<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12
KERR-MCGEE CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
KERR-MCGEE CORPORATION
KERR-MCGEE CENTER
P. O. BOX 25861
OKLAHOMA CITY, OKLAHOMA 73125
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 3, 1994
TO THE STOCKHOLDERS:
The 1994 annual meeting of stockholders of Kerr-McGee Corporation (the
"Company") will be held in the Robert S. Kerr Auditorium, Kerr-McGee Center, 123
Robert S. Kerr Avenue, Oklahoma City, Oklahoma, at 11:00 a.m. on Tuesday, May 3,
1994, for the following purposes:
1. To elect nine directors.
2. To ratify the appointment of Arthur Andersen & Co. as the Company's
independent public accountants.
3. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed March 18, 1994, as the record date for
determination of stockholders entitled to notice of and to vote at this meeting.
STOCKHOLDERS OF RECORD WILL BE ADMITTED UPON VERIFICATION OF OWNERSHIP AT
THE ADMISSIONS COUNTER AT THE MEETING. BENEFICIAL OWNERS SHOULD PRESENT EVIDENCE
OF STOCK OWNERSHIP TO THE ADMISSIONS COUNTER FOR ADMITTANCE TO THE MEETING.
To assure your representation at the meeting, please sign and mail promptly
the enclosed proxy, which is being solicited on behalf of the Board of Directors
of the Company. A return envelope, which requires no postage if mailed in the
United States, is enclosed for such purpose. If you receive more than one form
of proxy, it is an indication that your shares are registered in more than one
account. All proxy forms received by you should be signed and mailed in order to
ensure that all your shares are voted.
By Order of the Board of Directors
TOM J. MCDANIEL
SECRETARY
March 31, 1994
<PAGE>
KERR-MCGEE CORPORATION
KERR-MCGEE CENTER
P. O. BOX 25861
OKLAHOMA CITY, OKLAHOMA 73125
PROXY STATEMENT FOR
1994 ANNUAL MEETING OF STOCKHOLDERS
March 31, 1994
The accompanying proxy is solicited on behalf of the Board of Directors of
Kerr-McGee Corporation (the "Company"). This Proxy Statement and the
accompanying form of proxy are first being mailed to stockholders on or about
March 31, 1994.
Proxies in the form enclosed that are properly signed and returned will be
voted as directed unless revoked before exercise by written notice from the
stockholder to the Secretary of the Company at the address set forth above or by
the stockholder's voting by ballot at the 1994 annual meeting. Unless directed
otherwise, returned proxies will be voted for the election of the nominees for
director listed below and on other matters as recommended by the Board of
Directors.
Under Section 216 of the Delaware General Corporation Law and the Company's
By-laws, a majority of the shares of the common stock, present in person or
represented by proxy, shall constitute a quorum for purposes of the annual
meeting. In all matters other than the election of directors, the affirmative
vote of the majority of shares present in person or represented by proxy at the
annual meeting and entitled to vote on the subject matter shall be the act of
the stockholders. Abstentions are treated as votes against a proposal and broker
non-votes have no effect on the vote. Directors shall be elected by a plurality
of the votes present in person or represented by proxy at the annual meeting and
entitled to vote on the election of directors.
VOTING SECURITIES
The Company's only class of voting securities is its common stock having a
par value of $1.00 per share (the "Common Stock"), of which there were
51,656,493 shares outstanding as of the close of business on March 18, 1994, the
record date for stockholders entitled to receive notice of and to vote at this
meeting. Each share is entitled to one vote. The number of shares outstanding
does not include shares held in treasury which will not be voted.
ITEM NO. 1
ELECTION OF DIRECTORS
In accordance with the Bylaws, the Board has designated nine as the number
of directors to be elected at the forthcoming annual meeting of stockholders. As
provided by the Company's By-laws, Richard D. Harrison is retiring at age 70
from the Board upon completion of his current term on May 3, 1994. The nine
nominees are incumbent directors who were elected at the 1993 annual
stockholders' meeting.
1
<PAGE>
All nominees have consented to serve and the Company has no reason to
believe any nominee will be unavailable. Should any nominee become unavailable
for any reason, the proxies will be voted for a substitute nominee to be named
by the Board unless the number of directors constituting a full board is
reduced. Each person elected director at an annual meeting will be elected to
serve until the next annual stockholders' meeting or until a successor is
elected.
