KAISER ALUMINUM & CHEMICAL CORP
DEF 14A, 2000-04-28
PRIMARY PRODUCTION OF ALUMINUM
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<PAGE>   1
                                  UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


                                  SCHEDULE 14A
                                 (RULE 14a-101)

                    INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION

          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:

<TABLE>
<S>                                       <C>
[ ]  Preliminary Proxy Statement          [ ]  Confidential, for Use of the
                                               Commission Only (as permitted by
                                               Rule 14a-6(e)(2))
[X]  Definitive Proxy Statement
[ ]  Definitive Additional Materials
[ ]  Soliciting Material Pursuant to Rule 14a-12
</TABLE>

                     Kaiser Aluminum & Chemical Corporation
- --------------------------------------------------------------------------------
                (Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

   [X]  No fee required.

   [ ]  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

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

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

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

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

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

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

   (4)  Proposed maximum aggregate value of transaction:

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

   (5)  Total fee paid:

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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:

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

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

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   (3)  Filing Party:

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   (4)  Date Filed:

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<PAGE>   2












                                 [Company Logo]






                                                                 April 28, 2000


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 9:00 a.m. on Thursday, June 8, 2000, at The Power Center, 12401 South
Post Oak, 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 17, 2000 (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               President and Chief Executive Officer



<PAGE>   3



                     KAISER ALUMINUM & CHEMICAL CORPORATION
                           5847 SAN FELIPE, SUITE 2600
                              HOUSTON, TEXAS 77057




                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                             TO BE HELD JUNE 8, 2000


     The Annual Meeting of Stockholders (the "Annual Meeting") of Kaiser
Aluminum & Chemical Corporation (the "Company") will be held at The Power
Center, 12401 South Post Oak, Houston, Texas, on Thursday, June 8, 2000, at
9:00 a.m., Houston time, for the following purposes:

     1.   To elect seven (7) directors to hold office until the Company's 2001
          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
17, 2000, are entitled to notice of and to vote at the Annual Meeting (all such
holders being collectively referred to as the "Stockholders"). The Stockholder
list will be available commencing May 29, 2000, 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 28, 2000



                                    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 BY FOLLOWING THE PROCEDURES DESCRIBED IN THE ATTACHED PROXY STATEMENT.
IN THAT EVENT, YOUR PROXY WILL NOT BE USED.


<PAGE>   4



                     KAISER ALUMINUM & CHEMICAL CORPORATION
                           5847 SAN FELIPE, SUITE 2600
                              HOUSTON, TEXAS 77057

                                 PROXY STATEMENT
                                       FOR
                         ANNUAL MEETING OF STOCKHOLDERS
                             TO BE HELD JUNE 8, 2000

     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 Thursday, June 8, 2000, and
any adjournments or postponements thereof, at the time and place and for the
purposes set forth in the accompanying Notice of Annual Meeting of Stockholders.
The principal executive offices of the Company are located at 5847 San Felipe,
Suite 2600, Houston, Texas 77057, telephone (713) 267-3777.

     This Proxy Statement, the Notice of Annual Meeting of Stockholders, and the
accompanying proxy card and Pre- Registration Form are being mailed, commencing
on or about May 8, 2000, to the record holders as of the close of business on
April 17, 2000, 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,
1999, is being mailed to Stockholders together with, but is not part of, this
Proxy Statement and other proxy materials.

     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 82.5% of the 1985 Series A Stock and
approximately 29.9% of the 1985 Series B Stock are the trustees under the Trust
Agreement of the Kaiser Aluminum USWA Employee Stock Ownership Plan and the
Trust Agreement of the Kaiser Aluminum 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 17, 2000, there were 46,171,365
shares of Common Stock, 316,755 shares of 1985 Series A Stock and 39,401 shares
of 1985 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.

     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 card are J. Kent
Friedman, John T. La Duc, Raymond J. Milchovich 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.

     All Stockholders, or their duly appointed proxies, may attend the Annual
Meeting. Seating, however, is limited. Admission to the Annual Meeting will be
on a first-come, first-served basis. Registration is expected to begin at
8:00 a.m., and seating is expected to be available at that time. Cameras,
recording equipment, communication devices or other similar equipment will not
be permitted in the meeting room without the prior written consent of the
Company. In addition, posters, placards and other signs and materials may not be
displayed in the meeting room. The Annual Meeting will be conducted in
accordance with certain rules and procedures established by the Company. These
rules and procedures will be announced or otherwise made available at the Annual
Meeting.

     PLEASE NOTE THAT IF YOU HOLD YOUR SHARES IN "STREET NAME" (THAT IS, THROUGH
A BROKER, BANK OR OTHER NOMINEE), YOU WILL NEED TO BRING A COPY OF A BROKERAGE
OR SIMILAR STATEMENT REFLECTING YOUR STOCK OWNERSHIP AS OF THE RECORD DATE. ALL
STOCKHOLDERS, OR THEIR DULY APPOINTED PROXIES, WILL BE REQUIRED TO CHECK IN AT
THE REGISTRATION DESK PRIOR TO THE ANNUAL MEETING. IN ADDITION, ALL
STOCKHOLDERS,



<PAGE>   5

REGARDLESS OF THEIR FORM OF OWNERSHIP, AND ALL PROXIES WILL ALSO BE REQUIRED TO
VERIFY THEIR IDENTITY WITH A DRIVER'S LICENSE OR OTHER APPROPRIATE
IDENTIFICATION BEARING A PHOTOGRAPH.

     In order to expedite your admission to the Annual Meeting, we suggest that
you pre-register by completing and returning the Pre-Registration Form being
sent to you with this Proxy Statement. Alternatively, you may pre-register by
submitting the Pre-Registration Form to the Company by facsimile on or before
the close of business on June 7, 2000, at 1-877-276-6983. Persons who
pre-register will be required to verify their identity at the registration table
with a driver's license or other appropriate identification bearing a
photograph. Please contact the Company at 1-877-276-6903 if you have any
questions regarding the pre-registration process.

     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 Delaware law, abstentions
and broker non-votes (i.e., shares held in street name as to which the broker,
bank or other nominee has no discretionary power to vote on a particular matter,
has received no instructions from the persons entitled to vote such shares, and
has appropriately advised the Company that it lacks voting authority) are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business, but will not be treated as shares present and entitled
to vote at the Annual Meeting (and not counted in the vote totals) with respect
to such matters on which the broker could not vote. 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 and broker non-votes will be excluded entirely from the
vote and will have no effect on the outcome. Abstentions may not be specified in
the election of directors.

     PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOUR SHARES ARE REGISTERED IN THE NAME OF
A BROKER, BANK OR OTHER NOMINEE, PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR
ACCOUNT AND INSTRUCT HIM OR HER TO VOTE THE PROXY CARD AS SOON AS POSSIBLE. IF
YOU PLAN TO ATTEND THE ANNUAL MEETING TO VOTE IN PERSON AND YOUR SHARES ARE
REGISTERED IN THE NAME OF A BROKER, BANK OR OTHER NOMINEE, YOU MUST SECURE A
PROXY FROM SUCH NOMINEE ASSIGNING VOTING RIGHTS TO YOU FOR YOUR SHARES.





                                       -2-

<PAGE>   6



                              ELECTION OF DIRECTORS

      At the Annual Meeting, seven directors will be elected by the Stockholders
to serve until the 2001 Annual Meeting or until their respective successors are
duly elected and qualified. The seven nominees receiving the highest number of
votes will be elected.

     The seven 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, Raymond J. Milchovich, James D. Woods, and James T.
Hackett. Messrs. Cruikshank, Haymaker, Hurwitz, Levin, Milchovich, and Woods are
currently members of the Board of Directors. See, "Executive Officers and
Directors" and "Principal Stockholders" for information concerning each of the
nominees, including 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 17, 2000. Each of the nominees has consented to serve as a
member of the Board of Directors if elected.

     The persons named on the enclosed proxy card will vote the shares
represented thereby for the election of the Company's 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 on the enclosed proxy card
will vote for the election of such other person as the Board of Directors may
recommend.

     THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL SUCH
NOMINEES.


                                 OTHER BUSINESS

     Neither the Board of Directors nor management intends to bring before the
Annual Meeting any business other than the matter referred to in the Notice of
Annual Meeting of Stockholders and this Proxy Statement. Nonetheless, if any
other business should properly come before the Annual Meeting, or any
adjournments or postponements thereof, the persons named on the enclosed proxy
card will vote on such matters according to their best judgment.


                    THE BOARD OF DIRECTORS AND ITS COMMITTEES

     The Board of Directors of the Company (sometimes referred to herein as the
"Board") held 12 meetings and acted by written consent on four occasions during
1999. In addition, management confers frequently with the directors on an
informal basis to discuss Company affairs. During 1999, 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 has four standing committees. These committees consist of the
Executive, Audit, Compensation Policy, and Section 162(m) Compensation
Committees. The Board does not have a standing nominating committee nor does it
have any committee performing a similar function.

     The Executive Committee meets on call and has authority to act on most
matters during the intervals between meetings of the entire Board. The current
members are Messrs. Haymaker and Hurwitz (Chairman). The Executive Committee met
four times and acted by written consent 15 times in 1999.

     The current members of the Audit Committee are Messrs. Levin and Cruikshank
(Chairman). 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 also 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 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 1999.


                                       -3-

<PAGE>   7



     The Compensation Policy Committee (the "Policy Committee") administers the
benefit plans, programs and related trust agreements maintained by the Company
and/or its subsidiaries, except to the extent such administration is reserved to
the Section 162(m) Compensation Committee. The Policy Committee has the
authority to review and approve proposals concerning or related to (i) the
establishment, termination, merger, or change of such benefit plans, programs or
trust agreements, (ii) material amendments to any such existing benefit plan,
program or trust agreement, and (iii) senior management salaries and other
compensation. The Policy Committee also has the authority to establish and
approve criteria for senior management to be used in determining awards, and to
approve any actual awards to be made, under such plans and programs. The Policy
Committee does not have such authority and does not perform the foregoing
functions in respect of (i) the compensation of certain senior executive
officers of the Company determined from time to time by the Section 162(m)
Compensation Committee (the "Section 162(m) Committee"), and (ii) any benefit
plan, program, or trust maintained by the Company and/or its subsidiaries to the
extent that it is designed or otherwise intended to comply with Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code"), as to which
authority is granted to, and such functions are to be performed by, the Section
162(m) Committee. The Policy Committee 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 Woods currently serve as members of the Policy
Committee. The Policy Committee, which met 26 times during 1999, did not act by
written consent during 1999.

     The Section 162(m) Committee (a) administers the benefit plans, programs
and related trust agreements maintained by the Company and/or its subsidiaries,
and (b) has the authority to review and approve proposals concerning or related
to (i) the establishment, termination, merger, or change of such benefit plans,
programs, and trust agreements, (ii) material amendments to any such existing
benefit plan, program or trust agreement, and (iii) salaries and other
compensation, in each case to the extent that such plans, programs, trust
agreements, salaries and other compensation are designed or otherwise intended
to comply with Section 162(m) of the Code. The Section 162(m) Committee also has
the authority to establish and approve criteria to be used in determining
awards, and to approve any actual awards to be made, under such plans and
programs to the extent that such plans, programs and awards are designed or
otherwise intended to comply with Section 162(m) of the Code. The Section 162(m)
Committee determines from time to time the senior executive officers of the
Company whose compensation shall be subject to the review and approval of the
Section 162(m) Committee. Messrs. Cruikshank (Chairman) and Woods currently
serve as members of the Section 162(m) Committee. The Section 162(m) Committee,
which met 24 times during 1999, did not act by written consent during 1999.

DIRECTOR COMPENSATION

     Each of the directors who was not an employee of the Company, KAC or KAC's
parent, MAXXAM Inc. ("MAXXAM"), received a base fee of $40,000 for 1999, $10,000
of which was paid in the form of an option to purchase shares of KAC's Common
Stock ("KAC Common Stock") as more fully described below. Non-employee directors
of the Company who were also non-employee directors of MAXXAM, 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 non-employee
Chairman of each of the committees was paid a fee of $3,000 per year for
services as Chairman. All committee members also 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 1999,
Messrs. Cruikshank, Levin, and Woods received an aggregate of $16,500, $16,500,
and $2,000, respectively, in such committee fees from the Company and KAC in the
form of cash payments.

     Non-employee directors are eligible to participate in the Kaiser 1997
Omnibus Stock Incentive Plan (the "1997 Omnibus Plan"). In 1999, non-employee
directors participated in a program pursuant to which each non-employee director
received an option to purchase KAC Common Stock at a price established by the
Board which would be equal to or greater than the average of the high and low
market price of the KAC Common Stock on the day of the grant. The grant had a
value of $10,000, and the number of shares covered by the options was determined
using the Black-Scholes option pricing method. Each such option becomes
exercisable as to all of the shares covered by the option one year from the date
of the grant, and is exercisable for a period ending ten years from the date of
grant. On December 15, 1999, in respect of 1999 services, Messrs. Cruikshank,
Levin, and Woods each received options under the program to purchase 2,667
shares of KAC Common Stock at an exercise price of $9.00 per share. For 2000,
the foregoing program has been modified. Annual stock option grants will be made
in May of each year with respect to services rendered during the preceding
twelve months, with the May 2000 grant to be appropriately prorated for the
period January through May

                                       -4-

<PAGE>   8


2000. The exercise price of each option will be the average of the high and low
market price of the KAC Common Stock on the date of the grant. In general, such
stock options will become exercisable at the earlier of (a) the time when the
KAC Common Stock trades at $10 or more per share for 20 consecutive trading days
and at least one year has elapsed since the date of the grant, or (b) nine years
after the date of grant, and such options generally will be exercisable for a
period ending ten years from the date of grant.

     In 1999, the Company had a program pursuant to which a one-time grant of an
option to purchase KAC Common Stock was to be made to each new non-employee
director of the Company based on the market price of such stock on the day of
the grant. In each instance the grant was to have a value of $10,000, and the
number of shares covered by the option was to be determined using the
Black-Scholes option pricing method. Each option would become exercisable as to
all of the shares covered by the option one year from the date of grant. No
options were granted under this program in 1999. For 2000, the foregoing program
has been modified to provide that, in general, such stock options will be
granted as soon as practicable after the election of the non-employee director
and become exercisable at the earlier of (a) the time when the KAC Common Stock
trades at $10 or more per share for 20 consecutive trading days and at least one
year has elapsed since the date of the grant, or (b) nine years after the date
of grant. On February 29, 2000, Mr. Woods received an option under such program
to purchase 2,358 shares of KAC Common Stock at an exercise price of $5.5625 per
share.

     KAC has adopted programs identical to the programs described in the two
preceding paragraphs, and each of the Company and KAC has expressed its
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.

     The Company and KAC also have a deferred compensation program 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 from the
Company and KAC for services in such capacity for any calendar year. The
deferred fees are credited to a book account and are deemed "invested," in 25%
increments, in two investment choices: 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, are 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. With the exception of Mr. Haymaker for the year 2000, no deferral
elections have been made under this program.

     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 KAC 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.

     Mr. Haymaker, the Company and KAC have entered into an agreement concerning
the terms upon which he will serve as a director and non-executive Chairman of
the Boards of the Company and KAC through KAC's 2001 Annual Meeting. Under the
agreement, Mr. Haymaker shall, in addition to acting as a director, provide
consulting services to the Company and KAC. The agreement provides for base
compensation of $250,000 per annum, of which $40,000 represents his base
Director's fee and any Board committee fees otherwise payable, and incentive
compensation for 2000 having a target amount of $50,000 payable upon the
achievement of goals established by the Board. Compensation under the agreement
is payable in cash. As permitted by the agreement, Mr. Haymaker has elected to
defer receipt of the Director fee portion of the compensation in accordance with
the deferred compensation program discussed above.



                                       -5-

<PAGE>   9



                        EXECUTIVE OFFICERS AND DIRECTORS

     The following table sets forth certain information, as of April 17, 2000,
with respect to the executive officers, directors and nominees for director 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>

             NAME                                     POSITIONS AND OFFICES WITH THE COMPANY
- -----------------------------------           -------------------------------------------------------
<S>                                           <C>
Raymond J. Milchovich                         President, Chief Executive Officer, Chief Operating Officer and Director

Jack A. Hockema                               Executive Vice President and President of Kaiser Fabricated Products

John T. La Duc                                Executive Vice President and Chief Financial Officer

J. Kent Friedman                              Senior Vice President and General Counsel

John Barneson                                 Vice President and Chief Administrative Officer

Joseph A. Bonn                                Vice President, Commodities Marketing, Corporate Planning and
                                              Development

Robert E. Cole                                Vice President, Government Affairs

Wayne R. Hale                                 Vice President and President of Kaiser Primary Products

W. Scott Lamb                                 Vice President, Investor Relations and Corporate Communications

Daniel D. Maddox                              Vice President and Controller

Ronald L. Reman                               Vice President, Special Initiatives

Geoffrey W. Smith                             Vice President and President of Kaiser Alumina

Karen A. Twitchell                            Vice President and Treasurer

Kris S. Vasan                                 Vice President, Financial Risk Management

Robert W. Warnock                             Vice President, Performance Measurement and Analysis

John Wm. Niemand II                           Secretary

Robert J. Cruikshank                          Director

George T. Haymaker, Jr.                       Chairman of the Board and Director

Charles E. Hurwitz                            Vice Chairman of the Board and Director

Ezra G. Levin                                 Director

James D. Woods                                Director

James T. Hackett                              ---
</TABLE>

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


     Raymond J. Milchovich. Mr. Milchovich, age 50, was elected a director of
the Company in June 1999 and of KAC in May 1999. He became Chief Executive
Officer of the Company and KAC in January 2000 and has served as President and
Chief Operating Officer of the Company and KAC since July 1997. He served as
Vice President, President of Kaiser Flat-Rolled Products, of the Company from
June 1995 through July 1997. He became a Vice President of KAC in May 1997 and
served in such capacity 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.

     Jack A. Hockema. Mr. Hockema, age 53, was elected to the position of
Executive Vice President, and President of Kaiser Fabricated Products of the
Company in January 2000. He has served as Vice President of KAC since May 1997.
Mr. Hockema became Vice President of the Company and President of Kaiser
Engineered Products in March 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

                                       -6-

<PAGE>   10



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 57, was elected Executive Vice President
and Chief Financial Officer of the Company effective July 31, 1998, and of KAC
effective September 1, 1998. Mr. La Duc served as Treasurer of the Company from
June 1995 until February 1996, and served as Vice President and Chief Financial
Officer of the Company from June 1989 and January 1990, respectively. He also
was Vice President and Chief Financial Officer of KAC from June 1989 and May
1990, respectively, and was Treasurer of KAC from August 1995 until February
1996 and from January 1993 until April 1993. Since September 1990, Mr. La Duc
has served as Senior Vice President of MAXXAM. Mr. La Duc also serves as a Vice
President and a director of MAXXAM Group Holdings Inc., a wholly owned
subsidiary of MAXXAM and parent of MAXXAM's forest products operations ("MGHI"),
as a Vice President and manager on the Board of Managers of Scotia Pacific
Company LLC ("Scopac LLC"), a wholly owned subsidiary of MAXXAM engaged in
forest product operations and successor by merger in July 1998 to Scotia Pacific
Holding Company, and as a director and Vice President of The Pacific Lumber
Company, the parent of Scopac LLC ("Pacific Lumber"). He previously served as
Chief Financial Officer of MAXXAM from September 1990 until December 1994.

     J. Kent Friedman. Mr. Friedman, age 56, was elected to the position of
Senior Vice President and General Counsel of the Company and KAC effective
December 1999. He was a partner of Mayor, Day, Caldwell & Keeton, L.L.P., a
Houston law firm, from 1982 until December 1999, and he was Managing Partner of
that firm from 1982 through 1992. Prior to 1982, he was a partner at Butler &
Binion, also a Houston law firm. Mr. Friedman has served as General Counsel of
MAXXAM since December 1999 and served as Acting General Counsel of that company
from March 1998 until his appointment as its General Counsel. He also has served
as a director of Pacific Lumber and a manager on the Board of Managers of Scopac
LLC since September 1999, and as a director of SHRP General Partner, Inc.
("SHRP") since October 1995. Mr. Friedman is co-chairman of the Greater Houston
Inner City Games, President of the Mickey Leland Kibbutzim Internship Foundation
and served as a member of the Board of Regents of Texas Southern University
(1987 to 1990) and as a member of the Executive Committee of the Board of
Directors of the Houston Symphony (1984 to 1999).

     John Barneson. Mr. Barneson, age 49, was elected to the position of Vice
President and Chief Administrative Officer of the Company and KAC effective
December 1999. He served as Engineered Products Vice President of Business
Development and Planning from September 1997 until December 1999. Mr. Barneson
served as Flat-Rolled Products Vice President of Business Development and
Planning from April 1996 until September 1997. Mr. Barneson has been an employee
of the Company since September 1975 and has held a number of staff and operation
management positions within the flat-rolled and engineered products business
units.

     Joseph A. Bonn. Mr. Bonn, age 56, has been Vice President, Commodities
Marketing, Corporate Planning and Development of the Company since September
1999, and has been Vice President of KAC since May 1997. He served as Vice
President, Planning and Development of the Company from March 1997 through
September 1999. He 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 has served as a Vice President of the
Company since April 1987 and served as Senior Vice President--Administration of
MAXXAM from September 1991 through December 1992. He was also the Company's
Director of Strategic Planning from April 1987 until July 1989. From September
1982 to April 1987, Mr. Bonn served as General Manager of various aluminum
fabricating divisions. Mr. Bonn also serves as a director and on the
Compensation Committee of National Refractories Corporation.

     Robert E. Cole. Mr. Cole, age 53, 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 and as a Vice President of
Pacific Lumber. Mr. Cole is currently a member of the United States Auto Parts
Advisory Committee to the United States Congress.

     Wayne R. Hale. Mr. Hale, age 44, 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.

                                       -7-

<PAGE>   11
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.

     W. Scott Lamb. Mr. Lamb, age 45, was elected Vice President, Investor
Relations and Corporate Communications of the Company effective July 31, 1998,
and of KAC effective September 1, 1998. Mr. Lamb previously served as Director
of Investor Relations and Corporate Communications of the Company and KAC from
June 1997 through July 1998. From July 1995 through June 1997, he served as
Director of Investor Relations of the Company and KAC and from January 1995
through July 1995, he served as Director of Public Relations of the Company and
KAC. From January 1992 through January 1995, Mr. Lamb served as Director of
Public Relations of MAXXAM.

      Daniel D. Maddox. Mr. Maddox, age 40, was elected to the position of Vice
President and Controller of the Company effective July 31, 1998, and of KAC
effective September 1, 1998. He served as Controller, Corporate Consolidation
and Reporting of the Company and KAC from October 1, 1997, through July 1998 and
September 1998, respectively. 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.

     Ronald L. Reman. Mr. Reman, age 42, was elected Vice President, Special
Initiatives of the Company and KAC in February 2000. From September 1998 through
February 2000, Mr. Reman served as Vice President, Taxes of the Company and KAC.
From September 1992 through September 1998, Mr. Reman served as Assistant
Treasurer of the Company and KAC. Mr. Reman was elected Vice President of MAXXAM
on March 30, 2000. From September 1992 until March 30, 2000, he served as Vice
President--Taxes of MAXXAM. From July 1984 until October 1986, Mr. Reman was a
Senior Manager in the Tax Department of the New York office of Price Waterhouse
after having served seven years with the New York office of Coopers & Lybrand.
Mr. Reman also serves as Vice President--Taxes of MGHI, Pacific Lumber and
Scopac LLC.

     Geoffrey W. Smith. Mr. Smith, age 53, has been a Vice President of the
Company since January 1992, President of Kaiser Alumina since March 1999 and a
Vice President of KAC since May 1997. From June 1996 through March 1999, Mr.
Smith served as President of Kaiser Aluminum Commodities of the Company. From
June 1995 until June 1996, Mr. Smith served as President of Kaiser Alumina, 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.

     Karen A. Twitchell. Ms. Twitchell, age 44, was elected to the position of
Vice President and Treasurer of the Company effective July 31, 1998, and KAC
effective September 1, 1998. She has served as Treasurer of the Company and KAC
since February 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.

      Kris S. Vasan. Mr. Vasan, age 50, 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.

     Robert W. Warnock. Mr. Warnock, age 53, was elected to the position of Vice
President, Performance Measurement and Analysis of the Company and KAC effective
September 1999. He previously served as Controller, Corporate Operations from
October 1997, and served as Controller of the Company's flat-rolled products
business unit from 1993 to 1997.

     John Wm. Niemand II. Mr. Niemand, age 55, became Secretary of the Company
in June 1997 and Secretary of KAC in May 1997. He served as an Assistant
Secretary of the Company and KAC since July 1988. Mr. Niemand has served as
Senior Assistant General Counsel of the Company and KAC since February 2000. He
previously served as Senior



                                       -8-

<PAGE>   12

Corporate Counsel of the Company and KAC from May 1992 through December 1995,
and as Assistant General Counsel of the Company and KAC from January 1996
through January 2000.

     Robert J. Cruikshank. Mr. Cruikshank, age 69, 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 of the
Houston office 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 Reliant Energy Incorporated (formerly Houston Industries
Incorporated), a public utility holding company with interests in electric and
natural gas utilities, coal and transportation businesses; a director of Texas
Biotechnology Incorporated; a trust manager of Weingarten Realty Investors; and
as advisory director of Compass Bank--Houston.

     George T. Haymaker, Jr. Mr. Haymaker, age 62, has served as Chairman of the
Board of the Company and KAC since January 1, 1994 (non-executive Chairman since
January 1, 2000). He served as Chief Executive Officer of the Company and KAC
from January 1, 1994 through December 31, 1999, 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 that 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. 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 was engaged in the manufacture of powdered metal components, from
August 1988 to March 1993, and Hayken Metals Asia Limited, which represented
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. From 1982 through 1984, he was Group Vice President,
International Operations for Alcoa, Inc., and held other executive and
management positions with that company from 1959 to 1982. Mr. Haymaker is also a
director of Flowserve Corporation, a provider of valves, pumps and seals, and a
director of CII Carbon, LLC., a producer of calcined coke.

     Charles E. Hurwitz. Mr. Hurwitz, age 59, 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. From January 1993 to January 1998, he also served MAXXAM
as President. Mr. Hurwitz has also been, since its formation in November 1996,
Chairman of the Board, President and Chief Executive Officer of MGHI. He has
been, since January 1974, Chairman of the Board and Chief Executive Officer of
Federated Development Company ("Federated"), a Texas corporation primarily
engaged in the management of real estate investments and principal stockholder
of MAXXAM. Mr. Hurwitz has also served, since May 1993 and October 1995,
respectively, as a director and Chairman of the Board of SHRP, the managing
general partner of Sam Houston Race Park, Ltd., a Texas limited partnership
which operates a horse racing facility in Texas and in which MAXXAM holds a
controlling interest ("SHRP, Ltd.").

     Ezra G. Levin. Mr. Levin, age 66, has been a director of the Company since
November 1998. 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. Mr. Levin has served as a director of Pacific Lumber since
February 1993, and as a manager on the Board of Managers of Scopac LLC since
June 1998. From January 1974 through December 1995, he served as a trustee of
Federated. Mr. Levin is a partner in the law firm of Kramer Levin Naftalis &
Frankel LLP, and served as Vice President of the New York Jewish Community
Relations Council from 1994 to 1999. Mr. Levin also served as visiting professor
at the University of Wisconsin Law School in 1998, and at Columbia College in
1992.

     James D. Woods. Mr. Woods, age 68, has been a director of the Company since
June 1999 and KAC since May 1999. Mr. Woods has served as Chairman Emeritus and
Consultant for Baker Hughes Incorporated from 1997 to the present, and he was
Chairman of the Board and Chief Executive Officer of Baker Hughes Incorporated
from 1987 to 1996.

                                      -9-
<PAGE>   13
Mr. Woods is a director of The Kroger Co.; Varco International, Inc.; Howmet
International, Inc.; Wynn's International, Inc.; and OMI Corporation.

     James T. Hackett. Mr. Hackett, age 46, is a nominee for election as a
director of the Company. Since January 2000, Mr. Hackett has been Chairman,
President and Chief Executive Officer of Ocean Energy, Inc., a company engaged
in oil and natural gas exploration and production worldwide. From 1990 through
1995, Mr. Hackett worked for NGC Corporation, now known as Dynegy, Inc., serving
as Senior Vice President and President of the Trident Division in 1995. From
January 1996 until June 1997, Mr. Hackett served as Executive Vice President of
PanEnergy Corporation and was responsible for integrated international energy
development, domestic power operations, and various corporate staff functions.
PanEnergy Corporation merged with Duke Energy Corporation in June 1997. From
June 1997 until September 1998, Mr. Hackett served as President-Energy Services
Group of Duke Energy Corporation, and was responsible for the non-regulated
operations of Duke Energy, including energy trading, risk management, and
international midstream energy infrastructure development and engineering
services. From September 1998 through December 1998, Mr. Hackett was Chief
Executive Officer of Seagull Energy Corporation, a company that was listed on
the New York Stock Exchange, which was engaged primarily in exploration and
production of oil and natural gas. From January 1999 through March 1999, Mr.
Hackett assumed the additional title of Chairman of Seagull Energy Corporation,
and when Seagull Energy Corporation merged with Ocean Energy, Inc. in March
1999, he was appointed President and Chief Executive Officer of Ocean Energy,
Inc.


                             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 17, 2000. 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. As of April 17, 2000, no such shares were beneficially owned by
any executive officers, directors or nominees for director of the Company.


OWNERSHIP OF CERTAIN BENEFICIAL OWNERS--COMMON STOCK

<TABLE>
<CAPTION>


            NAME AND ADDRESS OF                 AMOUNT AND NATURE OF               PERCENT
             BENEFICIAL OWNER                   BENEFICIAL OWNERSHIP             OF CLASS(1)
            -------------------                 --------------------             -----------
<S>                                               <C>                               <C>
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>


            NAME AND ADDRESS OF                 AMOUNT AND NATURE OF               PERCENT
             BENEFICIAL OWNER                   BENEFICIAL OWNERSHIP             OF CLASS(1)
            -------------------                 --------------------             -----------

<S>                                                <C>                              <C>
Kaiser Aluminum USWA                               261,460 shares                   82.5%
  Employee Stock Ownership Plan(2)
  c/o Frank Russell Trust Company
</TABLE>




                                      -10-

<PAGE>   14



OWNERSHIP OF CERTAIN BENEFICIAL OWNERS--CUMULATIVE (1985 SERIES B) PREFERENCE
STOCK

<TABLE>
<CAPTION>

            NAME AND ADDRESS OF                 AMOUNT AND NATURE OF               PERCENT
             BENEFICIAL OWNER                   BENEFICIAL OWNERSHIP             OF CLASS(1)
             ----------------                   --------------------             -----------
<S>                                                 <C>                             <C>
Kaiser Aluminum Salaried                            11,775 shares                   29.9%
  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
     17, 2000.

(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, Washington 98402.



OWNERSHIP OF KAC

      The following table sets forth, as of March 31, 2000, unless otherwise
indicated, the beneficial ownership of KAC's equity securities by (i) those
persons known by the Company to own beneficially more than 5% of the shares of
any class then outstanding, (ii) each of the directors and nominees for director
of the Company, (iii) each of the named executive officers listed in the Summary
Compensation Table, and (iv) all directors, nominees for director and executive
officers of the Company as a group.


<TABLE>
<CAPTION>


           NAME OF
       BENEFICIAL OWNER                                 TITLE OF CLASS                # OF SHARES(1)    % OF CLASS
- ----------------------------------                      --------------                --------------    ----------
<S>                                                     <C>                           <C>               <C>

MAXXAM Inc.                                              Common Stock                  50,000,000(2)       62.9

Wellington Management Company, LLP                       Common Stock                   5,792,834(3)        7.3

Joseph A. Bonn                                           Common Stock                     122,619(4)         *

Robert J. Cruikshank                                     Common Stock                       8,212(5)         *

James T. Hackett                                         Common Stock                         -0-            *

George T. Haymaker, Jr.                                  Common Stock                     354,858(4)         *

Jack A. Hockema                                          Common Stock                         -0-            *

Charles E. Hurwitz                                       Common Stock                     250,000(6)(7)      *

John T. La Duc                                           Common Stock                     330,157(4)         *

Ezra G. Levin                                            Common Stock                       6,212(6)         *

Raymond J. Milchovich                                    Common Stock                     324,698(4)         *

James D. Woods                                           Common Stock                       5,000            *

All directors, nominees for director and executive       Common Stock                   1,724,720(8)        2.1
officers of the Company as a group (22 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, 2000, to acquire
     such shares.

(2)  Includes 27,938,250 shares beneficially owned by MGHI. As of March 31,
     2000, such shares were pledged as security for $130.0 million principal
     amount of 12% Senior Secured Notes due 2003. An additional 7,915,000 shares
     of KAC Common Stock were pledged by MAXXAM under a separate agreement under
     which $16.0 million had been borrowed by MAXXAM as of December 31, 1999.
     The address of MAXXAM is 5847 San Felipe, Suite 2600, Houston, Texas 77057.

(3)  Information is based solely on the Schedules 13G filed with the SEC and
     dated February 9, 2000, and February 4, 2000, respectively, by Wellington
     Management Company, LLP ("Wellington"), a registered investment advisor,
     and Vanguard Windsor Funds - Windsor Fund ("Vanguard"), a registered
     investment company, reporting their respective ownership interest in KAC at
     December 31, 1999. The Schedule 13G filed by Vanguard indicates that it has
     shared dispositive power and sole voting power with respect to 5,789,334 of
     such shares. The Schedule 13G filed by Wellington indicates that it has
     shared dispositive power and no voting power with respect to all of such
     5,789,334 shares reported by Vanguard. In addition, the Wellington Schedule
     13G indicates that it has shared dispositive power and shared voting power
     with respect to an additional 3,500 of shares held by other clients.
     Vanguard's address is P.O. Box 2600, Valley Forge, Pennsylvania 19482.
     Wellington's address is 75 State Street, Boston, Massachusetts 02109.

                                      -11-

<PAGE>   15



(4)  Includes 275,366, 261,200, 196,700 and 62,896 options exercisable within 60
     days of March 31, 2000, to acquire shares of KAC Common Stock, by Messrs.
     Haymaker, Milchovich, La Duc and Bonn, respectively.

(5)  Includes options exercisable within 60 days of March 31, 2000, to acquire
     6,212 shares of KAC Common Stock.

(6)  Represents only options exercisable within 60 days of March 31, 2000, 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, 2000, to acquire
     1,242,103 shares of KAC Common Stock.

OWNERSHIP OF MAXXAM

     As of March 31, 2000, MAXXAM owned, directly and indirectly, approximately
62.9% of the issued and outstanding KAC Common Stock. The following table sets
forth, as of March 31, 2000, the beneficial ownership of the common stock and
Class A $.05 Non-Cumulative Participating Convertible Preferred Stock
("Preferred Stock") of MAXXAM by the directors of the Company, and by the
directors and nominees for director of the Company and the executive officers of
the Company as a group:

<TABLE>
<CAPTION>



               NAME OF                                                                   %         % OF COMBINED
          BENEFICIAL OWNER                    TITLE OF CLASS         # OF SHARES(1)    OF CLASS    VOTING POWER (2)
- ---------------------------------------     -------------------     ----------------  ----------- -----------------
<S>                                           <C>                   <C>                <C>        <C>
Charles E. Hurwitz                            Common Stock          2,920,704(3)(4)      41.9
                                              Preferred Stock         738,941(4)(5)(6)   99.2           71.5

Ezra G. Levin                                 Common Stock              2,925(7)            *              *

Robert J. Cruikshank                          Common Stock              2,925(7)            *              *

All directors, nominees for director and      Common Stock          2,926,804(4)(8)      41.9
executive officers of the Company as a        Preferred Stock         738,941(5)(6)      99.2           71.5
group (22 persons)
</TABLE>


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

*     Less than 1%.

(1)  Unless otherwise indicated, beneficial owners have sole voting and
     investment power with respect to the shares listed in the table. Includes
     the number of shares such persons would have received on March 31, 2000, 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.

(2)  MAXXAM Preferred Stock is generally entitled to ten votes per share on
     matters presented to a vote of MAXXAM's stockholders.

(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 director 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) 34,845 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) 91,926 shares of MAXXAM common stock owned by the 1992
     Hurwitz Investment Partnership L.P., of which 45,963 shares are owned by
     Mr. Hurwitz's spouse as separate property and as to which Mr. Hurwitz
     disclaims beneficial ownership, (d) 957,453 shares of MAXXAM common stock
     held directly by Mr. Hurwitz, including 256,808 shares of MAXXAM common
     stock with respect to which Mr. Hurwitz possesses sole voting power and
     which have certain transfer and other restrictions that generally lapse in
     December 2014, (e) 60,000 shares of MAXXAM common stock owned by Federated
     Development Investments, LLC, which is owned 79% by FDI and 21% by Mr.
     Hurwitz, and of which FDI is the managing member ("FDILLC"), (f) options to
     purchase 21,029 shares of MAXXAM common stock held by FDI, and (g) options
     held by Mr. Hurwitz to purchase 39,500 shares of MAXXAM common stock
     exercisable within 60 days of March 31, 2000.

(4)  FDI, Federated, FDILLC, the Hurwitz Investment Partnership L.P., the 1992
     Hurwitz Investment Partnership L.P. and Mr. Hurwitz 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
     March 31, 2000, in the aggregate, the members of the Stockholder Group
     owned 2,920,704 shares of MAXXAM common stock and 738,941 shares of
     Preferred Stock, aggregating approximately 71.5% of the total voting power
     of MAXXAM. By reason of his relationship with the members of the
     Stockholder Group, Mr. Hurwitz may be deemed to possess shared voting and
     investment power with respect to the shares held by the Stockholder Group.

(5)  Includes 661,377 shares owned by FDI as to which Mr. Hurwitz possesses
     voting and investment power and 1,064 shares held directly.

(6)  Includes options exercisable within 60 days of March 31, 2000, to acquire
     76,500 shares of Preferred Stock.

(7)  Includes options exercisable within 60 days of March 31, 2000, to acquire
     1,925 shares of MAXXAM common stock.

(8)  Includes (i) options exercisable within 60 days of March 31, 2000, to
     acquire 64,379 shares of MAXXAM common stock.


                                      -12-

<PAGE>   16





                             EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

     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.
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, 1999:

<TABLE>
<CAPTION>

                                                                                  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      ($)             ($)         ($)(1)        ($)          #        ($)(2)         ($)
- -------------------            ----     -------       ---------  ------------ -----------    -------    -------     -----------
<S>                            <C>      <C>            <C>            <C>         <C>       <C>         <C>           <C>
George T. Haymaker, Jr         1999     569,000        184,070(8)     -0-         -0-           -0-      259,027      28,450(3)
(Chief Executive Officer       1998     563,583        290,000        -0-         -0-       500,000(6)   294,328      28,179(3)
during 1997, 1998 and 1999)    1997     494,083        311,000        -0-         -0-           -0-      121,122      24,704(3)

Raymond J. Milchovich          1999     518,502        174,144(8)     -0-         -0-       500,000(7)   134,515      389,520(3)(4)
President and Chief            1998     419,583        250,000        -0-         -0-       500,000(7)   102,211      20,979(3)
Executive Officer              1997     272,083        211,000        -0-         -0-           -0-       71,212      17,796(3)(4)
(Chief Executive Officer
beginning January 2000)

John T. La Duc                 1999     358,167        171,928(5)(8)  -0-         -0-           -0-      120,990      17,908(3)
Executive Vice President and   1998     320,000        220,000(5)     -0-         -0-       468,750      124,356      16,000(3)
Chief Financial Officer        1997     260,000        184,000(5)     -0-         -0-           -0-       44,236      13,000(3)

Jack A. Hockema                1999     265,000        212,085(8)     -0-         -0-           -0-      165,270      13,250(3)
Executive Vice President and   1998     225,000         70,830        -0-         -0-           -0-      292,950      11,250(3)
President of Kaiser            1997     225,000        125,550        -0-         -0-           -0-          -0-      11,250(3)
Fabricated Products

Joseph A. Bonn                 1999     259,585         78,721(8)     -0-         -0-       163,190       79,760      12,979(3)
Vice President, Commodities    1998     235,300         89,560        -0-         -0-           -0-       82,898      11,765(3)
Marketing, Corporate           1997     235,300        100,000        -0-         -0-           -0-       40,550      11,765(3)
Planning and Development
</TABLE>



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

(1)  Excludes perquisites and other personal benefits because the aggregate
     amount of such compensation does not exceed the lesser of $50,000 or 10% of
     the total of annual salary and bonus reported.

(2)  The long-term component of the Company's incentive compensation program in
     effect for the periods covered above provides incentive compensation based
     on performance against goals over rolling three-year periods. Awards
     generally were made 57% in shares of KAC Common Stock and 43% in cash for
     the performance periods 1995-1997 and 1996-1998. For the performance period
     1997-1999, awards generally were made entirely in shares of KAC Common
     Stock. The aggregate number of shares distributed was based on the average
     closing price of KAC Common Stock during the last December of the
     performance period for the performance periods 1995-1997 and 1996-1998. For
     the 1997-1999 performance period, one-half of the aggregate number of
     shares to be distributed is based on the average closing price of KAC
     Common Stock during the last December of the performance period; the other
     half is based on a target price of $15.00 per share. Awards are generally
     paid in two equal installments: the first during the year following the end
     of the three-year performance period and the second during the following
     year. Payment of the second installment is generally conditioned on
     continued employment. If a participant voluntarily terminates his or her
     employment for any reason other than death, disability or retirement, any
     unmade payments are forfeited. Distribution of the first installment of the
     1997-1999 award to corporate officers was deferred until KAC's net income,
     as adjusted for certain factors, was positive for a fiscal quarter. KAC's
     net income, as adjusted, for the first quarter of 2000 satisfied this
     condition. Therefore, the first installment was paid in April 2000.
     Pursuant to a separate agreement, the full amount of Mr. Hockema's award
     for the 1997-1999 performance period was paid in cash at the time the first
     installment of awards for that period was paid. The amounts indicated in
     the Summary Compensation Table reflect the

                                      -13-

<PAGE>   17



     value of the actual payment received under the program during the year
     indicated with the stock portion of each amount being based on the market
     value on the date of distribution. Total awards for the 1995-1997,
     1996-1998 and 1997-1999 periods were $362,136, $250,000 and $47,600 for Mr.
     Haymaker; $161,500, $150,000 and $33,925 for Mr. Milchovich; $164,900,
     $120,000 and $22,081 for Mr. La Duc; $292,950, $165,270 and $235,600 for
     Mr. Hockema; and $90,965, $92,580 and $13,395 for Mr. Bonn, respectively.
     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 $28,450, $28,179 and $24,704 for Mr.
     Haymaker; $25,925, $20,979 and $13,604 for Mr. Milchovich; $17,908, $16,000
     and $13,000 for Mr. La Duc; $13,250, $11,250 and $11,250 for Mr. Hockema;
     and $12,979, $11,765 and $11,765 for Mr. Bonn under the Kaiser Savings Plan
     and Kaiser Supplemental Benefits Plan (each as defined below) for 1999,
     1998 and 1997, respectively

(4)  Includes moving-related items of $363,595 and $4,192 for Mr. Milchovich
     for 1999 and 1997.

(5)  Includes $75,000 (to be paid over a three-year period) for 1999, and
     $50,000 (to be paid over a two-year period) for each of 1998 and 1997,
     respectively, which will be reimbursed by MAXXAM.

(6)  In 1998, Mr. Haymaker received two stock option grants under the 1997
     Omnibus Plan which together exceeded the intended limit of 500,000 shares.
     A proportionate amount of each of the 1998 grants was canceled to bring
     them within the 500,000 share limit. The amount shown in column (g) of the
     table reflects the cancellations which occurred in 2000. Mr. Haymaker
     received option grants in 2000 equal to the canceled portions of the 1998
     grants (169,000 shares in the aggregate) which contain terms (including
     exercise price) designed to replicate the provisions of the 1998 grants.

(7)  In each of 1998 and 1999 Mr. Milchovich received a stock option grant under
     the 1997 Omnibus Plan which exceeded the intended limit of 500,000 shares.
     A portion of each grant was canceled to bring it within the 500,000 share
     limit, and the amounts shown in column (g) of the table reflect the
     cancellations which occurred in 2000. Mr. Milchovich received option grants
     in 2000 equal to the canceled portion of the grants (135,000 shares as to
     1998 and 250,000 shares as to 1999) which contain terms (including exercise
     price) designed to replicate the provisions of the 1998 and 1999 grants.

(8)  Payment of bonus for 1999 was deferred until KAC's net income, as adjusted
     for certain factors, was positive for a fiscal quarter. KAC's net income,
     as adjusted, for the first quarter of 2000 satisfied this condition.

OPTION GRANTS

     The following table sets forth certain information concerning stock options
granted in fiscal year 1999 to each of the Company's named executive officers
who were granted stock options during that period:

<TABLE>
<CAPTION>



                                         INDIVIDUAL GRANTS(1)
- ----------------------------------------------------------------------------------------------------         ---------------
            (a)                     (b)                 (c)                (d)               (e)                 (f)
                                   # OF             % OF TOTAL
                                SECURITIES            OPTIONS
                                UNDERLYING           GRANTED TO         EXERCISE OR                           GRANT DATE
                                  OPTIONS           EMPLOYEES IN        BASE PRICE        EXPIRATION         PRESENT VALUE
       NAME                       GRANTS                1999             ($/SHARE)           DATE                 ($)
- ---------------------           ----------          ------------         -----------      ----------         --------------
<S>                             <C>                     <C>              <C>              <C>                  <C>
Joseph A. Bonn                    163,190               16.9                8.8438         09/09/09            798,000(2)
Raymond J. Milchovich           100,000(3)              10.3                9.5000         06/01/09            455,765(4)
Raymond J. Milchovich           200,000(3)              20.6               12.3500         06/01/09            911,530(4)
Raymond J. Milchovich           200,000(3)              20.6               14.2500         06/01/09            911,530(4)
</TABLE>

- ------------------------------------
(1)  Represents options with respect to shares of KAC Common Stock only.

(2)  Valuation utilizing the Black-Scholes option pricing method with the
     following assumptions: 3-year monthly volatility for KAC Common Stock,
     5.95% risk-free rate (based on U.S. Treasury strip rate on the date of
     grant with a term equal to that of the option), no dividend yield and
     10-year exercise date. No adjustments were made for non-transferability or
     risk of forfeiture.

(3)  See note (7) to the Summary Compensation Table. The amounts shown in column
     (b) and column (c) of this Option Grant Table reflect the cancellation
     which occurred in 2000.

(4)  Valuation based on a targeted gain at achievement of a stock price goal of
     $16.20 for a share of KAC Common Stock, with a ten-year exercise period. No
     adjustments were made for non-transferability or risk of forfeiture.
     One-fifth of these stock options vest on December 31, 2000. An additional
     one-fifth vests on each December 31 thereafter until fully vested.

     The stock options set forth in the above table were granted under the 1997
Omnibus Plan. Each of the foregoing options is exercisable for cash, KAC Common
Stock or a combination thereof. Additional information with respect to the terms
of Mr. Milchovich's grant are set forth below under the caption "Employment
Contracts and Termination of Employment and Change-in-Control Arrangements."


                                      -14-

<PAGE>   18



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 during the fiscal year ended December 31,
1999, by each of the Company's named executive officers, and the 1999 fiscal
year-end value of unexercised options and SARs.

<TABLE>
<CAPTION>


            (a)                  (b)             (c)                 (d)                               (e)
                                                                                               VALUE OF UNEXERCISED
                                                              NUMBER OF UNEXERCISED                IN-THE-MONEY
                                                                  OPTIONS/SARS                     OPTIONS/SARS
                                SHARES                         AT YEAR END (#) (1)             AT FISCAL YEAR-END ($)
                             ACQUIRED ON      VALUE        ---------------------------    -------------------------------
       NAME                  EXERCISE (#)   REALIZED ($)   EXERCISABLE   UNEXERCISABLE     EXERCISABLE     UNEXERCISABLE
- ----------------------      -------------   ------------   -----------   -------------    ------------     --------------
<S>                             <C>          <C>            <C>             <C>              <C>             <C>
George T. Haymaker, Jr          -0-          -0-            275,366(2)      311,334(2)       26,250(2)(3)      --(5)
Raymond J. Milchovich           -0-          -0-            261,200(4)      746,000(4)        --(5)            --(5)
John T. La Duc                  -0-          -0-            196,700         281,250           --(5)            --(5)
                                -0-          -0-              4,000(6)          -0-          59,500(6)           -0-
Jack A. Hockema                 -0-          -0-                -0-             -0-             -0-              -0-
Joseph A. Bonn                  -0-          -0-             62,896         108,794           --(5)            --(5)
</TABLE>

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

(1)  Except as otherwise indicated, all references are to options to purchase
     shares of KAC Common Stock.

(2)  See note (6) to the Summary Compensation Table. The amounts shown in column
     (d) and column (e) of this Option/SAR Exercises and Fiscal Year End Value
     Table reflect the cancellations which occurred in 2000.

(3)  Valued at $7.6875, the closing price of KAC Common Stock on December 31,
     1999, less the exercise price.

(4)  See note (7) to the Summary Compensation Table. The amounts shown in column
     (d) of this Option/SAR Exercises and Fiscal Year End Value Table reflect
     the cancellations which occurred in 2000.

(5)  Valued at $7.6875, the closing price of KAC Common Stock on December 31,
     1999, less the exercise price. No value is shown because the exercise price
     is higher than the year-end closing price.

(6)  Represents SARs relating to MAXXAM common stock. Valued at $42.875 per
     share, the closing price of MAXXAM common stock on December 31, 1999, less
     the 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.



                                      -15-

<PAGE>   19



LONG-TERM INCENTIVE PLAN AWARDS TABLE

      Each of the Company's named executive officers received a distribution in
1999 under the long-term component of the Company's incentive compensation
program for the 1995-1997 and 1996-1998 three-year, long-term performance
periods. The following table and accompanying footnotes describe the non-cash
distributions received by each of the Company's named executive officers in
1999.

<TABLE>
<CAPTION>

                                                                                      ESTIMATED FUTURE PAYOUTS
                                                                                UNDER NON-STOCK PRICE BASED PLANS(5)
                                                                            -------------------------------------------
             (a)                       (b)                 (c)                (d)               (e)               (f)
                                                       PERFORMANCE OR
                                                    OTHER PERIODS UNTIL
                                     NUMBER OF          MATURATION
             NAME                    SHARES(1)           OR PAYOUT          THRESHOLD           TARGET           MAXIMUM
- ------------------------------  ------------------  -------------------     ---------           ------           -------
<S>                                 <C>                 <C>                 <C>                 <C>              <C>
George T. Haymaker, Jr              10,887(2)                  --             --                  --                  --
                                    13,097(3)                  --(4)          --                  --                  --
Raymond J. Milchovich                4,855(2)                  --             --                  --                  --
                                     7,858(3)                  --(4)          --                  --                  --
John T. La Duc                       4,957(2)                  --             --                  --                  --
                                     6,286(3)                  --(4)          --                  --                  --
Jack A. Hockema                         --                     --             --                  --                  --
                                        --                     --             --                  --                  --
Joseph A. Bonn                       2,734(2)                  --             --                  --                  --
                                     4,850(3)                  --(4)          --                  --                  --
</TABLE>

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

(1)  Represents shares of KAC Common Stock only.

(2)  Represents the stock portion of the second installment of long-term
     incentive award distributed in April 1999 in connection with the 1995-1997
     three-year, long-term performance period. The average closing price of KAC
     Common Stock during December 1997 was $9.48 per share. The total awards for
     the 1995-1997 long-term performance period for Messrs. Haymaker,
     Milchovich, La Duc, and Bonn were $362,136, $161,500, $164,900, and
     $90,965, respectively.

(3)  Represents the stock portion of the first installment of long-term
     incentive award distributed in April 1999 in connection with the 1996-1998
     three-year, long-term performance period. The average closing price of KAC
     Common Stock during December 1998 was $5.44 per share. The total awards for
     the 1996-1998 long-term performance period for Messrs. Haymaker,
     Milchovich, La Duc, and Bonn were $250,000, $150,000, $120,000 and $92,580,
     respectively.

(4)  Payment of the second installment for the 1996-1998 long-term performance
     period was conditioned on continued employment. The second installment was
     distributed in March 2000.

(5)  All payments in connection with the 1995-1997 and 1996-1998 three-year,
     long-term performance periods have been made. As more fully described in
     note (2) to the Summary Compensation Table above, the total award for the
     1997-1999 three-year, long-term performance period has been determined.
     Distribution of the first installment of the 1997-1999 award to corporate
     officers was deferred until KAC's net income, as adjusted for certain
     factors, was positive for a fiscal quarter. KAC's net income, as adjusted,
     for the first quarter of 2000 satisfied this condition. Therefore, the
     first installment was made in April 2000, and the second installment will,
     subject to certain conditions, be distributed in 2001.

     The amount of the awards earned for a performance period are dependent upon
the level of satisfaction of performance criteria established for that period.
During the 1995-1997 and 1996-1998 performance periods, target incentives were
based on the return on assets employed in the business. During the 1997-1999
performance period, target incentives were based upon earnings per share targets
established in 1997. Additional information with respect to long-term incentive
compensation awarded to the Company's named executive officers, including
information with respect to the 1997-1999 performance period, is set forth above
in the Summary Compensation Table, including note (2) to the Summary
Compensation Table, and below in the Report of the Compensation Committees on
Executive Compensation.


                                      -16-

<PAGE>   20



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>


                                                YEARS OF SERVICE
  AVERAGE ANNUAL     ------------------------------------------------------------------------
   REMUNERATION           15            20             25             30             35
  --------------     -----------   ------------   ------------    ------------ --------------

<S>                    <C>            <C>           <C>            <C>            <C>
   $  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, Hockema and Bonn had 6.7, 19.6, 30.3, 7.9
and 32.5 years of credited service, respectively, on December 31, 1999. 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). As more fully
described below under the caption "Employment Contracts and Termination of
Employment and Change-in-Control Arrangements," Mr. Haymaker's employment
agreement provided for the payment to him of an additional unfunded
non-qualified supplemental retirement benefit, which benefit in the amount of
$2,513,451 was paid to him in 2000 following his retirement at the end of 1999.

     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.


                                      -17-

<PAGE>   21


     Kaiser Supplemental Benefits Plan

     The Company maintains an unfunded, non-qualified Supplemental Benefits Plan
(the "Kaiser Supplemental Benefits Plan"), the purpose of which is to restore
benefits which would otherwise be paid from the Kaiser Retirement Plan or the
Supplemental Savings and Retirement Plan, a qualified Section 401(k) plan (the
"Kaiser Savings Plan"), were it not for the Section 401(a)(17) and Section 415
limitations imposed by the Code. Participation in the Kaiser Supplemental
Benefits Plan includes all employees of the Company and its subsidiaries whose
benefits under the Kaiser Retirement Plan and Kaiser Savings Plan are likely to
be affected by such limitations imposed by the Code. Eligible participants are
entitled to receive the equivalent of the Kaiser Retirement Plan and Kaiser
Savings Plan benefits which they may be prevented from receiving under those
plans because of such Code limitations. In 2000, following his retirement at the
end of 1999, Mr. Haymaker received payment of this supplemental benefit in the
amount of $681,281.

     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, Hockema
and Bonn under the policy if they had been involuntarily terminated on December
31, 1999, would have been $94,833, $262,500, $242,667, $55,208 and $180,000,
respectively.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

     George T. Haymaker, Jr.

     On April 1, 1993, the Company and KAC entered into an employment agreement
with Mr. Haymaker, pursuant to which he served as Chairman and Chief Executive
Officer of the Company and KAC. Mr. Haymaker's employment agreement, as amended,
terminated in December 1999 and provided for an annual base salary of not less
than $569,000, and a cumulative bonus target for 1999 of $1,245,000 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,
$395,000 was attributable to Mr. Haymaker's short-term incentive target and
$850,000 was attributable to his long-term incentive target for the three-year
period ending December 31, 1999.

     Mr. Haymaker's employment agreement provided that, in the event of a change
of control of the Company or KAC which, within one year thereafter, adversely
affected Mr. Haymaker's title, position, duties, responsibilities or
compensation, he could 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.

     In addition, under this employment agreement, Mr. Haymaker vested 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 (6.7 years) and a
prior employer (25 years), less his pension from that prior employer and any
pension benefits from the Company. Mr. Haymaker was fully vested under this
provision at the end of 1999. In 2000, following his retirement at the end of
1999, Mr. Haymaker received payment of this supplemental benefit together with
his other retirement benefits from the Company.

     Raymond J. Milchovich

     Mr. Milchovich and the Company entered into an employment agreement
effective June 1, 1999. Pursuant to the terms of the agreement, Mr. Milchovich
is entitled to a base salary of not less than $630,000 for 2000, $692,000 for
2001 and $750,000 for 2002. This amount is reviewed annually by the Section
162(m) Committee to evaluate Mr. Milchovich's performance, and in any event on
and after January 1, 2003, will be adjusted for inflation consistent with the
general program of increases for other executives and management employees.

     Mr. Milchovich's agreement establishes a target bonus equal to 80% of base
salary per year, which will be payable based on the attainment by the Company of
the short-term bonus plan objectives under the Company's executive bonus plan
for such year, as such objectives are agreed upon annually consistent with the
Company's business plan for the relevant year.

                                      -18-

<PAGE>   22



     Under the terms of the agreement, Mr. Milchovich received in 1999 a stock
option grant to purchase 750,000 shares of KAC Common Stock under the 1997
Omnibus Plan. Twenty percent (20%) of such grant, or 150,000 shares, was granted
with an exercise price of $9.50 per share, forty percent (40%) of such grant, or
300,000 shares, was granted with an exercise price of $12.35 per share, and
forty percent (40%) of such grant, or 300,000 shares, was granted with an
exercise price of $14.25 per share. The option has an exercise period of ten
years from the date of the grant. The option is in lieu of any payment of
long-term incentive compensation under the executive bonus plan for the five
year period beginning January 1, 2000, although Mr. Milchovich remains eligible
for additional option grants at the discretion of the Section 162(m) Committee.
Such grant generally will vest at the rate of 20% per year, beginning on January
1, 2001, although vesting may be accelerated in certain circumstances. The 1999
stock option grant to Mr. Milchovich exceeded the intended limit of 500,000
shares. A portion of the 1999 grant was canceled in 2000 to bring it within the
500,000 share limit. Mr. Milchovich received an option grant in 2000 equal to
the canceled portion of the 1999 grant, which contains terms (including exercise
price) designed to replicate the provisions of the 1999 grant.

     Mr. Milchovich's agreement provides that upon the termination of his
employment for any reason other than termination for cause, his acceptance of
any offer of employment with an affiliate of the Company, or a voluntary
termination by Mr. Milchovich for other than good reason, then Mr. Milchovich
would be entitled to receive the following benefits: (A) an early retirement
lump sum payment, equal to the excess, if any, of the sum of (i) the lump sum
benefit from the Kaiser Retirement Plan that Mr. Milchovich would have been
entitled to as of the date of his actual termination based upon the terms of the
Kaiser Retirement Plan as in effect June 1, 1999, and as if he qualified for a
full early retirement pension, and (ii) the lump sum benefit from the Kaiser
Supplemental Benefits Plan based upon the terms of that Plan as in effect June
1, 1999, and as if he qualified for a Kaiser Retirement Plan full early
retirement pension, over (iii) an amount equal to the lump sum actuarial
equivalent of Mr. Milchovich's actual benefit payable from the Kaiser Retirement
Plan on account of his actual termination, plus the actual benefit payable from
the Kaiser Supplemental Benefits Plan on account of his actual termination; (B)
full health benefits as if Mr. Milchovich had qualified for an early retirement
pension; (C) a lump sum equal to Mr. Milchovich's base salary as of the date of
his termination for a period equal to the greater of (x) the number of months
remaining in the employment period, or (y) two years, plus an amount equal to
Mr. Milchovich's target annual bonus for the year of termination; and (D) all
unvested stock options held by Mr. Milchovich on the date of such termination
that would have vested during his employment period would immediately vest and
become exercisable in full for the remaining portion of the applicable period.
In the event of a change in control, the terms and conditions of Mr.
Milchovich's agreement would continue in full force and effect during the period
that he would continue to provide services; provided, in the event of a
termination of his employment by the Company other than for cause, or in the
event Mr. Milchovich would terminate his employment for any reason within twelve
(12) months following a change in control, the foregoing benefits would become
due and payable.

     John T. La Duc

     Mr. La Duc and the Company entered into a five-year employment agreement
effective January 1, 1998. Pursuant to the terms of the agreement, Mr. La Duc
was entitled to a base salary of $350,000 per year effective June 1, 1998. This
amount is reviewed annually to evaluate Mr. La Duc's performance, and in any
event will be adjusted for inflation consistent with the general program of
increases for other executives and management employees. Mr. La Duc's agreement
established a 1998 annual target bonus of $200,000 (subject to adjustment for
inflation) payable upon the Company achieving short-term objectives under its
executive bonus plan which are to be agreed upon annually and otherwise
consistent with the Company's business plan.

      Pursuant to the terms of the agreement, Mr. La Duc received in 1998 a
grant under the 1997 Omnibus Plan of options to purchase 468,750 shares of KAC
Common Stock at an exercise price of $9.3125 per share. This grant was intended
to have a value at the date of grant equivalent to a value of five times Mr. La
Duc's annual long-term incentive target of $465,000 and to be in lieu of any
payment of long-term incentive compensation under the Company's executive bonus
plan for the five-year period beginning January 1, 1998, although Mr. La Duc
remains eligible for additional option grants. Such options generally vest at
the rate of 20% per year, beginning on December 31, 1998, with an additional 20%
vesting each December 31, thereafter until fully vested, although vesting may be
accelerated in certain circumstances.

     Mr. La Duc's agreement provides that upon the termination of his employment
for any reason other than termination for cause, his acceptance of any offer of
employment with an affiliate of the Company, or a voluntary termination by Mr.
La Duc for other than good reason, or if Mr. La Duc's employment terminates by
the expiration of the employment


                                      -19-
<PAGE>   23


period under the agreement without an offer for continued employment by the
Company for a position of responsibility comparable to that held by Mr. La Duc
at the beginning of the employment period and on substantially the same or
improved terms and conditions, then Mr. La Duc would be entitled to receive the
following benefits: (A) an early retirement lump sum payment, equal to the
excess, if any, of the sum of (i) the lump sum benefit from the Kaiser
Retirement Plan that Mr. La Duc would have been entitled to as of the date of
his actual termination based upon the terms of the Kaiser Retirement Plan as in
effect January 1, 1998, and as if he qualified for a full early retirement
pension, and (ii) the lump sum benefit from the Kaiser Supplemental Benefits
Plan based upon the terms of that Plan as in effect January 1, 1998, and as if
he qualified for a Kaiser Retirement Plan full early retirement pension, over
(iii) an amount equal to the lump sum actuarial equivalent of Mr. La Duc's
actual benefit payable from the Kaiser Retirement Plan on account of his actual
termination, plus the actual benefit payable from the Kaiser Supplemental
Benefits Plan on account of his actual termination; (B) full health benefits as
if Mr. La Duc had qualified for an early retirement pension; (C) a lump sum
equal to Mr. La Duc's base salary as of the date of his termination for a period
equal to the greater of (x) the number of months remaining in the employment
period, or (y) two years, plus an amount equal to Mr. La Duc's target annual
bonus for the year of termination (but no less than $200,000); and (D) all
unvested stock options held by Mr. La Duc on the date of such termination that
would have vested during his employment period would immediately vest and become
exercisable in full for the remaining portion of the period of five years from
the date of grant. In the event of a change in control, the terms and conditions
of Mr. La Duc's agreement would continue in full force and effect during the
period that he would continue to provide services; provided, in the event of a
termination of his employment by the Company other than for cause, or in the
event Mr. La Duc would terminate his employment for any reason within twelve
(12) months following a change in control, the foregoing benefits would become
due and payable.

     Jack A. Hockema

     Mr. Hockema and the Company entered into an employment agreement effective
September 1, 1996, which, as amended, will expire December 31, 2000. Under the
agreement, as of January 1, 1999, Mr. Hockema's base salary was $265,000. He
also participated in the engineered products business unit 1999 annual incentive
plan with an annual target incentive opportunity of $135,000 and the engineered
products business unit 1997-1999 long-term incentive plan with an incentive
opportunity of $200,000.

     Under the agreement, Mr. Hockema also is eligible for a "growing the
business bonus" based upon increasing earnings before interest and taxes during
the period January 1, 1999 through December 31, 2000. Mr. Hockema is entitled to
participate in the Company's pension and profit-sharing plans, and his prior
service as an employee of the Company is credited to him for eligibility and
participation purposes. The agreement provides that Mr. Hockema participates in
the Kaiser Severance Protection and Change of Control Benefits Program.

     The agreement may be terminated by either Mr. Hockema or the Company
without cause on 30 days written notice, and the Company may terminate the
agreement for cause without advance notice. If the Company terminates the
agreement, any incentive compensation due will be prorated. If Mr. Hockema
terminates the agreement, he will not be eligible for incentives in the year in
which he terminates.

     Effective January 24, 2000, Mr. Hockema was elected Executive Vice
President, and President of Kaiser Fabricated Products, of the Company. In
connection with that election, new compensation arrangements for 2000 and 2001
were approved by the Section 162(m) Committee for Mr. Hockema. The compensation
arrangements have three components: base pay, short-term incentive, and
long-term incentive. Mr. Hockema's base pay for 2000 was set at $315,000. Mr.
Hockema's short-term incentive for 2000 has two components. The first component
has a target amount of $135,000, and any award under the first component will be
made based on that target amount and on the performance of the engineered
products business unit. The second component has a target amount of $30,000, and
any award will be made based on that target amount and on the performance of the
flat-rolled products business unit as determined by the Chief Executive Officer
of the Company.

     Mr. Hockema's long-term incentive for 2000 has two components. The first
component has a target amount of $200,000, and any award under the first
component will be made based on that target amount and on the performance of the
engineered products business unit. The second component has a value of $135,000,
which award was made in 2000 in the form of a grant of a stock option to
purchase shares of KAC Common Stock.

     Mr. Hockema will qualify for a cash bonus of $500,000 in the event of the
sale of a specified portion of the business units under his management on or
before July 1, 2002. Payment of such a bonus would be made in three equal annual


                                      -20-

<PAGE>   24



installments, with the first payment occurring within 30 days of the closing of
such sale. Mr. Hockema's base pay for 2001 was set at $375,000. The target
amounts of Mr. Hockema's short-term incentive and long-term incentive for 2001
were established at $200,000 and $475,000, respectively; however, the other
terms and conditions of such incentive awards have not been determined.

     Kaiser Severance Protection and Change of Control Benefits Program

     In 1998, the Company and KAC implemented the Kaiser Severance Protection
and Change of Control Benefits Program (the "Program") in order to provide
certain selected executive officers of the Company and KAC, including Messrs.
Hockema and Bonn, and key employees of the Company (collectively,
"Participants") with (i) incentives intended to increase the likelihood of
retaining the services of the Participants and/or (ii) appropriate protection in
the event of a job loss or change of control. The Program will generally remain
in effect through December 31, 2000.

     The three components of the Program, each of which is described more fully
below, consist of (i) severance payments and benefits in the event of
termination, (ii) retention payments conditioned upon continued employment
through specified dates, and (iii) options relating to KAC Common Stock. Under
the Program, the Company and KAC have the sole discretion to determine which
persons will participate in the Program and the level of participation. Not all
components of the Program were made available to all Participants.

     Selected Participants are eligible for severance benefits under the Program
upon termination of employment for any reason other than (i) the voluntary
resignation or retirement of the Participant, (ii) the discharge of the
Participant for serious cause or other reason prejudicial to the Company or KAC,
(iii) the Participant becoming eligible for sick leave, long-term disability or
full early disability benefits under the Kaiser Retirement Plan, (iv) the
Participant's refusal to accept another suitable position with the Company or
KAC, or (v) the Participant's death. The benefits payable generally consist of a
lump sum cash payment ranging from six months to one year of base salary
(including, in some instances, prorated incentive awards based upon designated
incentive targets) less whatever severance benefits the Participant would
otherwise be eligible to receive under the Kaiser Termination Payment Policy.
Participants may also be entitled under the Program to continued medical,
dental, life and accidental death and disability coverage for designated periods
after termination.

     In lieu of the severance benefits described above, selected Participants
are also eligible for severance benefits in the event the Participant's
employment terminates or constructively terminates due to a change of control or
significant restructuring (collectively, a "Fundamental Change") during a period
which commences ninety (90) days prior to a Fundamental Change and ends on the
first anniversary of the Fundamental Change. These benefits are not available if
(i) the purchaser, new controlling entity, the Company or KAC offer the
Participant suitable employment in a substantially similar capacity at the
Participant's current level of compensation (regardless of whether the
Participant accepts or rejects the suitable position), (ii) the Participant
voluntarily resigns or is terminated, (iii) the Participant is discharged for
serious cause or other reason prejudicial to the Company or KAC, (iv) the
Participant becomes eligible within ninety (90) days prior to the Fundamental
Change for sick leave, long-term disability or full early disability benefits
under the Kaiser Retirement Plan, or (v) the Participant dies. If a Participant
fails to qualify for severance benefits under the Program as a result of a
termination of the Participant's employment due to a Fundamental Change, the
Participant will also fail to qualify for the severance benefits described above
in the preceding paragraph.

     The benefits payable under the Program as a result of a termination of
employment due to a Fundamental Change generally consist of a lump sum cash
payment in an amount ranging from twelve months to two years of base salary
(including, in some instances, prorated incentive awards based upon designated
incentive targets) less whatever severance benefits the Participant would
otherwise be eligible to receive under the Kaiser Termination Payment Policy.
Participants may also be entitled under the Program to continued medical,
dental, life and accidental death and disability coverage for designated periods
after termination due to a Fundamental Change.

     Under the Program, selected Participants are also eligible to receive
retention payments conditioned upon continued employment as of a designated
date. In each instance, the retention payment is also generally payable in the
event a Participant's employment is terminated prior to the designated date
unless the termination is for any of the reasons described above which preclude
severance payments under the Program. Retention payments under the Program
generally consist of a lump sum cash payment and are generally based upon six
months of salary (including, in some instances, prorated incentive awards based
upon designated incentive targets).

                                      -21-

<PAGE>   25




     Selected Participants are also eligible under the Program to receive
options to purchase shares of KAC Common Stock. The number of shares of KAC
Common Stock subject to such options and the specific terms of such options vary
depending upon the level of responsibility and seniority of the Participant.
Notwithstanding the foregoing, such options generally (i) replace the long-term
incentive compensation otherwise applicable to the Participant receiving the
options for designated long-term incentive periods beginning on or after January
1, 1999, (ii) expire five years after the date of grant, (iii) are based upon
the market price of KAC Common Stock on the date of grant, (iv) vest over a
period of three or five years, and (v) terminate upon the termination of
employment for cause.

     Except as otherwise noted, there are no employment contracts between the
Company or any of its subsidiaries and any of the Company's named executive
officers. Similarly, except as otherwise noted, 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.


                      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), 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 1999.

     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 1999, 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, respectively (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
performance of the Company as a whole, and the area of direct responsibility of
each executive, in creating economic value. 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 exceeded,
potentially superior to, that available from employers with whom the Company and
its businesses compete.

     Structure. Executive compensation for 1999 consisted of a combination of
base salary, short-term incentives based on performance during 1999, long-term
incentives based on performance over the 1997-1999 three-year performance
period, employee benefits and executive perquisites. Base salaries, together
with short and long-term incentive targets, were designed to fall near the 50th
percentile (mid-point) of the market. As a result, the combination of base pay
and incentive compensation allowed executive officers to potentially earn less,
the same as or more than the total compensation opportunity offered by competing
employers depending on Company performance.

     For 1999, the portion of executive compensation allocated to base
compensation ranged from approximately 27% to approximately 44% for the named
executive officers, with the portion allocated to incentive compensation in each
case generally increasing with position responsibility. For the named executive
officers other than Mr. Hockema, the incentive targets for 1999 were allocated
30% to short-term targets and 70% to long-term targets, and for Mr. Hockema the
incentive targets for 1999 were allocated 40% to short-term targets and 60% to
long-term targets. This structure reflected the Company's compensation
philosophy by structuring a major portion of each executive's total compensation

                                      -22-

<PAGE>   26


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.

COMPONENTS OF EXECUTIVE OFFICER COMPENSATION FOR 1999

     Base Salaries. Adjustments to the base salary of certain executive officers
were made during 1999 as necessary to (i) reflect market related adjustments and
increasing responsibilities assumed either as the result of promotions or
additional assignments during the year and (ii) increase the likelihood of
retaining such executive officers as the Company pursues its strategy for
creating stockholder value.

     Short-Term Incentive. For corporate executive officers, short-term
incentive awards for 1999 were generally based on the Company's return on net
assets, adjusted to trend line metal prices and for certain non-recurring
events. This metric was used in 1997, 1998 and 1999 to measure the Company's
progress toward the $120 million profit improvement program which was
established in 1997. Applying this metric for 1999 resulted in calculated awards
for corporate executive officers of just under 47% of the target short-term
incentive for those officers. As noted above, short-term incentive targets for
the most senior executives represented approximately 30% of total incentive
targets, while the long-term incentive targets described below represented
approximately 70% of total incentive targets.

     The 1999 awards take into consideration the significant impact of adverse
events on the Company's operating environment and performance, including the low
price of primary aluminum and alumina, primarily in the first half of 1999; the
sharp decline in demand and pricing of heat-treat products for aerospace and
other markets; the explosion at the Gramercy alumina refinery; and the
write-down of the value of the Micromill.

     Management has recommended, and the Committees have approved, certain
changes in short-term incentive metrics for corporate executive officers to more
closely align short-term incentives with "as reported" results and the ability
of the Company to pay. See "Future Incentive Programs," below.

     For business unit presidents, 1999 short-term incentives were based on
business unit earnings before interest and taxes. Two business units, engineered
products and primary aluminum, exceeded target levels, resulting in calculated
short-term awards of 157% of target for engineered products and 121% of target
for primary aluminum. In two business units, flat-rolled products and alumina,
earnings before interest and taxes fell below threshold levels, and those
business unit presidents received no short-term incentive for 1999.

     Long-Term Incentive. The year 1999 was the last year of the three-year
rolling long-term incentive programs initiated in 1995 for corporate executive
officers. The last program covered the performance period 1997-1999, and was
based on earnings per share targets established in 1997. For corporate executive
officers, these rolling three-year programs were replaced beginning in 1998 with
stock option grants, in the belief that stock options align the long-term
interests of management with shareholders more effectively than other
performance metrics. For business unit presidents, these programs were replaced
with programs for the management of each business unit based on performance of
that business unit, measured generally by earnings before interest and taxes
over a three year period.

     Awards under the 1997-1999 program averaged just under 6% of long-term
incentive targets for corporate executive officers, reflecting the profitable
period in 1997 and the first three quarters of 1998, largely offset by the
effect in the fourth quarter of 1998 of the labor dispute with the United
Steelworkers of America, the low price of primary aluminum and alumina in the
fourth quarter of 1998 and first half of 1999, the sharp decline in demand and
pricing for heat-treat products for the aerospace and other markets in 1999, the
explosion at the Gramercy alumina refinery in 1999, and the write-downs of the
value of the Micromill in 1998 and 1999. As noted above, long-term incentive
targets represent 70% of total incentive targets for most senior executive
officers. Awards under the 1997-1999 program, in

                                      -23-

<PAGE>   27



general, will be paid in two installments; the first installment to corporate
officers was made in April 2000, and the second installment will, subject to
certain conditions, be distributed in 2001. Pursuant to a separate agreement,
the full amount of Mr. Hockema's award for the 1997-1999 performance period was
paid in cash at the time such first installment was paid.

     The business unit long-term incentive programs were established in 1997 and
1998. Three of the four business unit programs are based on earnings before
interest and taxes, with the targets for the primary aluminum business unit and
the alumina business unit adjusted to trend line prices. The program for the
engineered products business unit is based on economic value added over the cost
of capital. Three of the four business units--primary aluminum, alumina, and
engineered products--established three-year rolling programs, while the
flat-rolled products business unit established a fixed three-year program for
the period 1998-2000. Awards under the 1997-1999 program for the alumina
business unit were just over 1.0 times target and for the primary aluminum
business unit were approximately 80% of target. Mr. Hockema participated in the
engineered products business unit program for the 1997-1999 period, and awards
under that program were just under 118% of target.

     Additional information with respect to the long-term component of executive
compensation is set forth above in the Summary Compensation Table and Long-Term
Incentive Awards Table.

FUTURE INCENTIVE PROGRAMS

     Although total incentives calculated for senior corporate executives were
approximately 18% of total incentive targets, management has recommended, and
the Committees have approved, certain changes in future incentive award
determinations. Future short-term incentives for corporate executives will be
awarded based on annual operating income as reported, except for certain
non-cash and non-recurring items. The Committees believe that this metric will
better reflect (i) the required performance from management in generating the
needed earnings and cash to invest in opportunities for value creation available
to the Company, and (ii) the Company's ability to pay incentives to executive
management, than the previous metric of return on net assets normalized to trend
line metal prices and for other non- recurring factors. As previously discussed,
the opportunity to earn long-term incentives will be provided through stock
option grants, with the amount of the grant equal to the long-term incentive
target for the executive.

EMPLOYMENT AGREEMENTS

      From time to time and for various reasons, management and the Board 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 and, if
appropriate, the Section 162(m) 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
1999, Messrs. Haymaker, Milchovich, La Duc, and Hockema were employed under the
employment agreements discussed above under the caption "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 1999 until his retirement at the age of 62 on
December 31, 1999. During 1999, Mr. Haymaker was employed pursuant to a written
employment agreement which is described above under the caption "Employment
Contracts and Termination of Employment and Change-in-Control Arrangements." Mr.
Haymaker's base salary remained with no increase at $569,000 in 1999. During
1999, the Company's performance fell below 1999 performance goals. As a result,
the short-term incentive award earned by Mr. Haymaker in 1999 was limited to
$184,070, or approximately 47% of his targeted amount of $395,000. Similarly,
the Company's performance during the 1997-1999 long-term incentive compensation
performance period fell below performance goals. As a result, the long-term
award value earned by Mr. Haymaker for the 1997-1999 three year long-term
performance period was $47,600, or approximately 6% of his targeted amount of
$850,000.


                                      -24-

<PAGE>   28

COMPENSATION BY MAXXAM

     Mr. La Duc received a portion of his compensation during 1999 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 the
Company, 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 their Chief Executive Officers and four
other most highly compensated executive officers. Qualifying performance-based
compensation will not be subject to the deduction limit if certain requirements
are met. Compensation earned by or awarded to certain senior executives whose
compensation is potentially subject to the limitations imposed by Section 162(m)
of the Code is intended to comply with the provisions of Section 162(m) of the
Code. The Kaiser 1993 Omnibus Stock Incentive Plan (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 awards under the
1993 Omnibus Plan and 1997 Omnibus Plan that are intended to comply with Section
162(m) are administered by the Section 162(m) Committee. Messrs. Cruikshank
(Chairman) and Woods currently serve as members of the Section 162(m) Committee
and for purposes of Section 162(m) are qualifying directors. The Section 162(m)
Committee believes that awards to senior executives whose compensation may be
subject to Section 162(m) of the Code should be tax deductible under that rule.

<TABLE>


<S>                                                                   <C>
Section 162(m) Compensation                                           Compensation Policy Committee of the Board
Committee of the Board of Directors                                   of Directors


Robert J. Cruikshank, Chairman                                        Ezra G. Levin, Chairman
James D. Woods                                                        Robert J. Cruikshank
                                                                      James D. Woods
</TABLE>


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     No member of the Policy Committee or the Section 162(m) Committee was,
during the 1999 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 1999 and is also a
partner in the law firm of Kramer Levin Naftalis & Frankel LLP, which provided
legal services to KAC, the Company and the Company's subsidiaries during 1999.

     During the Company's 1999 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, one of whose executive officers served as a director of the Company.

                                      -25-

<PAGE>   29
                              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. Payments or refunds for periods prior to
July 1, 1993 related to foreign jurisdictions could still be required pursuant
to the Company's tax allocation agreements with MAXXAM. In accordance with the
credit agreement entered into by the Company and KAC, any such payments to
MAXXAM by the Company would require lender approval, except in certain
circumstances. The tax allocation agreements with MAXXAM terminated pursuant to
their 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 relevant
tax allocation agreements, MAXXAM indemnifies the Company to the extent the tax
liability exceeds amounts payable by the Company under such agreements.

     The Company and MAXXAM have an arrangement pursuant to which they reimburse
each other for certain allocable costs associated with the performance of
services by their respective employees. The Company paid a total of
approximately $2.6 million to MAXXAM pursuant to such arrangements and MAXXAM
paid approximately $2.0 million to the Company pursuant to such arrangements in
respect of 1999. 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.

     During 1999, Mr. Milchovich, an executive officer and a director of the
Company and KAC, borrowed $326,368.54 on an interest free basis from the Company
in connection with the purchase of a new home. The loan was repaid in full in
October 1999.

     Mr. Levin, a director of the Company and KAC, is a partner in the law firm
of Kramer Levin Naftalis & Frankel LLP, 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. that was dissolved effective December 31, 1997.

     Mr. Haymaker's son, George T. Haymaker III, was an executive officer of
Coast Aluminum and Architectural ("Coast"), a distributor of aluminum products,
including products manufactured by the Company, until December 1999. During
1999, Coast purchased approximately $19 million of products from the Company.


             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     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 other
Form 5s 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, the Company's independent public accountants, has
completed its audit with respect to the Company's 1999 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 Annual Meeting, if they so
desire.

                                      -26-

<PAGE>   30
STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING OF STOCKHOLDERS

     Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's annual meeting of stockholders, consistent with
regulations adopted by the Securities and Exchange Commission (the
"Commission"). Proposals submitted for inclusion in the Company's proxy
statement and form of proxy for the 2001 annual meeting of stockholders are
subject to the requirements of Rule 14a-8 of the proxy rules adopted by the
Commission, and must be received by the Company not later than December 29,
2000. Timely submission of a proposal does not necessarily mean that such
proposal will be included. If a stockholder intends to present a proposal for
consideration at the 2001 annual meeting outside of Rule 14a-8, the Company must
receive notice of such proposal on or before March 26, 2001, or such notice will
be considered untimely under Rule 14a-4(c)(1) of the Commission's proxy rules,
and the Company's proxies will have discretionary voting authority with respect
to such proposal, if presented at the meeting, without including information
regarding such proposal in its proxy materials. 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, plus reasonable
out-of-pocket expenses. In addition to the use of mails, proxies may be
solicited by personal interviews, facsimile or telephone.



                                        By Order of the Board of Directors

                                        JOHN WM. NIEMAND II
                                        Secretary
April 28, 2000
Houston, Texas


                                      -27-

<PAGE>   31


<TABLE>
<CAPTION>





                                                                                                  [Company Logo]






<S>                                                                             <C>
================================================================                ===================================================

                TABLE OF CONTENTS                                                           NOTICE OF 2000 ANNUAL MEETING
                                                                                                        AND
Notice of Annual Meeting of Stockholders                                                           PROXY STATEMENT
Proxy Statement
           Election of Directors.....................         3                 ===================================================
           Other Business............................         3
           The Board of Directors and its
              Committees.............................         3
           Executive Officers and Directors..........         6
           Principal Stockholders....................        10
           Executive Compensation....................        13
           Report of the Compensation
              Committees on Executive
              Compensation...........................        22
           Certain Transactions......................        26
           Section 16(a) Beneficial Ownership
              Reporting Compliance...................        26
           Other Matters.............................        26

================================================================





                                                                                                     IMPORTANT
                                                                                         PLEASE SIGN AND DATE YOUR PROXY CARD
                                                                                  AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.


</TABLE>
                                                         SKU KACC - PROXY - 2000

Printed on recycled paper.

<PAGE>   32




                     KAISER ALUMINUM & CHEMICAL CORPORATION
                           5847 SAN FELIPE, SUITE 2600
                              HOUSTON, TEXAS 77057



                         ANNUAL MEETING OF STOCKHOLDERS
                             TO BE HELD JUNE 8, 2000


                              PRE-REGISTRATION FORM

     If you plan to attend the Annual Meeting of Stockholders at 9:00 a.m.,
local time, on Thursday, June 8, 2000, at The Power Center, 12401 South Post
Oak, Houston, Texas, you may use this form to pre-register and expedite your
admission to the meeting. If you choose to pre-register, you will only be
required to verify your identity at the registration table with a driver's
license or other appropriate identification bearing a photograph to enter the
meeting. If you are a Stockholder of record or are the beneficial owner of
shares held under the Kaiser Aluminum USWA Employee Stock Ownership Plan ("USWA
Stock Plan") or the Kaiser Aluminum Salaried Employee Stock Ownership Plan
("Salaried Plan"), please complete and return this form to pre-register. If you
hold your shares through your broker, bank or other nominee, please complete and
return this form accompanied by your brokerage or similar statement
demonstrating that you owned shares of the Company's stock as of the close of
business on April 17, 2000, to pre-register. All Stockholders will still need to
follow the rules and procedures set forth in the Proxy Statement and at the
Annual Meeting in order to vote their shares at the meeting; however, if you are
the beneficial owner of shares under the USWA Stock Plan or the Salaried Plan,
you may direct how those shares will be voted only by completing and returning
to the trustee for such plans the voting direction card provided to you with
your proxy statement for such shares in accordance with the instructions set
forth on such card.

     Please return this Pre-Registration Form, together with proof of ownership
of the Company's stock as of April 17, 2000, if necessary, to: Kaiser Aluminum &
Chemical Corporation, 5847 San Felipe, Suite 2600, Houston, Texas 77057,
Attention: Stockholder Meeting Pre-Registration or by facsimile to
1-877-276-6983. For further information, you may call toll-free 1-877-276-6903.

I plan to attend the Company's Annual Meeting of Stockholders on June 8, 2000.


Name:
     ---------------------------------------------
Street:
      --------------------------------------------
City:
     ---------------------------------------------
State:                    ZIP CODE:
     --------------------          ---------------
Daytime Telephone Number (including area code):
                                                ---------------------
<PAGE>   33
              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 8, 2000

         The undersigned hereby appoints J. Kent Friedman, John T. La Duc,
Raymond J. Milchovich 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 Cumulative (1985 Series A) Preference Stock the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
on June 8, 2000, and at any and all adjournments or postponements thereof.

PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.

                               (SEE REVERSE SIDE)
























                            o FOLD AND DETACH HERE O




<PAGE>   34

<TABLE>

<S>                                <C>             <C>                                                     <C>
                                                                                                            Please mark     [X]
                                                                                                            your votes as
                                                                                                            indicated in
                                                                                                            this example

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.



                                                   NOMINEES: Robert J. Cruikshank, James T. Hackett, George T. Haymaker, Jr.,
                                                   Charles E. Hurwitz, Ezra G. Levin, Raymond J. Milchovich and James D. Woods.

1.  ELECTION OF DIRECTORS.


                                                   To withhold authority to vote for any individual nominee(s) while voting for the
          FOR ALL                                  remainder, write the name of the nominee(s) for which authority is withheld in
          NOMINEES                                 the space below:
         (EXCEPT AS                 WITHHOLD
        MARKED TO THE               FROM ALL
         CONTRARY)                  NOMINEES

           [  ]                       [  ]         --------------------------------------------------------------------------------






2.  IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER            Please sign name(s) exactly as
    MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OR             printed hereon. If stock is held in
    POSTPONEMENTS THEREOF, HEREBY REVOKING ANY DIRECTION HERETOFORE GIVEN BY THE       the name of more than one person,
    UNDERSIGNED.                                                                       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: ___________________, 2000

                                                                                       ---------------------------------
                                                                                       Signature

                                                                                       ---------------------------------
                                                                                       Signature if held jointly

                                                                                       ---------------------------------
                                                                                       Title
</TABLE>










                            o FOLD AND DETACH HERE o



<PAGE>   35



              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 8, 2000

         The undersigned hereby appoints J. Kent Friedman, John T. La Duc,
Raymond J. Milchovich 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 Cumulative (1985 Series B) Preference Stock the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
on June 8, 2000, and at any and all adjournments or postponements thereof.

PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.

                               (SEE REVERSE SIDE)
























                            o FOLD AND DETACH HERE O








<PAGE>   36

<TABLE>

<S>                                <C>             <C>                                                     <C>
                                                                                                            Please mark     [X]
                                                                                                            your votes as
                                                                                                            indicated in
                                                                                                            this example

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.



                                                   NOMINEES: Robert J. Cruikshank, James T. Hackett, George T. Haymaker, Jr.,
                                                   Charles E. Hurwitz, Ezra G. Levin, Raymond J. Milchovich and James D. Woods.

1.  ELECTION OF DIRECTORS.


                                                   To withhold authority to vote for any individual nominee(s) while voting for the
          FOR ALL                                  remainder, write the name of the nominee(s) for which authority is withheld in
          NOMINEES                                 the space below:
         (EXCEPT AS                 WITHHOLD
        MARKED TO THE               FROM ALL
         CONTRARY)                  NOMINEES

           [  ]                       [  ]         --------------------------------------------------------------------------------






2.  IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER            Please sign name(s) exactly as
    MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OR             printed hereon. If stock is held in
    POSTPONEMENTS THEREOF, HEREBY REVOKING ANY DIRECTION HERETOFORE GIVEN BY THE       the name of more than one person,
    UNDERSIGNED.                                                                       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: ____________________, 2000

                                                                                       ---------------------------------
                                                                                       Signature

                                                                                       ---------------------------------
                                                                                       Signature if held jointly

                                                                                       ---------------------------------
                                                                                       Title
</TABLE>


                            o FOLD AND DETACH HERE o

<PAGE>   37



             DIRECTION BY PARTICIPANT TO TRUSTEE OF KAISER ALUMINUM
                 USWA EMPLOYEE STOCK OWNERSHIP PLAN (USWA 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 8, 2000


         The undersigned hereby directs the Trustee of the USWA Plan to vote all
shares (in person or by proxy) allocated to the undersigned's account as of
April 17, 2000, at the Annual Meeting of Stockholders to be held on June 8,
2000, 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 THE
                   ENCLOSED ENVELOPE BY MONDAY, JUNE 5, 2000.

                               (SEE REVERSE SIDE)










                            o FOLD AND DETACH HERE O

May 8, 2000

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 8, 2000. 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 17, 2000. 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 this item, 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 June 5, 2000, 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 your information, enclosed are Kaiser Aluminum's Notice of Annual Meeting of
Stockholders and Proxy Statement and its 1999 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 June 5, 2000.
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>   38

<TABLE>

<S>                                <C>             <C>                                                     <C>
                                                                                                            Please mark     [X]
                                                                                                            your votes as
                                                                                                            indicated in
                                                                                                            this example

THE TRUSTEE OR ITS PROXY IS DIRECTED TO VOTE AS INDICATED BELOW.



                                                   NOMINEES: Robert J. Cruikshank, James T. Hackett, George T. Haymaker, Jr.,
                                                   Charles E. Hurwitz, Ezra G. Levin, Raymond J. Milchovich and James D. Woods.

1.  ELECTION OF DIRECTORS.


                                                   To withhold authority to vote for any individual nominee(s) while voting for the
          FOR ALL                                  remainder, write the name of the nominee(s) for which authority is withheld in
          NOMINEES                                 the space below:
         (EXCEPT AS                 WITHHOLD
        MARKED TO THE               FROM ALL
         CONTRARY)                  NOMINEES

           [  ]                       [  ]         --------------------------------------------------------------------------------






2.  IN THEIR DISCRETION, THE TRUSTEE OR ITS PROXY IS AUTHORIZED TO VOTE UPON           Please sign name(s) exactly as
    SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY                  printed hereon. If stock is held in
    ADJOURNMENTS OR POSTPONEMENTS THEREOF, HEREBY REVOKING ANY DIRECTION               the name of more than one person,
    HERETOFORE GIVEN BY THE UNDERSIGNED.                                               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: ____________________, 2000

                                                                                       ---------------------------------
                                                                                       Signature

                                                                                       ---------------------------------
                                                                                       Signature if held jointly

                                                                                       ---------------------------------
                                                                                       Title

</TABLE>


                            o FOLD AND DETACH HERE O



<PAGE>   39



             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 8, 2000

         The undersigned hereby directs the Trustee of the Salaried Plan to vote
all shares (in person or by proxy) allocated to the undersigned's account as of
April 17, 2000, at the Annual Meeting of Stockholders to be held on June 8,
2000, 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 THE
                   ENCLOSED ENVELOPE BY MONDAY, JUNE 5, 2000.

                               (SEE REVERSE SIDE)
















                            o FOLD AND DETACH HERE O

May 8, 2000

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 8, 2000. 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 17, 2000. 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 this item, 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 June 5, 2000, 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 your information, enclosed are Kaiser Aluminum's Notice of Annual Meeting of
Stockholders and Proxy Statement and its 1999 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 June 5, 2000.
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>   40

<TABLE>

<S>                                <C>             <C>                                                     <C>
                                                                                                            Please mark     [X]
                                                                                                            your votes as
                                                                                                            indicated in
                                                                                                            this example

THE TRUSTEE OR ITS PROXY IS DIRECTED TO VOTE AS INDICATED BELOW.



                                                   NOMINEES: Robert J. Cruikshank, James T. Hackett, George T. Haymaker, Jr.,
                                                   Charles E. Hurwitz, Ezra G. Levin, Raymond J. Milchovich and James D. Woods.

1.  ELECTION OF DIRECTORS.


                                                   To withhold authority to vote for any individual nominee(s) while voting for the
          FOR ALL                                  remainder, write the name of the nominee(s) for which authority is withheld in
          NOMINEES                                 the space below:
         (EXCEPT AS                 WITHHOLD
        MARKED TO THE               FROM ALL
         CONTRARY)                  NOMINEES

           [  ]                       [  ]         --------------------------------------------------------------------------------






2.  IN THEIR DISCRETION, THE TRUSTEE OR ITS PROXY IS AUTHORIZED TO VOTE UPON           Please sign name(s) exactly as
    SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY                  printed hereon. If stock is held in
    ADJOURNMENTS OR POSTPONEMENTS THEREOF, HEREBY REVOKING ANY DIRECTION               the name of more than one person,
    HERETOFORE GIVEN BY THE UNDERSIGNED.                                               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: ____________________, 2000

                                                                                       ---------------------------------
                                                                                       Signature

                                                                                       ---------------------------------
                                                                                       Signature if held jointly

                                                                                       ---------------------------------
                                                                                       Title

</TABLE>


                            o FOLD AND DETACH HERE o





<PAGE>   41




                             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 8, 2000

         The undersigned hereby appoints J. Kent Friedman, John T. La Duc,
Raymond J. Milchovich 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 8, 2000, and at any and
all adjournments or postponements thereof.

               PLEASE COMPLETE, SIGN, DATE AND RETURN PROMPTLY IN
                               ENCLOSED ENVELOPE.

                               (SEE REVERSE SIDE)



















                            o FOLD AND DETACH HERE o




<PAGE>   42


<TABLE>


<S>                                <C>                 <C>                                                  <C>
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE UNDERSIGNED.  IF NO CHOICE            Please mark      [X]
IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" THE ELECTION OF NOMINEES TO THE BOARD OF DIRECTORS.             your votes as
                                                                                                            indicated in
                                                                                                            this example

1.   ELECTION OF DIRECTORS                             NOMINEES:  Robert J. Cruikshank, James T. Hackett, George T. Haymaker, Jr.,
                                                       Charles E. Hurwitz, Ezra G. Levin, Raymond J. Milchovich and James D. Woods.
     FOR ALL NOMINEES                WITHHOLD
   (EXCEPT AS MARKED TO              FROM ALL          To withhold authority to vote for any individual nominee(s) while voting for
       THE CONTRARY)                 NOMINEES          the remainder, write the name of the nominee(s) for which authority is
                                                       withheld in the space below:

           [  ]                       [  ]             ----------------------------------------------------------------------------


2.   IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER           Please sign name(s) exactly as
     MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OR            printed hereon. If stock is held in
     POSTPONEMENTS THEREOF, HEREBY REVOKING ANY DIRECTION HERETOFORE GIVEN BY          the name of more than one person,
     THE UNDERSIGNED.                                                                  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: ____________________, 2000

                                                                                       ---------------------------------
                                                                                       Signature

                                                                                       ---------------------------------
                                                                                       Signature if held jointly

                                                                                       ---------------------------------
                                                                                       Title


</TABLE>

















                            o FOLD AND DETACH HERE o


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