PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
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or Section 240.14a-12
MAXXAM Inc.
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(Name of Registrant as Specified In Its Charter)
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<PAGE>
YOUR BOARD OF DIRECTORS URGES YOU TO NOT
SUPPORT STOCKHOLDER PROPOSALS
May 7, 1998
Dear MAXXAM Shareholders:
Again this year, you have received proxy solicitation materials from a
group of stockholders, including the As You Sow Foundation (beneficial
owner of 100 shares of the Company's common stock) and Jill Ratner and
Thomas Little of the Rose Foundation (owners of record of 50 shares)
regarding the stockholder proposals contained in the Company's proxy
statement. The first of these proposals, to de-stagger the terms of
directors, is brought by Ms. Ratner and Mr. Little, together with the
California Public Employees Retirement System (CalPERS). The second
proposal, calling for the Company to prepare a report on strategies for
ending "all operations that cut, damage, remove, mill or otherwise involve
old-growth trees," is brought by the As You Sow Foundation.
With the exception of CalPERS, which opposes staggered boards as a matter
of policy, these are the same groups which last year sought to oust
directors and replace them with their own nominees to further a goal of
having the Company sell at bargain prices nearly one-third of its
timberlands, including a substantial portion of its most valuable timber
properties.
DO NOT BE MISLED!
The Company is concerned that shareholders will be misled by certain
inaccurate or incomplete statements in the materials being distributed by
these groups. Shareholders need to know the whole picture so that they may
draw their own conclusions.
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of five members. Two
of these are elected each year by the common shareholders. The remaining
directors are elected to staggered, three-year terms by the common and
preferred shareholders voting together as a single class, with one such
director elected each year. The three persons nominated for election to
the Board of Directors at this year's annual meeting are currently members
of the Board and, together, have a combined 55 years of service to the
Company either as a director or an employee.
The Board of Directors believes that the Company's Board as currently
structured strikes the correct balance between accountability and
flexibility, by providing for the annual election of a majority of the
directors, and continuity and stability, by generally ensuring that at
least two of the remaining directors will have had prior experience in the
management of the Company's business. In the late 1980s, staggered boards
of directors were approved by the stockholders of many large domestic
corporations for these very same reasons. Furthermore, the Board of
Directors believes that directors elected for staggered terms are as
accountable to stockholders as they would be if elected annually since the
same legal duties and standards of performance apply regardless of the term
of service.
For these reasons, the Board of Directors continues to believe that the
Company's partially staggered Board is in the best interests of the Company
and all of its shareholders. Therefore . . .
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST"
THIS STOCKHOLDER PROPOSAL.
MANAGEMENT OF THE COMPANY'S FOREST PRODUCTS ASSETS
The Company's forest products operations achieved major accomplishments in
1997 and in the early months of 1998:
- Operationally, the Company's forest products segment
reported record sales, shipments, operating cash flow and
operating income for 1997.
- Strategically, the Company made major progress toward
implementation of the Headwaters Agreement, a pact which the
Company, its Pacific Lumber subsidiary, and the United
States and California governments entered into in September
1996 to permanently preserve the most important virgin old
growth forests still owned by Pacific Lumber. In exchange
for relinquishing ownership of 5,600 acres of its property,
Pacific Lumber would receive (a) $300 million of
consideration and (b) approximately 7,800 acres of adjacent
timberlands.
Certain significant milestones have been achieved toward completing the
Headwaters Agreement. In November 1997, President Clinton signed an
appropriations bill which contains authorization for the expenditure of
$250 million of federal funds toward consummation of the Headwaters
Agreement. Then, on February 27, 1998, the Company and representatives of
the United States and California entered into an agreement in principle
regarding three conditions to completion of the Headwaters Agreement: (a)
approval of a multi-species habitat conservation plan; (b) issuance of a
related incidental take permit; and (c) approval of a long-term sustained
yield plan. While substantial work remains to be done by all parties to
the Headwaters Agreement to effectuate the contemplated transactions, the
Company stands by the Headwaters Agreement, believing that it strikes an
appropriate balance between environmental and economic interests.
The As You Sow Foundation, on the other hand, wants you to believe that the
Headwaters Agreement does not go far enough. Its goal is to require the
Company to discontinue production and sale of premium upper grade wood
products--the Company's most valuable product line of lumber. Although in
1997 the volume of shipments of all upper grade redwood and Douglas-fir
lumber comprised only 16% of the Company's total overall lumber shipments,
sales of these products accounted for 35% of the Company's overall lumber
sales.
Last year, the Rose and As You Sow Foundations sought passage of a proposal
to divest ownership of nearly a third of the Company's timberlands,
including its most valuable forests and groves. Specifically, they urged
that 60,000 acres of the Company's timberlands be sold or traded "taking
into account probable restrictions on their use." This is the same type of
argument made by environmental groups hoping that less than true value will
be paid for property taken or acquired. No shareholder looking out for the
best interests of the Company would advocate that its property be sold at a
discounted price reflecting government-imposed restrictions. Now, this
same group wants the Company to follow another, thinly veiled but equally
destructive course. Do not be misled. Increasing shareholder value is not
the objective of this group.
The Board of Directors believes that the officers, directors, and
management of the Company are in the best position to direct the manner in
which the Company's assets are to be used and managed. The Board of
Directors and the management of the Company also believe that the Company's
forest management policies support sustainable forestry, are scientifically
based, and are environmentally sound.
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS ALSO
RECOMMENDS A VOTE "AGAINST" THIS STOCKHOLDER PROPOSAL.
EXTREMELY IMPORTANT
PLEASE DO NOT VOTE OR COMPLETE ANY PROXY CARD YOU MAY RECEIVE FROM ANYONE
OTHER THAN THE COMPANY. BY NOW, YOU SHOULD HAVE RECEIVED THE COMPANY'S
PROXY STATEMENT ACCOMPANIED BY A WHITE PROXY CARD. PLEASE COMPLETE, DATE
AND SIGN THAT WHITE PROXY CARD AS RECOMMENDED IN THIS LETTER AND IN THE
PROXY STATEMENT, INCLUDING VOTING "AGAINST" EACH OF THE TWO STOCKHOLDER
PROPOSALS, AND RETURN IT IN THE POSTAGE PREPAID ENVELOPE PROVIDED WITH THE
PROXY STATEMENT.
IF YOUR SHARES ARE HELD WITH A BROKERAGE FIRM, YOUR BROKER CANNOT VOTE YOUR
SHARES UNLESS HE OR SHE RECEIVES YOUR SPECIFIC INSTRUCTIONS. PLEASE
CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT WITH YOUR VOTING
INSTRUCTIONS.
IF YOU HAVE ANY QUESTIONS ABOUT HOW TO VOTE YOUR SHARES, PLEASE CALL THE
COMPANY'S PROXY SOLICITOR, CORPORATE INVESTOR COMMUNICATIONS, INC.,
TOLL-FREE AT
(888) 202-1422
