SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S)
240.14a-12
MAXXAM INC.
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(Name of Registrant as Specified in Its Charter)
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THE COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS
- -----------------------------------------------------------------
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if other than the Registrant)
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COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS
6008 College Avenue, Suite 10
Oakland, CA 94618
(510) 658-0702; (510) 658-0732 (fax)
April 30, 1999
Dear Fellow Maxxam Shareholder:
You will shortly receive proxy materials from The Committee of
Concerned Maxxam Shareholders containing a BLUE PROXY CARD. You
will also receive, or may have already received, this year's
proxy materials from Maxxam containing a white proxy card.
Maxxam's annual meeting will be held in Houston on May 19, 1999.
WE ENCOURAGE YOU TO RESERVE YOUR VOTE UNTIL YOU HAVE HAD AN
OPPORTUNITY TO REVIEW OUR PROXY MATERIALS IN DETAIL. If you have
already voted Maxxam's white proxy card, you can revoke that
earlier vote by simply completing and returning our blue proxy
card.
We have formed The Committee of Concerned Maxxam Shareholders
because we are frustrated with Maxxam's financial performance and
leadership. IN 1997, BUSINESS WEEK NAMED MAXXAMS BOARD AS THE
10TH WORST ON ITS ROSTER OF "THE WORST BOARDS OF DIRECTORS,"
CALLING IT A "TINY BOARD WITH LITTLE BUSINESS EXPERIENCE
DOMINATED BY CEO." (December 8, 1997--consent of publication not
sought)
The Committee members are therefore proud to propose former U.S.
SENATOR HOWARD METZENBAUM and former federal JUDGE ABNER MIKVA as
its nominees to serve as the directors chosen by holders of
Maxxam common stock.
(Photograph of Abner J. Mikva to left of following paragraph and
of Howard M. Metzenbaum to right of following paragraph)
HOWARD METZENBAUM (right), a businessman and former U.S. Senator
from Ohio (1977-95), has an extensive background serving on
corporate boards. He was co-founder and Chairman of the Board of
Airport Parking Company of America and Chairman of the Board of
ITT Consumer Services Corporation and ComCorp., and he has served
on the boards of Dart Group, Shoppers Food Warehouse, Trak Auto,
Society National Bank and Capital National Bank.
ABNER MIKVA (left) was elected to five terms as a Member of
Congress from Illinois until his appointment to the U.S. Court of
Appeals for the D.C. Circuit in 1979, where he served as Chief
Judge from 1991-94. He served as White House Counsel in 1994-95
and currently works in mediation and arbitration for
JAMS/Endispute, a dispute resolution firm. He is also a visiting
professor at the College of Law, University of Illinois and has
legal experience in corporate and securities law.
Members of the Committee are THE ROSE FOUNDATION FOR COMMUNITIES
AND THE ENVIRONMENT; Jill Ratner and Thomas W. Little, the Rose
Foundation's president and executive director; and the UNITED
STEELWORKERS OF AMERICA.
MESSRS. METZENBAUM AND MIKVA WERE INDEPENDENTLY NOMINATED FOR
MAXXAM'S BOARD BY THE NEW YORK STATE COMMON RETIREMENT FUND WITH
45,700 SHARES OF COMMON STOCK AND ALAN KAHN (OF KAHN BROTHERS &
COMPANY, INC.). THE CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT
SYSTEM (CalPERS), THE FOURTH LARGEST INSTITUTIONAL INVESTOR OF
MAXXAM STOCK WITH 229,800 SHARES OF COMMON STOCK, HAS
INDEPENDENTLY ENDORSED MESSRS. METZENBAUM AND MIKVA.
The Committee supports two other shareholder proposals to be
voted upon at the 1999 annual meeting. Nell Minow, John
Harrington, The Rose Foundation for Communities and the
Environment, As You Sow Foundation, Brent Blackwelder, Jill
Ratner and Thomas Little have proposed that shareholders approve
a resolution to install CUMULATIVE VOTING for directors. In
addition, CalPERS has proposed ANNUAL ELECTIONS of Maxxam's
"general directors" (who are elected by the holders of common and
preferred Stock, voting together). The Committee intends to
support these important shareholder proposals, and we encourage
you to do the same.
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PROTECT YOUR INVESTMENT. DO NOT VOTE ANY PROXY CARD FROM MAXXAM
UNTIL YOU HAVE HAD THE OPPORTUNITY TO CONSIDER THE COMMITTEE'S
PROXY STATEMENT.
You will receive the Committee's definitive proxy materials
shortly. We encourage you to defer casting your proxy vote for
this very important meeting until you have had an opportunity to
fully review those materials.
USE YOUR BLUE PROXY CARD TO VOTE FOR MESSRS. METZENBAUM AND MIKVA
AND TO APPROVE THE CUMULATIVE VOTING AND ANNUAL ELECTION
SHAREHOLDER PROPOSALS.
If you have any questions about the resolutions, or Senator
Metzenbaum's and Judge Mikva's plans to reform the Maxxam board
and increase shareholder value, please call The Committee of
Concerned Maxxam Shareholders at: 510-658-0702.
Sincerely,
Thomas Little Jill Ratner David Foster
Executive Director President Director, District 11
Rose Foundation Rose Foundation United Steelworkers of
America
The following may be deemed to be "participants" in this
solicitation: The Rose Foundation for Communities and the
Environment, which owns 50 shares of Maxxam common stock; Jill
Ratner and Thomas W. Little, the Rose Foundation's president and
executive director, who own 90 shares of Maxxam common stock as
tenants in common; the United Steelworkers of America, which owns
1002 shares of Maxxam common stock; Howard M. Metzenbaum, who
does not own Maxxam stock; Abner J. Mikva, who owns 50 shares of
Maxxam common stock; and the As You Sow Foundation, which owns
100 shares of Maxxam common stock. They also constitute (except
for the As You Sow Foundation) the members of the Committee of
Concerned Maxxam Shareholders and the two nominees.
COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS
6008 COLLEGE AVENUE, SUITE 10
OAKLAND, CA 94618
(510) 658-0702; (510) 658-0732 (FAX)
(The following text appears on the top half of this page)
An important message
for Maxxam shareholders
Protect your investment.
Do not vote any proxy card from
Maxxam unless you've read our
proxy materials in detail.
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COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS
6008 COLLEGE AVENUE, SUITE 10
OAKLAND, CA 94618
(510) 658-0702; (510) 658-0732 (FAX)
May 4, 1999
Dear Fellow Maxxam Shareholder:
We have formed The Committee of Concerned Maxxam Shareholders
(the "Committee") because of what we see as Maxxam's lack of
effective leadership and disappointing performance.
In 1997, Business Week named Maxxam's board as the 10th worst on
its roster of "The Worst Boards of Directors," calling it a "tiny
board with little business experience dominated by CEO" Charles
Hurwitz. (December 8, 1997 -consent of publication not sought or
obtained)
As reported in Barron's, December 7, 1998, and Forbes, April 5,
1999 (consent of publications not sought or obtained), industry
analysts believe that Maxxam shares are undervalued. (See
footnote 1.) From March 31, 1994 to March 31, 1999, Maxxam's
share value has lagged far behind the S&P 500 during the
strongest bull run in stock market history. WHILE THE S&P 500
GAINED 189%, MAXXAM INCREASED BY ONLY 40%.
In this letter, and in the accompanying proxy statement, we
explain why we believe Maxxam is a troubled company and why the
owners of Maxxam common stock could increase shareholder value by
electing two independent directors and supporting two resolutions
to improve Maxxam's corporate governance.
Enclosed is a proxy statement from the Committee and a BLUE proxy
card to use for voting for independent directors and resolutions.
If you have already voted Maxxam's white proxy card, you can
revoke that earlier vote by simply completing and returning the
BLUE proxy card. MAXXAM'S ANNUAL MEETING WILL BE HELD IN
HUNTSVILLE, TEXAS ON MAY 19, 1999.
To ensure that your vote is counted, please review this
time-sensitive information and send in your completed BLUE proxy
card
today.
The Committee members are proud to propose former U.S. SENATOR
HOWARD METZENBAUM and former FEDERAL JUDGE ABNER J. MIKVA as its
nominees to serve as the directors chosen by holders of Maxxam
common stock. We believe our candidates have the integrity,
leadership and business and legal experience necessary to make a
substantial positive impact on Maxxam's management and board of
directors.
