PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /x /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
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14a-6(e)(2))
/x / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
MAXXAM Inc.
- -----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -----------------------------------------------------------------------
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Payment of Filing Fee (Check the appropriate box):
/x / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
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/ / Fee paid previously with preliminary materials.
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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 30, 1997
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 Thursday,
May 22, 1997, at The Houstonian Hotel & Conference Center, 111 North Post
Oak Lane, 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
MAXXAM INC.
5847 SAN FELIPE, SUITE 2600
HOUSTON, TEXAS 77057
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1997
The Annual Meeting of Stockholders (the "Annual Meeting") of
MAXXAM Inc. (the "Company") will be held at The Houstonian Hotel &
Conference Center, 111 North Post Oak Lane, Houston, Texas, on Thursday,
May 22, 1997, at 10:00 a.m., local time, for the following purposes:
1. To elect three (3) directors to serve on the Board of
Directors of the Company, two of whom will be elected
by the holders of Common Stock, voting separately as a
class, to hold office until the 1998 Annual Meeting of
Stockholders or until their successors are elected and
qualified, and one of whom will be elected by 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
2000 Annual Meeting of Stockholders or until his
successor is elected and qualified;
2. To vote on a proposed resolution submitted by certain
stockholders of the Company relating to 60,000 acres of
timberlands in northern California owned by the
Company's principal forest products subsidiary; and
3. 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 25,
1997 are entitled to notice of and to vote at the Annual Meeting. A list
of stockholders will be available commencing May 12, 1997, and may be
inspected for purposes germane to the Annual Meeting during normal business
hours prior to the Annual Meeting at the offices of the Company, 5847 San
Felipe, Suite 2600, Houston, Texas.
By Order of the Board of Directors
/s/ Byron L. Wade
BYRON L. WADE
Secretary
April 30, 1997
IMPORTANT
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED WHITE 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.
MAXXAM INC.
5847 SAN FELIPE, SUITE 2600
HOUSTON, TEXAS 77057
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1997
This proxy statement (the "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 Company's Annual Meeting of Stockholders (the "Annual Meeting") to
be held on Thursday, May 22, 1997, and any adjournments or postponements
thereof, at the time and place and for the purposes set forth in the
accompanying notice of Annual Meeting. 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 also provides certain additional information
required to be disclosed by the Company as a result of the proxy contest
initiated against the Company by "As You Sow" foundation and the "Rose
Foundation for Communities and the Environment" (collectively, the
"Foundations"). The Foundations are attempting to solicit proxies in
opposition to your Board's nominees for director and in support of a
resolution relating to 60,000 acres of timberland in northern California
owned by The Pacific Lumber Company ("Pacific Lumber"), the Company's
principal forest products subsidiary.
This Proxy Statement, the accompanying white proxy card and the
Notice of Annual Meeting of Stockholders are being mailed, commencing on or
about May 1, 1997, to the stockholders of record as of the close of
business on March 25, 1997 (the "Record Date"). Only holders of record of
the 8,631,573 shares of Common Stock (the "Common Stock") and the 688,856
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 such matters as they are entitled to vote and as may
properly come before the Annual Meeting or any adjournments or
postponements thereof. The holders of Common Stock, voting separately as a
class, are entitled to elect two members of the Company's Board of
Directors, and the holders of Common Stock and Preferred Stock, voting
together as a single class, are 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 the
enclosed white proxy card in the enclosed envelope. The persons authorized
to act as proxies at the Annual Meeting, individually or jointly, as listed
on the white proxy card are Charles E. Hurwitz, Paul N. Schwartz and Byron
L. Wade. 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 and
"AGAINST" the proposed resolution relating to 60,000 acres of timberlands
in northern California owned by Pacific Lumber.
The presence, in person or by proxy, of the holders of shares of
the Company's capital stock entitled to cast a majority of the votes
entitled to be cast at the Annual Meeting is required to constitute a
quorum for the transaction of business at the Annual Meeting. Under
applicable Delaware law, abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum for the
transaction of business. A plurality of the votes present, in person or by
proxy, is necessary for the election of directors. With regard to the
election of directors, votes may be cast in favor or withheld; votes that
are withheld will be excluded entirely from the vote and will have no
effect on the outcome. Abstentions may not be specified on the election of
directors. Because of the proxy contest, brokers who hold shares in street
name for customers may only vote such shares upon receipt of specific
instructions. If your shares are held in the name of a brokerage firm or
in "street name," please contact the person responsible for your account
and give instructions for your shares to be voted on the white proxy card.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED WHITE PROXY CARD AND
RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. IF YOUR SHARES ARE HELD IN
"STREET NAME," ONLY YOUR BANK OR BROKER CAN VOTE YOUR SHARES AND ONLY UPON
YOUR SPECIFIC INSTRUCTIONS. PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR
ACCOUNT AND INSTRUCT HIM OR HER TO VOTE THE WHITE PROXY CARD AS SOON AS
POSSIBLE.
THE BOARD OF DIRECTORS URGES YOU NOT TO SIGN ANY PROXY CARD SENT
TO YOU BY THE FOUNDATIONS. IF YOU HAVE ALREADY DONE SO, YOU MAY REVOKE
YOUR PREVIOUSLY SIGNED PROXY BY DELIVERING A WRITTEN NOTICE OF REVOCATION
OR A LATER-DATED WHITE PROXY CARD IN THE ENCLOSED ENVELOPE.
IF YOU HAVE ANY QUESTIONS OR NEED FURTHER ASSISTANCE IN VOTING
YOUR SHARES, PLEASE CALL THE COMPANY'S PROXY SOLICITOR, CORPORATE INVESTOR
COMMUNICATIONS, INC., TOLL FREE AT 1-800-346-7885 OR COLLECT AT 201-
896-1900.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
The Company and its directors may be deemed to be "participants"
as such term is defined by regulations promulgated by the Securities and
Exchange Commission (the "SEC"). Certain additional information with
respect to the Company and certain of its directors is set forth in
Appendix A to this Proxy Statement. Unless otherwise indicated, the
business address of the directors is the address of the Company's principal
executive offices.
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation currently
provides for three classes of directors (excluding the directors elected by
the holders of Common Stock as discussed below) 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 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.
All three persons nominated for election to the Board of
Directors at the Annual Meeting are currently members of the Board of
Directors. Two of the nominees, Stanley D. Rosenberg and Robert J.
Cruikshank, have been nominated for election by the holders of Common
Stock, voting separately as a class, to hold office until the 1998 Annual
Meeting of the Stockholders or until their successors shall have been duly
elected and qualified. The person nominated to stand for election by the
holders of Common Stock and Preferred Stock, voting together as a single
class, to hold office until the 2000 Annual Meeting of Stockholders is Ezra
G. Levin. 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 April 1, 1997. Each of the nominees has consented to serve
as a member of the Board of Directors if elected.
The persons named on the enclosed white proxy card will vote the
shares of Common Stock and Preferred Stock 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 on the enclosed white proxy card will
vote for the election of such other person, if any, as the Board of
Directors may recommend.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
EACH OF THE THREE NOMINEES NAMED IN THIS PROXY STATEMENT FOR DIRECTOR OF
THE COMPANY.
PROPOSAL OFFERED BY THE FOUNDATIONS
The Foundations are proposing that the stockholders of the
Company adopt the following resolution:
"RESOLVED: The shareholders request that MAXXAM
become a "willing seller" of its Headwaters Forest
properties, seeking to sell or trade all Company
properties within the 60,000 acre Headwaters
Forest area in northern California, to a
government agency or conservation organization,
for appropriate consideration, which may include
relief from potential financial liabilities
related to pending litigation (sometimes called
debt-for-nature), in a manner consistent with
sound tax planning."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE ADOPTION
OF THE ABOVE RESOLUTION.
STATEMENT IN OPPOSITION
The Board of Directors and management of the Company are opposed
to the adoption of this proposed resolution as they believe it is not in
the best interests of the Company. The resolution is inconsistent with the
Company's much-publicized September 1996 agreement with the United States
and the state of California (the "Headwaters Agreement"). The Headwaters
Agreement provides for the transfer to the United States and California of
approximately 5,600 acres of the timberlands of Pacific Lumber, the
Company's principal forest products subsidiary. These acres, along with an
additional 1,900 acres of timberlands to be acquired from a third party,
would be preserved by the United States and California. The 5,600 acres of
Pacific Lumber timberlands include approximately 3,000 acres of virgin old
growth redwood timberlands, including the so-called "Headwaters Forest,"
the largest stand of virgin old growth redwood timberlands remaining in
private hands. In return for the 5,600 acres to be transferred to the
government, Pacific Lumber would receive approximately 7,800 acres of
timberlands and $300 million in cash or other property, as well as other
consideration. The Headwaters Agreement was entered into by the parties
after long and intense negotiations. Substantial work is yet to be done by
all parties to the Headwaters Agreement to effectuate the transfer
contemplated thereunder before the extended expiration date of February 17,
1998. The Company stands by the Headwaters Agreement, believing that it
maximizes the value of these assets for the Company's stockholders and
serves well the interests of the Company and Pacific Lumber.
This proposed resolution is very similar in scope to a 60,000-
acre alternative to the Headwaters Agreement previously proposed by various
environmental groups--organizations which the Company believes do not have
in mind the best interests of the Company or Pacific Lumber. Government
officials involved in the Headwaters Agreement have already rejected the
60,000-acre proposal as being unrealistic. The Company has also rejected
the 60,000-acre alternative for several reasons, including that it would
constitute nearly one-third of the Company's timberlands--a transaction
that would dwarf the Headwaters Agreement and which, even if it were
advisable, the Company believes it is not realistically obtainable. The
Company has no knowledge of a party willing and able to undertake such an
enormous purchase.
The Company believes that the proposal is also ill-advised.
Pacific Lumber is the largest private employer in Humboldt County,
California and its operations are important to the economy of the county
and the region. The 60,000-acre proposal would dramatically impair those
operations. It is likely that if such a proposal were implemented,
Pacific Lumber would be compelled to undertake personnel layoffs and
significantly reduce the scope of its lumber operations, which would
reduce the economic contributions such operations make to the region. The
Company believes this would have a series of impacts which are
economically and socially undesirable. The Headwaters Agreement was
crafted with the notion that it would avoid serious economic dislocation--a
common objective of the parties to the agreement. The Company believes
the 60,000-acre proposal is inconsistent with the economic best interests
of not only the Company but of Pacific Lumber's approximately 1,600
employees, their families, the communities in which they work, the citizens
of Humboldt County and of the entire coastal region of northern California.
Finally, the resolution makes reference to "debt-for-nature."
This is a reference to proposals previously made by environmental groups
that the Company swap portions of its timberlands in exchange for a debt
purportedly owed by the Company to the federal government. See "Certain
Transactions--Litigation Matters--USAT Litigation." There are at least two
problems with these proposals. First, as the Company has repeatedly said,
it does not believe there is any debt owed to the federal government.
Second, the Company believes that the environmental groups making such
proposals do not have the best interests of the Company in mind. The
Company believes that they instead wish to expand the number of timberlands
in public hands--not by fairly compensating the Company for these
timberlands as provided for by the Fifth Amendment to the U.S.
Constitution--but instead by trading them for non-existent debt.
THE BOARD OF DIRECTORS AND MANAGEMENT OF THE COMPANY URGE THAT
YOU VOTE "AGAINST" WHAT THEY BELIEVE TO BE AN ILL-ADVISED, COUNTER-
PRODUCTIVE PROPOSAL.
OTHER BUSINESS
Neither the Board of Directors nor management intends to bring
before the meeting any business other than the matters referred to in the
Notice of Annual Meeting of Stockholders and this Proxy Statement. If any
other business should properly come before the meeting, or any postponement
or adjournment thereof, the persons named on the enclosed white proxy card
will vote on such matters according to their best judgment.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company (sometimes referred to
herein as the "Board") held six meetings and acted by written consent on
ten occasions during 1996. In addition, management confers frequently with
directors on an informal basis to discuss Company affairs. During 1996, no
director attended fewer than 75% of the aggregate of the meetings of the
Board and all committees on which he served.
The Board of Directors of the Company has the following standing
committees: Executive, Audit, Compensation Policy, Section 162(m)
Compensation, and Conflicts and Compliance. 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 nor did it act by written consent
during 1996.
The Audit Committee meets with the appropriate financial and
legal personnel, internal auditors, and independent public accountants and
reviews the internal controls of the Company and the objectivity and
appropriateness of its financial statements and reports. It also reports
to the Board of Directors on the major accounting policies and principles
adopted by the Company and recommends to the Board the appointment and
retention of the independent auditors of the Company. Further, the Audit
Committee supervises and directs the financial reporting, affairs, policies
and procedures of the Company. Messrs. Levin (Chairman) and Rosenberg
served as members of this committee, which met on two occasions during
1996.
Prior to its replacement by the Compensation Policy and Section
162(m) Compensation Committees on May 22, 1996, the Compensation Committee
reviewed and advised management, made recommendations to the Board of
Directors, and reviewed and approved 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 served as members of this committee. During
1996, this committee met on one occasion and took action by unanimous
written consent twice.
The Compensation Policy Committee reviews and approves proposals
concerning or related to the establishment or change of benefit plans, or
material amendments to existing benefit plans, salaries or other
compensation, including payments awarded pursuant to bonus and benefit
plans maintained by the Company and its subsidiaries and to all executive
officers and other employees of the Company and its subsidiaries. However,
the Compensation Policy Committee is not responsible for the administration
of, amendments to and awards pursuant to the 1994 Executive Bonus Plan (the
"Executive Plan") or the 1994 Omnibus Employee Incentive Plan (the "Omnibus
Plan"). Messrs. Cruikshank, Levin (Chairman) and Rosenberg served as
members of this committee. The Compensation Policy Committee met on three
occasions and took action by unanimous written consent on two occasions
during 1996.
The Section 162(m) Compensation Committee has the authority to
administer and make amendments to the Company's Executive Plan and the
Omnibus Plan and such other plans or programs, if any, as are intended to
comply with the provision of Section 162(m) of the Internal Revenue Code of
1986 as it may be amended from time to time (the "Code"). This committee
establishes criteria to be used in determining awards to be made pursuant
to the Executive Plan, while retaining the right to reduce any such awards
through its power of negative discretion, and approves awards made pursuant
to the Omnibus Plan. Messrs. Cruikshank (Chairman) and Rosenberg served as
members of this committee. During 1996, this committee met on three
occasions.
The Conflicts and Compliance Committee ensures that appropriate
policies with regard to employee conduct pursuant to the legal and ethical
business standards are formulated, maintained, periodically reviewed and
properly implemented and enforced, and reviews possible conflicts of
interest, establishes or maintains, governs and enforces policies regarding
sensitive payments, insider trading with regard to the Company's equity
securities and similar policies. Messrs. Rosenberg (Chairman), Cruikshank
and Levin served as members of this committee, which met on two occasions
and took action by unanimous written consent once during 1996.
DIRECTOR COMPENSATION
Each of the directors who were not employees of or consultants to
the Company received a fee of $30,000 for the 1996 calendar year.
Beginning May 22, 1996, such directors also were entitled to receive an
annual fee of $1,500 for each Board committee they chaired (prorated from
May 22 to December 31, 1996). Messrs. Cruikshank, Levin and Rosenberg
received an aggregate of $30,915.32, $31,830.64 and $30,915.32,
respectively, in payment of such director and committee chairman fees
during 1996. No additional compensation for attending Board or committee
meetings was paid to directors. 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 1996, Messrs. Cruikshank and Levin received an
aggregate $35,000 and $38,000, respectively, in such director and committee
fees from Kaiser and KACC (excluding any expense reimbursement).
All non-employee directors are eligible to participate in a
deferred compensation program. By executing a Deferred Fee Agreement, a
non-employee director may defer all or part, in 25% increments, of the
director's fees received from the Company for service in such capacity for
any calendar year. The designated percentage of deferred fees are credited
to a book account as of the date such fees would have been paid to the
director and are deemed "invested" in two investment choices, again in 25%
increments, of phantom shares of the Company's Common Stock and/or in an
account bearing interest calculated using one-twelfth of the sum of the
prime rate plus 2% on the first day of each month. Deferred director's
fees, including all earnings credited to the book account, will be paid in
cash to the director or beneficiary as soon as practicable following the
date the director ceases for any reason to be a member of the Board of
Directors, either in a lump sum or in a specified number of annual
installments not to exceed ten, at the director's election. Mr. Levin is
the only director who has elected to defer his director's fees, with such
fees having been deferred since September 1, 1994.
Non-employee directors are also eligible to participate in the
Company's 1994 Non-Employee Director Stock Plan (the "Non-Employee Director
Plan"). Pursuant to such plan, each eligible director receives an initial
grant of an option to purchase 500 shares of Common Stock the day following
the later of the 1994 Annual Meeting or the first annual meeting after such
eligible director is first elected or appointed by the Board to be a
director. Thereafter, each eligible director is granted an option to
purchase 300 shares of Common Stock each year the day following the annual
meeting. The exercise price of the options per share is the closing price
of the Common Stock as reported by the American Stock Exchange on the date
the option is granted. Each option granted under such plan becomes
exercisable as to 25% of the shares on the first, second, third and fourth
anniversaries of the date of the grant. During 1996, Messrs. Cruikshank,
Levin and Rosenberg each received options to purchase 300 shares of the
Company's Common Stock at an exercise price of $43.875.
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.
<TABLE>
<CAPTION>
NAME POSITIONS AND OFFICES WITH THE COMPANY
----------------------- -------------------------------------------
<S> <C>
Charles E. Hurwitz Chairman of the Board, President and Chief
Executive Officer
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
</TABLE>
Charles E. Hurwitz. Mr. Hurwitz, age 56, 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 has also served the
Company as President since January 1993. Mr. Hurwitz has been, since
January 1974, Chairman of the Board and Chief Executive Officer of
Federated Development Company ("Federated"), a New York business trust
primarily engaged in the management of real estate investments, and a
principal stockholder of the Company. In December 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 Executive
Officer, and since January 1, 1993, President, of MAXXAM Group Inc.
("MGI"), a subsidiary of the Company engaged in forest products operations.
Mr. Hurwitz has also been, since its formation in November 1996, Chairman
of the Board, President and Chief Executive Officer of MAXXAM Group
Holdings Inc. ("MGHI"), a wholly owned subsidiary of the Company and MGI's
parent. Mr. Hurwitz has also served, since May 1993 and October 1995,
respectively, as a director and Chairman of the Board of SHRP General
Partner, Inc. ("SHRP"), the managing general partner of Sam Houston Race
Park, Ltd., a Texas limited partnership which operates a horse racing
facility in Texas.
Paul N. Schwartz. Mr. Schwartz, age 51, has served as Executive
Vice President and Chief Financial Officer of the Company since January
1995. He previously served as Senior Vice President--Corporate Development
of the Company from June 1987 until December 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, Pacific Lumber and Scotia
Pacific Holding Company ("Scotia Pacific"), a wholly owned subsidiary of
Pacific Lumber, since May 1987, January 1987 and November 1992,
respectively, and as Chief Financial Officer of MGI, Pacific Lumber and
Scotia Pacific since February 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 1994. Mr. Schwartz has also served as Vice President, Chief
Financial Officer and Director of MGHI since its formation in November
1996. Since May 1993, Mr. Schwartz has also served as a director and a
Vice President of SHRP.
John T. La Duc. Mr. La Duc, age 54, has served as Senior Vice
President of the Company since September 1990. 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. Mr. La Duc served as
Kaiser's Treasurer from August 1995 until February 1996 and from January
1993 until April 1993, and as KACC's Treasurer from June 1995 until
February 1996 and from January 1993 until April 1993. Mr. La Duc has also
been a Vice President and 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 1994 and February 1995,
respectively. Mr. La Duc also currently serves as a director and Vice
President of MGHI, 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 1995.
Anthony R. Pierno. Mr. Pierno, age 65, recently announced his
retirement from the Company and its subsidiaries effective May 31, 1997.
Mr. Pierno has resigned from all officer positions he holds with the
Company and its subsidiaries, effective as of April 30, 1997. Mr. Pierno
has served the Company as Senior Vice President and General Counsel since
February 1989. He has also served as Vice President and General Counsel of
MGI and Pacific Lumber since May 1989, of Scotia Pacific since November
1992 and of MGHI since November 1996, and has served as a director of
Pacific Lumber, MGI and MGHI since November 1993, January 1994 and November
1996, respectively. Additionally, Mr. Pierno served as Vice President and
General Counsel of Kaiser and KACC from January 1992 until February 1997.
Immediately prior to joining the Company, 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 50, 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. Mr. Cole is currently Chairman of
the United States Auto Parts Advisory Committee to the United States
Congress.
Diane M. Dudley. Ms. Dudley, age 56, was named Vice President--
Chief Personnel Officer of the Company in May 1990. Since November 9,
1995, Ms. Dudley has also served as a Vice President of Pacific Lumber.
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 60, has served the Company as
Vice President--Public Relations since September 1990. He has also served
as Vice President--Public Relations of MGI and Pacific Lumber since
September 1990. He had served as Vice President--Public Relations of KACC
from February 1988 until his retirement from KACC on March 31, 1997. 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 39, 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 Vice
President--Taxes of MGHI and certain other subsidiaries of the Company, and
as Assistant Treasurer of Kaiser and KACC.
Byron L. Wade. Mr. Wade, age 50, was recently named Senior Vice
President and Chief Legal Officer of the Company commencing May 1, 1997.
Mr. Wade 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
May 1993 as a Vice President and Secretary of SHRP. Mr. Wade has also
served as a Vice President, Secretary and Deputy General Counsel of MGHI
and MGI since November 1996 and July 1990, respectively. 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 66, has served as a
director of the Company since May 1993. Mr. Cruikshank is a nominee for
reelection as a director of the Company to serve until the 1998 Annual
Meeting of Stockholders. 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 the Houston office of Deloitte Haskins & Sells from
June 1974 until the merger and served on such firm's board of directors
from 1981 to 1985. Mr. Cruikshank also serves as a director and on the
Compensation Committee of Houston Industries Incorporated, a public utility
holding company with interests in electric utilities, coal and
transportation businesses; as a director of American Residential Services,
Inc., a publicly traded company which performs residential plumbing,
heating and air conditioning services; as a director of Texas Biotechnology
Incorporated; and as Advisory Director of Compass Bank--Houston.
Ezra G. Levin. Mr. Levin, age 63, was first elected a director
of the Company in May 1978. Mr. Levin is a nominee for reelection as a
director of the Company to serve until the 2000 Annual Meeting of
Stockholders. He has served as a director of Kaiser and KACC since July
1991 and November 1988, respectively. Since February 1993, Mr. Levin has
also served as a director of Pacific Lumber and Scotia Pacific. From
January 1974 through December 1995, he served as a Trustee of Federated.
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 & Frankel.
Stanley D. Rosenberg. Mr. Rosenberg, age 65, was first elected
to the Board of Directors of the Company in June 1981. Mr. Rosenberg is a
nominee for reelection as a director of the Company to serve until the 1998
Annual Meeting of Stockholders. 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, from which time he served as Of Counsel to that
firm through June 30, 1993.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of April 15, 1997, unless
otherwise indicated, 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 executive officers named in the Summary Compensation
Table, (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
Name Of % of % of Voting
Beneficial Owner Title of Class # of Shares(1) Class Power(2)
- ------------------------------- --------------- -------------------- ----------- -----------
<S> <C> <C> <C> <C>
Federated Development Inc.(3) Common Stock 1,740,626(4) 20.0 54.3
Preferred Stock 661,377 98.9
The Stockholder Group(3) Common Stock 2,735,494(4)(5)(6) 31.4 61.4
Preferred Stock 685,074(7) 99.1
Harold C. Simmons, Kronos, Common Stock 1,278,250(8) 14.8 8.3
Inc., The Combined Master
Retirement Trust, NL
Industries, Inc. and related
entities
Robertson, Stephens & Company, Common Stock 744,900(9) 8.6 4.9
Inc., The Robertson, Stephens
Orphan Fund, The Contrarian
Fund and related entities
Robert J. Cruikshank Common Stock 1,600(6) * *
Charles E. Hurwitz(10) Common Stock 2,733,542(4)(5)(11) 31.4 61.4
Preferred Stock 684,941(7)(12) 99.1
John T. La Duc -- -- -- --
Ezra G. Levin Common Stock 1,600(6)(11) * *
Anthony R. Pierno Common Stock 3,000(13) * *
Stanley D. Rosenberg Common Stock 2,600(6) * *
Paul N. Schwartz Common Stock 29,988(14) * *
Byron L. Wade Common Stock 4,801(15) * *
All directors and executive Common Stock 2,780,363(4)(5)(16) 31.9
officers of the Company as a Preferred Stock 684,941(7)(12) 99.1 61.6
group (12 persons)
<FN>
- ---------------
* Less than 1%.
(1) Unless otherwise indicated, the beneficial owners have sole voting and
investment power with respect to the shares listed in the table.
Includes the number of shares such persons would have received on
April 15, 1997, if any, for their exercisable stock appreciation
rights ("SARs") (excluding SARs payable in cash only) exercisable
within 60 days of such date if such rights had been paid solely in
shares of Common Stock. Also includes the number of shares of Common
Stock credited to such person's stock fund account under the Company's
401(k) savings plan as of February 28, 1997.
(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 Development Inc. ("FDI") is a wholly owned subsidiary of
Federated. FDI, Federated, Messrs. Hurwitz and Levin, and Mr. James
H. Paulin, Jr., Secretary and Treasurer of Federated, may be deemed a
"group" (the "Stockholder Group") within the meaning of Section 13(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The address of FDI 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 & Frankel, 919 Third Avenue, New
York, New York 10022.
(4) Includes 71,175 shares of Common Stock which FDI 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 (a) 1,669,451 shares of Common Stock owned by FDI as to which
Mr. Hurwitz indirectly possesses voting and investment power, (b)
20,892 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) 119,832 shares of Common Stock owned by the 1992
Hurwitz Investment Partnership, L.P., of which 59,916 shares are owned
by Mr. Hurwitz's spouse as separate property and as to which Mr.
Hurwitz disclaims beneficial ownership, and (e) 805,692 shares of
Common Stock held directly by Mr. Hurwitz.
(6) Includes options exercisable within 60 days of April 15, 1997 to
purchase 600 shares of Common Stock.
(7) Includes options exercisable within 60 days of April 15, 1997 to
purchase 22,500 shares of Preferred Stock.
(8) Information is based solely on Amendment No. 3 to the Schedule 13D
filed with the SEC dated April 15, 1997 (the "Simmons 13D"). The
Simmons 13D was filed by The Combined Master Retirement Trust (the
"CMRT") and Harold C. Simmons. The Simmons 13D states that CMRT, NL
Industries, Inc. ("NL") and Mr. Simmons' spouse are the direct
beneficial owners of 1,027,250, 250,000 and 1,000 shares of the
Company's Common Stock, respectively. The Simmons 13D also states
that Mr. Simmons may be deemed to share indirect power to vote and
direct the disposition of the shares of the Company's Common Stock
held by CMRT, NL and his spouse. Except to the extent of his vested
beneficial interest in shares directly held by the CMRT, Mr. Simmons
disclaims beneficial ownership of all of such shares of the Company's
Common Stock. The business address of Mr. Simmons and the CMRT is
Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas
75240-2697.
(9) Information is based solely on Amendment No. 3 to the Schedule 13D
filed with the SEC dated March 14, 1997, (the "Robertson 13D"). The
Robertson 13D was filed by The Robertson Stephens Contrarian Fund (the
"Contrarian Fund"), Robertson Stephens Global Natural Resources Fund,
Robertson Stephens Partners Fund, Robertson Stephens Orphan Fund,
Robertson Stephens Orphan Off-shore Fund, Bayview Investors Ltd.,
Robertson, Stephens & Company, Incorporated ("RS & Co.") and RS &
Co.'s five shareholders (Messrs. Sanford R. Robertson, Paul H.
Stephens, Michael G. McCaffery, G. Randy Hecht and Kenneth R.
Fitzsimmons). The purchase of the Common Stock giving rise to the
Robertson 13D was made by the Contrarian Fund, the Robertson Stephens
Partners Fund, the Robertson Stephens Global Natural Resources Fund
and the Robertson Stephens Orphan Off-shore Fund (collectively, the
"Funds"). Pursuant to the Robertson 13D, the Funds are the direct
beneficial owners of 744,900 shares of the Company's Common Stock. RS
& Co.'s five shareholders disclaim any beneficial ownership of all of
the 744,900 shares of the Company's Common Stock. The business
address of RS & Co. and the Funds is 555 California Street, Suite
2600, San Francisco, CA 94104.
(10) Mr. Hurwitz serves as a trustee of Federated, and together with
members of his immediate family and trusts for the benefit thereof,
owns all of the voting shares of Federated, and his positions include
Chairman of the Board, President and Chief Executive Officer of the
Company and Federated and membership on the Company's Executive
Committee. By reason of the foregoing and his relationship with the
members of the Stockholder Group, Mr. Hurwitz may be deemed to possess
shared voting and investment power with respect to the shares held by
the Stockholder Group.
(11) Does not include shares owned by other members of the Stockholder
Group.
(12) Includes 661,377 shares of Preferred Stock owned by FDI as to which
Mr. Hurwitz possesses voting and investment power, and 1,064 shares of
Preferred Stock held directly by Mr. Hurwitz.
(13) Includes 2,843 shares of Common Stock, which is the number of shares
Mr. Pierno would have received on April 15, 1997 for SARs exercisable
within 60 days of such date on 26,000 shares of Common Stock, if such
SARs had been paid solely in shares of Common Stock.
(14) Includes 5,551 shares of Common Stock, which is the number of shares
Mr. Schwartz would have received on April 15, 1997 for SARs
exercisable within 60 days of such date on 18,000 shares of Common
Stock, if such SARs had been paid solely in shares of Common Stock.
Also includes options to purchase 10,000 shares of Common Stock
exercisable within 60 days of April 15, 1997, and 10,749 shares of
Common Stock owned by a trust of which Mr. Schwartz and his spouse are
trustees.
(15) Includes 4,163 shares of Common Stock, which is the number of shares
Mr. Wade would have received on April 15, 1997 for SARs exercisable
within 60 days of such date on 13,000 shares of Common Stock, if such
SARs had been paid solely in shares of Common Stock.
(16) The Stockholder Group beneficially owns 2,735,142 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 (i) 10,749 owned by a trust of which an officer and his spouse
are trustees, and (ii) options exercisable within 60 days of April 15,
1997 to purchase 11,800 shares of Common Stock.
</TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation information, cash and
non-cash, for each of the Company's last three completed fiscal years with
respect to the Chief Executive Officer and the four most highly compensated
executive officers of the Company (collectively referred to as the "named
executive officers") for the fiscal year ended December 31, 1996:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
(A) (B) (C) (D) (E) (F) (G) (H) (I)
OTHER RESTRICTED
ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($)(8) (#) ($) ($)
- ------------------------- ----- ---------- ------------- ------------- ----------- --------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles E. Hurwitz, Chief 1996 645,900 450,000 -- -0- 22,500 -0- 102,885(3)
Executive Officer, 1995 633,235 450,000 -- -0- 22,500 -0- 100,985(3)
President and Chairman 1994 608,880 450,000 -- -0- 295,000(2) -0- 97,332(3)
of the Board
Anthony R. Pierno, 1996 351,666 250,000 -- -0- -0- -0- 58,750(3)
Senior Vice President 1995 344,771 263,633(4) -- -0- 5,000 -0- 55,928(3)
and General Counsel 1994 331,511 263,633(4) -- -0- -0- -0- 55,514(3)
Paul N. Schwartz,(5) 1996 325,000 250,000 -- -0- -0- -0- 54,750(3)
Executive Vice President 1995 290,850 218,307(4) -- -0- 10,000 -0- 48,476(3)
and Chief Financial 1994 264,409 218,307(4) -- -0- 25,000 -0- 45,390(3)
Officer
John T. La Duc,(6) 1996 260,000 83,200(7) -- -0- -0- -0-(10) 5,200(11)
Senior Vice President 1995 248,333 130,000(7) -- -0- -0- -0- 12,417(11)
1994 240,000 103,000(7) -- -0- 9,200(9) -0- 4,800(11)
Byron L. Wade, 1996 214,200 165,000 -- -0- -0- -0- 38,130(3)
Vice President, 1995 196,660 128,355 -- -0- 5,000 -0- 37,500(3)
Secretary and Deputy 1994 171,140 128,355 -- -0- -0- -0- 31,671(3)
General Counsel
<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. Additionally, an option for 250,000
shares of Kaiser common stock was granted by Kaiser.
(3) Includes the following aggregate amounts accrued in respect of the
Company's Revised Capital Accumulation Plan for 1996, 1995 and 1994
respectively, pursuant to which, in general, benefits vesting 10%
annually are payable upon termination of employment with the Company:
Mr. Hurwitz--$96,885, $94,985 and $91,332; Mr. Pierno--$52,750,
$51,716 and $49,727; Mr. Schwartz--$48,750, $43,628 and $39,661; and
Mr. Wade--$32,130, $31,500 and $25,671. Additionally, these amounts
include matching contributions by the Company under its 401(k) savings
plan for 1996, 1995 and 1994, respectively, as follows: Mr. Hurwitz--
$6,000, $6,000 and $6,000; Mr. Pierno--$6,000, $4,212 and $5,787; Mr.
Schwartz--$6,000, $4,848 and $5,729; and Mr. Wade--$6,000, $6,000 and
$6,000.
(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 in the amount of $15,000 and $20,000,
respectively, per year in 1995 and 1994. 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 of
the Company for fiscal year 1994.
(6) Mr. La Duc also served as Chief Financial Officer of the Company for
fiscal year 1994. Mr. La Duc received his compensation for all three
years 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 $50,000 per year (to be paid over two-year periods) awarded
for 1996 and 1995, and $75,000 (to be paid over a three-year period)
awarded for 1994, for which the Company reimburses KACC.
(8) No named executive officer held restricted stock of Kaiser or the
Company at fiscal year end 1996.
(9) Represents option for shares of Kaiser common stock.
(10) In 1995, Kaiser adopted the Kaiser 1995 Executive Incentive
Compensation Program, an unfunded incentive compensation program. The
long-term component of the system provides incentive compensation
based on performance against goals over rolling three-year periods.
Payments under the long-term component of the system are made 57% in
shares of Common Stock of the Company and 43% in cash and will be paid
in two installments, one-half during the year following the end of the
three-year period and one-half during the second year following the
end of the three-year period. In each case, however, such payments
are conditioned on the continued employment of the participant. As a
result, if a participant voluntarily terminates his or her employment
for any reason other than death, disability or retirement prior to the
beginning of the fiscal year the payment is to be made, any unmade
payments are forfeited. The total awards for the 1994-1996 period for
Mr. La Duc was $84,000. The first installment was paid in March 1997.
(11) Amount represents contributions under the KACC 401(k) savings plan by
KACC.
</TABLE>
OPTION/SAR GRANTS TABLE
The following table sets forth certain information concerning
stock options or SARs granted in fiscal year 1996 to any of the named
executive officers:
<TABLE>
<CAPTION>
GRANT
INDIVIDUAL GRANTS DATE VALUE
(A) (B) (C) (D) (E) (F)
% OF TOTAL
# OF OPTIONS/
SECURITIES SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTS 1996 ($/SHARE) DATE PRESENT VALUE ($)(1)
------------------------------- ----------------- ------------------ ----------------- ----------------- ---------------------
<S> <C> <C> <C> <C> <C>
Charles E. Hurwitz 22,500(2) 100(3) 50.875 12/18/06 $477,360
<FN>
- ---------------
(1) Valuation utilizing Black-Scholes Option Price Model using the
following assumptions: 5-year daily volatility for Common Stock,
6.41% risk-free rate (10-year Government Bond as of the grant date),
no dividend yield and 6.59-year exercise date. No adjustments were
made for non-transferability or risk of forfeiture.
(2) Represents underlying shares of Preferred Stock.
(3) Mr. Hurwitz was also granted options to purchase 22,500 shares of
Preferred Stock at an exercise price of $46.80 in January 1996. These
options were for services provided during 1995 and were reported in
the option grants table in the Company's 1996 Proxy Statement.
</TABLE>
The stock options set forth in the above table were granted to
Mr. Hurwitz on December 18, 1996 under the Company's Omnibus Plan at an
exercise price of 10% above the closing price of the Common Stock on the
date of grant.
OPTION/SAR EXERCISES AND FISCAL YEAR END VALUE TABLE
The table below provides information on an aggregated basis
concerning each exercise of stock options (or tandem SARs) and freestanding
SARs during the fiscal year ended December 31, 1996 by each of the named
executive officers, and the 1996 fiscal year-end value of unexercised
options and SARs, including SARs exercisable for cash only.
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
AT YEAR END (#) AT FISCAL YEAR-END ($)
SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------------- ---------------- --------------- --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Charles E. Hurwitz -0- -0- 31,500(1) 72,000(1) 767,813(4) 484,313(4)
-0- -0- 125,000(2) 125,000(2) --(5) --(5)
John T. La Duc -0- -0- 8,000(3) 2,000(3) 157,000(4) 39,250(4)
-0- -0- 4,600(2) 4,600(2) --(5) --(5)
Paul N. Schwartz -0- -0- 28,000(3) 28,000(3) 491,450(4) 376,675(4)
Anthony R. Pierno -0- -0- 26,000(3) 4,000(3) 243,100(4) 9,900(4)
Byron L. Wade -0- -0- 13,000(3) 7,000(3) 237,975(4) 68,775(4)
<FN>
- ---------------
(1) Represents underlying shares of Preferred Stock.
(2) Represents underlying shares of Kaiser's common stock
(3) Represents underlying shares of Common Stock.
(4) Valued at $47.625 per share, the closing price of the Company's Common
Stock on December 31, 1996, less exercise price.
(5) Valued at $11.625 per share, the closing price of Kaiser common stock
on December 31, 1996, less exercise price. No value is shown because
the exercise price is higher than such closing price.
</TABLE>
DEFINED BENEFIT PLANS
MAXXAM Pension Plan
All 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, funded 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, but excluding bonuses, commissions,
incentive compensation and all other extra compensation ("plan
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 plan 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 service.
The amount of an employee's aggregate plan compensation that may
be included in benefit computations under the Pension Plan is limited to
$150,000 for 1996. 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 1996 and credited years of service as of December 31, 1996 for the
Pension Plan and estimated annual benefits payable upon retirement at
normal retirement age (age 65) 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--16 years--$116,667; Mr. Pierno:
$150,000--7 years--$36,170; Mr. Schwartz: $150,000--16 years--$114,782;
and Mr. Wade: $150,000--16 years--$96,712.
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 $160,000 for 1997 and subsequent years
under Section 401(a)(17) of the Code. In addition, the amounts reflect a
maximum benefit limit of $125,000 for 1997 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 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 participating
subsidiaries who meet certain eligibility requirements. The table below
shows estimated annual retirement benefits payable under the terms of the
Kaiser Retirement Plan to participants with the indicated years of credited
service. These benefits are reflected without reduction for the
limitations imposed by the Code on qualified plans and before adjustment
for the Social Security offset, thereby reflecting aggregate benefits to be
received, subject to Social Security offsets, under the Kaiser Retirement
Plan and the Kaiser Supplemental Benefit Plan (as defined below).
<TABLE>
<CAPTION>
YEARS OF SERVICE
ANNUAL
REMUNERATION 15 20 25 30 35
- ---------------- ------------- --------------- ----------------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
$ 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
350,000 78,750 105,000 131,250 157,500 183,750
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
</TABLE>
The estimated annual retirement benefits shown are based upon the
assumptions that current Kaiser Retirement Plan and Kaiser Supplemental
Benefit 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 27.3 years of credited service on
December 31, 1996. Monthly retirement benefits, except for certain minimum
benefits, are determined by multiplying years of credited service (not in
excess of 40) by the difference between 1.50% of average monthly
compensation for the highest base period (of 36, 48 or 60 consecutive
months, depending upon compensation level) in the last ten years of
employment and 1.25% of monthly primary Social Security benefits. Pension
compensation covered by the Kaiser Retirement Plan and the Kaiser
Supplemental Benefits Plan consists of salary and bonus amounts set forth
in the Summary Compensation Table (column (c) plus column (d) thereof).
Participants are entitled to retire and receive pension benefits,
unreduced for age, upon reaching age 62 or after 30 years of credited
service. Full early pension benefits (without adjustment for Social
Security offset prior to age 62) are payable to participants who are at
least 55 years of age and have completed ten 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 ten or more years of
pension service (or whose age and years of pension service total at least
70) may receive pension benefits, unreduced for age, payable at age 62 or
reduced benefits payable earlier. Participants who terminate their
employment after five years or more of pension service, or after age 55 but
prior to age 62, are entitled to pension benefits, unreduced for age,
commencing at age 62 or, if they have completed ten or more years of
pension service, actuarially reduced benefits payable earlier. For
participants with five or more years of pension service or who have reached
age 55 and who die, the Kaiser Retirement Plan provides a pension to their
eligible surviving spouses. Upon retirement, participants may elect among
several payment alternatives including, for most types of retirement, a
lump-sum payment.
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. Four executive
officers of the Company, Messrs. Hurwitz, Pierno, Schwartz and Wade, were
entitled to receive benefits under the SERP during 1996.
The following projections are based on the same assumptions as
utilized in connection with the Pension Plan projections above. The 1997
qualified plan pay limit ($160,000) and benefit limit ($125,000) are
reflected for all years in the future. In addition, no future increases in
the participants' covered compensation amounts from the 1997 levels are
assumed.
<TABLE>
<CAPTION>
HURWITZ PIERNO SCHWARTZ WADE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
COVERED COMPENSATION FOR
1996:
Qualified Plan $ 150,000 $ 150,000 $ 150,000 $ 150,000
Nonqualified Plan 495,900 201,666 175,000 64,200
Total $ 645,900 $ 351,666 $ 325,000 $ 214,200
CREDITED YEARS OF SERVICE 16 7 16 16
AS OF DECEMBER 31, 1996
PROJECTED NORMAL RETIREMENT
BENEFIT:
Qualified Plan $ 116,667 $ 36,170 $ 114,782 $ 96,712
Nonqualified Plan 181,651 20,288 65,345 22,208
Total $ 298,318 $ 56,458 $ 180,127 $ 118,920
</TABLE>
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 certain
conditions and 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 officers had been involuntarily terminated on December
31, 1996 would have been as follows: Mr. Hurwitz-- $1,291,888; Mr. Pierno-
- -$94,679; Mr. Schwartz--$650,000; and Mr. Wade--$428,480.
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, 1996 would have been $151,667.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
All executive officers are eligible to participate in a deferred
compensation program. An executive officer may defer up to 20% of gross
salary and up to 20% of any bonus otherwise payable to such executive
officer for any calendar year. The designated percentage of deferred
compensation is credited to a book account as of the date such compensation
would have been paid and is deemed "invested" in an account bearing
interest calculated using one-twelfth of the sum of the prime rate plus 2%
on the first day of each month. Deferred compensation, including all
earnings credited to the book account, will be paid in cash to the
executive or beneficiary as soon as practicable following the date the
executive ceases for any reason to be an employee of the Company, either in
a lump sum or in a specified number of annual installments, not to exceed
ten, at the executive's election.
REPORT OF THE COMPENSATION COMMITTEES
ON
EXECUTIVE COMPENSATION
The Compensation Policy Committee (the "Policy Committee") and
the Section 162(m) Compensation Committee (the "Section 162(m) Committee")
of the Board of Directors of the Company have furnished the following
report on executive compensation for fiscal year 1996:
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Effective as of the date of last year's annual meeting, two
separate compensation committees were formed, the Policy Committee, which
administers and establishes overall compensation policies except those
related to Section 162(m) plans, and the Section 162(m) Committee, which
administers the Section 162(m) plans. Each such committee reports directly
to the full Board of Directors. For purposes of Section 162(m) of the Code,
the Section 162(m) Committee was composed of qualifying directors during
1996.
Section 162(m) of the Code, enacted in 1993, 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. The MAXXAM 1994 Executive Bonus Plan (the "Executive
Plan") and the Omnibus Plan, each of which has been approved by the
stockholders of the Company, are performance based and designed to enable
compliance with Section 162(m) of the Code and the regulations thereunder.
EXECUTIVE OFFICER COMPENSATION
The Policy Committee generally approves the policies under which
compensation is paid or awarded to the Company's executive officers.
Occasionally, the Chief Executive Officer of the Company exercises his
authority to make a particular payment, award or adjustment. Among the
factors the Policy Committee takes into consideration in its decisions on
executive compensation is the Company's complex structure requiring
diversified and multifaceted financial and managerial skills. For
instance, the Company consists of units operating in wholly separate
industries: aluminum, forest products, and real estate and parimutuel
horse racing, and many of the Company's executives also serve in executive
capacities in some or all of its operating subsidiaries in the varying
industries. The Company's annual earnings and the enhancement of
stockholder value continue to be important focuses of the Company. The
Company continues to position itself to respond when growth opportunities
through acquisitions become available. Accordingly, the Policy Committee
looks not only to the Company's annual earnings, enhanced stockholder
value, and business positioning and development pursued by its existing
business units as additional factors when making executive compensation
decisions but also recognizes that particular talents of its executives are
required to build the Company's asset base, expand into new business
segments and assimilate acquired businesses when the opportunities arise.
The Company's operating subsidiaries are highly leveraged. The Policy
Committee also recognizes and takes into account the role of its executive
officers in financial structuring, refinancing and reorganizations on
behalf of its operating units. Further, additional factors considered by
the Policy Committee are the special public relations, regulatory and
litigation related challenges the Company presents for its executive
officers. The numerous factors set forth above present a particular
challenge for the Policy 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 Policy Committee also recommends or approves bonus
compensation awards under additional incentive compensation programs such
as the Company's Omnibus Plan or deferred compensation program. See
"Executive Compensation--Employment Contracts and Termination of Employment
and Change-in-Control Arrangements" above for a description of such
program. From time to time certain eligible executive officers may
participate in the Company's Executive Plan, although to date only the
Chief Executive Officer has met the criteria. See "--Compensation for the
Chief Executive Officer for the Last Completed Fiscal Year" below. There
are no longer any employment agreements governing the compensation of any
of the executive officers of the Company. However, the base salaries and
the incentive amounts set in pre-existing employment agreements still serve
as a benchmark and are sometimes reviewed in determining compensation
decisions for those certain executives who at one time had such agreements.
Base Salary
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. Base salaries are generally adjusted
annually according to cost of living information. On December 3, 1996,
base salaries for executive officers (except those principally compensated
by KACC) were reviewed individually and recommendations as to increases for
the coming fiscal year were made by the Policy Committee. Among the
factors considered by the Policy Committee in determining the amount of the
base salary increases were the Consumer Price Index and the national
average increases. For the most part, across-the-board base salary
increases for key employees of the Company were 4%. None of the Company's
executive officers (except the Chief Executive Officer whose compensation
is discussed below or those executive officers principally compensated by
KACC), were granted stock appreciation rights ("SARs") or other awards
under the Omnibus Plan during 1996.
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 Policy Committee to focus on each executive
officer's individual efforts and 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 Policy Committee believes that this approach best
serves both the short- and long-term interests of the Company and its
stockholders by significantly compensating executive officers
retrospectively for services they have performed that can be both
quantitatively 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 KACC) during December 1996 were approximately
10% higher than the dollar amounts paid for 1995 for all but one executive
officer. These increases in bonus amounts were given in part because no
grants of SARs or other awards were made under the Omnibus Plan discussed
above. Such bonuses were proposed (other than with respect to himself) by
the Chief Executive Officer, and reviewed and approved by the Policy
Committee. One executive officer not named in the Summary Compensation
Table received a bonus of approximately 94% of his base compensation based
upon such officer's individual and extraordinary performance resulting in
significant cost benefit to the Company.
Additional Incentive Awards
Awards under the Omnibus Plan are stock-based and such
compensation received thereunder, if any, is usually tied to stock price
appreciation which will also be realized by the Company's stockholders. As
discussed above, no awards were granted to any executive officer (other
than the Chief Executive Officer and executive officers principally
compensated by KACC) under the Omnibus Plan or otherwise for 1996.
Executive Plan
Under the Executive Plan, the executive officers who are or will
be eligible to participate are the only executive officers of the Company
to which the deduction limitation is likely to apply. In general, in
administering the Executive Plan, the Section 162(m) Committee meets before
March 31 of each year to identify 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, objective
performance goals are pre-established, which are either based on general
business standards or are narrowly fact-specific to a given fiscal year.
For example, some of the performance goals for 1996 under the Executive
Plan were based upon specific projects, including (i) two major
subsidiaries committing to certain new business ventures, and (ii) the
execution of a binding written agreement in respect to an extraordinary
transaction. Other criteria for 1996 were more general, such as loss
reductions, earning improvements and achievement of the 1996 business plan
for each of the Company's industry segments. No officer other than the
Chief Executive Officer was eligible under this plan for 1996.
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, generally consists of the same
elements as for other executive officers. However, the Policy Committee
recognizes the special entrepreneurial talents of Mr. Hurwitz which have
provided extraordinary opportunities for the Company from time to time, and
the Policy Committee has awarded extraordinary compensation to Mr. Hurwitz
in recognition of his role in providing such opportunities and as an
incentive to provide future opportunities. On December 18, 1996, the
Policy Committee approved a base salary increase for 1997 of 4% for Mr.
Hurwitz. This was the same percentage of increase generally provided
during the same period to the Company's executive officers and other key
employees.
Under the Executive Plan, Mr. Hurwitz was entitled to receive
approximately $1,400,000 based on specific performance goals, established
before the end of March 1996, having been achieved at fiscal year end 1996.
The amount available for award to Mr. Hurwitz under the Executive Plan was
based on the achievement of annual business plans setting forth financial
performance objectives by three operating units of the Company. However,
the Section 162(m) Committee exercised its negative discretion permitted
under the Executive Plan and awarded Mr. Hurwitz a bonus amount of $250,000
thereunder, or approximately 18% of his entitlement under the Executive
Plan, in respect of his services during 1996. Separately from the
Executive Plan, the Policy Committee awarded Mr. Hurwitz a bonus of
$200,000 under the Company's annual discretionary bonus policies applicable
to all of its executive officers as discussed above, which was $50,000 less
than the amount he received for 1995. This discretionary bonus when added
to the amount Mr. Hurwitz earned under the Executive Plan, although such
amounts are not dependent upon or related to the other, gave Mr. Hurwitz an
aggregate bonus of $450,000 for 1996 as reflected in the Summary
Compensation Table.
The 162(m) Committee also gave Mr. Hurwitz a choice between two
alternative awards under the Omnibus Plan of either options to purchase (i)
22,500 shares of Preferred Stock or (ii) 25,000 shares of Common Stock,
both at an exercise price of $50.875, which is 10% above the closing price
for the Company's Common Stock on December 18, 1996, the date of the grant.
Mr. Hurwitz chose the options to purchase 22,500 shares of Preferred Stock.
The options will vest in 20% increments each year on the anniversary date
of the grant until fully vested. They expire ten years from the date of
grant.
COMPENSATION BY KAISER ALUMINUM & CHEMICAL CORPORATION
Certain of the Company's executive officers were compensated
during 1996 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.
Section 162(m) Compensation Compensation Policy Committee
Committee of the Board of Directors
of the Board of Directors
Robert J. Cruikshank
Robert J. Cruikshank, Chairman Ezra G. Levin, Chairman
Stanley D. Rosenberg Stanley D. Rosenberg
COMPENSATION POLICY COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Policy Committee of the Board of
Directors of the Company was, during the 1996 fiscal year, an officer or
employee of the Company or any of its subsidiaries, or was formerly an
officer of the Company or any of its subsidiaries; 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 and
Compensation Policy Committees and on the Board of Directors during 1996.
Mr. Levin is also a partner in the law firm of Kramer, Levin, Naftalis &
Frankel, which provided legal services for the Company and its subsidiaries
during 1996.
During the Company's 1996 fiscal year, no executive officer of
the Company served as (i) a member of the compensation committee (or other
board committee performing equivalent functions) of another entity, one of
whose executive officers served on the Compensation Policy Committee of the
Board of Directors, (ii) a director of another entity, one of whose
executive officers served on the Compensation Policy 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, 1991,
and that all dividends were reinvested. The data points are calculated as
of the last trading day for the year indicated.
<TABLE>
<CAPTION>
Company/Index Name Dec91 Dec92 Dec93 Dec94 Dec95 Dec96
<S> <C> <C> <C> <C> <C> <C>
MAXXAM Inc. 100 93.62 125.11 105.11 120.00 162.13
S&P 500 Index 100 107.62 118.46 120.03 165.13 203.05
Paper & Forest Products 100 114.34 126.01 131.30 144.57 159.91
Aluminum 100 102.37 104.81 128.52 158.39 181.91
</TABLE>
The Company is involved in the real estate and horse racing
industries in addition to the aluminum and forest product industries.
However, the real estate and horse racing units of the Company account for
less than 5% of the Company's gross revenues on a consolidated basis and,
therefore, a line-of-business index for each such industry is not
utilized.
CERTAIN TRANSACTIONS
LITIGATION MATTERS
USAT Litigation
In October 1994, the Company learned that the United States
Department of Treasury's Office of Thrift Supervision ("OTS") had commenced
an investigation into United Financial Group, Inc. ("UFG") and the
insolvency of its wholly owned subsidiary, United Savings Association of
Texas ("USAT"). In December 1988, the Federal Home Loan Bank Board
("FHLBB") placed USAT into receivership and appointed the Federal Savings &
Loan Insurance Corp. as receiver. At the time of the receivership, the
Company owned approximately 13% of the voting stock of UFG.
On December 26, 1995, the OTS initiated formal administrative
proceedings (the "OTS action") against the Company and others by filing the
Notice of Charges (No. AP 95-40; the "Notice"). The Notice alleges, among
other things, misconduct by the Company, Federated, Mr. Hurwitz and others
(the "respondents") with respect to the failure of USAT. The Notice claims
that the Company was a savings and loan holding company, that with others
it controlled USAT, and that, as a result of such status and agreements
with FHLBB, it was obligated to maintain the net worth of USAT. The Notice
makes numerous other allegations against the Company and the other
respondents, including that through USAT it was involved in prohibited
transactions with Drexel, Burnham, Lambert Inc. ("Drexel"). The OTS, among
other things, seeks unspecified damages in excess of $138.0 million from
the Company and Federated, civil money penalties from certain respondents
and restitution and reimbursement of certain losses as well as a removal
from, and prohibition against the Company and the other respondents
engaging in, the banking industry. The date for the hearing on the merits
of the case is scheduled for September 22, 1997. It is impossible to
predict the ultimate outcome of the foregoing matter or its potential
impact on the Company's consolidated financial position, results of
operations or liquidity. See also the description of the FDIC action and
the Martel action below.
On August 2, 1995, the Federal Deposit Insurance Corporation (the
"FDIC") filed a civil action entitled Federal Deposit Insurance
Corporation, as manager of the FSLIC Resolution Fund v. Charles E. Hurwitz
(the "FDIC action") in the U.S. District Court for the Southern District of
Texas (No. H-95-3936). The original complaint was against Mr. Hurwitz and
sought damages in excess of $250.0 million based on the allegation that Mr.
Hurwitz was a controlling shareholder, de facto senior officer and director
of USAT, and was involved in certain decisions which contributed to the
insolvency of USAT. The original complaint further alleged, among other
things, that Mr. Hurwitz was obligated to ensure that UFG, Federated and
the Company maintained the net worth of USAT. The Court has joined the OTS
as a party to the FDIC action and granted the motions to intervene filed by
the Company and three other respondents in the OTS action. The OTS is
seeking to be dismissed from the FDIC action. On January 15, 1997, the
FDIC filed an amended complaint which seeks, conditioned on the OTS
prevailing in the OTS action, unspecified damages from Mr. Hurwitz relating
to amounts the OTS does not collect from the Company and Federated with
respect to alleged obligations to maintain USAT's net worth. It is
impossible to predict the ultimate outcome of the foregoing matter or its
potential impact on the Company's consolidated financial position, results
of operations or liquidity.
In January 1995, an action entitled U.S., ex rel., Martel v.
Hurwitz, et al. (the "Martel action") was filed in the U.S. District Court
for the Northern District of California (No. C950322) and names as
defendants the Company, Mr. Hurwitz, MGI, Federated, UFG and a former
director of the Company. This action is purportedly brought by plaintiff
on behalf of the U.S. government; however, the U.S. government has declined
to participate in the suit. The suit alleges that defendants made false
statements and claims in violation of the Federal False Claims Act in
connection with USAT. Plaintiff alleges, among other things, that
defendants used the federally insured assets of USAT to acquire junk bonds
from Michael Milken and Drexel and that, in exchange, Mr. Milken and Drexel
arranged financing for defendants' various business ventures, including the
acquisition of Pacific Lumber. Plaintiff alleges that USAT became
insolvent in 1988 and that defendants should be required to pay $1.6
billion (subject to trebling) to cover USAT's losses. The Company's
alleged portion of such damages has not been specified. Plaintiff seeks,
among other things, that the Court impose a constructive trust upon the
fruits of the alleged improper use of USAT funds. In August 1996, the
Court transferred this matter (No. 96-CV-1164) to the court handling the
FDIC action. The parties are awaiting a ruling or hearing on defendants'
motion to dismiss. The Company believes this matter should not have a
material adverse effect on the Company's consolidated financial position,
results of operations or liquidity.
Zero Coupon Note Litigation
In April 1989, an action was filed against the Company, MGI,
MAXXAM Properties Inc. ("MPI"), a wholly owned subsidiary of MGI, 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.,
(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. and the two cases were consolidated (under case No. 10785;
collectively, the "Zero Coupon Note actions"). The Zero Coupon Note
actions relate to a Put and Call Agreement entered into between MPI and Mr.
Hurwitz, 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 Company's
Common Stock 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.
Rancho Mirage Litigation
In May 1991, an action entitled Progressive United Corporation v.
MAXXAM Inc., et al. (No. 12111) (the "Progressive United action") was filed
in the Court of Chancery of the State of Delaware against the Company,
Federated, the Company's directors and MCO Properties Inc. ("MCOP"), a
subsidiary of the Company. This action was brought derivatively on behalf
of the Company. At trial, plaintiffs alleged abuse of control and breaches
of fiduciary obligations based on, and unfair consideration for, the
Company's forgiveness of certain principal and interest due from Federated
under two loan agreements entered into between MCOP and Federated in 1987
(and later assigned by MCOP to the Company). Plaintiffs alleged that
Federated caused the Company to forgive $34.3 million of such indebtedness
by selling the underlying collateral to the Company for the amount of that
debt plus $7.3 million of additional consideration. Plaintiff seeks, among
other things, an accounting under the loan agreements, repayment of any
losses or damages suffered by the Company or MCOP, costs and attorneys'
fees.
The following six additional lawsuits, similar to the Progressive
United action, were filed in 1991 and 1992 in Delaware Chancery Court
challenging the Mirada transactions: NL Industries, et al. v. MAXXAM Inc.,
et al. (No. 12353) (the "NL Industries action"); Kahn, et al. v. Federated
Development Company, et al. (No. 12373); Thistlethwaite, et al. v. MAXXAM
Inc., et al. (No. 12377) (the "Thistlethwaite action"); Glinert, et al. v.
Hurwitz, et al. (No. 12383) (the "Glinert action"); Friscia, et al. v.
MAXXAM Inc., et al. (No. 12390) (the "Friscia action"); and Kassoway, et
al. v. MAXXAM Inc., et al. (No. 12404) (the "Kassoway action"). 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; and 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. The parties have agreed to stay this
action in light of the In re MAXXAM Inc./Federated Development Shareholders
Litigation.
The In re MAXXAM Inc./Federated Shareholders Litigation action
was tried before the Court commencing January 29, 1996. On April 4, 1997,
the Court issued its opinion concerning the merits of the case. The Court
found, among other things, that Federated and the director defendants,
respectively, caused and allowed the Company and MCOP to agree to terms in
the Mirada transaction which were unfair to the Company and MCOP. The
Court mentioned various theories of damages which had been presented at the
trial (ranging from $3.6 million to $49.4 million, which would be payable
to the Company). However, the Court deferred a decision on damages,
stating that it would reconsider rescission as a possible remedy and might
await any appeal of its decision.
Recapitalization Litigation
On March 19, 1996, a lawsuit was filed against the Company,
Kaiser and Kaiser's directors challenging and seeking to enjoin a proposed
recapitalization of Kaiser. The suit, which is entitled Matheson, et. al.
v. Kaiser Aluminum Corporation, et. al. (No. 14900) and was filed in
Delaware Court of Chancery, alleges, among other things, breaches of
fiduciary duties by certain defendants and that the proposed
recapitalization violates Delaware law and the certificate of designation
for the outstanding preferred stock of Kaiser. On April 8, 1996, the
Delaware Court of Chancery issued a ruling which preliminarily enjoined
Kaiser from implementing the proposed recapitalization. On May 1, 1996,
Kaiser's stockholders approved the proposed recapitalization which was not
implemented at that time due to a pending appeal of the trial court's
ruling. On August 29, 1996, the Delaware Supreme Court upheld the
preliminary injunction and remanded the case to the Court of Chancery. On
September 24, 1996, the plaintiffs filed a motion to make permanent the
temporary injunction issued on April 8, 1996. On September 27, 1996,
Kaiser's Board of Directors adopted a resolution abandoning the proposed
recapitalization. On October 2, 1996, Kaiser filed a motion in the
Delaware Court of Chancery to dismiss the shareholder litigation relating
to the proposed recapitalization on the ground of mootness and filed a
response to plaintiffs' motion for entry of a permanent injunction. On
March 18, 1997, plaintiffs withdrew their motion for a permanent
injunction, leaving their fee application for $3.5 million as the only
issue for the Court of Chancery to consider. On March 25, 1997, the Court
of Chancery awarded plaintiffs attorneys' fees and expenses in the total
amount of $800,000. On March 27, 1997, the Court of Chancery signed a
final order and judgment, approved as to form by all parties, awarding such
fees and expenses, dissolving the preliminary injunction, and dismissing
plaintiffs' case with prejudice. The decision to abandon the Proposed
Recapitalization does not preclude a recapitalization being proposed to the
stockholders of Kaiser in the future.
OTHER MATTERS
The Company and certain of its subsidiaries share certain
administrative and general expenses with Federated. Under these
arrangements, Federated's obligation to the Company and its subsidiaries
was approximately $138,000 for 1996. Federated and the Company also share
office space leased by the Company. The obligations of Federated relating
to 1996 under such office space sharing arrangement amounted to
approximately $12,000. At December 31, 1996, Federated owed the Company
$26,000 for shared office space and certain general and administrative
expenses. The Company's wholly owned subsidiary, Bering Holdings, Inc.
("Bering Holdings"), is a Texas registered investment adviser which has an
agreement with Federated whereby Bering Holdings manages an investment
portfolio for Federated on substantially the same terms as provided to
other persons. The agreement provides for an annual management fee equal
to 1% of the average value of the portfolio, except for certain short-term
investments for which the management fee is -1/2 of 1% per annum. The
agreement also provides for an annual performance fee equal to 10% of the
net gain in certain portfolios. Bering Holdings has accrued management and
performance fees for the year ended December 31, 1996 of approximately
$68,000 and $140,000, respectively. At December 31, 1996, Federated owed
Bering Holdings $145,000 in respect of such fees.
Mr. Levin, a director of the Company, is a partner in the law
firm of Kramer, Levin, Naftalis & Frankel, which provides legal services
for the Company and its subsidiaries.
On April 17, 1995, Sam Houston Race Park, Ltd. (the
"Partnership"), SHRP Acquisition, Inc. and SHRP Capital Corp. filed
voluntary petitions under Chapter 11 of the United States Bankruptcy Code.
Their bankruptcy reorganization plan has since been confirmed and the
transactions contemplated by the bankruptcy plan were consummated on
October 6, 1995. Since July 1993, Mr. Wade has served as a director, Vice
President and Secretary of SHRP, Inc., the Partnership's sole general
partner prior to the Partnership's bankruptcy reorganization, and of SHRP
Capital Corp., a subsidiary of the Partnership; Mr. Schwartz has served as
a director and Executive Vice President of both SHRP, Inc. and SHRP Capital
Corp.; and Mr. Hurwitz has served as a director and Chairman of the Board
of SHRP, Inc., and as a director, Chairman of the Board and President of
SHRP Capital Corp.
Currently, Mr. Pierno has an outstanding loan from the Company
bearing interest at 6% per annum with a principal balance of $37,500. Such
loan is secured by real estate owned by Mr. Pierno. As of February 28,
1995, the Company entered into an amendment of Mr. Pierno's promissory note
evidencing such loan which provides that (i) installments of $18,750 be
paid 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; and (ii) the loan also be secured by any amounts to
which Mr. Pierno may be entitled pursuant to the Company's Revised Capital
Accumulation Plan. Pursuant to the terms of Mr. Pierno's employment
agreement, he also borrowed an additional $200,000 bearing interest at 6%
per annum, with interest being payable monthly and principal being due
December 15, 1998, as amended (with prepayments due upon the exercise by
Mr. Pierno of any SARs granted pursuant to the agreement or employee
benefit plan). Such promissory note is also secured by any amounts to
which Mr. Pierno may be entitled pursuant to the Company's Revised Capital
Accumulation Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Non-Employee Director Plan provides that each non-employee
director is automatically granted an option to purchase 300 shares of
Common Stock each year the day following each annual meeting. Each of
Messrs. Cruikshank, Levin and Rosenberg received such a grant on May 22,
1996. The Company has historically assumed primary responsibility for
advising its directors and officers as to their obligations under Section
16(a) of the Exchange Act. Section 16(a) requires that a Form 4 or a Form
5 be filed reporting such grant. Such filing should have occurred not
later than February 14, 1997. While preparing Forms 5 and related
materials in February 1997, Company personnel inadvertently failed to note
that a filing had not been made with respect to the May 22, 1996 grants.
In the course of completing this Proxy Statement, Company personnel noticed
this oversight and appropriate Forms 5 were subsequently filed.
OTHER MATTERS
SOLICITATION OF PROXIES
The cost of this proxy solicitation, the total amount of which is
estimated not to exceed $100,000, will be borne by the Company. Such
estimate does not include costs represented by the amount normally expended
for a solicitation for an election of directors in the absence of a
contest, and costs represented by salaries and wages of regular employees
and officers. The total expenditures to date is approximately $25,000.
In addition to solicitations by mail, solicitations also may be
made by advertisement, telephone, telegram, facsimile transmission or other
electronic media, and personal meetings and interviews. In addition to
solicitation services to be provided by Corporate Investors Communications,
Inc. ("CIC"), as described below, proxies may be solicited by the Company
and its directors, officers and employees (who will receive no compensation
therefor in addition to their regular salaries or fees). Arrangements also
will be made with brokerage houses and other custodians, nominees and
fiduciaries to forward solicitation materials to the beneficial owners of
the Common Stock and Preferred Stock of the Company and such entities will
be reimbursed for their expenses. The Company has retained CIC at a fee
estimated not to exceed $45,000, plus reasonable out-of-pocket expenses, to
assist in the solicitation of proxies (which amount is included in the
estimate of total expenses above). It is anticipated that approximately
twenty employees of CIC may solicit proxies.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has appointed Arthur Andersen LLP as its independent
public accountants through the conclusion of the audit with respect to the
Company's 1996 fiscal year. Representatives of Arthur Andersen LLP plan to
attend the Annual Meeting 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 1998 ANNUAL MEETING OF STOCKHOLDERS
Proposals which stockholders intend to present at the 1998 annual
meeting of stockholders (other than those submitted for inclusion in the
Company's proxy material pursuant to Rule 14a-8 of the Proxy Rules of the
SEC) must be received by the Company no earlier than February 19, 1998, and
no later than March 20, 1998 to be presented at the meeting. Proposals
pursuant to Rule 14a-8 of the Proxy Rules must be received by December 31,
1997, to be eligible for inclusion in the proxy material for that meeting.
Any such stockholder proposals must be sent to the Company's Secretary at
its executive offices at 5847 San Felipe, Suite 2600, Houston, Texas 77057.
By Order of the Board of Directors
/s/ Byron L. Wade
BYRON L. WADE
Secretary
April 30, 1997
Houston, Texas
APPENDIX A
BUSINESS ADDRESSES
Unless otherwise indicated below, the business address of each of
the directors is the address of the Company's principal executive offices:
Robert J. Cruikshank
River Oaks Trust Building
2001 Kirby Dr., Box 106
Houston, Texas 77019
Ezra G. Levin
Kramer, Levin, Naftalis & Frankel
919 Third Avenue, 40th Floor
New York, New York 10022
Stanley D. Rosenberg
Rosenberg, Tuggey, Agather & Rosenthal
140 E. Houston St., Suite 220
San Antonio, Texas 78205
RECORD OWNERSHIP
The table below sets forth the amount of each class of securities
of the Company which the directors own of record:
NAME CLASS AMOUNT
-------------------- ------------ ---------------
Charles E. Hurwitz Common 802,874
PURCHASES AND SALES OF STOCK OF THE COMPANY
The table below sets forth all shares of Common Stock purchased
by the Company within the past two years:
Number of
Date Shares
- -------- ---------
10/09/96 2,300
10/10/96 2,300
10/15/96 2,900
10/29/96 8,000
11/01/96 19,100
11/05/96 5,000
11/11/96 5,000
02/25/97 6,500
02/26/97 1,500
03/14/97 11,500
03/18/97 500
03/19/97 1,700
03/24/97 5,000
03/25/97 5,500
03/27/97 1,500
03/31/97 1,400
04/01/97 10,400
The following table sets forth all shares of Common Stock or
Preferred Stock purchased or sold within the past two years by the
directors of the Company:
<TABLE>
<CAPTION>
Name Date Class Amount Transaction
---------------------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Robert J. Cruikshank 06/05/95 Common 1,000 Purchase
Charles E. Hurwitz 05/05/95 Preferred 4,524 Purchase
12/29/95 Common 2,500 Gift to
Third Party
</TABLE>
Table of Contents
Notice of Annual Meeting of Stockholders
Proxy Statement
Certain Information Concerning Participants 2
Election of Directors 2
Proposal Offered by the Foundations 3
Other Business 4
The Board of Directors and
its Committees 4
Executive Officers and Directors 7
Principal Stockholders 10
Executive Compensation 12
Report of the Compensation Committees
on Executive Compensation 17
Performance Graph 21
Certain Transactions 22
Section 16(a) Beneficial
Ownership Reporting Compliance 25
Other Matters 25
Appendix A A-1
[MAXXAM Logo]
NOTICE OF 1997 ANNUAL MEETING
AND
PROXY STATEMENT
IMPORTANT
PLEASE SIGN AND DATE YOUR WHITE PROXY CARD
AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
[recycle logo] Printed on recycled paper.
<PAGE>
COMMON
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, Paul N.
Schwartz and Byron L. Wade 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 22, 1997, 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 NOMINEES TO THE
BOARD OF DIRECTORS AND "AGAINST" THE PROPOSED RESOLUTION AS
SET FORTH IN THE PROXY STATEMENT.
Votes MUST be indicated
(X) in Black or Blue ink. /X/
1. ELECTION OF DIRECTORS
(a) Stanley D. Rosenberg (for term expiring in 1998)
/X/FOR nominee listed /X/ WITHHOLD AUTHORITY
to vote for nominee
(b) Robert J. Cruikshank (for term expiring in 1998)
/X/FOR nominee listed /X/ WITHHOLD AUTHORITY
to vote for nominee
(c) Ezra G. Levin (for term expiring in 2000)
/X/FOR nominee listed /X/ WITHHOLD AUTHORITY
to vote for nominee
2. Proposed resolution submitted by certain stockholders of the
Company relating to 60,000 acres of timberlands in northern
California owned by the Company's principal forest products
subsidiary.
FOR /X/ AGAINST /X/ ABSTAIN /X/
(Continued and to be signed on the reverse side)
3. 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.
Please note change of address
or comments below and, if so
noted, please mark here /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.
Return to: Corporate Election
Services
P.O. Box 3200
Pittsburgh, PA 15230-9544
Date:________________________,1997
_________________________________
Signature
_________________________________
Signature if held jointly
Please complete, sign, date and return the proxy card promptly,
using the enclosed envelope.
<PAGE>
PREFERRED
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, Paul N.
Schwartz and Byron L. Wade 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 22, 1996, 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 AND "AGAINST" THE PROPOSED RESOLUTION AS SET FORTH
IN THE PROXY STATEMENT.
Votes MUST be indicated
(X) in Black or Blue ink. /X/
1. ELECTION OF DIRECTOR
Ezra G. Levin (for term expiring in 2000)
/X/ FOR nominee listed /X/ WITHHOLD AUTHORITY
to vote for nominee
2. Proposed resolution submitted by certain stockholders of the Company
relating to 60,000 acres of timberlands in northern California owned by
the Company's principal forest products subsidiary.
FOR /X/ AGAINST /X/ ABSTAIN /X/
(Continued and to be signed on the reverse side)
3. 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.
Please note change of address
or comments below and, if so
noted, please mark here /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.
Return to: Corporate Election
Services
P.O. Box 3200
Pittsburgh, PA 15230-9544
Date:________________________,1997
_________________________________
Signature
_________________________________
Signature if held jointly
Please complete, sign, date and return the proxy card promptly, using
the enclosed envelope.
