The Rose Foundation pressures Maxxam, and look at the list of lawsuits... guess who is behind them...

Not fully cleaned up yet but - A very important piece of the puzzle
http://www.secinfo.com/d111wf.5w.htm
Committee of Concerned Maxxam Shareholders · DEFC14A · Maxxam Inc · On 5/9/00

Filed On 5/9/00 · SEC File 1-03924 · Accession Number 1083040-0-26

5/09/00 Committee of Concer..Shareholders DEFC14A
1:29 Maxxam Inc
Definitive Proxy Solicitation Material -- Contested Solicitation · Schedule 14A
Filing Table of Contents
Document/Exhibit Description Pages Size
1: DEFC14A Definitive Proxy Solicitation Material -- 29± 95K
Contested Solicitation
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Reasons for Electing Independent Directors
Revocation Rights
Solicitation
Supporting Statement
Voting Rights
1 1st Page
4 Voting Rights
6 Reasons for Electing Independent Directors
9 Supporting Statement
14 Revocation Rights
" Solicitation
DEFC14A 1st "Page" of 18 TOC Top Previous Next Bottom Just 1st

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)
[ X ] Definitive Proxy Statement
[ ] 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:_______________________________
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PROXY STATEMENT OF THE COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS IN CONNECTION WITH A SHAREHOLDER SOLICITATION REGARDING THE ELECTION OF TWO INDEPENDENT COMMON DIRECTORS AND THREE SHAREHOLDER PROPOSALS RECOMMENDING THAT MAXXAM INC.
(1) PERMIT CUMULATIVE VOTING IN THE ELECTION OF COMMON DIRECTORS,
(2) DECLASSIFY ITS BOARD OF DIRECTORS SO THAT GENERAL DIRECTORS ARE ELECTED ANNUALLY AND
(3) PROVIDE THAT A MAJORITY OF ALL BOARD MEMBERS ARE INDEPENDENT OF MAXXAM MANAGEMENT

May 9, 2000

The Committee of Concerned Maxxam Shareholders (the "Committee") furnishes this Proxy Statement in connection with the solicitation of proxies for use at the Annual Meeting (the "Annual Meeting") of shareholders of Maxxam Inc. ("Maxxam" or the "Company") to be held at 8:30 A.M. on Wednesday, May 24, 2000, at The Power Center, 12401 South Post Oak, Houston, Texas, or at any postponement or rescheduling thereof. Copies of the Proxy Statement and form of proxy are being mailed by the Committee to shareholders on or about May 9, 2000.

Members of the Committee are The Rose Foundation for Communities and the Environment (the "Rose Foundation") and the United Steelworkers of America ("USWA"). They, along with Abner J. Mikva and Paul Simon, the independent candidates for Common Director, may be deemed participants in this solicitation, and they collectively hold 0.016% of the common stock and 0.008% of the common and preferred stock, aggregated together for voting purposes (see "Solicitation" and "Voting Rights" below).

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Dear Fellow Maxxam Shareholder:

The Committee of Concerned Maxxam Shareholders is seeking your support because the Committee believes that Maxxam is a company in trouble.

Maxxam reported net losses of $57.2 million in 1998. In 1999, Maxxam posted an operating loss of $51.5 million and would have shown an overall net loss for a second straight year, but for a one-time $239.8 million gain on the sale of Headwaters Timberlands, as well as a pre-tax $85 million gain on insurance proceeds collected following the 1999 explosion of an alumina production facility operated by Kaiser Aluminum Corp. ("Kaiser"), a Maxxam subsidiary.

Maxxam's stock price dropped 43% over the year ending March 31, 2000, during which period the S&P 500 index rose 16.5%. Over the past year Maxxam also underperformed its industry peers. This 43% decline compares unfavorably with a 56.9% increase in the S&P aluminum index, a 7.4% increase in the S&P paper and forest products index and a 6.7% percent decline in the S&L real estate investment trust ("REIT") index over the same period.

Poor performance has been a problem for more than the past year. The table below summarizes Maxxam's performance over the last one, two, three, four and five years, compared with the performance of the S&P 500; the S&P aluminum index (Kaiser
Aluminum Corp., Maxxam's 63%-owned subsidiary, accounted for 88 percent of revenues in 1999); the S&P paper and forest products index (Maxxam's forest products subsidiaries, Pacific Lumber Co. and Britt Lumber Co., accounted for eight percent of 1999 revenues); and the S&P REIT index (Maxxam's real estate operations accounted for 2% of 1999 revenues), which index began in 1997.
[Download Table]
MAXXAM SHARE PERFORMANCE COMPARED TO THE S&P 500 AND INDUSTRY PEERS
S&P Paper and S&P S&P Forest S&P 500 Aluminum Products REIT
Maxxam Index Index Index Index
1 Year Return -43.4% 16.5% 56.9% 7.4% -6.7%
2 Year Return -53.5% 36.0% 58.6% -1.7% -32.8%
3 Year Return -37.0% 97.9% 55.1% 21.5% -25.0%
4 Year Return -43.0% 129.2% 66.2% 19.5% n.a.
5 Year Return -1.3% 199.3% 122.7% 24.7% n.a.
Source: Bloomberg News Service. Notes: Data as of market close, March 31, 2000. Returns summary takes into account share/index price return, but does not include dividends issued to shareholders.

Thus, a $10,000 investment in Maxxam on March 31, 1995 would have been worth $9870 on March 31, 2000. A comparable investment (exclusive of dividends) in the S&P 500, the S&P aluminum index, and the S&P paper and forest products fund would have been worth $29,929, $22,272 and $12,470, respectively.

In two consecutive rankings, BUSINESS WEEK listed Maxxam
on its roster of "The Worst Boards of Directors" in America. In
its December 8, 1997 issue, Maxxam's board was voted the 10th
worst and called a "tiny board with little business experience
dominated by CEO" Charles Hurwitz. In its January 24, 2000 issue,
Maxxam's board was ranked the 12th worst and described as a
"small, cozy board dominated by CEO. Makes repeat showing on
worst list." FORTUNE magazine, in its April 17, 2000 issue
placed Maxxam on its list of the six worst boards, citing the
Company's "depressing performance" and poor corporate governance
practices. The magazine CORPORATE BOARD MEMBER (Autumn 1999)
named Maxxam's board one of five "Lollapa-losers." (Consent of
authors and publications not sought or obtained.)

The Committee believes that concentration of control in the
hands of Maxxam CEO Charles Hurwitz and a small number of
Maxxam's preferred stockholders may result in policies that
depress the value of common stock and threaten Maxxam's long-term
financial success. The Committee also believes that any
resolution of Maxxam's many problems will require the
participation of truly independent "Common Directors" -- those
directors elected solely by the

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holders of Maxxam common stock who are committed to
representing the long-term interests of Maxxam common
stockholders and to increasing the value of Maxxam common stock.

To this end, the Committee proposes the following:

1. Electing Abner J. Mikva and Paul Simon, both independent
nominees, to serve on Maxxam's board as two of the three
directors chosen by the holders of common stock.

Abner J. Mikva is currently a visiting professor at the
College of Law at the University of Illinois. He was previously
Counsel to the President of the United States, Chief Judge of the
United States Court of Appeals for the District of Columbia
Circuit and a Member of Congress from Illinois.

Paul Simon is currently director of the Public Policy
Institute at Southern Illinois University and a professor of
public policy and journalism. He also serves on the board of
directors of the Chicago Mercantile Exchange and of Penn-America
Group, Inc. He served two terms as a United States Senator from
Illinois and was also the Lieutenant Governor of Illinois and a
Member of Congress from that State. He previously built a chain
of 13 newspapers in southern and central Illinois.

2. Adopting three shareholder proposals:

(a) a resolution requesting that the board of directors
provide for cumulative voting in the election of Common Directors
(the "Cumulative Voting Proposal");

(b) a resolution requesting that the board of directors
provide for the annual election of the "General Directors," i.e.,
those directors who are elected by the holders of Maxxam common
stock and preferred stock, voting together (the "Declassified
Board Proposal"); and

(c) a resolution requesting that the board of directors take
steps to provide that a majority of all board members shall be
independent of the Company (the "Independent Board Proposal").

The Committee urges all shareholders to attend the meeting
in person. If you are unable to attend in person and wish to
have your shares voted, please sign and date the enclosed BLUE
proxy card, and return it in the postpaid envelope as promptly as
possible. By returning the enclosed BLUE proxy card,
shareholders will be able to vote on the nomination of Abner J.
Mikva and Paul Simon to serve as two of the three Common
Directors, to be elected by the holders of common shares in lieu
of two of the three individuals nominated by the Company.
Shareholders will also be able to use the BLUE card to vote on
the Cumulative Voting Proposal, the Declassified Board Proposal,
and the Independent Board proposal.

PLEASE SIGN, DATE AND RETURN TODAY THE ENCLOSED BLUE
PROXY CARD TO:

COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS
c/o Ellen Philip Associates
P.O. Box 1997
New York, N.Y. 10117-0024

VOTING RIGHTS

The Company's board of directors has fixed the close of
business on March 31, 2000 as the record date for determining the
shareholders of the Company entitled to notice of and to vote at
the Annual Meeting and any adjournment thereof. Only holders of
record of the 6,913,951 shares of common stock (the "common
stock") and the 668.510 shares of Class A $.05 non-cumulative
participating convertible preferred stock (the "preferred stock")
are entitled to vote at the Annual Meeting. Each share of common
stock is entitled to one vote, and each share of preferred stock
is entitled to ten votes on such matters as may properly come
before the Annual Meeting or any adjournments thereof. The
holders of common stock, voting separately as a class, will also
be entitled to elect three Common Directors.

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PRIOR SOLICITATIONS BY CERTAIN COMMITTEE MEMBERS

In 1999, the Committee conducted an independent proxy
solicitation on behalf of Mr. Mikva and another candidate and in
favor of resolutions similar to the Cumulative Voting and
Declassified Board Proposals being offered this year. In
addition the Rose Foundation (a Committee member), along with
Jill Ratner, its president, and Thomas W. Little, its executive
director, were sponsors of a cumulative voting resolution similar
to the one submitted this year by the As You Sow Foundation and
John C. Harrington, who were also sponsors of that 1999
resolution. In 1998, Ms. Ratner and Mr. Little, along with the
California Public Employees Retirement System ("CalPERS"),
sponsored the Declassified Board Proposal that Brent Blackwelder
has submitted for consideration by the shareholders this year.
In 1997, Ms. Ratner, Mr. Little, and the As You Sow Foundation
conducted an independent proxy solicitation on behalf of two
other independent candidates for Common Director, as well as a
shareholder resolution asking the Company to sell or trade its
properties within the 60,000 acre Headwaters Forest area in
northern California to a government agency or conservation
organization for appropriate consideration.

ELECTION OF DIRECTORS (ITEM 1)

The Company's Restated Certificate of Incorporation
currently provides for three classes of directors having
staggered terms of office, with directors of each class to be
elected by the holders of the Company's common stock and
preferred stock, voting together as a single class, for terms of
three years and until their respective successors have been duly
elected and qualified. The Company's Restated Certificate of
Incorporation also provides that so long as any shares of the
preferred stock are outstanding, the holders of common stock,
voting as a class separately from the holders of any other class
or series of stock, shall be entitled to elect, for terms of one
year, at each annual meeting, the greater of (I) two directors,
or (ii) that number of directors (rounded up to the nearest whole
number) to be in office subsequent to such annual meeting.

The Company currently has two categories of director:
General Directors, who are elected by the holders of common stock
and preferred stock, voting together, and who are elected to
three year terms, and Common Directors, who are elected solely by
the holders of common stock to one year terms.

Until recently, the board of directors had five members,
consisting of three General Directors, one of whom is elected
each year to a three-year term, and two Common Directors, both of
whom are elected annually to one-year terms. In March 2000 the
Company increased the size of the board of directors from five
members to seven so that henceforth there will be four General
Directors and three Common Directors. All five incumbents remain
in office, and the Company has nominated one additional General
Director and one additional Common Director for election by the
shareholders. The shareholders are thus being asked this year to
elect two General Directors (one incumbent and one new nominee)
to serve until 2003, as well as three Common Directors (two
incumbents and one new nominee) to serve until 2001. As newly
configured, a majority of the board of directors will be elected
each year (three Common Directors plus one or two General
Directors).

The Committee's members have nominated Abner J. Mikva and
Paul Simon to serve on the board of directors of Maxxam Inc. as
two of the three Common Directors to be chosen by the holders of
common stock, because the Committee members believe that Maxxam
needs effective independent voices at this time. Messrs. Mikva
and Simon were also nominated by investment advisor Alan Russell
Kahn, although Mr. Kahn is not a participant in the present
solicitation within the meaning of Item 4 of Reg. 240.101
promulgated pursuant to the Securities and Exchange Act of 1934,
as amended. Both nominees have consented to serve if elected.

The Committee believes that Messrs. Mikva and Simon would be
the type of independent, effective directors that Maxxam needs
now more than ever. Committee members have nominated them
because of their experience, judgment and integrity, as well as
their commitment to protecting shareholder interests and
increasing shareholder value, as we explain more fully in the
following section.

Abner J. Mikva has a broad range of experience as a lawyer,
an elected representative, a judge and a mediator. He served
five consecutive terms in the Illinois legislature and then
served as a Member of Congress from 1969 to 1973

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and again from 1975 until 1979, when he was appointed to be a
judge of the United States Court of Appeals for the District of
Columbia Circuit. He served on that court until 1994, including
service as Chief Judge from 1991 to 1994. He then served as
Counsel to the President of the United States from October 1,
1994 until November 1, 1995. Judge Mikva, 74, is currently a
visiting professor at the College of Law of the University of
Illinois and a senior fellow at the Institute of Government and
Public Affairs at that University. He also engages in
arbitration and mediation with JAMS/Endispute, a national dispute
resolution firm. His address is 815 Van Buren Street, Suite 525
(MC-191), Chicago, Illinois 60607. He is beneficial owner of
50 shares of Maxxam common stock, purchased on March 17, 2000 and
held in street name.

Paul Simon served in the United States Senate from 1985 to
1997, where his committee assignments included the Budget and
Judiciary Committees. Prior to his election to the Senate, Mr.
Simon served ten years in the United States House of
Representatives, one term as Lieutenant Governor of the State of
Illinois and fourteen years in the Illinois legislature. Senator
Simon currently serves on the board of Penn-America Insurance and
also serves on the board of the Chicago Mercantile Exchange. He
has extensive experience in the publishing industry, where he
began his career as an editor and publisher and built a chain of
thirteen newspapers throughout southern and central Illinois
before selling the chain in 1966. Senator Simon, 71, is the
founder and director of the Public Policy Institute at Southern
Illinois University, and a professor of public policy and
journalism. His address is 1231 Lincoln Drive, Southern Illinois
University, Carbondale, Illinois 62901. He is the beneficial
owner of 100 shares of Maxxam, Inc. stock, purchased on March 20,
2000 and held in street name.

For the reasons stated more fully in the following section,
the Committee believes that Messrs. Mikva and Simon should be
chosen by the holders of common stock as our Common Directors in
lieu of any of the three nominees presented in the Company's
Proxy Statement for these three positions (Robert J. Cruikshank,
Stanley D. Rosenberg and Michael J. Rosenthal). The Company's
2000 Proxy Statement (incorporated herein by reference) sets
forth the names and ages of these nominees for Common Director
and of J. Kent Friedman and Ezra J. Levin, the board's nominees
for General Director, and describes the principal business
experience of each, as well as the year each first held Company
office and/or served as a director, the number of shares each
beneficially owns, and the percentage of outstanding shares owned
by each nominee. Information is also provided concerning the
committees of the board of directors.

REASONS FOR ELECTING INDEPENDENT DIRECTORS

The Committee believes that Judge Mikva and Senator Simon
offer precisely the kind of experience and judgment that holders
of Maxxam common stock need to enhance the value of their Maxxam
investment. Judge Mikva has a broad range of experience as a
lawyer, elected representative, judge and mediator, with
high-level service in all three branches of the federal
government. Senator Simon had a successful career in business
before devoting himself to public service, and he currently
serves on the board of directors of the Chicago Mercantile
Exchange and Penn-American Group, Inc., a company traded on the
New York Stock Exchange with its primary operations in insurance.
The Committee believes that this experience would be very helpful
at a company that has been surrounded by controversy for years on
various fronts.

The past year has seen the following events:

On July 5, 1999, an explosion destroyed much of Kaiser's
Gramercy, Louisiana alumina facility, injuring 29 workers and
leaving six severely injured, including one who is now blind.
The explosion covered workers in boiling lye and showered the
surrounding community with asbestos, lye and red mud. Kaiser had
been operating this plant and four other plants using replacement
workers after it decided to lock out 2900 workers represented by
the USWA in January 1999.

The federal Mine Safety and Health Administration
("MSHA") levied $533,000 in fines against Kaiser for 21 civil
violations, including operating the plant beyond its limits, lack
of worker training and "management's failure to identify
hazardous conditions and unsafe practices and to initiate actions
to correct these conditions and practices." The fine is the
largest ever assessed by MSHA for a non-fatal accident. THE WALL
STREET JOURNAL reported in March 2000 that MSHA has launched a
probe into whether the company should be charged with criminal
violations as a result of the

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explosion (permission of publication and author neither sought
nor obtained).

Owing to the extensive damage to the facility, Kaiser
expects production to remain completely curtailed until some
partial production begins in the third quarter of 2000. Full
production is not expected to resume until the first quarter of
2001 at the earliest.

Since Kaiser's labor dispute began, Kaiser's Mead plant in
Spokane, Washington has been fined $169,200 by the State of
Washington's Department of Ecology for violations of state air
emission and water quality laws.

Maxxam's Pacific Lumber subsidiary remains a focus of
controversy and litigation:

-- Three pending lawsuits claim that Company logging operations
have damaged neighboring property and property values; these
suits seek unspecified monetary damages, and ask the court
to enjoin certain future timber operations of the Company.

-- A wrongful death suit, filed in September, 1999, seeks
unspecified damages based on allegations that Pacific
Lumber's conduct and policies led to an incident in which an
employee killed a young man by felling a tree on top of him.

-- The Sierra Club and the Environmental Protection
Information Center ("EPIC")
have sued to block logging on a piece of Company property
that is surrounded
on three sides by the newly created Headwaters Reserve,
alleging the modifications in the plan
did not receive appropriate environmental review.

-- On March 31, 1999, EPIC and Sierra Club sued to stop
implementation of the
Pacific Lumber Sustained Yield Plan ("SYP"), the Company's
comprehensive plan for logging operations over the next
120 years, claiming that the plan
violates both California's Environmental Quality Act and
Endangered Species Act.

-- Also on March 31, 1999, Don Kegley and the United
Steelworkers of America filed a separate lawsuit challenging
the SYP on the grounds that it fails to provide for
sustained timber production and harvesting over time.
Additional information on this action is supplied below in
the "Solicitation" section of this proxy statement.

-- EPIC and Sierra Club have also filed a Notice of Intent to
Sue challenging the
Company's Habitat Conservation Plan, on the grounds that it
does not meet the requirements of the federal Endangered
Species Act.

No determination has been made at this time as to the merits
of any of these cases, and in each instance a final judgment will
be determined in a court of law.

The Committee also believes that electing these independent
candidates is important, given the Company's failure over the
past year to capitalize on the so-called "Headwaters Agreement."
Under this Agreement, into which the Company entered on March 3,
1999, Maxxam received an extraordinary payment of $380 million in
cash and property from the United States and the State of
California, as payment for the sale of 5,600 acres of forest land
owned by Pacific Lumber Company in northern California. But
despite Maxxam's recognition of a $239 million gain in the
Headwaters transaction, shareholders have seen relatively little
benefit from the Headwaters Agreement. The Company reported
significant operating losses and a relatively small amount of net
income, and, approximately one year after consummation of the
Headwaters Agreement, Maxxam stock price is where it was five
years ago.

Similar opportunities may come along in the near future.
The California legislature has authorized an expenditure of $79.7
million for additional Pacific Lumber properties in the
Headwaters area of northern California, and the legislature has
allocated an additional $20 million towards the purchase of even
more property. The Committee questions whether, based on the
experience to date, the board would use those resources to
maximize shareholder value.

Unfortunately, Maxxam's problems go back for more than just
the past year, and some long-standing issues that were unresolved
last year are still unresolved.

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Maxxam faces potential liabilities in two separate legal
proceedings based on the failure and subsequent $1.6 billion
bailout of United Savings Association of Texas, a savings and
loan association that Maxxam is alleged to have controlled.

Maxxam and Charles Hurwitz, the Company's Chief Executive
Officer and Chairman of the Board, are respondents in an action
brought by the Office of Thrift Supervision ("OTS"), an agency of
the United States Department of the Treasury, seeking
$821,000,000 in restitution. Maxxam has agreed to indemnify Mr.
Hurwitz and several other respondents in this action, which could
result in significant exposure for restitution and penalties.
That case is being litigated before an administrative law judge,
who is expected to rule later this year. No determination as to
the merits of this case has been made at this time, and a final
judgment will be determined in an appropriate administrative
proceeding (In the Matter of United Savings Association of
Texas).

In addition, Mr. Hurwitz is currently defending a
lawsuit brought by the Federal Deposit Insurance Corporation
("FDIC"), which alleges that Mr. Hurwitz breached his fiduciary
duties in connection with United Savings Association of Texas, in
which both Maxxam and Mr. Hurwitz held substantial interests.
Among other things, the FDIC charges that Mr. Hurwitz engaged in
"a pattern of deceptive financial reporting and balance sheet
manipulation" (Complaint, FDIC v. Hurwitz, paragraph 16, filed
August 2, 1995 in the United States District Court for the
Southern District of Texas). The suit, which originally sought
damages in excess of $250,000,000, now seeks unspecified damages
relating to any amounts that OTS does not collect in the suit
described above from the Company or from Federated Development
Company, a New York business trust of which Mr. Hurwitz is
Chairman of the Board and CEO. According to Maxxam's filings with
the Securities and Exchange Commission, Maxxam may have to
indemnify Mr. Hurwitz for any or all restitution ordered or
penalties imposed in this action. No determination as to the
merits of this case has been made at this time, and a final
judgment will be made in a court of law. These suits and related
litigation have already been costly to the Company, which has
paid approximately $40,000,000 in litigation expenses, including
Mr. Hurwitz's expenses. (For an additional discussion of this
litigation, see "Solicitation" below.)

These are not isolated incidents, for allegations of
fiduciary lapses have surrounded Maxxam's CEO and Chairman, Mr.
Hurwitz, in other litigation as well. In April 1997 the Delaware
Court of Chancery ruled in a case brought by minority Maxxam
shareholders that Mr. Hurwitz had engaged in self-dealing in
connection with loans that were not found fair to the Company.
Following this finding of liability, the case was settled for
approximately $20 million, the plaintiffs having sought $27
million. In its April 1997 ruling for the shareholder plaintiffs
on liability issues, the Delaware Court found that the
defendants, including Mr. Hurwitz, had failed to show the
fairness of a 1987 loan that Maxxam made to Mr. Hurwitz's private
business trust. The Court also ruled that the defendants had
failed to demonstrate the fairness of a 1991 transaction in which
Mr. Hurwitz's trust sold to Maxxam the underlying collateral, and
Maxxam then forgave the loan (In re: Maxxam Inc./Federated
Development Shareholders Litigation).

There remains as well the fact that Maxxam's Kaiser Aluminum
Corp. subsidiary is embroiled in a serious labor dispute, the
longest in Kaiser's history. The Committee believes that this
dispute and the associated costs were avoidable.

On September 30, 1998, approximately 2900 workers
represented by the USWA, a participant in this solicitation, went
on strike at five plants operated by Kaiser Aluminum & Chemical
Corporation ("KACC"), which is wholly owned by Kaiser. The
strike began upon the expiration of the existing contract on that
date, with the USWA protesting what it viewed as unfair labor
practices by the Company, and with the parties unable to resolve
differences on various issues, including job security and
pensions. On October 14, 1998, the USWA filed an unfair labor
practices charge with the National Labor Relations Board
("NLRB"), alleging that KACC had violated its duty to bargain,
had bargained in bad faith, and discriminated against workers for
going on strike. On July 16, 1999 the Oakland Regional Office of
the General Counsel of the NLRB dismissed the above charge. On
September 23, 1999, the USWA appealed the Oakland Office's
dismissal to the General Counsel's Office of Appeals. On April
26, 2000 the NLRB General Counsel's Office of Appeals reversed
that dismissal in part and directed the Oakland Regional Office
to prepare a complaint charging KACC with violating the National
Labor Relations Act as a result of the lockout. A determination
by the NLRB that the lockout is unlawful could subject KACC to
potential gross back pay liability of as much as $3 million per
week from January 14, 1999. No adjudication of liability has
been made, and a final decision will be made by the NLRB, which
could be appealed to court.
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KACC continued to operate these plants since October 1,
1998 using replacement employees. On January 13, 1999, the USWA
made an unconditional offer to return to work. On January 14,
1999, KACC refused that offer, locked out its workforce at these
five plants, and chose to continue operating with replacement
employees. KACC has explained its refusal to accept the USWA
return-to-work offer on the ground that KACC is acting "in
support of its bargaining position," and KACC officials have
expressed concern that such a return to work would be under the
terms of the expired contract and that in the absence of a new
contract that contained a "no strike" agreement, KACC might be
susceptible to a strike. Kaiser Aluminum, which produced 88.4%
of Maxxam's 1999 revenues and accounted for approximately 71.5%
of its total assets as of December 31, 1999, reported a net loss
of $54.1 million for 1999 and a net loss of $38.9 million for the
4th quarter of 1998.

Negotiations regarding the labor dispute resumed in April
1999 and are still continuing. According to KACC, they have been
"constructive," and both parties "have agreed to continue meeting
on a regular basis to work toward a settlement," although no
collective bargaining agreement has been reached.

* * *

In the Committee's view, this history does not suggest that
Maxxam is a well-managed company whose affairs are overseen by a
capable, independent board of directors. The Committee believes
that the current problems justify the step of electing truly
independent directors, even if those candidates do not have the
current management's support. The Committee does not believe that
the current board of directors can be relied upon to exercise the
sort of effective oversight that is needed to adequately protect
the interests of Maxxam's holders of common stock.

The Committee notes too that in April 2000 the trustees
of the California Public Employees' Retirement System
("CalPERS"), which owns approximately 3.2% of Maxxam common
stock, announced that it voted to support the election of Judge
Mikva and Senator Simon to the Maxxam board. CalPERS is not a
member of the Committee and is not a participant in this
solicitation. In addition the New York State Common Retirement
Fund has endorsed Judge Mikva and Senator Simon; the Fund is not
a Committee member or a participant in this solicitation.

* * *

THE COMMITTEE THEREFORE ASKS THE HOLDERS OF MAXXAM COMMON STOCK
TO VOTE FOR ABNER J. MIKVA AND PAUL SIMON TO SERVE ON THE BOARD
OF DIRECTORS.

THE CUMULATIVE VOTING PROPOSAL (ITEM 2)

The Committee further urges that the shareholders of
Maxxam Inc. adopt the following resolution (which is accompanied
by the proponents' "Supporting Statement"), which is sponsored by
the As You Sow Foundation, a participant in this solicitation,
and John C. Harrington:

"RESOLVED: The shareholders request that the board of
directors take steps to provide for cumulative voting in the
election of those directors elected solely by holders of common
stock. Cumulative voting means that each holder of common stock
may cast as many votes as equal the number of shares held,
multiplied by the number of common directors to be elected. A
shareholder may cast all such cumulated votes for a single
candidate or split votes between multiple candidates."

SUPPORTING STATEMENT

Cumulative voting allows a significant group of stockholders
to elect a Director or Directors of its choice -- safeguarding
minority shareholder interests and bringing independent
perspectives to Board decisions.

In our view, cumulative voting for Maxxam's Common Directors
is needed because Maxxam's two-tier stock structure allows
preferred stock to outvote common stock ten to one. Maxxam's CEO
and affiliates control nearly all preferred stock and
approximately 37% of common stock, giving the CEO almost complete
control of Board elections and policy.

We believe that Maxxam suffers from excessive CEO control of
Board affairs. This year, Corporate Board

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Member magazine identified Maxxam's Board as one of the five
worst in America. We believe subsequent events demonstrate
increasing need for a minority shareholder voice on the Board.

Maxxam has shown operating losses for some time, with a 1998
net loss of $57.2 million, or $8.17 per share. We believe only
the recent consummation of the Headwater Agreement allowed the
company to report net profits in the first nine months of 1999.

This gain, moreover, may be short-lived. In 2000 the U.S.
Treasury Office of Thrift Supervision Director is expected to
issue an order on approximately $820 million in federal claims
against Maxxam, CEO Hurwitz and a Hurwitz business trust. Maxxam
is indemnifying Mr. Hurwitz in this case and has paid $40 million
in this and related litigation, including Mr. Hurwitz' expenses.

In our view, company operating practices continue to be
mired in needless controversy and expensive litigation.
Inability to secure regulatory approval for timber harvest plans
has adversely affected the company's forest products segment and
reduced net sales. Meanwhile, the Headwaters Agreements are
being challenged in court as allowing too much logging.

The Company's Kaiser Aluminum division remains troubled. An
expensive, and we believe avoidable, labor dispute began in
September 1998. Since then, Washington State fined Kaiser
$250,000 for air pollution violations. In July 1999 Kaiser's
Gramercy, Louisiana plant exploded, injuring employees and
showering caustic debris on the surrounding area. Numerous
property claims have been filed. The Gramercy plant remains
closed, with civil and/or criminal fines and penalties possible.
In light of these significant challenges facing the company, we
believe Maxxam's minority shareholders need cumulative voting to
protect their interests and give them a voice. Last year's
cumulative voting resolution received nearly 14% of the vote.

Safeguard your investment. Vote FOR cumulative voting.

* * *

The Committee notes that Maxxam's proxy materials term
"misleading" the statement in the proponents' Supporting
Statement that the Company has shown operating losses "for some
time." The Company states that it "has had operating income in
every year other than one since 1994." In response the Committee
would note that the Company suffered net losses in four out of
the seven years between 1992 and 1998 and would have shown an
overall net loss for 1999 but for the one-time $239.8 million
gain on sale of Headwaters Timberlands, as well as a pre-tax $85
million gain on insurance proceeds following the 1999 explosion
at a Kaiser plant in Louisiana, as discussed above.

THE COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS
RECOMMENDS A VOTE FOR THE CUMULATIVE VOTING PROPOSAL.

THE DECLASSIFIED BOARD PROPOSAL (ITEM 3)

The Committee further seeks your support for the following
proposal, which has been submitted by Brent Blackwelder and is
accompanied by the "Supporting Statement" submitted by Mr.
Blackwelder to Maxxam for inclusion in the Company's proxy
materials:

"RESOLVED: Maxxam, Inc. shareholders request that the Board
of Directors change the election of all directors who are elected
by the holders of common and preferred stock voting together
(General Directors), by providing that, at future Board
elections, such new directors be elected annually and not for
staggered terms. This declassification of General Directors
shall not affect the separate election of Common Directors as
provided in the Articles of Incorporation and shall be phased in
in a manner that does not affect the unexpired terms of Directors
previously elected."

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SUPPORTING STATEMENT

This proposal encourages the board to reorganize itself so
that each General Director would stand before the shareholders
for re-election annually. Currently, shareholders can only vote
on one-third of the board at any given time. We believe that
corporate governance procedures and practices, and the level of
accountability they impose, are closely related to financial
performance. In our view, when directors are accountable for
their actions yearly, they and the company perform better. We
believe that shareholders deserve a greater level of
accountability given Maxxam's disappointing financial
performance, and what we perceive as its poor stewardship of
critical natural and human resources. For example,

-- According to Institutional Shareholder Services,
"There is no dispute that [Maxxam's] performance has been
poor for many years relative to its peers." Seven out of
the ten S&P 1500 Paper & Forest Products Companies and
two-thirds of the S&P 1500 Aluminum companies outperformed
Maxxam in the five year period ending December 21, 1999.
Recently, Maxxam trailed the S&P 1500 Aluminum and Paper &
Forest Products Sector Scorecards for the one and two-year
periods ending December 21, 1999.

-- We believe that Maxxam's environmental, health and safety
practices continue to attract legal action and public
criticism, and contribute to lagging financial
performance. Maxxam's 1999 third quarter 10-Q mentions
four forestry-related
lawsuits, 96,000 pending asbestos claims, and 30 lawsuits
stemming from the explosion of Kaiser's Gramercy, Louisiana
alumina refinery.

-- We believe that Kaiser's troubled labor relations have
serious ramifications for its operating costs. Currently,
the Company buys discount power from Bonneville
Power Authority, which is reviewing its rates. Washington
Governor Locke has endorsed withholding power discounts
from companies with environmental, labor or
community problems. At full rates, power costs could
increase 50%, and could seriously reduce Kaiser's
competitiveness.

In light of such events, we believe that our Company's
leadership is in urgent need of greater accountability. Board
classification insulates its directors from immediate challenge.
We believe that requiring all directors to stand for election
every year is one of the best ways to hold the board and
individual directors accountable.

At the 1999 Maxxam annual meeting, approximately half of the
shares not owned or controlled by CEO Hurwitz and/or his
affiliates voted in support of annual election of the General
Directors. This year, we urge you to join us in VOTING TO
DECLASSIFY the terms of election, as a powerful tool for
management incentive and accountability.

* * *

The Committee notes that a classified board may prevent
the occurrence of certain transactions, including acquisitions,
that may be in the best interest of shareholders. Also, there is
no assurance that elimination of the staggered board would
produce greater management incentive or improve operating
results. Moreover, even if all directors were to be elected
annually, the Company has adopted pursuant to Delaware law an
anti-takeover "rights agreement" of the sort commonly known as a
"poison pill." Rights agreements seek to deter takeover attempts
by making them expensive to execute, thus inducing a would-be
acquirer to negotiate with the board.

THE COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS
RECOMMENDS A VOTE FOR THE DECLASSIFIED BOARD PROPOSAL.

THE INDEPENDENT BOARD PROPOSAL (ITEM 4)

The Committee further seeks your support for the following
proposal, which has been submitted by the Rose Foundation for
Communities and the Environment, a participant in this
solicitation, and Nell Minow. The resolution is accompanied by
the "Supporting Statement" submitted by the Rose Foundation and
Ms. Minow for inclusion in the Company's proxy materials:

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"RESOLVED: the shareholders request the board of directors
take steps to provide that a majority of all board members shall
be 'independent.'

"For purposes of this resolution, an independent director is
one who:
-- has not been employed by Maxxam or an affiliate in an
executive capacity for the past five years;
-- is not a member of a firm that is one of Maxxam's paid
advisors or consultants;
-- is not employed by a significant Maxxam customer or
supplier;
-- does not have personal services contracts with Maxxam or
an affiliate;
-- is not employed by a non-profit entity that receives
significant contributions from Maxxam;
-- is not a relative of an executive of Maxxam or an affiliate;
-- is not part of an interlocking directorate in which the CEO
or other executive officer of Maxxam serves on the board of
another corporation that employs that director; and
-- 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 judgment
by such director."

SUPPORTING STATEMENT

This proposal seeks to establish a level of independence
that we believe will permit clear and objective decision making
in the best long term interest of all shareholders. Two of
Maxxam's five directors are company insiders; a third has long
been associated with CEO Hurwitz as his attorney
and trustee of Hurwitz' personal business trust. Maxxam thus
falls far short of the level of independence proposed. In our
view, board dominance by insiders and people having other
significant management ties can raise questions about whether a
board is giving priority to management's interest at the
shareholders' expense. According to a committee of the Business
Roundtable, an association of leading corporate CEOs:

"Boards of Directors at large publicly held corporations
should be composed predominately of independent directors
who do not hold management responsibilities within the
corporation... In order to underscore their independence,
non-management directors should not be dependent on the
companies on whose boards they serve."

Maxxam's stock trails the S&P Aluminum and S&P Paper and Forest
Products Indices for one and two-year periods ending December 21,
1999. Maxxam lost $57,200,000 in 1998, reporting operating
losses of $56,900,000 in the first three quarters of 1999. The
company will likely avoid a net loss in 1999 only because of the
Headwaters sale. We believe an independent board could better
evaluate and deal with factors contributing to these losses,
which may include ongoing labor and environmental controversies.
An independent board is also important at this time, as an
administrative law judge is currently reviewing a suit brought by
the federal government seeking $820,000,000 from Maxxam and
Maxxam's CEO for the failure of a savings and loan Maxxam
allegedly controlled. We believe an independent board could best
consider how to deal with this serious matter, including
exploring settlement options that may be in the best interests of
all Maxxam shareholders. Please vote FOR this resolution.

* * *

The Committee recommends a vote FOR the Independent Director
Resolution. If anything, recent developments have underscored
the need for an independent board at this Company.

On January 24, 2000, Business Week Magazine, for the
second time in just over two years, identified Maxxam's board as
among the 25 worst in the nation, describing it as a "small, cozy
board, dominated by CEO." (Consent of publication not sought or
obtained) Maxxam's Board currently is composed of the following
individuals:
-- Mr. Charles E. Hurwitz is Chief Executive Officer and a
controlling shareholder of Maxxam.
-- Mr. Paul N. Schwartz, Maxxam's President, is also Chief
Financial Officer, and Chief Operating Officer of Maxxam.
-- Mr. Ezra G. Levin and his law firm acted as counsel for
various corporate enterprises associated with CEO Hurwitz for
more than 25 years, and Mr. Levin was trustee of CEO Hurwitz'
personal business trust from 1974 to 1995.
-- Mr. Stanley D. Rosenberg has been Mr. Hurwitz's business
associate and attorney for 25 years. Although

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Mr. Rosenberg has served on the Maxxam's board since 1981 he
recently stated under oath that he did not clearly understand the
ownership structure of Maxxam's two major subsidiaries, Pacific
Lumber Company and Kaiser Aluminum, although Kaiser's sales
constituted 88% of Maxxam's revenues in 1998 and 1999.

-- Mr. Robert J. Cruikshank, has served seven one year terms on
Maxxam's board, each time nominated by a committee without
independent members.

In March 2000, the Company proposed expanding the size of
the board to seven members and nominated the two following
individuals to serve in addition to the five incumbents named
above:
-- J. Kent Friedman, who has served as Maxxam's General Counsel
since December 1999 after previously serving as the Company's
outside counsel.
-- Michael J. Rosenthal, Chairman and President of M.J.
Rosenthal and Associates, Inc., an investment company.

We believe that adding the two new board members proposed by
the Company would not give the board the independence needed to
address Maxxam's financial problems and to overcome the legal and
regulatory challenges facing the Company.

VOTING PROCEDURES

The Company's proxy statement and proxy card include the
Cumulative Voting Proposal, the Declassified Board Proposal and
the Independent Board Proposal, but not the names of Abner J.
Mikva and Paul Simon, our nominees for Common Director.

Even if you have already returned a proxy to the Company
using the Company's proxy card, you can still cast your vote for
Judge Mikva or Senator Simon or both, and for any or all of the
three shareholder proposals described herein, by signing and
returning the enclosed BLUE proxy card. See the discussion in
"Revocation Rights" below.

The presence, in person or by proxy, of the holders of
shares of the Company's capital 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 (i.e., shares held in street
name as to which the broker, bank or other nominee has no
discretionary power to vote on a particular matter, has received
no instructions from the persons entitled to vote such shares and
has appropriately advised the Company that it lacks voting
authority) 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 or broker non-votes will be excluded
entirely from the vote and will have no effect on the outcome.
Abstentions may not be specified in the election of directors.

A stockholder may, with respect to each other matter
specified in the notice of the meeting, including the Cumulative
Voting Proposal, the Declassified Board Proposal and the
Independent Board Proposal, (I) vote "FOR," (ii) vote "AGAINST"
or (iii) "ABSTAIN" from voting. An affirmative vote of a
majority of the shares present in person or by proxy and entitled
to vote at the annual meeting is required for approval of the
other matters presented, including the Cumulative Voting
Proposal, the Declassified Board Proposal and the Independent
Board Proposal. Shares represented by proxies that are marked
"ABSTAIN" on such matters and proxies relating to broker non-
votes will be counted as shares present for purposes of
determining the presence of a quorum. Such shares, however, will
not be treated as shares voting and therefore will not affect the
outcome of the vote on matters such as the Cumulative Voting
Proposal, the Declassified Board Proposal and the Independent
Board Proposal. The Cumulative Voting Proposal, the Declassified
Board Proposal and the Independent Board Proposal are advisory in
nature and cannot be implemented without board approval.

Unless otherwise directed on the enclosed BLUE proxy card,
as more fully described below, the Committee will vote FOR Mr.
Mikva and FOR Mr. Simon to serve as two of the Common Directors
chosen by the holders of common stock (Item 1); we will also vote
FOR the Cumulative Voting Proposal (Item 2); FOR the Declassified
Board

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Proposal (Item 3) and FOR the Independent Board Proposal
(Item 4) described herein.

The accompanying BLUE Annual Meeting proxy card will be
voted at the Annual Meeting in accordance with your instructions
on the card. You may vote FOR the election of Mr. Mikva, Mr.
Simon, or both as Common Directors,

or you may withhold authority to vote for the election of Mr.
Mikva, Mr. Simon, or both by marking the proper box or boxes on
the BLUE Annual Meeting proxy card. It will not be possible to
vote on the election of J. Kent Friedman or Ezra J. Levin, who
have been nominated by the board of directors to serve as General
Directors to be chosen by holders of common stock and preferred
stock, voting together, by using the BLUE Annual Meeting card.
Nor will it be possible to use the BLUE Annual Meeting proxy card
to vote on the election of Robert J. Cruikshank, Stanley D.
Rosenberg or Michael J. Rosenthal, who have been nominated by the
board of directors to serve as Common Directors to be chosen by
holders of common stock. As required by SEC Regulation
240.14a-4(d)(iv), the Committee hereby states that there is no
assurance that the registrant's nominees will serve if elected
with any of the soliciting parties' nominees. However, we have
no reason to believe that they will not serve.

IF NO MARKING IS MADE, YOU WILL BE DEEMED TO HAVE GIVEN A
DIRECTION TO VOTE THE SHARES REPRESENTED BY THE BLUE PROXY CARD
FOR THE ELECTION OF MR. MIKVA AND MR. SIMON AS COMMON DIRECTORS
(ITEM 1), AS WELL AS FOR THE CUMULATIVE VOTING PROPOSAL (ITEM 2),
THE DECLASSIFIED BOARD PROPOSAL (ITEM 3) AND THE INDEPENDENT
BOARD PROPOSAL (ITEM 4), PROVIDED THAT YOU HAVE SIGNED AND DATED
THE PROXY CARD.

REVOCATION RIGHTS

You may revoke a proxy vote any time before the tally by (1)
executing a later proxy card, (2) appearing at the meeting to
vote, or (3) delivering to the proxy holder or to the Company's
secretary written notice of revocation prior to the date of the
meeting. The Company's secretary is Bernard L. Birkel, and
Maxxam's offices are located at 5847 San Felipe, Suite 2600,
Houston, Texas 77057, telephone (713) 975-7600, fax (713)
267-3702.

The Committee will keep the content of all cards it receives
confidential from everyone except those working directly with us
and our staff until the annual meeting, at which time our cards
must be presented to the company's tabulator in order to be
counted.

SOLICITATION

The participants in this solicitation are the Rose
Foundation, 6008 College Avenue, Suite 10, Oakland, California
94618; its President, Jill Ratner, who owns 90 shares of Maxxam
common stock as tenant in common with Rose Foundation Executive
Director Thomas W. Little; Rose Foundation staff, including Carla
Din and Karla James; the United Steelworkers of America, 5
Gateway Center, Pittsburgh, Pennsylvania 15222, which owns 1002
shares of Maxxam common stock (two shares purchased on December
14, 1998 and 1000 shares purchased on March 3, 1999); USWA staff,
including David Foster and Scott Adams; the Committee's two
nominees, Judge Mikva, who owns 50 shares (purchased on March 17,
2000), and Senator Simon, who owns 100 shares (purchased on March
20, 2000); As You Sow Foundation, which owns 100 shares purchased
in 1996, and Michael Passoff; and Dorset Management Corp., which
does not own any shares.

Proxies will be sought by mail, facsimile, telephone and
personal interview. The Rose Foundation and USWA will bear the
cost of this solicitation, expected to be $50,000, and to date
they have expended approximately $25,000. The Committee will not
seek reimbursement from the Company for the costs of the
solicitation.

The Rose Foundation has engaged in advocacy and public
education efforts seeking to preserve the Headwaters Forest area
in northern California, which is owned by Pacific Lumber Company,
a Maxxam subsidiary, and which contains several thousands of
acres of old-growth redwood trees. The Headwaters Forest area
encompasses slightly more than 50,000 acres of company property,
or roughly one quarter of the forest land currently owned by
Pacific Lumber. (This estimate is derived from Pacific Lumber's
statement in its 1998 Habitat Conservation Plan, prepared

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prior to consummation of the Headwaters Agreement, that it owns
61,000 acres in the Headwaters Forest area and excludes the 7400
Headwaters Forest Reserve now owned by the Federal Government
pursuant to that Agreement.) In March 1999, Maxxam, the United
States and the State of California reached final agreement on the
so-called "Headwaters Agreement," under which Maxxam received an
extraordinary payment of $380 million in cash and property

in return for the sale of 5600 acres of redwoods, including 3000
acres of old-growth redwoods. An additional 1984 acresc
will be acquired in the future, and a Habitat Conservation Plan
approved by the U.S. Department of the Interior establishes
conditions under which Pacific Lumber can log on 210,000 acres of
nearby land.

The Rose Foundation and its Headwaters Acquisition and
Restoration Trust have solicited contributions that would be used
towards purchasing areas of the Headwaters Forest that are not
acquired by the federal government or the State of California, in
the event that Maxxam should decide to make any such properties
available and should a willing buyer be found. To date, the Rose
Foundation and its Headwaters Acquisition and Restoration Trust
have received $5,679.37 in cash plus a $5 million pledge that
could be used for that purpose. The Rose Foundation does not plan
to acquire any such properties on its own behalf, nor is the Rose
Foundation acting on behalf of any potential buyer and would not
directly benefit from any such acquisition.

For several years, the Rose Foundation has advocated
settlement of pending claims in which the U.S. Treasury Office of
Thrift Supervision (OTS) and the Federal Deposit Insurance
Corporation (FDIC) are seeking approximately $820 million in
restitution, damages and penalties from the Company in connection
with the failure of United Savings Association of Texas ("USAT"),
a savings and loan in which the Company held a significant
interest and which the Office of Thrift Supervision alleges the
Company controlled. (see "Reasons for Electing Independent
Directors" above). The Rose Foundation has urged the company to
offer, and urged the federal agencies to accept, a settlement
built around approximately 10,000 to 20,000 acres in the
Headwaters Forest area on which logging is now significantly
restricted by agreements between the Company and state and
federal regulatory agencies. In an effort to enhance FDIC's and
OTS's willingness to consider this kind of settlement, which the
Rose Foundation believes to be in the best interest of the
Company, the Rose Foundation is currently seeking Congressional
enactment of legislation which would clearly authorize FDIC to
transfer such property to a sister federal agency if the parties
were able to agree upon a property settlement of this kind.

In 1993, four years after the FDIC gave notice of its
belief that it had a claim growing out of the 1988 USAT collapse,
and after the media had reported a proposal to have the FDIC
accept certain Pacific Lumber forest lands in the Headwaters
Forest area to resolve potential FDIC claims related to USAT, the
Rose Foundation undertook an analysis of such a "debt for nature"
swap to resolve the potential FDIC claims. In 1994 the Rose
Foundation shared its written and oral analysis with the FDIC and
urged the FDIC to seek in litigation the transfer of certain
property in the Headwaters Forest area to resolve USAT-related
claims. The Rose Foundation also encouraged others to write the
FDIC urging similar action. The FDIC filed its pending action
against Mr. Hurwitz in August 1995.

In October 1994 OTS began its own investigation of the
USAT failure and filed the currently pending action against
Maxxam, Mr. Hurwitz and others in December 1995. At various
times in 1995 the Rose Foundation, in written and oral
communications with federal officials, urged exploration of a
global settlement of FDIC claims and any potential OTS claims
involving a Headwaters Forest property transfer. The Rose
Foundation did not contact the OTS directly until after the OTS
case had been filed in December 1995. It is possible that the
Rose Foundation's advocacy of a proposed property transfer to
resolve USAT-related claims may have contributed to either or
both of the FDIC and OTS actions being brought against
Maxxam and/or Mr. Hurwitz.

In September 1996, before any agreement on the
Headwaters Forest area had been reached, and at a time when
Pacific Lumber had announced plans to log old-growth forest lands
in the Headwaters area, the Rose Foundation urged the U.S. Office
of Thrift Supervision to issue a temporary cease-and-desist order
in OTS's pending case against Maxxam, Mr. Hurwitz and others (see
"Reasons for Electing Independent Directors" above). The Rose
Foundation recommended this action as a way to prevent these
assets from being liquidated, a step that would have reduced the
value of those properties to conservation-oriented buyers,
including government agencies. OTS did not seek such an order.
Had such an order been imposed, it could have had a materially
adverse impact on the Company, in that all significant Company
financial transactions and any liquidation of significant assets
would have required approval of a court or monitor. Later that
month, Maxxam, the United States and the State of California
announced an agreement in principle on the Headwa-

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ters area, which was finalized as the Headwaters Agreement in
March 1999. The Rose Foundation did not renew its proposal for a
cease-and-desist order after the September 1996 agreement. In
addition, Jill Ratner, the Rose Foundation's President, provided
legal advice to Robert Martel, the "relator" or plaintiff in a
False Claims Act suit naming Maxxam as a defendant which was
dismissed as frivolous, with attorneys' fees assessed against Mr.
Martel, based on the Court's determination that Mr. Martel lacked
standing as a False Claims Act relator, although Ms. Ratner did
not appear as an attorney in that or any other litigation adverse
to the Company.

In June 1995 the Rose Foundation contacted the United
States Fish and Wildlife Service expressing concerns about the
possible impacts of logging operations in the Blanton Creek and
Yager Creek watersheds on Company property in the Headwaters
Forest area and encouraging the Service to ensure that Pacific
Lumber Co. complies with federal and state laws protecting
endangered species. The Rose Foundation testified at public
hearings on the scope and preparation of environmental
documentation required under the National Environmental Policy
Act, the Endangered Species Act and state environmental statutes
in connection with the Headwaters sale, encouraging relevant
agencies, including the Fish and Wildlife Service, to consider
the comparative impacts of a variety of forest management
approaches, and encouraging relevant agencies to require
documentation of the infeasibility of rejected environmentally
preferable alternatives. In addition, at several points starting
in 1995 the Rose Foundation wrote letters to the Service in an
effort to seek support for settlement of USAT-related claims in a
way that preserves old-growth timber in the Headwaters Forest
area.

The USWA is a collective-bargaining representative of
employees at, inter alia, steel and aluminum mills located
throughout the United States, including employees of Kaiser
Aluminum & Chemical Corporation ("KACC"), which is wholly owned
by Kaiser Aluminum Corporation, 63 percent of whose outstanding
common stock is owned by Maxxam. The USWA is currently involved
in a labor dispute with KACC involving five of its plants: the
Trentwood Plant in Spokane, Washington; the Mead Plant in
Spokane, Washington; the Gramercy Plant in Gramercy, Louisiana;
the Newark Plant in Newark, Ohio; and the Tacoma Plant in Tacoma,
Washington, where 2900 USWA members were locked out by management
in January 1999. The details of that dispute are described more
fully above ("Reasons for Electing Independent Directors").

Independently of this matter, the USWA and one of its
members filed a complaint in California state court on March 31,
1999 against the California Department of Forestry and Fire
Protection, challenging one aspect of the Headwaters Agreement,
which was described earlier in this section. In particular, the
USWA suit seeks to prohibit the CDF from approving any Timber
Harvesting Plan that relies in any manner upon a Sustained Yield
Plan (the "Plan") that was proposed by Pacific Lumber Co. and its
subsidiaries, Scotia Pacific Lumber LLC and Salmon Creek
Corporation, and approved by CDF on March 1, 1999 as part of the
Headwaters Agreement. Specifically, the complaint alleges that
the approved Plan authorizes an unsustainable high harvest of
timber in the short term, without consideration of the long-term
impact of such harvest levels on the economic vitality and
employment in the region. The complaint alleges that this result
violates California state law, which is said to require "maximum
sustained production of high-quality timber products while giving
consideration to regional economic vitality and employment at
planned harvest levels during the planning process." No final
determination has been made about the allegations in this suit.

The USWA has identified Pepsi Bottling Group, Anheuser
Busch, Boeing and Daws Better Built in consumer alert initiatives
designed to dissuade the above companies from purchasing Kaiser
metal. Pepsi and Anheuser Busch have ceased purchasing Kaiser
metal.

The USWA supports passage of the Extended Unemployment
Benefits Bill in the state of Washington that would provide a 30
week extension of unemployment coverage to workers who have been
locked out of their jobs in that state. Under the bill passed by
the State Senate, a company locking out workers would pay the
cost of benefits.

The Bonneville Power Administration ("BPA") is considering
whether to implement a "Good Corporate Citizen Clause" when
awarding subscription power sale contracts to direct service
industries ("DSI"). The USWA supports the implementation of the
clause, as have public officials, including Washington Governor
Gary Locke. Kaiser operates aluminum smelters and has benefitted
from discounted power from the BPA as a DSI. To qualify for
below-market power, the clause would require DSIs to observe
basic standards of conduct as embodied in federal, state and
local laws,

15

DEFC14A 17th "Page" of 18 TOC 1st Previous Next Bottom Just 17th


regulations, and orders. Kaiser might not qualify for discounted
power if the BPA should adopt this measure.

RECORD DATE/SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE
OFFICERS/EXECUTIVE COMPENSATION/ELECTION OF DIRECTORS

Information on these subjects appears in the Company's proxy
statement.

SHAREHOLDER PROPOSALS FOR 2001 MEETING

Proposals that shareholders intend to present at the
2001 annual meeting of stockholders (other than those submitted
for inclusion in the Company's proxy material pursuant to Rule
14a-8 of the Proxy Rules of the SEC) must be received by the
Company no later than January 1, 2001 to be presented at the
meeting. Proposals from shareholders owning over $2,000 in stock
for over one year that are submitted under Rule 14a-8 for
inclusion in the Company's proxy materials must be received by
the Company by January 1, 2001. Any such stockholder proposals
must be sent to the Company's Secretary at its executive offices
at 5847 San Felipe, Suite 2600, Houston, Texas 77057.

PLEASE VOTE FOR ABNER J. MIKVA AND PAUL SIMON AND FOR THE
CUMULATIVE VOTING PROPOSAL, THE DECLASSIFIED BOARD PROPOSAL, AND
THE INDEPENDENT BOARD PROPOSAL.

Sincerely,

The Committee of Concerned
Maxxam Shareholders

For additional Information Please Call
Committee of Concerned Maxxam Shareholders
Scott Adams
Toll Free (877) 634-6546
or
Collect (510) 655-8248

DEFC14A Last "Page" of 18 TOC 1st Previous Next Bottom Just 18th


MAXXAM INC.
2000 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY
THE COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS

The undersigned shareholder of Maxxam Inc. hereby appoints
each of Scott Adams and Jill Ratner, with full power of
substitution, for and in the name below, all shares of common
stock of Maxxam Inc. that the undersigned is entitled to vote if
personally present at the 2000 Annual Meeting of Shareholders of
Maxxam Inc., to be held on May 24, 2000 at The Power Center,
12401 South Post Oak, Houston, Texas at 8:30 A.M. (local time) or
at any adjournment, postponement or rescheduling thereof. The
undersigned hereby revokes any previous proxies with respect to
the matters covered by this Proxy.

THE COMMITTEE OF CONCERNED MAXXAM SHAREHOLDERS RECOMMENDS A
VOTE
FOR ABNER J. MIKVA AND PAUL SIMON (ITEM 1), FOR ITEM 2 (THE
CUMULATIVE VOTING PROPOSAL), FOR ITEM 3 (THE DECLASSIFIED BOARD
PROPOSAL) AND FOR ITEM 4 (THE INDEPENDENT BOARD PROPOSAL).

Item 1: Election of Directors
The Committee of Concerned Maxxam Shareholders intend
to use this proxy to vote for Abner J. Mikva and Paul
Simon, whom they have nominated to serve as two of the
Directors to be elected by holders of shares of
common stock (the "Common Directors"). By using this
card, you will not be able to vote for any of the
the Company's three nominees for Common Director
(Robert J. Cruikshank, Stanley D. Rosenberg and
Michael J. Rosenthal), or on the election of J. Kent
Friedman and Ezra J. Levin, the Company's two nominees
to be elected by holders of the common and preferred
stock, voting together. You should refer to the proxy
statement and form of proxy distributed by the Company
for the background, qualifications and other
information concerning the Company's nominees.

Item 2: To act upon a stockholder proposal, if presented at
the meeting, by As You Sow Foundation and John
Harrington requesting that the board of directors take
steps to provide for cumulative voting in the election
of those directors elected by holders of common stock.

Item 3: To act upon a stockholder proposal, if presented at
the meeting, by Brent Blackwelder, President of
Friends of the Earth, requesting that the board of
directors take steps to declassify the board and to
provide for the annual election of all General
Directors elected by the holders of common and
preferred stock voting together.

Item 4: To act upon a stockholder proposal, if presented at
the meeting, by the Rose Foundation for Communities
and the Environment and Nell Minow, requesting that
the board of directors take steps to provide that a
majority of all board members shall be "independent."

/x/ PLEASE MARK VOTES AS IN THIS EXAMPLE

The Committee of Concerned Maxxam Shareholders recommends a vote
FOR Abner J. Mikva and Paul Simon on Item 1, FOR Item 2, FOR Item
3 and FOR Item 4.

1. Election of Directors

Abner J. Mikva (for term expiring in 2001)
Paul Simon (for term expiring in 2001)
/ / For / / Withhold / / For both except

_______________________________________________
For both nominees except as noted above

2. Proposed resolution submitted by As You Sow Foundation
and John Harrington, requesting that the board of directors take
steps to provide for cumulative voting in the election of those
directors elected by holders of common stock.

For / / Against/ / Abstain / /

3. Proposed resolution submitted by Brent Blackwelder,
President of Friends of the Earth, requesting that the board of
directors take steps to declassify the board and to provide for
the annual election of all General Directors elected by the
holders of common and preferred stock voting together.

For / / Against/ / Abstain / /

4. Proposed resolution submitted by the Rose Foundation for
Communities and the Environment and Nell Minow requesting that
the board of directors take steps to provide that a majority of
all board members shall be "independent."

For / / Against / / Abstain / /

WHERE NO VOTING INSTRUCTIONS ARE GIVEN, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED FOR ABNER J. MIKVA AND PAUL SIMON ON
ITEM 1, FOR ITEM 2, FOR ITEM 3 AND FOR ITEM 4.

IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT, POSTPONEMENT OR RESCHEDULING THEREOF, HEREBY
REVOKING ANY PROXY OR PROXIES HERETOFORE GIVEN BY THE
UNDERSIGNED.

This Proxy, when properly executed, will be voted in the manner
marked herein by the undersigned shareholder. Securities and
Exchange Commission reg. 240.14a-4(d)(iv) requires the following
statement on this card: There is no assurance that the
registrant's nominees will serve if elected with any of the
soliciting party's nominees.

(place mailing label here)

Please date and sign this proxy exactly as your name appears
hereon:

Dated:________________________, 2000

____________________________ _______________________________
(Signature) (Signature, if held jointly)

_______________________________
(Title)

When shares are held by joint tenants, both should sign. When
signing as attorney-in-fact, executor, administrator, trustee,
guardian, corporate officer or partner, please give full title as
such. If a corporation, please sign in corporate name by
President or other authorized officer. If a partnership, please
sign in partnership name by authorized person.

To vote in accordance with the recommendation of The Committee of
Concerned Maxxam Shareholders, just sign and date this proxy. No
boxes need to be checked.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN
THE ENCLOSED ENVELOPE PROVIDED.


Dates Referenced Herein and Documents Incorporated By Reference

Referenced-On Page
This DEFC14A Filing Date First Last Other Filings

10/1/94 6
3/31/95 3 10-Q
8/2/95 8
11/1/95 6
12/8/97 3
9/30/98 8 10-Q
10/1/98 9
10/14/98 8
12/14/98 14
1/13/99 9
1/14/99 8 9
3/1/99 16
3/3/99 7 14
3/31/99 7 16 8-K, 10-Q, 10-K405
7/5/99 6
7/16/99 8
9/23/99 8
12/21/99 11 12
12/31/99 9 10-K405
1/24/00 3 12
3/17/00 6 14
3/20/00 6 14
3/31/00 3 4 10-Q
4/17/00 3
4/26/00 8 PRRN14A
Filed On / Filed As Of 5/9/00 2 DFAN14A, DEFA14A
5/24/00 2 18
1/1/01 17

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