MAXXAM INC
DFAN14A, 2000-05-22
PRIMARY PRODUCTION OF ALUMINUM
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                    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)

[   ]  Definitive Proxy Statement

[ X ]  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.

     (1)  Title of each class of securities to which transaction
applies:________________________________________________________

     (2)  Aggregate number of securities to which transaction
applies:________________________________________________________

     (3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount
on which the filing fee is calculated and state how it was
determined):____________________________________________________

     (4)  Proposed maximum aggregate value of transaction:______

     (5)  Total fee paid:_______________________________________

[   ]  Fee paid previously with preliminary materials.

[   ]  Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously.  Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.

     (1)  Amount previously paid:_______________________________

     (2)  Form, Schedule or Registration Statement No.:_________

     (3)  Filing Party:_________________________________________

     (4)  Date Filed:___________________________________________

<PAGE>

            COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS
                           PO BOX 20877
                     OAKLAND, CA   94620-0877
(510) 655-8248 (TEL)  1-877-634-6546 (TOLL FREE)  (510) 658-0732
(FAX)

                                        May 2000

        Enclosed is the material that you requested, which we
hope you find helpful.  Please let us know if you have any
questions.  (Consent of publication neither sought nor received).

                                   Sincerely,


                                   The Committee of Concerned
                                   Maxxam Shareholders

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, its
President, Jill Ratner, who owns 90 shares of Maxxam common stock
as a tenant in common with Rose Foundation Executive Director
Timothy W. Little; the United Steelworkers of America,  which
owns 1002 shares of Maxxam common Stock; Judge Abner Mikva, who
owns 50 shares of Maxxam common stock, and Senator Paul Simon,
who owns 100 shares; As You Sow Foundation, which owns 100 shares
of Maxxam common stock; and Dorset Management Corp., which does
not own any shares.  The Rose Foundation and the United
Steelworkers are the members of the Committee of Concerned Maxxam
shareholder, and Judge Mikva and Senator Simon are the
Committee's nominees.

<PAGE>

FOR IMMEDIATE RELEASE

Contacts:
Stephen Sears                      Richard Ferlauto
Asst. Director, U.S. Research      Director, Proxy Voter Services
[email protected]              [email protected]


        ISS SUPPORTS DISSIDENT DIRECTOR NOMINEES AT MAXXAM
        Proposals on Cumulative Voting, Classified Board,
               Independent Directors Also Supported

ROCKVILLE, MD May 15, 2000 -- A dissident campaign to install two
alternative directors to the board of MAXXAM, Inc., won support
from Institutional Shareholder Services (ISS), a leading provider
of proxy advisory and voting agent services.  The Committee of
Concerned MAXXAM Shareholders, which includes the United
Steelworkers of America (USWA) and the Rose Foundation, is
seeking to elect former Senator Paul Simon and retired federal
judge Abner Mikva to MAXXAM's board at the company's May 24
annual meeting.

ISS also supports the approval of three shareholder proposals
seeking to permit cumulative voting in the election of directors,
repeal the company's classified board structure, and require the
board to have a majority of independent outside directors.

Shareholders of MAXXAM have witnessed several debilitating events
over the last several years, including a strike, a lockout, a
tree-sit, a plant explosion, and a seemingly endless avalanche of
litigation, while the company's stock has continued to languish.

Perhaps the most serious event in recent years was the explosion
that occurred in July 1999 at a facility of Kaiser Aluminum
Corp., one of MAXXAM's largest assets.  Approximately 35 class
action lawsuits have been filed as a result of injuries and
damages sustained as a result of the accident.  In addition, the
Mine Safety and Health Administration issued 21 citations
following its investigation of the accident and levied
extraordinary fines. Management believes that its insurance
coverage will "largely offset" the financial impact of the
accident.

Despite the efforts of management and the incumbent board to
resolve these issues and focus on operations, litigation and bad
press will continue to occupy a front-row position for
shareholders and management alike. ISS believes that installing
the dissident director nominees is the best way for MAXXAM to
move forward and pursue a strategic course of action that enables
it to resolve the controversy, litigation, and labor disputes
that have consumed the company.  "Sen. Simon and Judge Mikva are
cognizant of their fiduciary obligations to all shareholders of
MAXXAM, if elected," states Stephen Sears, Assistant Director of
U.S. Research for ISS. "More importantly, it is our belief that
they take seriously that obligation and will earnestly pursue a
course of oversight and control of management on behalf of all
shareholders."

Institutional Shareholder Services is the world's largest
provider of proxy voting and corporate governance services.
Serving more than 700 institutional and corporate clients
throughout North America and Europe, ISS analyzes proxy proposals
and issues vote recommendations for more than 8,500 U.S. and
7,500 non-U.S. shareholder meetings each year. The firm has
satellite offices in New York, Chicago and London. Founded in
1985, ISS is a Thomson Financial company.  For more information,
visit www.isstf.com.

Thomson Financial is a US$1.2 billion provider of information
services and work solutions to the worldwide financial community.
Through the widest range of products and services in the
industry, Thomson Financial helps clients in more than 70
countries make better decisions, be more productive and achieve
superior results.  Thomson Financial is part of The Thomson
Corporation, one of the world's leading information companies.
With annual revenues of more than US$6 billion, Thomson has
interests in specialized information and newspaper publishing.
The Corporation's common shares are listed on the Toronto and
London stock exchanges.  For more information on Thomson
Financial, visit www.thomsonfinancial.com.

