Exhibit 10.2

 

2007 BONUS CRITERIA FOR

MAXXAM CO-VICE CHAIRMAN AND GENERAL COUNSEL

UNDER THE MAXXAM 1994 EXECUTIVE BONUS PLAN

 

The Section 162(m) Compensation Committee (the "Committee") of the Board of
Directors of MAXXAM Inc. (the "Company") has on the 30th day of March 2007,
established the following specific targets, criteria and bonus opportunities for
J. Kent Friedman ("JKF"), Vice Chairman of the Board and General Counsel of the
Company, relating to the 2007 fiscal year (set forth in Part I), under Sections
3 and 4 of the MAXXAM 1994 Executive Bonus Plan (the "Plan"). Part II sets forth
bonus opportunities relating to the 2008 fiscal year. It is anticipated that
additional criteria will be established relating to the 2008 fiscal year at a
later date. All terms not defined herein shall have the meanings assigned to
them in the Plan. As used herein, the term "earn" shall be subject to the
Committee's absolute discretion, under Section 4.1 of the Plan, to reduce the
actual bonus payable hereunder as the result of any of the criteria being
achieved. As used herein, the term "base salary" shall mean JKF's base salary
from the Company of $510,000.

 

PART I: BONUS CRITERIA RELATING TO

THE 2006 FISCAL YEAR

 

A.

Improved 2007 Consolidated Financial Results

 

JKF will earn a bonus equal to 1% of base salary for each full $1 million in
improvement (representing a decrease in net loss or an increase in net income)
in 2007 Consolidated Financial Results as compared to the 2006 Consolidated
Financial Results not to exceed an aggregate of 150% of base salary. The 2007
Consolidated Financial Results for this purpose shall be deemed to be the amount
of net income (or loss) shown in the Company's earnings release with respect to
its 2007 results. The 2006 Consolidated Financial Results for this purpose shall
be deemed to be the amount of net income (or loss) shown in the Company's
audited financial statements as of December 31, 2006 (excluding (i) the net
income arising from the reversal in 2006 of the Company's net investment in
Kaiser, and (ii) the results of forest products operations in the event that the
Company is not consolidating the results of forest products operations as of
December 31, 2007) as the same are published in the Company's Annual Report on
Form 10-K for 2006.

 

B.

Business Development Projects

 

JKF will earn a bonus for 2007 services, not to exceed an aggregate of 100% of
base salary, based on the following criteria: 25% of base salary for any of the
business development projects described below. It is believed and intended that
all of the items described below are substantially uncertain on the date hereof.
Completion of each of the items described below shall be deemed to constitute a
separate business development project so that 25% of base salary shall be earned
as a bonus for each such project completed, subject to the overall limitation of
100% of base salary for all criteria under this section.

 

(1)

The undertaking by the Sam Houston Race Park, Ltd. and/or an affiliate thereof
("SHRP") of a new business opportunity wherein a written commitment is made to
invest $5 million or more (in cash or property) in connection with racing and/or
gaming operations. Satisfaction of this Plan criterion shall be deemed to have
occurred upon the approval or ratification of such undertaking by resolution of
the applicable Board and the execution by all parties to such undertaking of a
binding written agreement in respect thereto.

 

 

(2)

The approval by the Texas Legislature of significant gaming legislation. The
term "significant gaming legislation" means initial enabling legislation for any
or all of the following: (a) off-track betting on horse and/or dog racing which
may be conducted in at least 20 locations in Texas, (b) poker, card or other
games of skill or chance at any racing facilities owned by the Company or a
subsidiary thereof, (c) video lottery, slot machines or similar gaming devices
at any racing facilities owned by the Company or a subsidiary thereof, or (d)
casino gaming (full or partial scale) at any racing facilities owned by the
Company or a subsidiary thereof.

 

 

(3)

The receipt, directly, or indirectly through a joint venture or similar
arrangement, by the Company or one of its subsidiaries of a permit, license or
similar approval to conduct gaming as allowed under any significant gaming
legislation approved by the Texas Legislature but which does not apply to any
racing facilities owned by the Company.

 

 

(4)

The receipt, directly, or indirectly through a joint venture or other
arrangement, by the Company or one of its subsidiaries of a license to operate
an additional horse or dog racing track in the State of Texas.

 

C.

Extraordinary Transactions

 

JKF will earn a bonus of 75% of base salary for completion in 2007 of an
Extraordinary Transaction as such is defined in Section 1.8 of the Plan;
provided that any other items specifically listed under Section B. as a Business
Development Project for this fiscal year shall not also be considered an
Extraordinary Transaction under this item. The maximum bonus that can be earned
under this provision is 225% of base salary. An Extraordinary Transaction shall
be deemed to have occurred upon the approval or ratification of such
transaction(s) by resolution of the applicable Board and the execution by all
parties to such transaction(s) of a binding written agreement in respect
thereto.

 

D.

Improved 2007 Earnings per Share

 

JKF will earn a bonus equal to 1% of base salary for each full $0.15 (fifteen
cents) improvement (representing a decrease in net loss per share or an increase
in net income per share) in the Company's 2007 Earnings per Share as compared to
the Company's 2006 Earnings per Share, not to exceed an aggregate of 150% of
base salary. The 2007 Earnings per Share for this purpose shall be deemed to be
the earnings (or loss) per common and common equivalent share of the Company as
shown in the Company's earnings release with respect to its 2007 results. The
2006 Earnings per Share for this purpose shall be deemed to

 

be the earnings (or loss) per common and common equivalent share of the Company
as shown in the Company's audited financial statements as of December 31, 2006
(excluding (i) the net income arising from the reversal in 2006 of the Company's
net investment in Kaiser, and (ii) the results of forest products operations in
the event that the Company is not consolidating the results of forest products
operations as of December 31, 2007) as the same are published in the Company's
Annual Report on Form 10-K for 2006.

 

PART II: BONUS CRITERIA RELATING TO

THE 2008 FISCAL YEAR

 

 

A.

In the event that any of the criteria set forth above under Sections B. and C.
of Part I are satisfied subsequent to December 31, 2007 and prior to
establishment of the 2008 bonus criteria, the corresponding bonus shall be
earned by JKF using the salary in effect during 2008.

 

[signature page follows]

 

IN WITNESS WHEREOF, the undersigned have affixed their signatures hereto as of
the date shown below.

 

Dated:

March 30, 2007

MAXXAM INC. SECTION 162(m)

 

COMPENSATION COMMITTEE

 

 

/s/ Robert J. Cruikshank        

 

Robert J. Cruikshank, Chairman

 

 

/s/ Stanley D. Rosenberg       

 

Stanley D. Rosenberg

 

 

/s/ Michael J. Rosenthal        

 

Michael J. Rosenthal