50,000 (to be paid over a two-year period), and
$75,000 (to be paid over a three-year period), awarded
for 1996, 1995 and 1994, respectively, for which the
Company will be reimbursed by MAXXAM.
(6) As of December 31, 1996, Messrs. Smith and Watts each
owned 25,642 shares of restricted KAC Common Stock
valued at approximately $298,088 based on the
closing market price of $11.625. Restrictions on such
shares were lifted on January 2, 1997. No other named
executive officer held restricted stock of the Company
at fiscal year end 1996.
(7) Amount reflects value of 51,282 shares of KAC Common
Stock issued on May 24, 1994, based on the
closing price of $9.75 per share on the date issued.
Restrictions were lifted on 12,820 of such shares on
each of May 24, 1995, and May 24, 1996. When issued,
the restrictions on 12,821 of the remaining shares were
scheduled to be lifted on each of May 24, 1997, and May
24, 1998. However, the restrictions were lifted on
January 2, 1997.
Option/SAR Grants
- - - -----------------
No options to purchase common stock of the Company or
SARs were granted by the Company or by KAC with respect to
KAC Common Stock or SARs in fiscal year 1996.
Option/SAR Exercises and Fiscal Year End Value Table
- - - ----------------------------------------------------
The table below provides information on an aggregated
basis concerning each exercise of stock options (or tandem
SARs) and freestanding SARs of KAC, unless otherwise
indicated, during the fiscal year ended December 31, 1996 by
each of the named executive officers, and the 1996 fiscal
year-end value of unexercised options and SARs.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of
Unexercised Value of Unexercised
Options/SARs in-the-Money Options/SARs
at Year End (#) at Fiscal Year-End ($)
--------------- -------------------------
Shares
Acquired on Value
Name Exercise Realized
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
- - - --------------------- ------------ -------- ------------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George T. Haymaker, Jr. - - 33,350 53,350 87,500(2) 175,000(2)
John T. La Duc - - 4,600 4,600 -(2) -(2)
- - 8,000(3) 2,000(3) 157,000(3) 39,250(3)
Geoffrey W. Smith - - 7,930 12,310 19,163(2) 38,325(2)
Lawrence L. Watts - - 7,770 11,990 18,463(2) 36,925(2)
Raymond J. Milchovich - - 3,600 3,600 -(2) -(2)
</TABLE>
- - - --------------------
(1) If no shares received, the number reflected, if any,
represents the number of securities with respect to
which options/SARs were exercised.
(2) Valued at $11.625, the closing price of the KAC Common
Stock on December 31, 1996, less exercise price. If
the exercise price is equal to or higher than the
closing price, no value is shown.
(3) Represents SARs relating to MAXXAM's common stock.
Valued at $47.625, the closing price of MAXXAM's common
stock on December 31, 1996, less exercise price.
Except as set forth below, the SARs relating to MAXXAM
common stock set forth in the above table for Mr. La Duc
were granted under MAXXAM's 1984 Phantom Share Plan (the
"MAXXAM Phantom Plan"). All of Mr. La Duc's SARs under the
MAXXAM Phantom Plan are exercisable for cash only. All such
SARs under
-17-
<PAGE>
<PAGE>
the MAXXAM Phantom Plan vest with respect to 20% on the
first anniversary date of the grant and an additional 20% on
each anniversary date thereafter until fully vested.
Defined Benefit Plans
Kaiser Retirement Plan
The Company maintains a qualified, defined-benefit
retirement plan (the "Kaiser Retirement Plan") for salaried
employees of the Company and co-sponsoring subsidiaries who
meet certain eligibility requirements. The table below
shows estimated annual retirement benefits payable under the
terms of the Kaiser Retirement Plan to participants with the
indicated years of credited service. These benefits are
reflected without reduction for the limitations imposed by
the Code on qualified plans and before adjustment for the
Social Security offset, thereby reflecting aggregate
benefits to be received, subject to Social Security offsets,
under the Kaiser Retirement Plan and the Kaiser Supplemental
Benefits Plan (as defined below).
<TABLE>
<CAPTION>
Annual Years of Service
--------------------------------------------------
Remuneration 15 20 25 30 35
------------ --------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 150,000 33,750 45,000 56,250 67,500 78,750
200,000 45,000 60,000 75,000 90,000 105,000
250,000 56,250 75,000 93,750 112,500 131,250
350,000 78,750 105,000 131,250 157,500 183,750
450,000 101,250 135,000 168,750 202,500 236,250
550,000 123,750 165,000 206,250 247,500 288,750
650,000 146,250 195,000 243,750 292,500 341,250
750,000 168,750 225,000 281,250 337,500 393,750
850,000 191,250 255,000 318,750 382,500 446,250
</TABLE>
The estimated annual retirement benefits shown are based
upon the assumptions that current Kaiser Retirement Plan and
Kaiser Supplemental Benefits Plan provisions remain in
effect, that the participant retires at age 65, and that the
retiree receives payments based on a straight-life annuity
for his lifetime. Messrs. Haymaker, La Duc, Smith, Watts
and Milchovich had 3.7, 27.3, 22.5, 21.0 and 16.6 years of
credited service, respectively, on December 31, 1996.
Monthly retirement benefits, except for certain minimum
benefits, are determined by multiplying years of credited
service (not in excess of 40) by the difference between
1.50% of average monthly compensation for the highest base
period (of 36, 48 or 60 consecutive months, depending upon
compensation level) in the last 10 years of employment and
1.25% of monthly primary Social Security benefits. Pension
compensation covered by the Kaiser Retirement Plan and the
Kaiser Supplemental Benefits Plan consists of salary and
bonus amounts set forth in the Summary Compensation Table
(column (c) plus column (d) thereof).
Participants are entitled to retire and receive pension
benefits, unreduced for age, upon reaching age 62 or after
30 years of credited service. Full early pension benefits
(without adjustment for Social Security offset prior to age
62) are payable to participants who are at least 55 years of
age and have completed 10 or more years of pension service
(or whose age and years of pension service total 70) and who
have been terminated by the Company or an affiliate for
reasons of job elimination or partial disability.
Participants electing to retire prior to age 62 who are at
least 55 years of age and who have completed 10 or more
years of pension service (or whose age and years of pension
service total at least 70) may receive pension benefits,
unreduced for age, payable at age 62 or reduced benefits
payable earlier. Participants who terminate their
employment after five years or more of pension service, or
after age 55 but prior to age 62, are entitled to pension
benefits, unreduced for age, commencing at age 62 or, if
they have completed 10 or more years of pension service,
actuarially reduced benefits payable earlier. For
participants with five or more years of pension service or
who have reached age 55 and who die, the Kaiser Retirement
Plan provides a pension to their eligible surviving spouses.
Upon retirement, participants may elect among several
payment alternatives including, for most types of
retirement, a lump-sum payment.
-18-
<PAGE>
<PAGE>
Kaiser Supplemental Benefits Plan
The Company maintains an unfunded, non-qualified
Supplemental Benefits Plan (the "Kaiser Supplemental
Benefits Plan"), the purpose of which is to restore benefits
which would otherwise be paid from the Kaiser Retirement
Plan or the Supplemental Savings and Retirement Plan, a
qualified Section 401(k) plan (the "Kaiser Savings Plan"),
were it not for the Section 401(a)(17) and Section 415
limitations imposed by the Code. Participation in the
Kaiser Supplemental Benefits Plan includes all employees of
the Company and its subsidiaries whose benefits under the
Kaiser Retirement Plan and Kaiser Savings Plan are likely to
be affected by such limitations imposed by the Code.
Eligible participants are entitled to receive the equivalent
of the Kaiser Retirement Plan and Kaiser Savings Plan
benefits which they may be prevented from receiving under
those plans because of such Code limitations.
Kaiser Termination Payment Policy
Most full-time salaried employees of the Company are
eligible for benefits under an unfunded termination policy
if their employment is involuntarily terminated, subject to
a number of exclusions. The policy provides for lump-sum
payments after termination ranging from one-half month's
salary for less than one year of service graduating to eight
months' salary for 30 or more years of service. The amounts
payable to Messrs. La Duc, Smith, Watts and Milchovich under
the policy if they had been involuntarily terminated on
December 31, 1996, would have been $151,667, $148,750,
$117,000 and $102,083, respectively.
Employment Contracts and Termination of Employment and
- - - ------------------------------------------------------
Change-in-Control Arrangements
- - - ------------------------------
On April 1, 1993, the Company and KAC entered into a
five-year employment agreement with Mr. George T. Haymaker,
Jr., pursuant to which Mr. Haymaker currently serves as
Chairman, President and Chief Executive Officer of the
Company and KAC. Mr. Haymaker's agreement provided for a
base salary of $450,000 per annum and a bonus target of 50%
of his salary which began fiscal year 1994. Mr. Haymaker's
base salary is subject to review and possible change on an
annual basis but cannot be reduced below $450,000 without
his consent. In 1995, Mr. Haymaker's agreement was amended
to increase his base salary to $465,000 and increase his
bonus targets in a manner consistent with the Executive
Program described below in the Report of the Compensation
Committees on Executive Compensation. In 1996, Mr.
Haymaker's base salary was increased to $487,000. Pursuant
to his agreement, Mr. Haymaker received an initial award
under the 1993 Omnibus Plan upon its approval by
stockholders of options to purchase up to 100,000 shares of
KAC Common Stock at its fair market value on the date of the
award. Such options vest 20% per year for a period of five
years.
In the event of a change of control of the Company or KAC
which within one year thereafter adversely affects Mr.
Haymaker's title, position, duties, responsibilities or
compensation, Mr. Haymaker's employment agreement provides
that he may elect to be deemed terminated without cause, and
therefore, entitled to a severance payment in an amount
equal to two times his base annual salary reduced by any
payment made as discussed under "Defined Benefit
Plans Kaiser Termination Payment Policy" above.
Additionally, in the event of such termination, Mr.
Haymaker's options for 100,000 shares of KAC Common Stock will
fully vest.
Mr. Haymaker's employment agreement further provides that
he vests 20% per year in an unfunded non-qualified
supplemental benefit, payable at retirement after age 62,
equal to a benefit determined as if his Kaiser Retirement
Plan pension were based on his aggregate service with the
Company and a prior employer (25 years), less his pension
from that prior employer and any retirement benefits from
the Company.
-19-
<PAGE>
<PAGE>
REPORT OF THE COMPENSATION COMMITTEES
ON
EXECUTIVE COMPENSATION
Effective June 5, 1996, the Board replaced the Company's
Compensation Committee with the Compensation Policy
Committee and the Section 162(m) Compensation Committee.
The Compensation Policy Committee administers and
establishes the Company's overall compensation policies,
except to the extent that such authority has been delegated
by the Board to the Section 162(m) Compensation Committee.
The Section 162(m) Compensation Committee administers and
approves amendments to the Company's plans or programs which
are intended to comply with the provisions of Section
162(m), and also establishes the criteria to be used in
determining awards to be made pursuant to those plans or
programs. Messrs. Marcus (Chairman) and Cruikshank
currently serve as members of the Section 162(m)
Compensation Committee and for purposes of Section 162(m)
are qualifying directors. Each committee reports to the
full Board of Directors. During 1996, the members who
served on each of these committees also served on the
Section 162(m) Committee and the Compensation Policy
Committee (these committees are hereinafter collectively
referred to in this report as the "Committees") of the
Company. Although certain plans or programs in which
executive officers of the Company participate are jointly
sponsored by the Company and KAC, executive officers of the
Company are directly employed and compensated by the
Company. References to the "Company" made in the remainder
of this report are deemed to include KAC as well as the
Company.