Certain information with respect to the nominees for director, including
their principal occupations during the past five years, is set forth below:
<TABLE>
<CAPTION>
NAME, AGE (AS OF JANUARY 1, 1994), FIRST BECAME
PRINCIPAL OCCUPATION & OTHER DIRECTORSHIPS A DIRECTOR
- - ---------------------------------------------------------------------------------------------- ---------------
<S> <C>
BENNETT E. BIDWELL, 66 -- Retired; Chairman, Pentastar Transportation Group, Inc. from January 1986
1991 to December 1992; Chairman, Chrysler Motors Corporation from November 1988 to December
1990. Director, McDonald & Company.
EARNEST H. CLARK, JR., 67 -- Chairman of the Board and Chief Executive Officer, The Friendship 1988
Group, an investment partnership since 1989; Retired as Chairman of the Board of Baker Hughes
Incorporated in 1989; Director, Honeywell, Inc., CBI Industries, Inc., Beckman Instruments,
Inc., and American Mutual Fund.
MARTIN C. JISCHKE, 52 -- President of Iowa State University since 1991; Chancellor of the 1993
University of Missouri -- Rolla from 1986 to 1991.
ROBERT S. KERR, JR., 67 -- Attorney, Chairman of the Board of Kerr, Irvine, Rhodes & Ables, an 1957
Oklahoma City law firm and President of the Kerr Foundation, Inc. both for a period in excess
of five years.
FRANK A. MCPHERSON, 60 -- Chairman of the Board and Chief Executive Officer of the Company 1977
since 1983. Director, Kimberly-Clark Corporation.
WILLIAM C. MORRIS, 55 -- Chairman of the Board and President of J. & W. Seligman & Co. 1977
Incorporated, Chairman of the Board of Tri-Continental Corporation, and Chairman of the
Boards of the companies in the Seligman family of investment companies, all since December
1988. Chairman of the Board of Carbo Ceramics, Inc. since 1987. Director, Daniel Industries,
Inc.
JOHN J. MURPHY, 62 -- Chairman of the Board and Chief Executive Officer of Dresser Industries, 1990
Inc. since 1983; President of Dresser Industries, Inc. from 1982 to 1992. Director, PepsiCo
Inc. and Nationsbank Corporation.
JOHN J. NEVIN, 66 -- Retired; Chairman and Chief Executive Officer of Bridgestone/Firestone 1990
Inc. from 1981 to December 1989. Director, Littelfuse, Inc. and MCII, Inc.
FARAH M. WALTERS, 48 -- President and Chief Executive Officer of University Hospitals of 1993
Cleveland and University Hospitals Health System, Inc. since 1992; Executive Director of
University Hospitals of Cleveland and Senior Executive Vice President of University Hospitals
Health Systems, Inc. from 1989 to 1992. Director, Shelby Insurance Company, Society National
Bank and LTV Corporation.
</TABLE>
2
<PAGE>
None of the above nominees is related to any executive officer of the
Company, its subsidiaries or affiliates.
For additional information relating to directors and executive officers, see
"Security Ownership", and "Executive Compensation and Other Information."
BOARD OF DIRECTORS MEETINGS, COMPENSATION AND COMMITTEES
During 1993 the Board held six meetings. Each director attended 75% or more
of the aggregate number of meetings of the Board and the committees of the Board
on which each such director served. Average attendance in 1993 of all directors
at these meetings was in excess of 96%. Directors discharge their
responsibilities not only by attending Board and committee meetings but also
through communication with the Chairman and other members of management relative
to matters of mutual interest and concern to the Company. Board members who are
not employees of the Company are paid an annual fee of $20,000 per year and an
additional fee of $1,000 for each Board meeting and committee meeting attended.
Directors are reimbursed for travel expenses and lodging.
Pursuant to a Plan of Deferred Compensation adopted in 1982, any director
who is not an employee of the Company may elect to defer compensation as a
director until such person ceases to be a director after which the deferred
compensation, together with interest, will be paid in ten equal annual
installments.
In 1988 a Stock Deferred Compensation Plan for Non-Employee Directors was
approved. The non-employee director may elect to defer compensation as a
director through the purchase of Common Stock on a year-by-year basis by
notifying the Company on or before December 31 of the preceding year. The stock
acquired in this nonqualified plan may not be distributed to the non-employee
director until 185 days after the participant ceases being a director.
The Board has established and currently maintains as standing committees an
Audit Committee, an Executive Compensation Committee and a Nominating Committee.
