SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ x ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S)
240.14a-12
MAXXAM INC.
- -----------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
THE COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS
- -----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11.
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applies:________________________________________________________
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applies:________________________________________________________
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computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
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the offsetting fee was paid previously. Identify the previous
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PROXY STATEMENT
OF
THE COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS
IN CONNECTION WITH
A SHAREHOLDER SOLICITATION REGARDING
THE ELECTION OF TWO INDEPENDENT COMMON DIRECTORS
AND
TWO SHAREHOLDER PROPOSALS RECOMMENDING THAT MAXXAM INC.
(1) DECLASSIFY ITS BOARD OF DIRECTORS SO THAT
GENERAL DIRECTORS ARE ELECTED ANNUALLY
AND
(2) PERMIT CUMULATIVE VOTING IN THE ELECTION OF COMMON DIRECTORS
May 4, 1999
The Committee of Concerned Maxxam Shareholders (the
"Committee") furnishes this Proxy Statement in connection with
the solicitation of proxies for use at the Annual Meeting (the
"Annual Meeting") of shareholders of Maxxam Inc. ("Maxxam" or the
"Company") to be held at 8:30 A.M. on Wednesday, May 19, 1999,
at the Waterwood National Resort and Conference Center, 1
Waterwood Parkway, Huntsville, Texas, or at any postponement or
rescheduling thereof. Copies of the Proxy Statement and form of
proxy are being mailed by the Committee to shareholders on or
about May 4, 1999.
Members of the Committee are The Rose Foundation for
Communities and the Environment (the "Rose Foundation"), as well
as Jill Ratner and Thomas W. Little, its President and Executive
Director, and the United Steelworkers of America ("USWA"). They,
along with Howard M. Metzenbaum and Abner J. Mikva, the
independent candidates for Common Director, and the As You Sow
Foundation are participants in this solicitation, and they
collectively hold 0.016% of the common stock and 0.008% of the
common and preferred stock, aggregated together for voting
purposes (see "Solicitation" and "Voting Rights" below).
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Dear Fellow Maxxam Shareholder:
The Committee of Concerned Maxxam Shareholders is seeking
your support because the Committee believes that Maxxam is a
company in trouble.
Maxxam reported net losses of $57.2 million in 1998. For
the last five years, Maxxam's stock price has lagged significant
ly behind S&P and NASDAQ indices and, in the Committee's view,
has failed to consolidate any substantial long-term increase in
value. In December 1997 Business Week ranked Maxxam's board of
directors tenth on its list of "The Worst Boards of Directors,"
explaining that Maxxam has a "tiny board with little business
experience" that was "dominated by CEO" Charles Hurwitz (December
8, 1997 -- consent of publication not sought or obtained).
The Committee believes that concentration of control in the
hands of Maxxam CEO Charles Hurwitz and a small number of
Maxxam's preferred stockholders may result in policies that
depress the value of common stock and threaten Maxxam's long-term
financial success. The Committee also believes that any
resolution of Maxxam's many problems will require the
participation of truly independent "Common Directors" -- the
directors elected solely by holders of Maxxam common stock -- who
are committed to representing the long-term interests of Maxxam
common stockholders and to increasing the value of Maxxam common
stock.
To this end, the Committee proposes the following:
1. Electing Howard M. Metzenbaum and Abner J. Mikva, both
independent nominees, to serve on Maxxam's board as the two
directors chosen by the holders of common stock.
Howard M. Metzenbaum was a co-founder and former chairman of
the board of American Parking Company of America, which merged
with International Telephone and Telegraph Corp. and became ITT
Consumer Services Corp. He is a former chairman of the latter
company as well as of ComCorp, the newspaper group, and he served
on the board of Dart Group and other corporations. He also
served three terms as a United States Senator from Ohio.
Abner J. Mikva is currently a visiting professor at the
College of Law at the University of Illinois. He was previously
Counsel to the President of the United States, Chief Judge of the
United States Court of Appeals for the District of Columbia
Circuit and a Member of Congress from Illinois.
2. Adopting two shareholder proposals:
(a) a resolution requesting that the board of directors
provide for the annual election of the "General Directors," i.e.,
those directors who are elected by the holders of Maxxam common
stock and preferred stock, voting together (the "Declassified
Board Proposal"); and
(b) a resolution requesting that the board of directors
provide for cumulative voting in the election of Common Directors
(the "Cumulative Voting Proposal").
The Committee urges all shareholders to attend the meeting
in person. If you are unable to attend in person and wish to
have your shares voted, please sign and date the enclosed BLUE
proxy card, and return it in the postpaid envelope as promptly as
possible. By returning the enclosed BLUE proxy card,
shareholders will be able to vote on the nomination of Howard M.
Metzenbaum and Abner J. Mikva to serve as the two Common
Directors, to be elected by the holders of common shares in lieu
of the two individuals nominated by the Company. Shareholders
will also be able to vote on the Declassified Board Proposal and
the Cumulative Voting Proposal. The BLUE proxy card can also be
used to vote on the Company's proposal to reapprove Maxxam's 1994
Omnibus Employee Incentive Plan, although the Committee takes no
position on that proposal, which is more fully described in the
Company's proxy materials.
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PLEASE SIGN, DATE AND RETURN TODAY THE ENCLOSED BLUE PROXY
CARD TO:
GEORGESON & COMPANY INC.
Wall Street Plaza
30th Floor
88 Pine Street
New York, N.Y. 10005
VOTING RIGHTS
The Company's board of directors has fixed the close of
business on March 31, 1999 as the record date for determining the
shareholders of the Company entitled to notice of and to vote at
the Annual Meeting and any adjournment thereof. Only holders of
record of the 7,000,863 shares of common stock (the "common
stock") and the 668,590 shares of Class A $.05 non-cumulative
participating convertible preferred stock (the "preferred stock")
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 may properly come
before the Annual Meeting or any adjournments thereof. The
holders of common stock, voting separately as a class, will also
be entitled to elect two Common Directors.
PRIOR SOLICITATIONS BY CERTAIN COMMITTEE MEMBERS
In 1998, two Committee members (Jill Ratner and Thomas W.
Little), along with the California Public Employees' Retirement
System ("CalPERS") and the As You Sow Foundation, sponsored the
Declassified Board Proposal that CalPERS has resubmitted for
consideration by the shareholders this year. In 1997, Ms.
Ratner, Mr. Little, and the As You Sow Foundation conducted an
independent proxy solicitation on behalf of two other independent
candidates for Common Director, as well as a shareholder
resolution asking the Company to sell or trade its properties
within the 60,000 acre Headwater Forest area in northern
California to a government agency or conservation organization
for appropriate consideration. Ms. Ratner, Mr. Little and the As
You Sow Foundation are participants in this solicitation (see
"Solicitation" below).
ELECTION OF DIRECTORS (ITEM 1)
The Company's Restated Certificate of Incorporation current
ly provides for three classes of directors having staggered terms
of office, with directors of each class to be elected by the
holders of the Company's common stock and preferred stock, voting
together as a single class, for terms of three years and until
their respective successors have been duly elected and qualified.
The Company's Restated Certificate of Incorporation also provides
that so long as any shares of the preferred stock are outstand
ing, 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 direc
tors (rounded up to the nearest whole number) to be in office
subsequent to such annual meeting.
The Committee's members have nominated Howard M. Metzenbaum
and Abner J. Mikva to serve on the board of directors of Maxxam
Inc. as the Common Directors to be chosen by the holders of
common stock, because the Committee members believe that Maxxam
needs effective independent voices at this time. Messrs.
Metzenbaum and Mikva were also nominated by the New York State
Common Retirement Fund, which beneficially owns 45,700 shares of
Maxxam common stock, and Alan Kahn, although neither of these
nominators is a "participant" in the present solicitation under
Item 4 of Reg. 240.101 promulgated pursuant to the Securities
Exchange Act of 1934, as amended. Both nominees have consented
to serve if elected.
The Committee believes that Messrs. Metzenbaum and Mikva
would be the type of independent, effective direc-
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tors that Maxxam needs now more than ever. Committee members
have nominated them because of their experience, judgment and
integrity, as well as their commitment to protecting shareholder
interests and increasing shareholder value, as we explain more
fully in the following section.
Howard M. Metzenbaum was co-founder and chairman of the
board of directors of Airport Parking Company of American
("APCOA"), which merged with International Telephone and Tele
graph Corp. and became ITT Consumer Services Corp. He served as
chairman of the board of the latter company, as well as chairman
of the board of ComCorp Communications Corp., the newspaper
group. In addition, he has served on the board of directors of
Dart Group, Inc., Shoppers Food Warehouse, Trak Auto, Society
National Bank and Capital National Bank. From 1977 until 1995,
he served as a United States Senator from Ohio. He previously
served in the Ohio legislature from 1943 to 1950. Senator
Metzenbaum, 81, is retired, and his address is 398 Oaks Club
House Drive, Pompano Beach, Florida. He does not currently own
Maxxam stock.
Abner J. Mikva has a broad range of experience as a lawyer,
an elected representative, a judge and a mediator. He served
five consecutive terms in the Illinois legislature and then
served as a Member of Congress from 1969 to 1973 and again from
1975 until 1979, when he was appointed to be a judge of the
United States Court of Appeals for the District of Columbia
Circuit. He served on that court until 1994, including service
as Chief Judge from 1991 to 1994. He then served as Counsel to
the President of the United States from October 1, 1994 until
November 1, 1995. Judge Mikva, 73, is currently a visiting
professor at the College of Law of the University of Illinois and
a senior fellow at the Institute of Government and Public Affairs
at that University. He also engages in arbitration ad mediation
with JAMS/Endispute, a national dispute resolution firm. His
address is 815 Van Buren Street, Suite 525 (MC-191), Chicago,
Illinois 60607. He is beneficial owner of 50 shares of Maxxam
common stock, purchased on March 17, 1999 and held in street
name.
For the reasons stated more fully in the following section,
the Committee believes that Messrs. Metzenbaum and Mikva should
be chosen by the holders of common stock as our Common Directors
in lieu of Stanley D. Rosenberg and Robert J. Cruikshank, the
nominees presented in the Company's Proxy Statement for these two
positions. The Company's 1999 Proxy Statement (incorporated
herein by reference) sets forth the names and ages of these
nominees for Common Director and of Charles E. Hurwitz, the
board's nominee for General Director, and describes the principal
business experience of each, as well as the year each first held
Company office and/or served as a director, the number of shares
each beneficially owns, and the percentage of outstanding shares
owned by each nominee. Information is also provided concerning
the committees of the board of directors.
REASONS FOR ELECTING INDEPENDENT DIRECTORS
The Committee believes that Senator Metzenbaum and Judge
Mikva offer precisely the kind of experience and judgment that
holders of Maxxam common stock need to enhance the value of their
Maxxam investment. Senator Metzenbaum has extensive experience
as a businessman and corporate director. Most recently, during
his service on the Dart Group board in 1997 and 1998, he was
actively involved in facilitating a merger with Richfood
Holdings, Inc., announced in April 1998, that allowed
shareholders to realize approximately $160 per share,
representing a premium of over 35% above the Dart stock's highest
price in 1997. Dart Group trustee Richard Stone credited Mr.
Metzenbaum and his entrepreneurial skills as playing a key role
in negotiating the best price for shareholders. Similarly, Judge
Mikva has a broad range of experience as a lawyer, elected
representative, judge and mediator, with high-level service in
all three branches of the federal government. The Committee
believes that this experience would be very helpful at a company
that has been surrounded by controversy for years on various
fronts.
The Committee also believes that electing these independent
candidates is important, given the critical juncture at which
Maxxam finds itself today. Maxxam recently received an
extraordinary payment of $380 million in cash and property under
the so-called "Headwaters Agreement" with the United States and
the State of California that will lead to preservation of certain
ancient redwood groves in the Headwaters Forest area of northern
California, which area is
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owned by Pacific Lumber Company, a Maxxam subsidiary. The
California legislature has authorized a further expenditure of
$80 million for additional Pacific Lumber properties in the
Headwaters area and has allocated an additional $20 million
toward purchase of even more property.
This infusion of new cash and assets into the Company
provides important opportunities for Maxxam and its shareholders,
but the Committee questions whether, based on past experience,
the current board will use these resources to maximize
shareholder value.
Specifically, allegations of fiduciary lapses have
surrounded Maxxam's CEO and Chairman, Charles Hurwitz. In April
1997 the Delaware Court of Chancery ruled in a case brought by
minority Maxxam shareholders that Mr. Hurwitz had engaged in
self-dealing in connection with loans that were not found fair to
the Company. Following this finding of liability, the case was
settled for approximately $20 million, the plaintiffs having
sought $27 million. In its April 1997 ruling for the shareholder
plaintiffs on liability issues, the Delaware Court found that the
defendants, including Mr. Hurwitz, had failed to show the fair
ness of a 1987 loan that Maxxam made to Mr. Hurwitz's private
business trust. The Court also ruled that the defendants had
failed to demonstrate the fairness of a 1991 transaction in which
Mr. Hurwitz's trust sold to Maxxam the underlying collateral, and
Maxxam then forgave the loan (In re: Maxxam Inc./Federated
Development Shareholders Litigation).
In addition, Maxxam faces potential liabilities in two
separate legal proceedings based on the failure and subsequent
$1.6 billion bailout of United Savings Association of Texas, a
savings and loan association that Maxxam is alleged to have
controlled.
Maxxam and Mr. Hurwitz are respondents in an action brought
by the Office of Thrift Supervision ("OTS"), an agency of the
United States Department of the Treasury, seeking restitution for
at least $560,000,000 in losses plus $399,600 in penalties.
Maxxam has agreed to indemnify Mr. Hurwitz and several other
respondents in this action, which could result in significant
exposure for restitution and penalties. That case is being
litigated before an administrative law judge. No determination
as to the merits of this case has been made at this time, and a
final judgment will be determined in an appropriate administra
tive proceeding (In the Matter of United Savings Association of
Texas).
Mr. Hurwitz is currently defending a lawsuit brought by the
Federal Deposit Insurance Corporation ("FDIC"), which alleges
that Mr. Hurwitz breached his fiduciary duties in connection with
United Savings Association of Texas, in which both Maxxam and Mr.
Hurwitz held substantial interests. Among other things, the FDIC
charges that Mr. Hurwitz engaged in "a pattern of deceptive
financial reporting and balance sheet manipulation" (Complaint,
FDIC v. Hurwitz, paragraph 16, filed August 2, 1995 in the United
States District Court for the Southern District of Texas). The
suit, which originally sought damages in excess of $250,000,000,
now seeks unspecified damages relating to any amounts that OTS
does not collect in the suit described above from the Company or
from Federated Development Company, a New York business trust of
which Mr. Hurwitz is Chairman of the Board and CEO. According to
Maxxam's filings with the Securities and Exchange Commission,
Maxxam may have to indemnify Mr. Hurwitz for any or all
restitution ordered or penalties imposed in this action. No
determination as to the merits of this case has been made at this
time, and a final judgment will be made in a court of law.
These suits and related litigation have already been costly
to the Company, which has paid approximately $40,000,000 in
litigation expenses, including Mr. Hurwitz's expenses.
Apart from these controversies, the Committee believes that
recent events also call into question the quality of Maxxam's
management decisions and the board's oversight of management.
In 1997 and 1998 the California Department of Forestry and
Fire Prevention ("CDF") suspended the timber operator license of
Maxxam's Pacific Lumber subsidiary twice in a twelve month
period, based on 128 cited violations
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of state forest practice rules. The most recent license
suspension lasted over three months.
No other major timber company in California has ever been
cited for so many violations in such a limited time or had its
operating license suspended, revoked or withheld. Because of
these repeated violations, Pacific Lumber faces increased regula
tory scrutiny, which the Committee believes will significantly
increase the difficulties and costs associated with environmental
compliance and other aspects of timber operations.
In addition, Maxxam's Kaiser Aluminum Corporation subsidiary
("Kaiser"), 63% of whose outstanding common stock is held by
Maxxam, is embroiled in a serious labor dispute, the longest in
Kaiser's history. The Committee believes that this dispute and
the associated costs were avoidable. On September 30, 1998,
approximately 2900 workers represented by the USWA, a participant
in this solicitation, went on strike at five plants operated by
Kaiser Aluminum & Chemical Corporation ("KACC"), which is wholly
owned by Kaiser. The strike began upon the expiration of the
existing contract on that date, with the USWA protesting what it
viewed as unfair labor practices by the Company, and with the
parties unable to resolve differences on various issues,
including job security and pensions. On October 14, 1998, the
USWA filed an unfair labor practices charge with the National
Labor Relations Board ("NLRB"), alleging that KACC had violated
its duty to bargain, had bargained in bad faith, and
discriminated against workers for going on strike. The NLRB's
General Counsel has not yet decided whether to file a complaint
on the basis of that charge.
KACC continued to operate these plants since that date using
replacement employees. On January 13, 1999, the USWA made an
unconditional return-to-work offer. On January 14, 1999, KACC
refused that offer, locked out its workforce at these five
plants, and chose to continue operating with replacement
employees. KACC has explained its refusal to accept the USWA
return-to-work offer on the ground that KACC is acting "in
support of its bargaining position," and KACC officials have
expressed concern that such a return to work would be under the
terms of the expired contract and that in the absence of a new
contract that contained a "no strike" agreement, KACC might be
susceptible to a strike. Negotiations resumed in April 1999 and,
according to KACC, concluded without making meaningful progress.
The USWA has also alleged that this lockout is unlawful.
If the NLRB General Counsel does decide to file a
complaint, such a complaint could allege that KACC engaged in an
illegal lockout. That contention, if established, could result
in gross back pay liability of up to $3 million per week from
January 14, 1999. KACC reported losses of $50 million in the
fourth quarter of 1998 owing to the strike, and Kaiser reported a
net loss of $38.9 million in that quarter. In addition, serious
accident rates and worker compensation claims increased at KACC
since the strike began. According to the Occupational Health and
Safety Administration ("OSHA") safety logs, serious workplace
injuries increased 138 percent in the fourth quarter of 1998 over
the average at KACC during the first three quarters of 1998 prior
to the labor dispute.
In addition, both Kaiser and Pacific Lumber have experienced
tragic fatalities that the Committee believes could have been
prevented. In October 1997, a 33 year old Kaiser mechanic died
when he was crushed beneath the bucket of a front-end loader he
was repairing. The Washington State Department of Labor and
Industries found Kaiser at fault in the incident, cited Kaiser
for five safety violations, and fined it $35,000. In September
1998, a Pacific Lumber employee logged a tree into a group of
protesters, killing a 24 year old man. Attorneys for the young
man's family have publicly announced that they expect the logging
incident to be the subject of a lawsuit seeking damages.
In the Committee's view, this history does not suggest that
Maxxam is a well-managed company whose affairs are overseen by a
capable, independent board of directors. The Committee believes
that the current problems justify the step of electing truly
independent directors, even if those candidates do not have the
current management's support. The Committee does not believe that
the current board of directors can be relied upon to exercise the
sort of effective oversight that is needed to adequately protect
the interests of Maxxam's holders of common stock.
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THE COMMITTEE THEREFORE ASKS THE HOLDERS OF MAXXAM COMMON STOCK
TO VOTE FOR HOWARD M. METZENBAUM AND ABNER J. MIKVA TO SERVE ON
THE BOARD OF DIRECTORS.
THE COMPANY'S PROPOSAL TO REAPPROVE MAXXAM'S
1994 OMNIBUS EMPLOYEE INCENTIVE PLAN (ITEM 2)
The Company is seeking shareholder approval of its proposal
to re approve the Maxxam 1994 Omnibus Employee Incentive Plan.
Shareholders should consult the Company's proxy materials, which
provide the Company's reasons for this proposal, along with the
text of the Plan. The Committee takes no position on this
proposal. For convenience, the attached proxy card affords
shareholders an opportunity to vote for or against, or to abstain
from voting on, this proposal. Unless otherwise directed on the
enclosed BLUE proxy card, as more fully described below, the
Committee will abstain from voting on this proposal.
THE DECLASSIFIED BOARD PROPOSAL (ITEM 3)
The Committee further seeks your support for the following
proposal, which has been submitted by the California Public
Employees' Retirement System ("CalPERS") and which is accompanied
by the "Supporting Statement" submitted by CalPERS to Maxxam for
inclusion in the Company's proxy materials:
"RESOLVED: Maxxam, Inc. shareholder request that the Board
of Directors change the election of all directors who are elected
by the holders of common and preferred stock voting together
("General Directors"), by providing that, at future Board
elections, such new directors be elected annually and not for
staggered terms. This declassification of General Directors
shall not affect the separate election of Common Directors as
provided in the Articles of Incorporation and shall be phased in
in a manner that does not affect the unexpired terms of Directors
previously elected."
SUPPORTING STATEMENT
Is accountability by the Board of Directors important to
shareholders? As a trust fund with more than 1 million partici
pants, and as the owner of approximately 229,800 shares of the
Company's common stock, the California Public Employees' Retire
ment System ("CalPERS") thinks accountability is of paramount
importance. That is why we are sponsoring this proposal which,
if passed, would encourage the board to reorganize itself so that
each General Director stands before the shareholders for re-
election each year. We hope to eliminate the Company's so-called
"classified board," whereby the General Directors are divided
into three classes, each serving a three-year term. Under the
current structure, shareholders can only vote on one-third of the
board at any given time.
By classifying itself, a board insulates its members from
immediate challenge. Insularity may have made sense in the past
(e.g., during the takeover frenzy of the 1980s). But now, we
believe that insularity works primarily to hamper accountability.
A classified board can prevent shareholders from mounting a
successful opposition to the entire board, because only one-third
of the directors are up for election in any given year. By way
of contrast, a declassified board would mean that each General
Director would stand for election each year.
CalPERS believes that corporate governance procedures and
practices, and the level of accountability they impose, are
closely related to financial performance. It is intuitive that,
when directors are accountable for their actions, they perform
better.
At the 1998 Maxxam annual meeting, more than 14% of the
votes cast supported the above resolution calling for annual
election of the General Directors. This represented nearly half
of all the votes cast by shareholders not directly affiliated
with the Company's CEO. We hope for even greater support this
year as we continue to focus the Company on its responsibilities
to all of its shareholders.
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If the Board acts on our proposal, shareholders would have
the opportunity to register their views at each annual meeting on
the performance of the board as a whole, and of each director as
an individual.
CalPERS urges you to join us in VOTING TO DE-STAGGER the
terms of election, as a powerful tool for management incentive
and accountability. We urge your support FOR this proposal."
* * *
THE COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS
RECOMMENDS A VOTE FOR THE DECLASSIFIED BOARD PROPOSAL.
THE CUMULATIVE VOTING PROPOSAL (ITEM 4)
The Committee further urges that the shareholders of Maxxam
Inc. adopt the following resolution (which is accompanied by the
proponents' "Supporting Statement"), which is sponsored by the
Rose Foundation for Communities and the Environment, As You Sow
Foundation, Nell Minow, John Harrington, Brent Blackwelder, Jill
Ratner and Thomas Little:
"RESOLVED: The shareholders request that the board of
directors take steps to provide for cumulative voting in the
election of those directors elected by holders of common stock.
Cumulative voting means that each holder of common stock may cast
as many votes as equal the number of shares held, multiplied by
the number of common directors to be elected. A shareholder may
cast all such cumulated votes for a single candidate or split
votes between multiple candidates, as that shareholder sees fit."
SUPPORTING STATEMENT
Cumulative voting allows a significant group of stockholders
to elect a director or directors of its choice -- safeguarding
minority shareholder interests and bringing independent perspec
tives to Board decisions.
In our view, cumulative voting for Maxxam's Common Directors
is needed because Maxxam's two-tier stock structure, with pre
ferred stock outvoting common stock 10-to-1, allows Maxxam's CEO
and his affiliates to effectively control Board elections and
policy based on majority holding of preferred stock.
We believe that Maxxam suffers from excessive CEO control of
Board affairs. In December 1997, BUSINESS WEEK named Maxxam's
Board the 10th worst in America, citing CEO domination. We
believe that subsequent events demonstrate an increasing need for
a minority shareholder voice on the Board.
-- Maxxam reported net losses of more than $30 million in
the first nine months of 1998 -- $3.86 per share.
-- Twice in 12 months, California suspended the operating
license of Maxxam's Pacific Lumber Company division, citing
serious violations of state forestry laws.
-- Company forestry practices, including extensive old-
growth logging and clearcutting, attract expensive litigation and
public criticism. Large timber companies like MacMillan Bloedel
are moving away from these practices. Thirteen Fortune 500
companies have pledged to forgo using old-growth wood products.
-- In October 1998 the federal government rested its case
seeking $500,000,000 restitution from CEO Hurwitz, Maxxam and
others, relating to the failure of a savings and loan Maxxam
allegedly controlled. We believe management has failed to
aggressively pursue opportunities to settle this case using
forest lands with low commercial, but
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high environmental value. Maxxam has paid $40,000,000 in this
and related litigation, including all of CEO Hurwitz' expenses.
-- Maxxam has been embroiled in a major labor dispute
resulting in a costly (and, we believe, avoidable) strike against
the Kaiser Aluminum division, the longest in Kaiser's history.
-- Serious accidents and worker compensation claims have
skyrocketed at Kaiser -- from an average of 4 serious injuries
per month at the Mead, Washington plant in 1997 to 29 in two
weeks in October 1998.
Safeguard your investment. Vote FOR cumulative voting.
* * *
The Committee believes that since this proposal was submitted to
Maxxam in December 1998, additional reasons to support this
proposal have developed. Specifically--
-- Maxxam has continued to lose money, reporting a net loss
for the year ending December 31, 1998 of $57.2 million.
-- Maxxam's Pacific Lumber subsidiary remained without a
timber operator's license for an additional three months. The
California Department of Forestry and Fire Prevention had sus
pended Pacific Lumber's license based on 128 cited violations of
state forestry rules. Due to more recent violations, Pacific
Lumber faces increased regulatory scrutiny, which the Committee
believes significantly increases the difficulties and costs
associated with environmental compliance and other aspects of
timber operations.
THE COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS RECOMMENDS A
VOTE FOR THE CUMULATIVE VOTING PROPOSAL.
VOTING PROCEDURES
The Company's proxy statement and proxy card include the
Declassified Board Proposal and the Cumulative Voting Proposal,
but not the names of Howard M. Metzenbaum and Abner J. Mikva, our
nominees for Common Director.
Even if you have already returned a proxy to the Company
using the Company's proxy card, you can still cast your vote for
Senator Metzenbaum or Judge Mikva or both, and for either or both
of the two shareholder proposals described herein, by signing and
returning the enclosed BLUE proxy card. See the discussion in
"Revocation Rights" below.
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 re
quired to constitute a quorum for the transaction of business at
the Annual Meeting. Under applicable Delaware law, abstentions
and broker non-votes (i.e., shares held in street name as to
which the broker, bank or other nominee has no discretionary
power to vote on a particular matter, has received no
instructions from the persons entitled to vote such shares and
has appropriately advised the Company that it lacks voting
authority) are counted for purposes of determining the presence
or absence of a quorum for the transaction of business. 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 or broker non-votes will be excluded
entirely from the vote and will have no effect on the outcome.
Abstentions may not be specified in the election of directors.
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A stockholder may, with respect to each other matter
specified in the notice of the meeting, including the
Declassified Board Proposal and the Cumulative Voting Proposal,
(i) vote "FOR," (ii) vote "AGAINST" or (iii) "ABSTAIN" from
voting. An affirmative vote of a majority of the shares present
in person or by proxy and entitled to vote at the annual meeting
is required for approval of the other matters presented,
including the Declassified Board Proposal and the Cumulative
Voting Proposal. Shares represented by proxies that are marked
"ABSTAIN" on such matters and proxies relating to broker non-
votes will be counted as shares present for purposes of
determining the presence of a quorum. Such shares, however, will
not be treated as shares voting and therefore will not affect the
outcome of the vote on matters such as the Declassified Board
Proposal and the Cumulative Voting Proposal. The Declassified
Board Proposal and the Cumulative Voting Proposal are advisory in
nature and cannot be implemented without board approval.
Unless otherwise directed on the enclosed BLUE proxy card,
as more fully described below, the Committee will vote FOR Mr.
Metzenbaum and FOR Mr. Mikva to serve as the Common Directors
chosen by the holders of common stock (Item 1); we will also vote
FOR the Declassified Board Proposal (Item 3) and FOR the
Cumulative Voting Proposal (Item 4) described herein; we will
ABSTAIN from voting on the Company's proposal to reapprove the
1994 Maxxam Omnibus Employee Incentive Plan (Item 2).
The accompanying BLUE Annual Meeting proxy card will be
voted at the Annual Meeting in accordance with your instructions
on the card. You may vote FOR the election of Mr. Metzenbaum,
Mr. Mikva or both as Common Directors, or you may withhold
authority to vote for the election of Mr. Metzenbaum, Mr. Mikva
or both by marking the proper box or boxes on the BLUE Annual
Meeting proxy card. It will not be possible to vote on the
election of Charles Hurwitz, who has been nominated by the board
of directors to serve as a General Director to be chosen by
holders of common stock and preferred stock, voting together, by
using the BLUE Annual Meeting card. As required by SEC Regula
tion 240.14a-4(d)(iv), the Committee hereby states that there is
no assurance that the registrant's nominees will serve if elected
with any of the soliciting parties' nominees. However, we have
no reason to believe that they will not serve.
IF NO MARKING IS MADE, YOU WILL BE DEEMED TO HAVE GIVEN A
DIRECTION TO VOTE THE SHARES REPRESENTED BY THE BLUE PROXY CARD
FOR THE ELECTION OF MR. METZENBAUM AND MR. MIKVA AS COMMON
DIRECTORS (ITEM 1), AS WELL AS FOR THE DECLASSIFIED BOARD
PROPOSAL (ITEM 3) AND THE CUMULATIVE VOTING PROPOSAL (ITEM 4),
PROVIDED THAT YOU HAVE SIGNED AND DATED THE PROXY CARD.
REVOCATION RIGHTS
You may revoke a proxy vote any time before the tally by (1)
executing a later proxy card, (2) appearing at the meeting to
vote, or (3) delivering to the proxy holder or to the Company's
secretary written notice of revocation prior to the date of the
meeting. The Company's secretary is Bernard L. Birkel, and
Maxxam's offices are located at 5847 San Felipe, Suite 2600,
Houston, Texas 77057, telephone (713) 975-7600, fax (713)
267-3702.
The Committee will keep the content of all cards it receives
confidential from everyone except those working directly with us
and our staff until the annual meeting, at which time our cards
must be presented to the company's tabulator in order to be
counted.
SOLICITATION
The participants in this solicitation are the Rose Founda
tion, 6008 College Avenue, Suite 10, Oakland, California 94618,
which owns 50 shares of Maxxam common stock; the Rose
Foundation's President, Jill Ratner, and its Executive Director,
Thomas W. Little, who own 90 shares of Maxxam common stock as
tenants in common; Rose Foundation staff, including Carla Din and
Karla James; the United Steelworkers of America, 5 Gateway
Center, Pittsburgh, Pennsyl-
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vania 15222, which owns 1002 shares of Maxxam common stock (two
shares purchased on December 14, 1998 and 1000 shares purchased
on March 3, 1999); USWA staff, including David Foster, Scott
Adams, John Duray and Jon Youngdahl; and the As You Sow
Foundation, 116 New Montgomery, Suite 800, San Francisco,
California 94105, which owns 100 shares of Maxxam common stock.
Proxies will be sought by mail, facsimile, telephone and
personal interview. The Rose Foundation and USWA will bear the
cost of this solicitation, expected to be $140,000, and to date
they have expended approximately $25,000. The Committee will not
seek reimbursement from the Company for the costs of the
solicitation.
The Rose Foundation has engaged in advocacy and public
education efforts seeking to preserve the Headwaters Forest area
in northern California, which is owned by Pacific Lumber Company,
a Maxxam subsidiary, and which contains several thousands of
acres of old-growth redwood trees. In March 1999, Maxxam, the
United States and the State of California reached final agreement
on the so-called "Headwaters Agreement," under which Maxxam
received an extraordinary payment of $380 million in cash and
property in return for the sale of 7500 acres of redwoods,
including 3000 acres of old-growth redwoods. An additional 4500
acres will be acquired in the future, and a Habitat Conservation
Plan approved by the U.S. Department of the Interior establishes
conditions under which Pacific Lumber can log on 210,000 acres of
nearby land. The Rose Foundation and its Headwaters Acquisition
and Restoration Trust have solicited contributions that would be
used towards purchasing areas of the Headwaters Forest that are
not acquired by the federal government or the State of
California, in the event that Maxxam should decide to make any
such properties available and should a willing buyer be found.
To date, the Rose Foundation and its Headwaters Acquisition and
Restoration Trust have received $5,496.60 in cash plus a $5
million pledge that could be used for that purpose. The Rose
Foundation does not plan to acquire any such properties on its
own behalf, nor is the Rose Foundation acting on behalf of any
potential buyer and would not directly benefit from any such
acquisition.
In September 1996, before any agreement on the Headwaters
Forest area had been reached, and at a time when Pacific Lumber
had announced plans to log old-growth forest lands in the
Headwaters area, the Rose Foundation urged the U.S. Office of
Thrift Supervision to issue a temporary cease-and-desist order in
OTS's pending case against Maxxam, Mr. Hurwitz and others (see
"Reasons for Electing Independent Directors" above). The Rose
Foundation recommended this action as a way to prevent these
assets from being liquidated, a step that would have reduced the
value of those properties to conservation-oriented buyers,
including government agencies. OTS did not seek such an order.
Had such an order been imposed, all significant Company financial
transactions and any liquidation of significant assets would have
required approval of a court or monitor. Later that month,
Maxxam, the United States and the State of California announced
an agreement in principle on the Headwaters area, which was
finalized as the Headwaters Agreement in March 1999. The Rose
Foundation did not renew its proposal for a cease-and-desist
order after the September 1996 agreement. In addition, Jill
Ratner, the Rose Foundation's President, provided legal advice to
Robert Martel, the "relator" or plaintiff in a False Claims Act
suit naming Maxxam as a defendant which was dismissed, although
Ms. Ratner did not appear as an attorney in that or any other
litigation adverse to the Company.
The USWA is a collective-bargaining representative of
employees at, inter alia, steel and aluminum mills located
throughout the United States, including employees of Kaiser
Aluminum & Chemical Corporation ("KACC"), which is wholly owned
by Kaiser Aluminum Corporation, 63 percent of whose outstanding
common stock is owned by Maxxam. The USWA is currently involved
in a labor dispute with KACC involving five of its plants: the
Trentwood Plant in Spokane, Washington; the Mead Plant in
Spokane, Washington; the Gramercy Plant in Gramercy, Louisiana;
the Newark Plant in Newark, Ohio; and the Tacoma Plant in Tacoma,
Washington. As noted above ("Reasons for Electing Independent
Directors"), approximately 3000 workers represented by the USWA
at these plants went on strike on September 30, 1998, following
the expiration of the existing contract. KACC continued to
operate these plants since that date using replacement employees.
On January 13, 1999, the USWA made an unconditional return-to-
work offer. On January 14, 1999, KACC refused that offer, locked
out its workforce at these five plants, and chose to continue
operating with replacement employees. Negotiations resumed in
April 1999 and, according to KACC, concluded
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without making meaningful progress. On October 14, 1998, the
USWA filed an unfair labor practices charge with the National
Labor Relations Board ("NLRB"), alleging that KACC had violated
its duty to bargain, had bargained in bad faith, and
discriminated against workers for going on strike. In addition,
the USWA has alleged that the January 14, 1999 lockout is
unlawful. The General Counsel of the NLRB has not yet decided
whether to file a complaint against KACC. Independently of this
matter, the USWA and one of its members filed a complaint in
California state court on April 7, 1999 against the California
Department of Forestry and Fire Protection, challenging one
aspect of the Headwaters Agreement, which was described earlier
in this section. In particular, the USWA suit seeks to prohibit
the CDF from approving any Timber Harvesting Plan that relies in
any manner upon a Sustained Yield Plan (the "Plan") that was
proposed by Pacific Lumber Co. and its subsidiaries, Scotia
Pacific Lumber LLC and Salmon Creek Corporation, and approved by
CDF on March 1, 1999 as part of the Headwaters Agreement.
Specifically, the complaint alleges that the approved Plan
authorizes an unsustainable high harvest of timber in the short
term, without consideration of the long-term impact of such
harvest levels on the economic vitality and employment in the
region. The complaint alleges that this result violates
California state law, which is said to require "maximum sustained
production of high-quality timber products while giving
consideration to regional economic vitality and employment at
planned harvest levels during the planning process." No final
determination has been made about the allegations in this suit.
RECORD DATE/SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE
OFFICERS/EXECUTIVE COMPENSATION/ELECTION OF DIRECTORS
Information on these subjects appears in the Company's proxy
statement.
SHAREHOLDER PROPOSALS FOR 2000 MEETING
Proposals that shareholders intend to present at the 2000
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, 2000, and no later than March 20, 2000
to be presented at the meeting. Proposals from shareholders
owning over $2,000 in stock for over one year that are submitted
under Rule 14a-8 for inclusion in the Company's proxy materials
must be received by the Company by December 30, 1999. 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.
PLEASE VOTE FOR HOWARD M. METZENBAUM AND ABNER J. MIKVA,
AND FOR THE DECLASSIFIED BOARD AND
CUMULATIVE VOTING PROPOSALS.
Sincerely,
The Committee of Concerned
Maxxam Shareholders
For Additional Information Please Call
Georgeson & Company Inc.
Toll Free (800) 223-2064
or
Committee of Concerned Maxxam Shareholders
Jill Ratner/Thomas W. Little
Collect (510) 658-0702
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MAXXAM INC.
1999 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY
THE COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS
The undersigned shareholder of Maxxam Inc. hereby appoints each
of Jill Ratner and Thomas W. Little, with full power of
substitution, for and in the name below, all shares of common
stock of Maxxam Inc. that the undersigned is entitled to vote if
personally present at the 1999 Annual Meeting of Shareholders of
Maxxam Inc., to be held on May 19, 1999 at the Waterwood National
Resort and Conference Center, 1 Waterwood Parkway, Huntsville,
Texas at 8:30 A.M. (local time) or at any adjournment,
postponement or rescheduling thereof. The undersigned hereby
revokes any previous proxies with respect to the matters covered
by this Proxy.
THE COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS RECOMMENDS A VOTE
FOR HOWARD M. METZENBAUM AND ABNER J. MIKVA AND FOR ITEM 3 (THE
DECLASSIFIED BOARD PROPOSAL) AND FOR ITEM 4 (THE CUMULATIVE
VOTING PROPOSAL). THE COMMITTEE TAKES NO POSITION ON ITEM 2.
Item 1: Election of Directors
The Committee of Concerned Maxxam Shareholders intend
to use this proxy
to vote for Howard M. Metzenbaum and Abner J. Mikva,
whom they have nominated to serve as the two Directors
to be elected by holders of shares of common stock
(the "Common Directors"). By using this card, you
will not be able to vote for the Company's two
nominees for Common Director (Stanley D. Rosenberg
and Robert J. Cruikshank) or on the election of
Charles E. Hurwitz, the Company's nominee to be
elected by holders of the common and preferred stock,
voting together. You should refer to the proxy
statement and form of proxy distributed by the Company
for the background, qualifications and other
information concerning the Company's nominees.
Item 2: To act upon a proposal, presented by the Company, to
reapprove the Maxxam
1994 Omnibus Employee Incentive Plan. You should
refer to the proxy statement and form of proxy
distributed by the Company for information
on this proposal.
Item 3: To act upon a stockholder proposal, if presented at
the meeting, by the California Public Employees'
Retirement System, requesting that the board of
directors take steps to declassify the board and to
provide for the annual election of all General
Directors elected by the holders of common and
preferred stock voting together.
Item 4: To act upon a stockholder proposal, if presented at
the meeting, by the Rose Foundation for Communities
and the Environment, As You Sow Foundation,
Nell Minow, John Harrington, Brent Blackwelder, Jill
and Thomas Little requesting that the board of
directors take steps to provide for cumulative
voting in the election of those directors elected by
holders of common stock.
/x/ PLEASE MARK VOTES AS IN THIS EXAMPLE
The Committee of Concerned Maxxam Shareholders recommends a vote
FOR Howard M. Metzenbaum and Abner J. Mikva on Item 1, FOR Item 3
and FOR Item 4. The Committee takes no position on Item 2.
1. Election of Directors
Howard M. Metzenbaum (for term expiring in 2000)
Abner J. Mikva (for term expiring in 2000)
/ / For / / Withhold / / For both except
_______________________________________________
For both nominees except as noted above
2. Proposal by the Company to reapprove the Maxxam 1994
Omnibus Employee Inventive Plan.
For/ / Against/ / Abtain/ /
3. Proposed resolution submitted by the California Public
Employees' Retirement System, requesting that the board of
directors take steps to declassify the board and to provide for
the annual election of all General Directors elected by the
holders of common and preferred stock voting together.
For / / Against/ / Abstain / /
4. Proposed resolution submitted by the Rose Foundation for
Communities and the Environment, As You Sow Foundation, Nell
Minow, John Harrington, Brent Blackwelder, Jill and Thomas Little
requesting that the board of directors take steps to provide for
cumulative voting in the election of the Common Directors, who
are elected by holders of common stock.
For / / Against / / Abstain / /
WHERE NO VOTING INSTRUCTIONS ARE GIVEN, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED FOR HOWARD M. METZENBAUM AND ABNER J.
MIKVA ON ITEM 1, FOR ITEM 3 AND FOR ITEM 4. WHERE NO VOTING
INSTRUCTIONS ARE GIVEN, THE SHARES REPRESENTED ON THIS PROXY WILL
ABSTAIN ON ITEM 2.
IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT, POSTPONEMENT OR RESCHEDULING THEREOF, HEREBY
REVOKING ANY PROXY OR PROXIES HERETOFORE GIVEN BY THE
UNDERSIGNED.
This Proxy, when properly executed, will be voted in the manner
marked herein by the undersigned shareholder. Securities and
Exchange Commission reg. 240.14a-4(d)(iv) requires the following
statement on this card: There is no assurance that the
registrant's nominees will serve if elected with any of the
soliciting party's nominees.
(place mailing label here)
Please date and sign this proxy exactly as your name appears
hereon:
Dated:________________________, 1999
____________________________ _______________________________
(Signature) (Signature, if held jointly)
_______________________________
(Title)
When shares are held by joint tenants, both should sign. When
signing as attorney-in-fact, executor, administrator, trustee,
guardian, corporate officer or partner, please give full title as
such. If a corporation, please sign in corporate name by
President or other authorized officer. If a partnership, please
sign in partnership name by authorized person.
To vote in accordance with the recommendation of The Committee of
Concerned Maxxam Shareholders, just sign and date this proxy. No
boxes need to be checked.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN
THE ENCLOSED ENVELOPE PROVIDED.
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