-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RxPQfYMtZo8/ysB/wMUQohC1LvsdGsCD1SptL/TeYrtDxCFlkN7llx400yL7Ch6b kQIlqCQkLKrv7XBCX/Rd2Q== 0000055458-99-000007.txt : 19990330 0000055458-99-000007.hdr.sgml : 19990330 ACCESSION NUMBER: 0000055458-99-000007 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990511 FILED AS OF DATE: 19990318 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KERR MCGEE CORP CENTRAL INDEX KEY: 0000055458 STANDARD INDUSTRIAL CLASSIFICATION: 1311 IRS NUMBER: 730311467 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-03939 FILM NUMBER: 99567785 BUSINESS ADDRESS: STREET 1: KERR MCGEE CTR STREET 2: 123 ROBERT S KERR CITY: OKLAHOMA CITY STATE: OK ZIP: 73102 BUSINESS PHONE: 4052701313 MAIL ADDRESS: STREET 1: P O BOX 25861 CITY: OKLAHOMA CITY STATE: OK ZIP: 73125 FORMER COMPANY: FORMER CONFORMED NAME: KERR MCGEE OIL INDUSTRIES INC DATE OF NAME CHANGE: 19671227 DEF 14A 1 DEFINITIVE PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential for Use of the Commission Only (as (permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [X] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 Kerr-McGee Corporation (Name of Registrant as Specified in Its Charter) N/A (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)and 0-11. 1) Title of each class of securities to which transaction applies: Common stock 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 O-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): 4) Proposed maximum aggregate value of transaction: 5) Total fee paid: [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: 2) Form, Schedule or Registration Statement No.: 3) Filing Party: 4) Date Filed: [KERR-MCGEE LOGO] KERR-MCGEE CORPORATION KERR-MCGEE CENTER P. O. BOX 25861 OKLAHOMA CITY, OKLAHOMA 73125
NOTICE OF ANNUAL MEETING TIME 9:00 a.m. on Tuesday, May 11, 1999 PLACE Robert S. Kerr Auditorium, Kerr-McGee Center, 123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma ITEMS OF BUSINESS 1. Elect 4 Directors each with a term expiring in 2002 2. Ratify the appointment of Arthur Andersen LLP as the Company's independent public accountant 3. Transact such other business as may properly come before the meeting RECORD DATE March 15, 1999 ANNUAL REPORT The 1998 Annual Report, which is not a part of the proxy solicitation material, has been mailed along with this Notice and accompanying Proxy Statement. PROXY VOTING It is important that your shares be represented and voted at the Annual Meeting. Stockholders of record may appoint proxies and vote their shares in one of three ways: - Signing, dating and mailing the enclosed Proxy Card in the envelope provided; - Calling the toll-free number on the enclosed Proxy Card; or - Via Internet pursuant to the instructions on the Proxy Card. Stockholders whose shares are held by a bank, broker or other financial intermediary may appoint proxies and vote as provided by the intermediary. Any proxy may be revoked in the manner described in the accompanying Proxy Statement at any time prior to its exercise at the meeting. By Order of the Board of Directors March 19, 1999 Russell G. Horner, Jr. Secretary KERR-MCGEE CORPORATION KERR-MCGEE CENTER P. O. BOX 25861 OKLAHOMA CITY, OKLAHOMA 73125 PROXY STATEMENT FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS March 19, 1999 The accompanying proxy is solicited on behalf of the Board of Directors (the "Board") of Kerr-McGee Corporation (the "Company"). This Proxy Statement and the accompanying form of proxy are first being mailed to stockholders on or before March 19, 1999. Stockholders of record may appoint proxies and vote their shares in one of three ways: 1. Signing dating and mailing the enclosed Proxy Card in the envelope provided 2. Calling the toll-free number on the enclosed Proxy Card or 3. Via internet pursuant to the instructions on the Proxy Card. Proxies will be voted as directed, unless revoked before the annual meeting on May 11, 1999 by the stockholder. Any Stockholder who attends the Annual Meeting and elects to vote in person may revoke the proxy previously submitted at the meeting. Otherwise a Stockholder must advise the Corporate Secretary in writing of the revocation of the proxy. Unless directed otherwise, returned proxies will be voted for the election of the nominees for director listed below and on other matters as recommended by the Board of Directors. Under Section 216 of the Delaware General Corporation Law and the Kerr-McGee Corporation ByLaws (the "ByLaws"), a majority of the shares of the common stock, present in person or represented by proxy, shall constitute a quorum for purposes of the annual meeting. In all matters other than the election of directors, the affirmative vote of the majority of shares present in person or represented by proxy at the annual meeting and entitled to vote on the subject matter shall be the act of the stockholders. Directors shall be elected by a plurality of the votes present in person or represented by proxy at the annual meeting and entitled to vote on the election of directors. Abstentions will have the effect of votes against a proposal and broker nonvotes have no effect on the vote. VOTING SECURITIES The Company's only class of voting securities is its common stock having a par value of $1.00 per share (the "Common Stock"), of which there were 83,614,002 shares outstanding as of the close of business on March 15, 1999, the record date for stockholders entitled to receive notice of and to vote at this meeting. Each share is entitled to one vote. The number of shares outstanding does not include shares held in treasury, which will not be voted. Item No. 1 ---------- ELECTION OF DIRECTORS The Board of Directors has currently fixed the number of Directors at 14. Eight were elected at the 1998 Annual Stockholders' Meeting. Paul M. Anderson resigned from the Board effective November 30, 1998. Matthew R. Simmons was elected a Director effective January 1, 1999. Dr. Earle and Messrs. Bradford, Genever-Watling, Keiser and White-Thomson were elected to the Board immediately following the merger with Oryx Energy Company. The Restated Certificate of Incorporation and ByLaws provide that Directors shall be divided into three classes (Class I, Class II and Class III) serving staggered three-year