Executive Compensation
- - - ----------------------
Compensation Philosophy. The Company's philosophy is
that compensation of its executives, managers and key
employees should be related as closely as possible to the
ability of the Company as a whole, and the area of direct
responsibility of each executive, manager and key employee,
to create economic value. Only when earnings and cash flow
exceed the amount necessary to provide a positive rate of
return on the debt and equity capital invested in the
Company and new or added economic value is created can
Company shareholders and management share in increased
economic rewards.
Incentive emphasis. Management's incentive to create
added economic value should be to share in that added value
through additional compensation. To attract and retain
talented individuals, the Company provides the opportunity
to earn total compensation that is not only competitive
with, but potentially superior to, that available from
employers with whom the Company and its businesses compete.
Total Compensation System
- - - -------------------------
Compensation components. Total compensation for Company
executives is made up of a combination of base salary, short
and long-term incentive targets, employee benefits and
executive perquisites. Base salary is designed to fall
approximately within the 45th to 50th percentile of the
market described below, while the incentive component, when
added to base salary, allows executives and other
participants in the Company's incentive programs to earn
less, the same or more than the total compensation
opportunity offered by competing employers. The Company's
compensation for executives also includes other benefits and
perquisites which generally fall within the 50th percentile
of its comparative market.
Incentive Compensation. The Incentive Programs reflect
the Company's compensation philosophy by (i) providing
annual incentives based on yearly performance, and long-term
incentives based on three-year performance; (ii) structuring
a major portion of each participant's total compensation to
be at-risk and performance-based; (iii) providing incentive
toward the achievement of excellent safety practices; and
(iv) promoting individual and group contributions that add
value to the Company. The Incentive Programs also reward
aggressive and accurate planning. This component is rooted
in the belief that economic value results that
-20-
<PAGE>
<PAGE>
are planned and controlled by management should be rewarded
more positively than those that occur because of unplanned
and uncontrolled activity.
Methodology of Incentive Programs. Target incentives
under each Incentive Program are set at the beginning of
each annual or three-year long-term performance period. The
target incentives are established based on a combination of
market survey data, internal force-ranking and assessment of
position responsibilities. During 1996, the annual and
long-term awards were based on return on assets employed in
the business, plus achievement of goals or financial
accomplishments not reflected in the return on assets of the
Company or its business units. Each year, the Committees
approve performance goals for the Company and for each
business unit for each one year and three-year period.
Annual incentive payments under the Incentive Programs
are made in cash and long-term incentive payments are made
43% in cash and 57% in shares of KAC Common Stock and are paid
in two installments, the first installment during the year
following the end of the three-year period and the second
installment during the second year following the end of the
three-year period. In each case, such payments are
generally conditioned on the continued employment of the
participant. Any stock-related awards granted pursuant to
the Incentive Programs are issued under the 1993 Omnibus
Plan.
Executive Program. During 1996, the participants in the
Executive Program were limited to Messrs. Haymaker, La Duc
and Bonn. Effective January 1, 1997, Messrs. Milchovich,
Smith and Watts were added as participants in the Executive
Program. The Executive Program is administered by the
Section 162(m) Compensation Committee. When incentive
awards are determined at the end of each performance period,
an additional 30% of incentive targets based on achievement
of goals or other accomplishments not reflected in the
return on assets, is added to the incentive payment amount.
While the Section 162(m) Compensation Committee cannot
increase the incentive payment, it may decrease the
incentive payment by 1% to 60% of the target incentive.
Employee Program. During 1996, the participants in the
Employee Program included the Company's executive officers
(other than Messrs. Haymaker, La Duc and Bonn), managers and
other key employees of the Company. The Employee Program is
directed by the Compensation Policy Committee and
administered by the Company's corporate human resources
department.
Base Salaries
- - - -------------
The Company has set a goal of achieving profit
improvements and significant cost reductions during 1997,
with the full effect to be realized in 1998. As part of its
plan to achieve this goal, the Committee determined that, in
general, 1997 base salaries for executive officers,
including Mr. Haymaker, should be maintained at the 1996
level. However, incentive targets for 1997 were increased
to place additional emphasis on achieving desired
performance levels.
1993 Omnibus Plan
- - - -----------------
The 1993 Omnibus Plan is utilized to provide those
persons who have substantial responsibility for management
and growth of the Company with an opportunity to increase
their ownership of KAC Common Stock, stock options or related
types of benefits. No grants were made under the 1993
Omnibus Plan in 1996. However, in March 1997, shares of KAC
Common Stock were issued from the 1993 Omnibus Plan as
partial payment of the first installment of awards for the
1994 - 1996 performance period of the long-term component of
the Incentive Programs.
-21-
<PAGE>
<PAGE>
Employment Agreements
- - - ---------------------
From time to time and for various reasons, management and
the Board of Directors has deemed it appropriate to enter
into specific employment agreements with certain executive
officers. Such agreements may relate, for example, to the
further retention of the officer or a commitment by the
officer to relocate to another location. Where such
agreements are made, they are negotiated by the Company's
General Counsel, or his designee under the supervision of
the Compensation Policy Committee and reviewed and approved
by the Board of Directors or the Compensation Policy
Committee. In making its compensation decisions, and in
supervising the negotiations and approving such employment
agreements, the Compensation Policy Committee is mindful of
the Company's overall corporate objectives and its
compensation objectives described above as well as the
circumstances making the employment agreement an appropriate
compensation mechanism. Such employment agreements
generally range in term from one to five years. During
1996, Mr. Haymaker was employed under an employment
agreement as discussed under the heading "Employment
Contracts and Termination of Employment and Change-in-
Control Arrangements."
Compensation of the CEO and Other Executives for the Last
- - - ---------------------------------------------------------
Completed Fiscal Year
- - - ---------------------
Mr. Haymaker served as the Chairman of the Board and
Chief Executive Officer of the Company for all of 1996 and
has also served as President of the Company since May 1996.
Mr. Haymaker is employed pursuant to a written employment
agreement which is described above under "Employment
Contracts and Termination of Employment and Change-in-Control
Arrangements." As amended, Mr. Haymaker's employment
agreement provides for an annual base salary of
$465,000 and for his salary to be reviewed and possibly
changed on an annual basis, provided however, that his base
salary cannot be reduced to less than $450,000 without Mr.
Haymaker's consent. In 1996, Mr. Haymaker's base salary was
increased to $487,000 in accordance with the foregoing. In
addition, Mr. Haymaker's employment agreement contains
target incentives which are consistent with the goals and
objectives of the Company's total compensation system as
described above.
In recognition of the Company's overall performance
relative to the 1996 performance goals, the annual payment
earned by Mr. Haymaker in 1996 under the Executive Program
was $71,638 or approximately 29% of the targeted amount.
Similarly, the annual payments earned in 1996 under the
Incentive Programs by the remaining executive officers
eligible to participate in the Incentive Programs during
1996 were approximately 37% of the aggregate targeted
amount.
Compensation by MAXXAM
- - - ----------------------
Certain of the Company's executive officers were
compensated during 1996 principally by MAXXAM, the Company's
parent corporation, which establishes salaries and other
elements of compensation for such executive officers. Where
an executive officer of both the Company and MAXXAM is
compensated by the Company, or where an executive officer of
both the Company and MAXXAM is compensated by MAXXAM, the
respective corporations make intercompany allocations of the
costs of employment of the executive officer based on
allocation of that executive officer's time as expended
among the Company, MAXXAM or their respective subsidiaries.
Such allocations are described under "Certain Transactions"
below.
-22-
<PAGE>
<PAGE>
Compliance with Section 162(m)
- - - ------------------------------
Section 162(m) generally disallows a tax deduction to
public companies for compensation over $1 million paid to
the CEO and four other most highly compensated executive
officers of such corporations. Qualifying performance-based
compensation will not be subject to the deduction limit if
certain requirements are met. The Executive Program and the
1993 Omnibus Plan, each of which has been approved by the
stockholders of the Company, are performance based and
designed to enable compliance with Section 162(m) and the
regulations thereunder. The executive officers eligible to
participate in the Executive Program are the only executive
officers of the Company to which the deduction limitation is
likely to apply and the Section 162(m) Compensation
Committee believes that awards thereunder should be tax
deductible.
Section 162(m) Compensation Compensation Policy Committee
Committee of the Board of Of the Board of Directors
Directors
Robert J. Cruikshank Robert J. Cruikshank
Robert Marcus, Chairman Ezra G. Levin, Chairman
Robert Marcus
Compensation Committee Interlocks and Insider Participation
- - - -----------------------------------------------------------
No member of the Compensation Committee, Compensation
Policy Committee or the Section 162(m) Compensation
Committee was, during the 1996 fiscal year, an officer or
employee of the Company or any of its subsidiaries, or was
formerly an officer of the Company or any of its
subsidiaries or, other than Messrs. Levin and Marcus, had
any relationships requiring disclosure by the Company under
Item 404 of Regulation S-K. Mr. Levin served on the
Company's Compensation Committee, Compensation Policy
Committee and Board of Directors during 1996 and is also a
partner in the law firm of Kramer, Levin, Naftalis &
Frankel, which provided legal services for the Company and
its subsidiaries during 1996. Mr. Marcus served on the
Company's Compensation Committee, Compensation Policy
Committee, Section 162(m) Compensation Committee, Special
Committee and Board of Directors during 1996 and also
performed extraordinary services in his capacity as a
Director of the Company when requested to travel to China to
review the Company's activities there.
During the Company's 1996 fiscal year, no executive
officer of the Company served as (i) a member of the
compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose
executive officers served on the Compensation Committee,
Compensation Policy Committee or Section 162(m) Compensation
Committee of the Company, (ii) a director of another entity,
one of whose executive officers served on any of such
committees, or (iii) a member of the compensation committee
(or other board committee performing equivalent functions)
of another entity, one of whose executive officers served as
a director of the Company.
-23-
<PAGE>
<PAGE>
CERTAIN TRANSACTIONS
---------------------
For certain periods through June 30, 1993, the Company
and its subsidiaries (including KAC) were included in the
consolidated Federal income tax returns filed by MAXXAM.
Payments to MAXXAM or refunds from MAXXAM may still be
required by or payable to the Company or KAC under the tax
allocation agreements that governed those periods due to the
final resolution of audits, amended returns and related
matters with respect to such periods. The Company's and
KAC's credit agreement dated as of February 15, 1994, as
amended (the "Credit Agreement"), prohibits any cash
payments by the Company to MAXXAM pursuant to the relevant
tax allocation agreement after February 15, 1994; however,
MAXXAM may offset amounts owing to it against amounts owed
by it under the relevant tax allocation agreement, and the
Company may make certain cash payments to MAXXAM that are
required as a result of audits of MAXXAM's tax returns and
only to the extent of any amounts paid after February 15,
1994 by MAXXAM to the Company under the relevant tax
allocation agreement. While the Company and KAC are
severally liable for the MAXXAM tax group's Federal income
tax liability for all of 1993 and applicable prior periods,
pursuant to the relevant tax allocation agreements, MAXXAM
indemnifies the Company and KAC to the extent the tax
liability exceeds amounts payable by them under such
agreements.
The Company and MAXXAM have an arrangement pursuant to
which they reimburse each other for certain allocable costs
associated with the performance of services by their
respective employees. The Company paid a total of
approximately $3.8 million to MAXXAM pursuant to such
arrangements and MAXXAM paid approximately $2.9 million to
the Company pursuant to such arrangements in respect of
1996. Generally, the Company and MAXXAM endeavor to
minimize the need for reimbursement by ensuring that
employees are employed by the entity to which the majority
of their services are rendered.
Mr. Levin, a director of the Company and KAC, is a
partner in the law firm of Kramer, Levin, Naftalis &
Frankel, which provides legal services for the Company and
its subsidiaries. In addition, in 1996, Mr. Marcus, who is
also a director of the Company and KAC, received fees in the
amount of $13,500 for extraordinary services performed in
such capacity when requested to travel to China to review
the Company's activities there.
On April 17, 1995, SHRP, Ltd. and two affiliated
entities, SHRP Acquisition, Inc. and SHRP Capital Corp.,
filed voluntary corporate petitions under Chapter 11 of the
United States Bankruptcy Code. Their bankruptcy plan has
since been confirmed and the transactions contemplated by
the bankruptcy reorganization plan were consummated on
October 6, 1995. Since July 1993, Mr. Wade has served as a
director, Vice President and Secretary of SHRP, Inc., SHRP,
Ltd.'s sole general partner prior to SHRP, Ltd.'s bankruptcy
reorganization, and of SHRP Capital Corp., a subsidiary of
SHRP, Ltd. Also, Mr. Hurwitz has served as a director and
Chairman of the Board of SHRP, Inc., and as a director,
Chairman of the Board and President of SHRP Capital Corp.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based solely upon a review of the copies of the Forms
3, 4 and 5 and amendments thereto furnished to the Company
with respect to its most recent fiscal year, and written
representations from certain reporting persons that no Forms
5 were required, the Company believes that all filing
requirements were complied with which were applicable to its
officers, directors and greater than ten percent beneficial
owners except as to Messrs. Smith and Milchovich. Form 4
filings with respect to a sale of 20 shares of
such 1985 Series B Stock by each of Messrs. Smith and
Milchovich were not made on a timely basis. In January
1997, those sales were reported in Form 4 filings for each
of Messrs. Smith and Milchovich.
-24-
<PAGE>
<PAGE>
OTHER MATTERS
-------------
Independent Public Accountants
- - - ------------------------------
The Company has appointed Arthur Andersen LLP as its
independent public accountants through the conclusion of the
audit with respect to the Company's 1996 fiscal year.
Representatives of Arthur Andersen LLP plan to attend the
Annual Meeting and will be available to answer appropriate
questions. Such representatives will also have an
opportunity to make a statement at the meeting, if they so
desire.
Stockholder Proposals for the 1998 Annual Meeting of
- - - ----------------------------------------------------
Stockholders
- - - ------------
Proposals intended to be presented at the 1998 Annual
Meeting of Stockholders pursuant to Rule 14a-8 of the
Exchange Act must be received by December 30, 1997, in order
to be included in the Company's proxy statement and form of
proxy relating to that meeting. Any stockholder proposals
must be sent to the Company's Secretary at the Company's
offices at 5847 San Felipe, Suite 2600, Houston,
Texas 77057.
Other Matters
- - - -------------
The cost of mailing and soliciting proxies in connection
with the Annual Meeting will be borne by the Company. The
Company will, if requested, reimburse banks, brokerage
houses and other custodians, nominees and certain
fiduciaries for their reasonable expenses incurred in
mailing proxy material to their principals. Proxies may be
solicited by directors, officers and employees of the
Company without special remuneration. The Company has
retained Corporate Investor Communications, Inc. to assist
in the distribution and solicitation of proxies at an
estimated cost of approximately $2,500 (including expenses).
In addition to the use of mails, proxies may be solicited by
personal interviews, facsimile, telephone or telegraph.
The persons designated to vote shares covered by
management proxies intend to exercise their judgment in
voting such shares on other matters that may properly come
before the meeting. Management knows of no matters which
will be presented for action at the meeting other than as
referred to in this Proxy Statement.
By Order of the Board of Directors
BYRON L. WADE
Secretary
April 30, 1997
Houston, Texas
<PAGE>
<PAGE>
DIRECTION BY PARTICIPANT TO TRUSTEE OF KAISER ALUMINUM
USWA EMPLOYEE STOCK OWNERSHIP PLAN (USWA STOCK PLAN)
PROXY FOR CUMULATIVE (1985 SERIES A) PREFERENCE STOCK
KAISER ALUMINUM & CHEMICAL CORPORATION
Solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held June 4, 1997
The undersigned hereby directs the Trustee of the USWA
Stock Plan to vote all the shares (in person or by proxy)
allocated to the undersigned's account as of April 30, 1997,
at the Annual Meeting of Stockholders to be held on June 4,
1997, and at any and all adjournments or postponements
thereof. The Trustee or its proxy, acting at the meeting,
may exercise all powers hereby conferred.
THE TRUSTEE OR ITS PROXY IS DIRECTED TO VOTE AS
INDICATED ON THE REVERSE SIDE. IF THIS CARD IS RETURNED AND
NO CHOICE IS SPECIFIED, THE SHARES REPRESENTED HEREBY WILL
BE VOTED "FOR" THE ELECTION OF NOMINEES TO THE BOARD OF
DIRECTORS AS SET FORTH IN THE PROXY STATEMENT AND "FOR" THE
APPROVAL OF THE KAISER 1997 OMNIBUS STOCK INCENTIVE PLAN.
THE TRUSTEE WILL KEEP ALL VOTES CONFIDENTIAL AND WILL VOTE
SHARES AS TO WHICH NO VOTING INSTRUCTION CARDS ARE RECEIVED
IN THE SAME PROPORTIONS AS THE SHARES TO WHICH VOTING
INSTRUCTION CARDS ARE RECEIVED ARE VOTED.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE BY WEDNESDAY, MAY 28, 1997.
(SEE REVERSE SIDE)
- - - ------------------------------------------------------------
FOLD AND DETACH HERE
May 5, 1997
To: Participants in Kaiser Aluminum USWA Employee Stock
Ownership Plan (USWA Plan)
As a participant in the USWA Plan, you have an interest in
the forthcoming Annual Meeting of Stockholders of Kaiser
Aluminum & Chemical Corporation ("Kaiser Aluminum") to be
held on June 4, 1997. Each participant is entitled to
direct the USWA Plan Trustee how to vote the shares of
Kaiser Aluminum's Cumulative (1985 Series A) Preference
Stock credited to his or her account as of April 30, 1997.
Shares credited to your account, which you are entitled to
vote, are shown on this voting direction card.
The items to be voted on at this year's Annual Meeting are
the election of Directors and the approval of the Kaiser
1997 Omnibus Stock Incentive Plan. If you wish to instruct
the Trustee how to vote on these items, you may use this
card.
If the Trustee does not receive a signed direction card from
you before 5:00 p.m. Eastern Daylight Time on May 28, 1997,
the Trustee or its proxy will vote the shares in your
account in the same manner proportionally as it votes the
other shares for which timely voting instructions are
received.
For you information, enclosed are Kaiser Aluminum's Notice
of Annual Meeting of Stockholders and Proxy Statement and
its 1996 Annual Report on Form 10-K to the Securities and
Exchange Commission. Please return your card in the
enclosed postage-paid envelope before 5:00 p.m. Eastern
Daylight Time on May 28, 1997. Individual voting
instructions received by the Trustee will be held in
complete confidence.
Your participation in this vote is encouraged.
Frank Russell Trust Company as Trustee of
Kaiser Aluminum USWA
Employee Stock Ownership Plan
Enclosures
<PAGE>
<PAGE>
THE TRUSTEE OR ITS PROXY IS DIRECTED TO VOTE AS INDICATED
BELOW.
1. ELECTION OF DIRECTORS
NOMINEES: Robert J. Cruikshank, George T. Haymaker,
Jr., Charles E. Hurwitz, Ezra G. Levin, Robert Marcus,
Robert J. Petris
To withhold authority to vote for any individual
nominee(s) while voting for the remainder, write the
name of the nominee(s) for which authority is withheld
in the space below:
- - - -----------------------------------------------------------
FOR ALL WITHHOLD
NOMINEES FROM ALL
(except as NOMINEES
marked to the
contrary)
/ / / /
2. Approval of the Kaiser 1997 Omnibus Stock Incentive
Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the Trustee or its proxy is
authorized to vote upon such other matters as may
properly come before the meeting or any adjournment or
postponements thereof, hereby revoking any direction
heretofore given by the undersigned.
Please sign name(s) exactly as printed hereon. If
stock is held in the name of more than one person,
EACH person should sign. Executors, administrators,
trustees, etc. should give full title as such. If a
corporation, please sign full corporate name by duly
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Dated:------------------------, 1997
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
<PAGE>
<PAGE>
DIRECTION BY PARTICIPANT TO TRUSTEE OF KAISER ALUMINUM
SALARIED EMPLOYEE STOCK OWNERSHIP PLAN (SALARIED PLAN)
PROXY FOR CUMULATIVE (1985 SERIES B) PREFERENCE STOCK
KAISER ALUMINUM & CHEMICAL CORPORATION
Solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held June 4, 1997
The undersigned hereby directs the Trustee of the
Salaried Plan to vote all the shares (in person or by proxy)
allocated to the undersigned's account as of April 30, 1997,
at the Annual Meeting of Stockholders to be held on June 4,
1997, and at any and all adjournments or postponements
thereof. The Trustee or its proxy, acting at the meeting,
may exercise all powers hereby conferred.
THE TRUSTEE OR ITS PROXY IS DIRECTED TO VOTE AS
INDICATED ON THE REVERSE SIDE. IF THIS CARD IS RETURNED AND
NO CHOICE IS SPECIFIED, THE SHARES REPRESENTED HEREBY WILL
BE VOTED "FOR" THE ELECTION OF NOMINEES TO THE BOARD OF
DIRECTORS AS SET FORTH IN THE PROXY STATEMENT AND "FOR" THE
APPROVAL OF THE KAISER 1997 OMNIBUS STOCK INCENTIVE PLAN.
THE TRUSTEE WILL KEEP ALL VOTES CONFIDENTIAL AND WILL VOTE
SHARES AS TO WHICH NO VOTING INSTRUCTION CARDS ARE RECEIVED
IN THE SAME PROPORTIONS AS THE SHARES TO WHICH VOTING
INSTRUCTION CARDS ARE RECEIVED ARE VOTED.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE BY WEDNESDAY, MAY 28, 1997.
(SEE REVERSE SIDE)
- - - ----------------------------------------------------------
FOLD AND DETACH HERE
May 5 1997
To: Participants in Kaiser Aluminum Salaried Employee Stock
Ownership Plan (Salaried Plan)
As a participant in the Salaried Plan, you have an interest
in the forthcoming Annual Meeting of Stockholders of Kaiser
Aluminum & Chemical Corporation ("Kaiser Aluminum") to be
held on June 4, 1997. Each participant is entitled to
direct the Salaried Plan Trustee how to vote the shares of
Kaiser Aluminum's Cumulative (1985 Series B) Preference
Stock credited to his or her account as of April 30, 1997.
Shares credited to your account, which you are entitled to
vote, are shown on this voting direction card.
The items to be voted on at this year's Annual Meeting are
the election of Directors and the approval of the Kaiser
1997 Omnibus Stock Incentive Plan. If you wish to instruct
the Trustee how to vote on these items, you may use this
card.
If the Trustee does not receive a signed direction card from
you before 5:00 p.m. Eastern Daylight Time on May 28, 1997,
the Trustee or its proxy will vote the shares in your
account in the same manner proportionally as it votes the
other shares for which timely voting instructions are
received.
For you information, enclosed are Kaiser Aluminum's Notice
of Annual Meeting of Stockholders and Proxy Statement, and
its 1996 Annual Report on Form 10-K to the Securities and
Exchange Commission. Please return your card in the
enclosed postage-paid envelope before 5:00 p.m. Eastern
Daylight Time on May 28, 1997. Individual voting
instructions received by the Trustee will be held in
complete confidence.
Your participation in this vote is encouraged.
Frank Russell Trust Company as Trustee of
Kaiser Aluminum Salaried
Employee Stock Ownership Plan
Enclosures
<PAGE>
<PAGE>
THE TRUSTEE OR ITS PROXY IS DIRECTED TO VOTE AS INDICATED
BELOW.
1. ELECTION OF DIRECTORS
NOMINEES: Robert J. Cruikshank, George T. Haymaker,
Jr., Charles E. Hurwitz, Ezra G. Levin, Robert Marcus,
Robert J. Petris
To withhold authority to vote for any individual
nominee(s) while voting for the remainder, write the
name of the nominee(s) for which authority is withheld
in the space below:
- - - -----------------------------------------------------------
FOR ALL WITHHOLD
NOMINEES FROM ALL
(except as NOMINEES
marked to the
contrary)
/ / / /
2. Approval of the Kaiser 1997 Omnibus Stock Incentive
Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the Trustee or its proxy is
authorized to vote upon such other matters as may
properly come before the meeting or any adjournment or
postponements thereof, hereby revoking any direction
heretofore given by the undersigned.
Please sign name(s) exactly as printed hereon. If
stock is held in the name of more than one person,
EACH person should sign. Executors, administrators,
trustees, etc. should give full title as such. If a
corporation, please sign full corporate name by duly
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Dated:------------------------, 1997
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
- - - -----------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<PAGE>
PROXY FOR CUMULATIVE (1985 SERIES B) PREFERENCE STOCK
KAISER ALUMINUM & CHEMICAL CORPORATION
Solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held June 4, 1997
The undersigned hereby appoints E. BRUCE BUTLER, JOHN T. LA
DUC, and JOHN WM. NIEMAND II as proxies (each with power to
act alone, or jointly, and with the power of substitution)
to vote, as designated on the reverse side, all shares of
Cumulative (1985 Series B) Preference Stock the undersigned
is entitled to vote at the Annual Meeting of Stockholders to
be held on June 4, 1997, and at any and all adjournments or
postponements thereof.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
(SEE REVERSE SIDE)
<PAGE>
<PAGE>
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS
DESIGNATED BY THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED,
THE PROXY WILL BE VOTED "FOR" THE ELECTION OF NOMINEES TO
THE BOARD OF DIRECTORS AND "FOR" THE KAISER 1997 OMNIBUS
STOCK INCENTIVE PLAN.
1. ELECTION OF DIRECTORS
NOMINEES: Robert J. Cruikshank, George T. Haymaker,
Jr., Charles E. Hurwitz, Ezra G. Levin, Robert Marcus,
Robert J. Petris
To withhold authority to vote for any individual
nominee(s) while voting for the remainder, write the
name of the nominee(s) for which authority is withheld
in the space below:
- - - -----------------------------------------------------------
FOR ALL WITHHOLD
NOMINEES FROM ALL
(except as NOMINEES
marked to the
contrary)
/ / / /
2. Approval of the Kaiser 1997 Omnibus Stock Incentive
Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the proxies are authorized to vote
upon such other matters as may properly come before the
meeting or any adjournment or postponements thereof,
hereby revoking any direction heretofore given by the
undersigned.
Please sign name(s) exactly as printed hereon. If
stock is held in the name of more than one person,
EACH person should sign. Executors, administrators,
trustees, etc. should give full title as such. If a
corporation, please sign full corporate name by duly
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Dated:------------------------, 1997
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
<PAGE>
<PAGE>
PROXY FOR CUMULATIVE (1985 SERIES A) PREFERENCE STOCK
KAISER ALUMINUM & CHEMICAL CORPORATION
Solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held June 4, 1997
The undersigned hereby appoints E. BRUCE BUTLER, JOHN T. LA
DUC, and JOHN WM. NIEMAND II as proxies (each with power to
act alone, or jointly, and with the power of substitution)
to vote, as designated on the reverse side, all shares of
Cumulative (1985 Series A) Preference Stock the undersigned
is entitled to vote at the Annual Meeting of Stockholders to
be held on June 4, 1997, and at any and all adjournments or
postponements thereof.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
(SEE REVERSE SIDE)
<PAGE>
<PAGE>
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS
DESIGNATED BY THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED,
THE PROXY WILL BE VOTED "FOR" THE ELECTION OF NOMINEES TO
THE BOARD OF DIRECTORS AND "FOR" THE KAISER 1997 OMNIBUS
STOCK INCENTIVE PLAN.
1. ELECTION OF DIRECTORS
NOMINEES: Robert J. Cruikshank, George T. Haymaker,
Jr., Charles E. Hurwitz, Ezra G. Levin, Robert Marcus,
Robert J. Petris
To withhold authority to vote for any individual
nominee(s) while voting for the remainder, write the
name of the nominee(s) for which authority is withheld
in the space below:
- - - -----------------------------------------------------------
FOR ALL WITHHOLD
NOMINEES FROM ALL
(except as NOMINEES
marked to the
contrary)
/ / / /
2. Approval of the Kaiser 1997 Omnibus Stock Incentive
Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the proxies are authorized to vote
upon such other matters as may properly come before the
meeting or any adjournment or postponements thereof,
hereby revoking any direction heretofore given by the
undersigned.
Please sign name(s) exactly as printed hereon. If
stock is held in the name of more than one person,
EACH person should sign. Executors, administrators,
trustees, etc. should give full title as such. If a
corporation, please sign full corporate name by duly
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Dated:------------------------, 1997
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
<PAGE>
<PAGE>
PROXY FOR COMMON STOCK
KAISER ALUMINUM & CHEMICAL CORPORATION
Solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held June 4, 1997
The undersigned hereby appoints E. BRUCE BUTLER, JOHN T.
LA DUC, and JOHN WM. NIEMAND II as proxies (each with power
to act alone, or jointly, and with power of substitution) to
vote, as designated on the reverse side, all shares of
Common Stock the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held on June 4, 1997,
and at any and all adjournments or postponements thereof.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
(SEE REVERSE SIDE)
<PAGE>
<PAGE>
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS
DESIGNATED BY THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED,
THE PROXY WILL BE VOTED "FOR" THE ELECTION OF NOMINEES TO
THE BOARD OF DIRECTORS AND "FOR" THE KAISER 1997 OMNIBUS
STOCK INCENTIVE PLAN.
1. ELECTION OF DIRECTORS
NOMINEES: Robert J. Cruikshank, George T. Haymaker,
Jr., Charles E. Hurwitz, Ezra G. Levin, Robert Marcus,
Robert J. Petris
To withhold authority to vote for any individual
nominee(s) while voting for the remainder, write the
name of the nominee(s) for which authority is withheld
in the space below:
- - - -----------------------------------------------------------
FOR ALL WITHHOLD
NOMINEES FROM ALL
(except as NOMINEES
marked to the
contrary)
/ / / /
2. Approval of the Kaiser 1997 Omnibus Stock Incentive
Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the proxies are authorized to vote
upon such other matters as may properly come before the
meeting or any adjournment or postponements thereof,
hereby revoking any direction heretofore given by the
undersigned.
Please sign name(s) exactly as printed hereon. If
stock is held in the name of more than one person,
EACH person should sign. Executors, administrators,
trustees, etc. should give full title as such. If a
corporation, please sign full corporate name by duly
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Dated:------------------------, 1997
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
<PAGE>
DIRECTION BY PARTICIPANT TO TRUSTEE OF KAISER ALUMINUM
USWA EMPLOYEE STOCK OWNERSHIP PLAN (USWA STOCK PLAN)
PROXY FOR CUMULATIVE (1985 SERIES A) PREFERENCE STOCK
KAISER ALUMINUM & CHEMICAL CORPORATION
Solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held June 4, 1997
The undersigned hereby directs the Trustee of the USWA
Stock Plan to vote all the shares (in person or by proxy)
allocated to the undersigned's account as of April 30, 1997,
at the Annual Meeting of Stockholders to be held on June 4,
1997, and at any and all adjournments or postponements
thereof. The Trustee or its proxy, acting at the meeting,
may exercise all powers hereby conferred.
THE TRUSTEE OR ITS PROXY IS DIRECTED TO VOTE AS
INDICATED ON THE REVERSE SIDE. IF THIS CARD IS RETURNED AND
NO CHOICE IS SPECIFIED, THE SHARES REPRESENTED HEREBY WILL
BE VOTED "FOR" THE ELECTION OF NOMINEES TO THE BOARD OF
DIRECTORS AS SET FORTH IN THE PROXY STATEMENT AND "FOR" THE
APPROVAL OF THE KAISER 1997 OMNIBUS STOCK INCENTIVE PLAN.
THE TRUSTEE WILL KEEP ALL VOTES CONFIDENTIAL AND WILL VOTE
SHARES AS TO WHICH NO VOTING INSTRUCTION CARDS ARE RECEIVED
IN THE SAME PROPORTIONS AS THE SHARES TO WHICH VOTING
INSTRUCTION CARDS ARE RECEIVED ARE VOTED.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE BY WEDNESDAY, MAY 28, 1997.
(SEE REVERSE SIDE)
<PAGE>
<PAGE>
THE TRUSTEE OR ITS PROXY IS DIRECTED TO VOTE AS INDICATED
BELOW.
1. ELECTION OF DIRECTORS
NOMINEES: Robert J. Cruikshank, George T. Haymaker,
Jr., Charles E. Hurwitz, Ezra G. Levin, Robert Marcus,
Robert J. Petris
To withhold authority to vote for any individual
nominee(s) while voting for the remainder, write the
name of the nominee(s) for which authority is withheld
in the space below:
- - - -----------------------------------------------------------
FOR ALL WITHHOLD
NOMINEES FROM ALL
(except as NOMINEES
marked to the
contrary)
/ / / /
2. Approval of the Kaiser 1997 Omnibus Stock Incentive
Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the Trustee or its proxy is
authorized to vote upon such other matters as may
properly come before the meeting or any adjournment or
postponements thereof, hereby revoking any direction
heretofore given by the undersigned.
Please sign name(s) exactly as printed hereon. If
stock is held in the name of more than one person,
EACH person should sign. Executors, administrators,
trustees, etc. should give full title as such. If a
corporation, please sign full corporate name by duly
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Dated:------------------------, 1997
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
May 5, 1997
To: Participants in Kaiser Aluminum USWA Employee Stock
Ownership Plan
(USWA Plan)
As a participant in the USWA Plan, you have an interest in
the forthcoming Annual Meeting of Stockholders of Kaiser
Aluminum & Chemical Corporation ("Kaiser Aluminum") to be
held on June 4, 1997. Each participant is entitled to
direct the USWA Plan Trustee how to vote the shares of
Kaiser Aluminum's Cumulative (1985 Series A) Preference
Stock credited to his or her account as of April 30, 1997.
Shares credited to your account, which you are entitled to
vote, are shown on this voting direction card.
The items to be voted on at this year's Annual Meeting are
the election of Directors and the approval of the Kaiser
1997 Omnibus Stock Incentive Plan. If you wish to instruct
the Trustee how to vote on these items, you may use this
card.
If the Trustee does not receive a signed direction card from
you before 5:00 p.m. Eastern Daylight Time on May 28, 1997,
the Trustee or its proxy will vote the shares in your
account in the same manner proportionally as it votes the
other shares for which timely voting instructions are
received.
For you information, enclosed are Kaiser Aluminum's Notice
of Annual Meeting of Stockholders and Proxy Statement and
its 1996 Annual Report on Form 10-K to the Securities and
Exchange Commission. Please return your card in the
enclosed postage-paid envelope before 5:00 p.m. Eastern
Daylight Time on May 28, 1997. Individual voting
instructions received by the Trustee will be held in
complete confidence.
Your participation in this vote is encouraged.
Frank Russell Trust Company as Trustee of
Kaiser Aluminum USWA
Employee Stock Ownership Plan
Enclosures
<PAGE>
<PAGE>
DIRECTION BY PARTICIPANT TO TRUSTEE OF KAISER ALUMINUM
SALARIED EMPLOYEE STOCK OWNERSHIP PLAN (SALARIED PLAN)
PROXY FOR CUMULATIVE (1985 SERIES B) PREFERENCE STOCK
KAISER ALUMINUM & CHEMICAL CORPORATION
Solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held June 4, 1997
The undersigned hereby directs the Trustee of the
Salaried Plan to vote all the shares (in person or by proxy)
allocated to the undersigned's account as of April 30, 1997,
at the Annual Meeting of Stockholders to be held on June 4,
1997, and at any and all adjournments or postponements
thereof. The Trustee or its proxy, acting at the meeting,
may exercise all powers hereby conferred.
THE TRUSTEE OR ITS PROXY IS DIRECTED TO VOTE AS
INDICATED ON THE REVERSE SIDE. IF THIS CARD IS RETURNED AND
NO CHOICE IS SPECIFIED, THE SHARES REPRESENTED HEREBY WILL
BE VOTED "FOR" THE ELECTION OF NOMINEES TO THE BOARD OF
DIRECTORS AS SET FORTH IN THE PROXY STATEMENT AND "FOR" THE
APPROVAL OF THE KAISER 1997 OMNIBUS STOCK INCENTIVE PLAN.
THE TRUSTEE WILL KEEP ALL VOTES CONFIDENTIAL AND WILL VOTE
SHARES AS TO WHICH NO VOTING INSTRUCTION CARDS ARE RECEIVED
IN THE SAME PROPORTIONS AS THE SHARES TO WHICH VOTING
INSTRUCTION CARDS ARE RECEIVED ARE VOTED.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE BY WEDNESDAY, MAY 28, 1997.
(SEE REVERSE SIDE)
<PAGE>
<PAGE>
THE TRUSTEE OR ITS PROXY IS DIRECTED TO VOTE AS INDICATED
BELOW.
1. ELECTION OF DIRECTORS
NOMINEES: Robert J. Cruikshank, George T. Haymaker,
Jr., Charles E. Hurwitz, Ezra G. Levin, Robert Marcus,
Robert J. Petris
To withhold authority to vote for any individual
nominee(s) while voting for the remainder, write the
name of the nominee(s) for which authority is withheld
in the space below:
- - - -----------------------------------------------------------
FOR ALL WITHHOLD
NOMINEES FROM ALL
(except as NOMINEES
marked to the
contrary)
/ / / /
2. Approval of the Kaiser 1997 Omnibus Stock Incentive
Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the Trustee or its proxy is
authorized to vote upon such other matters as may
properly come before the meeting or any adjournment or
postponements thereof, hereby revoking any direction
heretofore given by the undersigned.
Please sign name(s) exactly as printed hereon. If
stock is held in the name of more than one person,
EACH person should sign. Executors, administrators,
trustees, etc. should give full title as such. If a
corporation, please sign full corporate name by duly
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Dated:------------------------, 1997
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
May 5 1997
To: Participants in Kaiser Aluminum Salaried Employee Stock
Ownership Plan
(Salaried Plan)
As a participant in the Salaried Plan, you have an interest
in the forthcoming Annual Meeting of Stockholders of Kaiser
Aluminum & Chemical Corporation ("Kaiser Aluminum") to be
held on June 4 1997. Each participant is entitled to direct
the Salaried Plan Trustee how to vote the shares of Kaiser
Aluminum's Cumulative (1985 Series B) Preference Stock
credited to his or her account as of April 30, 1997. Shares
credited to your account, which you are entitled to vote,
are shown on this voting direction card.
The items to be voted on at this year's Annual Meeting are
the election of Directors and the approval of the Kaiser
1997 Omnibus Stock Incentive Plan. If you wish to instruct
the Trustee how to vote on these items, you may use this
card.
If the Trustee does not receive a signed direction card from
you before 5:00 p.m. Eastern Daylight Time on May 28, 1997,
the Trustee or its proxy will vote the shares in your
account in the same manner proportionally as it votes the
other shares for which timely voting instructions are
received.
For you information, enclosed are Kaiser Aluminum's Notice
of Annual Meeting of Stockholders and Proxy Statement, and
its 1996 Annual Report on Form 10-K to the Securities and
Exchange Commission. Please return your card in the
enclosed postage-paid envelope before 5:00 p.m. Eastern
Daylight Time on May 28, 1997. Individual voting
instructions received by the Trustee will be held in
complete confidence.
Your participation in this vote is encouraged.
Frank Russell Trust Company as Trustee of
Kaiser Aluminum Salaried
Employee Stock Ownership Plan
Enclosures
<PAGE>
<PAGE>
PROXY FOR CUMULATIVE (1985 SERIES B) PREFERENCE STOCK
KAISER ALUMINUM & CHEMICAL CORPORATION
Solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held June 4, 1997
The undersigned hereby appoints E. BRUCE BUTLER, JOHN T. LA
DUC, and JOHN WM. NIEMAND II as proxies (each with power to
act alone, or jointly, and with the power of substitution)
to vote, as designated on the reverse side, all shares of
Cumulative (1985 Series B) Preference Stock the undersigned
is entitled to vote at the Annual Meeting of Stockholders to
be held on June 4, 1997, and at any and all adjournments or
postponements thereof.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
(SEE REVERSE SIDE)
<PAGE>
<PAGE>
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS
DESIGNATED BY THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED,
THE PROXY WILL BE VOTED "FOR" THE ELECTION OF NOMINEES TO
THE BOARD OF DIRECTORS AND "FOR" THE KAISER 1997 OMNIBUS
STOCK INCENTIVE PLAN.
1. ELECTION OF DIRECTORS
NOMINEES: Robert J. Cruikshank, George T. Haymaker,
Jr., Charles E. Hurwitz, Ezra G. Levin, Robert Marcus,
Robert J. Petris
To withhold authority to vote for any individual
nominee(s) while voting for the remainder, write the
name of the nominee(s) for which authority is withheld
in the space below:
- - - -----------------------------------------------------------
FOR ALL WITHHOLD
NOMINEES FROM ALL
(except as NOMINEES
marked to the
contrary)
/ / / /
2. Approval of the Kaiser 1997 Omnibus Stock Incentive
Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the proxies are authorized to vote
upon such other matters as may properly come before the
meeting or any adjournment or postponements thereof,
hereby revoking any direction heretofore given by the
undersigned.
Please sign name(s) exactly as printed hereon. If
stock is held in the name of more than one person,
EACH person should sign. Executors, administrators,
trustees, etc. should give full title as such. If a
corporation, please sign full corporate name by duly
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Dated:------------------------, 1997
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
<PAGE>
<PAGE>
PROXY FOR CUMULATIVE (1985 SERIES A) PREFERENCE STOCK
KAISER ALUMINUM & CHEMICAL CORPORATION
Solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held June 4, 1997
The undersigned hereby appoints E. BRUCE BUTLER, JOHN T. LA
DUC, and JOHN WM. NIEMAND II as proxies (each with power to
act alone, or jointly, and with the power of substitution)
to vote, as designated on the reverse side, all shares of
Cumulative (1985 Series A) Preference Stock the undersigned
is entitled to vote at the Annual Meeting of Stockholders to
be held on June 4, 1997, and at any and all adjournments or
postponements thereof.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
(SEE REVERSE SIDE)
<PAGE>
<PAGE>
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS
DESIGNATED BY THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED,
THE PROXY WILL BE VOTED "FOR" THE ELECTION OF NOMINEES TO
THE BOARD OF DIRECTORS AND "FOR" THE KAISER 1997 OMNIBUS
STOCK INCENTIVE PLAN.
1. ELECTION OF DIRECTORS
NOMINEES: Robert J. Cruikshank, George T. Haymaker,
Jr., Charles E. Hurwitz, Ezra G. Levin, Robert Marcus,
Robert J. Petris
To withhold authority to vote for any individual
nominee(s) while voting for the remainder, write the
name of the nominee(s) for which authority is withheld
in the space below:
- - - -----------------------------------------------------------
FOR ALL WITHHOLD
NOMINEES FROM ALL
(except as NOMINEES
marked to the
contrary)
/ / / /
2. Approval of the Kaiser 1997 Omnibus Stock Incentive
Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the proxies are authorized to vote
upon such other matters as may properly come before the
meeting or any adjournment or postponements thereof,
hereby revoking any direction heretofore given by the
undersigned.
Please sign name(s) exactly as printed hereon. If
stock is held in the name of more than one person,
EACH person should sign. Executors, administrators,
trustees, etc. should give full title as such. If a
corporation, please sign full corporate name by duly
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Dated:------------------------, 1997
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
<PAGE>
<PAGE>
PROXY FOR COMMON STOCK
KAISER ALUMINUM & CHEMICAL CORPORATION
Solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held June 4, 1997
The undersigned hereby appoints E. BRUCE BUTLER, JOHN T.
LA DUC, and JOHN WM. NIEMAND II as proxies (each with power
to act alone, or jointly, and with power of substitution) to
vote, as designated on the reverse side, all shares of
Common Stock the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held on June 4, 1997,
and at any and all adjournments or postponements thereof.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
(SEE REVERSE SIDE)
<PAGE>
<PAGE>
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS
DESIGNATED BY THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED,
THE PROXY WILL BE VOTED "FOR" THE ELECTION OF NOMINEES TO
THE BOARD OF DIRECTORS AND "FOR" THE KAISER 1997 OMNIBUS
STOCK INCENTIVE PLAN.
1. ELECTION OF DIRECTORS
NOMINEES: Robert J. Cruikshank, George T. Haymaker,
Jr., Charles E. Hurwitz, Ezra G. Levin, Robert Marcus,
Robert J. Petris
To withhold authority to vote for any individual
nominee(s) while voting for the remainder, write the
name of the nominee(s) for which authority is withheld
in the space below:
- - - -----------------------------------------------------------
FOR ALL WITHHOLD
NOMINEES FROM ALL
(except as NOMINEES
marked to the
contrary)
/ / / /
2. Approval of the Kaiser 1997 Omnibus Stock Incentive
Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the proxies are authorized to vote
upon such other matters as may properly come before the
meeting or any adjournment or postponements thereof,
hereby revoking any direction heretofore given by the
undersigned.
Please sign name(s) exactly as printed hereon. If
stock is held in the name of more than one person,
EACH person should sign. Executors, administrators,
trustees, etc. should give full title as such. If a
corporation, please sign full corporate name by duly
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Dated:------------------------, 1997
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
<PAGE>
<PAGE>
APPENDIX A
Kaiser Aluminum Corporation
and
Kaiser Aluminum & Chemical Corporation
Kaiser 1997 Omnibus Stock Incentive Plan
Article 1. Establishment, Objectives, and Duration
- - - ----------------------------------------------------
1.1. Establishment of the Plan. Kaiser Aluminum
----------------------------------
Corporation ("KAC") and Kaiser Aluminum & Chemical
Corporation ("KACC"), both Delaware corporations
(hereinafter collectively referred to as the "Company"),
hereby establish an incentive compensation plan to be known
as the "Kaiser 1997 Omnibus Stock Incentive Plan"
(hereinafter referred to as the "Plan"), as set forth in
this document. The Plan permits the grant of Nonqualified
Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Shares, Performance
Units, and Cash-Based Awards.
Subject to approval by the Company's stockholders, the
Plan shall become effective as of April 1, 1997 (the
"Effective Date") and shall remain in effect as provided in
Section 1.3 herein.
1.2. Objectives of the Plan. The purpose of the Plan
-------------------------------
is to advance the interests of the Company and optimize the
profitability and growth of the Company through annual and
long-term incentives which are consistent with the Company's
goals by encouraging and providing for the acquisition of
equity interests (or rights measured by the market value of
the equity) in the success of the Company by key employees
and non-employee directors, by providing additional
incentives and motivation toward enhancing the long-term
performance of the Company. The Plan is further intended to
provide increased flexibility to the Company within a single
plan in its ability to motivate, attract, and retain the
services of Participants who make significant contributions
to the Company's success and to allow Participants to share
in the success of the Company.
1.3. Duration of the Plan. The Plan shall commence
-----------------------------
on the Effective Date, as described in Section 1.1 herein,
and shall remain in effect, subject to the right of the
Board of Directors to amend or terminate the Plan at any
time pursuant to Article 15 herein, until all Shares subject
to the Plan shall have been purchased or acquired according
to the Plan's provisions. However, in no event may an Award
be granted under the Plan after March 31, 2007.
Article 2. Definitions
- - - ------------------------
Whenever used in the Plan, the following terms shall
have the meanings set forth below, and when the meaning is
intended, the initial letter of the word shall be
capitalized:
2.1. "Affiliate" shall have the meaning ascribed to
--------------------
such term in Rule 12b-2 of the General Rules and Regulations
of the Exchange Act.
<PAGE>
<PAGE>
2.2. "Award" means, individually or collectively, a
----------------
grant under this Plan of Nonqualified Stock Options,
Incentive Stock Options, Stock Appreciation Rights,
Restricted Stock, Performance Shares, Performance Units, or
Cash-Based Awards.
2.3. "Award Agreement" means an agreement entered
-------------------------
into by the Company and each Participant setting forth the
terms and provisions applicable to Awards granted under this
Plan.
2.4. "Board" or "Board of Directors" unless otherwise
---------------- --------------------
specified, means collectively, the Boards of Directors of
KAC and KACC, collectively.
2.5. "Cash-Based Award" means an Award granted to a
---------------------------
Participant, as described in Article 9 herein.
2.6. Intentionally Left Blank.
2.7. "Code" means the Internal Revenue Code of 1986,
---------------
as amended from time to time, and any successor act thereto,
and, to the extent applicable, any federal income tax
regulations, including any temporary or proposed
regulations, promulgated under the Code, as such may be
amended from time to time.
2.8. "Committee" means any committee appointed by the
--------------------
Board to administer Awards to Employees, as specified in
Article 3 herein, including, but not limited to the
Compensation Policy and Section 162(m) Compensation
Committees of KAC and KACC. Any such committee shall be
comprised entirely of Directors.
2.9. "Company" shall have the meaning given to it in
------------------
Section 1.1 herein.
2.10. "Covered Employee" means a Participant who, as
---------------------------
of the date of vesting and/or payout of an Award, as
applicable, is one of the group of "covered employees," as
defined in the regulations promulgated under Code Section
162(m), or any successor statute.
2.11. "Director" means any individual who is a member
-------------------
of the Board of Directors of KAC, KACC, or any Subsidiary or
Affiliate thereof; provided, however, that any Director who
is employed by the Company or any Subsidiary or Affiliate
shall be considered an Employee under the Plan.
2.12. "Disability" shall have the meaning ascribed to
---------------------
such term in the KACC pension plan for salaried employees,
or if no such plan exists, at the discretion of the Board.
2.13. "Effective Date" shall have the meaning ascribed
-------------------------
to such term in Section 1.1 herein.
-2-
<PAGE>
<PAGE>
2.14. "Employee" means a regular full-time salaried
-------------------
employee (including officers and directors who are also
employees other than directors who serve on the Committee)
of the Company or its Subsidiaries or Affiliates, or any
branch, unit, or division thereof.
2.15. "Exchange Act" means the Securities Exchange Act
-----------------------
of 1934, as amended from time to time, or any successor act
thereto.
2.16. "Fair Market Value" means the average of the
----------------------------
highest and lowest prices of the Shares as reported by the
consolidated tape of the New York Stock Exchange on a
particular date. In the event that there are no Share
transactions on such date, the Fair Market Value shall be
determined as of the immediately preceding date on which
there were Share transactions, provided that such date is
not more than ten (10) business days preceding the
applicable date. If there were no such transaction within
the period stated above, the Fair Market Value of such
Shares shall be determined by the Committee.
2.17. "Freestanding SAR" means an SAR that is granted
---------------------------
independently of any Options, as described in Article 7
herein.
2.18. "Incentive Stock Option" or "ISO" means an
--------------------------------- -----
option to purchase Shares granted under Article 6 herein and
which is designated as an Incentive Stock Option and which
is intended to meet the requirements of Code Section 422.
2.19. "Insider" shall mean an individual who is, on
------------------
the relevant date, an officer, director or ten percent (10%)
beneficial owner of any class of the Company's equity
securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the
Exchange Act.
2.20. "Nonqualified Stock Option" or "NQSO" means an
------------------------------------ ------
option to purchase Shares granted under Article 6 herein and
which is not intended to meet the requirements of Code
Section 422.
2.21. "Option" means an Incentive Stock Option or a
-----------------
Nonqualified Stock Option, as described in Article 6 herein.
2.22. "Option Price" means the price at which a Share
-----------------------
may be purchased by a Participant pursuant to an Option.
2.23. "Participant" means an Employee or Director who
----------------------
has been selected to receive an Award or who has outstanding
an Award granted under the Plan.
2.24. "Performance-Based Exception" means the
--------------------------------------
performance-based exception from the tax deductibility
limitations of Code Section 162(m).
-3-
<PAGE>
<PAGE>
2.25. "Performance Share" means an Award granted to a
----------------------------
Participant, as described in Article 9 herein.
2.26. "Performance Unit" means an Award granted to a
---------------------------
Participant, as described in Article 9 herein.
2.27. "Period of Restriction" means the period during
--------------------------------
which the transfer of Shares of Restricted Stock is limited
in some way (based on the passage of time, the achievement
of performance goals, or upon the occurrence of other events
as determined by the Board, at its discretion), and the
Shares are subject to a substantial risk of forfeiture, as
provided in Article 8 herein.
2.28. "Restricted Stock" means an Award granted to a
---------------------------
Participant pursuant to Article 8 herein.
2.29. "Retirement" shall have the meaning ascribed to
---------------------
such term in the KACC pension plan for salaried employees.
2.30. "Shares" means the Common Stock of KAC, par
-----------------
value $.01.
2.31. "Stock Appreciation Right" or "SAR" means an
----------------------------------- -----
Award, granted alone or in connection with a related Option,
designated as an SAR, pursuant to the terms of Article 7
herein.
2.32. "Subsidiary" means any corporation, partnership,
---------------------
joint venture, or other entity in which the Company has a
majority voting interest.
2.33. "Tandem SAR" means an SAR that is granted in
---------------------
connection with a related Option pursuant to Article 7
herein, the exercise of which shall require forfeiture of
the right to purchase a Share under the related Option (and
when a Share is purchased under the Option, the Tandem SAR
shall similarly be canceled).
Article 3. Administration
- - - --------------------------
3.1. General. The Plan shall be administered by the
----------------
Board, or (subject to the following) by one or more
Committees appointed by the Board. The members of the
Committee shall be appointed from time to time by, and shall
serve at the discretion of, the Board of Directors. The
Board may delegate to the Committee any or all of the
administration of the Plan; provided, however, that the
administration of the Plan with respect to Awards granted to
Directors may not be so delegated. To the extent that the
Board has delegated to the Committee any authority and
responsibility under the Plan, all applicable references to
the Board in the Plan shall be to the Committee. The
Committee shall have the authority to delegate
administrative duties to officers or Directors of the
Company.
-4-<PAGE>
<PAGE>
3.2. Authority of the Board. Except as limited by
-------------------------------
law or by the Certificate of Incorporation or Bylaws of the
Company, and subject to the provisions herein, the Board
shall have full power to select Employees and Directors who
shall participate in the Plan; determine the sizes and types
of Awards; determine the terms and conditions of Awards in a
manner consistent with the Plan; construe and interpret the
Plan and any agreement or instrument entered into under the
Plan; establish, amend, or waive rules and regulations for
the Plan's administration; and amend the terms and
conditions of any outstanding Award as provided in the Plan.
Further, the Board shall make all other determinations which
may be necessary or advisable for the administration of the
Plan. As permitted by law (and subject to Section 3.1
herein), the Board may delegate its authority as identified
herein.
3.3. Decisions Binding. All determinations and
--------------------------
decisions made by the Board pursuant to the provisions of
the Plan and all related orders and resolutions of the Board
shall be final, conclusive and binding on all persons,
including the Company, its stockholders, Directors,
Employees, Participants, and their estates and
beneficiaries.
Article 4. Shares Subject to the Plan and Maximum Awards
- - - ---------------------------------------------------------
4.1. Number of Shares Available for Grants. Subject
----------------------------------------------
to adjustment as provided in Section 4.2 herein, the number
of Shares hereby reserved for issuance to Participants under
the Plan shall be Five Million Five Hundred Thousand
(5,500,000), including any Shares remaining available under
the Kaiser 1993 Omnibus Stock Incentive Plan which Shares
shall be rolled into the Shares available for issuance under
the Plan. In addition, no more than One Million Eight
Hundred Thousand (1,800,000) of which may be granted in the
form of Restricted Stock. The Board shall determine the
appropriate methodology for calculating the number of shares
issued pursuant to the Plan. Unless and until the Board
determines that an Award to a Covered Employee shall not be
designed to comply with the Performance-Based Exception, the
following rules shall apply to grants of such Awards under
the Plan:
(a) Stock Options: The maximum aggregate number of
-------------
Shares that may be granted in the form of Stock
Options, pursuant to any Award granted in any
one fiscal year to any one Participant shall be
Five Hundred Thousand (500,000).
(b) SARs: The maximum aggregate number of Shares
----
that may be granted in the form of Stock
Appreciation Rights, pursuant to any Award
granted in any one fiscal year to any one
Participant shall be Five Hundred Thousand
(500,000).
(c) Restricted Stock: The maximum aggregate grant
-----------------
with respect to Awards of Restricted Stock
granted in any one fiscal year to any one
Participant shall be Two Hundred Thousand
(200,000) Shares.
-5-
<PAGE>
<PAGE>
(d) Performance Shares/Performance Units and Cash-
-----------------------------------------------
Based Awards: The maximum aggregate payout
------------
(determined as of the end of the applicable
performance period) with respect to Cash-Based
Awards or Awards of Performance Shares or
Performance Units granted in any one fiscal
year to any one Participant shall be equal to
the value of Three Hundred Thousand (300,000)
Shares.
4.2. Lapsed Awards. If any Award granted under this
----------------------
Plan is canceled, terminates, expires, or lapses for any
reason (with the exception of the termination of a Tandem
SAR upon exercise of the related Option, or the termination
of a related Option upon exercise of the corresponding
Tandem SAR), any Shares subject to such Award again shall be
available for the grant of an Award under the Plan.
4.3. Adjustments in Authorized Shares. In the event
-----------------------------------------
that the Board or any Committee, as appropriate, shall
determine that any dividend or other distribution (whether
in the form of cash, securities, or other property),
recapitalization, forward or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase, or
share exchange, or other similar corporate transaction or
event, affects the Shares such that an adjustment is
appropriate in order to prevent dilution or enlargement of
the rights of Participants under the Plan, then the
Committee shall, in such manner as it may deem equitable,
adjust any or all of (i) the number and kind of Shares or
securities which may thereafter be issued in connection with
Awards, (ii) the number and kind of Shares or securities
issued or issuable in respect of outstanding Awards, and
(iii) the exercise price, grant price, or purchase price
relating to any Award or, if deemed appropriate, make
provision for payment of cash or other property with respect
to any outstanding Award; provided in each case, that with
respect to ISOs, no such adjustment shall be authorized to
the extent that such authority would cause the Plan to
violate Section 422 of the Code. In addition, the Board or
Committee, as appropriate, is authorized to make adjustments
in the terms and conditions of, and the criteria included in
Awards in recognition of unusual or nonrecurring events
(including, without limitation, events described in the
preceding sentence) affecting the Company or any subsidiary
or the financial statements of the Company or any
subsidiary, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and
regulations of business conditions.
Article 5. Eligibility and Participation
- - - -----------------------------------------
5.1. Eligibility. Persons eligible to participate in
--------------------
this Plan include all Employees and Directors.
5.2. Actual Participation. Subject to the provisions
-----------------------------
of the Plan, the Board may, from time to time, select from
all eligible Employees and Directors, those to whom Awards
shall be granted and shall determine the nature and amount
of each Award.
-6-<PAGE>
<PAGE>
Article 6. Stock Options
- - - -------------------------
6.1. Grant of Options. Subject to the terms and
-------------------------
provisions of the Plan, Options may be granted to
Participants in such number, and upon such terms, and at any
time and from time to time as shall be determined by the
Board.
6.2. Award Agreement. Each Option grant shall be
------------------------
evidenced by an Award Agreement that shall specify the
Option Price, the duration of the Option, the number of
Shares to which the Option pertains, and such other
provisions as the Board shall determine. The Award
Agreement also shall specify whether the Option is intended
to be an ISO within the meaning of Code Section 422, or an
NQSO whose grant is intended not to fall under the
provisions of Code Section 422.
6.3. Option Price. The Option Price for each grant
---------------------
of an Option under this Plan shall be at least equal to one
hundred percent (100%) of the Fair Market Value of a Share
on the date the Option is granted.
6.4. Duration of Options. Each Option granted to a
----------------------------
Participant shall expire at such time as the Board shall
determine at the time of grant; provided, however, that no
Option shall be exercisable later than the tenth (10th)
anniversary of the date of its grant.
6.5. Exercise of Options. Options granted under this
----------------------------
Article 6 shall be exercisable at such times and be subject
to such restrictions and conditions as the Board shall in
each instance approve, which need not be the same for each
grant or for each Participant.
6.6. Payment. Options granted under this Article 6
----------------
shall be exercised by the delivery of a written notice of
exercise to the Company, setting forth the number of Shares
with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
The Option Price upon exercise of any Option shall be
payable to the Company in full either: (a) in cash or its
equivalent, or (b) by tendering previously acquired Shares
having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that the
Shares which are tendered must have been held by the
Participant for at least six (6) months prior to their
tender to satisfy the Option Price), or (c) by a combination
of (a) and (b).
The Board also may allow cashless exercise as permitted
under Federal Reserve Board's Regulation T, subject to
applicable securities law restrictions, or by any other
means which the Board determines to be consistent with the
Plan's purpose and applicable law.
Subject to any governing rules or regulations, as soon
as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to the
Participant, in the Participant's name, Share certificates
in an appropriate amount based upon the number of Shares
purchased under the Option(s).
-7-<PAGE>
<PAGE>
6.7. Restrictions on Share Transferability. The
----------------------------------------------
Board may impose such restrictions on any Shares acquired
pursuant to the exercise of an Option granted under this
Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities
laws, under the requirements of any stock exchange or market
upon which such Shares are then listed and/or traded, and
under any blue sky or state securities laws applicable to
such Shares.
6.8. Termination of Employment/Directorship. Each
-----------------------------------------------
Participant's Option Award Agreement shall set forth the
extent to which the Participant shall have the right to
exercise the Option following termination of the
Participant's employment or directorship with the Company.
Such provisions shall be determined in the sole discretion
of the Board, shall be included in the Award Agreement
entered into with each Participant, need not be uniform
among all Options issued pursuant to this Article 6, and may
reflect distinctions based on the reasons for termination.
6.9. Nontransferability of Options.
--------------------------------------
(a) Incentive Stock Options. No ISO granted under
------------------------
the Plan may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothe-
cated, other than by will or by the laws of
descent and distribution. Further, all ISOs
granted to a Participant under the Plan shall
be exercisable during his or her lifetime only
by such Participant.
(b) Nonqualified Stock Options. Except as otherwise
---------------------------
provided in a Participant's Award Agreement, no
NQSO granted under this Article 6 may be sold,
transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will
or by the laws of descent and distribution.
Further, except as otherwise provided in a
Participant's Award Agreement, all NQSOs
granted to a Participant under this Article 6
shall be exercisable during his or her lifetime
only by such Participant.
Article 7. Stock Appreciation Rights
- - - --------------------------------------
7.1. Grant of SARs. Subject to the terms and
----------------------
conditions of the Plan, SARs may be granted to Participants
at any time and from time to time as shall be determined by
the Board. The Board may grant Freestanding SARs, Tandem
SARs, or any combination of these forms of SARs.
The Board shall have complete discretion in determining
the number of SARs granted to each Participant (subject to
Article 4 herein) and, consistent with the provisions of the
Plan, in determining the terms and conditions pertaining to
such SARs. The grant price of a Freestanding SAR shall
equal the Fair Market Value of a Share on the date of grant
of the SAR. The grant price of Tandem SARs shall equal the
Option Price of the related Option.
7.2. Exercise of Tandem SARs. Tandem SARs may be
--------------------------------
exercised for all or part of the Shares subject to the
related Option upon the surrender of the right to exercise
the equivalent portion of the related Option. A Tandem SAR
may be exercised only with respect to the Shares for which
its related Option is then exercisable.
-8-<PAGE>
<PAGE>
Notwithstanding any other provision of this Plan to the
contrary, with respect to a Tandem SAR granted in connection
with an ISO: (i) the Tandem SAR will expire no later than
the expiration of the underlying ISO; (ii) the value of the
payout with respect to the Tandem SAR may be for no more
than one hundred percent (100%) of the difference between
the Option Price of the underlying ISO and the Fair Market
Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (iii) the Tandem SAR
may be exercised only when the Fair Market Value of the
Shares subject to the ISO exceeds the Option Price of the
ISO.
7.3. Exercise of Freestanding SARs. Freestanding
--------------------------------------
SARs may be exercised upon whatever terms and conditions the
Board, in its sole discretion, imposes upon them.
7.4. SAR Agreement. Each SAR grant shall be
----------------------
evidenced by an Award Agreement that shall specify the grant
price, the term of the SAR, and such other provisions as the
Board shall determine.
7.5. Term of SARs. The term of an SAR granted under
---------------------
the Plan shall be determined by the Board, in its sole
discretion; provided, however, that such term shall not
exceed ten (10) years.
7.6. Payment of SAR Amount. Upon exercise of an SAR,
-------------------------------
a Participant shall be entitled to receive payment from the
Company in an amount determined by multiplying:
(a) The difference between the Fair Market Value of
a Share on the date of exercise over the grant
price; by
(b) The number of Shares with respect to which the
SAR is exercised.
At the discretion of the Board, the payment upon SAR
exercise may be in cash, in Shares of equivalent value, or
in some combination thereof. The Board's determination
regarding the form of SAR payout shall be set forth in the
Award Agreement pertaining to the grant of the SAR.
7.7. Termination of Employment/Directorship. Each
-----------------------------------------------
SAR Award Agreement shall set forth the extent to which the
Participant shall have the right to exercise the SAR
following termination of the Participant's employment or
directorship with the Company and/or its subsidiaries. Such
provisions shall be determined in the sole discretion of the
Board, shall be included in the Award Agreement entered into
with Participants, need not be uniform among all SARs issued
pursuant to the Plan, and may reflect distinctions based on
the reasons for termination.
7.8. Nontransferability of SARs. Except as otherwise
-----------------------------------
provided in a Participant's Award Agreement, no SAR granted
under the Plan may be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution and except as
otherwise required by law. Further, except as otherwise
provided in a Participant's
-9-<PAGE>
<PAGE>
Award Agreement, all SARs granted to a Participant under the
Plan shall be exercisable during his or her lifetime only by
such Participant.
Article 8. Restricted Stock
- - - ----------------------------
8.1. Grant of Restricted Stock. Subject to the terms
----------------------------------
and provisions of the Plan, the Board, at any time and from
time to time, may grant Shares of Restricted Stock to
Participants in such amounts as the Board shall determine.
8.2. Restricted Stock Agreement. Each Restricted
-----------------------------------
Stock grant shall be evidenced by a Restricted Stock Award
Agreement that shall specify the Period(s) of Restriction,
the number of Shares of Restricted Stock granted, and such
other provisions as the Board shall determine.
8.3. Transferability. Except as provided in this
------------------------
Article 8, the Shares of Restricted Stock granted herein may
not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable
Period of Restriction established by the Board and specified
in the Restricted Stock Award Agreement, or upon earlier
satisfaction of any other conditions, as specified by the
Board in its sole discretion and set forth in the Restricted
Stock Award Agreement. All rights with respect to the
Restricted Stock granted to a Participant under the Plan
shall be available during his or her lifetime only to such
Participant.
8.4. Other Restrictions. Subject to Article 11
---------------------------
herein, the Board shall impose such other conditions and/or
restrictions on any Shares of Restricted Stock granted
pursuant to the Plan as it may deem advisable including,
without limitation, a requirement that Participants pay a
stipulated purchase price for each Share of Restricted
Stock, restrictions based upon the achievement of specific
performance goals (Company-wide, divisional, and/or
individual), time-based restrictions on vesting following
the attainment of the performance goals, and/or restrictions
under applicable federal or state securities laws.
The Company may retain the certificates representing
Shares of Restricted Stock in the Company's possession until
such time as all conditions and/or restrictions applicable
to such Shares have been satisfied.
Except as otherwise provided in this Article 8, Shares
of Restricted Stock covered by each Restricted Stock grant
made under the Plan shall become freely transferable by the
Participant after the last day of the applicable Period of
Restriction.
8.5. Voting Rights. Participants holding Shares of
----------------------
Restricted Stock granted hereunder may be granted the right
to exercise full voting rights with respect to those Shares
during the Period of Restriction.
8.6. Dividends and Other Distributions. During the
------------------------------------------
Period of Restriction, Participants holding Shares of
Restricted Stock granted hereunder may be credited with
regular cash dividends
-10-
<PAGE>
<PAGE>
paid with respect to the underlying Shares while they are so
held. The Board may apply any restrictions to the dividends
that the Board deems appropriate. Without limiting the
generality of the preceding sentence, if the grant or
vesting of Restricted Shares granted to a Covered Employee
is designed to comply with the requirements of the
Performance-Based Exception, the Board may apply any
restrictions it deems appropriate to the payment of
dividends declared with respect to such Restricted Shares,
such that the dividends and/or the Restricted Shares
maintain eligibility for the Performance-Based Exception.
8.7. Termination of Employment/Directorship. Each
-----------------------------------------------
Restricted Stock Award Agreement shall set forth the extent
to which the Participant shall have the right to receive
unvested Restricted Shares following termination of the
Participant's employment or directorship with the Company.
Such provisions shall be determined in the sole discretion
of the Board, shall be included in the Award Agreement
entered into with each Participant, need not be uniform
among all Shares of Restricted Stock issued pursuant to the
Plan, and may reflect distinctions based on the reasons for
termination; provided, however that, except in the cases of
terminations by reason of death or Disability, the vesting
of Shares of Restricted Stock which qualify for the
Performance-Based Exception and which are held by Covered
Employees shall occur at the time they otherwise would have,
but for the termination.
Article 9. Performance Units, Performance Shares, and Cash-
- - - ------------------------------------------------------------
Based Awards
- - - ------------
9.1. Grant of Performance Units/Shares and Cash-Based
---------------------------------------------------------
Awards. Subject to the terms of the Plan, Performance Units,
- - - -------
Performance Shares, and/or Cash-Based Awards may be granted
to Participants in such amounts and upon such terms, and at
any time and from time to time, as shall be determined by
the Board.
9.2. Value of Performance Units/Shares and Cash-Based
---------------------------------------------------------
Awards. Each Performance Unit shall have an initial value
- - - ------
that is established by the Board at the time of grant. Each
Performance Share shall have an initial value equal to the
Fair Market Value of a Share on the date of grant. Each
Cash-Based Award shall have a value as may be determined by
the Board. The Board shall set performance goals in its
discretion which, depending on the extent to which they are
met, will determine the number and/or value of Performance
Units/Shares and Cash-Based Award that will be paid out to
the Participant. For purposes of this Article 9, the time
period during which the performance goals must be met shall
be called a "Performance Period."
9.3. Earning of Performance Units/Shares and Cash-
------------------------------------------------------
Based Awards. Subject to the terms of this Plan, after the
- - - ------------
applicable Performance Period has ended, the holder of
Performance Units/Shares and Cash-Based Awards shall be
entitled to receive payout on the number and value of
Performance Units/Shares and of Cash-Based Awards earned by
the Participant over the Performance Period, to be
determined as a function of the extent to which the
corresponding performance goals have been achieved.
-11-
<PAGE>
<PAGE>
9.4. Form and Timing of Payment of Performance
--------------------------------------------------
Units/Shares and Cash-Based Awards. Except as provided in
- - - ----------------------------------
the Participant's Award Agreement, payment of earned
Performance Units/Shares and Cash-Based Awards shall be made
in a single lump sum following the close of the applicable
Performance Period. Subject to the terms of this Plan, the
Board, in its sole discretion, may pay earned Performance
Units/Shares and Cash-Based Awards in the form of cash or in
Shares (or in a combination thereof) which have an aggregate
Fair Market Value equal to the value of the earned
Performance Units/Shares at the close of the applicable
Performance Period. Such Shares may be granted subject to
any restrictions deemed appropriate by the Board. The
determination of the Board with respect to the form of
payout of such Awards shall be set forth in the Award
Agreement pertaining to the grant of the Award.
At the discretion of the Board, Participants may be
entitled to receive any dividends declared with respect to
Shares which have been earned in connection with grants of
Performance Units and/or Performance Shares which have been
earned, but not yet distributed to Participants (such
dividends shall be subject to the same accrual, forfeiture,
and payout restrictions as apply to dividends earned with
respect to Shares of Restricted Stock, as set forth in
Section 8.6 herein). In addition, Participants may, at the
discretion of the Board, be entitled to exercise their
voting rights with respect to such Shares.
9.5. Termination of Employment/Directorship Due to
- - - ------------------------------------------------------
Death, Disability, or Retirement. Unless determined
- - - ---------------------------------
otherwise by the Board and set forth in the Participant's
Award Agreement, in the event the employment or directorship
of a Participant is terminated by reason of death,
Disability, or Retirement during a Performance Period, the
Participant shall receive a payout of the Performance
Units/Shares or Cash-Based Awards which is prorated, as
specified by the Board in its discretion.
Payment of earned Performance Units/Shares or Cash-Based
Awards shall be made at a time specified by the Board in its
sole discretion and set forth in the Participant's Award
Agreement. Notwithstanding the foregoing, with respect to
Covered Employees who retire during a Performance Period,
payments shall be made at the same time as payments are made
to Participants who did not terminate employment during the
applicable Performance Period.
9.6. Termination of Employment/Directorship for Other
---------------------------------------------------------
Reasons. In the event that a Participant's employment or
- - - -------
directorship terminates for any reason other than those
reasons set forth in Section 9.5 herein, all Performance
Units/Shares shall be forfeited by the Participant to the
Company unless determined otherwise by the Board, as set
forth in the Participant's Award Agreement.
9.7. Nontransferability. Except as otherwise
---------------------------
provided in a Participant's Award Agreement, Performance
Units/Shares and Cash-Based Awards may not be sold,
transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent
and distribution. Further, except as otherwise provided in
a Participant's Award Agreement, a Participant's rights
under the Plan shall be exercisable during the Participant's
lifetime only by the Participant or the Participant's legal
representative.
-12-<PAGE>
<PAGE>
Article 10. Stock Bonuses
- - - --------------------------
Subject to the terms and provisions of the Plan, the
Committee may grant Shares of stock of the Company to any
Participant as a bonus, upon such terms and at any time and
from time to time as determined by the Board.
Article 11. Performance Measures
- - - ---------------------------------
Unless and until the Committee proposes for shareholder
vote and shareholders approve a change in the general
performance measures set forth in this Article 11, the
attainment of which may determine the degree of payout
and/or vesting with respect to Awards to Covered Employees
which are designed to qualify for the Performance-Based
Exception, the performance measure(s) to be used for
purposes of such grants shall be chosen from among the
following:
(a) Earnings per share;
(b) Net income (before or after taxes);
(c) Return measures (including, but not limited to,
return on assets, revenue, equity, or sales);
(d) Cash flow return on investments which equals
net cash flows divided by owners equity;
(e) Earnings before or after taxes;
(f) Measures of gross sales, gross revenues, or
growth in sales or revenues;
(g) Share price (including, but no limited to,
growth measures and total shareholder return);
and
(h) Operating measures (including, but not limited
to, operating margin and operating costs).
The Board shall have the discretion to adjust the
determinations of the degree of attainment of the
preestablished performance goals; provided, however, that
Awards which are designed to qualify for the Performance-
Based Exception, and which are held by a Covered Employee,
may not be adjusted upward (the Board shall retain the
discretion to adjust such Awards downward).
In the event that applicable tax and/or securities laws
change to permit Board discretion to alter the governing
performance measures without obtaining shareholder approval
of such changes, the Board shall have sole discretion to
make such changes without obtaining shareholder
-13-<PAGE>
<PAGE>
approval. In addition, in the event that the Board
determines that it is advisable to grant Awards which shall
not qualify for the Performance-Based Exception, the Board
may make such grants without satisfying the requirements of
Code Section 162(m).
Article 12. Beneficiary Designation
- - - ------------------------------------
Each Participant under the Plan may, from time to time,
name any beneficiary or beneficiaries (who may be named con-
tingently or successively) to whom any benefit under the
Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such
designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Company,
and will be effective only when filed by the Participant in
writing with the Company during the Participant's lifetime.
In the absence of any such designation, benefits remaining
unpaid at the Participant's death shall be paid to the
Participant's estate.
Article 13. Deferrals
- - - ----------------------
The Board may permit or require a Participant to defer
such Participant's receipt of the payment of cash or the
delivery of Shares that would otherwise be due to such
Participant by virtue of the exercise of an Option or SAR,
the lapse or waiver of restrictions with respect to
Restricted Stock, or the satisfaction of any requirements or
goals with respect to Performance Units/Shares. If any such
deferral election is required or permitted, the Board shall,
in its sole discretion, establish rules and procedures for
such payment deferrals.
Article 14. Rights of Employees/Directors
- - - ------------------------------------------
14.1. Employment. Nothing in the Plan shall interfere
-------------------
with or limit in any way the right of the Company to
terminate any Participant's employment at any time, nor
confer upon any Participant any right to continue in the
employ of the Company.
14.2. Participation. No Employee or Director shall
----------------------
have the right to be selected to receive an Award under this
Plan, or, having been so selected, to be selected to receive
a future Award.
Article 15. Intentionally Left Blank
- - - -------------------------------------
Article 16. Amendment, Modification, and Termination
- - - -----------------------------------------------------
16.1. Amendment, Modification, and Termination.
-------------------------------------------------
Subject to the terms of the Plan, the Board may at any time
and from time to time, alter, amend, suspend or terminate
the Plan in whole or in part.
-14-<PAGE>
<PAGE>
16.2. Adjustment of Awards Upon the Occurrence of
----------------------------------------------------
Certain Unusual or Nonrecurring Events. The Board may make
- - - --------------------------------------
adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the
events described in Section 4.3 herein) affecting the
Company or the financial statements of the Company or of
changes in applicable laws, regulations, or accounting
principles, whenever the Board determines that such
adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended
to be made available under the Plan; provided that, unless
the Board determines otherwise at the time such adjustment
is considered, no such adjustment shall be authorized to the
extent that such authority would be inconsistent with the
Plan's meeting the requirements of Section 162(m) of the
Code, as from time to time amended.
16.3. Awards Previously Granted. Notwithstanding any
----------------------------------
other provision of the Plan to the contrary, no termination,
amendment, or modification of the Plan shall adversely
affect in any material way any Award previously granted
under the Plan, without the written consent of the
Participant holding such Award.
16.4. Compliance with Code Section 162(m). At all
--------------------------------------------
times when Code Section 162(m) is applicable, all Awards
granted under this Plan shall comply with the requirements
of Code Section 162(m); provided, however, that in the event
the Board determines that such compliance is not desired
with respect to any Award or Awards available for grant
under the Plan, then compliance with Code Section 162(m)
will not be required. In addition, in the event that
changes are made to Code Section 162(m) to permit greater
flexibility with respect to any Award or Awards available
under the Plan, the Board may, subject to this Article 16,
make any adjustments it deems appropriate.
Article 17. Withholding
- - - ------------------------
17.1. Tax Withholding. The Company shall have the
------------------------
power and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount sufficient to
satisfy Federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with
respect to any taxable event arising as a result of this
Plan.
17.2. Share Withholding. With respect to withholding
--------------------------
required upon the exercise of Options or SARs, upon the
lapse of restrictions on Restricted Stock, or upon any other
taxable event arising as a result of Awards granted
hereunder, Participants may elect, subject to the approval
of the Board, to satisfy the withholding requirement, in
whole or in part, by having the Company withhold Shares
having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax which
could be imposed on the transaction. All such elections
shall be irrevocable, made in writing, signed by the
Participant, and shall be subject to any restrictions or
limitations that the Board, in its sole discretion, deems
appropriate.
-15-<PAGE>
<PAGE>
Article 18. Indemnification
- - - ----------------------------
Each person who is or shall have been a member of the
Committee, or of the Board, shall be indemnified and held
harmless by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from
any claim, action, suit, or proceeding to which he or she
may be a party or in which he or she may be involved by
reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him or her
in settlement thereof, with the Company's approval, or paid
by him or her in satisfaction of any judgement in any such
action, suit, or proceeding against him or her, provided he
or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she
undertakes to handle and defend it on his or her own behalf.
The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which
such persons may be entitled under the Company's Certificate
of Incorporation of Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to
indemnify them or hold them harmless.
Article 19. Successors
- - - -----------------------
All obligations of the Company under the Plan with
respect to Awards granted hereunder shall be binding on any
successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
Article 20. Legal Construction
- - - -------------------------------
20.1. Gender and Number. Except where otherwise
--------------------------
indicated by the context, any masculine term used herein
also shall include the feminine; the plural shall include
the singular and the singular shall include the plural.
20.2. Severability. In the event any provision of the
---------------------
Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining
parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been
included.
20.3. Requirements of Law. The granting of Awards and
----------------------------
the issuance of Shares under the Plan shall be subject to
all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national
securities exchanges as may be required.
20.4. Securities Law Compliance. With respect to
----------------------------------
Insiders, transactions under this Plan are intended to
comply with all applicable conditions or Rule 16b-3 or its
successors under the Exchange Act. To the extent any
provision of the plan or action by the Board fails to so
comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Board.
-16-
<PAGE>
<PAGE>
20.5. Governing Law. To the extent not preempted by
----------------------
federal law, the Plan, and all agreements hereunder, shall
be construed in accordance with and governed by the laws of
the State of Texas.
