April 27, 1998
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Kaiser Aluminum Corporation (the "Company"); Definitive
Proxy Materials
Ladies and Gentlemen:
On behalf of the Company and pursuant to Rule 14a-6(b)
promulgated under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), please find attached the
Definitive Proxy Statement with respect to the 1998 Annual
Meeting of Stockholders, including the Notice of 1998 Annual
Meeting, and form of Proxy. It is intended that these
materials will be released to the Company's stockholders
commencing on or about April 27, 1998.
A hard copy of the actual performance graph has been
provided via Federal Express to Charles A. Sjoquist, Branch
Chief, under our cover dated April 27, 1998.
Please be advised that by copy of this letter, six (6)
copies of such materials are being delivered the New York
Stock Exchange.
Please contact the undersigned at (925) 847-5882 with
any questions or comments you may have.
Sincerely,
/s/ John M. Donnan
John M. Donnan
General Attorney
cc: w/ Enclosures
VIA FEDERAL EXPRESS
Mr. Hugh O'Brien
New York Stock Exchange
20 Broad Street, 18th Floor
New York, New York 10005
<PAGE>
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /x /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(As permitted by Rule 14(a)-6(e)(2))
/x / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
Kaiser Aluminum Corporation
- --------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Kaiser Aluminum Corporation
- --------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/x / No fee required
/ / Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which
transaction applies:
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2) Aggregate number of securities to which transaction
applies:
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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:
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(4) Date Filed:
-------------------------------------------------<PAGE>
[KAC Logo]
April 27, 1998
To Our Stockholders:
You are cordially invited to attend the Annual Meeting
of Stockholders (the "Annual Meeting") of Kaiser Aluminum
Corporation (the "Company") to be held at 8:00 a.m. on
Wednesday, May 20, 1998, at the Wyndham Greenspoint Hotel,
12400 Greenspoint Drive, Houston, Texas.
At the Annual Meeting, the holders of the Company's
Common Stock, par value $.01 per share ("Common Stock"), on
March 23, 1998 (all such holders being collectively
referred to as the "Stockholders") will consider and vote,
as a single class, (i) in the election of directors, and
(ii) upon such other business as may properly be presented
to the Annual Meeting or any adjournments or postponements
thereof.
Each Stockholder is entitled to receive notice of and
to vote at the Annual Meeting and is urged to attend.
Holders of shares of Common Stock have one vote for each
share held of record. Whether or not you intend to be
present at the Annual Meeting, we urge you to complete,
date, sign and promptly return the enclosed proxy card.
We look forward to seeing as many of you as possible
at the Annual Meeting.
GEORGE T. HAYMAKER, JR. RAYMOND J. MILCHOVICH
Chairman of the Board and President and Chief
Chief Executive Officer Operating Officer
<PAGE>
KAISER ALUMINUM CORPORATION
5847 San Felipe, Suite 2600
Houston, Texas 77057
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 20, 1998
The Annual Meeting of Stockholders (the "Annual
Meeting") of Kaiser Aluminum Corporation (the "Company")
will be held at the Wyndham Greenspoint Hotel, 12400
Greenspoint Drive, Houston, Texas, on Wednesday, May 20,
1998, at 8:00 a.m., Houston time, for the following
purposes:
1. To elect six (6) directors to hold office
until the Company's 1999 Annual Meeting of
Stockholders or until their respective
successors are elected and qualified; and
2. To consider and transact such other business as
may properly be presented to the Annual Meeting
or any adjournments or postponements thereof.
Holders of record of the Company's Common Stock, par
value $.01 per share (the "Common Stock"), as of the close
of business on March 23, 1998, are entitled to notice of
and to vote at the Annual Meeting (all such holders being
collectively referred to as the "Stockholders").
Stockholder lists will be available commencing May 10,
1998, and may be inspected for purposes germane to the
Annual Meeting during normal business hours prior to the
Annual Meeting at the offices of the Company, 5847 San
Felipe, Suite 2600, Houston, Texas.
By Order of the Board
of Directors
/s/ John Wm. Niemand II
JOHN WM. NIEMAND II
Secretary
April 27, 1998
IMPORTANT
Please complete, date and sign the enclosed proxy card
and return it promptly in the enclosed envelope provided
for your convenience and which requires no postage if
mailed in the United States. Any Stockholder who attends
the Annual Meeting may vote personally on all matters
brought before the Annual Meeting and, in that event, his
or her proxy will not be used. <PAGE>
KAISER ALUMINUM CORPORATION
5847 San Felipe, Suite 2600
Houston, Texas 77057
PROXY STATEMENT
for
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 20, 1998
This proxy statement (the "Proxy Statement") is
furnished to Stockholders (as defined below) in connection
with the solicitation of proxies on behalf of the Board of
Directors of Kaiser Aluminum Corporation (the "Company"), a
Delaware corporation, to be voted at the Company's Annual
Meeting of Stockholders (the "Annual Meeting") to be held
on May 20, 1998, and any adjournments or postponements
thereof, at the time and place and for the purposes set
forth in the accompanying Notice of Annual Meeting of
Stockholders. The principal executive offices of the
Company are located at 5847 San Felipe, Suite 2600,
Houston, Texas 77057, telephone (713) 267-3777.
This Proxy Statement, the accompanying proxy card, and
the Notice of Annual Meeting of Stockholders are being
mailed, commencing on or about April 27, 1998, to the
record holders as of the close of business on March 23,
1998, of the Company's Common Stock, par value $.01 per
share (the "Common Stock") (all such holders being
collectively referred to as the "Stockholders").
Holders of shares of Common Stock have one vote for
each share held of record. As of March 23, 1998, there
were 79,142,903 outstanding shares of Common Stock.
We cordially invite you to attend the Annual Meeting.
Whether or not you plan to attend, please complete, date,
sign and promptly return your proxy card in the enclosed
envelope. The persons authorized to act as proxies at the
Annual Meeting, individually or jointly, as listed on the
proxy cards are George T. Haymaker, Jr., Charles E.
Hurwitz, John T. La Duc and E. Bruce Butler. You may
revoke your proxy at any time prior to its exercise at the
Annual Meeting by giving notice to the Company's Secretary,
by filing a later-dated proxy or, if you attend the Annual
Meeting, by voting your shares in person. Proxies for the
Common Stock will be voted in accordance with the
directions specified thereon or, in the absence of
instructions, "FOR" the election of the directors as set
forth in this Proxy Statement.
The presence, in person or by proxy, of the holders of
shares of the Company's Common Stock entitled to cast a
majority of the votes entitled to be cast at the Annual
Meeting is required to constitute a quorum for the
transaction of business at the Annual Meeting. Under
applicable Delaware law, abstentions and broker non-votes
are counted for purposes of determining the presence or
absence of a quorum for the transaction of business. A
plurality of the votes present, in person or by proxy, is
necessary for the election of directors. With regard to
the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely
from the vote and will have no effect on the outcome.
Abstentions may not be specified on the election of
directors.
<PAGE>
ELECTION OF DIRECTORS
At the Annual Meeting, six directors will be elected
by the Stockholders to serve until the 1999 Annual Meeting
or until their respective successors are duly elected and
qualified. The six nominees receiving the highest number
of votes will be elected.
The six persons nominated for election to the Board of
Directors at the Annual Meeting are Robert J. Cruikshank,
George T. Haymaker, Jr., Charles E. Hurwitz, Ezra G. Levin,
Robert Marcus and Robert J. Petris. All of such nominees
are currently members of the Board of Directors. See,
"Executive Officers and Directors" and "Principal
Stockholders" for information concerning each of the
nominees, including the dates on which they first became
directors, their business experience during the past five
years, and the number of shares of the Company's Common
Stock owned beneficially by each of them as of March 31,
1998. Each of the nominees has consented to serve as a
member of the Board of Directors if elected.
The persons named in the proxies will vote the shares
represented thereby for the election of the foregoing named
nominees except where authority has been withheld as to a
particular nominee or as to all such nominees. Should any
nominee decline or be unable to serve as a director of the
Company, which is not anticipated, the persons named in the
proxies will vote for the election in his stead of such
other person as the Board of Directors may recommend.
The Board of Directors recommends a vote "FOR" the
election of all nominees for director of the Company.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company (sometimes
referred to herein as the "Board") held four meetings and
acted by written consent on four occasions during 1997. In
addition, management confers frequently with its directors
on an informal basis to discuss Company affairs. During
1997, no director attended fewer than 75% of the aggregate
of the meetings of the Board and all committees of the
Board on which he served.
The Board currently has five standing committees.
These committees consist of the Executive, Audit,
Compensation Policy, Section 162(m) Compensation, and
Strategic Planning Committees.
The Executive Committee meets on call and has
authority to act on most matters during the intervals
between meetings of the entire Board of Directors. The
current members are Messrs. Haymaker and Hurwitz
(Chairman). The Executive Committee, which did not meet
during 1997, acted by written consent nine times.
The current members of the Audit Committee are Messrs.
Levin, Marcus (Chairman) and Petris. The Audit Committee
meets with appropriate Company financial and legal
personnel, internal auditors and independent public
accountants and reviews the internal controls of the
Company and the objectivity and appropriateness of its
financial reporting. The Audit Committee recommends to the
Board the appointment and retention of the independent
public accountants to serve as auditors in examining the
corporate accounts of the Company and also has the
authority to supervise and direct the financial reporting,
affairs, policies and procedures of the Company, limited
only by restrictions imposed by applicable law, rule or
regulation. The independent public accountants
periodically meet privately with the Audit Committee and
have access to the Audit Committee at any time. The Audit
Committee met three times during 1997.
The Compensation Policy Committee (the "Policy
Committee") reviews and approves proposals concerning or
relating to the establishment or change of benefits plans,
or material amendments to any existing benefit plan,
salaries or other compensation, except to the extent that
(i) such authority has been delegated by the Board to the
Section 162(m) Compensation Committee (the "Section 162(m)
Committee") or (ii) such plans are governed by a plan
committee, a subsidiary's board of directors, or are
covered by a collective bargaining arrangement or other
binding contract. Notwithstanding the foregoing, the
Policy Committee also supervises plan committees other than
the Section 162(m) Committee and may delegate the
administration and investment decisions concerning plans to
committees established for those purposes. Messrs.
