-----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, PBxDUYZtlfUGB/lM1mTkPZ6yAyZpbyuuHp9k4xOa973UJJJe42OyQwzZIOEfqty9 faNCx5Omr1HRUG8eNfWSiA== 0000950134-97-002361.txt : 20030406 0000950134-97-002361.hdr.sgml : 20030406 19970328125729 ACCESSION NUMBER: 0000950134-97-002361 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970513 FILED AS OF DATE: 19970328 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KERR MCGEE CORP CENTRAL INDEX KEY: 0000055458 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 730311467 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-03939 FILM NUMBER: 97566962 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 [ ] Filed by a Party other than the Registrant [X] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12 - - -------------------------------------------------------------------------------- (Name of Registrant as Specified in its Charter) Kerr-McGee Corporation - - -------------------------------------------------------------------------------- (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)(l) 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 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 [KERR-MCGEE LOGO] KERR-MCGEE CORPORATION KERR-MCGEE CENTER P. O. BOX 25861 OKLAHOMA CITY, OKLAHOMA 73125 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS MAY 13, 1997
TO THE STOCKHOLDERS: The 1997 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 13, 1997, for the following purposes: 1. To elect nine 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 17, 1997, 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 RUSSELL G. HORNER, JR. Secretary March 31, 1997 3 KERR-MCGEE CORPORATION KERR-MCGEE CENTER P. O. BOX 25861 OKLAHOMA CITY, OKLAHOMA 73125 PROXY STATEMENT FOR 1997 ANNUAL MEETING OF STOCKHOLDERS March 31, 1997 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 about March 31, 1997. 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 1997 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 Kerr-McGee Corporation ByLaws ("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 will have the effect of votes against a proposal and broker nonvotes 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 48,050,062 shares outstanding as of the close of business on March 17, 1997, 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 nine as the number of Directors to be elected at the forthcoming Annual Meeting of Stockholders. Eight of the nominees are incumbent Directors who were elected at the 1996 Annual Stockholders' Meeting. Mr. McDaniel was elected a Director effective February 1, 1997. Three current Directors, Earnest H. Clark, Jr., Robert S. Kerr, Jr., and John J. Nevin, having reached the mandatory retirement age of 70 prior to May 13, 1997, are not 1 4 standing for reelection to the Board, and Frank A. McPherson retired as a Director, as well as Chairman of the Board and Chief Executive Officer, effective February 1, 1997. 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 FEBRUARY 1, 1997), FIRST BECAME PRINCIPAL OCCUPATION & OTHER DIRECTORSHIPS A DIRECTOR ------------------------------------------ ------------ [PAUL M. ANDERSON PAUL M. ANDERSON, 51 -- President and Chief Executive 1996 PHOTO] Officer of PanEnergy Corp, a provider of natural gas transportation and related services in North America since 1995; President of PanEnergy Corp from 1993 to 1995; President of Panhandle Eastern Pipeline and Group Vice President from 1991 to 1993. Director, TEPPCO Partners, L.P. and Temple-Inland Inc. ------------------------------------------------------------------------ [BENNETT E. BIDWELL BENNETT E. BIDWELL, 69 -- Retired; Chairman of Pentastar 1986 PHOTO] Transportation Group, Inc., a national car rental firm, from 1991 through 1992. Chairman of Chrysler Motors Corporation from 1988 through 1990. Director, T I Group, PLC. ------------------------------------------------------------------------ [LUKE R. CORBETT LUKE R. CORBETT, 49 -- Chairman of the Board and Chief 1995 PHOTO] Executive Officer of the Company since February 1, 1997; President and Chief Operating Officer from May 1995 through January 1997; Group Vice President from 1992 to May 1995; Senior Vice President of the Company from 1991 until 1992. Director, Devon Energy Corporation and OGE Energy Corp. ------------------------------------------------------------------------
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NAME, AGE (AS OF FEBRUARY 1, 1997), FIRST BECAME PRINCIPAL OCCUPATION & OTHER DIRECTORSHIPS A DIRECTOR ------------------------------------------ ------------ [MARTIN C. JISCHKE MARTIN C. JISCHKE, 55 -- President of Iowa State 1993 PHOTO] University since 1991. Director, Bankers Trust Corporation. ------------------------------------------------------------------------ [TOM J. McDANIEL TOM J. MCDANIEL, 58 -- Vice Chairman of the Company 1997 PHOTO] since February 1, 1997; Senior Vice President and Corporate Secretary from 1989 through January 1997. Director, Devon Energy Corporation. ------------------------------------------------------------------------ [WILLIAM C. MORRIS WILLIAM C. MORRIS, 58 -- Chairman of the Board of J. & 1977 PHOTO] 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. ------------------------------------------------------------------------ [JOHN J. MURPHY JOHN J. MURPHY, 65 -- Retired; Chairman of the Board of 1990 PHOTO] Dresser Industries, Inc., hydrocarbon energy products and services, from 1983 through November 1996; Chief Executive Officer of Dresser Industries, Inc., from 1983 to 1995; President of Dresser Industries, Inc. from 1982 to 1992. Director, Carbo Ceramics, Inc., PepsiCo Inc. and NationsBank Corporation. ------------------------------------------------------------------------
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NAME, AGE (AS OF FEBRUARY 1, 1997), FIRST BECAME PRINCIPAL OCCUPATION & OTHER DIRECTORSHIPS A DIRECTOR ------------------------------------------ ------------ [RICHARD M. ROMPALA RICHARD M. ROMPALA, 50 -- President and Chief Executive 1996 PHOTO] 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. ------------------------------------------------------------------------ [FARAH M. WALTERS FARAH M. WALTERS, 52 -- President and Chief Executive 1993 PHOTO] 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, KeyBank National Association 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 1996 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 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 4 7 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 controls. The Audit Committee consists of six independent non-employee directors: Robert S. Kerr, Jr. (Chairman), Paul M. Anderson, Earnest H. Clark, Jr., Martin C. Jischke, Richard M. Rompala and Farah M. Walters. The Committee met twice during 1996. 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 served as an ex-officio member until his retirement. The Committee did not meet in 1996. 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 five independent non-employee directors: Bennett E. Bidwell (Chairman), Martin C. Jischke, John J. Murphy, John J. Nevin and Richard M. Rompala. The Committee met twice in 1996. 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 five independent non-employee directors: John J. Nevin (Chairman), Paul M. Anderson, Bennett E. Bidwell, William C. Morris and John J. Murphy. The Committee met twice in 1996. 5 8 SECURITY OWNERSHIP The following table sets forth the number of shares of Common Stock beneficially owned as of December 31, 1996 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 ------------- ------------------ ---------- Paul M. Anderson........................................... 305(1) * Bennett E. Bidwell......................................... 1,994(1) Earnest H. Clark, Jr....................................... 342(1) Luke R. Corbett............................................ 98,978(4) Martin C. Jischke.......................................... 2,516(1) Robert S. Kerr, Jr......................................... 40,692(2)(3) Tom J. McDaniel............................................ 33,663(4) Frank A. McPherson......................................... 160,789(4) William C. Morris.......................................... 11,200 John J. Murphy............................................. 1,284(1) John J. Nevin.............................................. 2,134(1) Richard M. Rompala......................................... 447(1) Farah M. Walters........................................... 2,398(1) John C. Linehan............................................ 87,278(4) Robert C. Scharp........................................... 51,091(4) All directors and executive officers as a group, including those named above........................................ 705,349(4) 1.46
- - --------------- * 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) 15,031 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 that are exercisable within 60 days of December 31, 1996: 136,799 shares for Mr. McPherson; 86,999 shares for Mr. Corbett; 70,533 shares for Mr. Linehan; 24,533 shares for Mr. McDaniel; 46,400 shares for Mr. Scharp; and 503,011 shares for all directors and executive officers as a group. 6 9 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 1997 in accordance with the recommendation of the Audit Committee. This firm served in the same capacity for the year ended December 31, 1996. 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 accountants for 1997. 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 approved by the stockholders, Arthur Andersen LLP ceases to act as the Company's independent public accountants or the Board of Directors removes Arthur Andersen LLP as the Company's independent public accountants, the Board will appoint other independent public accountants. 7 10 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, 1996, 1995 and 1994. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION AWARDS ------------ NO. OF ANNUAL COMPENSATION SECURITIES -------------------- UNDERLYING ALL OTHER NAME AND PRINCIPAL POSITION(1) YEAR SALARY BONUS OPTIONS(2) COMPENSATION(3) ------------------------------ ---- -------- -------- ------------ --------------- Frank A. McPherson, 1996 $698,077 $800,000 40,000 $43,077 Retired as Chairman of 1995 668,385 775,000 40,000 40,103 the Board and Chief 1994 589,000 150,000 40,000 35,340 Executive Officer effective February 1, 1997 Luke R. Corbett, 1996 413,847 475,000 22,000 26,023 Chairman of the 1995 379,816 440,000 21,000 22,789 Board and Chief 50,000(4) Executive Officer 1994 296,167 75,000 20,000 17,770 John C. Linehan, 1996 294,231 265,000 18,000 18,846 Executive Vice 1995 283,846 280,000 17,000 17,031 President and Chief 1994 270,000 65,000 18,000 16,200 Financial Officer Tom J. McDaniel, 1996 269,231 245,000 11,000 17,346 Vice Chairman of 1995 259,231 260,000 15,000 15,554 the Board 1994 250,000 65,000 12,000 15,000 Robert C. Scharp, 1996 254,231 230,000 9,000 16,446 Senior Vice 1995 243,462 220,000 12,000 14,608 President 1994 206,250 50,000 11,400 12,375
- - --------------- (1) Effective February 1, 1997 upon Mr. McPherson's retirement, Luke R. Corbett became Chairman of the Board and Chief Executive Officer. Also on that date, Tom J. McDaniel became Vice Chairman and John C. Linehan was named Executive Vice President and Chief Financial Officer. (2) The Company has never granted free-standing Stock Appreciation Rights ("SARs") and has not granted tandem SARs since January 1991. (3) 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 8 11 pursuant to the Savings Investment Plan for 1996 were $10,192 each to Messrs. McPherson, Corbett, Linehan, McDaniel and Scharp. Amounts contributed under the non-qualified benefits restoration plan for 1996 on behalf of Messrs. McPherson, Corbett, Linehan, McDaniel and Scharp were $32,885, $15,831, $8,654, $7,154 and $6,254, 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 Savings Investment Plan except for the Internal Revenue Code ("Code") limitations. (4) 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, which was 100% of the fair market value of a share of Common Stock on May 9, 1995. STOCK OPTIONS The following table contains information concerning stock options granted during the fiscal year ended December 31, 1996 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 12.9% $64.875 January 9, 2006 $501,600 Luke R. Corbett.................. 22,000 7.1 64.875 January 9, 2006 275,880 John C. Linehan.................. 18,000 5.8 64.875 January 9, 2006 225,720 Tom J. McDaniel.................. 11,000 3.5 64.875 January 9, 2006 137,940 Robert C. Scharp................. 9,000 2.9 64.875 January 9, 2006 112,860
- - --------------- (1) All stock options granted in 1996 were non-qualified 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 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 1996, 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, with assumptions consistent with the Statement of Financial Accounting Standards No. 123, 9 12 "Accounting for Stock-Based Compensation", as permitted by the rules of the Securities and Exchange Commission. Based on Black-Scholes, the value on January 9, 1996, the grant date, was $12.54 per option. The Company believes, however, that it is not possible to accurately determine the value of options at the time of grant using any option pricing model, including Black-Scholes, since any valuation depends on numerous assumptions. The model assumes: (a) an expected option term of 5.8 years; (b) interest rate of 5.46% which represents the U.S. Treasury Strip Rate at the date of grant with maturity corresponding to the expected option term; (c) volatility of 17.97% calculated using monthly stock prices for the 5.8 years prior to the date of the grant; and (d) dividends at an average annual dividend yield of 3.07% for the ten years prior to December 31, 1996. OPTION/SAR EXERCISES AND HOLDINGS The following table sets forth information for the named executives with respect to options/SARs exercised during 1996 and the value of unexercised options/SARs held as of December 31, 1996. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS AT OPTIONS/SARS SHARES DECEMBER 31, 1996 AT DECEMBER 31, 1996(1) ACQUIRED ON VALUE --------------------------- --------------------------- NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- ----------- ----------- ----------- ------------- ----------- ------------- Frank A. McPherson.......... 6,956 $877,543 96,799 80,001 $2,638,724 $1,350,026 Luke R. Corbett............. 2,877 366,875 65,999 76,001 1,635,240 1,290,853 John C. Linehan............. -- -- 52,866 35,334 1,468,701 589,268 Tom J. McDaniel............. 11,833 237,144 11,867 25,000 309,946 452,625 Robert C. Scharp............ -- -- 35,600 20,800 966,294 378,600
- - --------------- (1) Options/SARs are "in-the-money" if the fair market value of the Common Stock exceeds the exercise price. At December 31, 1996, the closing price of the Common Stock on the New York Stock Exchange was $72.00. 10 13 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.......................... $ 93,932 $125,242 $156,553 $187,864 $ 219,174 600,000.......................... 141,932 189,242 236,553 283,864 331,174 800,000.......................... 189,932 253,242 316,553 379,864 443,174 1,000,000.......................... 237,932 317,242 396,553 475,864 555,174 1,200,000.......................... 285,932 381,242 476,553 571,864 667,174 1,400,000.......................... 333,932 445,242 556,553 667,864 779,174 1,600,000.......................... 381,932 509,242 636,553 763,864 891,174 1,800,000.......................... 429,932 573,242 716,553 859,864 1,003,174
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, 1996, Mr. McPherson had 34 years of credited service; Mr. Corbett, 11; Mr. Linehan, 11; Mr. McDaniel, 12; and Mr. Scharp, 21. Pursuant to the Company's Supplemental Executive Retirement Plan (the "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, or 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. 11 14 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, 1996, 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 retired effective February 1, 1997 at the age of 63) and (ii) salaries are maintained at their current level, is: Mr. McPherson, $1,627,885; Mr. Corbett, $1,042,883; Mr. Linehan, $930,284; Mr. McDaniel, $1,370,519 and Mr. Scharp, $315,664. EMPLOYMENT AND CONSULTING AGREEMENTS The Company does not have Employment Agreements in force with any of the executive officers. Mr. McPherson retired as Chairman of the Board and Chief Executive Officer of the Company on February 1, 1997. Mr. McPherson has agreed to serve as a consultant to the Company for a period of two years following his retirement, which period may be extended by the Company for one additional year. Mr. McPherson will be reimbursed for his consulting services at the rate of $300,000 per year and will receive life insurance coverage at least equal to the coverage previously provided prior to his retirement under the Company's group life insurance plan. Mr. McPherson has agreed not to engage in certain activities which compete in any material respect with any business of the Company. Upon a change in control of the Company, amounts remaining unpaid under the agreement will be immediately paid to Mr. McPherson and the agreement will remain in effect in accordance with its terms. CHANGE OF CONTROL ARRANGEMENTS With respect to Messrs. McPherson, Corbett, Linehan, McDaniel and Scharp, 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 receive under the SERP with the specified percentage multiplier being 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. 12 15 REPORT ON EXECUTIVE COMPENSATION The Executive Compensation Committee (the "Committee") is comprised of five independent non-employee directors 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. 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 non-employee directors. Set forth below is the report on the Company's executive compensation policies for 1996 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 16, 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 current 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 (the "AICP") 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 competitive target returns is the appropriate approach to annual incentive pay. 13 16 Before the AICP 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 amount 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. In 1996, Kerr-McGee's financial results exceeded budget projections and the Company achieved historical record earnings. The rolling five-year average total return to stockholders as reflected in the chart on page 16, exceeds the S&P 500 and the Domestic Integrated Oil stocks. The 1996 ROACE threshold was exceeded, triggering incentive compensation awards. 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 pretax income from continuing operations, before extraordinary and 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 1996. 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 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 1996 awards. The number of stock options granted in 1996 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, including consideration by the Committee of competitive compensation of CEOs within the Comparison Group compiled by an independent consulting firm. Mr. McPherson's annual base salary was last increased in February 1996 to $700,000. In 1996, the Company's overall financial results exceeded projections with net income at a record high. Kerr-McGee's total return -- stock price appreciation plus dividends -- to stockholders for 1996 was 16%. For the five years ended December 31, 1996, the Company's total return to stockholders ranked among the top three companies in its industry peer group. Under Mr. McPherson's leadership, the Company successfully completed its E&P restructuring program, continued its Stock Repurchase Program and positioned its business units for improved financial results. In determining Mr. McPherson's compensation, no specific weight was assigned by the Committee to any individual factor. The Committee believes that Mr. McPherson's leadership played a major role in the Company's performance and awarded Mr. McPherson a 1996 incentive award under the Company's AICP as shown in the Summary Compensation Table. 14 17 The Committee believes that executive compensation for 1996 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 Company has adopted a Deferred Compensation Plan that 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 that together with their base salary, exceeds $1 million, will be minimal. The Committee believes it is in the stockholders' interest to maintain compensation plans that support the achievement of long-term strategic objectives and enhance stockholder value. Submitted by: EXECUTIVE COMPENSATION COMMITTEE Bennett E. Bidwell, Chairman Martin C. Jischke John J. Murphy John J. Nevin Richard M. Rompala OTHER INDEPENDENT NON-EMPLOYEE DIRECTORS Paul M. Anderson Earnest H. Clark, Jr. Robert S. Kerr, Jr. William C. Morris Farah M. Walters 15 18 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 1992 through 1996. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN KERR-MCGEE CORPORATION S&P 500 INDEX AND S&P DOMESTIC INTEGRATED OIL INDEX [GRAPH]
1991 1992 1993 1994 1995 1996 ---- ---- ---- ---- ---- ---- Assumes $100 invested on December 31, 1991 S&P 500 100 108 118 120 165 203 KMG 100 121 125 132 187 217 S&P Domestic Integrated Oil Index 100 102 108 113 129 161
Year-end index Data supplied by Compustat STOCKHOLDER PROPOSALS Stockholder proposals for the 1998 Annual Meeting must be received at the principal executive offices of the Company no later than December 1, 1997. 16 19 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. 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 17, 1997, 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. 3,626,290(1) 7.48% 82 Devonshire Street Boston, MA 02109-3614 Common Stock............... State Street Bank and Trust Company 3,138,976(2) 6.50% 225 Franklin St. Boston, MA 02110
- - --------------- (1) Based on a Schedule 13G for the year ended December 31, 1996, FMR Corp. has sole voting power over 254,283 shares and sole power to dispose over 3,626,290 shares. FMR Corp. reports that it 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, 1996, State Street Bank and Trust Company has sole voting power over 464,491 shares, sole power to dispose over 592,828 shares, shared voting power over 2,538,685 and shared power to dispose over 2,546,148 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. 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 ("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. 17 20 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, 1996, all applicable Section 16(a) filing requirements were complied with except that Robert S. Kerr, Jr. made a late filing of a Form 4 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 18 21 =============================================================================== 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 17, 1997. IT IS IMPORTANT THAT YOU VOTE AND SIGN THE PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE. =============================================================================== [KERR-MCGEE CORPORATION LOGO] 22 - - -------------------------------------------------------------------------------- THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS [KERR KERR-McGEE The undersigned hereby appoints Luke R. Corbett, Tom J. McDaniel and Russell G. MCGEE CORPORATION Horner, Jr., and each of them, as Proxies, each with the power to appoint his LOGO] PROXY substitute, and hereby authorizes them to represent and to vote, as designated Kerr-McGee Center below, all the shares of Common Stock of Kerr-McGee Corporation held of record P. O. Box 25861 by the undersigned on March 17, 1997 at the Annual Meeting of Stockholders to Oklahoma City, Oklahoma be held on May 13, 1997 or any adjournment thereof (1) as hereinafter specified 73125 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) - - -------------------------------------------------------------------------------- 23 - - -------------------------------------------------------------------------------- THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" ITEMS 1 AND 2 1. ELECTION OF DIRECTORS Paul M. Anderson, Bennett E. Bidwell, Luke R. Corbett, Martin C. Jischke, Tom J. McDaniel, William C. Morris, John J. Murphy, 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 [ ] WITHHOLD [ ] 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 , 1997 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. - - ------------------------------------------------------------------------------- 24 March 31, 1997 To Participants In The Kerr-McGee Corporation SAVINGS INVESTMENT PLAN and the EMPLOYEE STOCK OWNERSHIP PLAN Dated September 12, 1989: As a participant in the Kerr-McGee Corporation Savings Investment Plan ("SIP") and the Kerr-McGee Corporation Employee Stock Ownership Plan dated September 12, 1989 ("ESOP"), you owned shares of Common Stock of the Company on March 17, 1997, the record date for stockholders entitled to vote at the annual stockholders' meeting to be held on May 13, 1997. This stock is held in trust by Bank of New York 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 1.3 million shares of the nearly 2.6 million shares in the ESOP) 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. THE SHARES ALLOCATED TO YOUR ACCOUNTS ARE NOTED ON THE ENCLOSED VOTING INSTRUCTIONS. 3. A postage-paid, self-addressed envelope for your use in returning your voting instructions to Liberty Bank and Trust Company of Oklahoma City, N.A., which will tabulate the voting instructions for each Trustee. Very truly yours, KERR-McGEE CORPORATION BENEFITS COMMITTEE By: ------------------------------------ John C. Linehan, Chairman 25 VOTING INSTRUCTIONS TO THE TRUSTEES FOR ANNUAL STOCKHOLDERS' MEETING OF KERR-MCGEE CORPORATION TO BE HELD ON MAY 13, 1997 Bank of New York, Trustee State Street Bank & Trust Co., Kerr-McGee Corporation Trustee Savings Investment Plan Kerr-McGee Corporation One Wall Street, 8th Floor Employee Stock Ownership Plan New York, NY 10286 P.O. Box 1994 Boston, MA 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 Bank of New York (as Trustee of the SIP) and State Street Bank and Trust Co. (as Trustee of the ESOP) at the Annual Meeting of Stockholders on May 13, 1997, as follows: --------------------------------------------------------------- THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" ITEMS 1 and 2. --------------------------------------------------------------- 1. ELECTION OF DIRECTORS SIP ESOP Paul M. Anderson, Bennett E. Bidwell, ____ FOR ____ FOR Luke R. Corbett, Martin C. Jischke, ____ WITHHOLD ____ WITHHOLD Tom J. McDaniel, William C. Morris, ____ WITHHOLD for ____ WITHHOLD for John J. Murphy, the following the following Richard M. Rompala, only, write only, write Farah M. Walters. name(s) name(s) __________________ __________________ 2. To ratify the appointment of ____ FOR ____ FOR Arthur Andersen LLP as the Company's independent public ____ AGAINST ____ AGAINST accountants. ____ 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 Trustees will vote your shares as you direct. IF YOU SIGN BELOW, BUT DO NOT GIVE ANY INSTRUCTIONS OR GIVE ONLY PARTIAL INSTRUCTIONS WITH RESPECT TO EITHER THE SIP OR THE ESOP, THE TRUSTEE FOR THAT PLAN WILL VOTE FOR ITEMS 1 AND 2. Please sign exactly as your name appears below. 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 , 1997 ------------------------ Date 26 March 31, 1997 To Participants In The Kerr-McGee Corporation SAVINGS INVESTMENT PLAN: As a participant in the Common Stock Fund of the Kerr-McGee Corporation Savings Investment Plan ("Plan"), you owned shares of Common Stock of the Company on March 17, 1997, the record date for stockholders entitled to vote at the annual stockholders' meeting to be held on May 13, 1997. This stock is held in trust by Bank of New York, as Trustee. The Plan provides that shares of Common Stock of the Company which have been allocated to your Participant Contribution Account and Company Contribution Account will be voted by the Trustee in accordance with your written instructions. So that your instructions may be received and tabulated by the Trustee in sufficient time to vote according to your instructions, you are urged to complete and mail your voting instructions promptly. IF THE TRUSTEE DOES NOT RECEIVE VOTING INSTRUCTIONS FROM YOU, YOUR SHARES WILL BE VOTED IN THE SAME PROPORTION AS THE TOTAL SHARES FOR WHICH INSTRUCTIONS ARE RECEIVED BY THE TRUSTEE. 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 Trustee, the enclosed voting instructions replace the Proxy referred to in the Proxy Statement.) 2. Voting instructions to the Trustee for your use in directing the Trustee to vote your shares. THE SHARES ALLOCATED TO YOUR ACCOUNTS ARE NOTED ON THE ENCLOSED VOTING INSTRUCTIONS. 3. A postage-paid, self-addressed envelope for your use in returning your voting instructions to Liberty Bank and Trust Company of Oklahoma City, N.A., which will tabulate the voting instructions for the Trustee. Very truly yours, KERR-McGEE CORPORATION BENEFITS COMMITTEE By: ------------------------------------ John C. Linehan, Chairman 27 VOTING INSTRUCTIONS TO THE TRUSTEE FOR ANNUAL STOCKHOLDERS' MEETING OF KERR-MCGEE CORPORATION TO BE HELD ON MAY 13, 1997 Bank of New York, Trustee Kerr-McGee Corporation Savings Investment Plan One Wall Street, 8th Floor New York, NY 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 Kerr-McGee Corporation Savings Investment Plan ("SIP"), be voted by Bank of New York, (as Trustee of the SIP) at the Annual Meeting of Stockholders on May 13, 1997, as follows: --------------------------------------------------------------- THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" ITEMS 1 and 2. --------------------------------------------------------------- 1. ELECTION OF DIRECTORS SIP Paul M. Anderson, Bennett E. Bidwell, FOR Luke R. Corbett, ----- Martin C. Jischke, WITHHOLD Tom J. McDaniel, ----- William C. Morris, WITHHOLD for the John J. Murphy, ----- following only, write Richard M. Rompala, name(s) Farah M. Walters. -------------------- 2. To ratify the appointment of FOR Arthur Andersen LLP as the ----- Company's independent public AGAINST accountants. ----- 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 ONLY PARTIAL INSTRUCTIONS, THE TRUSTEE WILL VOTE FOR ITEMS 1 AND 2. Please sign exactly as your name appears below. 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 , 1997 ------------------------- Date 28 March 31, 1997 To Participants In The Kerr-McGee UK EMPLOYEE SAVINGS PLAN As a participant in the Kerr-McGee UK Employee Savings Plan, you owned shares of Common Stock of the Company on March 17, 1997, the record date for Stockholders entitled to vote at the Annual Stockholders' Meeting to be held on May 13, 1997. This stock is held in Trust by Kerr-McGee Oil (U.K.) PLC, as Trustee. The Plan provides that shares of Common Stock of the Company which have been allocated to your account will be voted by the Trustee in accordance with your voting instructions. So that your voting instructions may be received and tabulated by the Trustee in sufficient time to vote according to your instructions, you are urged to complete and mail your voting instructions promptly. If the Trustee does not receive voting instructions from you, the shares for which no instructions are received will be voted in the same proportion as the total shares for which instructions are received by the Trustee. The total shares allocated to your account as of December 31, 1996, the last allocation prior to the record date, were reported on your Share Allocation Statement. If you are unable to locate your Share Allocation Statement or wish to know the exact number of shares you are entitled to direct the Trustee to vote, you should contact Dawn Gardner at Kerr- McGee Oil (U.K.) PLC, 75 Davies Street, London W1Y 1FA, Tel: 071-872-9738. 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 Trustee, the enclosed voting instructions replace the Proxy referred to in the Proxy Statement.) 2. Voting instructions 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 the Trustee. The Trustee will forward it to Liberty National Bank and Trust Company, the Company's Transfer Agent, which tabulates all of the voting instructions and proxies for the Annual Meeting. PLEASE NOTE THAT ALL VOTING INSTRUCTIONS SHOULD BE RETURNED TO KERR-McGEE OIL (U.K.) PLC, TO THE ATTENTION OF MS. DAWN GARDNER. Very truly yours, KERR-McGEE OIL (U.K.) PLC By: -------------------------------- Frank Sharratt, Director 29 VOTING INSTRUCTIONS TO THE TRUSTEE For Annual Stockholders' Meeting of Kerr-McGee Corporation To Be Held on May 13, 1997 Trustee Kerr-McGee UK Employee Savings Plan I hereby direct that all my shares of Common Stock of Kerr-McGee Corporation in the Kerr-McGee UK Employee Savings Plan be voted at the Annual Meeting of the Stockholders of the Company on May 13, 1997, as follows: The Board of Directors recommends you Vote "FOR" Items 1 and 2 1. ELECTION OF DIRECTORS Paul M. Anderson, Bennett E. Bidwell, Luke R. Corbett, Martin C. Jischke, Tom J. McDaniel, William C. Morris, John J. Murphy, Richard M. Rompala, Farah M. Walters. [ ] FOR [ ] WITHHOLD [ ] WITHHOLD VOTE ONLY FROM 2. To ratify the appointment of Arthur Andersen LLP as the Company's independent public accountants. [ ] FOR [ ] AGAINST [ ] 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. The Trustee will vote your shares as you direct. If you sign below but do not give any instructions, the Trustee will vote "FOR" Items 1 and 2. Please sign below. - - ----------------------------------- Signature of Participant - - ----------------------------------- (Type or Print Name Here) Dated , 1997. --------------- -----END PRIVACY-ENHANCED MESSAGE-----