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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to ss.240.14a-11(c) or ss.240.14a-12
ONEOK, Inc.
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(Name of Registrant as Specified In Its Charter)
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(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)(1) and
0-11.
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fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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ONEOK, INC.
100 WEST FIFTH STREET
TULSA, OKLAHOMA 74103
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JANUARY 15, 1998
December 15, 1997
To the Shareholders of ONEOK, Inc.:
Notice is hereby given that the Annual Meeting of the Shareholders of
ONEOK, Inc. will be held at ONEOK Plaza, 100 West Fifth Street, Tulsa,
Oklahoma, Thursday, January 15, 1998, at 10 a.m. for the following
purposes:
1. To elect five directors (Class A) to serve until the Annual
Meeting of Shareholders to be held January 2001, or until their
successors are duly elected and qualified.
2. To amend the certificate of incorporation of the company to
eliminate the applicability of the Oklahoma control share
acquisition provisions of the Oklahoma General Corporate Act (the
"OGCA").
3. To ratify and approve the appointment of KPMG Peat Marwick LLP
as independent auditor of the Corporation for the 1998 Fiscal
Year.
4. To transact such other business as may properly come before
the meeting and at any and all adjournments thereof.
Only shareholders of record on the stock transfer books of the
Corporation at the close of business November 26, 1997, the record
date fixed by the Board of Directors, are entitled to notice of and to
vote at the meeting and at any and all adjournments thereof.
By Order of the Board of Directors,
Deborah B. Barnes, Secretary
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN AND MAIL THE
ENCLOSED PROXY, WHICH IS BEING SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF ONEOK, INC. A return envelope that requires no postage,
if mailed in the United States, is enclosed for your convenience in
returning your proxy. 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 returned
promptly to be sure that all your shares are voted.
If your shares are held in the name of a broker, trust, bank, or other
nominee and you plan to attend the meeting and vote your shares in
person, you should bring with you a proxy or letter from the broker,
trustee, bank, or nominee confirming your beneficial ownership of the
shares.
PROXY STATEMENT
ONEOK, Inc.
100 West Fifth Street
Tulsa, Oklahoma 74103
December 15, 1997
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 15, 1998
PROXY AND SOLICITATION
The accompanying proxy is solicited by the Board of Directors of
ONEOK, Inc. (the Corporation) for use at the Annual Meeting of
Shareholders (Annual Meeting) to be held at ONEOK Plaza, 100 West
Fifth Street, Tulsa, Oklahoma, on Thursday, January 15, 1998, at 10
a.m. and at any and all adjournments thereof.
Properly executed proxies received in time for the Annual Meeting will
be voted. If the enclosed proxy is executed and returned, it may be
revoked by a later-dated proxy or by written notice to the Secretary
of the Corporation. Shareholders attending the meeting may revoke
their previously executed proxies and vote in person.
Pursuant to the Agreement, dated as of December 12, 1996, as amended
and restated as of May 19, 1997 (the "Amended and Restated
Agreement"), among ONEOK Inc., a Delaware corporation ("ONEOK"),
Western Resources, Inc. ("WRI") and the Corporation, on November 26,
1997, ONEOK merged (the "Merger") with and into the Corporation
(originally incorporated as a wholly-owned subsidiary of WRI), with
the Corporation as the surviving corporation and the corporation's
name was changed to "ONEOK, Inc." Immediately prior to the effective
time of the Merger, WRI contributed, or caused to be contributed, in
exchange for shares of Common Stock, par value $0.01 per share, of the
Corporation and Series A Convertible Preferred Stock, par value $.01
per share (the "Convertible Preferred Stock"), certain assets and all
of the outstanding capital stock of WRI's direct and indirect
wholly-owned subsidiaries, Westar Gas Marketing, Inc. and Mid
Continent Market Center, Inc. to the Corporation, and the Corporation
assumed certain liabilities and debt of WRI. Upon consummation of the
Merger, the shares of common stock, no par value, of ONEOK (the "ONEOK
Common Stock") outstanding as of the effective time of the Merger were
converted on a one-for-one basis into shares of the Common Stock, par
value $.01 per share, of the Corporation (the "Common Stock"). All
references in this Proxy Statement to the "Corporation" or the Board
of Directors, officers or directors of the Corporation prior to the
Merger shall mean ONEOK Inc., its Board of Directors, officers and
directors.
The cost of soliciting proxies will be borne by the Corporation. In
addition to the use of the mails, proxies may be solicited personally
or by telephone by officers and regular employees of the Corporation.
Morrow & Co., Inc., New York, New York, will assist in solicitation of
proxies. The Corporation will pay $10,000 to Morrow & Co., Inc., for
proxy solicitation services. The Corporation does not expect to pay
any additional compensation for the solicitation of proxies; however,
the proxy solicitor, brokers, and other custodians, nominees, and
fiduciaries will be reimbursed for expenses incurred in forwarding
proxy material to principals and obtaining their proxies.
ANNUAL REPORT
The Corporation's 1997 Annual Report to Shareholders, for the purposes
of this Proxy Statement, consisting of a Summary Annual Report and the
Corporation's Report on Form 10-K, has been sent to all shareholders
of record on November 26, 1997 (Record Date), except for accounts on
which the shareholder has filed a written request to eliminate
receiving duplicate reports. In addition, the Corporation is providing
brokers, dealers, banks, voting trustees, and their nominees
additional copies at the Corporation's expense so that such material
may be forwarded to beneficial owners as of the Record Date. The
Summary Annual Report to Shareholders is not part of this Proxy
Statement and is not to be used as such.
STOCK OUTSTANDING AND VOTING RIGHTS
At Record Date the Corporation had issued and outstanding 31,255,119
shares of Common Stock, each share being entitled to one vote on all
matters and 19,946,448 shares of the Convertible Preferred Stock, each
share being entitled to one vote, voting together with the Common
Stock as a single class, with respect to Proposal 2 relating to the
amendment of the certificate of incorporation. Shares of Convertible
Preferred Stock are not entitled to vote on Proposal 1 relating to
election of directors or Proposal 3 relating to ratification and
approval of appointment of auditor. WRI beneficially owns all of the
shares of the Convertible Preferred Stock.
Under Oklahoma Law and the Corporation's By-laws, the holders of
record of a majority in voting interest of the shares of the stock of
the Corporation entitled to be voted at the Annual Meeting and present
in person or by proxy shall constitute a quorum for the Annual
Meeting. In all matters other than the election of directors, the
affirmative vote of a majority in voting interest of the shares and
present in person or by proxy at the Annual Meeting and entitled to
vote on the subject matter shall be the act of the shareholders.
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.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following are known to the Corporation to be the beneficial owners
of more than five percent (5%) of any class of the Corporation's
voting securities at the Record Date.
Name and Address Amount and Nature
of Beneficial of Beneficial Percent
Title of Class Owner Ownership of Class
-------------- --------- ------------- --------
Common Stock Bank of Oklahoma 3,223,502 Shares 10.3%
Trustee for Thrift Direct of ONEOK, Inc.
Plan for Employees and
Subsidiaries
P.O. Box 2300
Tulsa, OK 74192
Common Stock (1) Western Resources, Inc. 3,094,257 Shares 9.9%
818 Kansas Avenue Direct
Topeka, KS 66612-1217
Preferred Stock (1) Western Resources, Inc. 19,946,448 Shares 100%
818 Kansas Avenue Direct
Topeka, KS 66612-1217
[FN]
(1) As of the Record Date, WRI owned approximately 45% of the
outstanding shares of capital stock entitled to vote at the
Annual Meeting with respect to Proposal 2. Pursuant to the
Shareholder Agreement (the "Shareholder Agreement") between the
Corporation and WRI, dated November 26, 1997, WRI has agreed to
vote all of the shares of Common Stock beneficially owned by it
and in favor of the election of all candidates for director
nominated by the Board of Directors. Under the Shareholder
Agreement, WRI is entitled to vote all of the shares beneficially
owned by it and entitled to vote at the Annual Meeting with
respect to Proposal 2 and Proposal 3 in its sole discretion.
</FN>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the shares of Common Stock beneficially
owned by directors and nominees for directors, the chief executive
officer, the four additional most highly compensated executive
officers serving at the end of the fiscal year of the Corporation and
by all executive officers and directors as a group as of August 31,
1997. Beneficial ownership of the stock is as shown unless otherwise
footnoted.
Shares Owned
Title --------------------
of Beneficial Percent
Class Name Ownership of Class
- ------------- ------------------------- ---------- --------
Common Stock Edwyna G. Anderson 362 *
Director
Common Stock William M. Bell 1,972 *
Director
Common Stock Larry W. Brummett (1) 33,613 *
Chairman of the Board,
and Chief Executive Officer -
ONEOK, Inc.
Common Stock Eugene N. Dubay (2) 4,319 *
Vice President - Corporate
Development
Common Stock N. E. Duckworth (3) 44,087 *
Vice President and Secretary
Common Stock Douglas R. Cummings 1,600 *
Director
Common Stock William L. Ford (4) 3,809 *
Director
Common Stock Howard R. Fricke (5) -0- *
Director
Common Stock J. M. Graves 2,478 *
Director
Common Stock Charles C. Ingram (6) 99,176 *
Chairman of the Board Emeritus
ONEOK, Inc.
Common Stock Stephen J. Jatras 3,300 *
Director
Common Stock Steven L. Kitchen (7) -0- *
Director
Common Stock David L. Kyle (8) 29,091 *
President - ONEOK, Inc.
Common Stock Bert H. Mackie 1,750 *
Director
Common Stock Jerry D. Neal (9) 22,200 *
Vice President, Treasurer, and Chief
Financial Officer - ONEOK, Inc.
Common Stock Douglas Ann Newsom, Ph.D. 729 *
Director
Common Stock Gary D. Parker 2,820 *
Director
Common Stock J. D. Scott (10) 122,912 *
Director and Retired Chairman of
the Board - ONEOK, Inc.
Common Stock Stanton L. Young 62,300 *
Director
Directors and Executive Officers as a Group (11) 436,518 1.55%
*Less than one percent of Class
NOTES:
[FN]
(1) Shares of Common Stock of the Corporation in the custody of the
Trustee under the Thrift Plan include 15,941 shares for the
account of Mr. Brummett.
(2) Shares of Common Stock of the Corporation in the custody of the
Trustee under the Thrift Plan include 4,319 shares for the
account of Mr. Dubay.
(3) Shares of Common Stock of the Corporation in the custody of the
Trustee under the Thrift Plan include 10,600 shares for the
account of Mr. Duckworth. Mr. Duckworth retired August 31, 1997.
(4) Includes 1,055 shares owned by the 1979 Leslie A. Ford Trust, of
which William L. Ford is a trustee. Mr. Ford is not a beneficial
owner of these shares and disclaims ownership thereof.
(5) Mr. Fricke became a director November 26, 1997.
(6) Includes 33,800 shares owned by Mrs. Charles C. Ingram. Mr.
Ingram disclaims ownership of these shares. In addition to the
99,176 shares, Mr. Ingram is the donor of 876 shares of ONEOK,
Inc. Common Stock held for the benefit of a relative in a trust
over which he has retained no control as to voting rights during
the terms of this trust.
(7) Mr. Kitchen became a director November 26, 1997.
(8) Shares of Common Stock of the Corporation in the custody of the
Trustee under the Thrift Plan include 24,250 shares for the
account of Mr. Kyle.
(9) Shares of Common Stock of the Corporation in the custody of the
Trustee under the Thrift Plan include 13,751 shares for the
account of Mr. Neal.
(10) Shares of Common Stock in the Corporation in the custody of the
Trustee under the Thrift Plan include 71,557 for Mr. Scott, who
retired from the Corporation in 1994.
(11) Shares of Common Stock of the Corporation in the custody of the
Trustee under the Thrift Plan include 140,418 shares for
directors and executive officers as a group and are reported in
the preceding tabulation. Nonemployee directors do not
participate in the Thrift Plan, except Mr. Scott who, as a former
employee, has elected to leave his Thrift Plan holdings intact.
</FN>
INFORMATION ON DIRECTORS
NOMINEES FOR DIRECTORS
CLASS A--TERM ENDING 2001
LARRY W. BRUMMETT Chairman of the Board and Chief Executive Officer -
(age 47) ONEOK, Inc.
Director since 1994 Tulsa, Oklahoma
Mr. Brummett has been employed by the
Corporation for more than 23 years. He was
employed by ONEOK's Oklahoma Natural Gas
Company division as an engineer trainee in
June 1974 and, after receiving a number of
promotions within the division, was elected
Vice President of Tulsa District September 1,
1986, and Executive Vice President in May
1990. He was elected Executive Vice President
of ONEOK, Inc. January 21, 1993. He was
elected President and Chief Executive Officer
February 17, 1994, and was elected to the
additional position of Chairman of the Board
effective June 1, 1994. Mr. Brummett is a
director of American Gas Association;
Southern Gas Association; Oklahoma State
Chamber of Commerce; Metropolitan Chamber of
Commerce, Tulsa; and the Oklahoma City Branch
of the Federal Reserve Bank. He is also an
officer or director of numerous civic and
business organizations and not-for-profit
associations.
DAVID L. KYLE President - ONEOK, Inc.
(age 45) Tulsa, Oklahoma
Director since 1995
Mr. Kyle was employed by Oklahoma Natural Gas
Company, a division of ONEOK, Inc., in 1974
as an engineer trainee. He served in a number
of positions prior to being elected Vice
President of Gas Supply September 1, 1986,
and Executive Vice President May 17, 1990. He
was elected President September 1, 1994. He
was elected President of ONEOK Inc. effective
September 1, 1997. He is a director of Bank
One, Oklahoma, Oklahoma City, Oklahoma.
STEVEN L. KITCHEN Executive Vice President and Chief Financial Officer
(age 52 ) Western Resources, Inc.
Director since 1997 Topeka, Kansas
Mr. Kitchen has been employed by Western
Resources, Inc., for 33 years, serving in a
number of positions in the company's finance
and accounting divisions. He was elected
Executive Vice President and Chief Financial
Officer in 1990. He is a director of 16
Western Resources, Inc., subsidiary
corporations. Mr. Kitchen also serves on the
boards of Central National Bank in Junction
City, Kansas, and Protection One, a home
security firm based in Culver City,
California, and he is a trustee of Washburn
University Endowment Association, Topeka,
Kansas.
DOUGLAS ANN NEWSOM Professor - Department of Journalism
Ph.D. Texas Christian University
(age 64) Fort Worth, Texas
Director since 1982
In addition to her teaching position, Dr.
Newsom is a textbook author and public
relations counselor.
J. D. SCOTT
(age 66) Retired Chairman of the Board - ONEOK Inc.
Director since 1979 Tulsa, Oklahoma
Mr. Scott served as President, Chief
Executive Officer, and Chairman of the Board
of ONEOK Inc. from January 1987 until he
retired in 1994.
CONTINUING DIRECTORS
CLASS B--TERM ENDING 1999
WILLIAM M. BELL Chairman, President, and Chief Executive Officer -
(age 62) Bank One, Oklahoma, N.A.
Director since 1981 Oklahoma City, Oklahoma
Mr. Bell is also Senior Vice President of
BancOne Oklahoma Corporation. He is a
director of Liberty Bank and Trust Company of
Oklahoma City, N.A.; and is Chairman,
President, and Chief Executive Officer of
Liberty Trust Company. He serves on the
boards of numerous civic and business
organizations and not-for-profit
associations.
DOUGLAS R. CUMMINGS President and Owner - Cummings Oil Company
(age 68) Oklahoma City, Oklahoma
Director since 1989
Mr. Cummings has been President of Cummings
Oil Company since 1972. He is an officer or
director of numerous civic and business
organizations and not-for-profit
associations.
HOWARD R. FRICKE Chairman of the Board, President, and Chief Executive
(age 61) Officer - Security Benefit Group of Companies
Director since 1997 Topeka, Kansas
Mr. Fricke joined the Security Benefit Group
of Companies in 1988, having previously
served as chairman and chief executive
officer of the Anchor National Companies in
Phoenix, Arizona. He is currently a director
of Payless ShoeSource, Inc., and serves on
the executive committee of Bank IV Kansas,
both in Topeka. He also serves on the boards
of directors of the American Council of Life
Insurance and Life Office Management
Association.
J. M. GRAVES President and Owner - Calumet Oil Company
(age 71) Tulsa, Oklahoma
Director since 1989
Mr. Graves is also President and Owner of
Green Country Supply, Inc., an oil field
supply and chemical company, and he is
co-owner and an officer of Cal Bohannan
Drilling Company and Tri-Am Acid and Fracture
Service, Inc. He serves on the boards of
numerous civic and business organizations and
not-for-profit associations.
STEPHEN J. JATRAS Retired Chairman of the Board - Memorex Telex
(age 71) Corporation
Director since 1985 Tulsa, Oklahoma
Mr. Jatras retired from the position of
Chairman of the Board of Memorex Telex
Corporation in 1991. He is a director of
Donald G. O'Brien, Inc., in Seabrook, New
Hampshire. He serves on the boards of
numerous civic and business organizations and
not-for-profit associations.
CLASS C--TERM ENDING 2000
EDWYNA G. ANDERSON Retired General Counsel - Duquense Light Company
(age 67) Pittsburgh, Pennsylvania
Director since 1995
Mrs. Anderson served as General Counsel of
Duquense Light Company from September 1988
until retirement in October 1994. She also
served as Special Counsel to the President of
Duquense Light Company until March 1995, when
she retired from that position.
WILLIAM L. FORD President - Shawnee Milling Company
(age 55) Shawnee, Oklahoma
Director since 1981
Mr. Ford has served as President of Shawnee
Milling Company since 1979. He serves on the
boards of numerous civic and business
organizations and not-for-profit
associations.
BERT H. MACKIE President - Security National Bank
(age 55) Enid, Oklahoma
Director since 1989
Mr. Mackie, with Security National Bank since
1962, is currently President and a director.
Mr. Mackie serves on the Board of Governors
of the United States Postal Service.
GARY D. PARKER President - Moffitt, Parker & Company, Inc.
(age 52) Muskogee, Oklahoma
Director since 1991
Mr. Parker, a certified public accountant, is
also the majority shareholder of Moffitt,
Parker & Company, Inc., and has been
President of the firm since 1982. He is a
director of First National Bank and Trust
Company of Muskogee, Oklahoma.
STANTON L. YOUNG President - The Young Companies
(age 70) Oklahoma City, Oklahoma
Director since 1972
Mr. Young is an individual investor with
ownership of oil and gas mineral and working
interests, a shopping center, and warehouses.
He is also Owner and President of Journey
House Travel Service, Inc., in Oklahoma City.
ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORS
Eleven regular meetings were held by the Board of Directors during the
fiscal year ended August 31, 1997 (the "1997 Fiscal Year"). No
Director attended fewer than seventy-five percent (75%) of the
meetings of the Board of Directors and committees on which such
director served.
Charles C. Ingram, Chairman of the Board Emeritus, retired as a
full-time employee of the Corporation effective January 1, 1982, and
as a director January 20, 1988. Mr. Ingram, as Chairman of the Board
Emeritus, is invited to attend all board meetings.
DIRECTORS' COMPENSATION
The aggregate amount of directors' fees paid during the 1997 Fiscal
Year was $476,668. Officer-directors receive no additional
compensation for service on the Board of Directors or its committees.
All other directors received an annual retainer of $20,000; a fee of
$1,000 for attending each board meeting and each committee meeting;
and reimbursement for expenses incurred in attending board and/or
committee meetings. Nonofficer directors who chair a committee
received an additional annual retainer of $2,000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on information submitted by the directors and officers,
it has been determined that all directors and all officers of the
Corporation who are required to so file have timely filed all forms
required to be filed under Section 16(a) of the Securities Exchange
Act of 1934, as amended.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has standing Executive, Audit, Nominating, and
Executive Compensation Committees.
EXECUTIVE COMMITTEE
During the 1997 Fiscal Year, members of the Executive Committee were:
Chairman Larry W. Brummett, Vice Chairman David L. Kyle, William M.
Bell, Douglas R. Cummings, J. M. Graves, Stephen J. Jatras, and J. D.
Scott. On November 26, 1997, Howard R. Fricke was added as a member of
the Executive Committee.
The Committee did not meet during the 1997 Fiscal Year. The Executive
Committee may exercise all of the powers and authority of the Board of
Directors in the management of the business and affairs of the
Corporation subject to certain statutory limitations.
AUDIT COMMITTEE
During the 1997 Fiscal Year, members of the Audit Committee were:
Chairman Stephen J. Jatras, Vice Chairman Gary D. Parker, Edwyna G.
Anderson, William M. Bell, William L. Ford, Bert H. Mackie, Douglas
Ann Newsom, J. D. Scott, and Stanton L. Young. On November 26, 1997,
Steven L. Kitchen was added as a member of the Audit Committee. The
Committee, composed entirely of outside directors, held three meetings
during the 1997 Fiscal Year. The Audit Committee reviews and makes
recommendations to the Board of Directors concerning employment of the
independent auditors, the proposed annual audit plan, the completed
annual audit, and the Corporation's conflict of interest program. The
Committee also meets periodically with:
a. the Corporation's independent auditors to review the
Corporation's accounting policies, internal controls, and other
accounting and auditing matters;
b. the Corporation's manager of internal auditing to review the
Corporation's internal auditing program;
c. the Corporation's chief financial officer to review the
Corporation's accounting policy, the results of the annual audit,
and the Corporation's periodic financial statements; and
d. the Corporation's general counsel to review outstanding and
potential litigation, regulatory proceedings, and other
significant legal matters.
NOMINATING COMMITTEE
During the 1997 Fiscal Year, members of the Nominating Committee were:
Chairman Bert H. Mackie, Vice Chair Douglas Ann Newsom, Edwyna G.
Anderson, William M. Bell, Larry W. Brummett, J. M. Graves, and David
L. Kyle. On November 26, 1997, Howard R. Fricke was added as a member
of the Nominating Committee. The Committee did not meet during the
1997 Fiscal Year. The Nominating Committee recommends nominees to fill
vacancies on the Board of Directors, establishes procedures to
identify potential nominees, recommends criteria for membership on the
Board of Directors, and recommends the successor chief executive
officer when a vacancy occurs. The Committee will consider nominees
recommended by shareholders for service on the Board of Directors.
Recommendations should be sent to the Corporate Secretary at the
address shown on the front of this Proxy Statement.
EXECUTIVE COMPENSATION COMMITTEE
During the 1997 Fiscal Year, members of the Executive Compensation
Committee were: Chairman William L. Ford, Vice Chair Douglas R.
Cummings, J. M. Graves, Stephen J. Jatras, Steven L. Kitchen, Gary D.
Parker, and Stanton L. Young. The Committee, composed entirely of
outside directors, held three meetings during the last fiscal year.
The Executive Compensation Committee oversees and approves all
elements of executive compensation, administers the Key Employee
Annual Incentive Plan and the Key Employee Stock Plan, and reports to
the Board all forms and amounts of executive compensation for
information, approval, or ratification, as necessary and appropriate.
BOARD EXECUTIVE COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Executive Compensation Committee (the Committee) is responsible
for overseeing and approving the Corporation's executive compensation
policies and practices and approves all elements of compensation for
corporate officers. In carrying out its duties, the Committee has
direct access to independent compensation consultants and outside
survey data. The Committee, which consists of six outside directors,
reports its activities regularly to the Board of Directors and obtains
ratification by the Board of all items of compensation for the
officers of the Corporation, its divisions, and its subsidiary
corporations.
Compensation Philosophy and Practices
The Corporation's executive compensation program is based on the
belief that the interests of executives should be closely aligned with
those of the shareholders. To support this philosophy, the following
principles provide a framework for the compensation program:
- - offer compensation opportunities that attract the best talent to
ONEOK; motivate individuals to perform at their highest levels;
reward outstanding achievement; and retain the leadership and
skills necessary for building long-term shareholder value;
- - maintain a significant portion of executives' total compensation
at risk, tied to both the annual and long-term financial
performance of the Corporation, as well as to the creation of
shareholder value; and
- - encourage executives to manage from the perspective of owners
with an equity stake in the Corporation.
ONEOK established the Key Employee Annual Incentive Plan (the Plan) on
August 17, 1995, and it became effective September 1, 1995. The
purpose of the Plan is to provide for compensation that focuses
attention on achievement of the goals set for the Corporation and each
of its operating units. The Plan targets base pay levels at
approximately 90 percent of the average salaries paid for similar
positions by ONEOK's peer competitors as identified through published
surveys, company documents, and other sources. The Plan is designed to
allow the Corporation's officers the opportunity to earn compensation
that is above average when compared to ONEOK's peer competitors if
ONEOK achieves premium results compared to those competitors and the
targeted objectives. The Committee administers the Plan in accordance
with its stated purposes. Participation in the Plan is provided to
executives and other key employees of ONEOK and subsidiaries selected
by the Committee and upon recommendations of the chief executive
officer.
The executive compensation practices are recommended by independent
consultants using industry salary surveys that include the American
Gas Association Executive Compensation Survey, the KPMG Oil and Gas
Industry Compensation Survey, the Mercer Oil and Gas Industry
Compensation Survey, the Towers & Perrin Natural Gas Pipeline Survey,
and the Watson Wyatt Worldwide Compensation Survey. These surveys
include corporations that are representative of the firms with which
ONEOK competes for executive talent and have jobs similar to those at
ONEOK in magnitude, complexity, and scope of responsibility.
Consequently, this is a broader and more diverse set of companies than
those included in the Standard & Poor's Natural Gas Distribution
Index, which is used in the Performance Graph below.
Components of Executive Compensation
The compensation for executive officers consists of the following
components. An executive's annual compensation includes the core
package component of base salary and benefits, a bonus award component
based on achievement of certain corporate and unit performance goals,
and a variable component which is entirely at risk. The variable
component is tied to the equity-based criteria that parallel the
interests of the Corporation's shareholders. Base salaries and bonus
awards are established by the Committee based on the executive's job
responsibilities, level of experience, individual performance and
contribution to the business, and information obtained from
compensation surveys. Criteria on which individual performance was
evaluated in 1996 were: achievement of corporate and unit goals,
including return on assets, revenue growth and other selected goals;
other performance, including problem analysis, planning,
organizational ability, directing, decision making, human, capital,
and material resource utilization; time management; initiation of and
response to change; communications and team relations; and personal
actions.
The Key Employee Stock Plan (the Plan), as approved by the
shareholders, became effective August 17, 1995. The Plan will remain
in effect until Stock Incentives have been granted with respect to all
shares of Common Stock of the Corporation authorized to be issued and
transferred under the Plan, or its earlier termination. The purpose of
the Plan is to provide incentives to enable the Corporation to
attract, retain, and reward key employees and give such employees an
interest parallel to the interests of the Corporation's shareholders.
The Committee administers the Plan and is authorized to make all
decisions and interpretations required to administer and execute the
Plan in accordance with its stated purposes. Participation in the Plan
is limited to Key Employees of ONEOK, Inc. and subsidiaries,
determined by the Committee to be those employees in a position to
contribute significantly to the growth and profitability of, or to
perform services of major importance to the Corporation or its
Subsidiaries. The Plan authorizes the Committee to grant stock
incentives to participating key employees in the form selected by the
Committee, including Incentive Stock Options, Non-Statutory Stock
Options, Restricted Stock Awards, and Performance Awards, as defined
in the Plan. Stock incentives granted under the Plan are subject to
the provisions of the Plan providing for the time and manner of
payments and other terms and conditions as the Committee determines.
Stock options granted by the Committee to key employees may be subject
to particular requirements contained in the Internal Revenue Code,
such as the purchase price and term of the option. The maximum number
of shares of Common Stock reserved for issuance under the Plan is
1,000,000 shares, subject to adjustment in the event of
recapitalization, merger, consolidation, or similar events. On
November 16, 1995, Non-Statutory Stock Options were granted to 57
employees by the Committee for 107,400 shares of Common Stock,
exercisable only after November 16, 1996, and before November 16,
2005. The Committee granted, on October 10, 1996, Non-Statutory Stock
Options totaling 100,700 shares to 63 employees, exercisable only
after October 10, 1997, and before October 10, 2006. On October 16,
1997, the Committee granted 199,000 shares to 85 employees,
exercisable only after October 16, 1998, and before October 16, 2008.
At present, a balance of 592,900 shares of Common Stock is available
for stock incentives under the Plan.
Compensation for the Chief Executive Officer
In considering the annual compensation for Mr. Brummett, who, in
addition to serving the Corporation as Chief Executive Officer, was
Chairman of the Board and President through August 31, 1997, the
Committee relied on the aforementioned surveys to provide basic
information regarding peer positions. The C. A. Turner Utility Report
on financial and stock performance and comparisons of American Gas
Association member companies' operating statistics were also utilized.
The industry statistics have large comparative universes of natural
gas distribution and integrated natural gas companies. The companies
in the Standard & Poor's Natural Gas Distributors' Index, which is
part of the Performance Graph below, are included in the C. A. Turner
Utility Report. The Committee also considers the results of a formal
Board of Directors' Evaluation of Mr. Brummett's performance during
the year. The categories in which his performance is evaluated
include: leadership, strategic planning, human resources, and
communication. Each of the categories contains as many as five areas
of specific performance evaluation. The Committee recommended and the
Board of Directors approved a base salary amount of $407,400 which was
in the lower range of the surveys utilized in the studies. Under the
Key Employee Stock Plan Mr. Brummett was granted an option to purchase
10,000 shares of the Corporation Common Stock at a purchase price of
$26.875 per share, exercisable only after October 10, 1997. Mr.
Brummett received, under the Key Employee Annual Incentive Plan
$500,000, which amounted to a total of 55.1 percent of his
compensation that related to the Corporation's performance during the
year. Because he was paid at his previously approved salary four
months in the 1997 fiscal year, the actual salary he received in
fiscal 1997 was $400,933, and the at-risk portion of his total
compensation relating to the Corporation's performance amounted to
55.4 percent.
Federal Income Tax Liability
ONEOK, Inc. has not yet adopted a policy regarding Internal Revenue
Code Section 162(m) regarding a $1 million annual limitation of a
Federal income tax deduction by the Corporation for compensation paid
to any executive officer. This limitation did not apply to ONEOK, Inc.
during fiscal year 1997; however, the Code requirement is being
evaluated and the tax regulations are being closely monitored.
Conclusion
The Board believes that the caliber and motivation of ONEOK's
leadership are fundamentally important to achieving the Corporation's
objectives as established by the strategic plan and providing a sound
investment for the shareholders. The Committee is responsible to the
Board, and by extension to the shareholders, for ensuring that
officers are compensated in a manner that is compatible with ONEOK's
business strategies, thereby aligning the officers' interests with
those of long-term investors. We believe the current methodology
governing executive compensation standards will prove beneficial to
the Corporation, its shareholders, its customers, and the communities
served.
William L. Ford, Chairman Douglas R. Cummings, Vice Chair
J. M. Graves Stephen J. Jatras
Gary D. Parker Stanton L. Young
Comparison of Five Year Cumulative Total Return
Among ONEOK Inc., S&P 500 Index and S&P Natural Gas Distributors Index
----------------------------------------------------------------------
[GRAPH]
12 Months Ended August 31 1992 1993 1994 1995 1996 1997
ONEOK Inc. 100.00 133.28 118.30 152.37 200.14 246.29
S&P 500 Index 100.00 115.21 121.52 147.58 175.22 246.44
S&P Natural Gas 100.00 132.43 118.68 134.49 182.12 220.15
Distributors
TOTAL SHAREHOLDER RETURNS
-------------------------
(Dividends Reinvested)
ANNUAL RETURN PERCENTAGE
Years Ending
Company/Index Aug 93 Aug 94 Aug 95 Aug 96 Aug 97
- -------------------------------------------------------------------------------
ONEOK INC 33.28 -11.24 28.80 31.35 23.06
S&P 500 INDEX 15.21 5.47 21.45 18.73 40.65
NATURAL GAS-500 32.43 -10.38 13.32 35.42 20.88
INDEXED RETURNS
Base Years Ending
Period
Company/Index Aug 92 Aug 93 Aug 94 Aug 95 Aug 96 Aug 97
- -------------------------------------------------------------------------------
ONEOK INC 100 133.28 118.30 152.37 200.14 246.29
S&P 500 INDEX 100 115.21 121.52 147.58 175.22 246.44
NATURAL GAS-500 100 132.43 118.68 134.49 182.12 220.15
The information provided under the foregoing sections entitled "Board
Executive Compensation Committee Report on Executive Compensation" and
"Performance Graph" shall not be deemed soliciting material or to be
filed with the Securities and Exchange Commission or subject to
Regulations 14A or 14C, other than as provided in Item 402 of
Regulation S-K, or to the liabilities of Section 18 of the Securities
Exchange Act of 1934, and unless specific reference is made to such
sections in a filing, the information shall not be incorporated by
reference into any such filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934. Additionally, the stock performance
as shown on the Performance Graph shall not be interpreted as a
prediction of future stock performance.
The following table sets forth information with respect to certain
benefits made available and compensation paid or accrued by ONEOK,
Inc., with respect to its Chief Executive Officer and its four other
most highly compensated officers (the "named executive officers") for
services rendered in all capacities during the fiscal years ended
August 31, 1997, 1996 and 1995.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
LONG-TERM
---------
COMPENSATION
------------
AWARDS
------
SECURITIES
UNDERLYING ALL OTHER
NAME AND OPTIONS/ COMPENSA-
PRINCIPAL POSITION YEAR SALARY BONUS SARs TION(1)
------------------ ---- ------ ----- ---- -------
Larry W. Brummett 1997 $400,933 $500,000 25,000 $9,400
Chairman of the Board, 1996 375,333 423,400 17,600 8,993
President and CEO 1995 335,000 357,963 NONE 9,000
Eugene N. Dubay 1997 $166,850 $250,000 10,000 $3,200
Vice President - 1996 45,000 25,080 NONE -0-
Corporate Development 1995 --- --- NONE ---
N. E. Duckworth 1997 $137,200 $84,200 -0- $8,232
Vice President and 1996 129,200 61,000 2,500 7,752
Secretary (2) 1995 --- --- NONE ---
David L. Kyle 1997 $297,600 $375,000 17,500 $9,400
President - Oklahoma 1996 275,333 278,600 11,000 9,000
Natural Gas Company 1995 240,000 164,175 NONE 9,000
Jerry D. Neal 1997 $166,066 $102,600 5,900 $9,400
Vice President, 1996 162,200 84,240 2,500 8,993
Treasurer and CFO 1995 161,133 122,313 NONE 9,000
[FN]
(1) ONEOK, Inc.'s contribution to the Thrift Plan for Employees of
ONEOK, Inc. and Subsidiaries.
(2) Retired August 31, 1997.
</FN>
STOCK OPTIONS
The following table provides information concerning options to
purchase Common Stock of the Corporation granted to the named
executive officers in Fiscal Year 1997.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST COMPLETED FISCAL YEAR(F1)
Potential Realizable
Value At Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term (F2)
----------------- -------------------
----------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted Fiscal Year Price Date 5% 10%
---- ------- ----------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Larry W. Brummett 10,000(F3) 9.93% $26.875 10-10-06 $169,015 $428,318
Eugene N. Dubay 2,500(F3) 2.48% $26.875 10-10-06 42,254 107,080
N.E. Duckworth 2,500(F3) 2.48% $26.875 10-10-06(F4) 42,254 107,080
1,918 0.01% $30.875 11-16-05(F5) 28,274 67,721
David L. Kyle 8,000(F3) 7.94% $26.875 10-10-06 135,212 342,655
Jerry D. Neal 2,500(F3) 2.48% $26.875 10-10-06 42,254 107,080
<FN>
(1) No SARs were granted in Fiscal Year 1997 to any of the named
executive officers.
(2) Potential realizable value is the amount that would be realized
upon exercise by the named executive officer of the options
immediately prior to the expiration of their respective terms,
assuming the specified compound annual rates of appreciation on
Common Stock over the respective terms of the options. These
amounts represent assumed rates of appreciation only. Actual
gains, if any, on stock option exercises depend on the future
performance of the Common Stock and overall market conditions.
There can be no assurance that the potential values reflected in
this table will be achieved.
(3) Pursuant to the stock option agreements with Messrs. Brummett,
Dubay, Duckworth, Kyle and Neal, 100% of the options became
exercisable on October 10, 1997. The stock option agreements also
provide that an additional option may be granted if and when the
optionee exercises all or part of his option using Common Stock
to pay the purchase price of the option or satisfy tax
obligations incident to the exercise of the option. The
additional option will be exercisable for the number of shares
tendered in payment of the option price or used to satisfy any
tax obligation, will be exercisable at the fair market value of
Common Stock on the date of grant, will become exercisable at any
time after the date of grant (or at such other time as determined
by the Corporation) and will expire on the expiration date of the
original option.
(4) Pursuant to the terms of Mr. Duckworth's stock option agreement
this option will expire on January 10, 1997, three months from
the date on which it became exercisable.
(5) Such option will become 100% exercisable on May 7, 1998 and will
expire on August 7, 1998.
</FN>
</TABLE>
The following table sets forth the number of shares of Common Stock
covered by both exercisable and unexercisable stock options as of
August 31, 1997 held by the named executive officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN
FISCAL YEAR 1997 AND YEAR-END VALUES(1)
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options at
Name Year End (#) Fiscal Year-End (2)
- ---- -------------------------------- ----------------------------------
Shares Value
Acquired on Realized($) Exercisable Unexercisable Exercisable Unexercisable
Exercise(#) ----------- ----------- ------------- ----------- -------------
-----------
<S> <C> <C> <C> <C> <C> <C>
Larry W. Brummett -0- -0- 27,600 -0- 864,225 -0-
Eugene N. Dubay -0- -0- 2,500 -0- 80,781 -0-
N.E. Duckworth 582(F3) 17,692 4,418 -0- 142,756 -0-
David L. Kyle -0- -0- 19,000 -0- 613,937 -0-
Jerry D. Neal -0- -0- 5,000 -0- 161,562 -0-
<FN>
(1) There are no SARs outstanding.
(2) Based on per share price for Company Common Stock of $32.3125 per
share. The price reflects the average of the high and low trading
price on the New York Stock Exchange on August 29, 1997.
(3) Mr. Duckworth surrendered 1,918 previously owned shares of Common
Stock in connection with his exercise of an option to purchase
2,500 shares of Common Stock, resulting in an acquisition of 582
shares.
</FN>
</TABLE>
PENSION PLANS
The following table sets forth, as of August 31, 1997, estimated
aggregate annual benefits payable upon retirement at age 65 under the
Retirement Plan for Employees of ONEOK, Inc. (the "Retirement Plan")
and the Supplemental Executive Retirement Plan (the "SERP").
FINAL-AVERAGE EARNINGS
PENSION PLAN TABLE(1)(2)(3)
Years of Service
------------------------------------------------------------
Remuneration 15 20 25 30 35
- ------------ ---------- ---------- ---------- ---------- -----------
$125,000.... $44,677 $54,101 $63,525 $72,948 $82,372
$150,000.... 54,052 65,507 76,962 88,417 99,872
$175,000.... 63,427 76,913 90,400 103,886 117,372
$200,000.... 72,802 88,320 103,837 119,354 134,872
$225,000.... 82,177 99,726 117,275 134,823 152,372
$250,000.... 91,552 111,132 130,712 150,292 169,872
$300,000.... 110,302 133,945 157,587 181,229 204,872
$400,000.... 147,802 179,570 211,337 243,104 274,872
$450,000.... 166,552 202,382 238,212 274,042 309,872
$500,000.... 185,302 225,195 265,087 304,979 344,872
[FN]
(1) Benefits reflected in the above table are not subject to
deduction for Social Security benefits or other offset.
(2) Amounts are estimates only and would be subject to adjustment
based on rules and regulations applicable to the method of
distribution and survivor benefit options selected by the
retiree. Retirement benefits would be actuarially reduced for
retirement prior to age 65.
(3) The compensation covered by the Retirement Plan benefit formula
is the basic salary paid to a named executive officer within the
named executive officer's final average earnings. The final
average earnings means the named executive officer's highest
earnings during any sixty consecutive months during the entire
period of employment. For any named executive officer named or
shown in the Summary Compensation Table who retires with vested
benefits under the Plan, the compensation shown as "salary" in
the Summary Compensation Table could be considered covered
compensation in determining benefits. Under Section 401(a)(17) of
the Internal Revenue Code of 1986, as amended (the "Code"),
however, the annual compensation of each employee that can be
taken into account under the Retirement Plan cannot exceed
$160,000. Accordingly, the total compensation covered by the
Retirement Plan for Fiscal Year 1997 for each of the named
executive officers was $160,000.
</FN>
The RETIREMENT PLAN is a tax-qualified, defined-benefit pension plan.
In plan years prior to 1989, benefits became vested and nonforfeitable
after completion of ten years of continuous employment; and in Plan
years after 1988, benefits become vested and nonforfeitable after
completion of five years of continuous employment. A vested
participant receives the retirement benefit upon attaining retirement
age under the Retirement Plan notwithstanding an earlier separation
from service. Benefits (joint and survivor for married participants
unless they otherwise elect) are calculated at retirement based on
credited service, limited to a maximum of 35 years, and final average
earnings
The maximum annual benefits for employees in higher salary
classifications retiring at age 65 with the specified years of service
are as shown in the Pension Plan Table above. There are a number of
options available to a retiring employee such as the method of
distribution and survivor benefit options, which, when selected by the
retiree, could result in reduced monthly pension payments. Retirement
benefits also would be actuarially reduced for retirement prior to age
65.
The SERP covers elected officers of the Corporation, appointed
officers of the Corporation, and certain other highly compensated
employees in the management of the Corporation who are selected for
participation by the Executive Compensation Committee and approved by
the Board of Directors and whose benefits are limited under the
Retirement Plan. An administrative committee interprets and
administers the SERP. Under the SERP, compensation for 1997 in excess
of $160,000 is considered in calculating benefits. The benefit payable
to an employee under the SERP is equal to the benefit which would be
payable to the employee under the Retirement Plan if the limitations
prescribed by Sections 401(a)(17) and 415 of the Code were not
applicable, less the benefit payable under the Retirement Plan with
such limitations. Benefits under the SERP are paid coincidentally with
the payment of benefits under the Retirement Plan or as the
administrative committee may determine. These benefits are unfunded
and are payable from the general assets of the Corporation. The Board
of Directors may amend or terminate the SERP at any time; however,
benefits accrued prior to termination of the SERP will not be
affected.
At August 31, 1997, the named executive officers had the following
credited service under the Retirement Plan and SERP, respectively:
Larry W. Brummett, 22 years and 2 months; Eugene N. Dubay, 1 year and
4 months; David L. Kyle, 22 years and 2 months; and Jerry D. Neal, 34
years and 9 months. At retirement, N. E. Duckworth had 35 years of
credited service.
TERMINATION OF EMPLOYMENT AND
CHANGE OF CONTROL ARRANGEMENTS
On January 19, 1984, a Severance Pay Policy (Policy) was adopted,
which includes the named executive officers; and termination
agreements (Termination Agreements) were authorized, which have been
entered into with the named executive officers. Under the Policy, if
within two years of any change of control, employment is terminated,
including voluntary termination following a material adverse change in
compensation, responsibility, and/or working conditions, the officer
would receive severance pay equal to eight weeks pay for each full
year of service. Under the Termination Agreements, if within three
years of a change of control, a named executive officer is terminated,
including voluntary termination under certain conditions, the officer
would receive a lump-sum termination payment equal to three times
annual salary and bonus, if any, and normal retirement and other
employee benefits for three years. Under the Policy and Termination
Agreements, a change of control occurs when a person or group acquires
beneficial ownership of twenty percent (20%) or more of the voting
power of the Corporation; or if after a transaction--including a cash
tender or exchange offer, merger or other business combination, sale
of assets, contested election, or any combination thereof--the
directors, prior to such transaction, cease to constitute a majority
of the Board of Directors of the Corporation or its successor.
Assuming a change of control and termination of their employment on
August 31, 1997, the named executive officers would have been entitled
to receive the following payments under the Policy and their
Termination Agreements, respectively: Larry W. Brummett, $1,441,605
and $2,599,407; Eugene N. Dubay, $30,108 and $769,344; N. E.
Duckworth, $942,300 and $691,729; Barry D. Epperson, $535,860 and
$659,306; David L. Kyle, $1,070,058 and $1,850,007; and Jerry D. Neal,
$904,638 and $859,369.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
As of January 15, 1997, the Board of Directors will consist of 15
members. The Board is divided into three Classes (A, B, and C)
consisting of 5 members each. Each Class is elected for a term of
three years, with the term of one class expiring at each annual
meeting of shareholders. At the Annual Meeting to be held on January
15, 1997, five directors (Class A) are to be elected to three-year
terms expiring at the Annual Meeting of shareholders to be held
January 18, 2001, or until their successors are duly elected and
qualified. The nominees for director are: Larry W. Brummett, Steven L.
Kitchen, David L. Kyle, Douglas Ann Newsom, and J. D. Scott. All are
presently serving as directors of the Corporation.
Should any of the nominees for the office of director become unable to
accept nomination or election, it is intended that the persons named
in the accompanying form of proxy will vote for the election of such
other person for such office as the Board of Directors may recommend
in the place of such nominee.
PROPOSAL NO. 2
AMEND THE CERTIFICATE OF INCORPORATION OF THE COMPANY
TO ELIMINATE THE APPLICABILITY OF THE OKLAHOMA CONTROL
SHARE ACQUISITION PROVISIONS OF
THE OKLAHOMA GENERAL CORPORATE ACT (THE "OGCA")
The Amended and Restated Agreement provides that after the Merger the
Corporation shall submit to its shareholders at its first meeting of
shareholders an amendment (the "Amendment") to the Certificate of
Incorporation of the Corporation, (i) to opt out, as of a date no more
than two days after the date of such shareholders' meeting, from
Sections 1145 through 1155 of the OGCA (the "Control Share
Acquisition Statute"), as it may be amended, which relates to control
share acquisitions, and (ii) to provide that this amendment may be
further amended only by the affirmative vote of at least 66-2/3% of
the voting power of all outstanding equity securities voting as a
class. WRI has advised the Corporation that it plans to vote or direct
the vote of all shares of capital stock of this Corporation
beneficially owned by it, and entitled to vote, in favor of Proposal
2. See "Security Ownership of Certain Beneficial Owners."
On November 26, 1997, the Board of Directors unanimously
determined that it would be advisable to amend, and approved the
Amendment to, the Certificate of Incorporation as set forth in Exhibit
A attached hereto. The Board of Directors believes that the
application of the Control Share Acquisition Statute to the Company is
not necessary to protect the interests of the shareholders and
recommends the adoption of the Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
APPROVAL OF THE AMENDMENT BY THE SHAREHOLDERS.
PURPOSE AND EFFECTS OF THE AMENDMENT
Under the OGCA, unless a company's certificate of
incorporation or bylaws otherwise provide, any Control Share
Acquisition (as defined below) of a public corporation may be made
only with the prior authorization of its shareholders in accordance
with the OGCA. The proposed Amendment to the Certificate of
Incorporation adds a new Article TWELFTH which states that (i) Section
1145 through 1155 of the OGCA, as the same may be amended, shall not
apply to the Company as of January 17, 1998, and (ii) the affirmative
vote of the holders of at least 66-2/3% of the voting power of all
outstanding equity securities of the Company, voting as a class, shall
be required in order to amend Article TWELFTH.
Pursuant to the OGCA, a "Control Share Acquisition" is an
acquisition of shares which would give the acquiring person voting
power falling within one of the following three categories: (a)
one-fifth or more, but less than one-third of the voting power, (b)
one-third or more but less than a majority of the voting power, or (c)
a majority or more of the voting power. Once a Control Share
Acquisition is deemed to have occurred, the voting power of all of the
Control Shares (i.e. the shares which are subject to the Control Share
Acquisition Statute) is reduced to zero unless and until the potential
acquiror files certain disclosures and the shareholders of the issuer
approve a resolution restoring to the control shares the same voting
rights they would have had before the Control Share Acquisition was
deemed to have occurred, subject to certain significant exceptions.
The effect of the Amendment is that a third party who
acquires shares of the Company above the applicable thresholds will
not need to obtain a shareholder resolution in order to exercise all
voting rights attributable to such shares, as would otherwise be
required by the Control Share Acquisition Statute. If the proposed
Amendment is adopted, persons seeking to acquire control of the
Company would not be required to file certain disclosures and to
obtain shareholder approval before a Control Share Acquisition could
be completed.
The Board of Directors does not believe that the application
of the Control Share Acquisition Statute is necessary to protect the
interests of the shareholders. Currently, the Company's Certificate of
Incorporation and Rights Agreement, together with Section 1090.3 of
the OGCA (the "Business Combinations Statute") contains provisions
which the Board believes accomplish goals similar to those of the
Control Share Acquisition Statutes. The Company's Rights Agreement
provides, among other things, that the shareholders of the Company,
subject to certain exceptions, will have the right to purchase
additional shares of Common Stock of the Company at a discount of 50%
of its market price upon the acquisition by a person or group of 15%
or more (in the case of Western Resources, Inc., certain other
specified percentages) of Common Stock of the Company. The Company's
Certificate provides that any merger, consolidation or other business
combination with, or upon a proposal by, any person who is a direct or
indirect beneficial owner of more than 10% of the outstanding voting
shares of the Company (a "Related Person") requires the approval of a
majority vote of all directors who are not affiliated with or
nominated by a Related Person or by the holders of at least 66-2/3% of
the shares otherwise entitled to vote as a single class with the
Common Stock of the Company to approve such business combination,
excluding shares owned by such Related Person, subject to certain
exceptions. The Business Combinations Statute provides that any merger
or other business combination of the Company with a 15% or greater
shareholder or its affiliates (an "Interested Person") within 3 years
following the date that such person became an Interested Person
requires either (a) approval of the business combination by the
holders of 66-2/3% of the shares not owned by such Interested Person
and a majority of the Company's independent directors, or (b) that,
prior to becoming an Interested Person, the Board approves either the
business combination or the transaction which resulted in the person
becoming an Interested Person. Based on a review of the provisions
described above, the Board of Directors believes that these
provisions, in combination, create sufficient means and provide the
Board with appropriate mechanisms to discourage appropriation of
control of the Company by potential acquirors which is not in the best
interests of the shareholders. The Board also noted that prior to the
merger of ONEOK Inc. into the Company, ONEOK Inc. was a Delaware
corporation and did not have the benefit of a Control Share
Acquisition Statute, since the Delaware General Corporation Law which
governs Delaware corporations does not contain a Control Share
Acquisition Statute.
BOARD OF DIRECTORS' RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
APPROVAL OF THE AMENDMENT BY THE SHAREHOLDERS.
PROPOSAL NO. 3
RATIFICATION AND APPROVAL OF APPOINTMENT OF AUDITOR
The Board of Directors, based on the recommendation of the Audit
Committee, appointed the firm of KPMG Peat Marwick LLP independent
auditor to examine the books of account and other records of the
Corporation and its consolidated subsidiaries for the 1998 Fiscal
Year. The Board of Directors is asking the shareholders to ratify and
approve this action. KPMG Peat Marwick LLP has been the Corporation's
independent auditor since 1951, and the audit engagement partner is
normally rotated every five years. Representatives of the auditing
firm will be present at the meeting and will be afforded the
opportunity, if they so desire, to make a statement or respond to
appropriate questions that may come before the meeting.
Although such ratification is not required by law, the Board of
Directors believes that shareholders should be given the opportunity
to express their views on the subject. The Board has asked for such
ratification since 1983. While not binding on the Board of Directors,
the failure of the shareholders to ratify the appointment of KPMG Peat
Marwick LLP as the Corporation's independent auditor would be
considered by the Board in determining whether or not to continue with
the services of KPMG Peat Marwick LLP.
SHAREHOLDER PROPOSALS
For any shareholder proposal to be considered for inclusion in the
Proxy Statement relating to the 1999 Annual Meeting of Shareholders,
such proposals must be received by the Corporation on or before August
14, 1998.
OTHER MATTERS
The management of the Corporation knows of no other matters that are
likely to be brought before the meeting.
Tulsa, Oklahoma
December 15, 1997
EXHIBIT A
AMENDED CERTIFICATE OF INCORPORATION
OF
ONEOK, Inc.
ONEOK, Inc., a corporation organized and existing under the laws
of the State of Oklahoma, for the purpose of amending its Certificate
of Incorporation as provided by Title 18, Oklahoma Statutes, Section
1077 hereby certifies:
1. The name of the corporation is ONEOK, Inc., as filed on May 16,
1997.
2. The address of the registered office in the State of Oklahoma and
the name of the registered agent at such address is as filed on
May 16, 1997.
3. The duration of the corporation is as filed on May 16, 1997.
4. The purpose or purposes for which the corporation is formed are
as filed on May 16, 1997.
5. The aggregate number of the authorized shares, itemized by class,
par value of shares, shares without par value, and series, if any
within a class is as filed on May 16, 1997.
6. The Certificate of Incorporation, as now in effect for the
Corporation, has been amended by adding a new Article TWELFTH, as
follows:
"1 Election. Section 1145 through 1155 of the
Oklahoma General Corporation Law, as the same may be amended,
shall not apply to the Corporation as of ______________________.
2 Amendment. The affirmative vote of the holders of at least
sixty-six and two-thirds percent (66 2/3%) of the voting power of
all outstanding equity securities of the Corporation, voting as a
class, shall be required in order to amend this Article TWELFTH."
That at a meeting of the Board of Directors, a resolution was
duly adopted setting forth the foregoing proposed amendment to the
Certificate of Incorporation of said corporation, declaring said
amendment to be advisable and referring and directing said amendment
be considered at the next annual meeting of the shareholders of the
Corporation.
That thereafter, pursuant to the resolution of its Board of
Directors, the matter was considered at the next annual meeting of
shareholders and the necessary number of shares as required by statute
were voted in favor of the amendment.
SUCH AMENDMENT WAS DULY ADOPTED IN ACCORDANCE WITH 18 O.S. ss.
1077.
IN WITNESS WHEREOF, the undersigned has caused this certificate
to be signed by its President and attested by its Secretary, this _
day of January, 1998.
ONEOK, Inc.
By:---------------------------
David L. Kyle
President
ATTEST:
- ----------------------------
Deborah B. Barnes
Secretary
- ----------------------------------------------------------------------
COMMON STOCK PROXY
ONEOK, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL
MEETING OF SHAREHOLDERS JANUARY 15, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Larry W. Brummett and David L.
Kyle, or either of them, with the power of substitution in each,
proxies to vote all stock of the undersigned in ONEOK, Inc. at the
Annual Meeting of Shareholders to be held January 15, 1998, and at any
and all adjournments thereof, upon the matter of the elections of
directors, the proposals referred to in Items 2, 3 and 4 of this
Proxy, and any other business that may properly come before the
meeting.
Shares will be voted as specified. IF NO SPECIFICATION IS MADE,
SHARES WILL BE VOTED TO ELECT THE DIRECTORS AS PROPOSED AND FOR THE
PROPOSALS REFERRED TO IN ITEMS 2, 3 AND 4 OF THIS PROXY. The proxies
or substitutes may vote accordingly in their discretion upon any other
business that may properly come before this Annual Meeting or any
adjournment thereof. MANAGEMENT RECOMMENDS A VOTE FOR ITEMS 1, 2, 3
AND 4.
1. Election of five Directors in Class A. Nominees: Larry W.
Brummett, David L. Kyle, Steven L. Kitchen, Douglas Ann Newsom,
and J.D. Scott
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY to
vote for all nominees
listed above
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME ON THE LINE PROVIDED BELOW)
- ----------------------------------------------------------------------
2. To amend the Certificate of Incorporation of the company to
eliminate the applicability of the Oklahoma control share
acquisition provisions of the Oklahoma General Corporate Act (the
"OGCA").
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(PLEASE SIGN ON REVERSE SIDE)
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
3. To ratify and approve the appointment of KPMG Peat Marwick LLP as
independent auditor of the Corporation for the 1998 fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
- ----------------------------------------------------------------------
4. To transact such other business as may properly come before the
meeting and at any and all adjournments thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
DATED:
-------------------------
------------------------------
(Signature)
------------------------------
(Signature)
NOTE: Please sign this proxy
exactly as your name appears
hereon, including the title
"Executor," "Trustee," etc.
If the name indicated is a
joint account, each joint
owner should sign. If the
stock is held by a
corporation, this proxy
should be executed by a
proper officer thereof.
- ----------------------------------------------------------------------
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
- ----------------------------------------------------------------------
SERIES A CONVERTIBLE PREFERRED PROXY
ONEOK, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL
MEETING OF SHAREHOLDERS JANUARY 15, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Larry W. Brummett and David L.
Kyle, or either of them, with the power of substitution in each,
proxies to vote all stock of the undersigned in ONEOK, Inc. at the
Annual Meeting of Shareholders to be held January 15, 1998, and at any
and all adjournments thereof, upon the proposal referred to in Item 2
of this Proxy.
Shares will be voted as specified. IF NO SPECIFICATION IS MADE,
SHARES WILL BE VOTED FOR THE PROPOSALS REFERRED TO IN ITEM 2 OF THIS
PROXY. The proxies or substitutes may vote accordingly in their
discretion upon any other business that may properly come before this
Annual Meeting or any adjournment thereof. MANAGEMENT RECOMMENDS A
VOTE FOR ITEM 2.
- ----------------------------------------------------------------------
1. To amend the Certificate of Incorporation of the company to
eliminate the applicability of the Oklahoma control share
acquisition provisions of the Oklahoma General Corporate Act (the
"OGCA").
[ ] FOR [ ] AGAINST [ ] ABSTAIN
- ----------------------------------------------------------------------
2. To transact such other business as may properly come before the
meeting and at any and all adjournments thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(PLEASE SIGN ON REVERSE SIDE)
- ----------------------------------------------------------------------
DATED:
-------------------------
------------------------------
(Signature)
------------------------------
(Signature)
NOTE: Please sign this proxy
exactly as your name appears
hereon, including the title
"Executor," "Trustee," etc.
If the name indicated is a
joint account, each joint
owner should sign. If the
stock is held by a
corporation, this proxy
should be executed by a
proper officer thereof.
- ----------------------------------------------------------------------
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