Cruikshank, Levin (Chairman) and Marcus currently serve as
members of the Policy Committee. The Policy Committee met
11 times and acted by written consent one time during 1997.
The Section 162(m) Committee administers and approves
amendments to the Company's plans or programs which are
intended to comply with the provisions of Section 162(m) of
the Internal Revenue Code of 1986, as it may be amended
from time to time (the "Code"). The Section 162(m)
Committee also establishes the criteria to be used in
determining awards to be made pursuant to such plans and
programs. Messrs. Cruikshank and Marcus (Chairman)
currently serve as members of the Section 162(m) Committee.
The Section 162(m) Committee met 12 times and acted by
written consent one time during 1997.
The Strategic Planning Committee, formed in February
1998 by the Board to serve in an advisory capacity to the
Company's management and the Board, consults with
management from time to time in connection with
management's review and analysis of alternative strategies
to create increased stockholder value. Messrs. Cruikshank
(Chairman), Levin and Marcus currently serve as members of
the Strategic Planning Committee.
The Board of Directors of the Company does not have a
standing nominating committee nor does it have any
committee performing a similar function.
Director Compensation
Each of the directors who was not an employee of the
Company or its principal subsidiary, Kaiser Aluminum &
Chemical Corporation ("KACC"), received a base fee of
$40,000 for the 1997 calendar year, $10,000 of which was
paid in the form of an option to purchase shares of the
Company's Common Stock as more fully described below.
Non-employee directors of the Company who were also
non-employee directors of MAXXAM Inc. ("MAXXAM"), the
Company's parent, received director or committee fees for
serving as a director of the Company and/or KACC in
addition to the fees received from MAXXAM. In addition,
the Chairman of each of the committees was paid a fee of
$3,000 per year, or $750 per quarter, for services as
Chairman. All committee members received a fee of $1,500
per day per committee meeting held in person on a date
other than a Board meeting date and $500 per formal
telephonic committee meeting. In respect of 1997, Messrs.
Cruikshank, Levin, Marcus and Petris received an aggregate
of $35,500, $39,500, $42,500 and $31,000, respectively, in
such director and committee fees from the Company and KACC
in the form of cash payments.
Non-employee directors are also eligible to
participate in the Kaiser 1997 Omnibus Stock Incentive Plan
(the "1997 Omnibus Plan"). In 1997 the Company adopted a
program pursuant to which the annual compensation paid to
each non-employee director of the Company was increased
$10,000, with such amount being paid in the form of an
option to purchase Common Stock at the market price of such
stock as of the close of the market at the New York Stock
Exchange on the day of the grant. The program provides for
such options to be granted annually at the Company's
regularly scheduled meeting of the Board in December. In
each instance the grant is intended to have a value of
$10,000 and the number of shares covered by the options is
determined using a modified Black-Scholes option pricing
method. Each option becomes exercisable as to all of the
shares covered by the option one year from the date of the grant.
In addition, in 1997 the Company adopted a program
pursuant to which a one-time grant of an option to purchase
Common Stock will be made to each new non-employee director
of the Company at the market price of such stock as of the
close of the market at the New York Stock Exchange on the
day of the grant. In each instance the grant is to have a
value of $10,000, and the number of shares covered by the
option is to be determined using a modified Black-Scholes
option pricing method. Each option becomes exercisable as
to all of the shares covered by the option one year from
the date of the grant. The Company also approved a
one-time grant of such an option to each existing
non-employee director of the Company.
In 1997 KACC adopted programs identical to the
programs described in the preceding two paragraphs. Each
of the Company and KACC expressed their intention that the
programs not be deemed to duplicate benefits with respect
to individuals who serve as a director of both the Company
and KACC. On December 10, 1997, Messrs. Cruikshank, Levin
and Marcus each received options to purchase 3,773 shares
of Common Stock at an exercise price of $10.0625 per share
under these programs.
The Company and KACC also adopted a deferred
compensation program in 1997 in which all non-employee
directors are eligible to participate. By executing a
deferred fee agreement, a non-employee director may defer
all or part, of the fees received from the Company and KACC
for services in such capacity for any calendar year. The
deferred fees would be credited to a book account as of the
date such fees would have been paid to the director and
would be deemed "invested" in two investment choices, in
25% increments, in phantom shares of the Company's Common
Stock and/or in an account bearing interest calculated
using one-twelfth of the sum of the prime rate plus 2% on
the first day of each month. If deferred, fees, including
all earnings credited to the book account, will be paid in
cash to the director or beneficiary as soon as practicable
following the date the director ceases for any reason to be
a member of the Board, either in a lump sum or in a
specified number of annual installments not to exceed ten,
at the director's election.
Subject to the approval of the Chairman of the Board,
directors may also be paid additional ad hoc fees for
extraordinary services in the amount of $750 per one-half
day or $1,500 per day. Directors are reimbursed for travel
and other disbursements relating to Board and committee
meetings and non-employee directors are provided travel
accident insurance in respect of Company related business
travel. Fees to directors who are also employees of KACC
or MAXXAM are deemed to be included in their salary.
Directors of the Company were also directors of KACC and
received the foregoing compensation for acting in both
capacities.
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information, as
of March 31, 1998, with respect to the executive officers
and directors of the Company and certain executive officers
of KACC. All officers and directors hold office until
their respective successors are elected and qualified or
until their earlier resignation or removal.
<TABLE>
<CAPTION>
<S> <C>
Name Positions and Offices with the Company
- ----------------------- ---------------------------------------
George T. Haymaker, Jr. Chairman of the Board, Chief Executive
Officer and Director
Raymond J. Milchovich President and Chief Operating Officer
Joseph A. Bonn Vice President, Planning and Development
E. Bruce Butler Vice President and General Counsel
Robert E. Cole* Vice President, Government Affairs
Wayne R. Hale* Vice President, and President of Kaiser
Primary Products
Jack A. Hockema Vice President, and President of Kaiser
Engineered Products
John T. La Duc Vice President and Chief Financial
Officer
Geoffrey W. Smith Vice President, and President of Kaiser
Aluminum Commodities
Kris S. Vasan* Vice President, Financial Risk Management
John H. Walker* Vice President, and President of Kaiser
Flat-Rolled Products
Lawrence L. Watts Vice President, Chief Administrative
Officer and President of Kaiser
Aluminum International
John Wm. Niemand II Secretary
Daniel D. Maddox Controller, Corporate Consolidation and
Reporting
Robert W. Warnock Controller, Corporate Operations
Karen A. Twitchell Treasurer
Robert J. Cruikshank Director
Charles E. Hurwitz Director
Ezra G. Levin Director
Robert Marcus Director
Robert J. Petris Director
</TABLE>
* KACC only
George T. Haymaker, Jr. Mr. Haymaker, age 60, was
elected to the positions of Chairman of the Board and Chief
Executive Officer of the Company and KACC effective January
1, 1994 and served as President of the Company and KACC from
May 1996 and June 1996, respectively, through July 1997.
From May 1993 to December 1993, Mr. Haymaker served as
President and Chief Operating Officer of the Company and
KACC. Mr. Haymaker became a director of the Company in May
1993, and a director of KACC in June 1993. From 1987 to
April 1993, Mr. Haymaker was a partner in a partnership
which acquired, redirected and operated small to medium
sized companies in the metals industry. Since July 1987,
Mr. Haymaker has been a director, and from February 1992
through March 1993 was President, of Midamerica Holdings
(formerly Metalmark Corporation), which is in the business
of semi-fabrication of aluminum extrusions. From May 1986
until February 1993, he also served as President of West
Coast Sales Corp., which provides management and acquisition
services. Mr. Haymaker also served as Chief Executive
Officer and a director of Amarlite Architectural Products,
Inc., a producer of architectural curtain wall and entrance
products, from August 1990 to April 1992 and from April 1989
to February 1993, respectively. He was a director of
American Powdered Metals Company, which is engaged in the
manufacture of powdered metal components, from August 1988
to March 1993, and Hayken Metals Asia Limited, which
represents manufacturers of aluminum and metal products,
from January 1988 to April 1993. From 1984 to 1986, Mr.
Haymaker served as Executive Vice President-Aluminum
Operations of Alumax Inc., responsible for all primary
aluminum and semifabricating activities. Mr. Haymaker is
also a director of Flowserve Corporation, a provider of
valves, pumps and seals.
Raymond J. Milchovich. Mr. Milchovich, age 48, became
President and Chief Operating Officer of the Company and
KACC in July 1997. He became a Vice President of the
Company in May 1997 and served in such capacity through July
1997. He served as Vice President-President of Kaiser
Flat-Rolled Products, of KACC from June 1995 through July
1997. From July 1986 to June 1995, Mr. Milchovich served as
Divisional Vice President of KACC's flat-rolled products
business unit and Works Manager of KACC's Trentwood facility
in Spokane, Washington.
Joseph A. Bonn. Mr. Bonn, age 54, has been Vice
President of the Company since May 1997 and has been Vice
President, Planning and Development of KACC since March
1997. He served as Vice President, Planning and
Administration of the Company and KACC from February 1992
and July 1989, respectively, through May 1997 and July 1997,
respectively. Mr. Bonn has served as a Vice President of
KACC since April 1987 and served as Senior Vice
President-Administration of MAXXAM from September 1991
through December 1992. He was also KACC's Director of
Strategic Planning from April 1987 until July 1989. From
September 1982 to April 1987, Mr. Bonn served as General
Manager of various aluminum fabricating divisions.
