SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE
ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting 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)
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[ X ] No fee required.
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1) Title of each class of securities to which transaction
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computed pursuant to Exchange Act Rule 0-11 (Set forth the
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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.
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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 18, 2001, or
until their successors are duly elected and qualified.
2. To amend the Certificate of Incorporation of the
Corporation 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
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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 in Oklahoma 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
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Common Stock Bank Of Oklahoma 3,223,502 Shares 10.3%
Trustee For Thrift Plan Direct
For Employees Of Oneok, Inc.
And Subsidiaries
P.O. Box 2300
Tulsa, Ok 74192
Common Stock Western Resources, Inc.(1) 3,094,257 Shares 9.9%
818 Kansas Avenue Direct
Topeka, Ks 66612-1217
Preferred Western Resources, Inc.(1) 19,946,448 Shares 100%
Stock 818 Kansas Avenue Direct
Topeka, KS 66612-1217
(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.
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
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BENEFICIAL PERCENT
TITLE OF CLASS NAME OWNERSHIP OF CLASS
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Common Stock Edwyna G. Anderson 362 *
Director
Common Stock William M. Bell 1,972 *
Director
Common Stock Larry W. Brummett 33,613(1) *
Chairman of the Board,
and Chief Executive
Officer -- ONEOK, Inc.
Common Stock Eugene N. Dubay 4,319(2) *
Vice President-- Corporate
Development
Common Stock N. E. Duckworth 44,087(3) *
Vice President and Secretary
Common Stock Douglas R. Cummings 1,600 *
Director
Common Stock William L. Ford 3,809(4) *
Director
Common Stock Howard R. Fricke --0--(5) *
Director
Common Stock J. M. Graves 2,478 *
Director
Common Stock Charles C. Ingram 99,176(6) *
Chairman of the Board
Emeritus ONEOK, Inc.
Common Stock Stephen J. Jatras 3,300 *
Director
Common Stock Steven L. Kitchen --0--(7) *
Director
Common Stock David L. Kyle 30,169(8) *
President-- ONEOK, Inc.
Common Stock Bert H. Mackie 1,750 *
Director
Common Stock Jerry D. Neal 22,200(9) *
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 122,912(10) *
Director and Retired Chairman of
the Board-- ONEOK, Inc.
Common Stock Stanton L. Young 62,300 *
Director
Directors and Executive Officers as a Group 437,596(11) 1.40%
* Less than one percent of Class
NOTES:
(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.
INFORMATION ON DIRECTORS
NOMINEES FOR DIRECTORS
CLASS A -- TERM ENDING 2001
LARRY W. BRUMMETT Chairman of the Board and Chief Executive
(age 47) Officer -- 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., Tulsa, Oklahoma
(age 45)
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., Topeka, Kansas
Director since 1997
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 Professor -- Department of Journalism Texas Christian
NEWSOM PH.D. 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 Retired Chairman of the Board -- ONEOK Inc., Tulsa,
(age 66) Oklahoma
Director since 1979 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 Bank One, Oklahoma, 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, Oklahoma City,
(age 68) 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., in Topeka and serves on the executive
committee of UMB Financial Corporation in Kansas City. 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, Tulsa, Oklahoma
(age 71)
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. 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 Corporation,
(age 71) Tulsa, Oklahoma
Director since 1985
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, Shawnee, Oklahoma
(age 55)
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, Enid, Oklahoma
(age 55)
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., Muskogee,
(age 52) 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, Oklahoma City, Oklahoma
(age 70)
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 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 $417,068. 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, Gary D. Parker,
and Stanton L. Young. On November 26, 1997 Steven L. Kitchen was added
as a member of the nominating Committee. 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:
o 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;
o 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
o 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 1997 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
MEASUREMENT PERIOD S&P NATURAL GAS
(FISCAL YEAR COVERED) ONEOK INC. S&P 500 INDEX DISTRIBUTORS
1992 100.00 100.00 100.00
1993 133.28 115.21 132.43
1994 118.30 121.52 118.68
1995 152.37 147.58 134.49
1996 200.14 175.22 182.12
1997 246.29 246.44 220.15
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.
<TABLE>
<CAPTION>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARDS
------
SECURITIES
UNDERLYING
NAME AND OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS SARS(1) COMPENSATION(2)
------------------ ---- ------ ----- ------- ---------------
<S> <C> <C> <C> <C> <C>
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-- Corporate 1996 45,000 25,080 NONE -0-
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(3) 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
(1) No SARs have been granted to any of the named executive officers.
(2) ONEOK, Inc.'s contribution to the Thrift Plan for Employees of
ONEOK, Inc. and Subsidiaries.
(3) Retired August 31, 1997.
</TABLE>
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(1)
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM(2)
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(3) 9.93% $ 26.875 10-10-06 $169,015 $428,318
Eugene N. Dubay 2,500(3) 2.48% $ 26.875 10-10-06 42,254 107,080
N.E. Duckworth 2,500(3) 2.48% $ 26.875 10-10-06(4) 42,254 107,080
1,918(5) 0.01% $ 30.875 11-16-05 28,274 67,721
David L. Kyle 8,000(3) 7.94% $ 26.875 10-10-06 135,212 342,655
Jerry D. Neal 2,500(3) 2.48% $ 26.875 10-10-06 42,254 107,080
(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 to 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, 1998, 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.
</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
SHARES YEAR END(#) FISCAL YEAR-END($)(2)
ACQUIRED ON VALUE ----------- ---------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------ ----------- ------------- ----------- -------------
<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(3) 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-
(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.
</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").
<TABLE>
<CAPTION>
FINAL-AVERAGE EARNINGS
PENSION PLAN TABLE(1)(2)(3)
YEARS OF SERVICE
----------------
REMUNERATION 15 20 25 30 35
- ------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$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
(1) Benefits reflected in the above table are not subject to
deduction for Social Security benefits or other offset amounts.
(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.
</TABLE>
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 including those attributable to the
SERP, 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; 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, 1998, 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, 1998, 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
November 26, 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 January 17, 1998.
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
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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)
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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:
------------------------------
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(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
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