April 23, 1996


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 1996 Annual Meeting of Stockholders, 
including the Notice of 1996 Annual Meeting, and form of Proxy.  

     The filing fee of $125 has been deposited to the
Commission's account via a transfer of a portion of the Company's
credit balance with the Commission.  It is intended that these
materials will be released to the Company's stockholders commencing 
on or about April 23, 1996.

     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 23, 1996.

     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 (510) 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



    PROXY STATEMENT PURSUANT TO SECTION 14(A)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-11(c) 
     or 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 / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2), or 14a-
      6(j)Item 22(a)(2). of Schedule 14A.
/  / $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
/  / Fee computed on table below per Exchange Act Rules 14a-6(i)14a-
6(i)(4) and 0-
      11.0-11.

     (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:  -/

          ---------------------------------------------------
     (4)  Proposed maximum aggregate value of transaction:

          ---------------------------------------------------

    Set0-11 (Set forth the amount on which the filing fee 
is calculated and state how it was determined.determined): 

- - ---------------------------------------------------
     (4)  Proposed maximum aggregate value of transaction:

- - ---------------------------------------------------
     (5) Total fee paid: ___________
/  / Fee paid prviously wth preliminary materials.
/  / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which 
the offsetting fee was paid previously.  Identify the previous 
filing by registration statement number, or the Form or Schedule 
and the date of its filing.

     (1)  Amount Previously Paid:

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

- - -----------------------------------------------------
     (3)  Filing Party:

- - ------------------------------------------------------
     (4)  Date Filed:

- - ------------------------------------------------------


                            [KAC Logo]




                              April 26, 199522, 1996


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 9:00 a.m. on Wednesday,
May 17, 1995,22, 1996, at the Westchase HiltonThe Houstonian Hotel 9999 Westheimer Road,& Conference Center, 1111
North Post Oak Lane, Houston, Texas.

     At the Annual Meeting, the holders of the Company's Common
Stock, par value $.01 per share (the "Common("Common Stock"), $.65 Depositary Shares (the
"Depositary Shares") and 8.255%
PRIDES[symbol for "Service Mark" appears
here]PRIDES , Convertible Preferred Stock, par value $.05 per share
(the "PRIDES"), on March 29, 1996 (all such holders being
collectively referred to as the "Stockholders") will consider and
vote, as a single class, (i) in the election of directors, (ii) upon a proposal to approve the Kaiser 1995 Executive
Incentive Compensation Program, and
(iii)(ii) upon such other business as may properly be presented to the
Annual Meeting or any adjournments or postponements thereof.

     Each Depositary Share represents one-tenth of a share of the Company's
Series A Mandatory Conversion Premium Dividend Preferred Stock, par value
$.05 per share (the "Series A Shares").  The Series A Shares have been
deposited with The First National Bank of Boston, as Depositary (the
"Depositary").  As the registered holder of the Series A Shares, the
Depositary will vote the Series A Shares represented by the Depositary
Shares at the Annual Meeting pursuant to instructions given to the
Depositary by the holders of such Depositary Shares.  Holders of Depositary
Shares will therefore exercise their vote by instructing the Depositary
pursuant to the instruction card enclosed with the proxy statement.

     Holders of shares of PRIDES have 4/5 vote for each share held of
record and are entitled to vote together with the holders of Common Stock.

     Each Stockholder of recordStock or PRIDES at the close
of business on March 31, 199529, 1996 is entitled to receive notice of
and vote at the Annual Meeting and is urged to attend the Annual
Meeting.  Holders of shares of Common Stock have one vote for
each share held of record and holders of shares of PRIDES have
4/5 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 or instruction card, as the case
may be.card.

     We look forward to seeing as many of you as possible at the
Annual Meeting.





                         /s/ George T. Haymaker, Jr.
                                        GEORGE T. HAYMAKER, JR.
                         Chairman of the Board and
                           Chief Executive Officer


                   KAISER ALUMINUM CORPORATION
                   5847 SAN FELIPE, SUITESan Felipe, Suite 2600
                       HOUSTON, TEXASHouston, Texas 77057


             NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                     TO BE HELD MAY 17, 1995To Be Held May 22, 1996


            The Annual Meeting of Stockholders (the "Annual
Meeting") of Kaiser Aluminum Corporation (the "Company") will be
held at the Westchase
HiltonThe Houstonian Hotel 9999 Westheimer Road,& Conference Center, 1111 North Post
Oak Lane, Houston, Texas, on Wednesday, May 17,
1995,22, 1996, at 9:00
a.m., Houston time, for the following purposes:

            1. To elect six (6) directors to hold office until
               the Company's 19961997 Annual Meeting of
               Stockholders or until their respective
               successors are elected and qualified; 2.   To consider and

            vote upon a proposal to approve
               the Kaiser 1995 Executive Incentive Compensation
               Program; and

          3.2  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,Common Stock, par
value $.01 per share (the "Common Stock"), $.65 Depositary Shares (the "Depositary
Shares") and holders of record
of  the Company's 8.255% PRIDES[symbol for "Service Mark" appears here]PRIDES , Convertible Preferred Stock,
par value $.05 per share (the "PRIDES") (all
such holders being collectively referred to as the "Stockholders"), as of the close of
business on March 31, 199529, 1996 are entitled to notice of and to vote
at the Annual Meeting.Meeting (all such holders being collectively
referred to as the "Stockholders").  All Stockholders will vote
as a single class at the Annual Meeting.  Stockholders' lists
will be available commencing May 5, 1995,3, 1996, 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/ Byron L. Wade
                                        BYRON L. WADE
                            Secretary
April 26, 199522, 1996


                            IMPORTANT

            PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY OR INSTRUCTION
CARD, AS THE CASE MAY BE, AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
PROVIDED FOR YOUR CONVENIENCE AND WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.  ANY HOLDER OF COMMON STOCK OR PRIDES ENTITLED TO VOTE
AND 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.  HOLDERS OF DEPOSITARY SHARES MAY ONLY VOTE BY COMPLETING THE
ENCLOSED INSTRUCTION CARD AND RETURNING THE CARD TO THE DEPOSITARY.  THE
DEPOSITARY WILL VOTE THE SERIES A MANDATORY CONVERSION PREMIUM DIVIDEND
PREFERRED STOCK (THE "SERIES A SHARES") REPRESENTED BY THE DEPOSITARY
SHARES IN ACCORDANCE WITH SUCH INSTRUCTIONS.  IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS FROM THE HOLDERS OF DEPOSITARY SHARES, THE DEPOSITARY WILL
ABSTAIN FROM VOTING WITH RESPECT TO THE SERIES A SHARES UNDERLYING THE
DEPOSITARY SHARES.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. 


                   KAISER ALUMINUM CORPORATION
                   5847 SAN FELIPE, SUITESan Felipe, Suite 2600
                       HOUSTON, TEXASHouston, Texas 77057


                         PROXY STATEMENT
                               FORfor
                  ANNUAL MEETING OF STOCKHOLDERS
                     TO BE HELD MAY 17, 1995To Be Held May 22, 1996

            This 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 an Annual Meeting of Stockholders (the "Annual Meeting") to be
held on May 17, 199522, 1996 and any adjournments or postponements
thereof, at the time and place and for the purposes set forth in
the accompanying notice of Annual Meeting.  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 or instruction card,
as the case may be,
and the Notice of Annual Meeting are being mailed, commencing on
or about April 23, 1996, to the record holders as of the close of
business on March 31, 199529, 1996 of the Company's common stock,Common Stock, par
value $.01 per share (the "Common Stock"), $.65
Depositary Shares (the "Depositary Shares"), and 8.255% PRIDES ,
Convertible Preferred Stock, par value $.05 per share (the
"PRIDES"), (all such holders being collectively referred to as
the "Stockholders")
commencing on or about April 27, 1995..

            Holders of shares of Common Stock have one vote for
each share held of record and holders of shares of PRIDES have
4/5 vote for each share held of record.   All Stockholders will
vote as a single class at the Annual Meeting.  As of March 29,
1996, there were 71,643,029 outstanding shares of Common Stock
and 8,673,850 outstanding shares of PRIDES.  

            We cordially invite you to attend the Annual
Meeting.  Whether or not you plan to attend, please complete,
date, sign and promptly return in the enclosed envelope your
proxy card, if you are a holder of Common Stock
or PRIDES, or your instruction card, if you are a holder of Depositary
Shares.  If you are a holder of Common Stock or PRIDES, youcard.  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.  If you are a
holder of Depositary Shares, you may revoke your instruction to The First
National Bank of Boston, as Depositary (the "Depositary") at any time prior
to the second business day immediately preceding the date of the Annual
Meeting by giving notice to the Depositary or by filing a later dated
instruction card with the Depositary.  

          Proxies for the
Common Stock and the PRIDES will be voted in accordance with the
directions specified thereon or, in the absence of instructions,
"FOR" the election of the directors and "FOR" the approval of
the Kaiser 1995 Executive Incentive Program as set forth in this proxy
statement.  Holders of Depositary Shares may only vote by completing the
enclosed instruction card and returning the card to the Depositary.  Each
Depositary Share represents one-tenth of a share of the Company's Series A
Mandatory Conversion Premium Dividend Preferred Stock (the "Series A
Shares").  The Depositary will vote the Series A Shares represented by the
Depositary Shares in accordance with such instructions.  In the absence of
specific instructions from the holders of Depositary Shares, the Depositary
will abstain from voting with respect to the Series A Shares underlying the
Depositary Shares.  The presence, in person or by proxy, of the holders
of a majority of the shares of the Company's capital stock
entitled to vote at the Annual Meeting is required to constitute
a quorum for the transaction of business at the Annual Meeting. 
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. 
Under applicable Delaware law, abstentions and broker non-votes
will have the same effect as
a vote "AGAINST" the proposal to approve the Kaiser 1995 Executive
Incentive Compensation Program, but will have no effect on the outcome of the election of directors.


                      ELECTION OF DIRECTORS

            At the Annual Meeting, six directors will be elected
by the stockholdersStockholders to serve until the 19961997 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.  FiveAll of such nominees excluding Mr. Petris, are
currently members of the Board of Directors.  See, "Executive
Officers Directors and Nominees for
Director"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 capital stock owned beneficially by each of them as of
March 31, 1995.29, 1996.  Each of the nominees has consented to serve as a
member of the Board of Directors if elected.  Paul D. Rusen is the director on the
Board of Directors whose term will end at the Company's Annual Meeting upon
the election of his successor. 

            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 VOTEThe Board of Directors recommends a vote "FOR" THE ELECTION OF
ALL NOMINEES FOR DIRECTOR OF THE COMPANY.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 fivesix meetings and acted by
written consent on threefive occasions during 1994.1995.  In addition,
management confers frequently with its directors on an informal
basis to discuss Company affairs.  During 1994,1995, no director
attended fewer than 75%93% of the aggregate of the meetings of the
Board and all Committeescommittees of the Board on which he served.

            The Board of Directors of the Company currently has
severalthree standing committees.  These committees includingconsist of the
Executive, Audit and Compensation Committees.  In addition, in
1995, the Board of Directors appointed a Special Committee of two
independent directors to consider a recapitalization of the
Company, and to recommend to the Board of Directors whether or
not to proceed and if so, the appropriate terms.  Mr. Marcus
(Chairman) and Mr. Petris were the appointed members of the
Special Committee and met ten times during 1995.

            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.  Its current members
are Messrs. Haymaker and Hurwitz (Chairman).  The Executive
Committee held no meetingsone meeting and acted by written consent one time
during 1994.1995.

            The Audit Committee presently consists of Messrs.
Levin, Marcus (Chairman) and Rusen.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 of its
financial reporting.  This Audit Committee recommends to the
Board the appointment of the independent public accountants to
serve as auditors in examining the corporate accounts of the
Company.  The independent public accountants periodically meet
privately with the Audit Committee and have access to the
Committee at any time.  The Audit Committee met on one occasion
during 1994.1995.

                               -2-


            The Compensation Committee reviews and advises
management, makes recommendations to the Board, and reviews and
approves proposals regarding the establishment or change of
benefit plans, salaries or compensation afforded the executive
officers and other employees of the Company.  Messrs. Cruikshank,
Levin (Chairman) and Marcus currently serve as members of thisthe
Compensation Committee.  The Compensation Committee met on foursix
occasions and acted by written consent one time during 1994.1995.

            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 COMPENSATIONDirector Compensation

            Directors who were not employees of the Company or
its principal subsidiary, Kaiser Aluminum & Chemical Corporation
("KACC"), received a base fee of $30,000 for the 19941995 calendar
year.  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 to the compensation payable as
a director for 1994,1995, the Chairman of each of the Executive, Audit
and Compensation Committees was paid a fee of $3,000 per year for
services as Chairman of such committee.  Mr. Marcus is also
entitled to a committee Chairman's fee, prorated for the portion
of 1995 during which he served as Chairman of the Special
Committee.  All members of such committees, including the Special
Committee, 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.  During 1994,In respect of 1995,
Messrs. Cruikshank, Levin, Marcus and LevinPetris received an
aggregate $37,000 each$32,500, $35,500, $42,356 and Mr.
Cruikshank received an aggregate $31,917$24,880, respectively, in
such director and committee fees from the Company and KACC.  

            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 half day or
$1,500 per day for such services. No such extraordinary services
were performed during 1994.1995.  Directors are reimbursed for travel
and other disbursements relating to Board and Committeecommittee meetings. 
Fees to directors who are also employees of the Company, KACC or
KACCMAXXAM 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.