E. Bruce Butler. Mr. Butler, age 58, became Vice
President and General Counsel of the Company and KACC in
March 1997. Prior to becoming Vice President and General
Counsel of both companies, Mr. Butler served as Assistant
General Counsel - Kaiser International of KACC from August
1996. Immediately prior to joining the Company and KACC, Mr.
Butler practiced in the Los Angeles office of Arter &
Hadden. Prior to joining Arter & Hadden, Mr. Butler served
as Vice President and General Counsel of Allied Signal
Aerospace Company from 1988 to 1994 and International
Counsel of Allied Signal, Inc. from 1984 through 1987. From
1971 through 1984, Mr. Butler practiced with Patton, Boggs &
Blow, where he became a partner in 1977 and served as the
Resident Partner in the firm's London office.
Robert E. Cole. Mr. Cole, age 51, has been a Vice
President of KACC since March 1981. Since September 1990,
Mr. Cole also has served as Vice President-Federal
Government Affairs of MAXXAM, MAXXAM Group Inc. ("MGI"), an
indirect subsidiary of MAXXAM engaged in forest products
operations, and The Pacific Lumber Company ("Pacific
Lumber"). Mr. Cole is currently Chairman of the United
States Auto Parts Advisory Committee established by the
United States Congress.
Wayne R. Hale. Mr. Hale, age 42, became a Vice
President of KACC effective November 1997 and President of
Kaiser Primary Products effective December 1997. From
January 1, 1997, until accepting his current position, Mr.
Hale served as the Managing Director of Anglesey Aluminium
Limited, a United Kingdom corporation 49% owned by KACC
("Anglesey"), on behalf of Rio Tinto plc, the owner of the
51% interest in Anglesey. Anglesey owns and operates an
aluminum smelter and port facility in Holyhead, Wales.
Between August 1990 and December 1996, Mr. Hale was employed
by KACC and served as Technical Manager and then Operations
Manager of the Anglesey smelter before becoming Managing
Director of Anglesey in August 1995.
Jack A. Hockema. Mr. Hockema, age 51, became a Vice
President of the Company in May 1997. Mr. Hockema became
Vice President of KACC and President of Kaiser Engineered
Products in March 1997. He served as President of Kaiser
Extruded Products and Engineered Components from September
1996 to March 1997. Mr. Hockema served as a consultant to
KACC and acting President of Kaiser Engineered Components
from September 1995 until September 1996. Mr. Hockema was
an employee of KACC from 1977 to 1982, working at KACC's
Trentwood facility, and serving as plant manager of its
former Union City, California, can plant and as operations
manager for Kaiser Extruded Products. Mr. Hockema left KACC
to become Vice President and General Manager of Bohn
Extruded Products, a division of Gulf+Western, and later
served as Group Vice President of American Brass Specialty
Products until June 1992. From June 1992 until September
1996, Mr. Hockema provided consulting and investment
advisory services to individuals and companies in the metals
industry.
John T. La Duc. Mr. La Duc, age 55, has been Vice
President and Chief Financial Officer of the Company since
June 1989 and May 1990, respectively, and was Treasurer of
the Company from August 1995 until February 1996 and from
January 1993 until April 1993. He was also Treasurer of
KACC from June 1995 until February 1996, and has been a Vice
President of KACC since June 1989 and Chief Financial
Officer of KACC since January 1990. Since September 1990,
Mr. La Duc has served as Senior Vice President of MAXXAM.
Mr. La Duc also serves as a Vice President and a director of
MAXXAM Group Holdings Inc. ("MGHI"), a wholly owned
subsidiary of MAXXAM, MGI, Pacific Lumber and Pacific
Lumber's subsidiary, Scotia Pacific Holding Company ("Scotia
Pacific"). He previously served as Chief Financial Officer
of MAXXAM and MGI from September 1990 until December 1994
and February 1995, respectively, and of Pacific Lumber from
October 1990 and Scotia Pacific from November 1992 until
February 1995.
Geoffrey W. Smith. Mr. Smith, age 51, has been a Vice
President of the Company since May 1997, President of Kaiser
Aluminum Commodities since June 1996, and a Vice President
of KACC since January 1992. From June 1995 until June 1996,
Mr. Smith served as President of Kaiser Alumina of KACC, and
from December 1994 until June 1995, Mr. Smith was General
Manager of KACC's alumina business unit. Mr. Smith
previously served as Co-General Manager of KACC's alumina
business unit from September 1991 through December 1994.
From September 1990 to January 1992, Mr. Smith was
Divisional Vice President of KACC's alumina business unit.
From August 1988 to August 1990, Mr. Smith was Director of
Business Development for the alumina business unit, and from
1982 to August 1988, he was Operations/Technical Manager for
KACC's Gramercy, Louisiana facility.
Kris S. Vasan. Mr. Vasan, age 48, has been Vice
President, Financial Risk Management, of KACC since June
1995. Mr. Vasan previously served as Treasurer of the
Company from April 1993 until August 1995 and as Treasurer
of KACC from April 1993 until June 1995. Prior to that, Mr.
Vasan served the Company and KACC as Corporate Director of
Financial Planning and Analysis from June 1990 until April
1993. From October 1987 until June 1990, he served as
Associate Director of Financial Planning and Analysis.
John H. Walker. Mr. Walker, age 40, has been a Vice
President of KACC since November 1997, and President of
Kaiser Flat-Rolled Products from December 1997. From
September 1996 through October 1997, Mr. Walker served as
Vice President, Operations of KACC's Flat-Rolled Products
business unit and Works Manager of KACC's Trentwood facility
in Spokane, Washington. Prior to joining KACC, Mr. Walker
spent eight years with Weirton Steel Company, a fully
integrated steel producer ("Weirton Steel"). From August
1995 to September 1996, Mr. Walker was the Vice President of
Operations for Weirton Steel. From March of 1994 to August
1995, he served as General Manager of Operations for Weirton
Steel and prior to that served as the Director of Operating
Planning from 1991 to 1994.
Lawrence L. Watts. Mr. Watts, age 51, became Vice
President and Chief Administrative Officer of the Company in
October 1997 and Vice President, Chief Administrative
Officer of KACC in June 1997. He served as Vice President,
Administration of KACC from March 1997 through June 1997.
He has been President of Kaiser Aluminum International since
June 1995 and a Vice President of KACC since January 1992.
From April 1994 until June 1995, Mr. Watts was General
Manager-International Development. Mr. Watts previously
served as Co-General Manager of KACC's alumina business unit
from September 1991 until December 1994. From June 1989 to
January 1992, Mr. Watts was Divisional Vice President,
Governmental Affairs and Human Resources, for the alumina
business unit, and from July 1988 to June 1989, he was
Divisional Vice President, Public Relations and Governmental
Relations, for the alumina business unit. From September
1984 to July 1988, Mr. Watts was Manager, Human Resources
for the alumina business unit.
John Wm. Niemand II. Mr. Niemand, age 53, became
Secretary of the Company in May 1997 and Secretary of KACC
in June 1997. He previously served as an Assistant Secretary
of the Company and KACC since July 1988. Mr. Niemand served
as Senior Corporate Counsel of the Company and KACC from May
1992 through December 1995, and has served as Assistant
General Counsel of the Company and KACC since January 1996.
Daniel D. Maddox. Mr. Maddox, age 38, was elected to
the position of Controller, Corporate Consolidation and
Reporting of the Company and KACC effective October 1, 1997.
Mr. Maddox previously served as Assistant Corporate
Controller of the Company from May 1997 to September 1997
and KACC from June 1997 to September 1997 and
Director-External Reporting of KACC from June 1996 to May
1997. Mr. Maddox was with Arthur Andersen LLP from 1982
until joining KACC in June 1996.
Karen A. Twitchell. Ms. Twitchell, age 42, was elected
to the position of Treasurer of the Company and KACC
effective February 1, 1996. Prior to that time, Ms.
Twitchell was Vice President and Treasurer of Southdown,
Inc., a Houston-based company specializing in portland and
masonry cement, from April 1994 and Treasurer from 1989.
Robert Warnock. Mr. Warnock, age 51, was elected to the
position of Controller, Corporate Operations of the Company
and KACC effective October 1, 1997. Mr. Warnock previously
served as Controller of KACC's Flat-Rolled Products business
unit since 1993 and, Controller of KACC's Trentwood facility
in Spokane, Washington from 1992 to 1993. Prior to that
time, Mr. Warnock served as controller of various of KACC's
other plants and divisions.
Robert J. Cruikshank. Mr. Cruikshank, age 67, has
served as a director of the Company and KACC since January
1994. In addition, he has been a director of MAXXAM since
May 1993. Mr. Cruikshank was a Senior Partner in the
international public accounting firm of Deloitte & Touche
from December 1989 until his retirement in March 1993. Mr.
Cruikshank served on the board of directors of Deloitte
Haskins & Sells from 1981 to 1985 and as Managing Partner
from June 1974 until its merger with Touche Ross & Co. in
December 1989. Mr. Cruikshank also serves as a director and
on the Compensation Committee of Houston Industries
Incorporated, a public utility holding company with
interests in electric utilities, coal and transportation
businesses; a director of Texas Biotechnology Incorporated;
a trust manager of Weingarten Realty Investors; a director
of American Residential Services, Inc.; and as advisory
director of Compass Bank-Houston.
Charles E. Hurwitz. Mr. Hurwitz, age 57, was appointed
Vice Chairman of KACC in December 1994 and has served as a
director of the Company and KACC since October and November
1988, respectively. Mr. Hurwitz has also served as a member
of the Board of Directors and the Executive Committee of
MAXXAM since August 1978 and was elected Chairman of the
Board and Chief Executive Officer of MAXXAM in March 1980.
Since May 1982, Mr. Hurwitz has been Chairman of the Board
and Chief Executive Officer of MGI. From January 1993 to
January 1998, he also served MAXXAM as President. Mr.
Hurwitz has served as President of MGI since January 1993.
He has also been, since its formation in November 1996,
Chairman of the Board, President and Chief Executive Officer
of MGHI. From May 1986 until February 1993, Mr. Hurwitz
served as a director of Pacific Lumber. He has been, since
January 1974, Chairman of the Board and Chief Executive
Officer of Federated Development Company ("Federated"), a
New York business trust primarily engaged in the management
of real estate investments. Mr. Hurwitz has also served as
a director of SHRP General Partner, Inc. ("SHRP"), the
current managing general partner of Sam Houston Race Park,
Ltd., a subsidiary of MAXXAM which operates a horse racing
facility in Texas ("SHRP, Ltd."), since May 1993, Chairman
of the Board since October 1995, and President from May 1993
until April 1996.
Ezra G. Levin. Mr. Levin, age 64, has been a director
of the Company since July 1991. He has been a director of
KACC since November 1988, and a director of MAXXAM since May
1978. Mr. Levin also served as a director of the Company
from April 1988 to May 1990, and as a director of MGI from
May 1982 through December 1993. Mr. Levin is a partner in
the law firm of Kramer, Levin, Naftalis & Frankel. He also
serves as a trustee of Federated and as a director of
Pacific Lumber, Scotia Pacific and United Mizrahi Bank and
Trust Company.
Robert Marcus. Mr. Marcus, age 73, has been a director
of the Company and KACC since September 1991. From 1987 to
January 1992, Mr. Marcus was a partner in American
Industrial Partners, a San Francisco and New York based firm
specializing in private equity investments in industrial
companies. From 1983 to 1991, Mr. Marcus was a director of
Domtar Inc., a Canadian resource-based multi-business
corporation. From 1982 to 1987, Mr. Marcus served as
President and Chief Executive Officer of Alumax Inc., an
integrated aluminum company.
Robert J. Petris. Mr. Petris, age 72, has been a
director of the Company since May 1995 and KACC since June
1995. He was Special Assistant to the International
President of the United Steelworkers of America (the "USWA")
from June 1995 until January 1, 1997. From 1977 to 1997,
Mr. Petris was a member of the International Union Executive
Board and Director of District 38, where he was exposed to a
wide range of issues and problems in the aluminum, steel,
container and non-ferrous metals industries.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 31, 1998,
unless otherwise indicated, the undiluted beneficial
ownership of the Company's equity securities by (i) those
persons known by the Company to own beneficially more than
5% of the shares of any class then outstanding, (ii) each of
the directors of the Company, (iii) and each of the named
executive officers listed in the Summary Compensation Table,
and (iv) all directors and executive officers of the Company
and KACC as a group.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name of
Beneficial Owner Title of Class # of Shares(1) % of Class
- ----------------------------- -------------- -------------- ----------
MAXXAM Inc. Common Stock 50,000,000(2) 63.2
Wellington Management Company, LLP Common Stock 5,271,634(3) 6.7
Vanguard/Windsor Funds, Inc. Common Stock 5,212,234(4) 6.6
Robert J. Cruikshank Common Stock 2,000 *
George T. Haymaker, Jr. Common Stock 102,436(5) *
Charles E. Hurwitz Common Stock 187,500(6)(7) *
John T. La Duc Common Stock 117,828(5) *
Ezra G. Levin - -0- -
Robert Marcus Common Stock 3,500 *
Raymond J. Milchovich Common Stock 43,327(5) *
Robert J. Petris - -0- -
Geoffrey W. Smith Common Stock 50,510(5) *
Lawrence L. Watts Common Stock 67,713(5) *
All directors and executive Common Stock 694,375(8) *
officers of the Company and
KACC as a group (21 persons)
</TABLE>
- --------------------
* Less than 1%.
(1) Unless otherwise indicated, the beneficial owners have
sole voting and investment power with respect to the
shares listed in the table. Also includes options
exercisable within 60 days of March 31, 1998, to
acquire such shares.
(2) Includes 27,938,250 shares held by MGHI, a wholly
owned subsidiary of MAXXAM. As of March 31, 1998,
27,938,250 shares of the Company's Common Stock owned
by MGHI were pledged as security for two debt issues
of MGI consisting of $100.0 million aggregate
principal amount of 11-1/4% Senior Secured Notes due
2003 and $15.7 million aggregate principal amount of
12-1/4% Senior Discount Notes due 2003. The address
of MAXXAM is 5847 San Felipe, Suite 2600, Houston,
Texas 77057.
(3) Information is based solely on the Schedule 13G filed
with the SEC dated January 14, 1998, by Wellington
Management Company, LLP, a registered investment
advisor ("Wellington"), as a result of its ownership
interest in the Company at December 31, 1997 (the
"Wellington 13G"). The Wellington 13G indicates that
these shares are held of record by clients of
Wellington, that Wellington does not have sole voting
or dispositive power with respect to any of such
shares and that Wellington has shared voting and
dispositive power with respect to 59,400 and 5,271,634
of such shares, respectively. The Wellington 13G
further indicates that only one of Wellington's
clients, Vanguard/Windsor Funds, Inc. ("Vanguard"),
has any rights with respect to more than 5% of the
Company's Common Stock. Additional information with
respect to Vanguard is set forth above in the table
and below in the following footnote. Wellington's
address is 75 State Street, Boston, Massachusetts
02109.
(4) Information is based solely on the Schedule 13G filed
with the SEC dated February 9, 1998, by Vanguard, an
investment advisor, as a result of its ownership
interest in the Company as of December 31, 1997 (the
"Vanguard 13G"). The Vanguard 13G indicates that
Vanguard has sole voting and shared dispositive power
with respect to all of these shares. Vanguard's
address is Post Office Box 2600, Valley Forge,
Pennsylvania 19482-2600.
(5) Includes 80,025, 5,400, 6,900, 17,985 and 18,465
options exercisable within 60 days of March 31, 1998,
to acquire shares of Common Stock, by Messrs.
Haymaker, Milchovich, La Duc, Watts and Smith,
respectively.
(6) Represents only options exercisable within 60 days of
March 31, 1998, to acquire such shares.
(7) Excludes shares owned by MAXXAM. Mr. Hurwitz may be
deemed to hold beneficial ownership in the Company as
a result of his beneficial ownership in MAXXAM.
(8) Includes options exercisable within 60 days of March
31, 1998, to acquire 341,850 shares of Common Stock.
Ownership of Parent of the Company
As of April 15, 1998, MAXXAM owned, directly and
indirectly, approximately 63.2% of the issued and
outstanding Common Stock of the Company. The following
table sets forth, as of April 15, 1998, the beneficial
ownership of the Common Stock and Class A $.05
Non-Cumulative Participating Convertible Preferred Stock
("Class A Preferred Stock") of MAXXAM by the directors of
the Company, and by the directors and executive officers of
the Company and KACC as a group:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
% of
Combined
Name of % Voting
Beneficial Owner Title of Class # of Shares(1) of Class Power (2)
- ---------------- -------------- -------------- -------- ---------
Charles E. Hurwitz Common Stock 2,683,396(3)(4)(5) 38.2 68.8
Class A Preferred Stock 702,941(6)(7) 99.1
Ezra G. Levin Common Stock 1,950(4)(5)(8) * *
Robert J. Cruikshank Common Stock 1,950(8) * *
All directors and Common Stock 2,687,546(4)(5) 38.3
executive officers 68.8
as a group Class A Preferred Stock 702,941(6)(7) 99.1
(21 persons)
</TABLE>
- --------------------
* Less than 1%.
(1) Unless otherwise indicated, beneficial owners have sole
voting and investment power with respect to the shares
listed. Includes the number of shares (i) such persons
would have received on April 15, 1998, if any, for
their exercisable stock appreciation rights ("SARs")
(excluding SARs payable in cash only) exercisable
within 60 days of such date if such rights had been
paid solely in shares of MAXXAM common stock, and (ii)
of MAXXAM common stock credited to such person's stock
fund account under MAXXAM's 401(k) savings plan as of
February 28, 1998.
(2) MAXXAM Class A Preferred Stock is generally entitled to
ten votes per share.
(3) Includes 1,669,451 shares of MAXXAM common stock owned
by Federated Development Inc., a wholly owned
subsidiary of Federated ("FDI"), as to which
Mr. Hurwitz indirectly possesses voting and investment
power. Mr. Hurwitz serves as a trustee of Federated,
and together with members of his immediate family and
trusts for the benefit thereof, owns all of the voting
shares of Federated. Also includes (a) 30,201 shares
of MAXXAM common stock separately owned by Mr.
Hurwitz's spouse and as to which Mr. Hurwitz disclaims
beneficial ownership, (b) 46,500 shares of MAXXAM
common stock owned by the Hurwitz Investment
Partnership L.P., a limited partnership controlled by
Mr. Hurwitz and his spouse, 23,250 of which shares were
separately owned by Mr. Hurwitz's spouse prior to their
transfer to such limited partnership and as to which
Mr. Hurwitz disclaims beneficial ownership, (c) 101,214
shares of MAXXAM common stock owned by the 1992 Hurwitz
Investment Partnership L.P., of which 50,607 shares are
owned by Mr. Hurwitz's spouse as separate property and
as to which Mr. Hurwitz disclaims beneficial ownership,
(d) 755,001 shares of MAXXAM common stock held directly
by Mr. Hurwitz, (e) 60,000 shares of MAXXAM common
stock owned by Federated Development Investments, LLC,
a Texas limited liability company owned 79% by FDI and
21% by Mr. Hurwitz, and of which FDI is the managing
member ("FDILLC"), and (f) options to purchase 21,029
shares of MAXXAM common stock within 60 days of April
15, 1998.
(4) In addition, FDI, Federated, FDILLC, the Hurwitz
Investment Partnership L.P., the 1992 Hurwitz
Investment Partnership L.P., Messrs. Hurwitz and Levin,
and Mr. James H. Paulin, Jr., Secretary and Treasurer
of Federated, may be deemed a "group" (the "Stockholder
Group") within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"). As of April 15, 1998, in the
aggregate, the Stockholder Group beneficially owned
2,685,698 shares of MAXXAM common stock and 703,074
shares of Class A Preferred Stock, aggregating
approximately 68.8% of the total voting power of
MAXXAM. By reason of the foregoing and their
relationship with the members of the Stockholder Group,
Messrs. Hurwitz and Levin may be deemed to possess
shared voting and investment power with respect to the
shares held by the Stockholder Group.
(5) Does not include shares owned by other members of the
Stockholder Group.
(6) Includes 661,377 shares owned by FDI and 1,064 shares
held directly.
(7) Includes options exercisable within 60 days of April
15, 1998, to acquire 40,500 shares of Class A Preferred
Stock.
(8) Includes options exercisable within 60 days of April
15, 1998, to purchase 950 shares of MAXXAM common
stock.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation
information, cash and non-cash, for each of the Company's
last three completed fiscal years with respect to the Chief
Executive Officer and the four most highly compensated
executive officers of the Company (collectively referred to
as the "named executive officers") for the fiscal year ended
December 31, 1997:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long-Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted
Annual Stock Options/ LTIP All Other
Name and Salary Bonus Compensation Award(s) SARs Payouts Compensation
Principal Position Year ($) ($) ($)(1) ($) (#) ($) ($)
- ------------------------ ---- ------- ----- ------------ --------- -------- -------- ------------
George T. Haymaker, Jr., 1997 494,083 311,000 -0- -0- -0- 121,122(2) 24,704(3)
Chairman and Chief 1996 487,000 71,638 -0- -0- -0- -0-(2) 9,740(3)
Executive Officer 1995 465,000 225,000 -0- -0- -0- -0- 23,250(3)
Raymond J. Milchovich, 1997 272,083 211,000 -0- -0- -0- 71,212(2) 17,796(3)(4)
President and Chief 1996 223,750 42,700 -0- -0- -0- -0-(2) 77,158(3)(4)
Operating Officer 1995 183,000 70,000 -0- -0- -0- -0- 9,150(3)
John T. La Duc, 1997 260,000 184,000(5) -0- -0- -0- 44,236(2) 13,000(3)
Vice President and 1996 260,000 83,200(5) -0- -0- -0- -0-(2) 5,200(3)
Chief Financial Officer 1995 248,333 130,000(5) -0- -0- -0- -0- 12,417(3)
Lawrence L. Watts, 1997 242,667 130,100 -0- -0- -0- 58,981(2) 12,133(3)
Vice President, 1996 234,000 37,000 -0- -0- -0- -0-(2) 24,180(3)(4)
Chief Administrative 1995 211,171 105,000 -0- -0- -0- -0- 10,559(3)
Officer and President
of Kaiser Aluminum
International
Geoffrey W. Smith, 1997 255,000 116,635 -0- -0- -0- 68,250(2) 55,743(3)(4)
Vice President, 1996 246,250 38,000 -0- -0- -0- -0-(2) 33,550(3)(4)
and President of Kaiser 1995 211,171 84,000 -0- -0- -0- -0- 10,559(3)
Aluminum Commodities
</TABLE>
- --------------------
(1) Excludes perquisites and other personal benefits
because the aggregate amount of such compensation is
the lesser of either $50,000 or 10% of the total of
annual salary and bonus reported for the named
executive officer. Tax preparation fees and the value
of the personal use of company cars with respect to
each named executive officer exceed 25% of the total
perquisites and other personal benefits received by
each such named executive officer.
(2) The long-term component of the Company's incentive
compensation program provides incentive compensation
based on performance against goals over rolling
three-year periods. The first installment for the
1994-1996 period was distributed in March 1997, and the
amounts shown in the table reflect the market value of
the stock portion of the grant on the date of
distribution. The second installment was distributed in
March 1998. Total awards for the 1995-1997 period for
Messrs. Haymaker, Milchovich, La Duc, Watts and Smith
were $362,100, $161,500, $164,900, $188,100 and
$152,700, respectively. The first installment for the
1995-1997 period was distributed in March 1998.
Additional information with respect to the long-term
component of the Company's incentive compensation
program is set forth below in the Long-Term Incentive
Plan Awards Table and in the Report of the Compensation
Committees on Executive Compensation.
(3) Includes accruals by KACC of $24,704, $9,740 and
$23,250 for Mr. Haymaker; $13,604, $4,475 and $9,150
for Mr. Milchovich; $13,000, $5,200 and $12,417 for Mr.
La Duc; $12,133, $4,680 and $10,559 for Mr. Watts and
$12,750, $4,925 and $10,559 for Mr. Smith under the
Kaiser Savings Plan and Kaiser Supplemental Benefits
Plan (each as defined below) for 1997, 1996 and 1995,
respectively.
(4) Includes moving-related items of $4,192 and $72,683 for
Mr. Milchovich for 1997 and 1996, respectively; $19,500
for Mr. Watts for 1996; and $42,993 and $28,625 for Mr.
Smith for 1997 and 1996, respectively.
(5) Includes $50,000 (to be paid over a two-year period)
for each of 1997, 1996 and 1995, respectively, which
will be reimbursed by MAXXAM.
Option/SAR Grants
No individual grants of stock options or SARs were made
during 1997 to any of the Company's named executive
officers.
Option/SAR Exercises and Fiscal Year End Value Table
The table below provides information on an aggregated
basis concerning each exercise of stock options and SARs
during the fiscal year ended December 31, 1997 by each of
the Company's named executive officers, and the 1997 fiscal
year-end value of unexercised options and SARs.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e)
Number of Unexercised Value of Unexercised
Options/SARs in-the-Money Options/SARs
at Year End (#) at Fiscal Year-End ($)
--------------------- -------------------------
Shares
Acquired on Value
Name Exercise(#)(1) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------
George T. Haymaker, Jr. - - 60,025 26,675 66,252(2) 33,126(2)
Raymond J. Milchovich - - 5,400 1,800 -(2) -(2)
John T. La Duc - - 6,900 2,300 -(2) -(2)
- 64,750 8,000(3) -0-(3) 125,000(3) -(3)
Lawrence L. Watts - - 13,765 5,995 13,979(2) 6,990(2)
Geoffrey W. Smith - - 14,085 6,155 14,509(2) 7,255(2)
</TABLE>
- ---------------------
(1) If no shares received, the number reflected, if any,
represents the number of securities with respect to
which options/SARs were exercised.
(2) Valued at $8.875, the closing price of the Company's
Common Stock on December 31, 1997, less exercise
price. If the exercise price is equal to or higher
than the closing price, no value is shown.
(3) Represents SARs relating to MAXXAM's common stock.
Valued at $43.625, the closing price of MAXXAM's
common stock on December 31, 1997, less exercise
price.
The SARs relating to MAXXAM common stock set forth in
the above table for Mr. La Duc were granted under MAXXAM's
1984 Phantom Share Plan (the "MAXXAM Phantom Plan"). All of
Mr. La Duc's SARs under the MAXXAM Phantom Plan are
exercisable for cash only.
<PAGE>
Long-Term Incentive Plan Awards Table
Each of the Company's named executive officers received
awards in 1997 under the long-term component of the
Company's incentive compensation program for the 1994-1996
three-year, long-term performance period. The following
table and accompanying footnotes describe the awards
received by each of the Company's named executive officers
in 1997 and the criteria applied in determining the amount
payable for the 1994-1996 performance period.
<TABLE>
<CAPTION>
<S> <C> <C>
(a) (b) (c)
Performance
Number of or Other
Shares, Units Periods Until
or Other Maturation or
Name Rights (#) Payout
- ---------------------------------------------------------
George T. Haymaker, Jr. 5,762(1) -(2)
Raymond J. Milchovich 1,009(1) -(2)
John T. La Duc 2,104(1) -(2)
Lawrence L. Watts 2,806(1) -(2)
Geoffrey N. Smith 3,247(1) -(2)
</TABLE>
- -----------
(1) Represents the stock portion of the first installment
of long-term incentive award distributed in March 1997
to each of the Company's named executive officers in
connection with the 1994-1996 three year, long-term
performance period. Payments under the long-term
component of the program are generally made 57% in
shares of the Company's Common Stock and 43% in cash
and are paid in two installments; the first installment
during the year following the end of the three-year
period and the second installment during the second
year following the end of the three-year period. The
aggregate number of shares distributed was based on the
average closing price of the Company's Common Stock
during the last December of the long-term performance
period. The average closing price of the Company's
Common Stock during December 1996 was $11.375 per
share. The total awards for the 1994-1996 long-term
performance period for Messrs. Haymaker, Milchovich,
La Duc, Watts and Smith were $230,000, $90,480,
$84,000, $112,000 and $129,600, respectively.
(2) Payment of the second installment for the 1994-1996
long-term performance period was conditioned on
continued employment through the end of the fiscal year
following the end of the performance period. If a
participant voluntarily terminates his or her
employment for any reason other than death, disability
or retirement prior to the beginning of the fiscal year
the payment is to be made; any unmade payments are
forfeited. Each of the Company's named executive
officers were employed by KACC on January 1, 1998, and
the second installment was distributed in March 1998.
Threshold, target and maximum amounts for the long-term
portion of executive compensation are based upon Company
performance. During the 1994-1996 performance period target
incentives were based on the return on assets employed in
the business. Minimum performance criteria must be met
before the threshold amount is earned. In addition, when
incentive awards are determined for the foregoing named
executive officers at the end of each performance period, an
additional 30% of incentive targets based on the achievement
of goals or other accomplishments not reflected in the
return on assets, is added to the incentive payment amount.
Finally, while the Section 162(m) Committee cannot increase
the incentive payment, it may decrease the payment by up to
60% of the target incentive. Additional information with
respect to long-term incentive compensation awarded to the
Company's named executive officers is set forth above in the
Summary Compensation Table.
Defined Benefit Plans
Kaiser Retirement Plan
KACC maintains a qualified, defined-benefit retirement
plan (the "Kaiser Retirement Plan") for salaried employees
of KACC and co-sponsoring subsidiaries who meet certain
eligibility requirements. The table below shows estimated
annual retirement benefits payable under the terms of the
Kaiser Retirement Plan to participants with the indicated
years of credited service. These benefits are reflected
without reduction for the limitations imposed by the Code on
qualified plans and before adjustment for the Social
Security offset, thereby reflecting aggregate benefits to be
received, subject to Social Security offsets, under the
Kaiser Retirement Plan and the Kaiser Supplemental Benefits
Plan (as defined below).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Annual Years of Service
---------------------------------------------------
Remuneration 15 20 25 30 35
- ------------ ---------------------------------------------------
$ 250,000 56,250 75,000 93,750 112,500 131,250
350,000 78,750 105,000 131,250 157,500 183,750
450,000 101,250 135,000 168,750 202,500 236,250
550,000 123,750 165,000 206,250 247,500 288,750
650,000 146,250 195,000 243,750 292,500 341,250
750,000 168,750 225,000 281,250 337,500 393,750
850,000 191,250 255,000 318,750 382,500 446,250
950,000 213,750 285,000 356,250 427,500 498,750
1,050,000 236,250 315,000 393,750 472,500 551,250
</TABLE>
The estimated annual retirement benefits shown are based
upon the assumptions that current Kaiser Retirement Plan and
Kaiser Supplemental Benefits Plan provisions remain in
effect, that the participant retires at age 65, and that the
retiree receives payments based on a straight-life annuity
for his lifetime. Messrs. Haymaker, Milchovich, La Duc,
Watts and Smith had 4.7, 17.6, 28.3, 22.0 and 23.5 years of
credited service, respectively, on December 31, 1997.
Monthly retirement benefits, except for certain minimum
benefits, are determined by multiplying years of credited
service (not in excess of 40) by the difference between
1.50% of average monthly compensation for the highest base
period (of 36, 48 or 60 consecutive months, depending upon
compensation level) in the last 10 years of employment and
1.25% of monthly primary Social Security benefits. Pension
compensation covered by the Kaiser Retirement Plan and the
Kaiser Supplemental Benefits Plan consists of salary and
bonus amounts set forth in the Summary Compensation Table
(column (c) plus column (d) thereof).
Participants are entitled to retire and receive pension
benefits, unreduced for age, upon reaching age 62 or after
30 years of credited service. Full early pension benefits
(without adjustment for Social Security offset prior to age
62) are payable to participants who are at least 55 years of
age and have completed 10 or more years of pension service
(or whose age and years of pension service total 70) and who
have been terminated by KACC or an affiliate for reasons of
job elimination or partial disability. Participants
electing to retire prior to age 62 who are at least 55 years
of age and who have completed 10 or more years of pension
service (or whose age and years of pension service total at
least 70) may receive pension benefits, unreduced for age,
payable at age 62 or reduced benefits payable earlier.
Participants who terminate their employment after five years
or more of pension service, or after age 55 but prior to age
62, are entitled to pension benefits, unreduced for age,
commencing at age 62 or, if they have completed 10 or more
years of pension service, actuarially reduced benefits
payable earlier. For participants with five or more years
of pension service or who have reached age 55 and who die,
the Kaiser Retirement Plan provides a pension to their
eligible surviving spouses. Upon retirement, participants
may elect among several payment alternatives including, for
most types of retirement, a lump-sum payment.
Kaiser Supplemental Benefits Plan
KACC maintains an unfunded, non-qualified Supplemental
Benefits Plan (the "Kaiser Supplemental Benefits Plan"), the
purpose of which is to restore benefits which would
otherwise be paid from the Kaiser Retirement Plan or the
Supplemental Savings and Retirement Plan, a qualified
Section 401(k) plan (the "Kaiser Savings Plan"), were it not
for the Section 401(a)(17) and Section 415 limitations
imposed by the Code. Participation in the Kaiser
Supplemental Benefits Plan includes all employees of KACC
and its subsidiaries whose benefits under the Kaiser
Retirement Plan and Kaiser Savings Plan are likely to be
affected by such limitations imposed by the Code. Eligible
participants are entitled to receive the equivalent of the
Kaiser Retirement Plan and Kaiser Savings Plan benefits
which they may be prevented from receiving under those plans
because of such Code limitations.
Kaiser Termination Payment Policy
Most full-time salaried employees of KACC are eligible
for benefits under an unfunded termination policy if their
employment is involuntarily terminated, subject to a number
of exclusions. The policy provides for lump-sum payments
after termination ranging from one-half month's salary for
less than one year of service graduating to eight months'
salary for 30 or more years of service. The amounts payable
to Messrs. Haymaker, Milchovich, La Duc, Watts and Smith
under the policy if they had been involuntarily terminated
on December 31, 1997 would have been $63,000, $129,166,
$151,666, $130,000 and $148,750, respectively.
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements
On April 1, 1993, the Company and KACC entered into a
five-year employment agreement with Mr. Haymaker, pursuant
to which he currently serves as Chairman and Chief Executive
Officer of the Company and KACC. In December 1997, the term
of Mr. Haymaker's employment agreement was extended until
December 5, 1999. As amended, Mr. Haymaker's agreement
provides for an annual base salary of not less than $569,000
effective February 1, 1998 and a cumulative bonus target in
1998 of $1,206,400 under the Company's executive
compensation programs as more fully described below in the
Report of the Compensation Committees on Executive
Compensation. Of this amount, $387,900 is attributable to
Mr. Haymaker's short term incentive target and $818,500 is
attributable to his long term incentive target for the three
year period ending December 31, 1998. Pursuant to his
agreement, Mr. Haymaker received an initial award under the
Kaiser 1993 Omnibus Stock Incentive Plan (the "1993 Omnibus
Plan") of options to purchase up to 100,000 shares of the
Company's Common Stock at its fair market value on the date
of the award. Such options vested at the rate of 20% per
year for a period of five years through and including April
1, 1998.
In the event of a change of control of the Company or
KACC which within one year thereafter adversely affects Mr.
Haymaker's title, position, duties, responsibilities or
compensation, Mr. Haymaker's employment agreement provides
that he may elect to be deemed terminated without cause, and
therefore, entitled to a severance payment in an amount
equal to two times his base annual salary reduced by any
payment made as discussed under "Kaiser Termination Payment
Policy" above.
Mr. Haymaker's employment agreement further provides
that he vests 20% per year in an unfunded non-qualified
supplemental benefit, payable at retirement after age 62,
equal to a benefit determined as if his Kaiser Retirement
Plan pension were based on his aggregate service with KACC
and a prior employer (25 years), less his pension from that
prior employer and any retirement benefits from KACC. Mr.
Haymaker is now fully vested under this provision.
KACC has agreed to provide Mr. Smith with an unfunded
nonqualified supplemental benefit after retirement equal to
the additional Kaiser Retirement Plan pension he would be
entitled to receive if his prior employment (6.3) years with
an affiliate of KACC were counted as credited service under
such plan. This additional credited service is also counted
in determining his benefits as described above under the
caption "Kaiser Termination Payment Policy" and for purposes
of determining his employee contributions under KACC's
retiree medical program.
Except as otherwise noted above, there are no
employment contracts between the Company or any its
subsidiaries and any of the Company's named executive
officers. Similarly, there are not any compensatory plans
or arrangements which include payments from the Company or
any of its subsidiaries to any of the Company's named
executive officers in the event of any such officer's
resignation, retirement or any other termination of
employment with the Company and its subsidiaries or from a
change-in-control of the Company or a change in the named
executive officer's responsibilities following a
change-in-control except as set forth above under the
caption "Kaiser Termination Payment Policy".
<PAGE>
REPORT OF THE COMPENSATION COMMITTEES
ON
EXECUTIVE COMPENSATION
Two compensation committees administer the Company's
compensation plans, the Policy Committee and the Section
162(m) Committee. The Policy Committee administers and
establishes the Company's overall compensation policies,
except to the extent that this authority has been delegated
by the Board to the Section 162(m) Committee. The Section
162(m) Committee administers and approves amendments to the
Company's plans or programs which are intended to comply
with the provisions of Section 162(m) of the Internal
Revenue Code of 1986, as it may be amended from time to time
(the "Code"), and also establishes the criteria to be used
in determining awards to be made pursuant to those plans or
programs. Each committee reports to the full Board and
together they have furnished the following report on
executive compensation for fiscal year 1997.
Although certain plans or programs in which executive
officers of the Company participate are jointly sponsored by
the Company and KACC, executive officers of the Company are
directly employed and compensated by KACC. During 1997, the
members serving on the Policy Committee and Section 162(m)
Committee also served on KACC's Compensation Policy
Committee and Section 162(m) Compensation Committee (these
committees are hereinafter collectively referred to in this
report as the "Committees"). References to the "Company"
made in the remainder of this report are deemed to include
KACC as well as the Company.
Compensation Philosophy, Structure and Methodology
Philosophy. The Company's philosophy continues to be
that compensation of its executives officers should be
related as closely as possible to the ability of the Company
as a whole, and the area of direct responsibility of each
executive to create economic value. Only when new or added
economic value is created can Company shareholders and
management share in increased economic rewards. To attract
and retain talented individuals, the Company provides the
opportunity to earn total compensation that is not only
competitive with, but, if Company goals are met, potentially
superior to, that available from employers with whom the
Company and its businesses compete.
Structure. Executive officer compensation for 1997
consisted of a combination of base salary, short-term
incentives based on performance during 1997, long-term
incentives based on performance over the 1995-1997
three-year performance period, employee benefits and
executive perquisites. Base salaries were designed to fall
somewhat below the 50th percentile of the market described
below and, together with short and long-term incentive
targets, were designed to fall somewhat above the 50th
percentile of that market. As a result, the combination of
base pay and incentive compensation allowed executives
officers to potentially earn less, the same as or more than
the total compensation opportunity offered by competing
employers depending on Company performance.
For 1997, the portion of executive compensation
allocated to base compensation ranged from approximately 32%
to 43% for certain senior executive officers, including the
named executive officers (collectively, the "Senior
Executives"), and 44% to 68% for the remaining executive
officers, with the portion allocated to incentive
compensation in each case generally increasing with position
responsibility. For the Senior Executives the incentive
targets for 1997 were allocated 30% to short-term targets
and 70% to long-term targets. For the remaining executive
officers the allocation was generally split evenly between
short and long-term targets. This structure reflected the
Company's compensation philosophy by structuring a major
portion of each executive's total compensation to be at-risk
and performance-based. The Company's compensation for
executive officers also included other benefits and
perquisites which generally fell within the 50th percentile
of its comparative market.
Methodology. Target compensation and incentives were
based on a combination of market survey data, internal
force-ranking and assessment of position responsibilities.
Major national surveys, as well as market data from a group
of companies engaged in metals, mining, chemicals and
similar industries, with whom the Company is likely to
compete for managerial talent, were used to establish the
market. In performing its assessment of position
responsibilities, descriptions of various key positions, the
duties and major responsibilities of each position, as well
as the required qualifications, were developed and then
matched to database descriptions to ensure an accurate match
to reasonably comparable positions at comparative companies.
Company performance awards and goals were established
at the beginning of 1997 with respect to the annual
performance period and at the beginning of 1995 with respect
to the three-year long-term performance period. In each
instance performance awards were structured in a manner
which would reward aggressive and accurate planning and
performance goals were based on (i) return on net assets
employed by the Company, and for certain executive officers,
the return on net assets employed by specific business units
or a combination of Company and business unit performance,
and (ii) safety or group and individual goals and
objectives. Minimum or threshold performance levels which
must be met for there to be any incentive payout, as well as
target and maximum performance levels were also established
for the short and long-term performance periods. With
respect to the short-term performance period, performance
goals were based on "normalized" metal prices to allow for
measurement of the progress toward the $120 million profit
improvement program without fluctuations due to changing
metal prices. In addition, incentive compensation payable
to each of the Senior Executives for the 1997 short-term
performance period was capped at their respective targets if
the average price of the Company's Common Stock during
December 1997 was lower than the average price during
December 1996.
Components of Executive Officer Compensation
Base Salaries. Adjustments to the base salary of
certain executive officers were made during 1997 as
necessary to reflect market related adjustments and
increasing responsibilities assumed either as the result of
promotions or additional assignments during the year.
Short-Term Incentive. As described above, short-term
incentive awards for 1997, as well as threshold performance
requirements, were based on the "normalized" return on net
assets. During 1997 Company results exceeded target
performance levels, however the average price of the
Company's Common Stock during December 1997 was lower than
the average price during December 1996. As a result,
short-term awards paid to certain Senior Executive Officers
were "capped" at their respective targets, while awards to
other executive officers were generally approximately 34%
above the target amounts. Short-term awards for 1997 were
paid in cash during the first quarter of 1998.
Long-Term Incentive. Long-term incentive compensation
for the 1995-1997 long-term performance period was based on
the simple average of the return on net assets during each
of the three years included within the performance period.
During the 1995-1997 long-term performance period Company
and business unit results generally exceeded threshold
performance goals, but did not reach target performance
levels. As a result, long-term awards for the 1995-1997
performance period were generally 54% of the target amounts.
Long-term incentive payments for the 1995-1997 long-term
performance period are made 43% in cash and 57% in shares of
Common Stock and are paid in two installments, the first
installment having been distributed in March 1998 and the
second installment being scheduled for distribution in March
1999. In each case, payments are generally conditioned on
continued employment.
1993 and 1997 Omnibus Plans
All long-term performance awards distributed in
connection with long-term performance periods beginning
before January 1, 1997 are made under the 1993 Omnibus
Plan. All long-term performance awards distributed in
connection with long-term performance periods beginning on
or after January 1, 1997 will be made under the 1997 Omnibus
Plan, which was approved by the stockholders of the Company
at the 1997 annual meeting. In addition, the 1997 Omnibus
Plan may be utilized as otherwise necessary to provide those
persons who have substantial responsibility for management
and growth of the Company with an opportunity to increase
their ownership of Common Stock, stock options or related
types of benefits. During 1997, no grants were made under
the 1993 Omnibus Plan, except in connection with the
distribution of the first installment of shares of Common
Stock awarded for the 1994 - 1996 long-term incentive
compensation performance period. No grants were made to
executive officers of the Company under the 1997 Omnibus
Plan during 1997.
Employment Agreements
From time to time and for various reasons, management
and the Board of Directors has deemed it appropriate to
enter into specific employment agreements with certain
executive officers. Such agreements may relate, for
example, to the further retention of the officer or a
commitment by the officer to relocate to another location.
Where such agreements are made, they are negotiated by the
Company's General Counsel, or his designee under the
supervision of the Policy Committee and reviewed and
approved by the Board or the Policy Committee. In making
its compensation decisions, and in supervising the
negotiations and approving such employment agreements, the
Policy Committee is mindful of the Company's overall
corporate objectives and the compensation objectives
described above as well as the circumstances making the
employment agreement an appropriate compensation mechanism.
Such employment agreements generally range in term from one
to five years. During 1997, Mr. Haymaker was employed under
an employment agreement as discussed under the heading
"Employment Contracts and Termination of Employment and
Change-in-Control Arrangements."
Compensation of the CEO for the Last Completed Fiscal Year
Mr. Haymaker served as the Chairman of the Board and
Chief Executive Officer of the Company for all of 1997 and
also served as President of the Company through July 1997.
Mr. Haymaker is employed pursuant to a written employment
agreement which is described above under "Employment
Contracts and Termination of Employment and
Change-in-Control Arrangements." Mr. Haymaker's employment
agreement provides that his annual base salary will be
reviewed and possibly changed on an annual basis, provided,
however that his base salary cannot be reduced to less than
$450,000 without his consent. In mid-1997, Mr. Haymaker's
base salary was increased from $487,000 to $504,000 as part
of a two-step increase intended to bring Mr. Haymaker's
salary more in line with market data obtained by the Company
and the Company's overall compensation structure for its
executive officers. The second increase raised Mr.
Haymaker's salary to $569,000 effective as of February 1,
1998. Mr. Haymaker's employment agreement also contains
target incentives which are consistent with the goals and
objectives of the Company's incentive compensation programs
as described above.
During 1997 the Company's performance slightly
exceeded 1997 performance goals, however, as previously
mentioned, the average price of the Company's Common Stock
during December 1997 was lower than the average price during
December 1996. As a result, the short-term incentive award
earned by Mr. Haymaker in 1997 was limited to his targeted
amount of $311,000. The long-term award earned by Mr.
Haymaker for the 1995-1997 three-year long-term performance
period was $362,136.
Compensation by MAXXAM
Mr La Duc received a portion of his compensation
during 1997 from MAXXAM, the Company's parent corporation.
Where an executive officer of both the Company and MAXXAM is
compensated by the Company, or where an executive officer of
both the Company and MAXXAM is compensated by MAXXAM, the
respective corporations make intercompany allocations of the
costs of employment of the executive officer based on the
allocation of that executive officer's time as expended
among the Company, MAXXAM or their respective subsidiaries.
Such allocations are described under "Certain Transactions"
below.
Compliance with Section 162(m)
Section 162(m) generally disallows a tax deduction to
public companies for compensation over $1 million paid to
the CEO and four other most highly compensated executive
officers of public companies. Qualifying performance-based
compensation will not be subject to the deduction limit if
certain requirements are met. Compensation earned by or
awarded to the Senior Executives whose compensation is
potentially subject to the limitations imposed by Section
162(m) of the Code is covered by a separate program intended
to comply with the provisions of Section 162(m) of the Code
(the "Senior Executive Program"). The Senior Executive
Program, the 1993 Omnibus Plan and the 1997 Omnibus Plan,
each of which has been approved by the stockholders of the
Company, are performance based and designed to enable
compliance with Section 162(m) and the regulations
thereunder. In addition, the Senior Executive Program and
awards under the 1993 and 1997 Omnibus Plans that are
intended to comply with Section 162(m) are administered by
the Section 162(m) Committee. Messrs. Marcus (Chairman) and
Cruikshank currently serve as members of the Section 162(m)
Committee and for purposes of Section 162(m) are qualifying
directors. The Senior Executives are the only executive
officers of the Company to which the limitation imposed by
Section 162(m) of the Code is likely to apply and the
Section 162(m) Committee believes that awards to the Senior
Executives should be tax deductible under Section 162(m).
Section 162(m) Compensation Compensation Policy Committee
Committee of the Board of of the Board of Directors
Directors
Robert J. Cruikshank Robert J. Cruikshank
Robert Marcus, Chairman Ezra G. Levin, Chairman
Robert Marcus
Compensation Committee Interlocks and Insider Participation
No member of the Policy Committee or the Section
162(m) Committee was, during the 1997 fiscal year, an
officer or employee of the Company or any of its
subsidiaries, or was formerly an officer of the Company or
any of its subsidiaries or, other than Mr. Levin, had any
relationships requiring disclosure by the Company under Item
404 of Regulation S-K. Mr. Levin served on the Company's
Policy Committee and Board of Directors during 1997 and is
also a partner in the law firm of Kramer, Levin, Naftalis &
Frankel, which provided legal services to the Company and
its subsidiaries during 1997.
During the Company's 1997 fiscal year, no executive
officer of the Company served as (i) a member of the
compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose
executive officers served on the Policy Committee or Section
162(m) Committee of the Company, (ii) a director of another
entity, one of whose executive officers served on any of
such committees, or (iii) a member of the compensation
committee (or other board committee performing equivalent
functions) of another entity, one of whose executive
officers served as a director of the Company.
<PAGE>
PERFORMANCE GRAPH
The following performance graph compares the
cumulative total stockholder return on the Company's Common
Stock with the cumulative total returns of the S&P 500 Stock
Index and a peer group which consists of companies included
by S&P in its published index for the Aluminum Industry.
The graph assumes that the value of the investment in the
Company's Common Stock and each index was $100 at December
31, 1992, and that all dividends were reinvested. The data
points are calculated as of the last trading day for the
year indicated.