<PAGE>
(Photograph of Senator Metzenbaum to left of following paragraph)
HOWARD METZENBAUM, a businessman and former U.S. Senator from
Ohio (1977-95) has an extensive background serving on corporate
boards. He was co-founder and Chairman of the Board of Airport
Parking Company of America and Chairman of the Board of ITT
Consumer Services Corporation and ComCorp., and he has served on
the boards of Dart Group, Shoppers Food Warehouse, Trak Auto,
Society National Bank and Capital National Bank. As a Dart Group
director, Mr. Metzenbaum helped arrange a merger that Dart Group
Trustee, Richard Stone, called "very beneficial to the
stockholders," further describing Mr. Metzenbaum's role in
negotiating the merger as "major and constant."
(Photograph of Judge Abner J. Mikva to left of following
paragraph)
ABNER MIKVA was elected to five terms as a Member of Congress
from Illinois until his appointment to the U.S. Court of Appeals
for the D.C. Circuit in 1979, where he served as Chief Judge from
1991-94. He served as White House Counsel in 1994-95 and
currently works in mediation and arbitration for JAMS/Endispute,
a dispute resolution firm. He is also a visiting professor at
the College of Law, University of Illinois and has legal
experience in corporate and securities law. When Mikva retired
as White House Counsel, President Clinton said he "brought a
special combination of legal acumen, wise judgment and
uncompromising integrity to his job."
Members of "the Committee" are The Rose Foundation for
Communities and the Environment; Jill Ratner and Thomas W.
Little, the Rose Foundation's president and executive director;
and the United Steelworkers of America.
Messrs. Metzenbaum and Mikva were independently nominated for
Maxxam's board by the York State Common Retirement Found with
45,700 shares of common stock and Alan Kahn (of Kahn Brothers &
Company, Inc.). The California Public Employees' Retirement
System (CalPERS), the fourth largest institutional investor of
Maxxam stock with 229,8000 shares of common stock, has
independently endorsed Messrs. Metzenbaum and Mikva.
MAXXAM IS IN TROUBLE
POOR OPERATING RESULTS. Maxxam's operational results have been
disappointing. At a time when management and the board should be
focusing on improving Maxxam's performance and maximizing
shareholder value, they have been mired in needless controversy,
litigation and labor disputes.
- - 1998: Maxxam recorded a net loss of $57.2 million (or $8.17 a
share).
- -- 1st quarter 1999: Even though Maxxam had a gain of $239.8
million in income from the Headwaters Agreement, the company
reported an operating loss of $35.2 million and a net income of
only $112.1 million.
QUESTIONABLE LEADERSHIP. Charles Hurwitz -- the Chairman and CEO
who, according to Business Week, dominates Maxxam's board -- has
been the subject of several lawsuits alleging breaches of
fiduciary duty and financial mismanagement.
In 1997, a $20,000,000 settlement was reached after a Delaware
court agree with shareholder liti-
<PAGE>
gants that Hurwitz had engaged in self dealing which was not
found fair to minority shareholders (In re Maxxam Inc./Federated
Development Shareholders Litigation).
The company and Mr. Hurwitz are parties to litigation filed by
the FDIC and the U.S. Office of Thrift Supervision that seek over
$810 million in restitution and penalties based on allegations
linking them to the failed United Savings Association of Texas.
Maxxam has already paid approximately $40,000,000 in litigation
expenses to defend these and related suits.
Several financial analysts are concerned that Mr. Hurwitz will
keep Maxxam's stock price below potential value and use the $380
million from the Headwaters Agreement to take the company
private. (See footnote 1). In our view, independent directors
are needed to ensure that the company takes advantage of this
agreement to maximize shareholder value by considering options
including paying dividends, acquiring new assets and reducing the
burden of the $867.2 million timber debt.
FORESTRY AND LABOR DISPUTES HURT THE BOTTOM LINE.
Maxxam subsidiary, Pacific Lumber Company, had its timber
operator's license suspended twice in a twelve month period
during 1997 and 1998 and was cited for 128 violations of
California forestry regulations between 1996-1998. No comparably
sized timber company has ever had its license suspended in
California.
On September 30, 1998, 2900 workers at Kaiser Aluminum and
Chemical Corporation, the operating unit of Maxxam's 63%-owned
Kaiser Aluminum Corporation, went on strike at five plants
located in Washington, Louisiana and Ohio. On January 14, 1999,
these workers offered to return to work but were locked out by
the company. Kaiser Aluminum Corporation reported a net loss of
$77.1 million during the 4th Quarter of 1998 and 1st Quarter of
1999.
INDEPENDENTLY SPONSORED RESOLUTIONS
The Committee supports two other shareholder proposals to be
voted upon at the 1999 annual meeting. Nell Minow, John
Harrington, The Rose Foundation for Communities and the
Environment, As You Sow Foundation, Brent Bladkwelder, Jill
Ratner and Thomas Little have proposed that shareholders approve
a resolution to install Cumulative Voting for directors. In
addition, CalPERS has proposed Annual Elections of Maxxam's
"general directors," who are elected by the holders of common and
preferred stock, voting together. The Committee intends to
support these important shareholder proposals, and we encourage
you to do the same.
UNLOCK THE VALUE OF YOUR MAXXAM INVESTMENT
USE THE BLUE PROXY CARD
VOTE FOR MESSRS. METZENBAUM AND MIKVA
APPROVE THE ANNUAL ELECTION AND CUMULATIVE VOTING SHAREHOLDER
PROPOSALS
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The Committee believes that concentration of control of Mr.
Hurwitz and a small number of Maxxam preferred shareholders has
resulted in policies that depress the value of common stock and
threaten Maxxam's long-term financial success. It is for this
reason that the Committee seeks your support.
If you have any questions about the resolutions, or Senator
Metzenbaum's and Judge Mikva's plans to reform the Maxxam board
and increase shareholder value, please call The Committee of
Concerned Maxxam Shareholders at 510-658-0702.
Sincerely,
/s/Thomas W. Little /s/Jill Ratner /s/David A. Foster
Thomas Little Jill Ratner David Foster
Executive Director President Director, District 11
Rose Foundation Rose Foundation United Steelworkers of
America
FOOTNOTE #1. The cited Barron's article states that George
Ireland, a portfolio manager at Knott Partners, believes that
$122 a share is Maxxam's "rock-bottom value," compared to the $57
range in which the company's stock has recently been trading.
Mr. Ireland believes that Kaiser Aluminum Corporation, 63% of
whose stock is owned by Maxxam, is worth $50 per Maxxam share.
The recent Headwaters Agreement between Maxxam, the United States
and the State of California, which resulted in a $380 million
gain to the company in return for preserving several thousand
acres of redwoods in northern California, is worth $43 a share,
fully taxed. California's additional purchase of nearby acreage
is worth another $10 a share. Mr. Ireland further estimates that
the ongoing business of Pacific Lumber Company, another Maxxam
subsidiary, is worth about $95 million a year of EBITDA (earnings
before interest, taxes, depreciation and amortization, which is
operating cash flow). At a multiple of 8.5 times EBITDA (said to
be the low end of forest-product transaction) that equals $14 a
share. Finally, real estate is carried on Maxxam's books at $17
a share.
This article notes that Maxxam has repurchased stock in
recent years and reduced the number of outstanding shares over
the past five years from nearly nine million to seven million,
thus prompting speculation that the company may try to go
private. The article adds that according to Maxxam President
Paul Schwartz, Maxxam is not aware of any plans to take Maxxam
private, although additional share repurchases may be considered.
Similarly, the Forbes article states that Daniel Breen III,
a Houston money manager, estimates that Maxxam shares are worth
$130 a share and cited a prediction by Mr. Breen that Maxxam CEO
Charles Hurwitz will try to take Maxxam private.
______________
The following may be deemed to be "participants" in this
solicitation: The Rose Foundation for Communities and the
Environment, which owns 50 shares of Maxxam common stock; Jill
Ratner and Thomas W. Little, the Rose Foundation's president and
executive director, who own 90 shares of Maxxam common stock as
tenants in common; and the United Steelworkers of America, which
owns 1002 shares of Maxxam common stock; As You Sow Foundation,
which owns 100 shares of Maxxam Common Stock. The participants
(excluding As You Sow Foundation) constitute the members of the
Committee of Concerned Maxxam Shareholders and the two nominees.
<PAGE>
Committee of Concerned Maxxam Shareholders
6008 College Avenue, Suite 10
Oakland, CA 94618
510-658-0702 (tel) 510-658-0732 (fax)
Contact: Scott Adams
For Immediate Release: May 5, 1999
Oakland, CA-- The Committee of Concerned Maxxam Shareholders has
begun mailing its proxy statement, blue proxy voting card and a
letter to holders of Maxxam (MXM) common stock, urging them to
elect as directors former Sen. Howard Metzenbaum and former
federal Judge Abner Mikva. Committee members and other
shareholders have nominated these candidates for the two director
seats elected by holders of Maxxam common stock.
In its proxy materials, the Committee also urges shareholders to
vote for shareholder proposals recommending that Maxxam institute
cumulative voting procedures for directors and that the directors
chosen by the holders of common and preferred stock, voting
together, be elected each year.
Maxxam's annual meeting will be held at 8:30 A.M. on Wednesday,
May 19, 1999 at the Waterwood National Resort and Conference
Center in Huntsville, Texas.
Maxxam has a five-person board of directors. Holders of common
stock are entitled to elect two directors each year. Holders of
preferred stock and common stock, voting together, elect three
directors, each to a three year term. Each Maxxam preferred
share has 10 votes, while each share of common stock has one
vote.
Members of The Committee of Concerned Maxxam Shareholders are the
Rose Foundation for Communities and the Environment, Jill Ratner
and Thomas W. Little, the Foundations president and executive
director, and the United Steelworkers of America.
Several Committee members nominated Sen. Metzenbaum and Judge
Mikva for director. Other shareholders who also nominated them,
but who are not Committee members, are the New York State Common
Retirement Fund, which holds 45,700 shares of Maxxam common
stock, and Alan Kahn (of Kahn Brothers & Co., Inc.)
In its materials, the Committee explains why it believes that
Maxxam needs independent directors and corporate governance
reform.
The Committee thus notes that Business Week named Maxxam's board
as the 10th worst on its roster of "The Worst Boards of
Directors," calling it a "tiny board with little business
experience dominated by CEO" Charles Hurwitz (Dec. 8,
1997consent of publication not obtained).
The Committees letter to shareholders adds that according to
Barron's (Dec. 7, 1998) and Forbes (Apr. 5, 1999), "industry
analysts believe that Maxxam shares are undervalued. From March
31, 1994 to March 31, 1999, Maxxams share value has lagged far
behind the S&P 500 during the strongest bull run in stock market
history. While the S&P 500 gained 189%, Maxxam increased by only
40%"
The Committees proxy materials state that Maxxam is a company in
trouble, noting that Maxxam recorded a net loss of $57.2 million
for 1998. The proxy materials note too that federal banking
agencies are litigating suits against Maxxam and CEO Hurwitz that
seek to recover over $810 million in restitution and penalties,
based on allegations that Maxxam controlled a failed savings and
loan association. The Committee also cites a 1997 ruling by a
Delaware trial court that Mr. Hurwitz had engaged in self-dealing
in connection with loans that were not found fair to the
company; the case then settled for $20 million.
The Committee's proxy materials note that in 1997-98, California
regulators twice suspended the timber operator license of Pacific
Lumber Co., a Maxxam subsidiary, during a twelve-month period,
citing 128 violations of state forest practice rules. No other
major timber company in California has previously been cited for
so many violations in such a period of time or had its license
suspended as a result. The proxy materials also note that Kaiser
Aluminum Corporation, 63% of whose stock is owned by Maxxam, has
since Sept. 30, 1998 been embroiled in a labor dispute and then
lockout of 2900 workers represented by the United Steelworkers of
America. During the last two quarters, Kaiser reported net
losses of $77 million.
_________________________________________________________________
The following may be deemed to be "participants" in this
solicitation: The Rose Foundation for Communities and the
Environment, which owns 50 shares of Maxxam common stock; Jill
Ratner and Thomas W. Little, the Rose Foundations president and
executive director, who own 90 shares of Maxxam common stock as
tenants in common; the United Steelworkers of America, which owns
1002 shares of Maxxam common stock; As You Sow Foundation, which
owns 100 shares of Maxxam common stock; Howard M. Metzenbaum, who
does not own any Maxxam common stock; and Abner J. Mikva, who
owns 50 shares of Maxxam common stock. These participants
(excluding As You Sow Foundation) constitute the members of The
Committee of Concerned Maxxam Shareholders and the two nominees
for director.