                            ###

<PAGE>


     * * * * * * * * * * * * * * * * * * * * * * * * * * * *
     ***  PLEASE NOTE:  THIS ALERT UPDATES OUR           ***
     ***  PREVIOUSLY DELIVERED ANALYSIS WHICH FOLLOWS.   ***
     * * * * * * * * * * * * * * * * * * * * * * * * * * * *

        (LOGO)
    Institutional
Shareholder Services
 Thompson Financial

PROXY ALERT

                                                     MAXXAM INC.

TICKER: MXM

ANNUAL MEETING: May 24, 2000

RECORD DATE: March 31, 2000

SECURITY ID: 577913106 (CUSIP), 577913205 (CUSIP)

ALERT: In our analysis dated May 12, 2000, we cited a Wall Street
Journal article that stated that a criminal investigation was
being conducted by U.S. Labor officials into the Gramercy
explosion.  According to the company, the Journal issued a
clarification, which we did not cite, that stated that the Labor
Department was conducting a "special" investigation that may lead
to a referral to the Justice Department for a criminal
investigation.

This alert is for clarification only and has no effect on our
previously issued vote recommendations.

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES        PAGE 2

Maxxam Inc. -- May 15, 2000  (c)2000, Institutional Shareholder
Services
Stephen Sears, Assistant Director - US Research  Phone:
301/545-4555

<PAGE>

     (LOGO)
    Institutional
Shareholder Services
  Thomson Financial


PROXY CONTEST:

                                                    MAXXAM INC.


          TICKER: MXM

          ANNUAL MEETING: May 24, 2000

          RECORD DATE: March 31, 2000

          SECURITY ID: 577913106 (CUSIP), 577913205 (CUSIP)

<TABLE>

<CAPTION>
                          MEETING AGENDA

<C>   <C>   <C>                               <C>        <C>
ITEM  CODE  MANAGEMENT PROPOSALS (WHITE CARD) MGT. REC.  ISS REC.

- --1   M0201 Elect Directors                   For         AGAINST

<CAPTION>
                      SHAREHOLDER PROPOSALS

<C>   <C>   <C>                               <C>         <C>
- --2   S0207 Restore or Provide for
            Cumulative Voting                 Against     FOR
- --3   S0201 Declassify the Board
            of Directors                      Against     FOR
- --4   S0215 Require Majority of
            Independent Directors on Board    Against     FOR

<CAPTION>

ITEM  CODE  DISSIDENT PROPOSALS (BLUE CARD)   DIS. REC.  ISS REC.


<C>   <C>   <C>                               <C>        <C>
- --1   M0225 Elect Directors (Opposition
            Slate)                           For         FOR
- --2   S0207 Restore or Provide for
            Cumulative Voting                For         FOR
- --3   S0201 Declassify the Board
            of Directors                     For         FOR

MAXXAM Inc.   May 12,2000      (c)2000, Institutional Shareholder
Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                   Page 2

- --4   S0215 Require Majority of Independent
            Directors on Board                 Against   FOR

</TABLE>

*TO FOLLOW ISS'S RECOMMENDATION, EXECUTE YOUR VOTES FOR THE
DISSIDENT DIRECTOR SLATE AND SHAREHOLDER PROPOSALS ON THE BLUE
CARD AND DISCARD THE MANAGEMENT WHITE CARD.

MAXXAM Inc.   May 12,2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                   Page 3

<TABLE>

<CAPTION>
                        FINANCIAL SUMMARY

INCOME STATEMENT SUMMARY (amounts in millions except per share
 data)

<S>             <C>           <C>           <C>            <C>
                1997          1998          1999           ACG*

NET SALES       $2,729.10     $2,572.70     $2,311.40      -7.97%
NET INCOME          65.20        -57.20         73.60      NMF
EPS (BASIC)          7.81         -8.17         10.49      NMF
DIVIDEND             0.00          0.00          0.00      NMF

* Annual Compound Growth
Fiscal Year Ended: December 31
Source: 10-K

</TABLE>

<TABLE>

<CAPTION>
PERFORMANCE SUMMARY

<S>                     <C>              <C>               <C>
                        1-YEAR           3-YEAR            5-YEAR
TOTAL SHAREHOLDER
RETURNS, COMPANY        -53.2%           -14.4%            -3.0%
TOTAL SHAREHOLDER
RETURNS, INDEX          -17.8%             5.8%             5.7%
TOTAL SHAREHOLDER
RETURNS, PEER GROUP       5.9%            14.4%             16.6%

Source: Bloomberg Business News

</TABLE>

BUSINESS: Holding company whose subsidiaries operate in aluminum,
forest products, real estate, and horse racing industries

STATE OF INCORPORATION: Delaware

ACCOUNTANTS: Arthur Andersen LLP

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                   Page 4

                   CORPORATE GOVERNANCE PROFILE

GOVERNANCE PROVISIONS

Blank check preferred stock (Charter)

Classified board (Charter) (Adopted: June 8, 1980)

D&O indemnification provisions for acts made in good faith
(Bylaw) (Adopted: Oct. 8, 1988)

No shareholder right to act by written consent (Charter)
(Adopted: June 18, 1980)

Poison pill with sunset provision greater than two years
(Adopted: Nov. 29, 1989; Renewed: Dec. 15, 1999; Expires: Dec.
11, 2009)

Unequal voting rights (Charter) (Adopted: June 15, 1982)


GOVERNANCE MILESTONES

Elimination of cumulative voting in the election of directors
(Adopted: May 17, 1979)


SEVERANCE AGREEMENTS

Change-in-control provisions in executive stock option or other
compensation plan

Golden parachute executive severance agreements triggered by
termination of employment following a change in control

Pension parachutes, which provide accelerated pension benefits,
triggered by termination of employment following a change in
control

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                   Page 5

STATE STATUTES: DELAWARE

Labor contract provision

Three-year freezeout provision

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
 Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                   Page 6

<TABLE>

<CAPTION>
                        DIRECTOR PROFILES

        <C>            <C>                <C>      <C>      <C>
        Name           Classification     Term     Dir.     No
                                          Ends     Since    Stock
NOMINEES

Robert J. Cruikshank       IO             2001      1993

Ezra G. Levin1             AO             2003      1978

Stanley D. Rosenberg       IO             2001      1981

Michael J. Rosenthal       IO             2001      2000

J. Kent Friedman           I              2003      1999


CONTINUING DIRECTORS

Charles E. Hurwitz         I              2002      1978

Paul N. Schwartz           I              2001      1998


DISSIDENT NOMINEES

Paul Simon                 IO             2001

Abner Mikva                IO             2001

</TABLE>

     Classified board: Yes           CEO as chairman: Yes

     Current nominees: 5             Retired CEO on board: No


MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                   Page 7

<TABLE>

<CAPTION>
                    COMPOSITION OF COMMITTEES

<C>           <C>   <C>               <C>      <C>           <C>
Audit         Type  Compensation      Type     Nominating    Type

Robert J.      IO   Robert J.         IO
Cruikshank          Cruikshank

Ezra G. Levin  AO   Ezra G. Levin     AO

Stanley D.     IO   Stanley D.        IO
Rosenberg           Rosenberg


     Committee Name Assigned by Company:

     Audit: Audit Committee
     Compensation: Compensation Policy Committee
     Nominating: Nominating Committee

</TABLE>

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                   Page 8

<TABLE>

<CAPTION>
                          EQUITY CAPITAL

<S>                 <C>            <C>            <C>
Type                Votes Per      Issued         Authorized
                    Share

Common stock        1.00           6,913,951      28,000,000

Class A $.05
noncumulative
participating
convertible
preferred stock     10.00            668,510      12,500,000


Ownership - Common stock    Number of Shares          % of Class

Officers & Directors        2,931,515                 42.40
Institutions                2,668,785                 38.60


Ownership - Class A $.05    Number of Shares          % of Class
noncumulative
participating convertible
preferred stock

Officers & Directors         663,162                  99.20

As of: March 31, 2000
Sources: Proxy Statement, Bloomberg Business News

</TABLE>

Note: The company has two types of voting stock: common stock and
Class A $.05 noncumulative participating convertible preferred
stock. Each share of common stock entitles its holder to one
vote, and each share of preferred stock entitles its holder to
ten votes.  The holders of common stock, voting as a separate
class, are entitled to elect three "common" directors.  The
holders of common and preferred stock, voting together as a
single class, are entitled to elect two "general" directors.

As of April 15, 2000, all officers and directors as a group
beneficially owned 71.7 percent of the company's total voting
power.  Included in this amount is Federated Development Inc. and
The Stockholder Group's (Charles Hurwitz and affiliates)
beneficial ownership of 71.5 percent.  Mr. Hurwitz, through his
affiliation with Federated Development and The Stockholder Group,
is deemed to have beneficial ownership of these shares.  Mr.
Hurwitz beneficially owns approximately 41.9 percent of the
common stock and 99.2 percent of the preferred stock.

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                   Page 9

PROXY CONTEST

MAXXAM Inc. faces its third proxy contest at this shareholder
meeting from a group of dissident shareholders.  The series of
contests arises from the company's historically adversarial
relationship with a number of groups that include individuals and
organizations whose interests may not be thoroughly aligned with
those of shareholders.  These groups include the United
Steelworkers of America (USWA) and the Rose Foundation for
Communities and the Environment, two members of The Committee of
Concerned MAXXAM Shareholders (the Committee).  The Committee is
soliciting proxies to elect two dissident nominees to the board:
former senator Paul Simon and former federal judge and
congressman Abner Mikva. The committee also supports the approval
of three shareholder proposals to (1) permit cumulative voting in
the election of directors, sponsored by the As You Sow Foundation
and John Harrington; (2) repeal the company's classified board
structure, sponsored by shareholder Brent Blackwelder; and (3)
require that the board have a majority of independent outsiders,
sponsored by the Rose Foundation and Nell Minow.

The interests of the Rose Foundation have historically been
focused on preserving the "old growth" redwood forests owned by
the company's Pacific Lumber Co. (Palco) subsidiary.  The
foundation attempted repeatedly to tie the company's redwood
assets to litigation between MAXXAM Chairman and CEO Charles
Hurwitz and the Federal Deposit Insurance Corp. (FDIC) that
relates to the failure of the United Savings Association of Texas
(USAT).  The FDIC responded to these proposals by pointing out
that neither MAXXAM nor Palco were defendants in the FDIC suit,
nor was there a legal basis for tying the redwood assets of Palco
to the litigation.  Moreover, Jill Ratner (president of the Rose
Foundation) provided legal counsel to a plaintiff in a False
Claims Act suit against MAXXAM that was dismissed as frivolous,
with attorneys' fees assessed against the plaintiff.