<TABLE>
<CAPTION>
TOTAL SHAREHOLDER RETURNS
-------------------------
(Dividends Reinvested)
ANNUAL RETURN PERCENTAGE
Years Ending
<S> <C> <C> <C> <C> <C> <C>
Company/Index Dec93 Dec94 Dec95 Dec96 Dec97
- ---------------------------------------------------------------------------
KAISER ALUMINUM CORP 4.35 20.83 20.69 -11.43 -23.66
ALUMINUM-500 2.38 22.62 23.24 14.85 1.64
S&P 500 INDEX 10.08 1.32 37.58 22.96 33.36
INDEXED RETURNS
Years Ending
Base
Period
Company/Index Dec92 Dec93 Dec94 Dec95 Dec96 Dec97
- ---------------------------------------------------------------------------
KAISER ALUMINUM CORP 100 104.35 126.09 152.17 134.78 102.90
ALUMINUM-500 100 102.38 125.55 154.72 177.69 180.60
S&P 500 INDEX 100 110.08 111.53 153.45 188.68 251.63
</TABLE>
CERTAIN TRANSACTIONS
During the period from October 28, 1988 through June
30, 1993, the Company and its domestic subsidiaries were
included in the consolidated federal income tax returns of
MAXXAM. During 1997, MAXXAM reached a settlement with the
Internal Revenue Service regarding all remaining years where
the Company and its domestic subsidiaries were included in
the MAXXAM consolidated federal income tax returns. As a
result of this settlement, KACC paid approximately $11.8
million to MAXXAM in respect of its liabilities pursuant to
its tax allocation agreement with MAXXAM. Payments or
refunds for periods prior to July 1, 1993, related to other
jurisdictions could still be required pursuant to the
Company's and KACC's respective tax allocation agreements
with MAXXAM. In accordance with the credit agreement
entered into by the Company and KACC which provides a $325
million five-year secured, revolving line of credit, any
such payments to MAXXAM by KACC would require lender
approval, except in certain circumstances. The tax
allocation agreements of the Company and KACC with MAXXAM
terminated pursuant to their terms, effective for taxable
periods beginning after June 30, 1993. While the Company
and KACC are severally liable for the MAXXAM tax group's
federal income tax liability for all of 1993 and applicable
prior periods, pursuant to the relevant tax allocation
agreements, MAXXAM indemnifies the Company and KACC to the
extent the tax liability exceeds amounts payable by them
under such agreements.
KACC and MAXXAM have an arrangement pursuant to which
they reimburse each other for certain allocable costs
associated with the performance of services by their
respective employees. KACC paid a total of approximately
$4.1 million to MAXXAM pursuant to such arrangements and
MAXXAM paid approximately $3.1 million to KACC pursuant to
such arrangements in respect of 1997. Generally, KACC and
MAXXAM endeavor to minimize the need for reimbursement by
ensuring that employees are employed by the entity to which
the majority of their services are rendered.
Mr. Levin, a director of the Company and KACC, is a
partner in the law firm of Kramer, Levin, Naftalis &
Frankel, which provides legal services to the Company and
its subsidiaries.
On April 17, 1995, SHRP, Ltd. and two affiliated
entities, SHRP Acquisition, Inc. and SHRP Capital Corp.,
filed voluntary corporate petitions under Chapter 11 of the
United States Bankruptcy Code. Their bankruptcy plan has
since been confirmed and the transactions contemplated by
the bankruptcy reorganization plan were consummated on
October 6, 1995. Mr. Hurwitz has served as a director and
Chairman of the Board of SHRP, Inc., SHRP, Ltd.'s sole
general partner prior to SHRP Ltd.'s bankruptcy
reorganization, and as a director, Chairman of the Board and
President of SHRP Capital Corp., a subsidiary of SHRP, Ltd.
which was dissolved effective December 31, 1997. Mr.
Hurwitz currently serves as a director and Chairman of the
Board of SHRP, the managing general partner of SHRP, Ltd.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based solely upon a review of the copies of the Forms
3, 4 and 5 and amendments thereto furnished to the Company
with respect to its most recent fiscal year, and written
representations from reporting persons that no Forms 5 were
required, the Company believes that all filing requirements
were complied with which were applicable to its officers,
directors and greater than 10% beneficial owners.
OTHER MATTERS
Independent Public Accountants
Arthur Andersen LLP served as the Company's independent
public accountants through the conclusion of the audit with
respect to the Company's 1997 fiscal year. Representatives
of Arthur Andersen LLP plan to attend the Annual Meeting and
will be available to answer appropriate questions. Such
representatives will also have an opportunity to make a
statement at the meeting, if they so desire.
Stockholder Proposals for the 1999 Annual Meeting of
Stockholders
The Company's Amended and Restated By-laws require that
the Company receive written notice of any proposals which
stockholders intend to present at the 1999 annual meeting
(other than those submitted for inclusion in the Company's
proxy material pursuant to Rule 14a-8 of the Exchange Act)
by no earlier than February 21, 1999, and no later than
March 23, 1999. The foregoing notice is required to set
forth (i) as to each person proposed to be nominated for
election as a director, all information relating to such
person that is required to be disclosed in solicitation of
proxies for election or reelection of directors, or is
otherwise required, in each case pursuant to Regulation 14A
of the Exchange Act (including such person's written consent
to being named in the proxy statement as a nominee and to
serving as a director if elected); and (ii) as to any other
business proposed to be brought before the meeting, a brief
description of such business, the reasons for conducting
such business and any material interest in such business by
the stockholder submitting the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is
being made, as well as (a) the name and address of such
stockholder, as they appear on the Company's books, and of
such beneficial owner, if applicable, and (b) the class and
number of shares of the Company which are owned beneficially
and of record by such stockholder and such beneficial owner,
if applicable. A copy of the provision referred to above
may be obtained, without charge, upon written request to the
Company's Secretary. Proposals intended to be presented at
the 1999 Annual Meeting of Stockholders pursuant to Rule
14a-8 of the Exchange Act must be received by December 30,
1998, in order to be included in the Company's proxy
statement and form of proxy relating to that meeting. Any
stockholder proposals must be sent to the Company's
Secretary at the Company's executive offices at 5847 San
Felipe, Suite 2600, Houston, Texas 77057.
Other Matters
The cost of mailing and soliciting proxies in
connection with the Annual Meeting will be borne by the
Company. The Company will, if requested, reimburse banks,
brokerage houses and other custodians, nominees and certain
fiduciaries for their reasonable expenses incurred in
mailing proxy material to their principals. Proxies may be
solicited by directors, officers and employees of the
Company without special remuneration. The Company has
retained Corporate Investor Communications, Inc. to assist
in the distribution and solicitation of proxies at an
estimated cost of approximately $5,000 (including expenses).
In addition to the use of mails, proxies may be solicited by
personal interviews, facsimile, telephone or telegraph.
The persons designated to vote shares covered by
management proxies intend to exercise their judgment in
voting such shares on other matters that may properly come
before the meeting. Management knows of no matters which
will be presented for action at the meeting other than as
referred to in this Proxy Statement.
By Order of the Board of
Directors
/s/ John Wm. Niemand II
JOHN WM. NIEMAND II
Secretary
April 27, 1998
Houston, Texas
<PAGE>
- ----------------------------------------------------
Table of Contents
Notice of Annual Meeting of Stockholders
Proxy Statement
Election of Directors. . . . . 2
The Board of Directors
and its Committees. . . . . . 2
Executive Officers and
Directors. . . . . . . . . . . 5
Principal Stockholders . . . . 10
Executive Compensation . . . . 12
Report of the Compensation
Committees on Executive
Compensation . . . . . . . . . 17
Performance Graph. . . . . . . 21
Certain Transactions . . . . . 21
Compliance with Section
16(a) of the Exchange
Act. . . . . . . . . . . . . . 22
Other Matters. . . . . . . . . 22
- ----------------------------------------------------
<PAGE>
[KAC Logo]
--------------------------------
Notice of 1998 Annual Meeting
and
Proxy Statement
--------------------------------
Important
Please sign and date your
proxy card and promptly
return it in the enclosed
envelope.
Printed on recycled paper.
<PAGE>
Appendix A
KAISER ALUMINUM CORPORATION
Solicited on behalf of the Board of Directors
for the Annual Meeting of Stockholders to be
held May 20 1998
P The undersigned hereby appoints GEORGE T.
HAYMAKER, JR.,
R CHARLES E. HURWITZ, JOHN T. LA DUC and E. Bruce
Butler
as proxies (each with
O power to act alone, or jointly, and with power of
substitution) to vote, as designated
X on the reverse side, all shares of Common Stock
Y The undersigned is entitled to vote at
the Annual Meeting of Stockholders to be held on
May 20, 1998, and
at any and all adjournments or postponements
thereof.
PLEASE COMPLETE, SIGN, DATE AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
/SEE REVERSE SIDE/
/X/ Please mark
votes as in
this example.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS
DESIGNATED BY THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED,
THE PROXY WILL BE VOTED "FOR" THE ELECTION OF NOMINEES TO
THE BOARD OF DIRECTORS AS SET FORTH IN THE PROXY
STATEMENT.
1. Election of Directors
Nominees: Robert J. Cruikshank, George T. Haymaker, Jr.,
Charles E. Hurwitz, Ezra G. Levin, Robert Marcus and
Robert J. Petris.
FOR ALL WITHHOLD
NOMINEES / / / / FROM ALL
(except as marked NOMINEES
to the contrary)
/ /
---------------------------------------------
To withhold authority to vote for any individual nominee(s)
while voting for the remainder mark the box and write the
name of the nominee(s) for which authority is withheld
in the space above.
2. In their discretion, the proxies are authorized to
vote upon such other matters as may properly come before
the meeting or any adjournments or postponements
thereof, hereby revoking any instruction(s) heretofore
given by the undersigned.
FOR AGAINST ABSTAIN
/ / / / / /
MARK HERE FOR ADDRESS CHANGE AND
NOTE AT LEFT / /
Please sign name(s) exactly as printed hereon. If stock is
held in the name of more than one person, EACH person should
sign. Executors, administrators, trustees, etc., should give
full title as such. If a corporation, please sign full
corporate name by duly authorized officer. If a
partnership, please sign in partnership name by authorized
person.
Title: Title:
----------------------- --------------------
Signature: Signature:
Date: Date:
