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SECURITIES EXCHANGE ACT OF 1934
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Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
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/ / Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
MAXXAM Inc.
- - -------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MAXXAM Inc.
- - -------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11: -/
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Set forth the amount on which the filing fee is calculated and state
how it was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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<PAGE>
[MAXXAM Logo]
April 25, 1995
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
(the "Annual Meeting") of MAXXAM Inc. to be held at 10:00 a.m. on
Wednesday, May 17, 1995, at the Westchase Hilton Hotel, 9999 Westheimer
Road, Houston, Texas.
Although you may presently plan to attend the Annual Meeting, we urge
you to indicate your approval in the spaces provided on the enclosed proxy
card by voting "FOR" the election of the directors named in the attached
proxy statement. Please then date, sign and promptly return the proxy card
in the enclosed envelope. If you are a stockholder of record and attend
the Annual Meeting, as we hope you will, you may vote in person even if you
have previously mailed a proxy card.
We look forward to seeing as many of you as possible at the Annual
Meeting.
/s/Charles E. Hurwitz
CHARLES E. HURWITZ
Chairman of the Board,
President and Chief Executive
Officer
<PAGE>
MAXXAM INC.
5847 SAN FELIPE, SUITE 2600
HOUSTON, TEXAS 77057
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 17, 1995
The Annual Meeting of Stockholders (the "Annual Meeting") of
MAXXAM Inc. (the "Company") will be held at the Westchase Hilton Hotel,
9999 Westheimer Road, Houston, Texas, on Wednesday, May 17, 1995, at 10:00
a.m., local time, for the following purposes:
1. To elect two (2) directors to serve on the
Board of Directors of the Company, one of
whom will be elected by the holders of Common
Stock, voting separately as a class, to hold
office until the 1996 Annual Meeting of
Stockholders or until his successor is
elected and qualified, and one of whom will
be elected by the holders of Common Stock and
Class A $.05 Non-Cumulative Participating
Convertible Preferred Stock, voting together
as a single class, to hold office until the
1998 Annual Meeting of Stockholders or until
his successor is elected and qualified; and
2. To transact such other business as may be
properly presented to the Annual Meeting or
any adjournments or postponements thereof.
Stockholders of record as of the close of business on March 31,
1995 are entitled to notice of and to vote at the Annual Meeting. A list
of stockholders will be available commencing May 5, 1995, 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
/s/ Byron L. Wade
BYRON L. WADE
Secretary
April 25, 1995
IMPORTANT
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE PROVIDED FOR YOUR CONVENIENCE AND
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. ANY STOCKHOLDER
WHO ATTENDS THE ANNUAL MEETING MAY VOTE PERSONALLY ON ALL MATTERS BROUGHT
BEFORE THE ANNUAL MEETING AND, IN THAT EVENT, HIS OR HER PROXY WILL NOT BE
USED.
<PAGE>
MAXXAM INC.
5847 SAN FELIPE, SUITE 2600
HOUSTON, TEXAS 77057
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 17, 1995
This proxy statement is furnished to stockholders in connection
with the solicitation by the Board of Directors of MAXXAM Inc. (the
"Company"), a Delaware corporation, of proxies for use at the Annual
Meeting of Stockholders (the "Annual Meeting") to be held on Wednesday, May
17, 1995, and any adjournments or postponements thereof, at the time and
place and for the purposes set forth in the accompanying notice of Annual
Meeting. The principal executive offices of the Company are located at
5847 San Felipe, Suite 2600, Houston, Texas 77057, telephone (713) 975-
7600.
This proxy statement, the accompanying proxy and the Notice of
Annual Meeting are being mailed to the stockholders of record as of the
close of business on March 31, 1995 (the "Record Date"), commencing on or
about April 26, 1995. Only holders of record of the 8,707,591 shares of
Common Stock (the "Common Stock") and the 669,112 shares of Class A $.05
Non-Cumulative Participating Convertible Preferred Stock (the "Preferred
Stock") of the Company outstanding as of the Record Date are entitled to
vote at the Annual Meeting. Each share of Common Stock is entitled to one
vote and each share of Preferred Stock is entitled to ten votes on each
matter to be voted upon, except that the holders of Common Stock, voting
separately as a class, will be entitled to elect one member of the
Company's Board of Directors.
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. You may revoke your proxy at any
time prior to its exercise at the Annual Meeting by notice to the Company's
Secretary, by filing a later dated proxy or, if you attend the Annual
Meeting, by voting your shares of stock in person. Proxies will be voted
in accordance with the directions specified thereon or, in the absence of
instructions, FOR the election of the nominees to the Board of Directors
named in this proxy statement. The presence, in person or by proxy, of the
holders of a majority of the shares of the Company's capital stock entitled
to vote at the Annual Meeting is required to constitute a quorum for the
transaction of business at the Annual Meeting. A plurality of the votes
present, in person or by proxy, is necessary for the election of directors.
Under applicable Delaware law, abstentions and broker non-votes will have
no effect on the outcome of election of directors. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence
of a quorum for the transaction of business. Broker non-votes will be
excluded from the number of shares present and entitled to vote thereon,
however, broker non-votes will also be treated as "no" votes.
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation currently
provides for three classes of directors having staggered terms of office,
with directors of each class to be elected by the holders of the Company's
Common Stock and Preferred Stock, voting together as a single class, for
terms of three years and until their respective successors have been duly
elected and qualified. The Company's Restated Certificate of Incorporation
also provides that so long as any shares of the Preferred Stock are
outstanding, the holders of
<PAGE>
Common Stock, voting as a class separately from the holders of any other
class or series of stock, shall be entitled to elect, for terms of one
year, at each annual meeting, the greater of (i) two directors, or (ii)
that number of directors which constitutes 25% of the total number of
directors (rounded up to the nearest whole number) to be in office
subsequent to such annual meeting.
Both persons nominated for election to the Board of Directors at
the Annual Meeting are currently members of the Board of Directors. One of
the nominees, Stanley D. Rosenberg, has been nominated for election by the
holders of Common Stock, voting separately as a class, to hold office until
the 1996 Annual Meeting of the Stockholders or until his successor shall
have been duly elected and qualified. The second nominee, Charles E.
Hurwitz, has been nominated for election by the holders of Common Stock and
Preferred Stock, voting together as a single class, to hold office until
the 1998 Annual Meeting of Stockholders or until his successor shall have
been duly elected and qualified. See, "Executive Officers and Directors"
and "Principal Stockholders" for information concerning each of the
nominees and other directors, including the dates on which they first
became directors, their business experience during the past five years and
the number of shares of the Company's Common Stock and Preferred Stock
owned beneficially by each of them as of March 31, 1995. Each of the
nominees has consented to serve as a member of the Board of Directors if
elected.
The persons named in the proxies will vote the shares represented
thereby for the election of the foregoing named nominees except where
authority has been withheld as to a particular nominee or as to all such
nominees. Should any nominee decline or be unable to serve as a director
of the Company, which is not anticipated, the persons named in the proxies
will vote for the election in his stead of such other person as the Board
of Directors may recommend.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
ALL NOMINEES FOR DIRECTOR OF THE COMPANY.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company (sometimes referred to
herein as the "Board") held seven meetings and acted by written consent on
13 occasions during 1994. In addition, management confers frequently with
its directors on an informal basis to discuss Company affairs. During
1994, no director attended fewer than 75% of the aggregate of the meetings
of the Board and all Committees on which he served.
The Board of Directors of the Company has the following standing
committees: Executive, Audit, Compensation, and Conflicts and Compliance
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 of
Directors. Its current members are Messrs. Hurwitz (Chairman) and Levin.
The Executive Committee held no meetings during 1994.
The Audit Committee presently consists of Messrs. Levin
(Chairman) and Rosenberg. 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 of its financial reporting. This Committee recommends to the
Board the appointment of the independent public
<PAGE>
accountants to serve as auditors in examining the corporate accounts of the
Company. The independent public accountants periodically meet privately
with the Audit Committee and have access to the Audit Committee at any
time. The Audit Committee met on one occasion during 1994.
The Compensation Committee reviews and advises management, makes
recommendations to the Board of Directors, and reviews and approves
proposals regarding the establishment or change of benefit plans, salaries
or other compensation afforded the executive officers and other employees
of the Company. Messrs. Cruikshank, Levin (Chairman) and Rosenberg
currently serve as members of this Committee. The Compensation Committee
met on five occasions during 1994.
The Conflicts and Compliance Committee has the authority to
interpret, administer and enforce the guidelines set forth in the Company's
Code of Business Conduct. In addition, it has the power to make new rules
and guidelines relating to the administration or violation of such Code.
The Conflicts and Compliance Committee reports its activities to the Board
of Directors on a regular basis. This Committee currently consists of
Messrs. Cruikshank, Levin and Rosenberg (Chairman) and met on two occasions
during 1994.
DIRECTOR COMPENSATION
Directors who were not employees of or consultants to the Company
received a fee of $30,000 for the 1994 calendar year and no additional
compensation for attending Committee meetings. Directors were reimbursed
for travel and other disbursements relating to Board and Committee
meetings. Fees to directors who were also employees of the Company were
deemed to be included in their salary. Non-employee directors of the
Company who also served as directors of the Company's majority owned
subsidiaries, Kaiser Aluminum Corporation ("Kaiser") and/or Kaiser Aluminum
& Chemical Corporation ("KACC"), also received additional director or
committee fees and were reimbursed for expenses pertaining to their
services in such capacities from Kaiser or KACC. During 1994, Messrs.
Cruikshank and Levin received an aggregate $31,917 and $37,000,
respectively, in such director and committee fees from Kaiser and KACC
(excluding any expense reimbursement).
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information, as of the
record date, with respect to the executive officers and directors of the
Company. All officers and directors hold office until their respective
successors are elected and qualified or until their earlier resignation or
removal.