The Audit Committee meets periodically with the Company's independent public
accountants to review plans for the audit and the audit results. The Audit
Committee also meets with the Director of Internal Auditing to review the scope
and results of the Company's internal auditing activities and assessment of the
system of internal controls. The Audit Committee consists of six independent
non-employee directors: John J. Murphy (Chairman), Bennett E. Bidwell, Richard
D. Harrison, Martin C. Jischke, Robert S. Kerr, Jr., and Farah M. Walters. The
Committee met twice during 1993.
The Nominating Committee recommends to the Board of Directors nominees as
vacancies occur on the Board. There is no established procedure for submission
of nominations by stockholders. The Nominating Committee will consider
recommendations for the position of director submitted by stockholders in
writing to the Corporate Secretary, Kerr-McGee Corporation, P. O. Box 25861,
Oklahoma City, Oklahoma 73125. Recommendations must be received by the Company
at least 90 days prior to the meeting at which the Election of Directors will
take place. Recommendations should include the individual's name, mailing
address, experience and a signed consent to serve. The Nominating Committee
consists of six independent non-employee
3
<PAGE>
directors: John J. Nevin (Chairman), Earnest H. Clark, Jr., Richard D. Harrison,
Martin C. Jischke, William C. Morris and John J. Murphy. Frank A. McPherson is
an ex-officio member. The Committee met twice during 1993.
The Executive Compensation Committee reviews the salaries and incentive pay
awards as recommended by the Chief Executive Officer for all officers of the
Company and its subsidiaries and recommends to the full Board such changes as it
may deem appropriate. It also administers the Annual Incentive Compensation
Plan, the Long Term Incentive Program, the Executive Deferred Compensation Plan
and the Supplemental Executive Retirement Plan. The Executive Compensation
Committee recommends but does not fix the cash compensation of the Chief
Executive Officer. The cash compensation of the Chief Executive Officer is
determined by all of the independent non-employee directors. The Executive
Compensation Committee consists of six independent non-employee directors:
William C. Morris (Chairman), Bennett E. Bidwell, Earnest H. Clark, Jr., Robert
S. Kerr, Jr., John J. Nevin and Farah M. Walters. The Committee met three times
in 1993.
SECURITY OWNERSHIP
The following table sets forth the number of shares of Common Stock
beneficially owned by each director, each of the executive officers named in the
Summary Compensation Table, and by all directors and officers as a group as of
December 31, 1993 and the percentage represented by such shares of the total
Common Stock outstanding on that date:
<TABLE>
<CAPTION>
Common Stock
Amount and Nature
of Beneficial Percent of
Name or Group Ownership Class
- - -------------------------------------------------------------------- --------------------- -------------
<S> <C> <C>
Bennett E. Bidwell.................................................. 1,594(1) *
Earnest H. Clark, Jr................................................ 100
Richard D. Harrison................................................. 600
Martin C. Jischke................................................... 240(1)
Robert S. Kerr, Jr.................................................. 65,892(2)(3)
Frank A. McPherson.................................................. 114,084(4)(5)
William C. Morris................................................... 11,200
John J. Murphy...................................................... 751
John J. Nevin....................................................... 1,500
Luke R. Corbett..................................................... 36,094(4)(5)
George R. Hennigan.................................................. 23,413(4)(5)
John C. Linehan..................................................... 50,111(4)(5)
C. C. Stewart, Jr................................................... 28,518(4)(5)
Farah M. Walters.................................................... 240(1)
All directors and executive officers as a group, including those
named above........................................................ 544,520(4)(5) 1.05%
<FN>
- - ------------------------
* The percentage of shares beneficially owned by any director, nominee or
executive officer does not exceed one percent.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
(1) Consists of shares held by the Stock Deferred Compensation Plan for
Non-Employee Directors.
(2) Includes (i) 7,200 shares held in a trust of which Mr. Kerr is a
co-trustee and one of four donors, the corpus of which reverts to the
donors on the death of the beneficiary (ii) 13,031 shares held in two
trusts of which Mr. Kerr and his wife are co-trustees and (iii) 45,661
shares held by The Kerr Foundation, Inc. of which Mr. Kerr is Chairman of
the Board of Trustees and President.
(3) Does not include (i) 120 shares held by Mr. Kerr's wife and (ii) 350
shares held in a trust for the benefit of one of Mr. Kerr's children of
which Mr. Kerr's wife is the trustee; in all of which beneficial interest
is disclaimed.
(4) Includes shares issuable upon the exercise of outstanding stock options,
exercisable within 60 days of December 31, 1993, of 55,500 shares for Mr.