                 In recognition of significant contributions made by Mr. Hurwitz
during 1994 as Chairman of the Executive Committee of the Company,
particularly dealing with international matters, and to incentivize him to
continue such efforts, Mr. Hurwitz was granted a 10-year option to purchase
250,000 shares of the Company's Common Stock under the Kaiser 1993 Omnibus
Stock Incentive Plan (the "Omnibus Plan") at an exercise price of $12.75,
which was 20% above the closing price of $10.625 on the date of the grant,
December 21, 1994.  The option vests with respect to 25% on the first
anniversary date of the grant and an additional 25% on each anniversary
date thereafter until fully vested. 


                      PROPOSAL TO APPROVE THE KAISER 
               1995 EXECUTIVE INCENTIVE COMPENSATION PROGRAM

          The Kaiser 1995 Executive Incentive Compensation Program (the
"Executive Program") was recommended by the Compensation Committee on March
23, 1995, adopted by the Board of Directors subject to stockholder
approval, and is hereby submitted to the Stockholders of the Company for
approval.  A COPY OF THE EXECUTIVE PROGRAM AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION MAY BE OBTAINED WITHOUT CHARGE BY WRITING TO THE
COMPANY AT 5847 SAN FELIPE, SUITE 2600, P. O. BOX 572887, HOUSTON, TEXAS
77257-2887, ATTENTION: BYRON L. WADE, OR CALLING (713) 267-3670.  The
following description of the Executive Program is qualified in its entirety
by reference to the full text of the Executive Program.



          The Executive Program has been proposed so that the Company can
provide performance incentives to participants while securing, to the
extent practicable, a tax deduction by the Company for payments of
additional incentive compensation to each participant.  Participants in the
Executive Program will be the Chief Executive Officer ("CEO"), the Chief
Financial Officer ("CFO") and the Chief Administrative Officer ("CAO"). 
The Executive Program will be administered by the Compensation Committee or
a designated subcommittee thereof, comprised solely of at least two
"outside directors" as such term is defined or interpreted for purposes of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code").  
          The Company's Board of Directors and Compensation Committee
believe that executive compensation should be closely related to the
performance of the Company.  The underlying philosophy of the Executive
Program is that the stockholders' investment in the Company will increase
if the Company's profitability equals or exceeds its cost of capital on a
consistent basis.  The purpose of the Executive Program is to provide
incentive for the CEO, the CFO and the CAO (collectively the
"Participants") to manage the Company so that it achieves such consistent
profitability by establishing a compensation mechanism through which the
Participants share in the increased value.

          The Executive Program is structured to achieve its objectives by: 
(a) aligning the Executives' compensation with stockholder value; (b)
rewarding the Participants with incentive compensation, on both a short-
term and long-term basis, for managing the Company so that its
profitability equals or exceeds its cost of capital; (c) providing annual
compensation incentives based on yearly performance results, and long-term
compensation incentives based on three-year performance results; and (d)
structuring a major portion of the Participants' total compensation to be
at-risk and performance-based.

          Compensation levels will be set as targets ("Target Incentives")
for both the annual and long-term incentives for each of the Participants
at the beginning of each annual or long-term performance period.  The
Target Incentives will be based on the mid-point of incentive compensation
for executives with a comparator group of companies engaged in metals,
mining, chemicals and similar industries with whom the Company will likely
compete for managerial talent.  For each one-year or three-year period, the
Compensation Committee will approve performance goals for the Company and
for each business unit of the Company.  Such goals must be established
before March 31 of each year.  The performance goals will be set so that
the Target Incentives can be valued at zero to three times their value,
depending on the level of which profitability of the Company exceeds the
cost of capital, for purposes of determining actual awards to be paid under
the Executive Program.  The maximum for both the annual and long-term
incentive will be three times the Target Incentive, based on the applicable
annual or long-term planned and actual return on assets, plus 30% of the
Target Incentive, based on achievement of goals or financial
accomplishments not reflected in the Company's return on assets.  The
Compensation Committee cannot increase but may decrease an incentive
payment to be paid under the Executive Program by an amount in the range of
1% to 60% of the Target Incentive.  In order for any payment to be made,
the Company must achieve at least a specified minimum return on assets.

          Determination of the annual or long-term incentive award will be
based on return on assets employed in the business, plus achievement of
goals or financial accomplishments not reflected in the Company's return on
assets.  The return on assets as compared to the Company's cost of capital
will determine the percentage of the Target Incentive that will be paid.

          Upon stockholder approval, the annual incentive component of the
Executive Program will be retroactively effective to January 1, 1995.  Any
annual incentive payments will be made in cash after the announcement of
the financial results of the Company for the prior fiscal year for which
the performance goals were set.  The first long-term performance period
will be retroactively effective to January 1, 1994 and continue through
December 31, 1996.  Payments for the long-term incentive component of the
Executive Program will be made 43% in cash and 57% in shares of Common
Stock of the Company.  Any stock-



related awards granted pursuant to the Executive Program will be issued
under the Omnibus Plan.  Long-term incentive compensation will be paid in
two installments, one-half during the year following the end of the three-
year period and one-half during the second year following the end of the
three-year period.   The 1995 annual Target Incentives for the CEO, CFO and
CAO are $235,900, $80,800 and $74,900, respectively.  The 1994 through 1996
long-term Target Incentives for the CEO, CFO and CAO are $680,400, $233,100
and $216,000, respectively. 
If the Executive Program had been in place for fiscal year 1994, no annual
incentive payments would have been paid because the specified minimum
return on assets was not achieved; and no long-term incentive payments
would have been paid because any such payments, if earned, will relate to
the initial three-year period of January 1, 1994 through December 31, 1996,
and will not be paid, if at all, until 1997 and 1998.  Further, the fact
that the specified minimum return on assets was not met during 1994 has a
negative impact on Target Incentives being met for the initial long-term
performance period.

          The Board of Directors may terminate, suspend or amend the
Executive Program, in whole or part, at any time, including the adoption of
amendments deemed necessary or advisable provided stockholder approval is
obtained if required by Section 162(m) of the Code.

          The Company's Compensation Committee believes that the Executive
Program is performance-based and that awards thereunder should be tax
deductible under Section 162(m) of the Code.  The Committee intends to take
all reasonable steps to maintain the Executive Program based on
performance-based standards.  In this regard, the Company is presenting
this Executive Program for stockholder approval.

          APPROVAL OF THE EXECUTIVE PROGRAM REQUIRES THE AFFIRMATIVE VOTE
OF THE HOLDERS OF A MAJORITY OF THE COMPANY'S CAPITAL STOCK REPRESENTED AT
THE ANNUAL MEETING.  THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS OF THE COMPANY VOTE "FOR" APPROVING THE EXECUTIVE PROGRAM.

EXECUTIVE OFFICERS DIRECTORS AND NOMINEES FOR DIRECTORDIRECTORS

            The following table sets forth certain information,
as of the record date, 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 earlier resignation
or removal.

