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SECURITIES EXCHANGE ACT OF 1934
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MAXXAM Inc.
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April 30, 1999
DEAR STOCKHOLDER:
In the coming weeks you are likely to receive proxy solicitation
materials from a group of stockholders who are attempting to
pressure the Company to adopt an agenda that the Company believes
would be harmful to it and you as a stockholder. While we respect
the rights of stockholders to submit resolutions and board
nominations for consideration, we urge you to vote "FOR" the
Company's nominees for the Board of Directors--Robert J. Cruikshank
and Stanley D. Rosenberg--and "AGAINST" the two proposals being
recommended by this group. The Company believes that casting your
votes in this manner is in the best interests of you and MAXXAM.
MAXXAM is concerned that you and other stockholders will be misled
by certain statements in the materials likely to be distributed by
this group concerning The Pacific Lumber Company and a labor dispute
at Kaiser Aluminum. Here are the facts:
FACT: Two of the proposals are being made by a group of labor and
environmental special interests, including the United Steelworkers
of America, The Rose Foundation and its president Jill Ratner, who
have joined forces in a corporate campaign against the Company.
Several years ago The Rose Foundation made an effort to freeze all
of the Company's assets in order to advance its particular agenda,
and Ms. Ratner admits that she advised another person in a lawsuit
against the Company.
FACT: The March 1999 Headwaters Agreement has won the support of
leading federal, state and local politicians, civic leaders,
editorial boards and others. Reached after more than a decade of
controversy, Pacific Lumber was able to craft an agreement with the
Clinton and Davis Administrations that should create a more
predictable and viable future for the 130 year old company and its
employees, saves environmentally sensitive timberlands for future
generations, and benefits the Company's investors and other
stakeholders.
FACT: The United Steelworkers of America have rejected Kaiser
Aluminum's proposals to eliminate artificial work rule restrictions
and realize productivity improvements in exchange for wage and
benefit increases. Moreover, the union has refused to put Kaiser's
offer to a vote by its members.
Keeping these items in mind, here are some additional facts you need
to know about these proposals:
PROPOSAL: ELECTION OF DIRECTORS
As part of its corporate campaign, The United Steelworkers of
America and other stockholders have nominated Howard Metzenbaum and
Abner Mikva as Common Directors to the Company's Board of Directors.
We urge that you vote "FOR" the Company's nominees--Robert J.
Cruikshank and Stanley D. Rosenberg.
MESSRS. MIKVA AND METZENBAUM'S TROUBLING MEDIA STATEMENTS: The
Company believes that Messrs. Metzenbaum and Mikva have demonstrated
a disturbing lack of knowledge about its operations, and a desire to
favor narrow agendas at the expense of all of the Company's
stockholders. The Chicago Tribune (in an article by David Greising,
April 9, 1999) said that Mr. Mikva is "hamstrung by an obvious
unfamiliarity with the details of MAXXAM's business" and that he
appeared to be reading from a script to explain why he is running
for a position on the Board. The Tribune concluded that "If it (the
interview) were an audition, he wouldn't get the part." Mr.
Metzenbaum told The Wall Street Journal (in an article by Mitchel
Benson, March 24, 1999) that his chances of winning election are "an
extreme long shot . . . But I've been in other situations before
where I just thought 'You ought to make a statement.'"<FN1>
OUTSTANDING QUALIFICATIONS OF STANLEY D. ROSENBERG AND ROBERT J.
CRUIKSHANK: The Board of Directors enthusiastically supports the
candidacy of Stanley D. Rosenberg and Robert J. Cruikshank as Common
Directors. Messrs. Rosenberg and Cruikshank have had distinguished
careers in the fields of law and accounting, respectively, and have
served as directors in a wide range of corporate, academic and
non-profit organizations. As non-management members of the Board,
Messrs. Rosenberg and Cruikshank have provided the Company with 24
total years of advice and counsel, and can be expected to continue
to well serve the Company in this capacity in the future.
PROPOSAL: CUMULATIVE VOTING
The Rose Foundation, the As You Sow Foundation, Jill Ratner and
Thomas Little, John Harrington, Nell Minow, and Dr. Brent
Blackwelder have submitted a proposal for cumulative voting in the
election of Common Directors. The Board of Directors recommends
that stockholders vote "AGAINST" this proposal.
PROMOTION OF SPECIAL INTEREST AGENDAS: The Company believes
cumulative voting will encourage special interest stockholders to
pool their collective voting power to attempt to elect single issue
directors. One need look no further than the list of "events" the
proponents cite in their proposal to understand the significant
potential problems with cumulative voting. These events primarily
focus on a narrow set of environmental and labor issues that, while
important to the Company, do not reflect the full range of issues in
the Company's businesses that its Board of Directors must consider
on a regular basis.
PROPOSAL: CLASSIFIED BOARD
The California Public Employees' Retirement System has proposed that
the terms for certain of the Company's directors be de-staggered. We
urge that you vote "AGAINST" this proposal.
ACCOUNTABILITY AND STABILITY: Directors elected for staggered terms
provide continuity and 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.
The Company's stockholders may express their satisfaction or
dissatisfaction with the performance of the Board at the annual
election over one-half of the Company's Board stands for election
every year. The staggered terms for the remaining directors assure
that the Company will have a core of experienced directors.
EXTREMELY IMPORTANT
* VOTE "FOR" STANLEY D. ROSENBERG AND ROBERT J. CRUIKSHANK AS
COMMON DIRECTORS
* VOTE "AGAINST" THE CUMULATIVE VOTING AND CLASSIFIED BOARD PROPOSALS.
* COMPLETE, DATE AND SIGN THE WHITE PROXY CARD AS RECOMMENDED IN
THIS LETTER AND RETURN IT IN THE POSTAGE PREPAID ENVELOPE PROVIDED
WITH THE PROXY STATEMENT.
* DO NOT VOTE ANY PROXY CARD YOU MAY RECEIVE FROM ANYONE OTHER THAN
THE COMPANY.
* IF YOUR SHARES ARE HELD WITH A BROKERAGE FIRM, YOUR BROKER CANNOT
VOTE YOUR SHARES UNLESS THEY RECEIVE YOUR SPECIFIC INSTRUCTIONS.
PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT WITH YOUR
VOTING INSTRUCTIONS.
* IF YOU HAVE ANY QUESTIONS, PLEASE CALL THE COMPANY'S PROXY SOLICITORS,
MACKENZIE PARTNERS, INC., TOLL FREE AT 800-322-2888.
<FN1> No permission has been sought or received to quote from, or
refer to, published materials cited in this letter.