In October 1998, approximately 2,900 employees who are USWA
members went on strike at five of the facilities of Kaiser
Aluminum Corp., MAXXAM's largest asset.  The dispute involved job
security and pension issues, among other things.  The company
operated the plants with salaried replacement workers, and on
Jan. 13, 1999, when the USWA offered an unconditional return to
work by its members, the company locked the striking employees
out.  The company has stated that it is not willing to go back to
operating under the old contract, which allowed the workers to
strike, while a new contract is negotiated.  The USWA filed a
complaint with the National Labor Relations Board (NLRB) alleging
various violations by the company of its obligation to bargain in
good faith and not to discriminate against workers for going on
strike.  More recently, in April 2000 the general counsel of the
NLRB announced that the government would charge that Kaiser
violated labor laws by initiating the lockout. Although there is
dispute as to the potential liability

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                  Page 10

regarding back pay, the labor dispute continues and may be
diverting valuable attention of management from other aspects of
the business.  Management contends it remains focused on Kaiser's
strategic plan and actually believes the newly restarted
negotiations with labor are progressing more positively than in
the past.

Management justified the lockout on several grounds.  First and
foremost is the reality that the company must reduce its
workforce and adopt more efficient and less costly means of
production to compete in its industry.  Equally important, the
company is demonstrating that it can operate efficiently with the
current, reduced nonunion workforce, as well as the company's
desire to avoid potential problems should the union return to
work with no contract.  If the company can operate with a
reduced, more efficient non-organized workforce, this would be
the more profitable outcome from a shareholder perspective.
Additionally, management remains optimistic that its aluminum
operations are evolving positively as the focus narrows to pursue
more selective growth opportunities such as engineered products
for the aerospace, sporting goods, medical equipment, and other
industries.

On the other hand, the recent Gramercy situation undermines, to a
certain degree, management's optimistic views.  Perhaps the most
serious development since MAXXAM's last proxy contest is the
explosion that occurred at Kaiser's Gramercy, La., plant in July
1999.  Approximately 35 class action lawsuits have been filed as
a result of injuries and damages sustained as a result of the
accident.  Moreover the Mine Safety and Health Administration
(MSHA) issued 21 citations following its investigation of the
accident and levied fines which, according to the dissidents, are
the highest ever levied by the MSHA for a nonfatal accident.
According to a Wall Street Journal report, a criminal probe is
being conducted by U.S. labor officials as to potential disregard
by the company for employee safety and other issues.  Management
believes that its insurance coverage will "largely offset" the
financial impact of the accident.

Still, the interests of the USWA and their alignment with other
shareholders are called into question by the USWA's lawsuit
against the California Department of Forestry and Fire Protection
challenging certain aspects of the landmark Headwaters agreement
between MAXXAM and the California and U.S. governments.
Shareholders should give credit to the company for securing this
agreement, which preserved old growth redwoods and garnered fair
value for the company and its shareholders.  The USWA's interest
in the affairs of Palco is clearly a means to apply pressure on
MAXXAM and thereby increase the bargaining power of the union in
its fight with Kaiser.  In addition, the USWA has focused
consumer alert initiatives on Pepsi Bottling Group, Boeing,
Anheuser Busch, and Daws Better Built in an attempt to persuade
those companies not to purchase aluminum products from Kaiser.
(According to the dissidents, Pepsi and Anheuser Busch have
stopped purchasing Kaiser metal.)

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                  Page 11

In our opinion, the Headwaters agreement represented an equitable
accommodation of all interested parties' interests.
Unfortunately, this is tempered by the reality that the benefits
of the agreement have not passed to shareholders in the form of
an increasing stock price.  This fact stands in stark contrast to
Mr. Hurwitz's $9.3 million bonus for 1999, $7.5 million of which
was attributed to completion of the Headwaters agreement and was
awarded in the form of 256,808 shares of restricted common stock.
We believe it is difficult to justify this bonus package for a
year in which shareholders saw the value of their holdings
decline by 25 percent.

In analyzing this proxy contest, ISS spoke with dissident
director nominee Abner Mikva, Ms. Ratner of the Rose Foundation,
MAXXAM President Paul Schwartz, and Kaiser Aluminum & Chemical
Corp. Executive Vice President and CFO John La Duc.

MANAGEMENT POSITION

The company cites the Headwaters agreement, the nomination of two
new directors (including one independent outsider), and the
improving levels of performance in the first quarter of 2000 as
evidence that the current board has acted in the interests of
shareholders.  Mr. Hurwitz called the 2000 first quarter
operating income of $38.5 million the "most dramatic" of the
quarterly results evidencing the company's "significant positive
turnaround."  On the other hand, the company used up $41.9
million in cash for operating activities and had a net decrease
in cash and equivalents of $35.2 million for the quarter.