terms, with each class to be as nearly equal in number as possible. In accordance with the recommendation of its Nominating Committee, the Board of Directors has nominated Tom J. McDaniel, John J. Murphy, Matthew R. Simmons and Ian L. White-Thomson for election as Class I Directors for a term expiring at the 2002 Annual Meeting and in each case until their respective successors are elected and qualified. All of the nominees are currently Directors of the Corporation whose terms expire at the 1999 Annual Meeting. All nominees have consented to serve, and the Company has no reason to believe any nominee will be unavailable. Should any nominee become unavailable for any reason, the proxies will be voted for a substitute nominee to be named by the Board unless the number of Directors constituting a full board is reduced. The following information is furnished for each person who is nominated for election as a Director or who is continuing as an incumbent Director: - name; age, whether such person is a nomineefor election or an incumbent Director whose term does not expire at the 1999 Annual Meeting; - how long the individual has served as a Director of the Company; - the year in which the term is to expire; - principal occupation and employment during the past five years; and - the board of directors of other publicly-owned companies on which the Director serves:
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS -- CLASS I (FOR A TERM ENDING 2002) [TOM J. MCDANIEL TOM J. MCDANIEL, 60 -- First became a Director in 1997. PHOTO] Vice Chairman of the Company since February 1, 1997; Senior Vice President and Corporate Secretary from 1989 through January 1997. Director, Devon Energy Corporation and UMB Oklahoma Bank. [JOHN J. MURPHY JOHN J. MURPHY, 67 -- First became a Director in 1990. PHOTO] Managing Director, SMG Management L.L.C., an investment firm, since January 1997; Chairman of the Board of Dresser Industries, Inc., hydrocarbon energy products and services, from 1983 through November 1996; Chief Executive Officer of Dresser Industries, Inc., from 1983 to 1995. Director, Carbo Ceramics, Inc.; PepsiCo Inc., W. R. Grace & Co. and Shaw Industries Ltd. [MATTHEW R. SIMMONS MATTHEW R. SIMMONS, 55 -- First became a Director in PHOTO] 1999. President of Simmons & Company International, a specialized investment banking firm that serves the worldwide energy service industry, since founding the company in 1974. [IAN L. WHITE-THOMSON IAN L. WHITE-THOMSON, 62 -- First became a Director in PHOTO] 1999. Chairman of U. S. Borax, Inc., a provider of borax and borate products, since 1996; President and Chief Executive Officer from 1996 to 1999. Chief Executive Officer, Rio Tinto Borax Ltd. since 1995. Director, KCET Community Television of Southern California, LA Opera and 3D Systems Corp. Continuing Directors -- Class II (Term Expires at the 2000 Annual Meeting) [SYLVIA A. EARLE SYLVIA A. EARLE, 63 -- First became a Director in 1999. PHOTO] Chair, Deep Ocean Exploration and Research, Inc., since 1992 and Explorer-in-Residence for the National Geographic Society since 1998; Chair of the Sea Change Trust, a non-profit scientific research organization from 1993 to 1995; Advisor to the Administrator from 1992 to 1993 and Chief Scientist from 1990 to 1992 of the National Oceanic and Atmosphere Administration. [MARTIN C. JISCHKE MARTIN C. JISCHKE, 57 -- First became a Director in 1993. PHOTO] President of Iowa State University since 1991. Director, Bankers Trust Corporation. [ROBERT L. KEISER ROBERT L. KEISER, 56 -- First became a Director in 1999. PHOTO] Chairman of the Board of the Company since February 27, 1999. Chairman of the Board and Chief Executive Officer of Oryx Energy Company from 1994 to February 26, 1999. [LEROY C. RICHIE LEROY C. RICHIE, 57 -- First became a Director in 1998. PHOTO] President, Intrepid World Communications since September 1998; Vice President and General Counsel for Automotive Legal Affairs, Chrysler Corporation, 1990 through December 1997. [RICHARD M. ROMPALA RICHARD M. ROMPALA, 52 -- First became a Director in PHOTO] 1996. Chairman of the Board, President and Chief Executive Officer of The Valspar Corporation, a manufacturer of paints and related coatings, since February 1998; President and Chief Executive Officer of The Valspar Corporation from 1995 through January 1998; President of The Valspar Corporation in 1994; Group Vice President of PPG Industries from 1987 to 1994; Director, Olin Corporation. Continuing Directors -- Class III (Term Expires at the 2001 Annual Meeting) [WILLIAM E. BRADFORD WILLIAM E. BRADFORD, 64 -- First became a Director in PHOTO] 1999. Chairman, Halliburton Company, a provider of energy and energy services from 1998; Chairman and Chief Executive Officer of Dresser Industries, Inc., now merged with Halliburton Company, from 1996 to 1998; President and Chief Operating Officer of Dresser Industries, Inc. from 1992 to 1995. Director, Ultramar/Diamond Shamrock, Inc. [LUKE R. CORBETT LUKE R. CORBETT, 52 -- First became a Director in 1995. PHOTO] Chief Executive Officer since February 27, 1999; Chairman of the Board and Chief Executive Officer of the Company from February 1997 to February 26, 1999; President and Chief Operating Officer from May 1995 through January 1997; Group Vice President from 1992 through May 1995. Director, Devon Energy Corporation, OGE Energy Corp. and BOK Financial Corp. [DAVID C. GENEVER- DAVID C. GENEVER-WATLING, 53 -- First became a Director WATLING PHOTO] in 1999. Managing Director, SMG Management L.L.C., an investment firm, since 1997; President and Chief Executive Officer from 1992 to 1995 of General Electric Industrial and Power Systems. [WILLIAM C. MORRIS WILLIAM C. MORRIS, 60 -- First became a Director in 1977. PHOTO] Chairman of the Board of J. & W. Seligman & Co., Incorporated; Chairman of the Board of Tri-Continental Corporation and Chairman of the Boards of the companies in the Seligman family of investment companies, all since December 1988. Chairman of the Board of Carbo Ceramics, Inc., since 1987. [FARAH M. WALTERS FARAH M. WALTERS, 54 -- First became a Director in 1993. PHOTO] President and Chief Executive Officer of University Hospitals Health System, Cleveland, Ohio since 1992. Director, LTV Corporation and Geon Company.
None of the above nominees is related to any executive officer of the Company, its subsidiaries, limited liability companies or affiliates. For additional information relating to directors and executive officers, see "Security Ownership" and "Executive Compensation and Other Compensation". BOARD OF DIRECTORS MEETINGS, COMPENSATION AND COMMITTEES During 1998 the Board held ten meetings. Each director attended 75% or more of the aggregate number of meetings of the Board and the committees of the Board on which each such director served. Directors discharge their responsibilities not only by attending Board and committee meetings but also through communication with the Chairman and other members of management relative to matters of mutual interest and concern to the Company. Board members who are not employees of the Company are paid an annual fee of $30,000 and an additional fee of $1,000 for each Board meeting and committee meeting attended. Directors are reimbursed for travel expenses and lodging. Pursuant to a Plan of Deferred Compensation, any director who is not an employee of the Company may elect to defer compensation as a director until such person ceases to be a director, after which the deferred compensation, together with interest, will be paid in ten equal annual installments. Under the Stock Deferred Compensation Plan for NonEmployee Directors, a nonemployee director may elect to defer compensation as a director through the purchase of Common Stock on a year-by-year basis by notifying the Company on or before December 31 of the preceding year. The stock acquired in this nonqualified plan may not be distributed to the nonemployee director until 185 days after the participant ceases being a director. The Board has established and currently maintains an Audit Committee, an Executive Compensation Committee, a Finance Committee and a Nominating Committee as standing committees. The Audit Committee meets periodically with the Company's independent public accountant to review plans for the audit and the audit results and recommends selection of the independent public accountant. The Audit Committee also meets with the Director of Internal Auditing to review the scope and results of the Company's internal auditing activities and assessment of the system of internal controls. The Audit Committee consists of three independent nonemployee directors: Farah M. Walters (Chair), Leroy C. Richie and Richard M. Rompala. The Committee met twice during 1998. The Executive Compensation Committee reviews the salaries and incentive pay awards as recommended by the Chief Executive Officer for all officers of the Company and recommends to the full Board such changes as it may deem appropriate. The Committee also administers the Annual Incentive Compensation Plan, the Long Term Incentive Program, the Executive Deferred Compensation Plan and the Supplemental Executive Retirement Plan. The Executive Compensation Committee recommends but does not fix the cash compensation of the Chief Executive Officer. The cash compensation of the Chief Executive Officer is determined by all of the independent nonemployee directors. The Executive Compensation Committee consists of two independent nonemployee directors: John J. Murphy (Chair) and Martin C. Jischke. Paul M. Anderson served on this Committee and attended its meetings until his resignation from the Board effective November 30, 1998. The Committee met twice in 1998. The Finance Committee reviews the annual budget, other budget and financial matters as may be requested and strategy as may be required. The Finance Committee consists of three independent nonemployee directors: William C. Morris (Chair), John J. Murphy and Richard M. Rompala. Paul M. Anderson served on this Committee and attended its meetings until his resignations from the Board effective November 30, 1998. The Committee met one time in 1998. The Nominating Committee recommends nominees to the Board of Directors. The Nominating Committee will consider recommendations for the position of director submitted by stockholders in writing to the Corporate Secretary, Kerr McGee Corporation, P.O. Box 25861, Oklahoma City, Oklahoma 73125 pursuant to timely notice in writing in strict accordance with the Company's ByLaws. A stockholder desiring to make a nomination should contact the Corporate Secretary to obtain a copy of the ByLaws. See also Stockholder Proposals on page 20. The Nominating Committee consists of four independent nonemployee directors: Martin C. Jischke (Chair), William C. Morris, Leroy C. Richie and Farah M. Walters. Luke R. Corbett serves as an ex-officio member. The Committee met one time in 1998. SECURITY OWNERSHIP The following table sets forth the number of shares of Common Stock beneficially owned as of March 1, 1999 by each director and nominee, each of the executive officers named in the Summary Compensation Table and all directors and officers as a group, and the percentage represented by such shares of the total Common Stock outstanding on that date:
NUMBER OF SHARES PERCENT OF NAME OR GROUP BENEFICIALLY OWNED CLASS --------------------------------------------------------------------------- William E. Bradford ........................ 10,000 * Luke R. Corbett ............................ 223,269 (2) Sylvia A. Earle ............................ 4,500 David C. Genever-Watling ................... 8,994 Martin C. Jischke .......................... 4,192 (1) Robert L. Keiser ........................... 279,816 (2) Tom J. McDaniel ............................ 70,092 (2) William C. Morris .......................... 11,200 John J. Murphy ............................. 1,680 (1) Leroy C. Richie ............................ 1,788 (1) Richard M. Rompala ......................... 2,027 (1) Matthew R. Simmons ......................... 27 (1) Farah M. Walters ........................... 4,048 (1) Ian L. White-Thomson ....................... 7,267 Kenneth W. Crouch .......................... 22,380 (2) Russell G. Horner, Jr. ..................... 37,328 (2) John C. Linehan ............................ 116,412 (2) All directors and executive officers as a group, including those named above (3)................... 962,827 (2) 1.15%
* The percentage of shares beneficially owned by any single director, nominee or executive officer does not exceed 1%. (1) Includes shares held by the Stock Deferred Compensation Plan for NonEmployee Directors. (2) Includes shares issuable upon the exercise of outstanding stock options that are exercisable within 60 days of March 1, 1999: 189,333 shares for Mr. Corbett; 279,816 shares for Mr. Keiser; 52,533 shares for Mr. McDaniel; 95,866 shares for Mr. Linehan; 15,833 shares for Mr. Crouch; 27,666 shares for Mr. Horner; and 733,235 shares for all directors and executive officers as a group. (3) In 1998, stock ownership guidelines were established for the Company's officers. Item No. 2 ---------- RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANT Arthur Andersen LLP, an independent public accounting firm, has been selected as the Company's independent public accountant for 1999 in accordance with the recommendation of the Audit Committee. This firm served in the same capacity for the year ended December 31, 1998. Representatives of Arthur Andersen LLP will be present at the Annual Meeting to make a statement if they desire to do so and will be available to respond to appropriate questions from stockholders. The stockholders will be asked to ratify the appointment of Arthur Andersen LLP as independent public accountant for 1999. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP. If the appointment of Arthur Andersen LLP is not ratified by the stockholders, if Arthur Andersen LLP ceases to act as the Company's independent public accountant or if the Board of Directors removes Arthur Andersen LLP as the Company's independent public accountant, the Board will appoint another independent public accounting firm. The engagement of a new independent public accounting firm for periods following the 2000 Annual Meeting will be subject to ratification by the stockholders at that meeting. EXECUTIVE COMPENSATION AND OTHER INFORMATION SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION The following table includes individual compensation information on the Chief Executive Officer and the four other most highly paid executive officers for services rendered in all capacities for the fiscal years ended December 31, 1998, 1997 and 1996. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION AWARDS - - ------------------------------------------------------------------------------------------------------------------------- NO. OF SECURITIES ANNUAL COMPENSATION UNDERLYING ALL OTHER - - ------------------------------------------------------------------------------------------------------------------------- NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (1) COMPENSATION (2) - - ------------------------------------------------------------------------------------------------------------------------- Luke R. Corbett, 1998 $653,077 $215,000 60,000 $39,185 Chairman of the 1997 582,212 400,000 50,000 34,933 Board and Chief 1996 413,847 475,000 22,000 26,023 Executive Officer Tom J. McDaniel, 1998 308,269 70,000 15,000 18,496 Vice Chairman of 1997 293,077 150,000 16,000 17,585 the Board 1996 269,231 245,000 11,000 17,346 John C. Linehan, 1998 308,269 70,000 15,000 18,496 Executive Vice 1997 295,000 150,000 16,000 17,700 President and Chief 1996 294,231 265,000 18,000 18,846 Financial Officer Russell G. Horner, Jr., 1998 268,269 60,000 10,000 16,096 Senior Vice President, 1997 252,693 130,000 8,000 15,162 General Counsel and 1996 224,231 205,000 13,000 13,454 Corporate Secretary Kenneth W. Crouch, 1998 238,846 50,000 10,000 14,331 Senior Vice President 1997 230,000 115,000 9,000 13,800 Exploration & Production 1996 215,113 155,000 3,000 12,907
(1) The Company has never granted free-standing Stock Appreciation Rights ("SARs") and has not granted tandem SARs since January 1991. (2) Consists entirely of 401(k) Company contributions pursuant to the Employee Stock Ownership Plan and amounts contributed under the nonqualified benefits restoration plan. Company contributions pursuant to the Employee Stock Ownership Plan for 1998 were $9,600 each to Messrs. Corbett, McDaniel, Linehan, Horner and Crouch. Amounts contributed under the nonqualified benefits restoration plan for 1998 on behalf of Messrs. Corbett, McDaniel, Linehan, Horner and Crouch were: $29,585, $8,896, $8,896, $6,496 and $4,731, respectively. The amounts contributed by the Company to the Kerr-McGee Corporation Benefits Restoration Plan on behalf of such persons are identical to the amounts that would have been contributed pursuant to the Employee Stock Ownership Plan except for the limitations under the Internal Revenue Code of 1986, as amended ("Code"). STOCK OPTIONS The following table contains information concerning stock options granted during the fiscal year ended December 31, 1998 to the named executives: OPTION GRANTS IN LAST FISCAL YEAR
PERCENT NO. OF OF TOTAL SECURITIES OPTIONS PER GRANT UNDERLYING GRANTED TO SHARE DATE OPTIONS EMPLOYEES IN EXERCISE PRESEMT NAME GRANTED (1) FISCAL YEAR 1998 PRICE EXPIRATION DATE VALUE(2) ------------------------------------------------------------------------------------------------------------------- Luke R. Corbett 60,000 7.64% $59.6563 January 13, 2008 $674,400 Tom J. McDaniel 15,000 1.91% 59.6563 January 13, 2008 168,600 John C. Linehan 15,000 1.91% 59.6563 January 13, 2008 168,600 Russell G. Horner, Jr. 10,000 1.27% 59.6563 January 13, 2008 112,400 Kenneth W. Crouch 10,000 1.27% 59.6563 January 13, 2008 112,400
(1) All stock options granted in 1998 were nonqualified stock options. The exercise price per option is 100% of the fair market value of a share of Common Stock on the date of grant. No option expires more than ten years from the date of grant. At or after the grant of an option, the Executive Compensation Committee ("Committee") may, in its discretion, grant a participant a SAR. A SAR is only exercisable during the term of the associated option. No SARs were granted in 1998, nor have any been granted since 1991. Options may also provide that, upon a change in control all options and any accompanying SARs held for more than six months shall become immediately exercisable in full. A change in control shall be deemed to have occurred if any person acquires 25% or more of the outstanding Common Stock, the stockholders approve a merger or consolidation of the Company with any other corporation, the stockholders approve a complete liquidation or disposition of all of the Company's assets, or a change in the majority of the Board of Directors, as described in the Plan, occurs within a period of 24 months. The recent merger between the Company and Oryx Energy Company did not constitute a change of control under this Plan. (2) The present value was computed in accordance with the Black-Scholes option pricing model, with assumptions consistent with the Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," as permitted by the rules of the Securities and Exchange Commission. Based on Black-Scholes, the value on January 13, 1998, was $11.24 per option. The Company believes, however, that it is not possible to accurately determine the value of options at the time of grant using any option pricing model, including Black-Scholes, since any valuation depends on numerous assumptions. The model assumes: (a) an expected option term of 5.8 years, (b) interest rate of 5.36% which represents the U. S. Treasury Strip Rate at the date of grant with maturity corresponding to the expected option term, (c) volatility of 17.243% calculated using monthly stock prices for the 5.8 years prior to the date of the grant, and (d) dividends at an average annual dividend yield of 2.99% for the ten years prior to December 31, 1998. OPTION/SAR EXERCISES AND HOLDINGS The following table sets forth information for the named executives with respect to options/SARs exercised during 1998 and the value of unexercised options/SARs held as of December 31, 1998. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS AT OPTIONS/SARS SHARES DECEMBER 31, 1998 AT DECEMBER 31, 1998(1) ACQUIRED ON VALUE -------------------------------------------------------- NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - - ------------------------------------------------------------------------------------------------------------------------ Luke R. Corbett 1,024 $111,563 145,332 100,668 $3,750 -- Tom J. McDaniel -- -- 38,533 29,334 -- -- John C. Linehan -- -- 84,533 31,667 6,875 -- Russell G. Horner, Jr. 5,201 106,052 17,332 19,668 -- -- Kenneth W. Crouch 3,000 43,125 9,500 17,000 -- -- - - ------------------------------------------------------------------------------------------------------------------------
(1) Options/SARs are "in-the-money" if the fair market value of the Common Stock exceeds the exercise price. At December 31, 1998, the closing price of the Common Stock on the New York Stock Exchange was $38.25. RETIREMENT PLANS The Company maintains retirement plans for all employees, including officers. The following table shows the estimated annual pension benefits payable to a covered participant at normal retirement age under the Company's qualified defined benefit plan, as well as the nonqualified benefits restoration plan that provides benefits that would otherwise be denied participants by reason of certain Code limitations on qualified plan benefits, based on remuneration that is covered under the plans and years of service with the Company and its subsidiaries: RETIREMENT PLAN TABLE
AVERAGE ANNUAL 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE --------------------------------------------------------------------------------------------- $ 400,000 $ 93,521 $124,694 $155,868 $187,041 $218,215 600,000 141,521 188,694 235,868 283,041 330,215 800,000 189,521 252,694 315,868 379,041 442,215 1,000,000 237,521 316,694 395,868 475,041 554,215 1,200,000 285,521 380,694 475,868 571,041 666,215
Covered compensation under the retirement plans consists of salary and bonus as reflected in the Summary Compensation Table plus pretax Section 125 and 401(k) benefit contributions as reflected under All Other Compensation in the Summary Compensation Table, based on the highest 36 consecutive months over the previous 120 months prior to retirement. Amounts shown have been computed on a straight life annuity basis. Benefits payable under the qualified defined benefit plan are not subject to offset by social security benefits. As of December 31, 1998, Mr. Corbett had 13 years of credited service; Mr. McDaniel, 14; Mr. Linehan, 13; Mr. Horner, 29; and Mr. Crouch, 24. Pursuant to the Company's Supplemental Executive Retirement Plan ("SERP"), adopted effective January 1, 1991, as subsequently revised, certain key senior executives are eligible to receive supplemental retirement benefits. The SERP is a defined benefit plan and is administered by the Committee. Management recommends to the Committee employees for participation in the SERP, and the Committee then selects the participants. Eligible employees may receive benefits under the SERP upon retirement on or after age 52, subject to reduction in benefits prior to age 60. Benefits under the SERP equal a specified percentage of an eligible employee's final average monthly compensation at retirement in the form of a monthly income for life payable as an actuarially equivalent tax-equalized lump sum. Generally, the SERP benefit at retirement is calculated by determining (i) the eligible employee's final average monthly compensation multiplied by a percentage based on years of Company service minus (ii) the sum of the anticipated monthly amounts payable to the eligible employee as a primary social security benefit and monthly amounts payable under the Company's qualified and nonqualified defined benefit plans. The SERP provisions establish a minimum benefit for employees who were participants before May 3, 1994, regardless of the years of Company service. The percentage of final average monthly compensation used to determine the SERP benefit ranges from 40% to 70%, with benefits depending on when the executive became a participant in the SERP, the age at which the employee retires and the reason for the retirement. As of March 1, 1999, the estimated lump sum SERP benefit payable upon retirement to the executive officers named in the Summary Compensation Table, page 10, assuming (i) retirement at age 60 (age 61 for Mr. McDaniel) and (ii) salaries are maintained at their current level, is: Mr. Corbett, $4,171,428; Mr. McDaniel, $2,934,573; Mr. Linehan, $2,804,763; Mr. Horner, $1,201,814; and Mr. Crouch, $852,807. EMPLOYMENT AND CONSULTING AGREEMENTS The only employment agreement in force with any of the executive officers is with Robert L. Keiser. Pursuant to an employment letter agreement dated October 14, 1998, Mr. Keiser was employed by Kerr-McGee following the merger with Oryx Energy Company as Chairman of the Board with responsibilities to be defined during the transition period. He is paid approximately $48,000 per month and is entitled to participate in all benefit plans that were maintained for the benefit of Oryx employees in which he was entitled to participate as of October 14, 1998. Mr. Keiser's employment will continue until March 1, 2000, unless he or Kerr-McGee decides that his employment should be terminated earlier. Upon the termination of his employment, Mr. Keiser will resign his positions as an executive officer and a director of Kerr-McGee. Mr. Keiser was a participant in the Oryx Energy Company Amended and Restated Special Executive Severance Plan ("Oryx Executive Severance Plan"). Upon the ultimate termination of his employment, Kerr-McGee has agreed to pay Mr. Keiser his benefits under the Oryx Executive Severance Plan. Under the Oryx Executive Severance Plan, Mr. Keiser is entitled to a lump sum payment of an amount equal to his final annual compensation multiplied by three years. Final annual compensation is the sum of final annualized base salary plus the product of such base salary multiplied by the guideline target incentive (bonus) percentage, all as applicable just prior to the corporate change or at the time of termination of employment, whichever is more favorable to Mr. Keiser. The terms of the Oryx Executive Severance Plan further provide that if any payments made or benefits provided to the officer upon or after a corporate change, whether or not made or provided under the Oryx Executive Severance Plan, causes the officer to be subject to an excise tax because the payments are parachute payments (as defined in the code), then the officer is entitled to an excise tax premium in a sufficient amount to make the officer whole with respect to any additional tax that would not have been payable except due to the payments constituting "parachute payments." Mr. Keiser is also entitled to supplemental benefits such as the continuation of health and life insurance, the cost of which will not be significant in relation to the aggregate payments and to the reimbursement of all legal fees and expense relating to determining validity of or enforcing the Oryx Executive Severance Plan. The payments under the Oryx Executive Severance Plan to Mr. Keiser will be approximately $2,846,000. CHANGE OF CONTROL ARRANGEMENTS With respect to Messrs. Corbett, McDaniel, Linehan, Horner and Crouch, the Company has agreed to provide certain benefits in the event of a "change of control" of the Company. A Change of Control means (a) a change in any two-year period in a majority of the members of the Board of Directors of the Company as defined in the agreement, (b) any person becomes the beneficial owner, directly or indirectly, of 25% or more of the Company's outstanding Common Stock, (c) the approval by the Company's stockholders of (i) the merger or consolidation of the Company with any other corporation, or (ii) the sale of all or substantially all of the assets of the Company or (d) when a majority of the members of the Board of Directors in office immediately prior to a proposed transaction were determined by written resolution that such proposed transaction, if taken, will be deemed a Change of Control and such proposed transaction is affected. The recent merger between Kerr-McGee and Oryx Energy Company constituted a "change of control" under these agreements. Therefore, if, within two years of February 26, 1999, any of these officer's employment is terminated by Kerr-McGee for any reason other than "cause," as defined, or by the officer for "good reason," such officer will be entitled to receive a maximum lump sum cash payment equal to three times the officer's annual base salary. If the payment made to the officer causes the officer to be subject to an excise tax because the payment is a "parachute payment" (as defined in the Internal Revenue Code), then the payment shall be reduced to the extent necessary so that no portion thereof is subject to the excise tax, but only if such reduction increases the net after-tax benefit received by the officer. In addition, upon such termination, the officer will be entitled to receive amounts that such officer would otherwise have been entitled to receive under Kerr-McGee's Supplemental Executive Retirement Plan (SERP) described more fully in the "Retirement Plans." In the event of such person's termination of employment within the two-year period for one of the reasons described above, currently the payments under the Kerr-McGee Change of Control Agreements to Kerr-McGee's five most highly compensated executive officers will be approximately $ 2,175,000 for Luke R. Corbett, $ 1,020,000 for Tom J. McDaniel, $ 975,000 for John C. Linehan, $ 855,000 for Russell G. Horner, Jr., and $ 900,000 for Kenneth W. Crouch. The Company also has made provision under its Benefits Restoration Plan for the crediting of additional years of age and service to certain executive officers, including those named in the Summary Compensation Table, whose employment is terminated under the circumstances described above following a change of control of the Company. REPORT ON EXECUTIVE COMPENSATION During 1998, the Executive Compensation Committee (the "Committee") was comprised of three independent nonemployee directors, John J. Murphy, Chair, Martin C. Jischke and Paul M. Anderson, and is responsible for administering compensation programs that make it possible for the Company to attract and retain employees with the skills and attitudes necessary to provide the Company with a fully competitive and capable management. Mr. Anderson resigned from the Board effective November 30, 1998. The Committee reviews the salaries and incentive pay awards as recommended by the Chief Executive Officer (the "CEO") for the officers of the Company. It recommends to the full Board such changes as it may deem appropriate. The Committee recommends but does not fix the compensation of the CEO, which is determined by all of the independent nonemployee directors. Set forth below is the report on the Company's executive compensation policies for 1998 and how they affected the Company's CEO and the Company's other officers (including the four other highest paid officers). The Company seeks to provide fully competitive levels of total compensation for its key executives through a mix of base salaries, annual incentive pay, long term incentives and other benefits. The Committee believes that incentive or "at risk" compensation is a key ingredient in motivating executive performance to maximize stockholder value and align executive performance with company objectives. Total compensation is targeted to be competitive at the median level of a peer group of comparable energy and chemical companies, which includes companies constituting the S&P Domestic Integrated Oil Index referred to in the Performance Graph on page 20, as well as other comparable energy and chemical companies selected with the assistance of an independent consulting firm to be representative of the Company's size and business activities (the "Comparison Group"). Since the Company has a substantial amount of its business outside the United States, its compensation policies must also be internationally competitive and flexible. This both attracts and retains high quality management, and facilitates global management. BASE SALARIES In determining base salaries for executive officers, the Committee annually reviews current competitive market compensation data of the Comparison Group prepared by an independent consulting firm. Base salaries are typically targeted at the median of the salary level Comparison Group. The Committee's policy is to set executive officers' base salaries at or near the median of base salaries of the Comparison Group to enable the Company to be competitive and to attract and retain key executives. When salary increases are made, the Committee also takes into consideration the individual's performance based on the CEO's evaluation of the executive officer's performance, the Board's evaluation of the CEO's performance and all executive officers' current and prior job-related experience and tenure. No specific weight is assigned to any individual factor in determining salary increases. ANNUAL INCENTIVE COMPENSATION The Company's Annual Incentive Compensation Plan (the "AICP") provides an opportunity for officers to earn supplemental incentive compensation each year if the Company's financial targets are met or exceeded. The Committee believes that setting threshold and competitive target returns is the appropriate approach to annual incentive pay. Under the AICP, an award target is established by the Committee for each executive officer which in 1998 ranged from 35% of base salary up to 65% of base salary. The executive officer's individual target is based on the officer's level of responsibility and Comparison Group competitive data which the Committee targets at the 50 percentile when determining an executive officer's award. An executive officer may receive up to 200% of the officer's award target if company performance objectives are exceeded. The amount of an officer's final award may be reduced or eliminated by the Committee based on the officer's individual performance. During 1998, the Company was successful in accomplishing several strategic and growth goals although the Company's financial results were negatively impacted by severely depressed oil prices. Highlighted by the Company's Chemical operations exceeding income goals and recording a strong profit in its pigment business, the Company also successfully divested its coal operations, acquired Bayer's European Titanium Dioxide assets, acquired Gulf Canada's North Sea assets, sold its ammonium perchlorate business, developed strategic alliances with British Petroleum and Canadian Occidental, and increased its oil and gas prospect inventory. Based on these significant accomplishments, the Committee approved discretionary incentive awards for officers. The awards of the CEO and the next four-highest paid officers are shown in the Summary Compensation Table. The CEO and the next four highest-paid officers have elected to defer 100% of their incentive award for 1998 into company stock through the Deferred Compensation Plan. LONG TERM INCENTIVES The Company's stockholders have approved the use of Company stock in the form of stock options and restricted stock awards to provide long-term incentives for the Company's key executives. No restricted stock awards were granted in 1998. The Committee believes that the use of stock options provides a direct relationship between the executives' compensation and the stockholders' interests and is an important key employee retention tool that rewards long-term management performance measured by corporate results. Stock ownership guidelines have been established for the Company's executive officers. The stock ownership goals are based on the value of the Company's stock and are expressed in a multiple of the officer's base salary. The Committee believes that stock ownership by the Company's executive officers is important and promotes commitment to the long term success of Kerr-McGee. The Committee periodically reviews the guidelines and the officer's stock ownership. The aggregate value of stock options granted to each executive officer, including the CEO, is based on a percentage of the individual's salary. The percentage is set annually by the Committee after considering surveys and reports by an independent consulting firm as to competitive awards made within the Comparison Group, as well as the individual's level of responsibility and a subjective performance evaluation. In determining the number of options to be granted an executive officer, the Committee targets the 50 percentile of competitive data. In making 1998 awards, the Committee also considered the amount and terms of prior awards. The number of stock options granted in 1998 to Mr. Corbett and the four other highest paid officers is set forth in the Option Grants Table. The Company's Long Term Incentive Plan was approved by stockholders in 1998 and the Committee expects that all income that may be received through the exercising of stock options granted in 1998 to executive officers will qualify as performance-based compensation as defined under Section 162(m). COMPENSATION OF THE CHIEF EXECUTIVE OFFICER The CEO's compensation is determined in accordance with the policies described above. In establishing Mr. Corbett's compensation, the Committee considers competitive compensation of CEOs of comparable energy and chemical companies within the Comparison Group as compiled by an independent consulting firm. Mr. Corbett's annual base salary was increased in February 1998 to $660,000. In determining Mr. Corbett's incentive compensation, the Committee considered several substantial accomplishments in 1998 - no specific weight was assigned to any individual accomplishment. During the six year period ended December 31, 1998, Kerr-McGee operated within its cash flow which was $3.1 billion, with capital expenditures of $2.6 billion and dividend payments of $500 million. Proceeds from divestitures of $900 million were offset by acquisitions of $500 million, company stock purchases of $300 million and a reduction in net debt of $100 million. Under Mr. Corbett's leadership the Company was successful in accomplishing strategic and growth goals including successfully divesting its coal and ammonium perchlorate businesses, acquiring Bayer's European titanium dioxide assets, acquiring Gulf Canada's North Sea assets, and developing strategic alliances with British Petroleum and Canadian Occidental. During 1998, the Company increased its oil and gas prospect inventory including inauguration of the Janice A facility in the North Sea and adding the first production platform in Ewing Bank 910 in the Gulf of Mexico. The Company's chemical operations recorded a strong profit for 1998 and announced a significant expansion of the titanium dioxide facility in Hamilton, Mississippi. Mr. Corbett's 1998 discretionary incentive award is shown in the Summary Compensation Table. The Committee believes that executive compensation for 1998 appropriately reflects its policy to align such compensation with overall business strategy, values and management initiatives and to ensure that the Company's goals and performance are consistent with the interests of it's stockholders. FEDERAL INCOME TAX DEDUCTIBILITY Code Section 162(m) generally limits the corporate deduction on compensation paid to the Chief Executive Officer and the next four-highest paid officers to $1 million each during any fiscal year unless such compensation meets certain performance based requirements. At the stockholders meeting in May, 1998, the Company's Annual Incentive Compensation Plan was approved by stockholders so that "performance based" compensation generated through this plan would be considered exempt from the deduction limit. For 1998, no executive officer of the Company received compensation, including the discretionary incentive award, in excess of $1 million. Submitted by: EXECUTIVE COMPENSATION COMMITTEE John J. Murphy, Chairman Martin C. Jischke OTHER INDEPENDENT NONEMPLOYEE DIRECTORS William C. Morris Leroy C. Richie Richard M. Rompala Matthew R. Simmons Farah M. Walters PERFORMANCE GRAPH Set forth below is a line graph comparing the yearly percentage change in the cumulative total return to stockholders on the Company's Common Stock against the cumulative total return of the S&P 500 Index and the S&P Domestic Integrated Oil Index for the five year period 1994 through 1998. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN KERR-MCGEE CORPORATION S&P 500 INDEX AND S&P DOMESTIC INTEGRATED OIL INDEX [GRAPH]
1993 1994 1995 1996 1997 1998 ---- ---- ---- ---- ---- ---- Assumes $100 invested on December 31, 1993 KMG 100 111 154 179 162 102 S&P Domestic Integrated Oil Index 100 111 153 187 249 320 S&P 500 100 110 126 157 187 153
Year-end Index Total return includes the reinvestment of dividends. Year-end data supplied by Bloomberg. STOCKHOLDER PROPOSALS Stockholder proposals for the 2000 Annual Meeting must be received at the principal executive offices of the Company no later than November 20, 1999 to be considered for inclusion in the Proxy Statement and form of proxy relating to the Annual Meeting in 2000. For any other proposal that a shareholder wishes to have considered at the Annual Meeting in 2000, the Company must have received written notice of such proposal during the period beginning February 11, 2000 and ending March 2, 2000. Proposals which are not received by the dates specified will be considered untimely. In addition, proposals must comply with the ByLaws and the rules and regulations of the Securities and Exchange Commission. EXPENSE OF SOLICITATION The cost of this proxy solicitation will be borne by the Company. To assist in the proxy solicitation, the Company has engaged Georgeson & Co. for a fee of $13,500 plus out-of-pocket expenses. The Company will reimburse brokers, banks or other persons for reasonable expenses in sending proxy material to beneficial owners. Proxies may be solicited through the mail, internet or telephonic communications or meetings with stockholders or their representatives by directors, officers and other employees of the Company who will receive no additional compensation. OWNERSHIP OF STOCK OF THE COMPANY To the best of the Company's knowledge, no person beneficially owned more than 5% of any class of the Company's outstanding voting securities at the close of business on March 15, 1999, except The Capital Group Companies, Inc., 333 South Hope Street, Los Angeles, California 90071 which holds 7,180,000 shares of the Company's common stock representing 8.59% of the outstanding shares. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers and persons who own more than 10% of a registered class of the Company's equity securities to file with the Securities and Exchange Commission (the "SEC") and the New York Stock Exchange initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and stockholders owning more than 10% are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on the information furnished to the Company and written representations that no other reports were required during the fiscal year ended December 31, 1998, all applicable Section 16(a) filing requirements were complied with except that Leroy C. Richie made a late filing of a Form 3 to report one transaction. OTHER MATTERS The Company does not know of any matters to be presented at the meeting other than those set out in the notice preceding this Proxy Statement. If any other matters should properly come before the meeting, it is intended that the persons named on the enclosed proxy will vote said proxy therein at their discretion. Russell G. Horner, Jr. Secretary [KERR-MCGEE LOGO] KERR-McGEE CORPORATION PROXY KERR-MCGEE CENTER P. O. BOX 25861 OKLAHOMA CITY, OKLAHOMA 73125
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS YOUR VOTE IS IMPORTANT! YOU CAN VOTGE IN ONE OF THREE WAYS: 1. INTERNET. 2. PHONE. 3. MAIL. VOTE BY INTERNET Your Internet vote is quick, convenient and your vote is immediately submitted. Just follow these easy steps: 1. Read the accompanying Proxy Statement. 2. Visit our Internet Voting site at http://www.umb.com/proxy and follow the instructions on the screen. Please note that all votes cast by internet must be submitted prior to 5:00 p.m. Central Time, May 10, 1999. Your Internet vote authorizes the named proxies to vote your shares to the same extent as if you marked, signed, dated and returned the proxy card. IF YOU VOTE BY INTERNET, PLEASE DO NOT RETURN YOUR PROXY BY MAIL. VOTE BY TELEPHONE Your Telephone vote is quick, easy and immediate. Just follow these easy steps: 1. Read the accompanying Proxy Statement. 2. Using a Touch-Tone Telephone, call Toll Free 800-758-6973 and follow the instructions. 3. When instructed, enter the Control Number, which is printed on the lower right hand corner of your proxy card. Your telephone vote authorizes the named proxies to vote your shares to the same extent as if you marked, signed, dated and returned the proxy card. If you vote by telephone, please do not return your proxy by mail. VOTE BY MAIL To vote by mail, complete, sign and date the proxy card below. Detach the card and return it in the envelope provided herein. IF YOU ARE NOT VOTING BY INTERNET OR BY TELEPHONE, DETACH PROXY CARD AND RETURN. - - -------------------------------------------------------------------------------- KERR-MCGEE CORPORATION PROXY FOR ANNUAL MEETING OF STOCKHOLDERS MAY 11, 1999 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Luke R. Corbett, Tom J. McDaniel and Russell G. Horner, Jr., and each of them as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated below, all the shares of Common Stock of Kerr-McGee Corporation held of record by the undersigned on March 15, 1999, at the Annual Meeting of Stockholders to be held on May 11, 1999, or any adjournment thereof (1) as hereinafter specified on the matters as more particularly described in the Company's Proxy Statement and (2) in their discretion on any such other business as may properly come before the meeting. THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" ITEMS 1 AND 2 1. ELECTION OF DIRECTORS (01) Tom J. McDaniel, (02) John J. Murphy, (03) Matthew R. Simmons, and (04) Ian L. White-Thomson [ ] FOR [ ] WITHHOLD [ ] WITHHOLD for the following only: (NAMES): ______________________________________________________________________ 2. Ratify the appointment of Arthur Andersen LLP as the Company's independent public acountant. [ ] FOR [ ] AGAINST [ ] ABSTAIN The Proxies are authorized to vote in their discretion upon such other business as may properly come before the meeting. If no direction is given, this Proxy will be voted FOR Items 1 and 2. The enclosed 1999 proxy material for Kerr-McGee Corporation has been mailed to you because you were a Kerr-McGee Corporation Stockholder on March 15, 1999, the record date for the 1999 Annual Meeting. It is important that you vote, sign and return this Proxy as soon as possible. By signing and promptly returning the Proxy, you will save your Company additional mailing and solicitation costs. Please turn to the reverse side, complete the Proxy, execute and mail today in the self-addressed, postage paid envelope. Thank you. - - -------------------------------------------------------------------------------- The Proxies are authorized to vote in their discretion upon such other business as may properly come before the meeting. If no direction is given, this Proxy will be voted FOR Items 1 and 2. Dated________________________________________, 1999 Signature__________________________________________ Signature, if held jointly_______________________________ Please sign exactly as the name appears in the address. When signing as attorney, executor, administrator, trustee or guardian, please give full title. If a corporation, please sign the full name of the corporation by the president or other authorized officer. If a partnership, please sign the name of the partnership by an authorized person. March 19, 1999 To: Participants In The Kerr-McGee Corporation SAVINGS INVESTMENT PLAN and/or the EMPLOYEE STOCK OWNERSHIP PLAN Dated September 12, 1989: As a participant in the Kerr-McGee Corporation Savings Investment Plan ("SIP") and/or the Kerr-McGee Corporation Employee Stock Ownership Plan dated September 12, 1989 ("ESOP"), you owned shares of Common Stock of the Company on March 15, 1999, the record date for stockholders entitled to vote at the annual stockholders' meeting to be held on May 11, 1999. This stock is held in trust by Putnam Fiduciary Trust Company as Trustee for the SIP and State Street Bank and Trust Company, as Trustee for the ESOP. Each plan provides that the shares of Common Stock of the Company which have been allocated to your account will be voted by the Trustees in accordance with your written instructions. Both the SIP and ESOP provide that shares allocated to participants for which no Voting Instructions are received shall be voted by the Trustees in the same proportion as those allocated shares for which instructions are received. The ESOP also provides that shares which have not yet been allocated (approximately 1 million shares) shall also be voted by the Trustees in the same proportion as those allocated shares for which instructions are received. Your vote is important! You are urged to complete and mail your Voting Instructions promptly. If the Trustees do not receive Voting Instructions from you, the shares in both plans for which no instructions are received and the unallocated shares in the ESOP will be voted in the same proportion as the total shares for which instructions are received by the Trustees. Enclosed for your information and use are the following: 1. Notice of the Annual Meeting and Proxy Statement. (Since your shares will be voted through the Trustees, the enclosed Voting Instructions replace the Proxy referred to in the Proxy Statement.) 2. Voting Instructions to the Trustee for each plan for your use in directing the Trustees to vote your shares. 3. A postage-paid, self-addressed envelope for your use in returning your Voting Instructions to UMB BANK N.A. which will tabulate the Voting Instructions for each Trustee. Very truly yours, KERR-McGEE CORPORATION BENEFITS COMMITTEE By:__________________________ John C. Linehan, Chairman VOTING INSTRUCTIONS TO THE TRUSTEES FOR ANNUAL STOCKHOLDERS' MEETING OF KERR-MCGEE CORPORATION TO BE HELD ON MAY 11, 1999 Putnam Fiduciary Trust State Street Bank and Trust Company, Trustee Company, Trustee Kerr-McGee Corporation Kerr-McGee Corporation Savings Investment Plan Employee Stock Ownership Plan 859 Willard Street P. O. Box 1994 Quincy, Massachusetts 02269-9110 Boston, Massachusetts 02101 I hereby direct that all my shares of Kerr-McGee Corporation Common Stock, the voting of which I am entitled to direct pursuant to the Kerr-McGee Corporation Savings Investment Plan ("SIP") and the Kerr-McGee Corporation Employee Stock Ownership Plan ("ESOP"), be voted by Putnam Fiduciary Trust Company (as Trustee of the SIP) and State Street Bank and Trust Company (as Trustee of the ESOP) at the Annual Meeting Of Stockholders on May 11, 1999, as follows: THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" ITEMS 1 and 2 SIP ESOP 1. ELECTION OF DIRECTORS: _____ FOR _____ FOR Tom J. McDaniel, _____ WITHHOLD _____ WITHHOLD John J. Murphy, _____ WITHHOLD for _____ WITHHOLD for Matthew R. Simmons and the following the following Ian L. White-Thomson only, write name(s) only, write name(s) ------------------------ ------------------------ ------------------------ ------------------------ 2. Ratify the appointment of Arthur _____ FOR _____ FOR Andersen LLP as the Company's _____ AGAINST _____ AGAINST independent public accountant. _____ ABSTAIN _____ ABSTAIN The Trustees are authorized to grant the Proxies authority to vote in their discretion upon such other business as may properly come before the meeting. Because the SIP and ESOP are separate plans, you are entitled to vote separately the shares of Kerr-McGee Corporation Common Stock you hold in each Plan. Please sign below. The Trustee will vote your shares as you direct. If you sign below, but do not give any instructions or give partial instructions with respect to either the SIP or the ESOP, the Trustee for the Plan will vote FOR Items 1 and 2. Please sign exactly as your name appears in the address. If you do not return voting instructions to the Trustees, the shares for which no instructions are received will be voted in the same proportion by each Trustee as the total shares for which instructions are received by such Trustee. - - ------------------------ ---------------------- -------------- Signature of Participant Social Security Number Date The enclosed 1999 proxy material for Kerr-McGee Corporation has been mailed to you because you held stock through the Kerr-McGee Corporation Savings Investment Plan and/or Kerr-McGee Corporation Employee Stock Ownership Plan on March 15, 1999, the record date for the 1999 Annual Meeting. It is important that you vote, sign and return the Voting Instructions as soon as possible. By signing and promptly returning the Voting Instructions, you will save your Company additional mailing and solicitation costs. Please turn to the reverse side, complete the Voting Instructions, execute and mail today in the self-addressed, postage paid envelope. Thank You. March 19, 1999 To: Participants In The Oryx Energy Company Capital Accumulation Plan As a participant in the Oryx Energy Company Capital Accumulation Plan ("CAP") and as a result of the recent merger between Kerr-McGee Corporation and Oryx Energy Company, you owned shares of Kerr-McGee Corporation Common Stock on March 15, 1999, the record date for stockholders entitled to vote at the Kerr-McGee Corporation Annual Stockholders' Meeting to be held on May 11, 1999. The CAP provides that the shares of Kerr-McGee Corporation Common Stock which have been allocated to your account will be voted by the Trustee in accordance with your written instructions. The CAP provides that shares allocated to participants for which no Voting Instructions are received shall be voted by the Trustee in the same proportion as those allocated shares for which Voting Instructions are received. Unallocated shares of Common Stock in Fund L (LESOP) of CAP will be voted in the same proportion as the allocated shares. Your vote is important! You are urged to complete and mail your Voting Instructions promptly. Enclosed for your information and use are the following: 1. Notice of the Annual Meeting and Proxy Statement. (Since your shares will be voted through a Trustee, the enclosed Voting Instructions replace the Proxy referred to in the Proxy Statement.) 2. Voting Instructions to the Trustee for the CAP for your use in directing the Trustee to vote your shares. 3. A postage-paid, self-addressed envelope for your use in returning your Voting Instructions to UMB BANK N.A. which will tabulate the Voting Instructions for the Trustee. Very truly yours, KERR-McGEE CORPORATION BENEFITS COMMITTEE VOTING INSTRUCTIONS TO THE TRUSTEE FOR ANNUAL STOCKHOLDERS' MEETING OF KERR-MCGEE CORPORATION TO BE HELD ON MAY 11, 1999 The Bank of New York, Trustee Oryx Energy Company Capital Accumulation Plan One Wall Street New York, New York 10286 I hereby direct that all my shares of Kerr-McGee Corporation Common Stock, the voting of which I am entitled to direct pursuant to the Oryx Energy Capital Accumulation Plan ("CAP") be voted by the Bank of New York (as Trustee of the CAP) at the Annual Meeting Of Stockholders on May 11, 1999, as follows: THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" ITEMS 1 and 2 1. ELECTION OF DIRECTORS: _____ FOR _____ FOR Tom J. McDaniel, _____ WITHHOLD _____ WITHHOLD John J. Murphy, _____ WITHHOLD for _____ WITHHOLD for Matthew R. Simmons and the following the following Ian L. White-Thomson only, write name(s) only, write name(s) ------------------------ ------------------------ ------------------------ ------------------------ 2. Ratify the appointment of Arthur _____ FOR _____ FOR Andersen LLP as the Company's _____ AGAINST _____ AGAINST independent public accountant. _____ ABSTAIN _____ ABSTAIN The Trustee is authorized to grant the Proxies authority to vote in their discretion upon such other business as may properly come before the meeting. Please sign below. The Trustee will vote your shares as you direct. If you sign below, but do not give any instructions or give partial instructions, the Trustee for the CAP will vote FOR Items 1 and 2. Please sign exactly as your name appears in the address. If you do not return Voting Instructions to the Trustee, the shares for which no instructions are received will be voted in the same proportion by the Trustee as the total shares for which instructions are received by the Trustee. - - -------------------------- ----------------------- --------------- Signature of Participant Social Security Number Date The enclosed 1999 proxy material for Kerr-McGee Corporation has been mailed to you because you held stock through the Oryx Energy Company Capital Accumulation Plan on March 15, 1999, the record date for the 1999 Annual Meeting. It is important that you vote, sign and return the Voting Instructions as soon as possible. By signing and promptly returning the Voting Instructions, you will save your Company additional mailing and solicitation costs. Please turn to the reverse side, complete the Voting Instructions, execute and mail today in the self-addressed, postage paid envelope. -----END PRIVACY-ENHANCED MESSAGE-----