NAME POSITIONS AND OFFICES WITH THE COMPANY
--------------------- --------------------------------------------
Charles E. Hurwitz Chairman of the Board, President, Chief
Executive Officer and Director
Paul N. Schwartz Executive Vice President and Chief Financial
Officer
John T. La Duc Senior Vice President
Anthony R. Pierno Senior Vice President and General Counsel
Robert E. Cole Vice President--Federal Government Affairs
Diane M. Dudley Vice President--Chief Personnel Officer
Robert W. Irelan Vice President--Public Relations
Ronald L. Reman Vice President--Taxes
Byron L. Wade Vice President, Secretary and Deputy General
Counsel
Robert J. Cruikshank Director
Ezra G. Levin Director
Stanley D. Rosenberg Director
Charles E. Hurwitz. Mr. Hurwitz, age 54, has served as a member
of the Board of Directors and the Executive Committee of the Company since
August 1978 and was elected as Chairman of the Board and Chief Executive
Officer of the Company in March 1980. Mr. Hurwitz is a nominee for
reelection as a director of the Company to serve until the 1998 Annual
Meeting of Stockholders. Mr. Hurwitz has also served the Company as
President since January 1993. Since July 1993, Mr. Hurwitz has also served
as a director and Chairman of the Board of SHRP, Inc. ("SHRP"), the sole
general partner of Sam Houston Race Park, Ltd., a Texas limited
partnership, which operates a horse racing facility in Harris County,
Texas. He has also served since July 1993 as a director, Chairman of the
Board and President of SHRP Capital Corp. ("SHRP Capital"), a wholly owned
subsidiary of Sam Houston Race Park, Ltd. As of December 15, 1994, Mr.
Hurwitz was appointed Vice Chairman of the Board of KACC. He has served as
a director of Kaiser since October 1988 and of KACC since November 1988.
Since May 1982, Mr. Hurwitz has been Chairman of the Board and Chief Execu
tive Officer, and since January 1, 1993, President, of MAXXAM Group Inc., a
wholly owned subsidiary of the Company ("MGI"). From May 1986 until
February 1993, Mr. Hurwitz served as a director of The Pacific Lumber
Company ("Pacific Lumber"), a subsidiary of the Company engaged in forest
products operations, and from December 1992 until February 1993, he served
as Chairman of the Board of Pacific Lumber. Mr. Hurwitz has been, since
January 1974, Chairman of the Board and Chief Executive Officer of
Federated Development Company ("Federated"), a New York business trust
primarily engaged in the management of real estate investments.
Paul N. Schwartz. Mr. Schwartz, age 48, was named Executive Vice
President and Chief Financial Officer of the Company effective January 1,
1995. He previously served as Senior Vice President--Corporate Development
of the Company from June 1987 until December 31, 1994, and Vice President--
Corporate Development of the Company from July 1985 to June 1987. Mr.
Schwartz has served as a Vice President of MGI and Pacific Lumber since May
1987 and January 1987, respectively, and was elected Chief Financial
Officer of Pacific Lumber and Scotia Pacific Holding Company ("Scotia
Pacific"), a wholly owned subsidiary of Pacific Lumber, since February 28,
1995. He also serves as Chairman of the Board and sole executive officer
of United Financial Group, Inc., a Delaware public corporation, and has
served as a director of Pacific Lumber and Scotia Pacific since February
1993, and as a director of MGI since January
<PAGE>
1994. Since July 1993, Mr. Schwartz also serves as a director and
Executive Vice President of both SHRP and SHRP Capital.
John T. La Duc. Mr. La Duc, age 52, has served as Senior Vice
President of the Company since September 1990, and as Vice President and as
a director of MGI since October 1990 and January 1994, respectively. He
also served the Company and MGI as Chief Financial Officer from September
1990 until December 31, 1994 and February 28, 1995, respectively.
Mr. La Duc has also served Kaiser as Chief Financial Officer since May 1990
and as a Vice President since June 1989. He has also served KACC as a Vice
President since June 1989 and Chief Financial Officer since January 1990.
From January 1993 until April 1993, Mr. La Duc served as Treasurer of
Kaiser and KACC, having previously served as Treasurer of Kaiser and KACC
from September 1987 to May 1990 and January 1990, respectively. Mr. La Duc
also currently serves as a director and Vice President of Pacific Lumber
and Scotia Pacific. He previously served as Chief Financial Officer of
Pacific Lumber and of Scotia Pacific from October 1990 and November 1992,
respectively, until February 28, 1995.
Anthony R. Pierno. Mr. Pierno, age 62, serves as Senior Vice
President and General Counsel of the Company, positions he has held since
February 1989. He has also served as Vice President and General Counsel of
MGI and Pacific Lumber since May 1989, and of Scotia Pacific since November
1992, and has served as a director of Pacific Lumber and MGI since November
1993 and January 1994, respectively. Additionally, Mr. Pierno has served
as Vice President and General Counsel of Kaiser and KACC since January
1992. From 1986 until joining the Company in February 1989, Mr. Pierno
served as partner in charge of the business practice group in the Los
Angeles office of the law firm of Pillsbury, Madison & Sutro. He has
served as the Commissioner of Corporations of the State of California and
as Chair of several committees of the State Bar of California. Mr. Pierno
is Chairman of the Board of Trustees of Whittier College, and a former
member and past Chairman of the Board of Trustees of Marymount College.
Robert E. Cole. Mr. Cole, age 48, has served the Company as Vice
President--Federal Government Affairs since September 1990. Since March
1981, Mr. Cole has also served as a Vice President of KACC. In addition,
Mr. Cole has served as Vice President--Federal Government Affairs for MGI
and Pacific Lumber since September 1990. He also currently serves as
Treasurer and as a director of National Environmental Development
Association, and as a director, Secretary and Treasurer of Global Climate
Coalition, both of which are non-profit organizations.
Diane M. Dudley. Ms. Dudley, age 54, was named Vice President--
Chief Personnel Officer of the Company in May 1990. From June 1987 until
May 1990, she was Vice President--Personnel and Administration of the
Company. From December 1983 until June 1987, Ms. Dudley served as
Assistant Vice President--Personnel of the Company.
Robert W. Irelan. Mr. Irelan, age 58, has served the Company as
Vice President--Public Relations since September 1990. He has also been
Vice President--Public Relations of MGI and Pacific Lumber since September
1990, and Vice President--Public Relations of KACC since February 1988.
From June 1985 to February 1988, Mr. Irelan served as Divisional Vice
President--Corporate Public Relations of KACC, and from 1968 to June 1985
he served KACC and certain affiliated companies in a variety of positions.
Ronald L. Reman. Mr. Reman, age 37, was named Vice President--
Taxes of the Company in September 1992. Prior to September 1992, he had
served the Company as Director of Taxes since joining the Company in
October 1986. 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, both of which are accounting firms. Mr. Reman also serves as
<PAGE>
Vice President--Taxes of MGI and certain other subsidiaries of the Company,
and as Assistant Treasurer of Kaiser and KACC.
Byron L. Wade. Mr. Wade, age 48, has served as Vice President
and Deputy General Counsel of the Company since May 1990, and Secretary of
the Company since October 1988. Mr. Wade has also served as Vice President
and Secretary of Kaiser and KACC since January 1992, and Deputy General
Counsel of Kaiser and KACC since May and June 1992, respectively. He has
been Vice President, Secretary and Deputy General Counsel of Pacific Lumber
and Scotia Pacific since June 1990 and November 1992, respectively. In
addition, Mr. Wade has served since July 1993 as a director, Vice President
and Secretary of both SHRP and SHRP Capital. Mr. Wade has also served as a
Vice President, Secretary and Deputy General Counsel of MGI since July
1990. He was Assistant Secretary of the Company from November 1987 to
October 1988 and Assistant General Counsel from November 1987 until May
1990. He had previously served as Vice President, Secretary and General
Counsel of MCO Resources, Inc., a publicly traded oil and gas company,
which was majority owned by the Company.
Robert J. Cruikshank. Mr. Cruikshank, age 64, has served as a
director of the Company since May 1993. In addition, he has served as a
director of Kaiser and KACC since January 1994. Mr. Cruikshank was a
Senior Partner in the international public accounting firm of Deloitte &
Touche from December 1989 until his retirement from that firm in March
1993. Prior to its merger with Touche Ross & Co. in December 1989, Mr.
Cruikshank served as Managing Partner of Deloitte Haskins & Sells from June
1974 until the merger and served on such firm's board of directors from
1981 to 1985. Mr. Cruikshank also serves as a director and on the
Compensation Committee of Houston Industries Incorporated, a public utility
holding company with interests in electric utilities, cable television,
coal and transportation businesses; as a director of Texas Biotechnology
Incorporated; and as Advisory Director of Compass Bank--Houston.
Ezra G. Levin. Mr. Levin, age 61, was first elected a director
of the Company in May 1978. He has served as a director of Kaiser and KACC
since July 1991 and November 1988, respectively. From May 1982 through
December 1993, he also served as a director of MGI. He is a partner in the
law firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel. Mr. Levin
also serves as a trustee of Federated and as a director of Pacific Lumber,
Scotia Pacific and United Mizrahi Bank and Trust Company.
Stanley D. Rosenberg. Mr. Rosenberg, age 63, was first elected
to the Board of Directors of the Company in June 1981. He is a partner in
the law firm of Rosenberg, Tuggey, Agather & Rosenthal. Mr. Rosenberg was
a partner in the law firm of Oppenheimer, Rosenberg & Kelleher, Inc. from
its inception in 1971 until February 1990, at which time he served as Of
Counsel to that firm through June 30, 1993.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 31, 1995, the
beneficial ownership of the Company's Common Stock and Preferred Stock by
(i) those persons known by the Company to own beneficially more than 5% of
the shares of each class then outstanding, (ii) each of the named executive
officers, (iii) each of the directors or nominees for director, and
(iv) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
COMBINED
% OF % OF VOTING
BENEFICIAL OWNER TITLE OF CLASS # OF SHARES(1) CLASS POWER(2)
- - --------------------------------------------------- -------------------------- ----------------------- ------------ ------------
<S> <C> <C> <C> <C>
Federated Development Company (3) Common Stock 1,740,626(4) 19.8 53.7
Preferred Stock 656,853 98.2
The Stockholder Group(3) Common Stock 2,737,394(4)(5) 31.2 60.2
Preferred Stock 658,050 98.4
Harold C. Simmons, Kronos, Inc., Common Stock 1,278,150(6) 14.6 8.3
The Combined Master Retirement Trust,
NL Industries, Inc. and related entities
Robertson, Stephens & Company, Inc., Common Stock 609,500(7) 6.9 3.9
The Robertson, Stephens Orphan Fund,
The Contrarian Fund and related entities
Robert J. Cruikshank Common Stock 125 * *
Charles E. Hurwitz(8) Common Stock 2,736,042(4)(5)(9) 31.2 60.2
Preferred Stock 657,917(10) 98.3
John T. La Duc -- None -- --
Ezra G. Levin(8) Common Stock 1,125(9) * *
Anthony R. Pierno Common Stock 25,000 * *
Stanley D. Rosenberg Common Stock 2,125 * *
Paul N. Schwartz Common Stock 11,052 * *
Byron L. Wade Common Stock 182 * *
All directors and executive officers of the Common Stock 2,777,369(4)(5)(11) 31.4 60.2
Company as a group (12 persons) Preferred Stock 657,917(12) 98.3<PAGE>
<FN>
- - --------------------
* Less than 1%.
(1) Except as may otherwise be indicated, the 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, 1995, if any, for their exercisable stock appreciation
rights ("SARs") (excluding SARs payable in cash only) if such rights
had been paid solely in shares of Common Stock.
(2) The Company's Preferred Stock is generally entitled to ten votes per
share on matters presented to a vote of the Company's stockholders.
(3) Federated, Messrs. Hurwitz and Levin, and Mr. James H. Paulin, Jr.,
Secretary and Treasurer of Federated, may be deemed a "group" (the
"Stockholder Group") within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended. The address of Federated
is 5847 San Felipe, Suite 2600, Houston, Texas 77057. The address of
the Stockholder Group is c/o Ezra G. Levin, Esq., Kramer, Levin,
Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New York, New
York 10022.
(4) Includes 71,175 shares of Common Stock which Federated may acquire in
exchange for 7% Cumulative Exchangeable Preferred Stock of MCO
Properties Inc., whose issued and outstanding common stock is wholly
owned by the Company.
(5) Includes as of March 31, 1995 (a) 1,669,451 shares of Common Stock
owned by Federated as to which Mr. Hurwitz possesses voting and
investment power, (b) 8,012 shares of Common Stock separately owned by
Mr. Hurwitz's spouse and as to which Mr. Hurwitz disclaims beneficial
ownership, (c) 46,500 shares of Common Stock owned by a limited
partnership controlled by Mr. Hurwitz and his spouse, 23,250 of which
shares were separately owned by Mr. Hurwitz's spouse prior to their
transfer to such limited partnership and as to which Mr. Hurwitz
disclaims beneficial ownership, (d) 145,592 shares of Common Stock
owned by the 1992 Hurwitz Investment Partnership, L.P., of which
72,796 shares are owned by Mr. Hurwitz's spouse as separate property
and as to which Mr. Hurwitz disclaims beneficial ownership, and (e)
795,312 shares of Common Stock held directly by Mr. Hurwitz.
(6) Information is based solely on the Schedule 13D filed with the
Securities and Exchange Commission ("SEC") dated June 30, 1989, as
amended through March 15, 1994 (the "Simmons 13D"). The Simmons 13D
was filed by Harold C. Simmons, Kronos, Inc. ("Kronos"), NL
Industries, Inc. ("NL"), The Combined Master Retirement Trust (the
"Trust") and certain related entities. The Simmons 13D states that
Kronos and the Trust are the direct beneficial owners of 250,900 and
1,027,250 shares of the Company's Common Stock, respectively. The
Simmons 13D also states that Mr. Simmons may be deemed to have the
direct power to vote and direct the disposition of the shares of the
Company's Common Stock held by the Trust and that Mr. Simmons and the
entities other than Kronos who filed the Simmons 13D may be deemed to
share the indirect power to vote and direct the disposition of the
shares of the Company's Common Stock held by Kronos. Mr. Simmons
disclaims beneficial ownership of all of such shares of the Company's
Common Stock. The address of Mr. Simmons and the Trust is Three
Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240.
The address of Kronos and NL is 3000 North Sam Houston Parkway East,
Houston, Texas 77032.
(7) Information is based solely on the Schedule 13D filed with the SEC
dated April 14, 1994, as amended through November 9, 1994 (the
"Robertson 13D"). The Robertson 13D was filed by Robertson, Stephens
& Company, Inc. ("RS & Co."), The Robertson, Stephens Orphan Fund (the
"Orphan Fund") and The Contrarian Fund (the "Contrarian Fund")
(collectively, the "Funds") and certain related entities. The
Robertson 13D states that the Orphan Fund and the Contrarian Fund are
the direct beneficial owners of 118,000 and 491,500 shares of the
Company's Common Stock, respectively, and RS & Co. is the indirect
beneficial owner of the aggregate 609,500 shares. The Robertson 13D
also states that Paul H. Stephens is the Chief Investment Officer of
RS & Co., and as such may be deemed to have shared voting power over
609,500 shares of the Company's Common Stock held by the Funds. The
five shareholders of RS & Co. (Messrs. Sanford R. Robertson, Paul H.
Stephens, Michael G. McCaffery, G. Randy Hecht and Kenneth R.
Fitzsimmons) disclaim any beneficial ownership of all of such shares
of the Company's Common Stock. The address of Mr. Stephens, RS & Co.
and the Funds is 555 California Street, Suite 2600, San Francisco, CA
94104.
(8) Messrs. Hurwitz and Levin serve as trustees of Federated, and
Mr. Hurwitz, together with members of his immediate family and trusts
for the benefit thereof, owns all of the voting shares of Federated,
and his positions include Chairman of the Board and Chief Executive
Officer of the Company and Federated and membership on the Company's
Executive Committee. By reason of the foregoing and their
relationship with the members of the Stockholder Group,
Messrs. Hurwitz and Levin may be deemed to possess shared voting and
investment power with respect to the shares held by the Stockholder
Group.
(9) Does not include shares owned by other members of the Stockholder
Group.
(10) Includes 656,853 shares of Preferred Stock owned by Federated as to
which Mr. Hurwitz possesses voting and investment power, and 1,064
shares of Preferred Stock held directly by Mr. Hurwitz.
(11) The Stockholder Group beneficially owns 2,737,394 of such shares. As
to the remaining shares, the directors and officers owning such shares
have sole voting and investment power with respect to all such shares
except 10,749 owned by a trust of which an officer and his spouse are
trustees.
(12) All of such shares are beneficially owned by Mr. Hurwitz and the
Stockholder Group.
</TABLE>
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation information, cash and
non-cash, for each of the Company's last three completed fiscal years with
respect to the Chief Executive Officer and the four most highly compensated
executive officers of the Company (collectively referred to as the "named
executive officers") for the fiscal year ended December 31, 1994:
<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) ($) (#) ($) ($)
- - ----------------------------- -------- --------- ---------- ------------ ------------- -------------- ----------- ------------
<C> <S> <S> <S> <S> <S> <S> <S> <S>
Charles E. Hurwitz, Chief 1994 608,880 450,000 -- -0- 295,000(2) -0- 97,332(3)
Executive Officer, President 1993 590,000 400,000 -- -0- -0-(2) -0- 97,494(3)
and Chairman of the Board 1992 558,250 400,000 -- -0- -0- -0- 88,102(3)
Anthony R. Pierno, 1994 331,511 263,633(4) -- -0- -0- -0- 55,514(3)
Senior Vice President and 1993 321,232 290,000(4) -- -0- -0- -0- 57,179(3)
General Counsel 1992 302,275 265,000(4) -- -0- -0- -0- 50,123(3)
Paul N. Schwartz,(5) 1994 264,409 217,306(4) -- -0- 25,000 -0- 45,390(3)
Executive Vice President and 1993 256,210 293,000(4) -- -0- -0- -0- 47,426(3)
Chief Financial Officer 1992 239,035 216,000(4) -- -0- 25,000 -0- 44,538(3)
John T. La Duc,(6) 1994 240,000 103,000(7) -- -0-(8) 9,200(10) -0- 4,800(12)
Senior Vice President and 1993 240,000 100,000(7) -- -0- -0- -0- 4,872(12)
former Chief Financial 1992 225,000 45,000 -- 1,428,967(9) 10,000 192,698(11) 8,469(12)
Officer
Byron L. Wade, 1994 171,140 128,355 -- -0- -0- -0- 31,671(3)
Vice President, Secretary 1993 165,833 124,412 -- -0- -0- -0- 30,955(3)
and Deputy General Counsel 1992 156,054 95,000 -- -0- 15,000 -0- 28,854(3)<PAGE>
<FN>
- - ---------------------
(1) Excludes perquisites and other personal benefits because the aggregate
amount of such compensation is the lesser of either $50,000 or 10% of
the total of annual salary and bonus reported for the named executive
officer.
(2) A 1994 option for 45,000 shares of Preferred Stock was granted in
exchange for Mr. Hurwitz relinquishing the SARs for 50,000 shares of
Common Stock granted in 1993. A 1994 option for 250,000 shares of
Kaiser common stock was granted by Kaiser.
(3) Reflects the following aggregate amounts accrued in respect of the
Company's Revised Capital Accumulation Plan for 1994, 1993 and 1992,
respectively, pursuant to which, in general, benefits vesting 10%
annually are payable upon termination of employment with the Company;
Mr. Hurwitz--$91,332, $88,500 and $83,738; Mr. Pierno--$49,727,
$48,185 and $45,341; Mr. Schwartz--$39,661, $38,432 and $35,855; and
Mr. Wade--$25,671, $24,875 and $23,408. Additionally, these amounts
reflect matching contributions by the Company under its 401(k) savings
plan for 1994, 1993 and 1992, respectively, as follows: Mr. Hurwitz--
$6,000, $8,994 and $4,364; Mr. Pierno--$5,787, $8,994 and $4,782; Mr.
Schwartz--$5,729, $8,994 and $8,728; and Mr. Wade--$6,000, $6,080 and
$5,446.
(4) Pursuant to the employment agreements of Messrs. Pierno and Schwartz,
their personal loans from the Company outstanding on the date of such
agreements were forgiven at the rate of $15,000 and $20,000,
respectively, per year. These amounts are included here as additional
bonus compensation. See, "Certain Transactions" for discussion on
such personal loans.
(5) Mr. Schwartz served as Senior Vice President--Corporate Development
for fiscal year 1994.
<PAGE>
(6) Mr. La Duc received his compensation principally from KACC; however,
the Company reimbursed KACC for certain allocable costs associated
with the performance of services for the Company by such executive
officer. The table reflects such officer's total compensation, rather
than any allocated part of such compensation.
(7) Includes $75,000 (to be paid over a three-year period) and $100,000
(to be paid over a four-year period), awarded for 1994 and 1993,
respectively, for which the Company will reimburse KACC.
(8) As of December 30, 1994, Mr. La Duc held 94,873 shares of restricted
common stock of Kaiser valued at approximately $1,031,744 based on the
closing price on such date of $10.875 per share. Restrictions on such
shares will be lifted on each December 2, 1995 and 1996 as to shares
totaling 47,436 and 47,437, respectively. No dividends will be paid
to Mr. La Duc in respect of any restricted shares held. No other
named executive officer held restricted stock of Kaiser or the Company
at fiscal year end 1994.
(9) Includes payout during 1993 of $5,934 of shares of Kaiser common stock
issued in April 1993 as 5% of 1992 distribution, $699 in cash paid in
April 1993 for fractional shares and balance of 1992 LTIP account
pursuant to December 1992 election as described in footnote (11)
below, and $332,918 of shares of Kaiser common stock issued in
November and December 1993 as to which restrictions were lifted.
(10) Represents option for shares of Kaiser common stock.
(11) In December 1992, in connection with the adoption of the Kaiser 1993
Omnibus Stock Incentive Plan (the "Plan"), participants in Kaiser's
and KACC's long-term incentive plan, as amended (the "LTIP") elected
to receive payment of their LTIP account balances as of December 31,
1992 as follows: (i) Amounts earned and vested were paid half in cash
and half in restricted shares of Kaiser common stock. The portion
payable in restricted shares of Kaiser common stock was divided by the
average of the December closing prices of $8.539 per share (December 1
through 28, 1992) to determine the number of shares granted. The
portion payable in cash was reduced by 1992 bonuses paid to recipients
and by appropriate tax withholdings. (ii) Amounts earned and unvested
were paid in options or shares of restricted stock under the Plan
during 1993. Restrictions will be removed or options will vest at the
rate of 25% each December for four (4) years, which began December
1993. (iii) Amounts unearned and unvested were paid in options or
shares of restricted stock under the Plan during 1993. Restrictions
will be removed or options will vest as to 50% thereof in each of
December 1995 and December 1996. The payments made in accordance with
item (i) above were separate and apart from the Plan and are reflected
in column (h) of the Summary Compensation Table for 1992. The grants
made in accordance with items (ii) and (iii) are reflected in column
(f) for 1992. Without such elections and subject to certain
reductions and limitations, participants were generally entitled to
receive the vested portion of their LTIP account balances on the
earlier to occur of (a) termination of their employment, (b)
termination of the LTIP if prior to December 31, 1996, or (c) April
10, 1997.
(12) Amount for 1992 includes moving related items of $3,969. Remaining
amount for 1992 and total amounts for 1994 and 1993 are contributions
under the KACC 401(k) savings plan by KACC.
</TABLE>
OPTION/SAR GRANTS TABLE
The following table sets forth certain information concerning
stock options or SARs granted in fiscal year 1994 to any of the named
executive officers:
<TABLE>
<CAPTION>
GRANT
INDIVIDUAL GRANTS DATE VALUE
- - --------------------------------------------------------------------------------------------------------- ----------------------
(A) (B) (C) (D) (E) (F)
% OF TOTAL
# OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTS 1994 ($/SHARE) DATE PRESENT VALUE ($)(1)
- - ------------------------------- ----------------- ------------------ ----------------- ----------------- ----------------------
<S> <C> <C> <C> <C> <C>
Charles E. Hurwitz 45,000(2) 64.3 30.375 12/07/2004 927,630
250,000(3) 50.5 12.750 12/21/2004 1,711,750
John T. La Duc 9,200(3) 1.9 12.750 12/21/2004 62,992
Paul N. Schwartz 25,000(4) 35.7 30.375 12/07/2004 515,350<PAGE>
<PAGE>
<FN>
- - --------------------
(1) Valuation utilizing Black-Scholes Option Price Model using the
following assumptions: 5-year daily volatility for Common Stock and
2-year daily volatility for Kaiser common stock, 7.9% risk-free rate
(10-year Government Bond), no dividend yield and 10-year exercise or
expiration date. No adjustments were made for non-transferability or
risk of forfeiture.
(2) Represents underlying shares of Preferred Stock. This grant of
options to Mr. Hurwitz was in exchange for his relinquishing SARs for
50,000 shares of Common Stock granted to him December 9, 1993 at
$38.50 per share under the 1984 Phantom Share Plan, which plan expired
in June 1994.
(3) Represents underlying shares of Kaiser common stock.
(4) Represents underlying shares of Common Stock.
</TABLE>
The SARs covering 45,000 shares of Preferred Stock and 25,000
shares of Common Stock set forth in the above table were granted to Messrs.
Hurwitz and Schwartz, respectively, on December 7, 1994 under MAXXAM's 1994
Omnibus Employee Incentive Plan (the "Omnibus Plan") at the closing price
on the date of grant. SARs under the Omnibus Plan are exercisable for
cash, Common Stock or a combination thereof at the discretion of the
Company's Board, and vest with respect to 20% on the first anniversary date
of the grant and an additional 20% on each anniversary date thereafter
until fully vested. The 250,000 and 9,200 stock options were granted to
Messrs. Hurwitz and La Duc, respectively, on December 21, 1994 under the
Kaiser 1993 Omnibus Stock Incentive Plan (the "Kaiser Plan") at 20% above
the closing price of $10.625 per share of Kaiser common stock on the date
of grant. The stock options under the Kaiser Plan are exercisable for
Kaiser common stock, subject to Kaiser's right to repurchase the option in
whole or part upon exercise, and vest with respect to 25% on the first
anniversary date of the grant and an additional 25% on each anniversary
date thereafter until fully vested. Mr. Hurwitz's options under the Kaiser
Plan become immediately exercisable upon a change of control of Kaiser.
OPTION/SAR EXERCISES AND FISCAL YEAR END VALUE TABLE
The table below provides information on an aggregated basis
concerning each exercise of stock options (or tandem SARs) and freestanding
SARs during the fiscal year ended December 31, 1994 by each of the named
executive officers, and the 1994 fiscal year-end value of unexercised
options and SARs, including SARs exercisable for cash only.<PAGE>
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Unexercised Value of Unexercised
Options/SARs in-the-Money Options/SARs
at Year End (#) at Fiscal Year-End ($)
Shares Acquired on Value
Name Exercise (#) (1) Realized ($)(2) Exercisable Unexercisable Exercisable Unexercisable
- - -------------------------- ------------------- ---------------- --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Charles E. Hurwitz -- -- 34,800 45,000 389,9261(3) 22,500(3)
-- -- -0- 250,000 -- -0-(4)
John T. La Duc -- -- 4,000 6,000 11,500(3) 17,250(3)
-0- 9,200 -- -0-(4)
Paul N. Schwartz 12,000 319,500 16,000 40,000 46,000(3) 55,625(3)
Anthony R. Pierno 6,000 82,500 22,000 5,000 5,750(3) -0-(3)
Byron L. Wade -- -- 25,000 9,000 353,875(3) 25,875(3)<PAGE>
<FN>
- - ---------------------
(1) If no shares received, the number reflected, if any, represents the
number of securities with respect to which options/SARs were
exercised.
(2) Valued at the closing price of the Company's Common Stock on the date
of exercise, less exercise price.
<PAGE>
(3) Valued at $30.875 per share, the closing price of the Company's Common
Stock on December 30, 1994, less exercise price. If exercise price is
equal to or higher than the closing price, no value is shown.
(4) Valued at $10.875 per share, the closing price of Kaiser common stock
on December 30, 1994, less exercise price. If exercise price is equal
to or higher than closing price, no value is shown.
</TABLE>
DEFINED BENEFIT PLANS
MAXXAM Pension Plan
All executive officers who are also employees and other regular
employees of the Company who work at least 1,000 hours in the plan year
automatically participate in the Company's Pension Plan (the "Pension
Plan"), a qualified, noncontributory plan. Benefits equal the sum of an
employee's "past service benefit" and "future service benefit" as set forth
in the following two paragraphs. Benefits are based on an employee's base
salary or wages, plus overtime (excluding bonuses, commissions, incentive
compensation and all other extra compensation), the age of such employee at
retirement and years of service.
Under the Pension Plan, the annual past service benefit is the
greatest of:
(i) benefits accrued under the plan through December 31,
1986,
(ii) the product of (a) the sum of 0.8% of the
participant's Past Service Compensation Base (as
defined), plus 0.8% of the participant's Past
Service Compensation Base in excess of $15,000
multiplied by (b) the participant's credited years
of service prior to January 1, 1987, or
(iii) the product of 1.2% of the participant's Past
Service Compensation Base multiplied by the
participant's credited years of service prior
to January 1, 1987.
For 1987 and 1988, the annual future service benefit equaled 1.6%
of an employee's compensation up to two-thirds of the Social Security wage
base, plus 2.4% of any remaining compensation. Effective January 1, 1989,
the annual future service benefit equaled 1.75% of an employee's
compensation for each year of participation, plus 0.6% of the employee's
compensation in excess of $10,000. Effective January 1, 1995, the annual
future service benefit equals 2.35% of an employee's compensation for each
year of participation.
The amount of an employee's aggregate compensation that may be
included in benefit computations under the Pension Plan is limited to
$150,000 for 1994. Benefits are generally payable as a lifetime annuity
or, with respect to married employees, as a 50% joint and survivor annuity,
or, if the employee elects (with spousal consent), in certain alternative
annuity forms. Benefits under the Pension Plan are not subject to any
deductions for Social Security or other offsets. The covered compensation
for 1994 and credited years of service as of December 31, 1994 for the
Pension Plan and estimated annual benefits payable upon retirement at
normal retirement age for the named executive officers (other than those
compensated by KACC who do not participate in this Pension Plan) were as
follows: Mr. Hurwitz: $150,000--14 years--$112,000; Mr. Pierno:
$150,000--5 years--$36,020; Mr. Schwartz: $150,000--14 years--$111,076;
and Mr. Wade: $150,000--14 years--$93,081.
The projected benefits shown above were computed as lifetime
annuity amounts, payable beginning at age 65. The benefit amounts reflect
a covered compensation limit of $150,000 for 1995 and subsequent years
under Section 401(a)(17) of the Internal Revenue Code (the "Code"). In
addition, the amounts reflect a maximum benefit limit of $120,000 for 1995
and subsequent years (with early retirement reductions where applicable)
that is placed upon annual benefits that may be paid to a participant in
the Pension Plan at
<PAGE>
retirement under Section 415 of the Code. Combined plan limits applicable
to employees participating in both defined contribution and defined benefit
plans have not been reflected.
Kaiser Retirement Plan
KACC maintains a qualified, defined-benefit Retirement Plan (the
"Kaiser Retirement Plan") for salaried employees of KACC 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 without reduction for the limitations imposed by the Code on
qualified plans and before adjustment for the Social Security offset,
thereby reflecting cumulative benefits to be received, subject to Social
Security offsets, under the Kaiser Retirement Plan in conjunction with the
Kaiser Supplemental Benefit Plan (as defined below).
YEARS OF SERVICE
ANNUAL
REMUNERATION 15 20 25 30 35
$ 125,000 $28,125 $37,500 $46,875 $56,250 $65,625
150,000 33,750 45,000 56,250 67,500 78,750
175,000 39,375 52,500 65,625 78,750 91,875
200,000 45,000 60,000 75,000 90,000 105,000
225,000 50,625 67,500 84,375 101,250 118,125
250,000 56,250 75,000 93,750 112,500 131,250
300,000 67,500 90,000 112,500 135,000 157,500
400,000 90,000 120,000 150,000 180,000 210,000
450,000 101,250 135,000 168,750 202,500 236,250
500,000 112,500 150,000 187,500 225,000 262,500
The estimated annual retirement benefits shown are based upon the
assumptions that current Kaiser Retirement 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. Mr.
La Duc had 25.3 years of credited service on December 31, 1994. 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.
The compensation covered by the Kaiser Retirement Plan includes
base salary and bonus payments. No named executive officer of the Company
had compensation covered by the Kaiser Retirement Plan which differed by
more than 10% from that set forth in the Summary Compensation Table (column
(c) plus column (d) thereof).
Participants are entitled to retire and receive pension benefits,
unreduced for age, upon reaching age 62 or after 30 years of credited
service. Full early pension benefits (without adjustment for Social
Security offset prior to age 62) are payable to participants who are at
least 55 years of age and have completed 10 or more years of pension
service (or whose age and years of pension service total 70) and who have
been terminated by KACC 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 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 in many
cases actuarially 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
<PAGE>
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.
MAXXAM Supplemental Executive Retirement Plan
Effective March 8, 1991, the Company adopted an unfunded non-
qualified Supplemental Executive Retirement Plan (the "SERP"). The SERP
provides that participants are entitled to receive benefits which would
have been payable to such participants under the Pension Plan except for
the limitations imposed by the Code. Participants in such plan are
selected by the Company's Board of Directors or are entitled to participate
by virtue of provisions in their employment agreements. Three executive
officers of the Company, Messrs. Pierno, Schwartz and Wade, were entitled
to receive benefits under the SERP during 1994.
The following projections are based on the same assumptions as
utilized in connection with the Pension Plan projections above. The 1995
qualified plan pay limit ($150,000) and benefit limit ($120,000) are
reflected for all years in the future. In addition, no future increases in
the participants' covered compensation amounts from the 1994 levels are
assumed.
Pierno Schwartz Wade
--------- --------- ----------
COVERED COMPENSATION FOR 1994:
Qualified Plan $ 150,000 $ 150,000 $ 150,000
Nonqualified Plan 181,511 114,409 21,140
--------- --------- ----------
Total $ 331,511 $ 264,409 $ 171,140
========= ========= ==========
CREDITED YEARS OF SERVICE AS OF
DECEMBER 31, 1994 5 14 14
========= ========= ==========
PROJECTED NORMAL RETIREMENT
BENEFIT:
Qualified Plan $ 36,020 $ 111,076 $ 93,081
Nonqualified Plan 19,503 46,656 8,942
--------- --------- ----------
Total $ 55,523 $ 157,732 $ 102,023
========= ========= ==========
Kaiser Supplemental Benefits Plan
KACC 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 KACC 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, including Mr. La Duc, 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.
MAXXAM Severance or Termination Policy
Severance or termination pay is generally granted to regular
full-time employees who are involuntarily terminated, subject to a number
of exclusions, pursuant to an unfunded policy. After such termination, the
policy provides for payment in an amount ranging from two weeks salary for
at least one year of service graduating to a maximum of 104 weeks salary.
The amounts payable under the policy if the named executive
<PAGE>
officers had been involuntarily terminated on December 31, 1994 would have
been as follows: Mr. Hurwitz: $1,217,760; Mr. Schwartz: $528,818; and
Mr. Wade: $315,950.
Kaiser Termination Payment Policy
Most full-time salaried employees of KACC 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 amount payable to Mr.
La Duc under the policy if he had been involuntarily terminated on December
31, 1994 would have been $120,000.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Mr. Pierno's five-year employment agreement with the Company
expired on March 8, 1995. Pursuant to the terms of the agreement, Mr.
Pierno was entitled during 1994 to a base salary of $331,511. The
agreement provided for a bonus for the year 1992 in an amount not less than
75% and not more than 125% of Mr. Pierno's then base salary. Although the
agreement specified no bonus percentage for the years 1993 and 1994, a
bonus as reflected in the Summary Compensation Table was paid during 1993
and 1994.
Mr. Schwartz's five-year employment agreement with the Company
expired on March 8, 1995. Pursuant to the terms of the agreement,
Mr. Schwartz was entitled during 1994 to a base salary of $264,409. The
agreement provided for a bonus for the year 1992 in an amount not less than
75% and not more than 125% of Mr. Schwartz's then base salary. Although
the agreement specified no bonus percentage for the years 1993 and 1994, a
bonus as reflected in the Summary Compensation Table was paid during 1993
and 1994.
Mr. Wade's five-year employment agreement with the Company
expired on March 8, 1995. Pursuant to the terms of the agreement, Mr. Wade
was entitled during 1994 to a base salary of $171,140. The agreement
provided for a bonus for the year 1992 in an amount not less than 50% and
not more than 100% of Mr. Wade's then base salary. Although the agreement
specified no bonus percentage for the years 1993 and 1994, a bonus as
reflected in the Summary Compensation Table was paid during 1993 and 1994.
<PAGE>
TEN-YEAR OPTION/SAR REPRICING TABLE<PAGE>
The following table sets forth certain information concerning all
amendment, cancellation or replacement grants or any other means of
repricings of options and SARs during the last ten completed fiscal years
held by any current executive officer.
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G)
LENGTH OF
ORIGINAL OPTION
# OF TERM REMAINING
OPTIONS/ MARKET PRICE OF EXERCISE PRICE AT
SARS STOCK AT TIME AT TIME OF DATE OF
REPRICED, OF REPRICING, REPRICING, REPRICING,
REPLACED OR REPLACEMENT OR REPLACEMENT OR NEW EXERCISE REPLACEMENT OR
NAME AND POSITION DATE AMENDED AMENDMENT ($)(1) AMENDMENT ($) PRICE ($)(1) AMENDMENT
- - ---------------------------- ------------- ---------------- ----------------- ----------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Charles E. Hurwitz, 12/07/94 50,000 30.375 38.50 30.375 9 years
Chief Executive
Officer, President and
Chairman of the Board
Paul N. Schwartz,(2) 12/02/92 25,000 28.00 38.00 28.00 7-1/2 years
Executive Vice
President and Chief
Financial Officer
Diane M. Dudley, 12/02/92 15,000 28.00 38.00 28.00 7-1/2 years
Vice President-
Chief Personnel Officer
Byron L. Wade, 12/02/92 15,000 28.00 38.00 28.00 7-1/2 years
Vice President,
Secretary and
Deputy General
Counsel
<FN>
- - --------------------
(1) Closing price of the Company's Common Stock on the American Stock
Exchange on the date of repricing.
(2) Mr. Schwartz was Vice President--Corporate Development at time of such
repricing.
</TABLE>
The SARs set forth in the above table are under MAXXAM's 1984
Phantom Share Plan. The SARs are exercisable for cash only and vest with
respect to 20% on the anniversary date of the repricing and an additional
20% on each anniversary date thereafter until fully vested. Mr. Hurwitz's
SARs for 50,000 shares of Common Stock were relinquished and exchanged for
options to purchase 45,000 shares of Preferred Stock; such options vest
with respect to 20% on the first anniversary date of the repricing and an
additional 20% on each anniversary date thereafter until fully vested.
See, "Compensation Committee Report on Executive Compensation" below for a
discussion of the 1994 repricing.
<PAGE>
COMPENSATION COMMITTEE REPORT
ON
EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of
Directors of the Company has furnished the following report on executive
compensation during fiscal year 1994:
EXECUTIVE OFFICER COMPENSATION
The Committee takes into consideration in its decisions on
executive compensation the Company's particular origins and complex
structure requiring diversified and multi-faceted financial and managerial
skills. The Company consists of units operating in four wholly separate
industries: aluminum, forest products, real estate and parimutuel horse
racing. Many of the Company's executives also serve in executive
capacities in some or all of its operating subsidiaries in the varying
industries. While the Company's annual earnings are an important focus,
its principal objective for the past decade has been the enhancement of
stockholder value which is measured only in part by current earnings.
During the past ten years, the Company's growth was accomplished primarily
through acquisitions, and the Company's executive officers have
responsibilities related to corporate development through acquisition and
assimilation of operating businesses that are additional to the
responsibilities of most executive officers at corporations of comparable
size. Accordingly, the Committee recognizes that the particular talents of
its executives in building the Company's asset base, in expanding into new
business segments and in assimilating acquired businesses, is not
necessarily tied to current earnings. These factors present a particular
challenge for the Committee in determining appropriate approaches to
executive compensation.
The primary elements of compensation for executive officers of
the Company are base salaries and annual discretionary bonuses. From time
to time, the Committee also recommends or approves bonus compensation
awards under additional incentive compensation programs such as the
Company's Omnibus Plan. The Omnibus Plan was recommended by the Committee,
adopted by the Board and approved by the stockholders of the Company during
1994 and replaces the Company's 1984 Phantom Share Plan (the "1984 Plan").
The Company's 1984 Plan expired in June 1994 and is no longer available for
awards, although previous grants thereunder are still outstanding.
Base Salary
For those executive officers of the Company not covered by an
employment agreement or whose agreements have expired, the Company's
executive compensation philosophy is to pay base salaries adequate to
attract and retain executives whose education, training, experience,
talents and particular knowledge of the Company, its businesses and
industries in which it operates allow them to be key contributors to the
administration, management and operations of the Company.
Specific determinations as to base salaries are based primarily
on individual attributes and the specific duties or responsibilities
assigned to the particular executive. In December 1994, base salaries for
the named executive officers were reviewed individually and recommendations
as to increases for the coming fiscal year were made by the Committee. For
the most part, base salary increases were approximately the average of the
U.S. Consumer Price Index of 4%. In one case, the Committee approved a
base salary increase for Paul N. Schwartz of approximately 10% in
recognition of his December 1994 promotion to Executive Vice President and
Chief Financial Officer of the Company.
<PAGE>
Annual Discretionary Bonus
It is the Company's policy that a significant portion of an
executive officer's compensation be at-risk compensation, that is paid
through an annual discretionary bonus. The purpose of such discretionary
bonus policy is to enable the Committee to focus on each executive
officer's individual contribution to the Company during the year in the
context of both the Company's performance and the particular
responsibilities and projects undertaken by the executive during the year,
and award bonus compensation accordingly. Specific determinations as to
such bonus compensation are based primarily on the level of achievement of
the Company's corporate objectives, the individual's contribution to such
achievement and assumption of additional duties or responsibilities by such
executive officer. The Company also recognizes particular challenges faced
by executives in efforts to strengthen some of its less profitable and
marginal operations. The Committee believes that this approach best serves
both the short and long-term interest of the Company and its stockholders
by significantly compensating executive officers retrospectively for
services they have performed that can be both quantatively and
qualitatively analyzed as opposed to compensating executive officers
prospectively through larger base salaries. Such bonus compensation is
typically awarded in December of each fiscal year and principally paid in
cash. Bonus amounts paid by the Company to executive officers (other than
the Chief Executive Officer and executive officers principally compensated
by Kaiser Aluminum & Chemical Corporation ("KACC")) during December 1994
were proposed by the Chief Executive Officer, reviewed, adjusted in certain
instances and approved by the Committee. Additionally, the Chief Executive
Officer recommended and the Committee awarded bonuses to two executive
officers who are principally compensated by KACC for their services
provided to the Company during 1994. Mr. La Duc and an executive officer
not named in the Summary Compensation Table were awarded cash bonuses in
the amount of $75,000 and $15,000, respectively, to be paid in three equal
installments over the next three years provided such officers continue in
active employment with the Company and KACC. These bonuses will be paid by
KACC but reimbursed to KACC by the Company.
Additional Incentive Awards
Awards under the Omnibus Plan or the 1984 Plan are stock-based
and such compensation received thereunder, if any, is directly tied to
stock price appreciation which will also be realized by the Company's
stockholders. The Company has not awarded across-the-board stock-based
incentives to its executives since mid-1989. Since that time, the Company
has only rarely awarded such incentives, and then on selective and
particular situation basis or in connection with negotiated employment
agreements as discussed below. Such was the case with the award to Paul N.
Schwartz on December 7, 1994. Mr. Schwartz was granted an option to
purchase 25,000 shares of Common Stock of the Company under the Omnibus
Plan in recognition of his promotion to Executive Vice President and Chief
Financial Officer of the Company. Mr. La Duc's 1994 option grant for 9,200
shares of Kaiser common stock was granted by Kaiser.
Employment Agreements
The employment agreements of certain of the executive officers of
the Company recently expired in March 1995, but were in effect for all of
1994. Such agreements had five year terms and were negotiated prior to the
relocation of the Company's corporate offices from Los Angeles to Houston
in 1990. The base salaries, ranges for incentive awards as well as stock-
based incentive awards were established during these negotiations by the
Chief Executive Officer and approved by the Committee. Factors considered
by the Committee in approving these employment agreements were the relevant
executive's compensation history, particular talents and responsibilities,
and relative contributions to the Company. In some instances, the Company
also expressed its intention in the employment agreements to compensate
particular executives with bonuses on a certain basis or at a certain
level. Bonus level ranges provided for in the agreements were generally
established as a percentage of salary with a view that bonuses play an
important role in total annual compensation. Specifically, executive
officers relocating from Los Angeles to Houston were entitled to initial
bonus levels in the ranges of 75% to 125% (for Senior Vice Presidents) and
50% to 100% (for Vice Presidents) of their respective annual salaries. The
intentions expressed in the employment agreements were
<PAGE>
followed by the Committee with respect to 1994 bonuses, by awarding and
paying bonuses in December 1994 at the lower to mid ranges of such levels.
These employment agreements were entered into in order to assure continued
employment of such executives in their respective capacities, and in order
to procure for the Company their continuing commitments for that period of
time. (See, description under "Employment Contracts and Termination of
Employment and Change-in-Control Arrangements" above.)
Compensation of the Chief Executive Officer for the Last
Completed Fiscal Year
The compensation of Charles E. Hurwitz, Chairman of the Board,
President and Chief Executive Officer, consists of the same elements as for
other executive officers. The Committee approved a base salary increase of
4% for Mr. Hurwitz in December of 1994. This was the same percentage of
increase generally provided during the same period to the Company's
executive officers and other employees. In addition, Mr. Hurwitz is the
only executive officer who was a participant under the Executive Plan (as
defined below) during 1994.
Under the Executive Plan (as defined below), Mr. Hurwitz was
entitled to receive $1,510,000 based on specific performance goals
established in March 1994 having been achieved at fiscal year end, 1994.
Upon the announcement in February 1995 of the 1994 financial results, the
Committee exercised its negative discretion permitted under the Executive
Plan and awarded Mr. Hurwitz a bonus amount of only $200,000 thereunder in
respect of his services during 1994 in achieving the performance goals
established in March 1994. The award under the Executive Plan was based on
the marked reduction in the Company's net loss per share in 1994 as
compared to 1993. However, factors considered in reducing such award were
the financial position at Sam Houston Race Park, Ltd. and the Company's
continuing net loss as reported. The Committee awarded Mr. Hurwitz a bonus
of $250,000 under the Company's annual discretionary bonus policies
applicable to all of its executive officers as discussed above. This
discretionary bonus added to the bonus Mr. Hurwitz earned under the
Executive Plan gave Mr. Hurwitz an aggregate bonus of $450,000 for 1994 as
reflected in the Summary Compensation Table.
Mr. Hurwitz was also granted a stock option under the Omnibus
Plan for 45,000 shares of Preferred Stock of the Company in exchange for
his relinquishment of the option for 50,000 phantom shares previously
granted to him on December 9, 1993. The 1993 grant was under the 1984 Plan
and any compensation received thereunder over the $1,000,000 limitation
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") would not be deductible, because the 1984 Plan does not meet the
requirements under Section 162(m) of the Code. The Omnibus Plan like the
Executive Plan is intended to be in compliance with Section 162(m). The
1994 replacement grant to Mr. Hurwitz was approved by the Committee to
preserve deductibility for the Company in regard to any compensation
received by Mr. Hurwitz.
COMPENSATION BY KAISER ALUMINUM & CHEMICAL CORPORATION
Certain of the Company's executive officers were compensated
during 1994 principally by KACC, a majority owned subsidiary of the
Company, which establishes salaries and other elements of compensation for
such executive officers. Where an executive officer of both the Company
and KACC is compensated by KACC (such as Mr. La Duc), or where an executive
officer of both the Company and KACC is compensated by the Company (such as
Messrs. Pierno and Wade), the respective corporations make intercompany
allocations of the costs of employment of the executive officer based on an
allocation of that executive officer's time as expended among the Company
or KACC and respective subsidiaries. Such allocations are described under
"Certain Transactions" below.
<PAGE>
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Effective January 1, 1994, Section 162(m) of the Code generally
disallows a tax deduction to public companies for compensation over $1
million paid to the Chief Executive Officer and four other most highly
compensated executive officers of such corporations. Qualifying
performance-based compensation will not be subject to the deduction limit
if certain requirements are met.
At the 1994 Annual Meeting of Stockholders, the MAXXAM 1994
Executive Bonus Plan (the "Executive Plan") recommended by the Committee
and adopted by the Board was approved by the Stockholders. The Executive
Plan is a cash-only plan intended to qualify under Section 162(m) of the
Code. In order to qualify for deduction under Section 162(m), compensation
for certain officers in excess of $1,000,000 must be tied to performance
goals, the outcome of which are "substantially uncertain" at the time the
performance goals are established. The Committee administers the Executive
Plan. The Executive Plan is applicable to those officers whose base salary
is equal to or in excess of $600,000. The executive officers who are or
will be eligible to participate in the Executive Plan are the only
executive officers of the Company to which the deduction limitation is
likely to apply.
In general, the Committee meets before March 31 of each year to
identify those current areas, factors or transactions of the Company's
business where it is beneficial in that particular year to provide an
incentive as to each participant's performance. Thus, specific performance
goals are established that are narrowly fact-specific to a given fiscal
year and prospective in nature. For example, some of the performance goals
for 1994 under the Executive Plan were based upon specific projects,
including (i) a major subsidiary committing to a certain new business
venture, (ii) the execution of a major redevelopment contract under
negotiation, which again would lead to a new business venture, (iii) the
completion of construction of the facility for a new business venture
before a specified date, and (iv) the execution of a binding written
agreement in respect to an extraordinary transaction. Other criteria for
1994 were more general, such as loss reductions and earning improvements.
Compensation Committee
of the Board of Directors
Robert J. Cruikshank
Ezra G. Levin, Chairman
Stanley D. Rosenberg
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Board of Directors
of the Company was, during the 1994 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; however, one member had a relationship
requiring disclosure by the Company under Item 404 of Regulation S-K. Mr.
Levin served on the Company's Compensation Committee and Board of Directors
during 1994. Mr. Levin is also a partner in the law firm of Kramer, Levin,
Naftalis, Nessen, Kamin & Frankel, which provided legal services for the
Company and its subsidiaries during 1994.
During the Company's 1994 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,
<PAGE>
one of whose executive officers served on the Compensation Committee of the
Board of Directors, (ii) a director of another entity, one of whose
executive officers served on the Compensation Committee of the Company, 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.
PERFORMANCE GRAPH
The following performance graph compares the cumulative total
stockholder return on the Company's Common Stock with the cumulative total
returns of the S&P 500 Stock Index and two peer groups consisting of
companies included by S&P in its published indices for the Aluminum
Industry and the Paper and Forest Products Industry for the Company's last
five fiscal years. The graph assumes that the value of the investment in
the Company's Common Stock and each index was $100 at December 31, 1989,
and that all dividends were reinvested. The data points are calculated as
of the last trading day for the year indicated.
Company/Index Name 1989 1990 1991 1992 1993 1994
MAXXAM Inc. 100 66.22 62.50 58.51 78.19 65.69
S&P 500 Index 100 96.89 126.42 136.05 149.76 151.74
Paper & Forest Products 100 90.34 114.59 131.02 144.40 150.46
Aluminum 100 90.09 97.25 99.56 101.93 124.99
The Company is involved in the real estate industry in addition
to the aluminum and forest product industries. However, the real estate
unit of the Company accounts for less than 5% of the Company's gross
revenues on a consolidated basis and, therefore, a line-of-business index
for such industry is not utilized.
<PAGE>
CERTAIN TRANSACTIONS
In January 1995, MCO Properties Inc. ("MCOP"), the issued and
outstanding common stock of which is wholly owned by the Company and the
issued and outstanding preferred stock of which is wholly owned by
Federated, entered into an agreement in principle to transfer to Olympus
Rancho Mirage, L.P. ("Olympus"), an unaffiliated third party, a non-
exclusive easement on certain property in Rancho Mirage, California. Such
easement is to allow access to a proposed golf course. Federated owns all
of the interests in the partnership which operates the business of the
Ritz-Carlton Hotel (the "Hotel"), which is also located in Rancho Mirage,
California. The partnership intends to transfer the Hotel to Olympus.
In consideration for such easement, MCOP will receive Hotel
amenity benefits which will be available to area lot owners for a fee.
Such amenities include, among other things, room service, maid service and
use of the tennis center, health club, meeting rooms and swimming pool.
The availability of these amenities will be in the form of a covenant
running with the land rather than a mere contract right and are not
expected to be subject to the abrogation upon foreclosure or sale of the
Hotel. MCOP also will agree not to develop a contemplated hotel-type
facility on other real property it owns in the vicinity. Olympus will also
receive a revocable parking license on certain other adjacent property of
MCOP.
The Company and KACC have an arrangement pursuant to which they
reimburse each other for certain allocable costs associated with the
performance of services by their respective employees, and KACC also pays
to the Company amounts in respect of directors' fees for directors of KACC
who are not employees of KACC and who are directors of the Company. During
1994, KACC paid a total of approximately $2.8 million to the Company
pursuant to such arrangements and the Company paid approximately $0.7
million to KACC pursuant to such arrangements. Generally, the Company and
KACC 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.
In April 1989, an action was filed against the Company, MGI,
MAXXAM Properties Inc. ("MPI") and certain of the Company's directors in
the Court of Chancery of the State of Delaware, entitled Progressive United
Corporation v. MAXXAM Inc., et al., Civil Action No. 10785. Plaintiff
purports to bring this action as a stockholder of the Company derivatively
on behalf of the Company and MPI. In May 1989, a second action containing
substantially similar allegations was filed in the Court of Chancery of the
State of Delaware, entitled Wolf v. Hurwitz, et al. (No. 10846) and the two
cases were consolidated (collectively, the "Zero Coupon Note" actions).
The Zero Coupon Note actions relate to a Put and Call Agreement entered
into between MPI and Mr. Charles Hurwitz (Chairman of the Board of the
Company, MGI and MPI), as well as a predecessor agreement (the "Prior
Agreement"). Among other things, the Put and Call Agreement provided that
Mr. Hurwitz had the option (the "Call") to purchase from MPI certain notes
(or the common stock of the Company into which they were converted) for
$10.3 million. In July 1989, Mr. Hurwitz exercised the Call and acquired
990,400 shares of the Company's common stock. The Zero Coupon Note actions
generally allege that in entering into the Prior Agreement Mr. Hurwitz
usurped a corporate opportunity belonging to the Company, that the Put and
Call Agreement constituted a waste of corporate assets of the Company and
MPI, and that the defendant directors breached their fiduciary duties in
connection with these matters. Plaintiffs seek to have the Put and Call
Agreement declared null and void, among other remedies.
In May 1991, a derivative action entitled Progressive United
Corporation v. MAXXAM Inc., et al. (No. 12111) ("Progressive United") was
filed in the Court of Chancery, State of Delaware against the Company,
Federated Development Company ("Federated"), MCOP and the Company's Board
of Directors. The action alleges abuse of control and breaches of
fiduciary obligations based on, and unfair consideration for, the Company's
Agreement in Principle with Federated to (a) forgive payments of principal
and interest of
<PAGE>
approximately $32.2 million due from Federated under two loan agreements
entered into between MCOP and Federated in 1987 (and later assigned by MCOP
to the Company), and (b) grant an additional $11.0 million of consideration
to Federated, in exchange for certain real estate assets valued at
approximately $42.9 million in Rancho Mirage, California, held by Federated
(the "Mirada transactions"). Plaintiff seeks to have the Agreement in
Principle rescinded, an accounting under the loan agreements, repayment of
any losses suffered by the Company or MCOP, costs and attorneys fees.
The following six additional lawsuits, similar to the Progressive
United case, have been filed in Delaware Chancery Court challenging the
Mirada transactions: NL Industries, et al. v. MAXXAM Inc., et al. (No.
12353); Kahn, et al. v. Federated Development Company, et al. (No. 12373);
Thistlethwaite, et al. v. MAXXAM Inc., et al. (No. 12377); Glinert, et al.
v. Hurwitz, et al. (No. 12383); Friscia, et al. v. MAXXAM Inc., et al.
(No. 12390); and Kassoway, et al. v MAXXAM Inc., et al. (No. 12404). The
Kahn, Glinert, Friscia and Kassoway actions have been consolidated with the
Progressive United action into In re MAXXAM Inc./Federated Development
Shareholders Litigation (No. 12111); the NL Industries action has been
"coordinated" with the consolidated actions; the Thistlethwaite action has
been stayed pending the outcome of the consolidated actions. In January
1994, a derivative action entitled NL Industries, Inc., et al. v. Federated
Development Company, et al. (No. 94-00630) was filed in the District Court
of Dallas County, Texas, against the Company (as nominal defendant) and
Federated. This action contains allegations and seeks relief similar to
that contained in the In re MAXXAM Inc./Federated Development Shareholders
Litigation. With respect to the In Re: MAXXAM Inc./Federated Development
Shareholders Litigation, on February 10, 1995, the Court issued its
decision disapproving a previously announced proposed settlement. With
respect to the similar NL Industries Inc., et. al., v. Federated
Development Co., et. al. action, the parties have agreed to stay this
action in light of the In Re: MAXXAM Inc., Federated Development
Shareholders litigation action.
In July 1993, Mr. Wade purchased an approximate .42% interest in
Sam Houston Race Park, Ltd. for $100,000. The right of Mr. Wade to
purchase such interest was assigned to him by, and purchased from, a wholly
owned subsidiary of the Company. His purchase was made at the same time
and at the same price as the Company's purchase of its equity interest. In
connection with Mr. Wade's purchase, the Company advanced him $50,000 which
was repaid within approximately ten days with a cash payment of $50,000,
and loaned Mr. Wade $50,000 evidenced by an unsecured promissory note,
interest on which is payable monthly at an annual rate of 6%. Currently,
the outstanding principal balance of the note is $20,000. The note is
payable upon the earliest to occur of July 20, 1998 or Mr. Wade's
termination of employment with the Company.
During 1994, the Company and certain of its subsidiaries shared
certain administrative and general expenses with Federated. Under these
arrangements, Federated's obligation to the Company and its subsidiaries
was approximately $174,267.
During 1994, Federated and the Company shared office space leased
by the Company. The obligations of Federated relating to 1994 under such
sharing arrangement amounted to $27,813.
Mr. Levin, a director of the Company, is a partner in the law
firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, which provides
legal services for the Company and its subsidiaries. The Company has been
billed by such firm an aggregate of approximately $3,754,000 for fees and
approximately $404,000 for disbursements and other charges with respect to
legal services rendered by such firm during 1994 for the Company and its
subsidiaries.
<PAGE>
On April 17, 1995, Sam Houston Race Park, Ltd. (the
"Partnership"), SHRP Acquisition, Inc. and SHRP Capital filed a voluntary
corporate petition under Chapter 11, Title 11, of the United States
Bankruptcy Court for the District of Delaware. Since July 1993, Mr. Wade
has served as a director, Vice President and Secretary of SHRP, the
Partnership's sole general partner, and of SHRP Capital; Mr. Schwartz has
served as a director and Executive Vice President of both SHRP and SHRP
Capital; and Mr. Hurwitz has served as director and Chairman of the Board
of SHRP, and as a director, Chairman of the Board and President of SHRP
Capital.
In August 1990, two real estate ventures holding unimproved real
property in which Mr. Rosenberg was a general partner filed voluntary
petitions for bankruptcy reorganization under Chapter 11 of the Code in the
United States Bankruptcy Court for the Western Division of Texas. One
reorganization plan was successfully confirmed and implemented. In the
second filing, a plan has been confirmed.
The Company reached an agreement as of December 1, 1991 with one
of its wholly owned subsidiaries, Bering Holdings, Inc. ("Bering
Holdings"), a Texas registered investment advisor. The agreement provides
for an annual management fee equal to 1% of the average value of the
accounts under management except for certain managed short-term investments
for which Bering Holdings receives -1/2 of 1% per annum. The agreement
also provides for an annual performance fee equal to 10% of the net gain in
certain of the accounts. Management and performance fees accrued to be
paid by the Company and its subsidiaries for 1994 were approximately
$386,710 and $327,614, respectively. Bering Holdings also manages
Federated investments pursuant to a similar arrangement. Management and
performance fees accrued to be paid by Federated for 1994 were
approximately $70,594 and $124,372, respectively.
In January 1994, the Company entered into a commercial guaranty
of payment (the "Guaranty") of a promissory note dated January 28, 1994, in
the original principal amount of $150,000 issued by Mr. Pierno to Charter
National Bank--Houston. The Guaranty is subject to an agreement between
the Company and Mr. Pierno that any payment by the Company under the
Guaranty shall be offset in like amount plus interest at 12% per annum from
the date of payment on the Guaranty to the date of payment to the Company
by Mr. Pierno. Such offset may be made from any payments due Mr. Pierno
from the Company that lawfully may be the subject of such offset, including
any payment under any compensation arrangement or employee benefit plan.
The Guaranty was entered into by the Company for the convenience of Mr.
Pierno and replaces a previous guaranty with substantially the same terms
entered into in February 1993 in respect of a promissory note dated January
28, 1993.
Pursuant to the terms of Mr. Pierno's employment agreement with
the Company, his personal loans outstanding on the date of such agreement
were forgiven at the rate of $15,000 per year beginning March 8, 1991
through March 8, 1995. At the time of the agreement, the Company had
loaned an aggregate of $150,000 at 6% interest to Mr. Pierno. Upon
expiration of Mr. Pierno's employment agreement on March 8, 1995, his
principal balance on such loans was $75,000. As of February 28, 1995, the
Company entered into an amendment of Mr. Pierno's promissory note
evidencing such loans. The amendment further provides that installments of
$18,750 be paid by Mr. Pierno on each of December 31, 1995, 1996 and 1997,
with any remaining principal balance, together with accrued interest, to be
paid in full on December 31, 1998. The amendment also provides that the
loans be secured by any amounts to which Mr. Pierno may be entitled
pursuant to the Company's Revised Capital Accumulation Plan. Mr. Pierno's
employment agreement also provided for up to an additional $200,000 in
loans to Mr. Pierno bearing interest at 6% per annum, with interest being
payable monthly and principal being due December 15, 1994 (with prepayments
due upon the exercise by Mr. Pierno of any SARs granted pursuant to the
agreement or employee benefit plan). All of such amount was borrowed by
Mr. Pierno. Such promissory note was also amended, extending the due date
to December 15, 1998 and securing such loan with any amounts to which Mr.
Pierno may be entitled pursuant to the Company's Revised Capital
Accumulation Plan.
<PAGE>
Pursuant to the terms of Mr. Schwartz's employment agreement, his
personal loans outstanding on the date of the agreement were forgiven at
the rate of $20,000 per year beginning March 8, 1991 through March 8, 1995.
The agreement also provided for additional loans to Mr. Schwartz, all of
which were received by Mr. Schwartz in 1990. At year end 1994,
Mr. Schwartz's principal balance on such loans was $120,000 at 6% interest,
with such interest payable monthly. $70,000 of principal on such loans was
payable on demand and $50,000 was payable on December 15, 1994 (with
prepayments due upon the exercise of certain SARs). The loans are secured
by real estate owned by Mr. Schwartz. On January 25, 1995, the real
estate lien note evidencing such loans was amended to provide that the
entire principal amount of $120,000 shall be payable upon demand. None of
the other terms of the note was affected by the amendment. Currently, Mr.
Schwartz has $100,000 in principal amount of loans outstanding.
As of December 31, 1994, one executive officer of the Company not
named in the Summary Compensation Table has a loan outstanding in the
aggregate principal amount of $100,000 at an annual interest rate of 6%.
Generally, such loan requires annual interest payments, is secured by real
estate owned by the officer and is payable on demand.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon a review of such copies of Forms 3, 4 and 5 and
any amendments thereto furnished to the Company with respect to its most
recent fiscal year, and written representations from certain reporting
persons that no Forms 5 were required, the Company believes that all filing
requirements were complied with which were applicable to its officers,
directors and greater than ten percent beneficial owners.
OTHER MATTERS
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has appointed Arthur Andersen LLP as its independent
public accountants through the conclusion of the audit with respect to the
Company's 1994 fiscal year. Representatives of Arthur Andersen LLP plan to
attend the Annual Meeting of Stockholders and will be available to answer
appropriate questions. Such representatives will also have an opportunity
to make a statement at the meeting, if they so desire.
STOCKHOLDER PROPOSALS FOR THE 1996 ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals intended to be presented at the 1996 Annual
Meeting of Stockholders must be received at the Company's executive offices
at 5847 San Felipe, Suite 2600, Houston, Texas 77057 by December 29, 1995
in order to be included in the Company's proxy statement and form of proxy
relating to that meeting.
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
<PAGE>
distribution and solicitation of proxies at an estimated cost of
approximately $4,300 (including expenses). In addition to the use of
mails, proxies may be solicited by personal interviews, facsimile,
telephone or telegraph.
The persons designated to vote shares covered by management
proxies intend to exercise their judgment in voting such shares on other
matters that may properly come before the meeting. Management knows of no
matters which will be presented for action at the meeting other than as
referred to in this proxy statement.
By Order of the Board of
Directors
/s/ Byron L. Wade
BYRON L. WADE
Secretary
April 25, 1995
Houston, Texas
<PAGE>
================================
Table of Contents
Notice of Annual Meeting of
Stockholders
Proxy Statement
Election of Directors . . 1
The Board of Directors and
its Committees . . . 2
Executive Officers and
Directors . . . . . 4
Principal Stockholders. . 7
Executive Compensation. . 9
Compensation Committee
Report on Executive
Compensation . . . .17
Performance Graph . . . .21
Certain Transactions. . .22
Compliance with Section
16(a)of the Exchange
Act . . . . . . . .25
Other Matters . . . . . .25
================================
[MAXXAM Logo]
================================
Notice of 1995 Annual Meeting
and
Proxy Statement
================================
Important
Please sign and date your proxy
card and promptly return it in
the enclosed envelope.
[Recyle logo appears here]
Printed on recycled paper.
<PAGE>
[COMMON STOCK]
MAXXAM INC.
5847 SAN FELIPE, SUITE 2600
HOUSTON, TEXAS 77057
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Charles E. Hurwitz and
Anthony R. Pierno as proxies (each with power to act alone 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 of MAXXAM Inc. to be held
on May 17, 1995, and at any and all adjournments or postponements
thereof.
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 THE NOMINEE TO THE
BOARD OF DIRECTORS AS SET FORTH IN THE PROXY STATEMENT.
(Continued and to be signed on the reverse side)
MAXXAM INC.
P.O. BOX 11240
NEW YORK, N.Y. 10203-0240
<PAGE>
1. ELECTION OF DIRECTOR
(a) FOR nominee listed
/X/ WITHHOLD AUTHORITY /X/ Stanley D. Rosenberg
to vote for nominee (for term expiring in 1995)
(b) FOR nominee listed
/X/ WITHHOLD AUTHORITY /X/ Charles E. Hurwitz
to vote for nominee (for term expiring in 1995)
2. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournments or
postponements thereof, hereby revoking any proxy or proxies heretofore
given by the undersigned.
FOR /X/ AGAINST /X/ ABSTAIN /X/
Votes MUST be indicated
(X) in Black or Blue ink. /X/
Address Change
and/or Correction /X/
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS AT LEFT, IF STOCK IS HELD
IN THE NAME OF MORE THAN ONE
PERSON, EACH PERSON SHOULD SIGN.
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. IF
A CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT OR
OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.
Date:________________________1995
_________________________________
Signature
_________________________________
Signature if held jointly
Please complete, sign, date and return the proxy card promptly, using
the enclosed envelope.
<PAGE>
[PREFERRED STOCK]
MAXXAM INC.
5847 SAN FELIPE, SUITE 2600
HOUSTON, TEXAS 77057
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Charles E. Hurwitz and
Anthony R. Pierno as proxies (each with power to act alone and
with power of substitution) to vote as designated on the reverse
side, all shares of Class A $.05 Non-Cumulative Participating
Convertible Preferred Stock the undersigned is entitled to vote
at the Annual Meeting of Stockholders of MAXXAM Inc. to be held
on May 17, 1995, and at any and all adjournments or postponements
thereof.
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 THE NOMINEE TO THE
BOARD OF DIRECTORS AS SET FORTH IN THE PROXY STATEMENT.
(Continued and to be signed on the reverse side)
MAXXAM INC.
P.O. BOX 11240
NEW YORK, N.Y. 10203-0240
PAGE
<PAGE>
1. ELECTION OF DIRECTOR
(a) FOR nominee listed
/X/ WITHHOLD AUTHORITY /X/ Charles E. Hurwitz
to vote for nominee (for term expiring in 1995)
2. In their discretion, the proxies are authorized to vote upon
such other matters as may properly come before the meeting or any
adjournments or postponements thereof, hereby revoking any proxy
or proxies heretofore given by the undersigned.
FOR /X/ AGAINST /X/ ABSTAIN /X/
Votes MUST be indicated
(X) in Black or Blue ink. /X/
Address Change
and/or Correction /X/
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS AT LEFT, IF STOCK IS HELD
IN THE NAME OF MORE THAN ONE
PERSON, EACH PERSON SHOULD SIGN.
WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. IF
A CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT OR
OTHER AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.
Date:_____________________1995
______________________________
Signature
______________________________
Signature if held jointly
Please complete, sign, date and return the proxy card
promptly, using the enclosed envelope.