Management also avers that the narrow interests of environmental
and labor groups represented by the Committee will influence the
dissident nominees and preclude them from acting on the behalf of
shareholders other than those associated with the Committee.
Former Sen. Simon and Judge Mikva voted on legislation that
management contends was not in the company's best interests,
including the 1977 National Energy Policy Act, which was
predicted to increase aluminum prices.

Management continues to speculate that the market's failure to
recognize the value in the company is, in part, due to its
"mini-conglomerate" form, which makes analysis and valuation more
difficult.

During the past year the company employed the services of a
nationally known executive search firm to obtain candidates for
board service at MAXXAM.  Ultimately the board nominated J. Kent
Friedman, who is general counsel to the company and has entered
into a five-year employment agreement that calls for a $450,000
base salary and entitles him to a bonus of not less than $150,000
for each calendar year he is employed by the company. The second
incumbent board nominee is Michael Rosenthal, president of an
investment company who has served as chairman, director, and/or
CEO of several companies in the

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                  Page 12

past, including Northwestern Steel and Wire Co., Wilson Sporting
Goods Co., and American Vision Centers.

Regarding the shareholder proposals to declassify the board and
provide for cumulative voting in the election of directors, the
incumbent board asserts that many other large companies have
similar governance profiles with respect to these provisions,
including America Online Inc., Dell Computer Co., Lucent
Technologies Inc., Pfizer Inc., and Coca Cola Co.

The annualized total return to shareholders over the prior five
years at each of those companies is a respectable 110.4 percent,
125.5 percent, 63.7 percent, 44.0 percent, and 11.4 percent,
respectively.  MAXXAM's comparable return is -3.0 percent.

DISSIDENT POSITION

The Committee has long held that the company's poor performance
is tied to Mr. Hurwitz's undue influence over the other
directors.  The board's attention has been needlessly diverted
from the business of increasing shareholder value toward the
controversy, litigation, and labor disputes that have consumed
the company.  Moreover, the incident at Gramercy and the slide in
the company's share price during the prior year add nothing to
management's claims that the incumbent board is adequately
overseeing the affairs of the company and its subsidiaries.  In
the words of Judge Mikva, "If the team has a losing record, you
need to change the manager."

Mr. Hurwitz's leadership has been questioned in light of the fact
that he has been the subject of lawsuits questioning his
fiduciary responsibilities to shareholders.  In particular, the
dissident group cites a 1997 $20 million settlement following a
finding by the Delaware Chancery Court that Mr. Hurwitz had
engaged in self-dealing in connection with loans made by MAXXAM
to Federated Development (a New York business trust privately
held by Mr. Hurwitz and members of his family) that were not fair
to the company.  The MAXXAM board (which at the time included
three of the current five directors) approved the loans made to
Federated.  The dissidents further point out that the Headwaters
agreement and associated cash gain have not resulted in an
increase in shareholder value. In fact, the company's share price
has declined approximately 50 percent over the prior 12 months.

According to Judge Mikva, the dissident nominees intend to hire
outside independent advisors to provide recommendations to the
board on how to improve performance, increase investor
confidence, and maximize shareholder benefits.  Proposals could
include expanding the board, instituting annual director
elections, instituting cumulative voting to offset the
supervoting preferred shares held by Mr. Hurwitz, and hiring an
investment

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                  Page 13

bank or other outside expert to examine ways to unlock
shareholder value.  This might include selling subsidiaries,
holdings, or other assets.

ANALYSIS

In some respects, not much has changed in the year since MAXXAM's
last proxy contest.  The primary issues of this contest are the
company's return to shareholders, its governance profile, and the
board's responsibility for both those issues.  There is no
dispute that the company's performance has been poor for many
years relative to its peers.  The prior year has been
particularly difficult for shareholders; in the last five years,
according to Bloomberg Business News, the S&P Aluminum index has
generated a 16.6 percent annualized return while MAXXAM has
returned a comparable -3.0 percent.  The S&P Paper and Forest
Products index is less stellar but still eked out a 5.7 percent
annualized return.  MAXXAM derives about 88 percent of its
consolidated revenues from its interest in Kaiser and eight
percent from its ownership of lumber producing entities.  The
real estate development and horse racing interests contribute the
balance.

The simplest analysis of MAXXAM accepts that the company's
subsidiaries have been, and will continue to be, embroiled in
controversy and litigation.  Despite the alleged best efforts of
management and the incumbent board to resolve these issues and
focus on operations, events during 1999 have ensured that
litigation and bad press will continue to occupy a front row
position for shareholders and management alike.

ISS does not accept that the small holdings of company stock by
certain members of the Committee automatically align their
interests with other shareholders.  While the fortunes and
welfare of the organized labor force at Kaiser is more dependent
on the long-term success of the company, and in that respect is
aligned with the owners of the firm, there is clear evidence that
the union has interests other than share price appreciation at
MAXXAM.  The reality of this situation, however, is that the
company has consistently failed to reach a resolution with labor
or the environmentalists.  We believe that MAXXAM has been unable
to effectively deal with the distractions and efforts of those
groups and generate an acceptable return to owners.  The game
plan followed historically has yielded little fruit, and there is
no evidence that a new game plan is being seriously considered.
In addition, ISS notes with concern the limited number of shares
of stock held by members of the board, particularly the long-term
members of the board other than Mr. Hurwitz and Mr. Schwartz.
According to the company's proxy statement, five of the directors
and new nominees combined own only 4,000 shares of common stock,
excluding 5,775 shares subject to options exercisable within 60
days of April 15, 2000.