NAME            POSITIONS AND OFFICES WITH THE COMPANY
 ------------------------
Name Positions and Offices with the Company - - ----------------------- -------------------------------------- George T. Haymaker, Jr. Chairman of the Board, Chief Executive Officer and Director Joseph A. Bonn Vice President, Planning and Administration John T. La Duc Vice President and Chief Financial Officer John E. Daniel Vice President, and President of Kaiser Primary Products, of KACC Lawrence L. Watts Vice President, and President of Kaiser Aluminum International, of KACC Anthony R. Pierno Vice President and General Counsel Byron L. Wade Vice President, Secretary and Deputy General Counsel Robert E. Cole Vice President, Government Affairs, of KACC Richard B. Evans Vice President of KACC -3- Robert W. Irelan Vice President, Public Relations, of KACC Alan G. Longmuir Vice President, Research and Development, of KACC Raymond J. Milchovich Vice President, and President of Kaiser Flat-Rolled Products, of KACC James T. Owen Vice President, and President of Kaiser Extruded Products, of KACC Geoffrey W. Smith Vice President, and President of Kaiser Alumina, of KACC Kris S. Vasan Vice President, Financial Risk Management, of KACC Arthur S. Donaldson Controller Karen A. Twitchell Treasurer Robert J. Cruikshank Director Charles E. Hurwitz Director and Vice Chairman Ezra G. Levin Director Robert Marcus Director Robert J. Petris Director Joseph A. Bonn Vice President, Planning and Administration John T. La Duc Vice President and Chief Financial Officer Anthony R. Pierno Vice President and General Counsel Byron L. Wade Vice President, Secretary and Deputy General Counsel Robert E. Cole Vice President, Government Affairs of KACC John E. Daniel Vice President, Primary Aluminum of KACC Richard B. Evans Vice President, Flat-Rolled Products of KACC Robert W. Irelan Vice President, Public Relations of KACC Geoffrey W. Smith Vice President, Alumina of KACC Lawrence L. Watts Vice President, International Development of KACC Charlie Alongi Controller Kris S. Vasan Treasurer Robert J. Cruikshank Director Charles E. Hurwitz Director and Vice Chairman Ezra G. Levin Director Robert Marcus Director Robert J. Petris Nominee for Director
George T. Haymaker, Jr. Mr. Haymaker, age 57,58, assumed the positions of Chairman of the Board and Chief Executive Officer of the Company and KACC effective January 1, 1994. From May 1993 to December 1993, Mr. Haymaker served as President and Chief Operating Officer of the Company and KACC. Mr. Haymaker was electedbecame a director of the Company at the Company's Annual Meeting of Stockholders onin May 19, 1993, and was also elected a director of KACC at KACC's Annual Meeting of Stockholders held onin June 15, 1993. From 1987 to April 1993, Mr. Haymaker had beenwas a partner in a partnership which acquires, redirectsacquired, redirected and operatesoperated small to medium sized companies in the metals industry. He served as President from February 1992 to March 30, 1993, andSince July 1987, Mr. Haymaker has been a director, since July 1987and from February 1992 through March 1993 was President of, Metalmark Corporation, which is in the business of semi-fabricationsemi- fabrication of aluminum specialty foils and 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. ("Amarlite"), 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 10, 1993. From 1984 to 1986, Mr. Haymaker served as Executive Vice President--AluminumPresident Aluminum Operations of Alumax Incorporated,Inc., responsible for all primary aluminum and semifabricating activities. Mr. Haymaker has extensive experience in the management of businesses engaged in the production and sale of aluminum and aluminum products, including 25 years of experience in a variety of executive and managerial positions with Aluminum Company of America and its subsidiaries. Joseph A. Bonn. Mr. Bonn, age 51,52, has been Vice President, Planning and Administration of the Company and KACC since February 1992 and July 1989, respectively. Mr. Bonn has served as a Vice President of KACC since April 1987 and served as Senior Vice President--AdministrationPresident Administration of MAXXAM from September 1991 through December 31, 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. John T. La Duc. Mr. La Duc, age 52,53, has been Vice President and Chief Financial Officer of the Company since June 1989 and May 1990, respectively.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 Chief Financial Officer of KACC since January 1990 and a Vice President of KACC since June 1989. From January 1, 1993 until April 5, 1993, Mr. La Duc served as Treasurer of the Company and KACC, having previously served as Treasurer of the Company from September 1987 to May 1990. Mr. La Duc also previously served as Treasurer of KACC from September 1987 until 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 Inc. ("MGI"), a wholly owned subsidiary of MAXXAM, The Pacific Lumber Company ("Pacific Lumber"), an indirect subsidiary of MAXXAM engaged in forest products operations, and Pacific Lumber's subsidiary, Scotia Pacific Holding Company ("Scotia Pacific"). He previously served as Chief Financial Officer of MAXXAM and MGI -4- 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. John E. Daniel. Mr. Daniel, age 60, has been a Vice President of KACC since January 1992, President of Kaiser Primary Products since June 1995, and has been the General Manager of KACC's primary aluminum products business unit since November 1990. From November 1990 to January 1992, he was Divisional Vice President of KACC's primary aluminum products business unit. From December 1989 to November 1990, Mr. Daniel was Reduction Plant Manager of KACC's Tacoma, Washington plant and from July 1986 to December 1989, he was Reduction Plant Manager of KACC's formerly owned Ravenswood, West Virginia plant. Lawrence L. Watts. Mr. Watts, age 49, 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. Anthony R. Pierno. Mr. Pierno, age 62,63, has served as Vice President and General Counsel of the Company and KACC since January 1992. He also serves as Senior Vice President and General Counsel of MAXXAM, positions he has held since February 1989. Mr. Pierno has also served as Vice President and General Counsel of MGI and Pacific Lumber since May 1989, and Scotia Pacific since November 1992, and as a director of MGI and Pacific Lumber since November 1993.1993 and January 1994, respectively. Immediately prior to joining MAXXAM, Mr. Pierno served as partner in charge of the business practice group in the Los Angeles office of the law firm of Pillsbury, Madison & Sutro. He has served as the Commissioner of Corporations of the stateState of California and as chairChair of several committees of the State Bar of California. Mr. Pierno is Chairman of the Board of Trustees of Whittier College, and a former member and past Chairman of the Board of Trustees of Marymount College. Byron L. Wade. Mr. Wade, age 48,49, has served as Vice President and Secretary of the Company and KACC since January 1992, and Deputy General Counsel of the Company and KACC since May and June 1992, respectively. Mr. Wade has also served as Vice President and Deputy General Counsel of MAXXAM since May 1990, and Secretary of MAXXAM since October 1988. He previously served as Assistant Secretary and Assistant General Counsel of MAXXAM from November 1987 to October 1988 and May 1990, respectively. In addition, Mr. Wade has served since May 1993 as a Vice President and Secretary of SHRP General Partner, Inc. ("SHRP"), the current managing general partner of Sam Houston Race Park, Ltd., a Texas limited partnership and subsidiary of MAXXAM which operates a horse racing facility in Texas ("SHRP, Ltd."). Mr. Wade has served as Vice President, Secretary and Deputy General Counsel of Pacific Lumber and Scotia Pacific since June 1990 and November 1992, respectively, and as Vice President, Secretary and Deputy General Counsel of MGI since July 1990. He had previously served since 1983 as Vice President, Secretary and General Counsel of MCO Resources, Inc., a publicly traded oil and gas company, which was majority owned by MAXXAM. Since July 1993, Mr. Wade has served as a director, Vice President and Secretary of SHRP, Inc. ("SHRP"), the sole general partner of Sam Houston Race Park, Ltd., a Texas limited partnership, which operates a horse racing facility in Harris County, Texas. Since July 1993, Mr. Wade has also served as a director, Vice President and Secretary of SHRP Capital Corp. ("SHRP Capital"), a wholly owned subsidiary of Sam Houston Race Park, Ltd. Robert E. Cole. Mr. Cole, age 48,49, has been a Vice President of KACC since March 1981. Since September 1990, Mr. Cole also has served as Vice President--FederalPresident Federal Government Affairs of MAXXAM, MGI and Pacific Lumber. He alsoMr. Cole is currently serves as Chairman of the Board of National Environmental Development Association, and as a director, Secretary and Treasurer of Global Climate Coalition, both of which are nonprofit organizations.United States Auto Parts Advisory Committee established by the United States Congress. -5- John E. Daniel. Mr. Daniel, age 59, has been a Vice President of KACC since January 1992, and has been the General Manager of KACC's primary aluminum products business unit since November 1990. From November 1990 to January 1992, he was Divisional Vice President of the Company's primary aluminum products business unit. From December 1989 to November 1990, Mr. Daniel was Reduction Plant Manager of the Company's Tacoma, Washington plant. From July 1986 to December 1989, he was Reduction Plant Manager of the Company's formerly owned Ravenswood, West Virginia plant. Richard B. Evans. Mr. Evans, age 47,48, has been a Vice President of KACC since January 1, 1992, and has beenwas responsible for the worldwide commercial development of KACC's proprietary micromill rolling process for canstock production from April 1994 through February 1996. Mr. Evans has been President of Kaiser Micromills since April 1994.June 1995. He previously served as General Manager of KACC's flat-rolled products business unit from January 1989 to April 1994. From July 1986 to January 1992, he was Divisional Vice President of KACC's flat-rolled products business unit. Robert W. Irelan. Mr. Irelan, age 58,59, has served KACC as Vice President, Public Relations since February 1988. He has also been Vice President--PublicPresident Public Relations of MGI, Pacific Lumber and MAXXAM since September 1990. From June 1985 to February 1988, Mr. Irelan served as Divisional Vice President--CorporatePresident Corporate Public Relations of KACC, and from 1968 to June 1985 he served KACC and certain affiliated companies in a variety of positions. Alan G. Longmuir. Mr. Longmuir, age 55, has been Vice President Research and Development of KACC since June 1995, and previously was Divisional Vice President Research and Development of KACC since October 1988. Mr. Longmuir served as KACC's Director of Manufacturing Systems from January 1985 to October 1988. From September 1982 to January 1985 he acted as KACC's Manager Automated Systems and Electrical Engineering; and from January 1978 to September 1982 was KACC's Manager Metals Automation. Raymond J. Milchovich. Mr. Milchovich, age 46, has been Vice President President of Kaiser Flat-Rolled Products, of KACC since June 1995. 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. James T. Owen. Mr. Owen, age 58, has been Vice President President of Kaiser Extruded Products, of KACC since June 1995. Mr. Owen previously served as a Divisional Vice President and General Manager of KACC's extruded products business unit from February 1988 to June 1995. From January 1984 to January 1985, Mr. Owen served as the General Manager of KACC's Los Angeles extrusions facility and from July 1976 to January 1984, Mr. Owen served as plant manager of various aluminum fabricating facilities. Geoffrey W. Smith. Mr. Smith, age 48,49, has been President of Kaiser Alumina since June 1995 and a Vice President of KACC since January 1992, and has been1992. From December 1994 until June 1995, Mr. Smith was General Manager of KACC's alumina business unit since December 1994.unit. Mr. Smith previously served as Co- GeneralCo-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 theKACC's Gramercy, Works. Lawrence L. Watts. Mr. Watts, age 48, has been a Vice President of KACC since January 1992, and General Manager--International Development since April 1994. Mr. Watts previously served as Co-General Manager of KACC's alumina business unit since 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. Charlie Alongi. Mr. Alongi, age 64, has been the Controller of the Company and KACC since July 1989, and was the Assistant Controller of KACC from February 1982 until July 1989.Louisiana facility. Kris S. Vasan. Mr. Vasan, age 45, became46, 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 infrom April 1993.1993 until June 1995. Prior to that, Mr. Vasan previously 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. Arthur S. Donaldson. Mr. Donaldson, age 53, became Controller of the Company and KACC effective February 1, 1996. Mr. Donaldson previously served as Assistant Controller of the Company and KACC since September 1992. From January 1985 to September 1992, Mr. Donaldson was Manager of External Reporting for the Company. -6- Karen A. Twitchell. Ms. Twitchell, age 40, was elected to the position of Treasurer of the Company and KACC effective February 1, 1996. Prior to joining the Company, Ms. Twitchell was Vice President and Treasurer of Southdown, Inc., a Houston-based company specializing in portland and masonry cement, since April 1994 and Treasurer since 1989. Robert J. Cruikshank. Mr. Cruikshank, age 64,65, 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. Prior to its merger with Touche Ross & Co. in December 1989, Mr. Cruikshank served as Managing Partner of Deloitte Haskins & Sells from June 1974 until the merger, and served on such firm's board of directors from 1981 to 1985. 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, cable television, coal and transportation businesses; a director of Texas Biotechnology Incorporated; and as Advisory Director of Compass Bank--Houston.Bank Houston. Charles E. Hurwitz. Mr. Hurwitz, age 54,55, 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. Since January 1, 1993, Mr. Hurwitz has also served MAXXAM and MGI as President. Since July 1993, Mr. Hurwitz has also served as a director and Chairman of the Board of SHRP and director, Chairman of the Board and President of SHRP Capital. From May 1986 until February 1993, Mr. Hurwitz served as a director of Pacific Lumber, and from December 31, 1992 until February 1993, he served as Chairman of the Board of Pacific Lumber. Mr. Hurwitz 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 SHRP as a director since May 1993, Chairman of the Board since October 1995, and President from May 1993 until April 1996. Ezra G. Levin. Mr. Levin, age 61,62, 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, Nessen, Kamin & 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 70,71, 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 69,70, has been nominated bya director of the Company since May 1995 and KACC since June 1995. He became Special Assistant to the International President of the United Steelworkers of America ("USWA"(the "USWA") to serve on the Board of Directors of KACC. As a result of such nomination, the Board of Directors of both KACC and the Company have nominated Mr. Petris to stand for election as a director of both KACC and the Company.in June 1995. Since 1977, Mr. Petris has been a member of the International Union Executive Board and Director of District 38, where he has been exposed to a wide range of issues and problems in the aluminum, steel, container and non-ferrous metals industries. Mr. Petris plans to retire from the USWA this year. -7- PRINCIPAL STOCKHOLDERS The following table sets forth, as of March 31, 1995,29, 1996, unless otherwise indicated, the undiluted beneficial ownership of each class of the Company's capital stock as of such date by (i) those persons known by the Company to own beneficially more than 5% of the shares of each applicable class of capital stock then outstanding, (ii) each of the directors the nominee for director and the named executive officers of the Company, and (iii) all directors and executive officers of the Company as a group.
% of Combined Name of Voting Beneficial Owner Title of Class # of Shares(1) % of Class ------------------------ ---------------------- ------------------ -----------Power(2) - - ---------------- --------------- ------------ ---------- -------- MAXXAM Inc.(2)(3) Common Stock 50,000,000 85.9 Preferred Stock(3) 698,000 2.569.8 63.6 FMR Corp.(4) Common Stock 1,587,219(5) 2.7 Preferred Stock 4,750,700(6) 16.88,142,610(5) 11.0 10.2 PRIDES 3,063,700 35.3 Joseph A. Bonn Common Stock 151,763118,225(6) * * Robert J. Cruikshank -- -0- --Common Stock 2,000 * * John E. Daniel Common Stock 6,185(7) * * George T. Haymaker, Jr. Common Stock 40,000(7)26,675(7) * * Charles E. Hurwitz Common Stock -0-62,500(7)(8) --* * John T. La Duc Common Stock 161,763134,063(6) * * Ezra G. Levin -- -0- -- Robert Marcus Common Stock 3,500 * * Robert J. Petris -- -0- -- Anthony R. PiernoLawrence L. Watts Common Stock 50044,457(6) * Byron L. Wade Common Stock 500 * All directors and executive officers of the Company as a group (18(22 persons) Common Stock 663,956(9) 1.1 - --------------------657,935(9) * Less than 1%. (1) Except as may otherwise be indicated, the beneficial owners have sole voting and investment power with respect to the shares listed in the table. (2) The address of MAXXAM is 5847 San Felipe, Suite 2600, Houston, Texas 77057. (3) Represents shares of Depository Shares. (4) Information is based solely on the Schedule 13G filed with the Securities and Exchange Commission ("SEC") dated February 13, 1995 (the "FMR 13G"). The FMR 13G was filed by FMR Corp., its wholly owned subsidiary Fidelity Management & Research Company ("Fidelity"), and Edward C. Johnson 3d, the Chairman and 24.9% owner of the common stock of FMR Corp. Fidelity is a registered investment advisor. The address of FMR Corp. is 82 Devonshire Street, Boston, Massachusetts 02109. (5) Represents 385,100 shares of Common Stock held directly and 1,202,119 shares of Common Stock immediately acquirable upon conversion of 1,442,600 shares of PRIDES at conversion rate of .8333 per share of PRIDES. (6) Represents 3,308,100 Depositary Shares and 1,442,600 shares of PRIDES. (7) Represents option exercisable on, or within sixty days of, March 31, 1995 to acquire such shares. (8) Mr. Hurwitz may be deemed to hold beneficial ownership in the Company as a result of his beneficial ownership in MAXXAM. (9) Includes options exercisable on, or within sixty days of, March 31, 1995 to acquire 77,920*
* 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 on, or within sixty days of March 29, 1996 to acquire such shares. (2) The PRIDES are generally entitled to 4/5 vote per share on matters presented to a vote of the Company's stockholders. (3) The address of MAXXAM is 5847 San Felipe, Suite 2600, Houston, Texas 77057. (4) Information is based solely on the Schedule 13G, as amended, filed with the Securities and Exchange Commission ("SEC") dated February 14, 1996 (the "FMR 13G"). The FMR 13G was filed by FMR Corp., its wholly owned subsidiary Fidelity Management & Research Company ("Fidelity"), Edward C. Johnson 3d, the Chairman and 12.0% owner of the outstanding voting stock of FMR Corp., and Abigail P. Johnson, a Director and 24.5% owner of the outstanding voting stock of FMR Corp. Fidelity is a registered investment advisor. The address of FMR Corp. is 82 Devonshire Street, Boston, Massachusetts 02109. (5) Represents 5,589,629 shares of Common Stock held directly and 2,552,981 shares of Common Stock immediately acquirable upon conversion of 3,063,700 shares of PRIDES at conversion rate of .8333 per share of PRIDES. (6) Includes 2,125, 2,300 and 5,995 options exercisable on, or within sixty days of, March 29, 1996 to acquire shares of Common Stock, by Messrs. Bonn, La Duc and Watts, respectively. (7) Represents only options exercisable on, or within sixty days of, March 29, 1996 to acquire such shares. (8) 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. (9) Includes options exercisable on, or within sixty days of, March 29, 1996 to acquire 128,565 shares of Common Stock. -8- OWNERSHIP OF PARENT OF THE COMPANY Ownership of Parent of the Company As of March 31, 1995,29, 1996, MAXXAM owned approximately 60%62% of the issued and outstanding capital stock in the Company on a fully diluted basis. The following table sets forth, as of March 31, 1995,1996, 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 and nominees for director of the Company, and by the Company's directors and executive officers as a group:
% of Combined Name of % Voting Beneficial Owner Title of Class # of Shares(1) of Class Power (2) ---------------------- ----------------- ----------------- ------------ -----------Power(2) - - ---------------- -------------- -------------- --------- -------- Charles E. Hurwitz Common Stock 2,736,042(3)2,733,542(3)(4) 31.2 60.2(5) 31.1 60.7 Class A Preferred 657,917(3)(4) 98.3 Stock 671,441(4)(5)(6)(7) 99.1 Ezra G. Levin Common Stock 1,500(3)1,325(4)(5)(8) * * Robert J. Cruikshank Common Stock 1,325(8) * * All directors and Common Stock 2,772,442 31.3 executive officers of 60.2 the Company as a group (22 persons) Common Stock 2,736,748(9) 31.2 60.8 Class A Preferred 657,917 98.3 (18 persons) Stock - -------------------- * Less than 1%. (1) Except as may otherwise be indicated, beneficial owners have sole voting and investment power with respect to the shares listed in the table. (2) MAXXAM's Class A preferred stock is generally entitled to ten votes per share on matters presented to a vote of that company's stockholders. (3) Messrs. Hurwitz and Levin serve as trustees of Federated, and Mr. Hurwitz, together with members of his immediate family and trusts for the benefit thereof, owns all of the shares of beneficial interest in Federated, and his positions include Chairman of the Board and Chief Executive Officer of MAXXAM and Federated, and membership on MAXXAM's Executive Committee. In addition, Federated, 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. As of March 31, 1995, in the aggregate, the Stockholder Group beneficially owned 2,737,394 shares of MAXXAM's common stock and 658,050 shares of MAXXAM's Class A preferred stock, aggregating approximately 60.2%661,377(7) 99.1
- - -------------------- * 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 March 31, 1996, if any, for their exercisable stock appreciation rights ("SARs") (excluding SARs payable in cash only) 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 December 31, 1995. (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 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) 16,154 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 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) 129,308 shares of MAXXAM common stock owned by the 1992 Hurwitz Investment Partnership, L.P., of which 64,654 shares are owned by Mr. Hurwitz's spouse as separate property and as to which Mr. Hurwitz disclaims beneficial ownership, (d) 800,954 shares of MAXXAM common stock held directly, and (e) 71,175 shares of MAXXAM common stock that FDI may acquire in exchange for 7% Cumulative Exchangeable Preferred Stock of MCO Properties Inc., a wholly owned subsidiary of MAXXAM. (4) In addition, Federated, 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. As of March 29, 1996, in the aggregate, the Stockholder Group beneficially owned 2,735,219 shares of MAXXAM common stock and 671,574 shares of MAXXAM Class A preferred stock, aggregating approximately 60.75% 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. (4) Includes as of March 31, 1995 (a) 1,669,451 shares of MAXXAM's common stock owned by Federated as to which Mr. Hurwitz possesses voting and investment power, (b) 8,012 shares of MAXXAM's common stock separately owned by Mr. Hurwitz's spouse and as to which Mr. Hurwitz disclaims beneficial ownership, (c) 46,500 shares of MAXXAM's common stock owned by 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, (d) 145,592 shares of MAXXAM's common stock owned by the 1992 Hurwitz Investment Partnership, L.P., of which 72,796 shares are owned by Mr. Hurwitz's spouse as separate property and as to which Mr. Hurwitz disclaims beneficial ownership, (e) 795,312 shares of MAXXAM common stock held directly, and (f) 71,175 shares of MAXXAM's common stock that Federated may acquire in exchange for 7% Cumulative Exchangeable Preferred Stock of MCO Properties Inc. (5) Does not include shares owned by other members of the Stockholder Group. At(6) Includes 661,377 shares owned by a wholly owned subsidiary of Federated, exercisable options to purchase 9,000 shares and 1,064 shares owned directly. (7) Includes options exercisable on, or within sixty days of, March 31, 1995,29, 1996 to acquire 9,000 shares of Class A Preferred Stock. (8) Includes exercisable options to purchase 325 shares of MAXXAM common stock. (9) Includes options exercisable on, or within sixty days of, March 29, 1996 to acquire 34,250 shares of MAXXAM common stock. As of March 29, 1996, 28,000,000 shares of the Company's Common Stock owned by MAXXAM were pledged as security for two MGI debt issues of MGI consisting of $100.0 million aggregate principal amount of 11-1/4% Senior Secured Notes due 2003 and $126.7$125.7 million aggregate principal amount of 12-1/4% Senior Secured Discount Notes due 2003. -9- EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLESummary Compensation Table The following table sets forth compensation information, cash and non-cash, for each of the Company's last three completed fiscal years with respect to the Chief Executive Officer and the four most highly compensated executive officers of the Company (collectively referred to as the "named executive officers") for the fiscal year ended December 31, 1994:1995:
Long-Term Compensation -------------------------------------------------------------- Annual Compensation Awards Payouts ------------------------------------- -------------------------- -------------------------------- ------ ------- (a) (b) (c) (d) (e) (f) (g) (h) (i) Other Restricted Annual Stock Options/ LTIP All Other Name and Salary Bonus Compensation Award(s) SARs Payouts Compensation Principal Position Year ($) ($) ($)(1) ($) (#) ($) ($) - ------------------------ ------------------ ----- ------ --------------- -------------- ------------ ------------- --------------------- ------- ------------ ------------- --------------- George T. Haymaker, Jr., 1995 465,000 225,000 - -0- -0- -0- 23,250(2) Chairman and Chief 1994 450,000 100,000 --- -0- 26,700 -0- 2,079(2) Jr., Chairman and Chief2,079(3) Executive Officer 1993 291,072 -0- --- -0- 100,000 -0- 40,443(2) Executive Officer 1992 -- -- -- -- -- -- -- Anthony R. Pierno,(3) 1994 331,511 263,633(4) -- -0- -0- -0- 55,514(5) Vice President and 1993 321,232 290,000(4) -- -0- -0- -0- 57,179(5) General Counsel 1992 302,275 265,000(4) -- -0- -0- -0- 50,123(5)40,443(3) John T. La Duc, Vice 1994 240,000 103,000(6) --1995 248,333 130,000(4) - -0-(7) 9,200(5) -0- 4,800(11)-0- 12,417(2) President and Chief 1994 240,000 103,000(4) - -0- 9,200 -0- 4,800(2) Financial Officer 1993 240,000 100,000(6) --100,000(4) - -0- -0- -0- 4,872(11) Financial Officer 1992 225,000 45,000 -- 1,428,967(8) 10,000(9) 192,698(10) 8,469(2)(11)4,872(2) Joseph A. Bonn, Vice 1995 224,633 75,000 - -0-(5) -0- -0- 11,232(2) President, Planning 1994 216,300 27,000 --- -0-(7) 8,500 -0- 4,326(11) President, Planning4,326(2) and Administration 1993 216,300 -0- --- -0- -0- -0- 4,326(11) Administration 1992 210,000 57,364(12) -- 1,428,967(8) -0- 195,697(10) 80,884(2)(11) Byron L. Wade,(3)4,326(2) John E. Daniel, Vice 1994 171,140 128,355 --1995 191,669 152,000 - -0- -0- -0- 31,671(5)9,583(2) President Secretaryand President 1994 170,004 24,000 - -0- 7,300 -0- 3,590(2) of Kaiser Primary 1993 165,833 124,412 --159,000 -0- - -0- 21,800 -0- 3,180(2) Products, of KACC Lawrence L. Watts, 1995 211,171 105,000 - -0-(5) -0- -0- 10,559(2) Vice President, and 1994 172,004 26,000 - -0- 30,955(5) and Deputy General 1992 156,054 95,000 --7,100 -0- 15,000(9)3,440(2) President of Kaiser 1993 154,000 -0- 28,854(5) Counsel - -------------------- (1) Excludes perquisites and other personal benefits because the aggregate amount-0- 21,100 -0- 3,080(2) Aluminum International, 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. (2) Includes moving related items of $2,079 and $40,443 for Mr. Haymaker in 1994 and 1993, respectively, and $3,969 and $76,684 in 1992 for Messrs. La Duc and Bonn, respectively. (3) Messrs. Pierno and Wade receive their compensation from MAXXAM; however the Company reimburses MAXXAM for certain allocable costs associated with the performance of services for the Company by such executive officers. The table reflects such officers' total compensation, rather than any allocated part of such compensation. (4) Pursuant to Mr. Pierno's employment agreement, his personal loans from MAXXAM outstanding on the date of such agreement were forgiven at the rate of $15,000 per year. This amount is included as part of his bonus compensation. See, "Certain Transactions" for discussion on such personal loans. (5) Represent matching contributions by MAXXAM during 1994, 1993 and 1992, respectively, under the MAXXAM 401(k) savings plan of $5,787, $8,994 and $4,782 and $6,000, $6,080 and $5,446 for Messrs. Pierno and Wade, respectively; and $49,727, $48,185 and $45,341 and $25,671, $24,875 and $23,408 for Messrs. Pierno and Wade, respectively, accrued during 1994, 1993 and 1992, respectively, in respect of MAXXAM's revised capital accumulation plan pursuant to which, in general, benefits vesting 10% annually are payable upon termination of employment with MAXXAM. (6) Includes $75,000 (to be paid over a three-year period) and $100,000 (to be paid over a four-year period), awarded for 1994 and 1993, respectively, for which KACC will be reimbursed by MAXXAM. (7) As of December 31, 1994, Messrs. Bonn and La Duc each owned 94,873 shares of restricted Common Stock of the Company valued at approximately $1,031,744 for each, based on the closing price of $10.875 per share. Restrictions on such shares will be lifted on 47,436 shares on December 2, 1995 and on 47,437 shares on December 2, 1996 for each of Messrs. Bonn and La Duc.KACC
- - -------------------- (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. (2) Includes contributions by KACC of $12,417, $4,800, and $4,800 for Mr. La Duc; $11,232, $4,326, and $4,326 for Mr. Bonn; $9,583, $3,400 and $3,180 for Mr. Daniel; and $10,559, $3,440, and $3,080 for Mr. Watts, under the Kaiser Savings Plan (as defined below) for 1995, 1994 and 1993, respectively, and $23,250, for 1995 to Mr. Haymaker. (3) Includes moving related items of $2,079 and $40,443 for Mr. Haymaker in 1994 and 1993, respectively. (4) Includes $50,000 (to be paid over a two-year period), $75,000 (to be paid over a three-year period) and $100,000 (to be paid over a four-year period), awarded for 1995, 1994 and 1993, respectively, for which KACC will be reimbursed by MAXXAM. (5) As of December 31, 1995, Messrs. Bonn, La Duc and Watts owned 47,437, 47,437 and 38,462 shares, respectively, of restricted Common Stock of the Company valued at approximately $622,611, $622,611 and $504,814, respectively, based on the closing price of $13.125 per share. Restrictions on such shares will be lifted on December 2, 1996 for each of Messrs. Bonn and La Duc and on May 24, 1996, May 24, 1997 and May 24, 1998 for 12,820, 12,821 and 12,821 shares, respectively, for Mr. Watts. No dividends will be paid on these shares to Messrs. Bonn, La Duc or Watts during the period of restriction. No other named executive officer held restricted stock of the Company at fiscal year end 1995. -10- Option/SAR Grants No dividends will be paid on these shares to Messrs. Bonn and La Duc during the periods of restriction. No other named executive officer held restricted stock of the Company at fiscal year end 1994. (8) Includes payout during 1993 of $5,934 of shares of the Company's Common Stock issued in April 1993 as 5% of 1992 distribution, $699 in cash paid in April 1993 for fractional shares and balance of 1992 LTIP account pursuant to December 1992 election as described in footnote (10) below, and $332,918 of shares of the Company's Common Stock issued in November and December 1993 as to which restrictions were lifted. (9) Represents stock appreciation rights ("SARs") received from MAXXAM with respect to MAXXAM's common stock. (10) In December 1992, in connection with the subsequent stockholder approval of the Omnibus Plan, participants in the Company's and KACC's long-term incentive plan, as amended (the "LTIP") elected to receive payment of their LTIP account balances as of December 31, 1992 as follows: (i) Amounts earned and vested were paid half in cash and half in restricted shares of the Company's Common Stock. The portion payable in restricted shares of the Company's Common Stock was divided by the average of the December 1992 closing prices of $8.539 per share (December 1 through 28, 1992) to determine the number of shares granted. The portion payable in cash was reduced by 1992 bonuses paid to recipients and by appropriate tax withholdings. (ii) Amounts earned and unvested were paid in options or shares of restricted stock under the Omnibus Plan during 1993. Restrictions will be removed or options will vest at the rate of 25% each December for four (4) years, which began December 1993. (iii) Amounts unearned and unvested were paid in options or shares of restricted stock under the Omnibus Plan during 1993. Restrictions will be removed or options will vest as to 50% thereof in each of December 1995 and December 1996. The payments made in accordance with item (i) above were separate and apart from the Omnibus Plan and are reflected in column (h) of the Summary Compensation Table for 1992. The grants made in accordance with items (ii) and (iii) are reflected in column (f) for 1992. Without such elections and subject to certain reductions and limitations, participants were generally entitled to receive the vested portion of their LTIP account balances on the earlier to occur of (a) termination of their employment, (b) termination of the LTIP if prior to December 31, 1996, or (c) April 10, 1997. (11) Includes contributions by KACC of $4,800, $4,800 and $4,500, and $4,326, $4,326 and $4,200 under the Kaiser Savings Plan (as defined below) for 1994, 1993 and 1992, respectively, to Messrs. La Duc and Bonn, respectively. (12) Includes $15,364 loan forgiveness granted to Mr. Bonn in March 1992. OPTION/SAR GRANTS TABLE The following table sets forth certain information concerning options to purchase Common Stock or SARs were granted by the Company in fiscal year 1994 to any of the named executive officers:
Grant Individual Grants Date Value (a) (b) (c) (d) (e) (f) % of Total Options/ # of Securities SARS Grant Underlying Granted to Exercise or Date Options/SARs Employees in Base Price Expiration Present Name Grants (#) 1994(1) ($/Share) Date Value ($) (1) - ----------------------------- ------------------- ------------------- -------------------------------------- ------------------- George T. Haymaker, Jr. 26,700 5.4 12.75 12/21/2004 182,815 Joseph A. Bonn 8,500 1.7 12.75 12/21/2004 58,200 John T. La Duc 9,200 1.9 12.75 12/21/2004 62,992 - -------------------- (1) Valuation utilizing Black-Scholes Option Price Model using the following assumptions: 2-year daily volatility, 7.9% risk-free rate (10-year Government Bond), no dividend yield and 10-year exercise or expiration date. No adjustments were made for non-transferability or risk of forfeiture.
The options set forth in the table above were granted on December 21, 1994 under the Omnibus Plan at 20% above the closing price of $10.625 per share of Common Stock on the date of grant. The options to purchase shares of the Company's Common Stock vest 25% on the first anniversary date of the grant1995. Option/SAR Exercises and an additional 25% on each anniversary date thereafter until fully vested. OPTION/SAR EXERCISES AND FISCAL YEAR END VALUE TABLEFiscal Year End Value Table The table below provides information on an aggregated basis concerning each exercise of stock options (or tandem SARs) and freestanding SARs during the fiscal year ended December 31, 19941995 by each of the named executive officers, and the 19941995 fiscal year-end value of unexercised options and SARs.
(a) (b) (c) (d) (e) Number of Unexercised Value of Unexercised Options/SARs in-the-Money Options/SARs at Year End (#) at Fiscal Year-End ($) -------------------------------- ------------------------------------------------------ ------------------------- Shares Acquired on Value Name Exercise (#) (1) Realized ($) Exercisable Unexercisable Exercisable Unexercisable - -------------------------- ------------------- --------------- --------------- --------------- --------------------------------- -------------------- ---------------- ------------ ----------- ------------- ----------- ------------- George T. Haymaker, Jr. -- -- 20,000 106,700 72,500(2) 290,000(2)40,000 500,000(2) 6,675 80,025 2,503(3) 360,009(3) Joseph A. Bonn -- -- -0- 8,500 -- -0-(2)2,125 6,375 795(3) 2,390(3) John T. La Duc -- --2,300 6,900 863(3) 2,588(3) 6,000 4,000 6,000 11,500(3) 17,250(3) -0- 9,200 -- -0-(2) Anthony R. Pierno 6,000 82,500(4) 22,000 5,000 5,750(3) -0-(3) Byron43,500(4) 29,000(4) John E. Daniel 8,720 78,480(2) 1,825 18,555 685(3) 78,900(3) Lawrence L. Wade -- -- 25,000 9,000 353,875(3) 25,875(3) Watts 8,440 75,430(2) 1,775 17,985 665(3) 76,375(3)
- - -------------------- (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 $10.875, the closing price of the Company's Common Stock on December 30, 1994, less exercise price. (3) Valued at $30.875, the closing price of MAXXAM's common stock on December 30, 1994, less exercise price. (4) Valued at the closing price of MAXXAM's common stock on the date of exercise, less exercise price. The(3) Valued at $13.125, the closing price of the Company's Common Stock on December 29, 1995, less exercise price. (4) Valued at $35.25, the closing price of MAXXAM's common stock on December 29, 1995, less exercise price. Except as set forth below, the SARs relating to MAXXAM common stock set forth in the above table for Messrs.Mr. La Duc Pierno and Wade were granted under MAXXAM's 1984 Phantom Share Plan.Plan (the "MAXXAM Phantom Plan"). Certain of such SARs under the MAXXAM Phantom Plan are exercisable for cash only and certain are exercisable for cash, MAXXAM common stock or a combination thereof at the discretion of MAXXAM's Board of Directors. All such SARs under the MAXXAM Phantom Plan vest with respect to 20% on the first anniversary date of the grant and an additional 20% on each anniversary date thereafter until fully vested. -11- DEFINED BENEFIT PLANS 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 Internal Revenue Code of 1986, as amended (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). Years of Service Annual ----------------------------------------------------------- Remuneration 15 20 25 30 35 ------------- ----------- ----------- ----------- ----------- ----------- $ 125,000 $ 28,125 $ 37,500 $ 46,875 $ 56,250 $ 65,625 150,000 33,750 45,000 56,250 67,500 78,750 175,000 39,375 52,500 65,625 78,750 91,875 200,000 45,000 60,000 75,000 90,000 105,000 225,000 50,625 67,500 84,375 101,250 118,125 250,000 56,250 75,000 93,750 112,500 131,250 300,000 67,500 90,000 112,500 135,000 157,500 400,000 90,000 120,000 150,000 180,000 210,000 450,000 101,250 135,000 168,750 202,500 236,250 500,000 112,500 150,000 187,500 225,000 262,500
Annual Years of Service ----------------------------------------------- Remuneration 15 20 25 30 35 --------- ------- ------- ------- ------- ------ $150,000 33,750 45,000 56,250 67,500 78,750 200,000 45,000 60,000 75,000 90,000 105,000 250,000 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
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, La Duc, Bonn, Daniel and BonnWatts had 1.7, 25.32.7, 26.3, 28.5, 38.5 and 27.520 years of credited service, respectively, on December 31, 1994.1995. 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. ThePension compensation covered by the Kaiser Retirement Plan includes baseand the Kaiser Supplemental Benefits Plan consists of salary and bonus payments. No named executive officer of the Company had compensation covered by the Kaiser Retirement Plan in 1994 which differed by more than 10% from thatamounts 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 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. -12- MAXXAM Pension Plan All executive officers who are also employees and other regular employees of MAXXAM who work at least 1,000 hours in the plan year automatically participate in the MAXXAM Pension Plan (the "Pension Plan"), a qualified, noncontributory plan. Benefits equal the sum of an employee's "past service benefit" and "future service benefit" as set forth in the following two paragraphs. Benefits are based on an employee's base salary or wages, plus overtime (excluding bonuses, commissions, incentive compensation and all other extra compensation), the age of such employee at retirement and years of service. Under the Pension Plan, the annual past service benefit is the greatest of: (i) benefits accrued under the plan through December 31, 1986, (ii) the product of (a) the sum of 0.8% of the participant's Past Service Compensation Base (as defined), plus 0.8% of the participant's Past Service Compensation Base in excess of $15,000 multiplied by (b) the participant's credited years of service prior to January 1, 1987, or (iii) the product of 1.2% of the participant's Past Service Compensation Base multiplied by his credited years of service prior to January 1, 1987. For 1987 and 1988, the annual future service benefit equaled 1.6% of an employee's compensation up to two-thirds of the Social Security wage base, plus 2.4% of any remaining compensation. Effective January 1, 1989, the annual future service benefit equaled 1.75% of an employee's compensation for each year of participation, plus 0.6% of the employee's compensation in excess of $10,000. Effective January 1, 1995, the annual future service benefit equals 2.35% of an employee's compensation for each year of participation. The amount of an employee's aggregate compensation that may be included in benefit computations under the Pension Plan is limited to $150,000 for 1994. Benefits are generally payable as a lifetime annuity or, with respect to married employees, as a 50% joint and survivor annuity, or, if the employee elects (with spousal consent), in certain alternative annuity forms. Benefits under the Pension Plan are not subject to any deductions for Social Security or other offsets. The covered compensation for 1994 and credited years of service as of December 31, 1994 for the Pension Plan and estimated annual benefits payable upon retirement at normal retirement age for the named executive officers (other than those compensated by KACC who do not participate in the Pension Plan) were as follows: Mr. Pierno: $150,000--5 years--$36,020; and Mr. Wade: $150,000- - -14 years--$93,081. The projected benefits shown above were computed as lifetime annuity amounts, payable beginning at age 65. The benefit amounts reflect a covered compensation limit of $150,000 for 1995 and subsequent years under Section 401(a)(17) of the Code. In addition, the amounts reflect a maximum benefit limit of $120,000 for 1995 and subsequent years (with early retirement reductions where applicable) that is placed upon annual benefits that may be paid to a participant in the Pension Plan at retirement under Section 415 of the Code. Combined plan limits applicable to employees participating in both defined contribution and defined benefit plans have not been reflected. 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. MAXXAM Supplemental Executive Retirement Plan Effective March 8, 1991, MAXXAM adopted an unfunded non-qualified Supplemental Executive Retirement Plan (the "SERP"). The SERP provides that participants are entitled to receive benefits which would have been payable to such participants under the Pension Plan except for the limitations imposed by the Code. Participants in such plan are selected by MAXXAM's Board of Directors or are entitled to participate by virtue of provisions in their employment agreements. Two executive officers of the Company, Messrs. Pierno and Wade, were entitled to participate in the SERP during 1994. The following projections for Messrs. Pierno and Wade are based on the same assumptions as utilized in connection with the Pension Plan projections above. The 1994 qualified plan pay limit ($150,000) and benefit limit ($120,000) are reflected for all years in the future. In addition, no future increases in the participants' covered compensation amounts from the 1994 levels are assumed. Pierno Wade ---------- ---------- COVERED COMPENSATION FOR 1994: Qualified Plan $ 150,000 $ 150,000 Nonqualified Plan 181,511 21,140 ---------- ---------- Total $ 318,747 $ 171,140 ========== ========== CREDITED YEARS OF SERVICE AS OF 5 14 DECEMBER 31, 1994 ========== ========== PROJECTED NORMAL RETIREMENT BENEFIT: Qualified Plan $ 36,020 $ 93,081 Nonqualified Plan 19,503 8,942 ---------- ---------- Total $ 55,523 $ 102,023 ========== ========== 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. La Duc, Bonn, Daniel and BonnWatts under the policy if they had been involuntarily terminated on December 31, 19941995 would have been $120,000$145,833, $132,008, $133,333 and $126,175,$112,500, respectively. MAXXAM Severance orEmployment Contracts and Termination Policy Severance or termination pay is generally granted to regular full-time employees who are involuntarily terminated, subject to a number of exclusions, pursuant to an unfunded policy. After such termination, the policy provides for payment in an amount ranging from two weeks salary for at least one year of service graduating to a maximum of 104 weeks salary. The amounts payable to Mr. Wade under the policy if he had been involuntarily terminated on December 31, 1994 would have been $315,950. EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTSEmployment and Change-in-Control Arrangements On April 1, 1993, the Company and KACC entered into a five-year employment agreement with Mr. George T. Haymaker, Jr., pursuant to which Mr. Haymaker currently serves as Chairman and Chief Executive Officer of the Company and KACC. Mr. Haymaker's agreement providesprovided for a base salary of $450,000 per annum and a bonus target of 50% of his salary which began fiscal year 1994. Mr. Haymaker's base salary is subject to review and possible change on an annual basis but cannot be reduced below $450,000 without his consent. AnyIn 1995, Mr. Haymaker's agreement was amended to increase his base salary to $465,000 and increase his bonus actually awarded could be less or greater thantargets in a manner consistent with the target level, depending upon corporate performance as compared to corporate plan objectives, as well as individual performance.executive incentive program described below in the Compensation Committee Report on Executive Compensation. Pursuant to Mr. Haymaker's agreement, he received an initial award under the 1993 Omnibus Stock Incentive Plan (the "1993 Omnibus Plan") upon its approval by stockholders of options to purchase up to 100,000 shares of Common Stock at its fair market value on the date of the award. Such options vest 20% per year for a period of five (5) years and are reflected in the Summary Compensation Table for 1993. 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 "Defined Benefit Plans--KaiserPlans Kaiser Termination Payment Policy" above. Additionally, in the event of such termination, Mr. Haymaker's options for 100,000 shares of Common Stock shall fully vest. 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. Pierno's five-year employment agreement with MAXXAM expired on March 8, 1995. Pursuant to the terms of the agreement, Mr. Pierno was entitled during 1994 to a base salary of $331,511. The agreement provided for a bonus for the year 1992 in an amount not less than 75% and not more than 125% of Mr. Pierno's then base salary. Although the agreement specified no bonus percentage for the years 1993 and 1994, a bonus as reflected in the Summary Compensation Table was paid during 1993 and 1994. Mr. Bonn's three-year employment agreement with KACC and MAXXAM expired June 30, 1994. The agreement provided for an initial base salary of $210,000, which increased at the discretion of KACC and MAXXAM. Subject to limitations pursuant to the LTIP, an annual bonus was paid under the terms of the KACC bonus plan. Mr. Wade's five-year employment agreement with MAXXAM expired on March 8, 1995. Pursuant to the terms of the agreement, Mr. Wade was entitled during 1994 to a base salary of $171,140. The agreement provided for a bonus for the year 1992 in an amount not less than 50% and not more than 100% of Mr. Wade's then base salary. Although the agreement specified no bonus percentage for the years 1993 and 1994, a bonus as reflected in the Summary Compensation Table was paid during 1993 and 1994.-13- COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION During 1994,1995, the members who served on the Company's Compensation Committee also served on the Compensation Committee (both Committees hereinafter referred to as the "Committee") of the Company's principal subsidiary, Kaiser Aluminum & Chemical Corporation ("KACC").KACC. 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. References to the "Company" made in the remainder of this report of the Committee are deemed to include KACC as well as the Company. EXECUTIVE OFFICER COMPENSATION Policies and ObjectivesExecutive Compensation Compensation Philosophy - The Company's philosophy is that compensation philosophy consists of threeits executives, managers and key priorities: Cash flowemployees should be related as closely as possible to the ability of the Company as a whole, and profit enhancement - Compensation programs are designedthe area of direct responsibility of each executive, manager and key employee, to support the primary corporate objective of long-termcreate economic value. Only when earnings and cash flow exceed the amount necessary to provide a positive rate of return on the debt and profit generation. Both annualequity capital invested in the Company and longer term variable compensation programs are utilizednew or added economic value is created can Company shareholders and designed to emphasize performance measures that contribute to long-term cash flow and corporate profits generation. Business unit orientation - Sensitivity to various of the Company's decentralized business units requires a development of operational objectives at major business component units.management share in increased economic rewards. Incentive emphasis - Strong emphasisThe incentive to management to create added economic value should be to share in that added value through additional compensation. To attract and retain talented individuals, the Company provides the opportunity to earn total compensation that is placed on incentives, sonot only competitive with, but potentially superior to, that available from employers with whom the Company and its businesses compete. When sufficient economic value is created to at least cover the cost of debt capital, the incentive component of executive compensation can,is added to base salary and the total compensation should be equivalent to the degree possible, rewardopportunity offered by competing employers. If economic value is created in excess of the cost of debt and equity capital, then the incentive component increases at a faster rate once the cost of capital is covered, providing participants an individual's effortseven stronger incentive to achieve the short-create added economic value. Total Compensation System Compensation components - Total compensation for Company executives is made up of a combination of base salary, short and long-term objectives of the unit or function for which he or she has responsibilities. The Company's general compensation objectives for executives are: (i)incentive targets, employee benefits and executive perquisites. Base salary is designed to pay base salaries infall approximately within the 45th to 50th percentile of its competitivethe market (ii)described below, while the incentive component, when added to utilize bonus awards as incentives (iii)base salary, allows executives and other participants in the Company's incentive programs to allow extraearn less, the same or more than the total compensation opportunity offered by competing employers. The Company's compensation for above average performance and effort, (iv) to provide long-term incentives which will result in opportunities for executives and key managers to realize personal rewards from good long-term performance, (v) to payalso includes other benefits and perquisites which generally infall within the 50th percentile of its comparative market,market. Incentive Compensation - In 1995, the Company adopted the Kaiser 1995 Executive Incentive Compensation Program (the "Executive Program") and (vi) to provide executive perquisites which are at or slightly below its competitive market level. Methodologythe Kaiser 1995 Employee Incentive Compensation Program (the "Employee Program"). The Executive and Employee Programs (collectively, the "Incentive Programs") reflect the Company's compensation philosophy by (i) providing annual incentives based on yearly performance, and long-term incentives based on three-year performance; (ii) structuring a major portion of its executive officers is administered in an overall program which includeseach participant's total compensation to be at-risk and performance-based; (iii) providing incentive toward the managersachievement of excellent safety practices; and other key employees of its six operating divisions. Generally, this includes approximately 75-85(iv) promoting individual employees. Underand group contributions that add value -14- to the directionCompany. The Incentive Programs also reward aggressive and accurate planning. This component of the Committee,system is rooted in the belief that economic value results that are planned and controlled by management prepares recommendationsshould be rewarded more positively than those that occur because of unplanned and uncontrolled activity. While there will always be uncertainty that affects economic results, the Board of Directors believes that management should do its best to anticipate these uncertainties, control their impact on the Company and be rewarded for success in doing so. Methodology of Incentive Programs - Target incentives under the Committee generallyIncentive Programs are set at the beginning of each annual or long-term performance period. The target incentives are established based on the following methodology: Comparator Companies - Using a combination of market survey data, base,internal force-ranking and assessment of position responsibilities. Major national surveys, as well as market data from a select group of approximately 20 companies engaged in metals, mining, chemicals and similar industries, with whom the Company is likely to compete for managerial talent, are used as a primary comparator group. The group indexes a mix of major customers, suppliers, competitorsto establish the market. These companies typically range in size from $1 billion to about $13 billion in assets and regionally equivalent comparable companies.average $4 billion in annual revenues. Two of the three companies that make up the S&P 500 Aluminum Industry Index used in the performance graph included in this proxy statement are included in this group. These companies usually range in size from $1 billion to about $13 billion in assets. They typically average $4 billion in annual revenues. The data are size-adjusted to allow comparisons toIn performing its assessment of position responsibilities the Company based on revenues. Position Matching - The Company develops a description of various key positions and their major responsibilities. These includeresponsibilities, including the scope of the job as indicated by unit sales levels, number of employees, production levels, reporting level and other relevant factors. These positionsPositions are then matched to data base descriptions to insureensure an accurate match to reasonably comparable positions at comparative companies. Base Salaries During mid-1994,The annual and long-term components of the target incentives are based on return on assets employed in the business, plus achievement of goals or financial accomplishments not reflected in the return on assets of the Company or its business units. Before March 31 of each year, the Compensation Committee approves performance goals for the Company and for each business unit for each one-year and three-year period. The performance goals are set so that at the end of each performance period the target incentives can be valued at zero to three times their value, depending on the return on assets in comparison to the cost of capital, for purposes of determining actual awards to be paid to each participant. The annual incentive component of each of the Incentive Programs was effective beginning January 1, 1995, and the first long-term performance period is retroactively effective beginning January 1, 1994, and continues through December 31, 1996. Each year a new three-year performance period is established. Annual incentive payments are made in cash after the announcement of the financial results of the Company for the prior fiscal year for which the performance goals were set. Payments for the long-term incentive component of the Incentive Programs will be made 43% in cash and 57% in shares of Common Stock and are expected to be paid in two installments, one-half during the year following the end of the three-year period and one-half during the second year following the end of the three-year period. In each case, however, such payments are conditioned on the continued employment of the participant. As a result, if a participant voluntarily terminates his or her employment for any reason other than death, disability or retirement, any unmade payments are forfeited. Any stock-related awards granted pursuant to the Incentive Programs are intended to be issued under the 1993 Omnibus Plan. Executive Program - The participants in the Executive Program are currently limited to the Chief Executive Officer recommended("CEO"), the Chief Financial Officer ("CFO") and the Committee approved increaseChief Administrative Officer ("CAO"). The Executive Program is currently administered by the Compensation Committee. When incentive awards are determined at the end of each performance period, an additional amount equal to 30% of incentive targets based on achievement of goals or other accomplishments not reflected in the base salariesreturn on assets, is added to the incentive payment amount. While the Compensation Committee cannot increase the incentive payment, it may decrease the incentive payment by an amount in the range of two1% to 60% of the target incentive. -15- Employee Program - Participants in the Employee Program include the Company's executive officers (other than the CEO, CFO and CAO), managers and other key employees of the Company. As of March 29, 1996, the number of participants, including 10 executive officers not named in the Summary Compensation. The increases broughtCompensation Table, was approximately 140. Twenty percent of the target incentive for both the annual and long-term component for all participants for each business unit or participant group is deducted from the tentative award, pooled and then allocated to participants in such officers into approximatelygroup by the 45th percentile base compensation level,business unit or participant group manager based on the comparative analysis doneindividual accomplishments and contributions of each individual, subject to the limitation that no participant may receive more than 40% of the participant's target incentive. To increase the focus and sense of urgency regarding excellent safety performance and group accomplishments, a participant's award may be increased or decreased by an outside consulting group.1% to 10% of the participant's target incentive based on safety or group achievements during the performance period. The Employee Program is administered by the Company's corporate human resources department. Base Salaries During mid-1995, the CEO recommended and the Committee approved increases in the base salaries and incentive compensation targets of certain executive officers. These increases were recommended mid-year in order to establish appropriate levels of individual total compensation and align the compensation of those executives in connection with the implementation of the Incentive Programs. The Committee also recognized that such salarya number of increases were extraordinaryrecommended in light of the Company's recent performance but also recognized that such increases were recommended becausenew or increasing responsibilities assumed by a number of executives and to maintain compensation at competitive levels. In addition, in recognition of the broadening of one executive's leadership role and the shifting of certain responsibilities for a business unit to the other. The increases were granted on the condition that such executives would not receive any additional base salary increase for twelve to eighteen months. For fiscal year 1994, due to the downturn in the aluminum business cycle experienced in the early 1990s, employeesimproved performance of the Company were asked to support cost reduction efforts by picking up additional workload due to a corporate force reduction and by not receiving any annual pay increase, except for the two executive officers discussed in the preceding paragraph. In recognition of the upturn in the aluminum business cycle which began in the latter half of 1994,1995, the Committee deemed it appropriate to reward suchthe Company's employees, including executive officers, except for the two discussed in the above paragraph, who assisted the Company in reducing costs.realizing such improvement. Accordingly, the Committee determined that, in general, 19951996 base salaries for executive officers, other than the Chief Executive Officer and the two executives discussed above,Mr. Haymaker, should be raised approximatelyincreased a general average of 4% contingent upon and commencing the first day of the first month of any consecutive three-month period. As discussed below, Mr. Haymaker's employment agreement was separately amended to increase his base salary in 1995 during whichin recognition of his demonstrated leadership ability as reflected in the Company attains and maintains profitability. Annual Bonus Incentives The Company maintains a bonus plan for officers, including executive officers, and managers which was first approved by stockholders in 1967. It was last materially amended in 1989. Early in each year, a target bonus award, based on the Company's target financial and operating plan for the year, is established. In establishing the target, target bonus levels at comparator companies are reviewed, and the target (as a percent of base compensation) is established at approximately the median of the target bonus levels of comparator companies. Performance above expected levels can result in above average bonus payments. Performance is viewed not only in terms of earnings, but also within the context of industry trends, possible longer term impacts of objectives achieved, progress toward multi-year, general corporate objectives, leadership, andimproved performance of both regularly assigned duties and extraordinary contributions. The Committee, pursuant to the bonus plan, identifies officers and management personnel of the Company who, by their services, ability, diligence and ingenuity make direct and important contributions to the Company's profits, performance, growth and continued success and authorizes bonus awards payable in cash to such persons. In determining recommendations to the Committee for bonus payments to be paid, the Company's management considers certain performance weighing factors. For example, bonus recommendations for executive officers are based 50% on corporate objectives and performance and 50% on individual performance. Elements of corporate performance considered include a comparison of production and financial results for a certain period with both the planned production and financial results for the period and the production and financial results of competitors within the aluminum industry for the period. Elements of individual performance considered include a comparison of an individual's planned objectives in areas such as safety, quality, on-time performance, budget, development and implementation of strategic plans, and other projects. Consideration of such factors, and giving the relative weight to such factors described above, forms the basis for the determination of whether bonuses will be paid for a period and of the amount of any such bonuses. Even though the Company incurred losses in 1994, the results were better than had been planned due in part to strengthening aluminum prices and also to the effort put forth by the executive officers and key employees of the Company. Because of such effort,1993 Omnibus Plan No grants were made under the elimination of bonus compensation for 1993 and based on the upturnOmnibus Plan in the aluminum business cycle in 1994, it was determined that the Company would pay bonuses in the aggregate of $300,000 for executive officers (excluding the CEO) for their services during 1994, which represents 4% of their total compensation target. Additionally, two executive officers who are principally compensated by the Company were awarded bonuses by MAXXAM, the Company's parent corporation, for their services to MAXXAM. Mr. La Duc and one executive officer not named in the Summary Compensation Table, were awarded cash bonuses in the amount of $75,000 and $15,000, respectively, such bonuses to be paid in three equal installments over the next three years provided such officers continue in active employment with the Company and MAXXAM. These bonuses will be paid by the Company but reimbursed to the Company by MAXXAM. Additional Incentive Awards1995. The 1993 Omnibus Plan is utilized 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. Grants were madeIn addition, the 1993 Omnibus Plan is intended to be used to issue Common Stock in connection with awards under the Omnibus Plan in December 1994 to the executive officers compensated principally by the Company in order to provide long-term retention and performance incentives to the recipientsincentive component of the grants. The size of the grants was determined based upon recommendations presented by management to the Committee. The Committee reviewed such recommendations mindful of the awards previously granted under the Omnibus Plan which are vesting and the limited number of shares of Common Stock remaining for grants under the Omnibus Plan. The Committee determined to grant awards but reduced the size of the option award recommendations presented by management by approximately 75%.Incentive Programs. 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 Committee and reviewed and approved by the Board of Directors or the Committee. In making its compensation decisions, and in supervising the negotiations and approving such employment agreements, the Committee is mindful of the Company's overall corporate objectives and its 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 1994, Messrs.1995, Mr. Haymaker Pierno, Wade and, for half of the year, Bonn werewas employed under an employment agreementsagreement as discussed under the heading "Employment Contracts, Termination of Employment and Change-in-Control Arrangements." -16- Compensation of the Chief Executive OfficerCEO and Other Executives for the Last Completed Fiscal Year George T.Mr. Haymaker Jr. served as the Chairman of the Board and Chief Executive Officer ("CEO")CEO of the Company for all of 1994.1995. Mr. Haymaker is employed pursuant to a written employment agreement which is described belowabove under "Employment Contracts, Termination of Employment and Change-in-Control Arrangements." His five-year employment agreement providesprovided for a base salary of $450,000 per annum and for such salary to be reviewed and possibly changed on an annual basis, provided however, that such base compensation cannot be reduced to less than $450,000 without Mr. Haymaker's consent. Mr. Haymaker's initial base salary was established at the time of his employment agreement with the Company pursuant to the base salary program and bonus plan for executives and managers for the Company generally and, in part, on a level of compensation in recognition of his previous compensation history, his leadership qualities and industry experience and expertise. In December 1994,recognition of Mr. Haymaker's demonstrated leadership since joining the Company, the Committee awarded Mr. Haymaker a bonus of $100,000 and a stock option under the Omnibus Plan for 26,700 shares of Common Stock of the Company.approved an amendment to Mr. Haymaker's employment agreement also setsin 1995 to increase his base salary to $465,000. In addition, the criteria and target ranges for bonus awardsCommittee approved additional changes to Mr. Haymaker. Such criteria is discussedHaymaker's employment agreement which increased the target incentives available to Mr. Haymaker in a manner consistent with the goals and objectives of the Company's total compensation system as described above. In recognition of the Company's return to profitability, overall performance relative to the 1995 performance goals and Mr. Haymaker's leadership of the Company in connection with the earlier referenced descriptionCompany's new business ventures, worldwide expansion and the commercialization of his employment agreement. Such bonus awards for 1994 represent,new technology, the annual payment earned by Mr. Haymaker in 1995 under the Executive Program was $225,000 or approximately 95% of the targeted amount. In recognition of many of the same factors, as well as individual accomplishments by certain executives, the annual payments earned in 1995 under the Incentive Programs by the remaining executive officers eligible to participate in those programs during 1995, including 10 executive officers not identified in the Summary Compensation Table were approximately 110% of the aggregate approximately 63% of his base salary. COMPENSATION BYtargeted amount. Compensation by MAXXAM Certain of the Company's executive officers were compensated during 19941995 principally by MAXXAM, the Company's parent corporation, which establishes salaries and other elements of compensation for such executive officers. Where an executive officer of both the Company and MAXXAM is compensated by the Company, (such as Mr. La Duc), or where an executive officer of both the Company and MAXXAM is compensated by MAXXAM, (such as Messrs. Pierno and Wade), the respective corporations make intercompany allocations of the costs of employment of the executive officer based on allocation of that executive officer's time as expended among the Company or MAXXAM and respective subsidiaries. Such allocations are described under "Certain Transactions" below. COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)Compliance with Internal Revenue Code Section 162(m) Section 162(m) of the Code, enacted in 1993, generally disallows a tax deduction to public companies for compensation over $1 million paid to the Chief Executive OfficerCEO and four other most highly compensated executive officers of such corporations. Qualifying performance-based compensation will not be subject to the deduction limit if certain requirements are met. On March 23, 1995, the Committee recommended to the Board of Directors that theThe Executive Program be adopted and submitted to the Stockholders1993 Omnibus Plan, each of which has been approved by the stockholders of the Company for approval at the 1995 Annual Meeting of Stockholders. The Executive Program isare performance based and designed to enable compliance with Section 162(m) of the Code and the proposed regulations thereunder. The three executive officers who will be eligible to participate in the Executive Program are the only executive officers of the Company to which the deduction limitation is likely to apply.apply and the Compensation Committee believes that awards thereunder should be tax deductible under Section 162(m). -17- Although for purposes of Section 162(m) of the Code, the Committee was composed of qualifying directors during 1995, under the final treasury regulations that govern this section, effective as of the date of the Annual Meeting, Mr. Levin will no longer qualify. Therefore, the Company intends to replace the Committee with two separate committees, the Section 162(m) Committee, which will administer the Section 162(m) plans and the Compensation Policy Committee, which will administer and establish overall compensation policies except those related to Section 162(m) plans. Each such committee will report directly to the full Board of Directors. Mr. Levin is expected to serve on the Compensation Policy Committee but will not serve on the Section 162(m) Committee. Compensation Committee of the Board of Directors Robert J. Cruikshank Ezra G. Levin, Chairman Robert Marcus COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONCompensation Committee Interlocks and Insider Participation No member of the Compensation Committee of the Board of Directors of the Company was, during the 19941995 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 Compensation Committee and Board of Directors during 1994.1995. Mr. Levin is also a partner in the law firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, which provided legal services for the Company and its subsidiaries during 1994. 1995. During the Company's 19941995 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 Compensation Committee, of the Board of Directors, (ii) a director of another entity, one of whose executive officers served on the Compensation Committee, of the Company, 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. -18- PERFORMANCE GRAPH The following performance graph compares, on a quarterly basis since July 11, 1991, 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 July 31, 1991 and that all dividends were reinvested. The data points are calculated as of the last trading day for the month indicated. The measurement period for the following graph is less than 5 years because the Company only became publicly traded on July 11, 1991, the date of the commencement of the Company's initial public offering.
Company/Index Name Jul. Sep. Dec. Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. 1991 1991 1991 1992 1992 1992 1992 1993 1993 1993 1993 Kaiser Aluminum 100 93.71 80.85 105.01 83.40 60.76 66.92 58.19 61.10 55.28 69.84 Corporation S&P 500 Index 100 100.82 109.27 106.50 108.53 111.95 117.58 122.72 123.32 126.50 129.43 Aluminum 100 92.57 93.32 97.17 105.18 90.65 95.54 92.17 96.36 90.85 97.83
Company/Index Name Mar. Jun. Sep. Dec. Mar. Jun. Sep. Dec. 1994 1994 1994 1994 1995 1995 1995 1995 Kaiser Aluminum 70.81 74.68 81.47 84.38 82.44 107.66 113.48 101.84 Corporation S&P 500 Index 124.52 125.05 131.16 131.14 143.91 157.65 170.17 180.42 Aluminum 101.96 105.57 123.31 119.96 120.14 139.23 149.75 147.82
-19- CERTAIN TRANSACTIONS For certain periods through June 30, 1993, the Company and its subsidiaries (including KACC) were members of an affiliated group of corporations (an "Affiliated Group") within the meaning of Section 1504 of the Code, of which MAXXAM is the common parent corporation (the "MAXXAM Tax Group"). Effective July 1, 1993, the Company and its subsidiaries are no longer members of the MAXXAM Tax Group (the "Deconsolidation") but are members of a new Affiliated Group of which the Company is the common parent corporation (the "New Kaiser Tax Group"). The taxable income and loss and tax credits for the Company and its subsidiaries for the period January 1, 1993 through June 30, 1993, was included in the 1993 MAXXAM Tax Group consolidated Federal income tax return (the "MAXXAM 1993 Tax Return"). For periods beginning on or after July 1, 1993 (the "Post Deconsolidation Periods"), the taxable income and loss and tax credits for the Company and its subsidiaries was and will be included in the consolidated Federal income tax returnsreturn filed by MAXXAM. Payments to be filed for the New Kaiser Tax Group. As a consequence of the Deconsolidation, the KACC Tax Allocation Agreement (as defined below) and the Kaiser Tax Allocation agreement (as defined below) (collectively, the "Tax Allocation Agreements") terminated pursuant to their terms, effective with respect to Post Deconsolidation Periods. The provisions of the Tax Allocation Agreements will continue to govern taxable periods ending before the date of the Deconsolidation (the "Pre Deconsolidation Periods"). Therefore, paymentsMAXXAM or refunds from MAXXAM may still be required by or payable to the Company or KACC under the Tax Allocation Agreements for Pre Deconsolidation Periodstax allocation agreements that governed those periods due to the final resolution of audits, amended returns and related matters with respect to such Pre Deconsolidation Periods. However, theperiods. The Company's and KACC's credit agreement dated as of February 15, 1994, as amended (the "Credit Agreement"), prohibits any cash payments by KACC to MAXXAM pursuant to the KACC Tax Allocation Agreementrelevant tax allocation agreement after February 15, 1994,1994; however, MAXXAM may offset amounts owing to it under the KACC Tax Allocation Agreement against amounts owed by it under the KACC Tax Allocation Agreement,relevant tax allocation agreement, and KACC may make certain cash payments to MAXXAM that are required as a result of audits of MAXXAM's tax returns and only to the extent of any amounts paid after February 15, 1994 by MAXXAM to KACC under the KACC Tax Allocation Agreement. To the extent the New Kaiser Tax Group generates unusedrelevant tax losses or tax credits in Post Deconsolidation Periods, such amounts will not be available to obtain refunds of amounts paid byallocation agreement. While the Company orand KACC to MAXXAM for Pre Deconsolidation Periods pursuant to the Tax Allocation Agreements. It is anticipated that such losses and credits will be carried forward to offset future Federal income taxes payable by the New Kaiser Tax Group. Unused tax attribute carryforwards existing as of the date of the Deconsolidation under the terms of the Tax Allocation Agreements were eliminated and are not available to offset Federal income tax liabilities of the New Kaiser Tax Group for Post Deconsolidation Periods. Upon the filing of the MAXXAM 1993 Tax Return, the tax attribute carryforwards of the MAXXAM Tax Group as of December 31, 1993 were apportioned in part to the New Kaiser Tax Group, based upon the provisions of the relevant consolidated return regulations. The benefit of such tax attribute carryforwards apportioned to the New Kaiser Tax Group approximate the benefit of tax attribute carryforwards eliminated under the Tax Allocation Agreements. The amounts of tax attribute carryforwards apportioned to the New Kaiser Tax Group are available, subject to certain limitations, to reduce Federal income taxes payable by the New Kaiser Tax Group for Post Deconsolidation Periods. In 1989, KACC and MAXXAM entered into a tax allocation agreement (the "KACC Tax Allocation Agreement"). Pursuant to the terms of the KACC Tax Allocation Agreement, MAXXAM pays any consolidated Federal income tax liability for the MAXXAM Tax Group. KACC is liable to MAXXAM for the Federal income tax liability of KACC and its subsidiaries (collectively, the "KACC Subgroup") computed as if the KACC Subgroup were a separate Affiliated Group which was never affiliated with the MAXXAM Tax Group (taking into account all limitations under the Code and regulations applicable to the KACC Subgroup), except that the KACC Subgroup excludes interest income received or accrued on an intercompany note issued by the Company in connection with a financing consummated in December 1989 (the "KACC Subgroup's Separate Income Tax Liability"). To the extent such calculation results in a net operating loss or a net capital loss or credit which the KACC Subgroup could have carried back to a prior taxable period under the principles of Sections 172 and 1502 of the Code, MAXXAM pays to KACC an amount equal to the tax refund to which KACC would have been entitled (but not in excess of the aggregate amount previously paid by KACC to MAXXAM for the current year and the three prior taxable years). If such separately calculated net operating loss or net capital loss or credit of the KACC Subgroup cannot be carried back to a prior taxable year of the KACC Subgroup for which the KACC Subgroup paid its separate tax liability to MAXXAM, the net operating loss or net capital loss or credit becomes a loss or credit carryover of the KACC Subgroup to be used in computing the KACC Subgroup's Separate Income Tax Liability for future taxable years. The same principles are applied to any consolidated or combined state or local income tax returns filed by the MAXXAM Tax Group with respect to KACC and its subsidiaries. Although, under Treasury regulations, all members of the MAXXAM Tax Group, including the members of the KACC Subgroup, are severally liable for the MAXXAM Tax Group's Federal income tax liability for all of 1993 and applicable prior periods, under the KACC Tax Allocation Agreement, MAXXAM indemnifies each KACC Subgroup member for all Federal income tax liabilities relating to taxable years during which such KACC Subgroup member was a member of the MAXXAM Tax Group, except for payments required under the KACC Tax Allocation Agreement. In 1991, MAXXAM also entered into a tax allocation agreement with the Company (the "Kaiser Tax Allocation Agreement"). Pursuant to the terms of the Kaiser Tax Allocation Agreement, the Federal income tax liability of the Company and its subsidiaries (collectively, the "Kaiser Subgroup") is computed using the same principles used in the KACC Tax Allocation Agreement to determine the KACC Subgroup's income tax liability. To the extent such tax liability ("Kaiser's Separate Income Tax Liability") for any applicable period exceeds the KACC Subgroup's Separate Income Tax Liability for such period, the Company is obligated to pay the amount of such difference to MAXXAM. To the extent that Kaiser's Separate Income Tax Liability for any applicable period is less than the KACC Subgroup's Separate Income Tax Liability for such period, MAXXAM is obligated to pay the amount of such difference to the Company (but not in excess of the aggregate net amount previously paid by the Company and KACC to MAXXAM for the current year and the three prior years). The foregoing principles also are applied to any consolidated or combined state or local income tax returns filed by the MAXXAM Tax Group with respect to the Company. While the Company is severally liable for the MAXXAM Tax Group'sgroup's Federal income tax liability for all of 1993 and applicable prior periods, pursuant to the Kaiser Tax Allocation Agreement,relevant tax allocation agreements, MAXXAM indemnifies the Company accordingand KACC to the same principles as those applied to KACC Subgroup membersextent the tax liability exceeds amounts payable by them under the KACC Tax Allocation Agreement. Under the existing consolidated return regulations, the Deconsolidation caused certain tax basis adjustments and the recognition of certain types of taxable income (including amounts that were previously deferred), none of which were material. On June 30, 1993, the Company and KACC entered into a tax allocation agreement (the "New Tax Allocation Agreement") effective for Post Deconsolidation periods. The terms of the New Tax Allocation Agreement are identical in all material respects to those of the KACC Tax Allocation Agreement except that KACC is liable to the Company.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, and KACC also pays to MAXXAM amounts in respect of directors' fees for directors of KACC who are not employees of KACC and who are directors of MAXXAM. During 1994,employees. KACC paid a total of approximately $2.5 $2.4 million to MAXXAM pursuant to such arrangements and MAXXAM paid approximately $0.7$2.5 million to KACC pursuant to such arrangements.arrangements in respect of 1995. 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. On December 15, 1992, KACC issued a note (the "PIK Note") to a subsidiary of MAXXAM in the principal amount of $2.5 million, representing the entire amount of a dividend received by such subsidiary in respect of the shares of the Company's Common Stock which it owned. The PIK Note bearswhich accrued interest, compounded semiannually, at a rate equal to 12% per annum, and is due and payable,was paid, together with accrued interest thereon, on June 30, 1995. KACC is not required to make any payment of principal of or interest on the PIK Note prior to June 30, 1995. However, to the extent not prohibited by the Credit Agreement, KACC may be required to prepay the PIK Note upon demand. The Credit Agreement currently prohibits the payment of principal and interest on the PIK Note except at the maturity thereof. In January 1994, MAXXAM entered into a commercial guaranty of payment (the "Guaranty") of a promissory note dated January 28, 1994, in the original principal amount of $150,000 from Mr. Pierno to Charter National Bank--Houston. The Guaranty is subject to an agreement between MAXXAM and Mr. Pierno that any payment by MAXXAM under the Guaranty shall be offset in like amount plus interest at 12% per annum from the date of payment on the Guaranty to the date of payment to MAXXAM by Mr. Pierno. Such offset may be made from any payments due Mr. Pierno from MAXXAM which lawfully may be the subject of such offset, including any payment under any compensation arrangement or employee benefit plan. The Guaranty was entered into by MAXXAM for the convenience of Mr. Pierno and replaces a previous guaranty with substantially the same terms entered into in February 1993 in respect of a promissory note dated January 28, 1993. Pursuant to the terms of Mr. Pierno's employment agreement with MAXXAM, his personal loans outstanding on the date of the agreement were forgiven at the rate of $15,000 per year beginning March 8, 1991 through March 8, 1995. Upon expiration of Mr. Pierno's employment agreement on March 8, 1995, Mr. Pierno's principal balance on such loans was $75,000. As of February 28, 1995, MAXXAM entered into an amendment of Mr. Pierno's promissory note evidencing such loans. The amendment provides that installments of $18,750 be paid by Mr. Pierno on each of December 31, 1995, 1996 and 1997, with any remaining principal balance, together with accrued interest, to be paid in full on December 31, 1998. The amendment also provides that the loans be secured by any amounts to which Mr. Pierno may be entitled pursuant to the MAXXAM's Revised Capital Accumulation Plan. Mr. Pierno's employment agreement also provided for up to an additional $200,000 in loans to Mr. Pierno bearing interest at 6% per annum, with interest being payable monthly and principal being due December 15, 1994 (with prepayments due upon the exercise by Mr. Pierno of any SARs granted pursuant to the agreement or employee benefit plan). All of such amount has been borrowed by Mr. Pierno. Such promissory note was also amended, extending the due date to December 15, 1998 and securing such loan with any amounts to which Mr. Pierno may be entitled pursuant to MAXXAM's Revised Capital Accumulation Plan. In July 1993, MAXXAM advanced Mr. Wade $50,000 which was repaid within approximately ten days with a cash payment of $50,000, and loaned Mr. Wade $50,000 evidenced by an unsecured promissory note, interest on which is payable monthly at an annual rate of 6%. Currently the outstanding principal balance of the note is $20,000. The note is payable upon the earliest to occur of July 20, 1998 or Mr. Wade's termination of employment with MAXXAM. Mr. Levin, a director of the Company, is a partner in the law firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, which provides legal services for the Company and its subsidiaries. On April 17, 1995, Sam Houston Race Park, Ltd. (the "Partnership"), SHRP Acquisition, Inc. and SHRP CapitalOctober 1990, Amarlite filed a voluntary corporate petition under Chapter 11 Title 11, of the United States Code in the United States Bankruptcy Court for the District of Delaware. Since July 1993, Mr. Wade has served as a director, Vice President and Secretary of SHRP, the Partnership's sole general partner, and of SHRP Capital. Also since July 1993, Mr. Hurwitz has served as director and Chairman of the Board of SHRP and director, Chairman of the Board and President of SHRP Capital. In October 1990, Amarlite Architectural Products, Inc. ("Amarlite") filed a voluntary corporate petition under Chapter 11, Title 11, of the United States Code in the United States Bankruptcy Court for the Northern District of Georgia.Code. In December 1991, Amarlite obtained approval of its reorganization plan, which was funded and substantially consummated on January 14, 1992. Mr. Haymaker was Chief Executive Officer and a director of Amarlite during such period. In January 1995, Mr. Pierno repaid a $150,000 bank loan which had been guaranteed by MAXXAM. Pursuant to the terms of Mr. Pierno's employment agreement with MAXXAM (which expired in March 1995), his personal loans from MAXXAM, which aggregated $150,000 at 6% interest, were forgiven at the rate of $15,000 per year. Such loans were, and continue to be, secured by real estate owned by Mr. Pierno. As of February 28, 1995, MAXXAM entered into an amendment of Mr. Pierno's promissory note evidencing such loans which provides that (i) installments of $18,750 be paid on each of December 31, 1995, 1996 and 1997, with any remaining principal balance, together with accrued interest, to be paid in full on December 31, 1998; and (ii) the loans be secured by any amounts to which Mr. Pierno may be entitled pursuant to the MAXXAM's Revised Capital Accumulation Plan. Mr. Pierno's principal balance on such loans is currently $56,250. Pursuant to the terms of Mr. Pierno's employment agreement he borrowed an additional $200,000 bearing interest at 6% per annum, with interest being payable monthly and principal being due December 15, 1998 (with prepayments due upon the exercise by Mr. Pierno of any SARs granted pursuant to the agreement or employee benefit plan). Such promissory note is also secured by any amounts to which Mr. Pierno may be entitled pursuant to MAXXAM's Revised Capital Accumulation Plan. In July 1993, MAXXAM loaned Mr. Wade $50,000, and advanced him an additional $50,000 which was repaid within ten days, in connection with his purchase of an interest in SHRP, Ltd. The loan was evidenced by an unsecured promissory note, interest on which was payable monthly at an annual rate of 6%. In August, 1995, Mr. Wade repaid the principal of this loan, together with accrued interest thereon. Mr. Levin, a director of the Company and KACC, is a partner in the law firm of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, which provides legal services for 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. Since July 1993, Mr. Wade has served as a director, Vice President and Secretary of SHRP, Inc., SHRP, Ltd.'s sole general partner prior to SHRP, Ltd.'s bankruptcy reorganization, and of SHRP Capital Corp., a subsidiary of SHRP, Ltd. Also, Mr. Hurwitz has served as a director and Chairman of the Board of SHRP, Inc., and as a director, Chairman of the Board and President of SHRP Capital Corp. COMPLIANCE WITH SECTION 16(A)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 ten percent beneficial owners. OTHER MATTERS INDEPENDENT PUBLIC ACCOUNTANTSIndependent Public Accountants The Company has appointed Arthur Andersen LLP as its independent public accountants through the conclusion of the audit with respect to the Company's 19941995 fiscal year. Representatives of Arthur Andersen LLP plan to attend the Annual Meeting of Stockholders 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 1996 ANNUAL MEETING OF STOCKHOLDERS-21- Stockholder Proposals for the 1997 Annual Meeting of Stockholders Stockholder proposals intended to be presented at the 19961997 Annual Meeting of Stockholders must be received at the Company's executive offices at 5847 San Felipe, Suite 2600, Houston, Texas 77057 by December 29, 199523, 1996 in order to be included in the Company's proxy statement and form of proxy relating to that meeting. OTHER MATTERSOther Matters The cost of 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 $4,800 (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/ Byron L. Wade BYRON L. WADE Secretary April 26, 199522, 1996 Houston, Texas -22- ================================ TABLE OF CONTENTS - - -------------------------------------------------------------- Table of Contents Notice of Annual Meeting of Stockholders Proxy Statement Election of Directors 2 The Board of Directors and its Committees 2 Proposal to Approve the Kaiser 1995 Executive Incentive Compensation Program 3 Executive Officers and Directors 63 Principal Stockholders 108 Executive Compensation 1210 Compensation Committee Report on Executive Compensation 1914 Performance Graph 2319 Certain Transactions 2420 Compliance with Section 16(a)of the Exchange Act 2721 Other Matters 27 ================================21 - - ------------------------------------------------------------ [KAC Logo] ================================ NOTICE OF 1995 ANNUAL MEETING AND PROXY STATEMENT ================================ IMPORTANT PLEASE SIGN AND DATE YOUR PROXY OR INSTRUCTION CARD AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE. ["Recycle" logo appears here]- - ---------------------------------------------------- Notice of 1996 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. PROXY FOR COMMON STOCK KAISER ALUMINUM CORPORATION Solicited on behalf of the Board of Directors for the Annual Meeting of Stockholders to be held May 17, 199522, 1996 P The undersigned hereby appoints GEORGE T. HAYMAKER, JR., R CHARLES E. HURWITZ and JOHN T. LA DUC as proxies (each with O power to act alone and with power of substitution) to vote, as designated X on the reverse side, all shares of Common Stock or 8.255% PRIDES Y Convertible Preferred Stock the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on May 17, 1995,22, 1996, 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.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. PetrisPetris. FOR ALL WITHHOLD NOMINEES (except as marked / / / / WITHHOLDFROM ALL (except as marked NOMINEES to the FROM ALL contrary) NOMINEES / / ------------------------------------------------------------------- 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. Approval of the Kaiser 1995 Executive Incentive Compensation Program FOR AGAINST ABSTAIN / / / / / / 3. In their discretion, the proxies FOR AGAINST ABSTAIN are authorized to vote upon such other matters as may properly come / / / / / / before the meeting or any adjournments or postponements thereof, hereby revoking any proxy or proxiesinstruction(s) heretofore given by the undersigned. FOR AGAINST ABSTAIN / / / / / / Please sign name(s) exactly as printed hereon. If stock is held in the name of more than one person.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. Dated: 1995 Title: Title: ----------------------- -------------------- Signature: Date: Signature: INSTRUCTION CARD FOR DEPOSITARY SHARES KAISER ALUMINUM CORPORATION Solicited on behalf of the Board of Directors for the Annual Meeting of Stockholders to be held May 17, 1995 The undersigned, a registered holder of $.65 Depositary Shares, each representing one-tenth of a share of the Company's Series A Mandatory Conversion Premium Dividend Preferred Stock ("Series A Shares"), hereby authorizes the Depositary, through its nominee(s), to vote or to execute proxies to vote as designated on the reverse side, all Series A Shares underlying the Depositary Shares the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on May 17, 1995, and at any and all adjournments or postponements thereof. IMPORTANT: IN ORDER FOR THE DEPOSITARY TO VOTE, THIS INSTRUCTION CARD MUST BE SIGNED, DATED AND RETURNED TO THE DEPOSITARY (DIRECTLY OR THROUGH YOUR BROKER) IN THE ENCLOSED ENVELOPE ON OR BEFORE MAY 16, 1995. /SEE REVERSE SIDE/ /X/ Please mark votes as in this example. DEPOSITARY SHARES WILL BE VOTED BY THE DEPOSITARY AS DIRECTED BY THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE DEPOSITARY WILL ABSTAIN FROM VOTING WITH RESPECT TO THE SERIES A SHARES UNDERLYING THE DEPOSITARY SHARES FOR WHICH NO INSTRUCTIONS HAVE BEEN GIVEN. 1. Election of Directors Nominees: Robert J. Cruikshank, George T. Haymaker, Jr., Charles E. Hurwitz, Ezra G. Levin, and Robert J. Petris FOR ALL NOMINEES (except as marked / / / / WITHHOLD to the FROM ALL contrary) NOMINEES / /------------------- To withhold authority to vote for any individual nominee(s) while voting for the remainder, mark box and write the name of the nominee(s) for which authority is withheld in the space above. 2. Approval of the Kaiser 1995 Executive Incentive Compensation Program FOR AGAINST ABSTAIN / / / / / / 3. In its discretion, the Depositary is 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 / / / / / / 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. Dated: 1995 Title: Signature: Signature: PROXY FOR 8.255% PRIDES, CONVERTIBLE PREFERRED STOCK KAISER ALUMINUM CORPORATION Solicited on behalf of the Board of Directors for the Annual Meeting of Stockholders to be held May 25, 1994 The undersigned hereby appoints GEORGE T. HAYMAKER, JR., CHARLES E. HURWITZ and JOHN T. LA DUC as proxies (each with power to act alone and with power of substitution) to vote, as designated on the reverse side, all shares of 8.255% PRIDES, Convertible Preferred Stock (the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on May 25, 1994, 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 NOMINEES (except as marked / / / / WITHHOLD to the FROM ALL contrary) NOMINEES / /----------------------- To withhold authority to vote for any individual nominee(s) while voting for the remainder, mark box and write the name of the nominee(s) for which authority is withheld in the space above. 2. Approval of the Kaiser 1995 Executive Incentive Compensation Program FOR AGAINST ABSTAIN / / / / / / 3. 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 proxy or proxies heretofore given by the undersigned. FOR AGAINST ABSTAIN / / / / / / 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. Date: 1995 Title: Signature: Signature: