-----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, Kh7VvqkHDc69royCWJJsZqWljb4eaorIqcvAec6/rzJKh7DdotVuiaKdyyllVjYN uRXLVZyOEEq8ariR9vf0Eg== 0000950134-96-001244.txt : 19960408 0000950134-96-001244.hdr.sgml : 19960408 ACCESSION NUMBER: 0000950134-96-001244 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960514 FILED AS OF DATE: 19960405 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KERR MCGEE CORP CENTRAL INDEX KEY: 0000055458 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 730311467 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-03939 FILM NUMBER: 96544748 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 1 SCHEDULE 14A (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) 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 / / Definitive Additional Materials / / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 Kerr-McGee Corporation - -------------------------------------------------------------------------------- (Name of Registrant as Specified in its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or 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)(4) and 0-11. (1) Title of each class of securities to which transaction applies: - -------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: - -------------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): - -------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- (5) Total fee paid: - -------------------------------------------------------------------------------- / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: - -------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: - -------------------------------------------------------------------------------- (3) Filing Party: - -------------------------------------------------------------------------------- (4) Date Filed: - -------------------------------------------------------------------------------- 2 [KM LOGO] KERR-MCGEE CORPORATION KERR-MCGEE CENTER P. O. BOX 25861 OKLAHOMA CITY, OKLAHOMA 73125 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS MAY 14, 1996 TO THE STOCKHOLDERS: The 1996 annual meeting of stockholders of Kerr-McGee Corporation (the "Company") will be held in the Robert S. Kerr Auditorium, Kerr-McGee Center, 123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma, at 9:00 a.m. on Tuesday, May 14, 1996, for the following purposes: 1. To elect 12 directors. 2. To ratify the appointment of Arthur Andersen LLP as the Company's independent public accountants. 3. To transact such other business as may properly come before the meeting. The Board of Directors has fixed March 18, 1996, as the record date for determination of stockholders entitled to notice of and to vote at this meeting. STOCKHOLDERS OF RECORD WILL BE ADMITTED UPON VERIFICATION OF OWNERSHIP AT THE ADMISSIONS COUNTER AT THE MEETING. BENEFICIAL OWNERS SHOULD PRESENT EVIDENCE OF STOCK OWNERSHIP TO THE ATTENDANT AT THE ADMISSIONS COUNTER FOR ADMITTANCE TO THE MEETING. To ensure your representation at the meeting, please sign and promptly mail the enclosed proxy, which is being solicited on behalf of the Board of Directors of the Company. A return envelope, which requires no postage if mailed in the United States, is enclosed for such purpose. If you receive more than one form of proxy, it is an indication that your shares are registered in more than one account. All proxy forms received by you should be signed and mailed to ensure that all your shares are voted. By Order of the Board of Directors TOM J. MCDANIEL Secretary April 5, 1996 3 KERR-MCGEE CORPORATION KERR-MCGEE CENTER P. O. BOX 25861 OKLAHOMA CITY, OKLAHOMA 73125 PROXY STATEMENT FOR 1996 ANNUAL MEETING OF STOCKHOLDERS April 5, 1996 The accompanying proxy is solicited on behalf of the Board of Directors of Kerr-McGee Corporation (the "Company"). This Proxy Statement and the accompanying form of proxy are first being mailed to stockholders on or about April 5, 1996. Proxies in the form enclosed that are properly signed and returned will be voted as directed unless revoked before exercise by written notice from the stockholder to the Secretary of the Company at the address set forth above or by the stockholders voting by ballot at the 1996 annual meeting. 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 Company's 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. Abstentions are treated as votes against a proposal and broker non-votes have no effect on the vote. 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. 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 50,406,962 shares outstanding as of the close of business on March 18, 1996, 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 In accordance with the Bylaws, the Board has designated 12 as the number of directors to be elected at the forthcoming annual meeting of stockholders. Ten of the nominees are incumbent directors who were elected at the 1995 annual stockholders' meeting. The Board has also nominated Paul M. Anderson and Richard M. Rompala to serve as members of the Board beginning May 14, 1996. 1 4 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. Each person elected director at an annual meeting will be elected to serve until the next annual stockholders' meeting or until a successor is elected. Certain information with respect to the nominees for director, including their principal occupations during the past five years, is set forth below:
NAME, AGE (AS OF JANUARY 1, 1996), FIRST BECAME PRINCIPAL OCCUPATION & OTHER DIRECTORSHIPS A DIRECTOR -------------------------------------------------------- ------------ [PHOTO] PAUL M. ANDERSON, 50 -- President and Chief Executive Officer of PanEnergy Corp, a provider of natural gas ------------ transportation and related services in North America since May 1995; President of PanEnergy Corp. from 1993 to May 1995; President of Panhandle Eastern Pipeline and Group Vice President from 1991 to 1993; Vice President -- Finance and Chief Financial Officer of Inland Steel Industries, Inc. from 1990 to 1991. Director, TEPPCO Partners, L.P. and Temple-Inland Inc. ----------------------------------------------------------------------- [PHOTO] BENNETT E. BIDWELL, 68 -- Retired; Chairman of Pentastar 1986 Transportation Group, Inc., a national car rental firm, from January 1991 to December 1992; Chairman of Chrysler Motors Corporation from 1988 to 1990. Director, T I Group, PLC. ----------------------------------------------------------------------- [PHOTO] EARNEST H. CLARK, JR., 69 -- Chairman of the Board and 1988 Chief Executive Officer of The Friendship Group, an investment partnership, since 1989; Retired as Chairman of the Board of Baker Hughes Incorporated in 1989. Director, Honeywell, Inc., CBI Industries, Inc., Beckman Instruments, Inc., Regenesis Inc. and American Mutual Fund. -----------------------------------------------------------------------
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NAME, AGE (AS OF JANUARY 1, 1996), FIRST BECAME PRINCIPAL OCCUPATION & OTHER DIRECTORSHIPS A DIRECTOR -------------------------------------------------------- ------------ [PHOTO] LUKE R. CORBETT, 48 -- President and Chief Operating 1995 Officer of the Company since May 1995; Group Vice President of the Company from 1992 to May 1995; Senior Vice President of the Company from 1991 until 1992; Vice President, Oil and Gas Exploration of the Company from 1987 until 1991. Director, Boatmen's Bank of Oklahoma City, N.A. ----------------------------------------------------------------------- [PHOTO] MARTIN C. JISCHKE, 54 -- President of Iowa State 1993 University since 1991; Chancellor of the University of Missouri-Rolla from 1986 to 1991. Director, Bankers Trust Corporation. ----------------------------------------------------------------------- [PHOTO] ROBERT S. KERR, JR., 69 -- Attorney, Chairman of the 1957 Board of Kerr, Irvine, Rhodes & Ables, an Oklahoma City law firm, and President of the Kerr Foundation, Inc., both for a period in excess of five years. ----------------------------------------------------------------------- [PHOTO] FRANK A. MCPHERSON, 62 -- Chairman of the Board and 1977 Chief Executive Officer of the Company since 1983. Director, Seligman Select Municipal Fund, Inc., Seligman Quality Municipal Fund, Inc., and each of the Seligman Group of Mutual Funds, Tri-Continental Corporation, Kimberly-Clark Corporation and Bank of Oklahoma, N.A. -----------------------------------------------------------------------
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NAME, AGE (AS OF JANUARY 1, 1996), FIRST BECAME PRINCIPAL OCCUPATION & OTHER DIRECTORSHIPS A DIRECTOR -------------------------------------------------------- ------------ [PHOTO] WILLIAM C. MORRIS, 57 -- Chairman of the Board and 1977 President 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. ----------------------------------------------------------------------- [PHOTO] JOHN J. MURPHY, 64 -- Chairman of the Board of Dresser 1990 Industries, Inc., hydrocarbon energy products and services, since 1983; Chief Executive Officer of Dresser Industries, Inc., from 1983 to 1995; President of Dresser Industries, Inc. from 1982 to 1992. Director, PepsiCo Inc. and NationsBank Corporation. ----------------------------------------------------------------------- [PHOTO] JOHN J. NEVIN, 68 -- Retired; Chairman and Chief 1990 Executive Officer of Bridgestone/Firestone Inc. from 1981 to 1989. Director, Littelfuse, Inc. ----------------------------------------------------------------------- [PHOTO] RICHARD M. ROMPALA, 49 -- President and Chief Executive Officer of The Valspar Corporation, a manufacturer of ----------- paints and related coatings, since October 1995; President of The Valspar Corporation since March 1994; Group Vice President of PPG Industries from 1987 to 1994. -----------------------------------------------------------------------
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NAME, AGE (AS OF JANUARY 1, 1996), FIRST BECAME PRINCIPAL OCCUPATION & OTHER DIRECTORSHIPS A DIRECTOR -------------------------------------------------------- ------------ [PHOTO] FARAH M. WALTERS, 51 -- President and Chief Executive 1993 Officer of University Hospitals of Cleveland and University Hospitals Health System, Inc. since 1992; Executive Director of University Hospitals of Cleveland and Senior Executive Vice President of University Hospitals Health Systems, Inc. from 1989 to 1992. Director, Society National Bank and LTV Corporation. -----------------------------------------------------------------------
None of the above nominees is related to any executive officer of the Company, its subsidiaries 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 1995 the Board held seven 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 per year 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 adopted in 1982, 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. In 1988 a Stock Deferred Compensation Plan for Non-Employee Directors was approved. The non-employee 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 non-employee 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 Nominating Committee and a Finance Committee as standing committees. The Audit Committee meets periodically with the Company's independent public accountants to review plans for the audit and the audit results and recommends selection of the independent public accountants. 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 5 8 controls. The Audit Committee consists of four independent non-employee directors: Robert S. Kerr, Jr. (Chairman), Earnest H. Clark, Jr., Martin C. Jischke and Farah M. Walters. The Committee met twice during 1995. 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. Recommendations must be received by the Company at least 90 days prior to the meeting at which the Election of Directors will take place. Recommendations should include the individual's name, mailing address, experience and a signed consent to serve. The Nominating Committee consists of four independent non-employee directors: Earnest H. Clark, Jr. (Chairman), Robert S. Kerr, Jr., William C. Morris and Farah M. Walters. Frank A. McPherson is an ex-officio member. The Committee met three times during 1995. 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. It 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 non-employee directors. The Executive Compensation Committee consists of four independent non-employee directors: Bennett E. Bidwell (Chairman), Martin C. Jischke, John J. Murphy and John J. Nevin. The Committee met twice in 1995. The Finance Committee reviews the annual budget, such other budget and financial matters as may be requested, and strategy as may be required. The Finance Committee consists of four independent non-employee directors: John J. Nevin (Chairman), Bennett E. Bidwell, William C. Morris and John J. Murphy. The Committee met three times in 1995. 6 9 SECURITY OWNERSHIP The following table sets forth the number of shares of Common Stock beneficially owned by each director and nominee, each of the executive officers named in the Summary Compensation Table, and by all directors and officers as a group as of December 31, 1995 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 - ------------------------------------------------------- ----------------------- ---------- Paul M. Anderson....................................... -0- * Bennett E. Bidwell..................................... 1,741(1) Earnest H. Clark, Jr................................... 144(1) Luke R. Corbett........................................ 63,903(4) Martin C. Jischke...................................... 1,694(1) Robert S. Kerr, Jr..................................... 42,192(2)(3) Frank A. McPherson..................................... 187,747(4) William C. Morris...................................... 11,200 John J. Murphy......................................... 848(1) John J. Nevin.......................................... 1,500 Richard M. Rompala..................................... -0- Farah M. Walters....................................... 1,640(1) George R. Hennigan..................................... 39,482(4) John C. Linehan........................................ 64,913(4) Tom J. McDaniel........................................ 29,734(4) All directors and executive officers as a group, including those named above.......................... 651,210(4)(5) 1.29
- --------------- * The percentage of shares beneficially owned by any director, nominee or executive officer does not exceed 1%. (1) Includes shares held by the Stock Deferred Compensation Plan for Non-Employee Directors. (2) Includes (i) 16,531 shares held in two trusts of which Mr. Kerr and his wife are co-trustees and (ii) 25,661 shares held by The Kerr Foundation, Inc., of which Mr. Kerr is Chairman of the Board of Trustees and President. (3) Does not include (i) 120 shares held by Mr. Kerr's wife and (ii) 350 shares held in a trust for the benefit of one of Mr. Kerr's children, of which Mr. Kerr's wife is the trustee; in all of which beneficial interest is disclaimed. (4) Includes shares issuable upon the exercise of outstanding stock options, exercisable within 60 days of December 31, 1995: 127,833 shares for Mr. McPherson, 55,033 shares for Mr. Corbett, 48,566 shares for Mr. Linehan, 20,833 shares for Mr. McDaniel, 33,634 shares for Mr. Hennigan and 443,588 shares for all directors and executive officers as a group. (5) Includes restricted stock awarded in 1993 to all directors and executive officers as a group pursuant to the Long Term Incentive Program and on which restrictions have not been removed as of December 31, 1995. 7 10 ITEM NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS Arthur Andersen LLP, an independent public accounting firm, has been selected as the Company's independent public accountants for 1996 in accordance with the recommendation of the Audit Committee. This firm served in the same capacity for the year ended December 31, 1995. Representatives of Arthur Andersen LLP will be present at the 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 accountants for 1996. The Board of Directors recommends a vote "FOR" ratification of the appointment of Arthur Andersen LLP. 8 11 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, 1995, 1994 and 1993. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION AWARDS ----------------------- NO. OF ANNUAL COMPENSATION RESTRICTED SECURITIES ------------------- STOCK UNDERLYING ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS OPTIONS(1) COMPENSATION(2) - ----------------------------- ---- -------- -------- ---------- ---------- --------------- Frank A. McPherson, 1995 $668,385 $775,000 -0- 40,000 $40,103 Chairman of the 1994 589,000 150,000 -0- 40,000 35,340 Board and Chief 1993 584,077 -0- -0- 40,200 35,045 Executive Officer Luke R. Corbett, 1995 379,816 440,000 -0- 21,000 22,789 President and Chief 50,000(3) Operating Officer 1994 296,167 75,000 -0- 20,000 17,770 1993 249,231 -0- -0- 12,900 14,954 John C. Linehan, 1995 283,846 280,000 -0- 17,000 17,031 Senior Vice President 1994 270,000 65,000 -0- 18,000 16,200 and Chief Financial 1993 268,077 -0- -0- 12,900 16,085 Officer Tom J. McDaniel, 1995 259,231 260,000 -0- 15,000 15,554 Senior Vice President 1994 250,000 65,000 -0- 12,000 15,000 and Secretary 1993 208,538 -0- -0- 8,600 12,512 George R. Hennigan 1995 248,846 225,000 -0- 12,000 14,931 Senior Vice President 1994 235,000 50,000 -0- 12,600 14,100 1993 232,308 -0- -0- 9,600 13,938
- --------------- (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 Savings Investment Plan and amounts contributed under the non-qualified benefits restoration plan. Company contributions pursuant to the Savings Investment Plan for 1995 were $9,000 each to Messrs. McPherson, Corbett, Linehan, McDaniel and Hennigan. Amounts contributed under the non-qualified benefits restoration plan for 1995 on behalf of Messrs. McPherson, Corbett, Linehan, McDaniel and Hennigan were $31,103, $13,789, $8,031, $6,554 and $5,931, respectively. The amounts contributed by the Company to the Kerr-McGee Corporation Benefits Restoration Plan on behalf of such 9 12 persons are identical to the amounts that would have been contributed pursuant to the Savings Investment Plan except for the Internal Revenue Code ("Code") limitations. (3) On May 9, 1995, upon being named President and Chief Operating Officer, a one-time option for 50,000 shares was granted at an exercise price of $54.50 per share. STOCK OPTIONS The following table contains information concerning stock options granted during the fiscal year ended December 31, 1995 to the five most highly compensated executive officers of the Company: OPTION GRANTS IN LAST FISCAL YEAR
PERCENT OF NO. OF TOTAL SECURITIES OPTIONS PER GRANT UNDERLYING GRANTED TO SHARE DATE OPTIONS EMPLOYEES IN EXERCISE EXPIRATION PRESENT NAME GRANTED(1) FISCAL YEAR PRICE DATE VALUE(2) - -------------------------------- ---------- ------------ -------- ----------------- --------- Frank A. McPherson.............. 40,000 9.8% $ 44.625 January 10, 2005 $ 548,400 Luke R. Corbett................. 21,000 5.1 44.625 January 10, 2005 287,910 50,000(3) 12.2 54.50 May 9, 2005 796,500 John C. Linehan................. 17,000 4.2 44.625 January 10, 2005 233,070 Tom J. McDaniel................. 15,000 3.7 44.625 January 10, 2005 205,650 George R. Hennigan.............. 12,000 2.9 44.625 January 10, 2005 164,520
- --------------- (1) All stock options granted in 1995 were non-qualified stock options. The exercise price per share 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 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 1995, nor have any been granted since 1991. Options may also provide that, upon the commencement of any tender offer for at least 25% of the outstanding Common Stock, all options and any accompanying SARs held for more than six months shall become immediately exercisable in full. If an optionee and the Company have previously agreed, the option shall be automatically repurchased by the Company at its fair market value if any person has made a successful tender offer for the Common Stock that, together with shares then owned by such person, would be 25% or more of the outstanding shares of Common Stock. The purchase price will generally be the difference between the tender offer price and the exercise price of the option. All executive officers of the Company have agreed to this automatic repurchase provision with respect to all their options. (2) The present value was computed in accordance with the Black-Scholes option pricing model, as permitted by the rules of the Securities and Exchange Commission. Based on Black-Scholes, the value on January 10, 1995 was $13.71 per share and on May 9, 1995 was $15.93 per share. The Company believes, however, that it is not possible to accurately determine the value of options at the time of grant using any model, including Black-Scholes, since any valuation depends on numerous assumptions. The model assumes: (a) an option term of ten years; (b) interest rates of 10 13 7.78% and 6.63% for grants on January 10, 1995 and May 9, 1995, respectively, which represent the interest rate on a U.S. Treasury Bond with a maturity date corresponding to that of the option term; (c) volatility calculated using daily stock prices for the year prior to the grant date; and (d) dividends at the annual rate of $1.52 per share. (3) On May 9, 1995, upon being named President and Chief Operating Officer, a one-time option for 50,000 shares was granted at an exercise price of $54.50 per share. OPTION/SAR EXERCISES AND HOLDINGS The following table sets forth information for the named executives with respect to options/SARs exercised during 1995 and the value of unexercised options/SARs held as of December 31, 1995. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS SHARES DECEMBER 31, 1995 AT DECEMBER 31, 1995(1) ACQUIRED ON VALUE --------------------------- ---------------------------- NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ----------------------------------------- ----------- ----------- ------------- ----------- ------------- Frank A. McPherson............ -- $ -- 101,167 80,067 $ 2,014,307 $ 1,423,626 Luke R. Corbett............... 582(2) 56,250 41,366 88,634 973,372 1,140,347 John C. Linehan............... 3,618(2) 387,813 36,900 33,300 740,350 592,669 Tom J. McDaniel............... 175(2) 18,913 11,833 25,867 219,192 464,326 George R. Hennigan............ 3,000(3) 91,875 25,434 23,600 492,508 419,950
- --------------- (1) Options/SARs are "in-the-money" if the fair market value of the Common Stock exceeds the exercise price. At December 31, 1995, the closing price of the Common Stock on the New York Stock Exchange was $63.50. (2) Shares received upon exercise. (3) Options exercised without receipt of shares. 11 14 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 - -------------- -------- -------- -------- -------- -------- 250,000.............................. $ 58,056 $ 77,408 $ 96,760 $116,112 $135,464 350,000.............................. 82,056 109,408 136,760 164,112 191,464 450,000.............................. 106,056 141,408 176,760 212,112 247,464 550,000.............................. 130,056 173,408 216,760 260,112 303,464 650,000.............................. 154,056 205,408 256,760 308,112 359,464 750,000.............................. 178,056 237,408 296,760 356,112 415,464 850,000.............................. 202,056 269,408 336,760 404,112 471,464 950,000.............................. 226,056 301,408 376,760 452,112 527,464
Covered compensation under the retirement plans consists of salary and bonus as reflected in the Summary Compensation Table plus pre-tax 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. As of December 31, 1995, Mr. McPherson had 33 years of credited service; Mr. Corbett, 10; Mr. Linehan, 10; Mr. McDaniel, 11 and Mr. Hennigan, 16. Pursuant to the Company's Supplemental Executive Retirement Plan ("SERP"), adopted effective January 1, 1991, and revised May 3, 1994, certain key senior executives are eligible to receive supplemental retirement benefits. The SERP is a defined benefit plan and is administered by the Executive Compensation Committee (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 62, upon retirement prior to age 62 if the employee is disabled or dies, or upon a change of control of the Company if termination of service from the Company occurs under certain circumstances. 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 non-qualified defined benefit plans. The plan provisions establish a minimum benefit for employees who were participants before May 3, 1994, regardless of the years of Company service. 12 15 The percentage of final average monthly compensation used to determine the SERP benefit ranges from 40% to 70%, 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 December 31, 1995, the estimated lump sum SERP benefit payable upon retirement to the executive officers named in the Summary Compensation Table -- assuming (i) retirement at age 62 (except Mr. McPherson who continues as Chief Executive Officer and Chairman of the Board past age 62) and (ii) salaries are maintained at their current level, is: Mr. McPherson, $1,042,599; Mr. Corbett, $989,309; Mr. Linehan, $698,382; Mr. McDaniel, $975,759 and Mr. Hennigan, $433,891. EMPLOYMENT AGREEMENTS The Company does not have an Employment Agreement in force with any of the executive officers. CHANGE OF CONTROL ARRANGEMENTS With respect to Messrs. McPherson, Corbett, Linehan, McDaniel and Hennigan as well as certain other executive officers, the Company has agreed to provide certain benefits in the event of a "change of control" (as defined) of the Company. If a change of control of the Company occurs, the executive whose employment is subsequently terminated for any reason other than death, disability or "cause" (as defined), or who subsequently terminates employment for "good reason" (as defined), will be entitled to receive a maximum lump sum cash payment equal to three times the executive's annual base salary. In addition, upon such termination, the executive will be entitled to receive amounts that he or she would otherwise have been entitled to under the SERP with the specified percentage multiplier being the greater of 70% or the amount as determined when the SERP is calculated using the eligible employee's service, as described under "Retirement Plans" above. 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. If an executive who has been granted options and the Company have previously agreed, options shall be automatically repurchased by the Company if any person has made a successful tender offer for the Common Stock that, together with shares then owned by such person, would be 25% or more of the outstanding shares of Common Stock. The purchase price will generally be the difference between the tender offer price and the exercise price of the options. All executive officers of the Company have agreed to this automatic repurchase provision with respect to all their options. In addition, in the event any person acquires 25% or more of the outstanding Common Stock, restrictions on shares of restricted stock shall lapse. REPORT ON EXECUTIVE COMPENSATION The Committee is comprised of four independent non-employee directors and is responsible for administering compensation programs that make it possible for the Company to attract and retain men and women with the skills and attitudes necessary to provide the Company with a fully competitive and capable management. The Committee reviews the salaries and incentive pay awards as recommended by the Chief Executive Officer ("CEO") for the officers of the Company. It recommends to the full Board such 13 16 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 non-employee directors. Set forth below is the report on the Company's executive compensation policies for 1995 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 shareholder 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 17, 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, as well as facilitating global management. BASE SALARIES In determining base salaries for executive officers, the Committee annually reviews competitive market compensation data of the Comparison Group prepared by an independent consulting firm. The Committee's policy is to set executive officers' base salaries at or near the median of base salaries of comparable positions within 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 provides an opportunity for key employees to earn supplemental incentive compensation each year if the Company's financial targets are met or exceeded. The Committee believes that setting threshold and target returns is the appropriate approach to annual incentive pay, while recognizing that some peer companies may use more subjective bases. As a result, while some peer companies continued incentive pay, Kerr-McGee did not pay supplemental incentive compensation in 1992 and 1993 notwithstanding the fact that Kerr-McGee's return to stockholders was above average for the industry during that time period. Before Annual Incentive Compensation Plan awards are made, the Company must earn a minimum return on average capital employed ("ROACE") established by the Committee at the beginning of the year. The size of each executive officer's award is directly related to the amount by which the threshold ROACE is exceeded and to the position and performance of the individual executive officer. 14 17 In 1995, Kerr-McGee's total return to shareholders (stock price appreciation and dividends) of 41% was the highest of the domestic integrated oil companies and significantly higher than the second highest performer in the group. The Company's overall financial results exceeded budget projections for each of the Company's operating divisions. The 1995 awards for Mr. McPherson and the four other highest paid officers are set forth in the Summary Compensation Table. The total awards granted corporate officers in any given year may not exceed 1.7% of pre-tax income from continuing operations, before extraordinary/unusual items. 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 1995. 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. 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 the size of competitive awards made within the Comparison Group, as well as the individual's level of responsibility and a subjective performance evaluation. The amount and terms of prior awards were also considered by the Committee when making 1995 awards. The number of stock options granted in 1995 to Mr. McPherson and the four other highest paid officers is set forth in the Option Grants Table. COMPENSATION OF THE CHIEF EXECUTIVE OFFICER The Chief Executive Officer's compensation is determined in accordance with the policies described above. Until recently, the Executive Compensation Committee's review of the base salaries paid to the CEOs of The Comparison Group led the Committee to conclude that Mr. McPherson's base salary was not fully competitive. That situation has been corrected; Mr. McPherson's base salary is now considered by the Committee to be competitive. In 1992 and 1993, Mr. McPherson's total compensation was adversely impacted by the fact that Kerr-McGee made no Annual Incentive Compensation awards to its executives during a period when competitors with comparable financial performance were paying such awards to their executives. In 1995, with Mr. McPherson's leadership, Kerr-McGee produced a 41% total return for its shareholders and significantly exceeded the internal performance targets set at the beginning of the year. In addition to leading efforts that produced dramatically improved financial results in 1995, Mr. McPherson, in the Committee's view, played a major role in completing the divestiture of the Refining and Marketing business on very favorable terms, restructuring the Exploration and Production business, and implementing management development and succession plans that will prove critically important to Kerr-McGee's future growth and prosperity. No specific weight was assigned by the Committee to any individual factor. 15 18 The Committee believes that Mr. McPherson's 1995 compensation appropriately recognizes his contributions to the Company's substantially improved performance during the last year. The Committee also believes that executive compensation for 1995 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 its stockholders. FEDERAL INCOME TAX DEDUCTIBILITY Code Section 162(m) generally limits the corporate deduction on compensation paid to an executive officer in excess of $1 million. The Internal Revenue Service did not issue final regulations on the deductibility limit until December 1995. The Company will study these regulations and will consider modifications to its compensation programs. The Company has adopted a Deferred Compensation Plan which allows executive officers to defer a portion of salary or incentive pay. At the current time it is not mandatory that an executive officer defer any compensation in any taxable year. The Company has determined that the impact to the Company of being unable to deduct that portion of annual incentive pay to such officers which, together with their base salary, exceeds $1 million, will be minimal. The Committee believes it is in the stockholders' interest to maintain compensation plans which support the achievement of long-term strategic objectives and enhance stockholder value. In applying this philosophy, the Company will also attempt to maximize the amount of compensation expense that is tax deductible. Submitted by: EXECUTIVE COMPENSATION COMMITTEE Bennett E. Bidwell, Chairman Martin C. Jischke John J. Murphy John J. Nevin OTHER INDEPENDENT NON-EMPLOYEE DIRECTORS Earnest H. Clark, Jr. Robert S. Kerr, Jr. William C. Morris Farah M. Walters 16 19 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 1991 through 1995. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN KERR-MCGEE CORPORATION VS. S&P 500 INDEX AND S&P DOMESTIC INTEGRATED OIL INDEX
1990 1991 1992 1993 1994 1995 ---- ---- ---- ---- ---- ---- S & P 500 100 130 140 154 156 215 KMG 100 89 108 112 118 167 S & P 500 Domestic Integrated Oil Index 100 94 96 101 106 121
Year-end index Data supplied by Compustat CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS On April 13, 1995, The M. W. Kellogg Company ("Kellogg") purchased from Kerr-McGee Corporation the ROSE(R) Technology for $18.5 million. Kellogg is a wholly owned subsidiary of Dresser Industries, Inc. John J. Murphy, a director of Kerr-McGee Corporation, serves as Chairman of the Board of Dresser Industries, Inc. STOCKHOLDER PROPOSALS Stockholder proposals for the 1997 annual meeting must be received at the principal executive offices of the Company not later than December 6, 1996. 17 20 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, telephonic or telegraphic communications or meetings with stockholders or their representatives by directors, officers and other employees of the Company who will receive no additional compensation therefor. 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 18, 1996, except as set forth below:
AMOUNT AND NATURE OF TITLE NAME AND ADDRESS OF BENEFICIAL PERCENT OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS - ------------------------------ ------------------------------ ---------- -------- Common Stock.................. FMR Corp. 3,454,834 (1) 6.7% 82 Devonshire Street Boston, MA 02109-3614 Common Stock.................. State Street Bank and Trust 3,198,383 (2) 6.2% Company 225 Franklin St. Boston, MA 02110 Common Stock.................. Lazard Freres & Co. LLC 3,040,642 (3) 6.0% 30 Rockefeller Plaza New York, NY 10020
- --------------- (1) Based on a Schedule 13G for the year ended December 31, 1995, FMR Corp. has sole voting power over 231,827 shares and sole power to dispose over 3,454,834 shares. This reporting entity holds no shares over which it has shared voting or shared disposition power. (2) Based on a Schedule 13G for the year ended December 31, 1995, State Street Bank and Trust Company has sole voting power over 422,026 shares, sole power to dispose over 550,743 shares, shared voting power over 2,639,057 and shared power to dispose over 2,647,640 shares. Included in these totals are shares the reporting person holds as Trustee of the Company's Employee Stock Ownership Plan for the benefit of the Plan participants. The decisions with respect to the voting and disposition are made by the Plan participants. (3) Based on a Schedule 13G for the year ended December 31, 1995, Lazard Freres & Co. LLC has sole voting power over 2,397,587 shares and sole power to dispose over 3,023,342 shares. This reporting entity holds no shares over which it has shared voting or shared disposition power. 18 21 COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 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 ("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 greater than 10% stockholders 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, 1995, all applicable Section 16(a) filing requirements were met. 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. TOM J. MCDANIEL Secretary 19 22 ================================================================================ BY SIGNING AND PROMPTLY RETURNING THE ENCLOSED PROXY CARD YOU WILL SAVE YOUR COMPANY THE EXPENSE OF ADDITIONAL MAILING AND SOLICITATION COSTS. - -------------------------------------------------------------------------------- THIS PROXY MATERIAL HAS BEEN FORWARDED TO YOU BECAUSE YOU WERE A STOCKHOLDER ON THE RECORD DATE, MARCH 18, 1996. IT IS IMPORTANT THAT YOU VOTE AND SIGN THE PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE. THANK YOU. ================================================================================ [LOGO] 23 [KM LOGO] KERR-McGEE CORPORATION PROXY Kerr-McGee Center P.O. Box 25861 Oklahoma City, Oklahoma 73125 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Frank A. McPherson, 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 18, 1996, at the Annual Meeting of Stockholders to be held on May 14, 1996, 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. (CONTINUED ON BACK) 24 THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" ITEMS 1 and 2. 1. ELECTION OF DIRECTORS Paul M. Anderson, Bennett E. Bidwell, Earnest H. Clark, Jr., Luke R. Corbett, Martin C. Jischke, Robert S. Kerr, Jr.,Frank A. McPherson, William C. Morris, John J. Murphy, John J. Nevin, Richard M. Rompala and Farah M. Walters. [ ] FOR [ ] WITHHOLD [ ] WITHHOLD for the following only, write name(s): ____________________________________________________________________________ 2. Ratify the appointment of Arthur Andersen LLP as the Company's independent public accountants. [ ] 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. Dated __________________, 1996 Signature _____________________________________ Signature if held jointly _____________________ Please sign exactly as the name appears above. When signing as attorney, executor, administrator, trustee or guardian please give full title. If a corporation, please sign full corporation name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. -----END PRIVACY-ENHANCED MESSAGE-----