We continue to believe the dissident group has a strong case.
The company's largest single asset (its interest in Kaiser)
remains highly leveraged.  Kaiser's total debt as of Dec. 31,
1999, was approximately $972.9 million (not including $103.6
million of guaranteed debt

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                  Page 14

of unconsolidated affiliates).  Despite the expectation by
management that insurance will substantially cover the $198
million rebuild of Gramercy and other liabilities, the fallout
and ultimate cost of the disaster cannot be accurately quantified
and could exceed the limits of coverage.

The company's next largest asset, Palco, has continued to suffer
throughout 1999 with reduced sales due primarily to reduced
numbers of approved timber harvest plans.  The incumbent board
has little to offer other than the Headwaters agreement in terms
of historical evidence of its ability to create value here.
Unfortunately, even this agreement has failed to increase
shareholder value since it was consummated.  ISS does not believe
that the issues surrounding the company's lumber operations will
be easily resolved.  On the other hand, an interminable,
continuing clash with environmentalists will only perpetuate the
kinds of activities that have added costs and reduced the
company's ability to generate expanding revenues.

In sum, there may not be another holding company with a more
targeted and encumbered group of holdings than MAXXAM.  The
events over the last several years and the accompanying poor
stock price performance have been unparalleled.

ISS can appreciate the difficulty faced by MAXXAM identifying
quality independent director candidates who would be willing to
serve in such an embattled environment.  In our opinion, the
addition of another company employee to the board is a "lateral
step" at best.

ISS believes that Sen. Simon and Judge Mikva are cognizant of
their fiduciary obligations to all shareholders.  More
importantly, they take seriously these obligations and will
earnestly pursue a course of oversight and control of management
on behalf of all shareholders.  Both nominees have laudable
records of public service and private business experience.  The
dissident nominees believe that a strong independent voice is
needed on the board to ask the difficult questions about the
company's strategic course, its prospects for success, and how
the board views its responsibility to shareholders.  We believe
the addition of the dissident nominees to the board represents
the best chance of altering the company's present course.



MANAGEMENT PROPOSALS (WHITE CARD)

- -- ITEM 1: ELECT DIRECTORS

MAXXAM classifies its seven directors into three director
classes.  This proposal seeks election of three "common"
directors for one-year terms expiring in 2001 and two "general"

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                  Page 15

directors for three-year terms expiring in 2003.  J. Kent
Friedman is a new general director nominee, and Michael Rosenthal
is a new common director nominee.

The full board comprises three insiders, one affiliated outsider,
and three independent outsiders.  The Audit Committee and the
Compensation Policy Committee each comprise one affiliated
outsider and two independent outsiders.  There is no standing
nominating committee.  Ezra Levin, an affiliated outside
director, and Stanley Rosenberg, an independent outside director,
have served on the board for a period of ten years or more.

Mr. Friedman and Mr. Rosenthal own no company stock.

- -- ISS strongly recommends that companies have a nominating
committee composed solely of independent directors.  In the
future, we may consider recommending withholding votes from
insiders at companies that fail to establish an independent
nominating committee.
- -- ISS prefers that all key board committees include only
independent outsiders.
- -- In our opinion, directors can best serve shareholder interests
by becoming shareholders themselves.

We recommend that shareholders DO NOT VOTE using management's
WHITE proxy card. We recommend shareholders vote for the
dissident director nominees using the dissident BLUE proxy card.


SHAREHOLDER PROPOSALS

- -- ITEM 2: RESTORE OR PROVIDE FOR CUMULATIVE VOTING

We recommend that shareholders execute their votes on the
dissident BLUE proxy card, as detailed below.


- -- ITEM 3: DECLASSIFY THE BOARD OF DIRECTORS

We recommend that shareholders execute their votes on the
dissident BLUE proxy card, as detailed below.


- -- ITEM 4: REQUIRE MAJORITY OF INDEPENDENT DIRECTORS ON BOARD

We recommend that shareholders execute their votes on the
dissident BLUE proxy card, as detailed below

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                  Page 16


DISSIDENT PROPOSALS (BLUE CARD)

- -- ITEM 1: ELECT DIRECTORS (OPPOSITION SLATE)

This item seeks the election of two dissident director nominees
to be elected by the common shareholders to serve for a term of
one year.  As described above, the Committee has nominated Sen.
Simon and Judge Mikva to serve as common directors.  Shareholders
who execute their votes using the dissident BLUE proxy card
cannot vote for any nominees other than Sen. Simon and Judge
Mikva.

We recommend shareholders vote for the dissident nominees by
executing their votes on the dissident BLUE proxy card.


- -- ITEM 2: RESTORE OR PROVIDE FOR CUMULATIVE VOTING

The As You Sow Foundation and John Harrington have submitted this
item requesting that the company take the necessary steps to
implement cumulative voting in common director elections.

Cumulative voting is one of the corporate governance tools that
provides shareholders access and influence over director
elections.  It ensures that holders of a significant number of
shares win board representation.  Under a cumulative voting
policy, shareholders can withhold votes from certain nominees in
order to cast multiple votes for others.  Currently shareholders
can only cast one vote for each nominee.

Management argues that cumulative voting allows shareholders
representing a relatively small number of shares to elect
directors against the wishes of a majority of shareholders.
Management also often argues that the presence of dissident
directors can disturb the "collegial" atmosphere of the board
which is necessary to encourage candor.

ISS believes that cumulative voting is an important tool in the
protection of shareholders' rights, but recognizes that the need
for cumulative voting can be offset if a company has other
safeguards in place to protect shareholders' rights and to
promote management accountability.  Proposals to provide for
cumulative voting are therefore evaluated based on an assessment
of a company's other corporate governance provisions.

ISS recommends a vote against a proposal to restore or provide
for cumulative voting only if a company has the following
corporate governance provisions in place: an annually elected
board comprising a majority of independent directors; a
nominating committee composed solely of independent directors;
confidential voting; a shareholder right to call

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                 Page 17

special meetings or to act by written consent with 90 days'
notice; the absence of a dual-class capital structure; and
absence of a dead-hand poison pill.  In addition, the board may
not have the sole right to alter the size of the board beyond a
range established by shareholders.  While not required, ISS
prefers that a company also have a published statement of board
governance guidelines, including a description of the process by
which a shareholder may submit a director nominee.

In addition to the governance requirements, ISS considers a
company's performance when evaluating a shareholder proposal to
restore or implement cumulative voting.  For ISS to recommend a
vote against such a proposal, the company's performance must be
comparable to or better than that of its peers or the board must
have demonstrated its focus on increasing shareholder value by
taking action to improve performance.

In this case, the company fails to meet all of the aforementioned
corporate governance and performance criteria.  Accordingly, the
proposal warrants shareholder support.
We recommend a vote FOR Item 2.


- -- ITEM 3: DECLASSIFY THE BOARD OF DIRECTORS

Brent Blackwelder has submitted this shareholder proposal calling
for the repeal of the company's classified board structure and
for the annual election of all directors.

The board currently comprises three general director classes,
each of which serves a three-year term and is elected by the
common and preferred shares voting together as a class.
Additionally, each year common shareholders voting without the
preferred shares elect common director nominees.

The ability to elect directors is the single most important use
of the shareholder franchise, and all directors should be
accountable on an annual basis.  Management believes that
staggered boards provide continuity, but empirical evidence has
suggested that such a structure is not in shareholders' best
interests from a financial perspective.

A classified board can entrench management and effectively
preclude most takeover bids or proxy contests.  Board
classification forces dissidents and would-be acquirers to
negotiate with the incumbent board, which has the authority to
decide on offers without a shareholder vote.

We recommend a vote FOR Item 3.

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                  Page 18

- -- ITEM 4: REQUIRE MAJORITY OF INDEPENDENT DIRECTORS ON BOARD

The Rose Foundation for the Communities and the Environment,
together with Nell Minow, has submitted this item that the
company take the necessary steps to provide that the board must
consist of a majority of independent directors.  The proponent
defines an independent director as one who meets the following
criteria:

     -- Not employed by the company or an affiliate in an
executive capacity in the last five years
     -- Not affiliated with a paid advisor or consultant to the
company
     -- Not employed by a significant customer or supplier
     -- Does not have a personal services contract with the
company
     -- Not employed by a tax-exempt organization that receives
significant charitable contributions from the company
     -- Not a relative of a member of management
     -- Is not part of an interlocking directorate in which the
CEO or other executive officer of the company serves on the board
of another corporation that employs that director
     -- Does not have any personal, financial, and/or
professional relationships with the CEO or other executive
officer that could interfere with the exercise of independent
judgement by such director

The proponent argues that the board should be an independent body
elected by shareholders whose duty is to direct and formulate
corporate policies on shareholders' behalf.  Currently, according
to our definitions, the board consists of three insiders, one
affiliated outsider, and three independent outsiders.

Management asserts that the board is already composed of a
majority of highly qualified independents, in addition to which
the board has nominated a new independent director for this year.
The board further believes that a director's independence should
be based on individual circumstances, as prescribed by the
Business Roundtable, rather than rigid mechanical criteria.
Lastly, the board contends that Ms. Ratner's historic activities
belie her true intentions with regard to the welfare of the
company, and therefore her proposal and arguments in support
thereof are without merit.

We agree with the proponent's basic position.  It is a
fundamental tenet of corporate governance that the board should
be an independent body capable of providing objective oversight
of management and the company's overall direction.  This goal can
best be achieved when directors are independent of the CEO and
have no personal interest in the company arising from salary, a
retainer (other than that received for service as a director), a
consulting agreement, or any other significant business
arrangement.

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                  Page 19

Although we do not agree with all of the proponent's stringent
classifications of independent directors, we believe this
proposal sends an important message to management and is in
shareholders' best interests.

We recommend a vote FOR Item 4.
                            __________

                            MAXXAM Inc.
                          5847 San Felipe
                             Suite 2600
                      Houston, Texas  77257-2887
                          (713) 975-7600


COMPANY SOLICITOR: Mackenzie Partners, Inc. (212) 929-5500

SHAREHOLDER PROPOSAL DEADLINE: January 1, 2001


This proxy analysis has not been submitted to, or received
approval from, the Securities and Exchange Commission.  While ISS
exercised due care in compiling this analysis, we make no
warranty, express or implied, regarding the accuracy,
completeness, or usefulness of this information and assume no
liability with respect to the consequences of relying on this
information for investment or other purposes.

ENDNOTES

1. Kramer Levin Naftalis & Frankel LLP performs services for the
company.  Mr. Levin is a partner of that law firm.  Source:
MAXXAM Inc. 2000 Proxy Statement, p.24.

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                  Page 20


VOTE RECORD FORM:

                                                      MAXXAM INC.

   TICKER: MXM                    RECORD DATE: March 31, 2000

   ANNUAL MEETING: May 24, 2000   SHARES HELD ON RECORD DATE:

   ACCOUNT ID CODE:               DATE VOTED:

<TABLE>

<CAPTION>
                          MEETING AGENDA

<C>   <C>   <C>                   <C>        <C>       <C>
ITEM  CODE  MANAGEMENT PROPOSALS  MGT. REC.  ISS REC.  VOTE CAST
            (WHITE CARD)
- --1   M0201 Elect Directors       For        AGAINST

<CAPTION>
                    SHAREHOLDER PROPOSALS

<C>   <C>   <C>                   <C>        <C>
- --2   S0207 Restore or Provide    Against    FOR
            Cumulative Voting
- --3   S0201 Declassify the Board  Against    FOR
            of Directors
- --4   S0215 Require Majority of   Against    FOR
            Independent Directors
            on Board

<CAPTION>

ITEM  CODE  DISSIDENT PROPOSALS   MGT. REC.   ISS REC.  VOTE CAST
            (BLUE CARD)

<C>   <C>   <C>                   <C>         <C>
- --1   M0225 Elect Directors       For         FOR
            (Opposition Slate)
- --2   S0207 Restore or Provide    Against     FOR
            for Cumulative Voting

</TABLE>

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>

INSTITUTIONAL
SHAREHOLDER
SERVICES                                                  Page 21

- --3   S0201 Declassify the Board  For         FOR
            of Directors
- --4   S0215 Require Majority of   For         FOR
            Independent Directors
            on Board

MAXXAM Inc.   May 12, 2000               (c)2000, Institutional
Shareholder Services
Stephen Sears, Assistant Director - US Research
Phone: 301/545-4555

<PAGE>


(LOGO)
CalPERS

Executive Office
P.O. Box 942701
Sacramento, CA 94229-2701
Telecommunications Device for the Deaf -- (916) 326-3829
(916) 658-1249, FAX (916) 326-3410

May 19, 2000

DEAR FELLOW MAXXAM SHAREHOLDER:

You have likely already received two competing proxy cards
relevant to the election of directors for MAXXAM.

The California Public Employees' Retirement System (CalPERS)
urges you to cast your vote in favor of dissident director
candidates Paul Simon and Abner Mikva, as shown on the BLUE proxy
card.

CalPERS, the beneficial owner of over 218,400 shares of MAXXAM
common stock and manager of over $170 billion in pension assets,
is supporting former U.S. Senator Paul Simon and former federal
judge Abner Mikva.  Although CalPERS supports these candidates,
we are not members of the sponsoring group, The Committee of
Concerned MAXXAM Shareholders.

CalPERS supports the dissident candidates for the following
reasons:

- -- MAXXAM'S share price has fallen 50% during the last 12 months.

- -- MAXXAM is, according to Fortune Magazine, "a textbook of
governance worst practices."

     "...most of what passes for corporate governance
     at Maxxam would be a comic parody if it weren't
     for the company's depressing performance..."

- -- The current board has demonstrated its inability to address
the company's serious performance problems and, in our view, does
not deserve the continued support of shareowners.

<PAGE>

MAXXAM SHAREHOLDERS

- -- The two new directors nominated by the company (Michael J.
Rosenthal and J. Kent Friedman) do not provide us, as one
shareowner, with comfort that they are sufficiently independent
of Mr. Hurwitz to seriously -- and aggressively if necessary --
challenge his decisions.  In the early 1980s Mr. Rosenthal was
involved in providing personal investment banking services to Mr.
Hurwitz.  Mr. Friedman is the company's general counsel.

- -- We believe that Messrs. Simon and Mikva have the skills
necessary to critically challenge the MAXXAM status quo, while
also seeking to work constructively and effectively with other
board members.  Quite simply, they bring new and independent
thought -- medicine that appears to be vital to this ailing
board.

As a MAXXAM shareowner, you clearly must reach your own
conclusions about this company's -- and this board's --
performance.  However, in making your proxy voting decision, we
urge you not to be confused about the issue before you.  This
issue is NOT the motivations of those who are sponsoring or
supporting the dissident candidates.  The issue is to
whom you trust the future of this company.

CalPERS has decided to place its shares, and the reputation
behind the CalPERS name, in support of Paul Simon and Abner
Mikva.

CalPERS IS VOTING THE BLUE PROXY CARD.

If you have questions about the Simon/Mikva candidacy, you should
contact The Committee of Concerned MAXXAM Shareholders at
1-888-284-2959.

Sincerely,

/s/ James E. Burton
JAMES E. BURTON
Chief Executive Officer

Please note that the cost of this solicitation is being borne
entirely by CalPERS, and that CalPERS is communicating to
shareowners through both written and telephonic communication.
CalPERS has no knowledge of or control over solicitation efforts
by others.  Please do not send CalPERS your proxy card.



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