April 29, 1998
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Kaiser Aluminum & Chemical 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 1998 Annual
Meeting of Stockholders, including the Notice of 1998 Annual
Meeting, and Proxy forms. It is intended that these
materials will be released to the Company's stockholders
commencing on or about May 1, 1998.
Please contact the undersigned at (925) 847-5882 with
any questions or comments you may have.
Sincerely,
/s/ John M. Donnan
John M. Donnan
General Attorney
cc: w/ Enclosures
<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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(4) Date Filed:
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<PAGE>
[KACC Logo]
April 29, 1998
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 Thursday, June 4, 1998, 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 ("Common Stock"),
Cumulative (1985 Series A) Preference Stock and Cumulative
(1985 Series B) Preference Stock as of the close of business
on April 30, 1998 (all such holders being collectively
referred to as the "Stockholders") will consider and vote,
as a single class, (i) in the election of directors, and
(ii) upon such other business as may properly be presented
to the Annual Meeting or any adjournments or postponements
thereof.
Each Stockholder 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. RAYMOND J. MILCHOVICH
Chairman of the Board and President and Chief
Chief Executive Officer Operating Officer
<PAGE>
Kaiser Aluminum & Chemical Corporation
6177 Sunol Boulevard
Pleasanton, California 94566
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 4, 1998
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
Thursday, June 4, 1998, at 10:00 a.m., Houston time, for the
following purposes:
1. To elect six (6) directors to hold office until
the Company's 1999 Annual Meeting of Stockholders
or until their respective successors are elected
and qualified; and
2. 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 $.33-1/3 per share (the "Common Stock"), Cumulative
(1985 Series A) Preference Stock and Cumulative (1985 Series
B) Preference Stock as of the close of business on April 30,
1998 (all such holders being collectively referred to as the
"Stockholders") are entitled to notice of and to vote at the
Annual Meeting. Stockholder lists will be available
commencing May 25, 1998, 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
JOHN WM. NIEMAND II
Secretary
April 29, 1998
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>
KAISER ALUMINUM & CHEMICAL CORPORATION
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
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, 1998, 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. Executive offices of the Company
are located at 6177 Sunol Boulevard, Pleasanton, California
94566, telephone (925) 462-1122.
This Proxy Statement, the accompanying proxy card, and
the Notice of Annual Meeting of Stockholders are being
mailed, commencing on or about May 1, 1998, to the record
holders as of the close of business on April 30, 1998, of
the Company's Common Stock, par value $.33-1/3 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, 1997, 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, George T. Haymaker, Jr.,
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 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. Under
applicable Delaware law, 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.
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 55% 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 15, 1998, there were 46,171,365 shares of Common
Stock, 513,977 shares of 1985 Series A Stock and 60,086
shares of Series B Stock outstanding. Holders of shares of
Common Stock, 1985 Series A Stock and 1985 Series B Stock
have one vote for each share held of record with respect to
any matter to be presented at the Annual Meeting.
ELECTION OF DIRECTORS
At the Annual Meeting, six directors will be elected by
the Stockholders to serve until the 1999 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,
1998. 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 five meetings and
acted by written consent on 14 occasions during 1997. In
addition, management confers frequently with its directors
on an informal basis to discuss Company affairs. During
1997, 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, which did not meet during 1997, acted by written
consent 14 times.
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 three
times during 1997.
The Compensation Policy Committee (the "Policy
Committee") reviews and approves proposals concerning or
relating to the establishment or change of benefits plans,
or material amendments to any existing benefit plan,
salaries or other compensation, except to the extent that
(i) such authority has been delegated by the Board to the
Section 162(m) Compensation Committee (the "Section 162(m)
Committee") or (ii) such plans are governed by a plan
committee, a subsidiary's board of directors, or are covered
by a collective bargaining arrangement or other binding
contract. Notwithstanding the foregoing, the Policy
Committee also supervises plan committees other than the
Section 162(m) 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
Policy Committee. The Policy Committee met 11 times and
acted by written consent one time during 1997.
The Section 162(m) 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)
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) Committee.
The Section 162(m) Committee met 12 times and acted by
written consent one time during 1997.
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
Each of the directors who was not an employee of the
Company or KAC received a base fee of $40,000 for the 1997
calendar year, $10,000 of which was paid in the form of an
option to purchase shares of KAC common stock as more fully
described below. 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 1997, Messrs. Cruikshank, Levin,
Marcus and Petris received an aggregate of $35,500, $39,500,
$42,500 and $31,000, respectively, in such director and
committee fees from the Company and KAC in the form of cash
payments.
Non-employee directors are also eligible to participate
in the Kaiser 1997 Omnibus Stock Incentive Plan (the "1997
Omnibus Plan"). In 1997 the Company adopted a program
pursuant to which the annual compensation paid to each
non-employee director of the Company was increased $10,000,
with such amount being paid in the form of an option to
purchase KAC common stock at the market price of such stock
as of the close of the market at the New York Stock Exchange
on the day of the grant. The program provides for such
options to be granted annually at the Company's regularly
scheduled meeting of the Board in December. In each
instance the grant is intended to have a value of $10,000,
and the number of shares covered by the options is
determined using a modified Black-Scholes option pricing
method. Each option becomes exercisable as to all of the
shares covered by the option one year from the date of the
grant.
In addition, in 1997 the Company adopted a program
pursuant to which a one-time grant of an option to purchase
KAC common stock will be made to each new non-employee
director of the Company at the market price of such stock as
of the close of the market at the New York Stock Exchange on
the day of the grant. In each instance the grant is to have
a value of $10,000, and the number of shares covered by the
option is to be determined using a modified Black-Scholes
option pricing method. Each option becomes exercisable as
to all of the shares covered by the option one year from the
date of the grant. The Company also approved a one-time
grant of such an option to each existing non-employee
director of the Company.
In 1997 KAC adopted programs identical to the programs
described in the preceding two paragraphs. Each of the
Company and KAC expressed their intention that the programs
not be deemed to duplicate benefits with respect to
individuals who serve as a director of both the Company and
KAC. On December 10, 1997, Messrs. Cruikshank, Levin and
Marcus each received options to purchase 3,773 shares of KAC
common stock at an exercise price of $10.0625 per share
under these programs.
The Company and KAC also adopted a deferred
compensation program in 1997 in which all non-employee
directors are eligible to participate. By executing a
deferred fee agreement, a non-employee director may defer
all or part of the fees received from the Company and KAC
for services in such capacity for any calendar year. The
deferred fees would be credited to a book account as of the
date such fees would have been paid to the director and
would be deemed "invested" in two investment choices, in 25%
increments, in phantom shares of KAC common stock and/or in
an account bearing interest calculated using one-twelfth of
the sum of the prime rate plus 2% on the first day of each
month. If deferred, fees, including all earnings credited
to the book account, will be paid in cash to the director or
beneficiary as soon as practicable following the date the
director ceases for any reason to be a member of the Board,
either in a lump sum or in a specified number of annual
installments not to exceed ten, at the director's election.
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. Directors are reimbursed for travel
and other disbursements relating to Board and committee
meetings and non-employee directors are provided travel
accident insurance in respect of Company-related business
travel. 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.
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information,
as of March 31, 1998, 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.
<TABLE>
<CAPTION>
<S> <C>
Name Positions and Offices with the Company
- ----------------------- ---------------------------------------------------------------------
George T. Haymaker, Jr. Chairman of the Board, Chief Executive Officer and Director
Raymond J. Milchovich President and Chief Operating Officer
Joseph A. Bonn Vice President, Planning and Development
E. Bruce Butler Vice President and General Counsel
Robert E. Cole Vice President, Government Affairs
Wayne R. Hale Vice President, and President of Kaiser Primary Products
Jack A. Hockema Vice President, and President of Kaiser Engineered Products
John T. La Duc Vice President and Chief Financial Officer
Geoffrey W. Smith Vice President, and President of Kaiser Aluminum Commodities
Kris S. Vasan Vice President, Financial Risk Management
John H. Walker Vice President, and President of Kaiser Flat-Rolled Products
Lawrence L. Watts Vice President, Chief Administrative Officer and President of Kaiser
Aluminum International
John Wm. Niemand II Secretary
Daniel D. Maddox Controller, Corporate Consolidation and Reporting
Robert W. Warnock Controller, Corporate Operations
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
</TABLE>
George T. Haymaker, Jr. Mr. Haymaker, age 60, was
elected to the positions of Chairman of the Board and Chief
Executive Officer of the Company and KAC effective January
1, 1994, and served as President of the Company and KAC from
June 1996 and May 1996, respectively, through July 1997.
From May 1993 to December 1993, Mr. Haymaker served as
President and Chief Operating Officer of the Company and
KAC. Mr. Haymaker became a director of the Company in June
1993, and a director of KAC in May 1993. From 1987 to April
1993, Mr. Haymaker was a partner in a partnership which
acquired, redirected and operated small to medium sized
companies in the metals industry. Since July 1987, Mr.
Haymaker has been a director, and from February 1992 through
March 1993 was President, of Midamerica Holdings (formerly
Metalmark Corporation), which 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. Mr. Haymaker is
also a director of Flowserve Corporation, a provider of
valves, pumps and seals.
Raymond J. Milchovich. Mr. Milchovich, age 48, became
President and Chief Operating Officer of the Company and KAC
in July 1997. He became a Vice President of KAC in May 1997
and served in such capacity through July 1997. He served as
Vice President-President of Kaiser Flat-Rolled Products, of
the Company from June 1995 through July 1997. 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.
Joseph A. Bonn. Mr. Bonn, age 54, has been Vice
President, Planning and Development of the Company since
March 1997 and a Vice President of the Company since April
1987. Mr. Bonn has served as a Vice President of KAC since
May 1997 and served as Vice President, Planning and
Administration of the Company and KAC from July 1989 and
February 1992, respectively, through July 1997 and May 1997,
respectively. Mr. Bonn also 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.
E. Bruce Butler. Mr. Butler, age 58, became Vice
President and General Counsel of the Company and KAC 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 the Company and
KAC, 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 51, 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"). Mr. Cole is currently Chairman of the United
States Auto Parts Advisory Committee established by the
United States Congress.
Wayne R. Hale. Mr. Hale, age 42, became a Vice
President of the Company effective November 1997 and
President of Kaiser Primary Products effective December
1997. From January 1, 1997, until accepting his current
position, Mr. Hale served as the Managing Director of
Anglesey Aluminium Limited, a United Kingdom corporation 49%
owned by the Company ("Anglesey"), on behalf of Rio Tinto
plc, the owner of the 51% interest in Anglesey. Anglesey
owns and operates an aluminum smelter and port facility in
Holyhead, Wales. Between August 1990 and December 1996, Mr.
Hale was employed by the Company and served as Technical
Manager and then Operations Manager of the Anglesey smelter
before becoming Managing Director of Anglesey in August
1995.
Jack A. Hockema. Mr. Hockema, age 51, became a Vice
President of the Company and President of Kaiser Engineered
Products in March 1997. Mr. Hockema became a Vice President
of KAC in May 1997. He served as President of Kaiser
Extruded Products and Engineered Components from September
1996 to March 1997. Mr. Hockema served as a consultant to
the Company and acting President of Kaiser Engineered
Components from September 1995 until September 1996. 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.
John T. La Duc. Mr. La Duc, age 55, has been Chief
Financial Officer of the Company since January 1990 and a
Vice President of the Company since June 1989. Mr. La Duc
has also 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. Mr. La Duc was also
Treasurer of the Company from June 1995 until February 1996.
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.
("MGHI"), a wholly owned subsidiary of MAXXAM, 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.
Geoffrey W. Smith. Mr. Smith, age 51, has been
President of Kaiser Aluminum Commodities since June 1996, a
Vice President of the Company since January 1992, and a Vice
President of KAC since May 1997. From June 1995 until June
1996, Mr. Smith served as President of Kaiser Alumina of the
Company, and 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 to 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 48, has been Vice
President, Financial Risk Management, of the Company since
June 1995. Mr. Vasan previously served as Treasurer of the
Company from April 1993 until June 1995 and as Treasurer of
KAC from April 1993 until August 1995. Prior to that, Mr.
Vasan served the Company and KAC 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.
John H. Walker. Mr. Walker, age 40, has been a Vice
President of the Company since November 1997, and President
of Kaiser Flat-Rolled Products from December 1997. From
September 1996 through October 1997, Mr. Walker served as
Vice President, Operations of the Company's Flat-Rolled
Products business unit and Works Manager of the Company's
Trentwood facility in Spokane, Washington. Prior to joining
the Company, Mr. Walker spent eight years with Weirton Steel
Company, a fully integrated steel producer ("Weirton
Steel"). From August 1995 to September 1996, Mr. Walker was
the Vice President of Operations for Weirton Steel. From
March of 1994 to August 1995, he served as General Manager
of Operations for Weirton Steel and prior to that served as
the Director of Operating Planning from 1991 to 1994.
Lawrence L. Watts. Mr. Watts, age 51, became Vice
President and Chief Administrative Officer of the Company in
June 1997 and Vice President, Chief Administrative Officer
of KAC in October 1997. He served as Vice President,
Administration of the Company from March 1997 through June
1997. Mr. Watts has been President of Kaiser Aluminum
International since June 1995 and a Vice President of the
Company since January 1992. From April 1994 until June
1995, Mr. Watts was General Manager-International
Development. 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.
John Wm. Niemand II. Mr. Niemand, age 53, became
Secretary of the Company in June 1997 and Secretary of the
KAC in May 1997. He previously served as an Assistant
Secretary of the Company and KAC since July 1988. Mr.
Niemand served as Senior Corporate Counsel of the Company
and KAC from May 1992 through December 1995, and has served
as Assistant General Counsel of the Company and KAC since
January 1996.
Daniel D. Maddox. Mr. Maddox, age 38, was elected to
the position of Controller, Corporate Consolidation and
Reporting of the Company and KAC effective October 1, 1997.
Mr. Maddox previously served as Assistant Corporate
Controller of the Company from June 1997 to September 1997
and KAC from May 1997 to September 1997
and Director-External Reporting of the Company from June
1996 to May 1997. Mr. Maddox was with Arthur Andersen LLP
from 1982 until joining the Company in June 1996.
Karen A. Twitchell. Ms. Twitchell, age 42, was elected
to the position of Treasurer of the Company and KAC
effective February 1, 1996. Prior to that time, Ms.
Twitchell was Vice President and Treasurer of Southdown,
Inc., a Houston-based company specializing in portland and
masonry cement, from April 1994 and Treasurer from 1989.
Robert Warnock. Mr. Warnock, age 51, was elected to the
position of Controller, Corporate Operations of the Company
and KAC effective October 1, 1997. Mr. Warnock previously
served as Controller of the Company's Flat-Rolled Products
business unit since 1993 and, Controller of the Company's
Trentwood facility in Spokane, Washington from 1992 to 1993.
Prior to that time, Mr. Warnock served as controller of
various of the Company's other plants and divisions.
Robert J. Cruikshank. Mr. Cruikshank, age 67, has
served as a director of the Company and KAC 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. Mr.
Cruikshank served on the board of directors of Deloitte
Haskins & Sells from 1981 to 1985 and as Managing Partner
from June 1974 until its merger with Touche Ross & Co. in
December 1989. 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 trust manager of Weingarten Realty Investors; a director
of American Residential Services, Inc.; and as advisory
director of Compass Bank-Houston.
Charles E. Hurwitz. Mr. Hurwitz, age 57, was appointed
Vice Chairman of the Company in December 1994 and has served
as a director of the Company and KAC since November and
October 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.
From January 1993 to January 1998, he also served MAXXAM as
President. Mr. Hurwitz has served as President of MGI since
January 1993. He has also been, since its formation in
November 1996, Chairman of the Board, President and Chief
Executive Officer of MGHI. From May 1986 until February
1993, Mr. Hurwitz served as a director of Pacific Lumber.
He 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. Mr. Hurwitz
has also served as a director of SHRP General Partner, Inc.
("SHRP"), the current managing general partner of Sam
Houston Race Park, Ltd., a subsidiary of MAXXAM which
operates a horse racing facility in Texas ("SHRP, Ltd."),
since May 1993, Chairman of the Board since October 1995,
and President from May 1993 until April 1996.
Ezra G. Levin. Mr. Levin, age 64, has been a director
of the Company since November 1988. He has been a director
of KAC since July 1991, 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 trustee of Federated and as a director of Pacific
Lumber, Scotia Pacific and United Mizrahi Bank and Trust
Company.
Robert Marcus. Mr. Marcus, age 73, has been a director
of the Company and KAC 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 72, has been a
director of the Company since June 1995 and KAC since May
1995. He was Special Assistant to the International
President of the United Steelworkers of America (the "USWA")
from June 1995 until January 1, 1997. 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.
<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, 1998.
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
<TABLE>
<CAPTION>
<S> <C> <C>
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
</TABLE>
Ownership of Certain Beneficial Owners-Cumulative
(1985 Series A) Preference Stock
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class(1)
------------------- --------------------- ----------
Kaiser Aluminum USWA 457,860 shares 89.1%
Employee Stock Ownership Plan(2)
c/o Frank Russell Trust Company
</TABLE>
Ownership of Certain Beneficial Owners-Cumulative
(1985 Series B) Preference Stock
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class(1)
- ------------------- --------------------- -----------
Kaiser Aluminum Salaried 32,859 shares 54.6%
Employee Stock Ownership Plan(2)
c/o Frank Russell Trust Company
</TABLE>
- -----------------
(1) The "Percent of Class" is computed using the shares
outstanding on April 1, 1998.
(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. The
address of Frank Russell Trust Company is 909 A Street,
Tacoma, WA 98402
Ownership of Management-Cumulative (1985 Series B)
Preference Stock
<TABLE>
<CAPTION>
<S> <C> <C>
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 (21 persons)
</TABLE>
- --------------------
* Less than 1%.
(1) The "Percent of Class" is computed using the shares
outstanding on April 1, 1998.<PAGE>
Ownership of KAC
The following table sets forth, as of March 31,
1998, unless otherwise indicated, the undiluted beneficial
ownership of the KAC's equity securities by (i) those
persons known to own beneficially more than 5% of the shares
of any class then outstanding, (ii) each of the directors of
the Company, (iii) and each of the named executive officers
listed in the Summary Compensation Table, and (iv) all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name of
Beneficial Owner Title of Class # of Shares(1) % of Class
- ----------------------------- -------------- -------------- ----------
MAXXAM Inc. KAC common stock 50,000,000(2) 63.2
Wellington Management Company, LLP KAC common stock 271,634(3) 6.7
Vanguard/Windsor Funds, Inc. KAC common stock 5,212,234(4) 6.6
Robert J. Cruikshank KAC common stock 2,000 *
George T. Haymaker, Jr. KAC common stock 102,436(5) *
Charles E. Hurwitz KAC common stock 187,500(6)(7) *
John T. La Duc KAC common stock 117,828(5) *
Ezra G. Levin - -0- -
Robert Marcus KAC common stock 3,500 *
Raymond J. Milchovich KAC common stock 43,327(5) *
Robert J. Petris - -0- -
Geoffrey W. Smith KAC common stock 50,510(5) *
Lawrence L. Watts KAC common stock 67,713(5) *
All directors and executive KAC common stock 694,375(8) *
officers of the Company
as a group (21 persons)
</TABLE>
- -------------------------
* Less than 1%.
(1) Unless otherwise indicated, the beneficial owners have
sole voting and investment power with respect to the
shares listed in the table. Also includes options
exercisable within 60 days of March 31, 1998, to
acquire such shares.
(2) Includes 27,938,250 shares held by MGHI, a wholly owned
subsidiary of MAXXAM. As of March 31, 1998, 27,938,250
shares of KAC common stock owned by MGHI 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. The address of MAXXAM is 5847 San
Felipe, Suite 2600, Houston, Texas 77057.
(3) Information is based solely on the Schedule 13G filed
with the SEC dated January 14, 1998, by Wellington
Management Company, LLP, a registered investment
advisor ("Wellington"), as a result of its ownership
interest in KAC at December 31, 1997 (the "Wellington
13G"). The Wellington 13G indicates that these shares
are held of record by clients of Wellington, that
Wellington does not have sole voting or dispositive
power with respect to any of such shares and that
Wellington has shared voting and dispositive power with
respect to 59,400 and 5,271,634 of such shares,
respectively. The Wellington 13G further indicates
that only one of Wellington's clients, Vanguard/Windsor
Funds, Inc. ("Vanguard"), has any rights with respect
to more than 5% of KAC common stock. Additional
information with respect to Vanguard is set forth above
in the table and below in the following footnote.
Wellington's address is 75 State Street, Boston,
Massachusetts 02109.
(4) Information is based solely on the Schedule 13G filed
with the SEC dated February 9, 1998, by Vanguard, an
investment advisor, as a result of its ownership
interest in KAC as of December 31, 1997 (the "Vanguard
13G"). The Vanguard 13G indicates that Vanguard has
sole voting and shared dispositive power with respect
to all of these shares. Vanguard's address is Post
Office Box 2600, Valley Forge, Pennsylvania 19482-2600.
(5) Includes 80,025, 5,400, 6,900, 17,985 and 18,465
options exercisable within 60 days of March 31, 1998,
to acquire shares of KAC common stock, by Messrs.
Haymaker, Milchovich, La Duc, Watts and Smith,
respectively.
(6) Represents only options exercisable within 60 days of
March 31, 1998, to acquire such shares.
(7) Excludes shares owned by MAXXAM. Mr. Hurwitz may be
deemed to hold beneficial ownership in KAC as a result
of his beneficial ownership in MAXXAM.
(8) Includes options exercisable within 60 days of March
31, 1998, to acquire 341,850 shares of KAC common
stock.
Ownership of Parent of KAC
As of April 15, 1998, MAXXAM owned, directly and
indirectly, approximately 63.2% of the issued and
outstanding KAC common stock. The following table sets
forth, as of April 15, 1998, 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>
<S> <C> <C> <C> <C>
% of
Combined
Name of % Voting
Beneficial Owner Title of Class # of Shares(1) of Class Power (2)
- ---------------- -------------- -------------- -------- ---------
Charles E. Hurwitz Common Stock 2,683,396(3)(4)(5) 38.2 68.8
Class A Preferred Stock 702,941(6)(7) 99.1
Ezra G. Levin Common Stock 1,950(4)(5)(8) * *
Robert J. Cruikshank Common Stock 1,950(8) * *
All directors and Common Stock 2,687,546(4)(5) 38.3
executive officers 68.8
as a group Class A Preferred Stock 702,941(6)(7) 99.1
(21 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 15, 1998, if any, for
their exercisable stock appreciation rights ("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, 1998.
(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) 30,201 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 the Hurwitz Investment
Partnership L.P., 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) 101,214
shares of MAXXAM common stock owned by the 1992 Hurwitz
Investment Partnership L.P., of which 50,607 shares are
owned by Mr. Hurwitz's spouse as separate property and
as to which Mr. Hurwitz disclaims beneficial ownership,
(d) 755,001 shares of MAXXAM common stock held directly
by Mr. Hurwitz, (e) 60,000 shares of MAXXAM common
stock owned by Federated Development Investments, LLC,
a Texas limited liability company owned 79% by FDI and
21% by Mr. Hurwitz, and of which FDI is the managing
member ("FDILLC"), and (f) options to purchase 21,029
shares of MAXXAM common stock within 60 days of April
15, 1998.
(4) In addition, FDI, Federated, FDILLC, the Hurwitz
Investment Partnership L.P., the 1992 Hurwitz
Investment Partnership L.P., 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
Securities Exchange Act of 1934, as amended (the
"Exchange Act"). As of April 15, 1998, in the
aggregate, the Stockholder Group beneficially owned
2,685,698 shares of MAXXAM common stock and 703,074
shares of Class A Preferred Stock, aggregating
approximately 68.8% 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
held directly.
(7) Includes options exercisable within 60 days of April
15, 1998, to acquire 40,500 shares of Class A Preferred
Stock.
(8) Includes options exercisable within 60 days of April
15, 1998, to purchase 950 shares of MAXXAM common
stock.
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, 1997:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted
Annual Stock Options/ LTIP All Other
Name and Salary Bonus Compensation Award(s) SARs Payouts Compensation
Principal Position Year ($) ($) ($)(1) ($) (#) ($) ($)
- ------------------------ ---- ------- ----- ------------ --------- -------- -------- ------------
George T. Haymaker, Jr., 1997 494,083 311,000 -0- -0- -0- 121,122(2) 24,704(3)
Chairman and Chief 1996 487,000 71,638 -0- -0- -0- -0-(2) 9,740(3)
Executive Officer 1995 465,000 225,000 -0- -0- -0- -0- 23,250(3)
Raymond J. Milchovich, 1997 272,083 211,000 -0- -0- -0- 71,212(2) 17,796(3)(4)
President and Chief 1996 223,750 42,700 -0- -0- -0- -0-(2) 77,158(3)(4)
Operating Officer 1995 183,000 70,000 -0- -0- -0- -0- 9,150(3)
John T. La Duc, 1997 260,000 184,000(5) -0- -0- -0- 44,236(2) 13,000(3)
Vice President and 1996 260,000 83,200(5) -0- -0- -0- -0-(2) 5,200(3)
Chief Financial Officer 1995 248,333 130,000(5) -0- -0- -0- -0- 12,417(3)
Lawrence L. Watts, 1997 242,667 130,100 -0- -0- -0- 58,981(2) 12,133(3)
Vice President, 1996 234,000 37,000 -0- -0- -0- -0-(2) 24,180(3)(4)
Chief Administrative 1995 211,171 105,000 -0- -0- -0- -0- 10,559(3)
Officer and President
of Kaiser Aluminum
International
Geoffrey W. Smith, 1997 255,000 116,635 -0- -0- -0- 68,250(2) 55,743(3)(4)
Vice President, and 1996 246,250 38,000 -0- -0- -0- -0-(2) 33,550(3)(4)
President of Kaiser 1995 211,171 84,000 -0- -0- -0- -0- 10,559(3)
Aluminum Commodities
</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. Tax preparation fees and the value
of the personal use of company cars with respect to
each named executive officer exceed 25% of the total
perquisites and other personal benefits received by
each such named executive officer.
(2) The long-term component of the Company's incentive
compensation program provides incentive compensation
based on performance against goals over rolling
three-year periods. The first installment for the
1994-1996 period was distributed in March 1997, and the
amounts shown in the table reflect the market value of
the stock portion of the grant on the date of
distribution. The second installment was distributed in
March 1998. Total awards for the 1995-1997 period for
Messrs. Haymaker, Milchovich, La Duc, Watts and Smith
were $362,100, $161,500, $164,900, $188,100 and
$152,700, respectively. The first installment for the
1995-1997 period was distributed in March 1998.
Additional information with respect to the long-term
component of the Company's incentive compensation
program is set forth below in the Long-Term Incentive
Plan Awards Table and in the Report of the Compensation
Committees on Executive Compensation.
(3) Includes accruals by the Company of $24,704, $9,740 and
$23,250 for Mr. Haymaker; $13,604, $4,475 and $9,150
for Mr. Milchovich; $13,000, $5,200 and $12,417 for Mr.
La Duc; $12,133, $4,680 and $10,559 for Mr. Watts and
$12,750, $4,925 and $10,559 for Mr. Smith under the
Kaiser Savings Plan and Kaiser Supplemental Benefits
Plan for 1997, 1996 and 1995, respectively.
(4) Includes moving-related items of $4,192 and $72,683 for
Mr. Milchovich for 1997 and 1996, respectively; $19,500
for Mr. Watts for 1996; and $42,993 and $28,625 for Mr.
Smith for 1997 and 1996, respectively.
(5) Includes $50,000 (to be paid over a two-year period)
for each of 1997, 1996 and 1995, which will be
reimbursed by MAXXAM.
Option/SAR Grants
No individual grants of stock options or SARs were made
during 1997 to any of the Company's named executive officers.
Option/SAR Exercises and Fiscal Year End Value Table
The table below provides information on an aggregated
basis concerning each exercise of stock options and SARs of
KAC, unless otherwise indicated, during the fiscal year
ended December 31, 1997 by each of the Company's named
executive officers, and the 1997 fiscal year-end value of
unexercised options and SARs.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e)
Number of Unexercised Value of Unexercised
Options/SARs in-the-Money Options/SARs
at Year End (#) at Fiscal Year-End ($)
--------------------- -------------------------
Shares
Acquired on Value
Name Exercise(#)(1) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------
George T. Haymaker, Jr. - - 60,025 26,675 66,252(2) 33,126(2)
Raymond J. Milchovich - - 5,400 1,800 -(2) -(2)
John T. La Duc - - 6,900 2,300 -(2) -(2)
- 64,750 8,000(3) -0-(3) 125,000(3) -(3)
Lawrence L. Watts - - 13,765 5,995 13,979(2) 6,990(2)
Geoffrey W. Smith - - 14,085 6,155 14,509(2) 7,255(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 $8.875, the closing price of KAC common
stock on December 31, 1997, 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 common stock.
Valued at $43.625, the closing price of MAXXAM common
stock on December 31, 1997, less exercise price.
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.
<PAGE>
Long-Term Incentive Plan Awards Table
Each of the Company's named executive officers
received awards in 1997 under the long-term component of
the Company's incentive compensation program for the
1994-1996 three-year, long-term performance period. The
following table and accompanying footnotes describe the
awards received by each of the Company's named executive
officers in 1997 and the criteria applied in determining
the amount payable for the 1994-1996 performance period.
- ---------------------
<TABLE>
<CAPTION>
<S> <C> <C>
(a) (b) (c)
Performance
Number of or Other
Shares, Units Periods Until
or Other Maturation or
Name Rights (#) Payout
- ------------------------------------------------------------
George T. Haymaker, Jr. 5,762(1) -(2)
Raymond J. Milchovich 1,009(1) -(2)
John T. La Duc 2,104(1) -(2)
Lawrence L. Watts 2,806(1) -(2)
Geoffrey N. Smith 3,247(1) -(2)
</TABLE>
- --------------
(1) Represents the stock portion of the first installment
of long-term incentive award distributed in March 1997
to each of the Company's named executive officers in
connection with the 1994-1996 three year, long-term
performance period. Payments under the long-term
component of the program are generally 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. The aggregate number of
shares distributed was based on the average closing
price of KAC common stock during the last December of
the long-term performance period. The average closing
price of KAC common stock during December 1996 was
$11.375 per share. The total awards for the 1994-1996
long-term performance period for Messrs. Haymaker,
Milchovich, La Duc, Watts and Smith were $230,000,
$90,480, $84,000, $112,000 and $129,600, respectively.
(2) Payment of the second installment for the 1994-1996
long-term performance period was conditioned on
continued employment through the end of the fiscal year
following the end of the performance period. 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. Each of the Company's named executive
officers were employed by the Company on January 1,
1998, and the second installment was distributed in
March 1998.
Threshold, target and maximum amounts for the long-term
portion of executive compensation are based upon Company
performance. During the 1994-1996 performance period target
incentives were based on the return on assets employed in
the business. Minimum performance criteria must be met
before the threshold amount is earned. In addition, when
incentive awards are determined for the foregoing named
executive officers at the end of each performance period, an
additional 30% of incentive targets based on the achievement
of goals or other accomplishments not reflected in the
return on assets, is added to the incentive payment amount.
Finally, while the Section 162(m) Committee cannot increase
the incentive payment, it may decrease the payment by up to
60% of the target incentive. Additional information with
respect to long-term incentive compensation awarded to the
Company's named executive officers is set forth above in the
Summary Compensation Table.
<PAGE>
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>
<S> <C> <C> <C> <C> <C>
Annual Years of Service
---------------------------------------------------
Remuneration 15 20 25 30 35
- ------------ ---------------------------------------------------
$ 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
950,000 213,750 285,000 356,250 427,500 498,750
1,050,000 236,250 315,000 393,750 472,500 551,250
</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, Milchovich,
La Duc, Watts and Smith had 4.7, 17.6, 28.3, 22.0 and 23.5
years of credited service, respectively, on December 31,
1997. 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.
Kaiser Supplemental Benefits Plan
KAC 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. Haymaker, Milchovich, La Duc,
Watts and Smith under the policy if they had been
involuntarily terminated on December 31, 1997 would have
been $63,000, $129,166, $151,666, $130,000 and $148,750,
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. Haymaker, pursuant
to which he currently serves as Chairman and Chief
Executive Officer of the Company and KAC. In December
1997, the term of Mr. Haymaker's employment agreement was
extended until December 5, 1999. As amended, Mr.
Haymaker's agreement provides for an annual base salary of
not less than $569,000 effective February 1, 1998 and a
cumulative bonus target in 1998 of $1,206,400 under the
Company's executive compensation programs as more fully
described below in the Report of the Compensation
Committees on Executive Compensation. Of this amount,
$387,900 is attributable to Mr. Haymaker's short term
incentive target and $818,500 is attributable to his long
term incentive target for the three year period ending
December 31, 1998. Pursuant to his agreement, Mr. Haymaker
received an initial award under the Kaiser 1993 Omnibus
Stock Incentive Plan (the "1993 Omnibus Plan") 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
vested at the rate of 20% per year for a period of five
years through and including April 1, 1998.
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 "Kaiser Termination Payment
Policy" above.
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. Mr. Haymaker is now fully vested under this
provision.
The Company has agreed to provide Mr. Smith with an
unfunded nonqualified supplemental benefit after retirement
equal to the additional Kaiser Retirement Plan pension he
would be entitled to receive if his prior employment (6.3)
years with an affiliate of the Company were counted as
credited service under such plan. This additional credited
service is also counted in determining his benefits as
described above under the caption "Kaiser Termination
Payment Policy" and for purposes of determining his
employee contributions under the Company's retiree medical
program.
Except as otherwise noted above, there are no
employment contracts between the Company or any of its
subsidiaries and any of the Company's named executive
officers. Similarly, there are not any compensatory plans
or arrangements which include payments from the Company or
any of its subsidiaries to any of the Company's named
executive officers in the event of any such officer's
resignation, retirement or any other termination of
employment with the Company and its subsidiaries or from a
change-in-control of the Company or a change in the named
executive officer's responsibilities following a
change-in-control except as set forth above under the
caption "Kaiser Termination Payment Policy".
REPORT OF THE COMPENSATION COMMITTEES
ON
EXECUTIVE COMPENSATION
Two compensation committees administer the Company's
compensation plans, the Policy Committee and the Section
162(m) Committee. The Policy Committee administers and
establishes the Company's overall compensation policies,
except to the extent that this authority has been delegated
by the Board to the Section 162(m) Committee. The Section
162(m) 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"), and also establishes the criteria to be
used in determining awards to be made pursuant to those
plans or programs. Each committee reports to the full
Board and together they have furnished the following report
on executive compensation for fiscal year 1997.
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.
During 1997, the members serving on the Policy Committee
and Section 162(m) Committee also served on KAC's
Compensation Policy Committee and Section 162(m)
Compensation Committee (these committees are hereinafter
collectively referred to in this report as the
"Committees"). References to the "Company" made in the
remainder of this report are deemed to include KAC as well
as the Company.
Compensation Philosophy, Structure and Methodology
Philosophy. The Company's philosophy continues to be
that compensation of its executives officers 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, to create economic value. Only when new
or added economic value is created can Company shareholders
and management share in increased economic rewards. To
attract and retain talented individuals, the Company
provides the opportunity to earn total compensation that is
not only competitive with, but, if Company goals are met,
potentially superior to, that available from employers with
whom the Company and its businesses compete.
Structure. Executive officer compensation for 1997
consisted of a combination of base salary, short-term
incentives based on performance during 1997, long-term
incentives based on performance over the 1995-1997
three-year performance period, employee benefits and
executive perquisites. Base salaries were designed to fall
somewhat below the 50th percentile of the market described
below and, together with short and long-term incentive
targets, were designed to fall somewhat above the 50th
percentile of that market. As a result, the combination of
base pay and incentive compensation allowed executives
officers to potentially earn less, the same as or more than
the total compensation opportunity offered by competing
employers depending on Company performance.
For 1997, the portion of executive compensation
allocated to base compensation ranged from approximately
32% to 43% for certain senior executive officers, including
the named executive officers (collectively, the "Senior
Executives"), and 44% to 68% for the remaining executive
officers, with the portion allocated to incentive
compensation in each case generally increasing with
position responsibility. For the Senior Executives the
incentive targets for 1997 were allocated 30% to short-term
targets and 70% to long-term targets. For the remaining
executive officers the allocation was generally split
evenly between short and long-term targets. This structure
reflected the Company's compensation philosophy by
structuring a major portion of each executive's total
compensation to be at-risk and performance-based. The
Company's compensation for executive officers also included
other benefits and perquisites which generally fell within
the 50th percentile of its comparative market.
Methodology. Target compensation and incentives were
based on a combination of market survey data, internal
force-ranking and assessment of position responsibilities.
Major national surveys, as well as market data from a group
of companies engaged in metals, mining, chemicals and
similar industries, with whom the Company is likely to
compete for managerial talent, were used to establish the
market. In performing its assessment of position
responsibilities, descriptions of various key positions,
the duties and major responsibilities of each position, as
well as the required qualifications, were developed and
then matched to database descriptions to ensure an accurate
match to reasonably comparable positions at comparative
companies.
Company performance awards and goals were established
at the beginning of 1997 with respect to the annual
performance period and at the beginning of 1995 with
respect to the three-year, long-term performance period.
In each instance performance awards were structured in a
manner which would reward aggressive and accurate planning,
and performance goals were based on (i) return on net
assets employed by the Company, and for certain executive
officers, return on net assets employed by specific
business units or a combination of Company and business
unit performance, and (ii) safety or group and individual
goals and objectives. Minimum or threshold performance
levels, which must be met for there to be any incentive
payout, as well as target and maximum performance levels
were also established for the short and long-term
performance periods. With respect to the short-term
performance period, performance goals were based on
"normalized" metal prices to allow for measurement of the
progress toward the $120 million profit improvement program
without fluctuations due to changing metal prices. In
addition, incentive compensation payable to each of the
Senior Executives for the 1997 short-term performance
period was capped at their respective targets if the
average price of KAC common stock during December 1997 was
lower than the average price during December 1996.
Components of Executive Officer Compensation
Base Salaries. Adjustments to the base salary of
certain executive officers were made during 1997 as
necessary to reflect market related adjustments and
increasing responsibilities assumed either as the result of
promotions or additional assignments during the year.
Short-Term Incentive. As described above, short-term
incentive awards for 1997, as well as threshold performance
requirements, were based on the "normalized" return on net
assets. During 1997 Company results exceeded target
performance levels, however the average price of KAC common
stock during December 1997 was lower than the average price
during December 1996. As a result, short-term awards paid
to certain Senior Executive Officers were "capped" at their
respective targets, while awards to other executive
officers were generally approximately 34% above the target
amounts. Short-term awards for 1997 were paid in cash
during the first quarter of 1998.
Long-Term Incentive. Long-term incentive compensation
for the 1995-1997 long-term performance period was based on
the simple average of the return on net assets during each
of the three years included within the performance period.
During the 1995-1997 long-term performance period Company
and business unit results generally exceeded threshold
performance goals, but did not reach target performance
levels. As a result, long-term awards for the 1995-1997
performance period were generally 54% of the target
amounts. Long-term incentive payments for the 1995-1997
long-term performance period are made 43% in cash and 57%
in shares of KAC Common Stock and are paid in two
installments, the first installment having been distributed
in March 1998 and the second installment being scheduled
for distribution in March 1999. In each case, payments are
generally conditioned on continued employment.
1993 and 1997 Omnibus Plans
All long-term performance awards distributed in
connection with long-term performance periods beginning
before January 1, 1997 are made under the 1993 Omnibus
Plan. All long-term performance awards distributed in
connection with long-term performance periods beginning on
or after January 1, 1997 will be made under the 1997
Omnibus Plan, which was approved by the stockholders of the
Company at the 1997 annual meeting. In addition, the 1997
Omnibus Plan may be utilized as otherwise necessary 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. During
1997, no grants were made under the 1993 Omnibus Plan,
except in connection with the distribution of the first
installment of shares of KAC common stock awarded for the
1994-1996 long-term incentive compensation performance
period. No grants were made to executive officers of the
Company under the 1997 Omnibus Plan during 1997.
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 Policy Committee and reviewed and
approved by the Board or the Policy Committee. In making
its compensation decisions, and in supervising the
negotiations and approving such employment agreements, the
Policy Committee is mindful of the Company's overall
corporate objectives and the 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 1997, 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 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 1997 and
also served as President of the Company through July 1997.
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." Mr. Haymaker's employment
agreement provides that his annual base salary will be
reviewed and possibly changed on an annual basis.
In mid-1997, Mr. Haymaker's base salary was increased from
$487,000 to $504,000 as part of a two-step increase
intended to bring Mr. Haymaker's salary more in line with
market data obtained by the Company and the Company's
overall compensation structure for its executive officers.
The second increase raised Mr. Haymaker's salary to
$569,000 effective as of February 1, 1998. Mr. Haymaker's
employment agreement also contains target incentives which
are consistent with the goals and objectives of the
Company's incentive compensation programs as described
above.
During 1997 the Company's performance slightly
exceeded 1997 performance goals; however, as previously
mentioned, the average price of KAC common stock during
December 1997 was lower than the average price during
December 1996. As a result, the short-term incentive award
earned by Mr. Haymaker in 1997 was limited to his targeted
amount of $311,000. The long-term award earned by Mr.
Haymaker for the 1995-1997 three-year long-term performance
period was $362,136.
Compensation by MAXXAM
Mr. La Duc received a portion of his compensation
during 1997 from MAXXAM, KAC's parent corporation. 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 the allocation of that executive officer's time as
expended among KAC, MAXXAM or their respective
subsidiaries. Such allocations are described under
"Certain Transactions" below.
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 public companies. Qualifying performance-based
compensation will not be subject to the deduction limit if
certain requirements are met. Compensation earned by or
awarded to the Senior Executives whose compensation is
potentially subject to the limitations imposed by Section
162(m) of the Code is covered by a separate program
intended to comply with the provisions of Section 162(m) of
the Code (the "Senior Executive Program"). The Senior
Executive Program, the 1993 Omnibus Plan and the 1997
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. In addition, the Senior Executive
Program and awards under the 1993 and 1997 Omnibus Plans
that are intended to comply with Section 162(m) are
administered by the Section 162(m) Committee. Messrs.
Marcus (Chairman) and Cruikshank currently serve as members
of the Section 162(m) Committee and for purposes of Section
162(m) are qualifying directors. The Senior Executives are
the only executive officers of the Company to which the
limitation imposed by Section 162(m) of the Code is likely
to apply and the Section 162(m) Committee believes that
awards to the Senior Executives should be tax deductible
under Section 162(m).
Section 162(m) Compensation Compensation Policy
Committee of the Board Committee of the
of Directors Board of 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 Policy Committee or the Section
162(m) Committee was, during the 1997 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 Mr. Levin, had any
relationships requiring disclosure by the Company under
Item 404 of Regulation S-K. Mr. Levin served on the
Company's Policy Committee and Board of Directors during
1997 and is also a partner in the law firm of Kramer,
Levin, Naftalis & Frankel, which provided legal services to
the Company and its subsidiaries during 1997.
During the Company's 1997 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 Policy Committee or
Section 162(m) 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, other than as
previously noted with respect to KAC, one of whose
executive officers served as a director of the Company.
CERTAIN TRANSACTIONS
During the period from October 28, 1988 through June
30, 1993, KAC and its domestic subsidiaries (including the
Company) were included in the consolidated federal income
tax returns of MAXXAM. During 1997, MAXXAM reached a
settlement with the Internal Revenue Service regarding all
remaining years where KAC and its domestic subsidiaries
were included in the MAXXAM consolidated federal income tax
returns. As a result of this settlement, the Company paid
approximately $11.8 million to MAXXAM in respect of its
liabilities pursuant to its tax allocation agreement with
MAXXAM. Payments or refunds for periods prior to July 1,
1993, related to other jurisdictions could still be
required pursuant to the Company's tax allocation agreement
with MAXXAM. In accordance with the credit agreement
entered into by the Company and KAC which provides a $325
million five-year secured, revolving line of credit, any
such payments to MAXXAM by the Company would require lender
approval, except in certain circumstances. The tax
allocation agreement of the Company with MAXXAM terminated
pursuant to its terms, effective for taxable periods
beginning after June 30, 1993. While the Company is
severally liable for the MAXXAM tax group's federal income
tax liability for all of 1993 and applicable prior periods,
pursuant to the tax allocation agreement, MAXXAM
indemnifies the Company to the extent the tax liability
exceeds amounts payable by the Company under such
agreement.
On June 30, 1993, the Company and KAC entered into a
tax allocation agreement (the "KACC Tax Allocation
Agreement") effective for periods beginning on or after
July 1, 1993. Pursuant to the terms of the KACC Tax
Allocation Agreement, KAC pays any consolidated Federal
income tax liability for KAC and its subsidiaries which are
members of an affiliated group of corporations (an
"Affiliated Group") within the meaning of Section 1504 of
the Code, of which KAC is the common parent corporation
(the "KAC Tax Group"). The Company is liable to KAC for
the Federal income tax liability of the Company and its
subsidiaries (collectively, the "KACC Subgroup") computed
as if the KACC Subgroup were a separate Affiliated Group
which was never affiliated with the KAC Tax Group (taking
into account all limitations under the Code and regulations
applicable to the KACC Subgroup), except that the KACC
Subgroup excludes interest income received or accrued on an
intercompany note issued by KAC in connection with a
financing consummated in December 1989 (the "KACC
Subgroup's Separate Income Tax Liability"). To the extent
such calculation results in a net operating loss or a net
capital loss or credit which the KACC Subgroup could have
carried back to a prior applicable taxable period under the
principles of Sections 172 and 1502 of the Code, KAC pays
to the Company an amount equal to the tax refund to which
the Company would have been entitled (but not in excess of
the aggregate amount previously paid by the Company to KAC
for the current year and the three prior taxable years).
If such separately calculated net operating loss or net
capital loss or credit of the KACC Subgroup cannot be
carried back to a prior taxable year of the KACC Subgroup
for which the KACC Subgroup paid its separate tax liability
to KAC, the net operating loss or net capital loss or
credit becomes a loss or credit carryover of the KACC
Subgroup to be used in computing the KACC Subgroup's
Separate Income Tax Liability for future taxable years.
The same principles are applied to any consolidated or
combined state or local income tax returns filed by the KAC
Tax Group with respect to the Company and its subsidiaries.
Although, under Treasury regulations, all members of the
KAC Tax Group, including the members of the KACC Subgroup,
are severally liable for the KAC Tax Group's Federal income
tax liability, under the KACC Tax Allocation Agreement, KAC
indemnifies each KACC Subgroup member for all Federal
income tax liabilities relating to taxable years during
which such KACC Subgroup member was a member of the KAC Tax
Group except for payments required under the KACC Tax
Allocation Agreement.
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 $4.1 million to MAXXAM pursuant to such
arrangements and MAXXAM paid approximately $3.1 million to
the Company pursuant to such arrangements in respect of
1997. 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 to KAC and its
subsidiaries (including the Company).
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. Mr. Hurwitz has served as a director and
Chairman of the Board of SHRP, Inc., SHRP, Ltd.'s sole
general partner prior to SHRP Ltd.'s bankruptcy
reorganization, and as a director, Chairman of the Board
and President of SHRP Capital Corp., a subsidiary of SHRP,
Ltd. which was dissolved effective December 31, 1997. Mr.
Hurwitz currently serves as a director and Chairman of the
Board of SHRP, the managing general partner of SHRP, Ltd.
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 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 10% beneficial owners.
OTHER MATTERS
Independent Public Accountants
Arthur Andersen LLP served as the Company's
independent public accountants through the conclusion of
the audit with respect to the Company's 1997 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 1999 Annual Meeting of
Stockholders
Proposals intended to be presented at the 1999 Annual
Meeting of Stockholders pursuant to Rule 14a-8 of the
Exchange Act must be received by December 31, 1998, 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 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 $5,000 (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
JOHN WM. NIEMAND II
Secretary
April 29, 1998
Houston, Texas
<PAGE>
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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
Executive Officers and Directors 5
Principal Stockholders. . . . . 10
Executive Compensation. . . . . 13
Report of the Compensation
Committees on Executive
Compensation. . . . . . . . . 18
Certain Transactions. . . . . . 22
Compliance with Section 16(a)
of the Exchange Act . . . . . 23
Other Matters . . . . . . . . . 23
- ------------------------------------------------------------
<PAGE>
[KACC Logo]
- -----------------------------------------------------------
Notice of 1998 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>
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, 1998
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, 1998,
at the Annual Meeting of Stockholders to be held on June 4,
1998, 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.
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, 1998.
(SEE REVERSE SIDE)
- ------------------------------------------------------------
FOLD AND DETACH HERE
May 5, 1998
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, 1998. 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, 1998.
Shares credited to your account, which you are entitled to
vote, are shown on this voting direction card.
The item to be voted on at this year's Annual Meeting is the
election of Directors. 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, 1998,
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 1997 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, 1998. 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>
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. 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:------------------------, 1998
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
<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, 1998
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, 1998,
at the Annual Meeting of Stockholders to be held on June 4,
1998, 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.
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, 1998.
(SEE REVERSE SIDE)
- ----------------------------------------------------------
FOLD AND DETACH HERE
May 5, 1998
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, 1998. 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, 1998.
Shares credited to your account, which you are entitled to
vote, are shown on this voting direction card.
The item to be voted on at this year's Annual Meeting is the
election of Directors. 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, 1998,
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 1997 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, 1998. 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>
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. 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:------------------------, 1998
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
- -----------------------------------------------------------
FOLD AND DETACH HERE
<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, 1998
The undersigned hereby appoints E. BRUCE BUTLER, GEORGE T.
HAYMAKER, JR., 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, 1998,
and at any and all adjournments or postponements thereof.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
(SEE REVERSE SIDE)
<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.
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. 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:------------------------, 1998
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
<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, 1998
The undersigned hereby appoints E. BRUCE BUTLER, GEORGE T.
HAYMAKER, JR., 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, 1998,
and at any and all adjournments or postponements thereof.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
(SEE REVERSE SIDE)
<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.
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. 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:------------------------, 1998
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
<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, 1998
The undersigned hereby appoints E. BRUCE BUTLER, GEORGE T.
HAYMAKER, JR., 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, 1998,
and at any and all adjournments or postponements thereof.
PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE.
(SEE REVERSE SIDE)
<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.
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. 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:------------------------, 1998
---------------------------------------
Signature
---------------------------------------
Signature if held jointly
---------------------------------------
Title
