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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(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
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Clear - Cutting
MAXXAM CORPORATION
As You Sow is deeply concerned about unsustainable timber
harvesting practices of Pacific Lumber co., a unit of MAXXAM
Corp., which owns the Headwaters Forest, the largest set of
intact groves of ancient redwoods that remain in private hands.
(Artwork of three trees to right of preceding paragraph)
We believe the company's harvesting practices have steadily
deteriorated after Maxxam, controlled by corporate raider Charles
Hurwitz, purchased Pacific Lumber 10 years ago. We believe the
need to make payment on the enormous debt incurred on Maxxam in
purchasing Pacific Lumber was the prime reason for the escalation
of timber harvesting.
The federal government has filed two cases seeking $800,000,000
restitution from CEO Hurwitz, Maxxam, and others, related 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 high environmental, value.
For the past two years, As You Sow has partnered with the Rose
Foundation for Communities and Environment in Oakland on several
resolutions challenging MAXXAM forestry operations and
management.
For 1999, As You Sow, Rose Foundation and Brent Blackwelder of
Friends of the Earth have filed a corporate governance resolution
seeking cumulative voting of common stock shares in an attempt to
offset Hurwitz's 70% control of the company.
Separately, the California Public Employees' Retirement System
has filed a resolution seeking a destaggered board. This
resolution, originally filed last year and co-filed with the Rose
Foundation received the support of 15% of shares cast, or about
50% of all shareholder votes not under control of Hurwitz and his
affiliates!
These Resolutions will be voted on at the annual meeting on May
19 in Huntsville, Texas.
"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, who own 90 shares of Maxxam common
stock as tenants in common; the United Steelworkers of America,
who own 1002 shares of Maxxam common stock; the As You Sow
Foundation, which owns 100 shares of Maxxam common stock;
Howard M. Metzenbaum, who does not own Maxxam stock; and Abner J.
Mikva, who owns 50 shares of Maxxam common stock. The foregoing
(except for the As You Sow Foundation) are the members of the
Committee of Concerned Maxxam Shareholders and two nominees
proposed by Committee members for Maxxam common director."
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Clear - Cutting
MAXXAM Shareholder Proposal
The stockholders 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.
(Drawing of three felled trees with caption "Stop Maxxam from
depleting Old Growth Timber!" appears to right of preceding
paragraph)
Cumulative voting allows a significant group of stockholders to
elect a Director or Directors of its choice--safeguarding
minority shareholder interests and bringing independent
perspectives to Board decisions. In our view, cumulative voting
for Maxxam's Common Directors is needed because Maxxam's two-tier
stock structure, with preferred stock outvoting common ten to
one, allows Maxxam's CEO and his affiliates to effectively
control Board elections and policy based on majority holdings of
preferred stock. We believe 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 subsequent events demonstrate increasing need for a
minority shareholder voice on the Board.
- - Maxxam reported net losses of more than $30,000,000 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 division citing serious violations of
state forestry laws.
- - These violations and suspensions may have placed at risk $480
million in Company revenue--approximately $48 per share--from
public purchases of forest lands in the Headwaters area that
depend on government approval of Company
logging and conservation plans.
- - Company forestry practices, including extensive old-growth
logging and clearcutting, attract expensive litigation and public
criticism. Large timber companies like MacMillan Blodel 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, related 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 high environmental, value.
Maxxam has paid $40,000,000 in this and related litigation,
including all 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, WA plant in 1997, to 29 in two weeks in
October, 1998.
SAFEGUARD YOUR INVESTMENT. VOTE FOR CUMULATIVE VOTING.
< Back to MAXXAM Home
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Clear - Cutting
GROUPS PROPOSE ALTERNATIVE MAXXAM BOARD
MEMBERS
As You Sow supports the Committee of Concerned Maxxam
Shareholders which is running U.S. Senator Howard Metzenbaum and
former federal Judge Abner Mikva as independent board members of
MAXXAM because of what we see as Maxxam's lack of effective
leadership and disappointing performance.
(Drawing of ballot with pencil marking "x" in it and caption
"Vote YES for New Board Members" to the right of preceding
paragraph)
The Committee believes that concentration of control in the
hands 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. We
believe that the Committee's proxy materials set forth more fully
the reasons for electing independent directors.
We believe the 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.
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.
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.
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.
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Clear - Cutting
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.
(Drawing with performance chart and arrow pointing downward below
lower right corner of the chart to right of preceding paragraph)
- - 1998: Maxxam recorded a net loss of $57.2 million (or $8.17 per
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 (Dec. 8, 1997, consent of author and
publication not sought or obtained) -- 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 agreed with shareholder litigants that Hurwitz had engaged
in self dealing which was unfair 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 its potential value and use the
$380 million from the Headwaters Agreement to take the company
private (Barron's, Dec. 7, 1998; Forbes, Apr. 5, 1999; consent of
authors and publications not sought or obtained). In our view,
independent directors are needed to ensure that the company takes
advantage of this agreement to maximize shareholder value by
considering paying dividends, acquiring new assets and reducing
the burden of the $867.2 million timber debt. Forestry and Labor
Disputes Hurt the Bottom Line. o Maxxam's 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 it's
license revoked 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
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1998 and 1st Quarter of 1999.
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.
"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, who own 90 shares of Maxxam common
stock as tenants in common; the United Steelworkers of America,
who own 1002 shares of Maxxam common stock; the As You Sow
Foundation, which owns 100 shares of Maxxam common stock; Howard
M. Metzenbaum, who does not own Maxxam stock; and Abner J. Mikva,
who owns 50 shares of Maxxam common stock. The foregoing (except
for the As You Sow Foundation) are the members of the Committee
of Concerned Maxxam Shareholders and two nominees proposed by
Committee members for Maxxam common director."
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