McPherson, 28,300 shares for Mr. Corbett, 15,433 shares for Mr. Hennigan,
36,033 shares for Mr. Linehan, 25,200 shares for Mr. Stewart and 274,680
shares for all directors and executive officers as a group.
(5) Includes restricted stock awarded in 1991 and 1992 to Mr. McPherson of
12,300 shares, Mr. Corbett of 2,650 shares, Mr. Hennigan of 2,075 shares,
Mr. Linehan of 4,025 shares, Mr. Stewart of 2,500 shares and 42,050 shares
of restricted stock awarded in 1991, 1992 and 1993 to all directors and
executive officers as a group pursuant to the Long Term Incentive Program
and on which restrictions have not been removed.
</TABLE>
ITEM NO. 2
RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen & Co., an independent public accounting firm, has been
selected as the Company's independent public accountants for the current year in
accordance with the recommendation of the Audit Committee. This firm served in
the same capacity for the year ended December 31, 1993. Representatives of
Arthur Andersen & Co. will be present at the meeting to make a statement if they
desire to do so and will be available to respond to appropriate questions.
The stockholders will be asked to ratify the appointment of Arthur Andersen
& Co. as independent public accountants for 1994. The Board of Directors
recommends a vote FOR ratification of the appointment of Arthur Andersen & Co.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table includes individual compensation information on the
Chief Executive Officer and the four other most highly paid executive officers
for services rendered in all capacities as of the end of the fiscal years ended
December 31, 1993, 1992 and 1991.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Awards
-------------------------
No. of
Securities
Annual Compensation Restricted Underlying
---------------------- Stock Options/ All Other
Name and Principal Position Year Salary Bonus Awards(1)(2) SARs(3) Compensation(4)
- - ------------------------------ --------- ----------- --------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Frank A. McPherson, 1993 $ 584,077 -0- -0- 40,200 $ 35,045
Chairman of the Board and 1992 $ 525,000 -0- $ 253,144 16,600 $ 31,500
Chief Executive Officer 1991 $ 521,667 -0- $ 230,175 9,100 $ 31,300
John C. Linehan, 1993 $ 268,077 -0- -0- 12,900 $ 16,085
Senior Vice President and 1992 $ 247,244 -0- $ 82,547 3,800 $ 14,835
Chief Financial Officer 1991 $ 243,583 $ 25,000 $ 75,659 3,000 $ 14,615
Luke R. Corbett, 1993 $ 249,231 -0- -0- 12,900 $ 14,954
Group Vice President 1992 $ 233,865 -0- $ 53,197 2,400 $ 14,032
1991 $ 218,750 $ 73,000 $ 51,150 1,900 $ 13,125
C.C. Stewart, Jr., 1993 $ 249,231 -0- -0- 12,900 $ 14,954
Group Vice President 1992 $ 231,781 -0- $ 51,363 2,400 $ 13,907
1991 $ 213,750 $ 71,000 $ 46,888 1,900 $ 12,825
George R. Hennigan, 1993 $ 232,308 -0- -0- 9,600 $ 13,939
Senior Vice President and 1992 $ 201,832 -0- $ 48,611 2,200 $ 12,110
President of Kerr-McGee 1991 $ 184,105 $ 25,000 $ 31,969 6,300 $ 11,046
Chemical Corporation
<FN>
- - ------------------------
(1) The value of the restricted stock awards are based upon the closing price
of the Company's Common Stock on the New York Stock Exchange on the grant
date.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
(2) As of December 31, 1993 the above executive officers owned the aggregate
number of shares of restricted stock, as follows, having the indicated
market value, based upon the closing price of the Company's Common Stock
on the New York Stock Exchange on December 31, 1993. Holders of restricted
stock are entitled to receive dividends.
<CAPTION>
RESTRICTED STOCK
------------------------------------
NAME NUMBER OF SHARES
- - ---- --------------------------------------------------------------------------
VALUE
--
<S> <C> <C> <C>
Frank A. McPherson................................................ 12,300 $ 556,575
John C. Linehan................................................... 4,025 $ 182,131
Luke R. Corbett................................................... 2,650 $ 119,913
C. C. Stewart, Jr................................................. 2,500 $ 113,125
George R. Hennigan................................................ 2,075 $ 93,894
(3) The Company has never granted free-standing SARs and has not granted tandem
SARs since January 1991.
(4) Consists entirely of 401(K) Company contributions pursuant to the Savings
Investment Plan and amounts contributed under the nonqualified benefits
restoration plan. Company contributions pursuant to the Savings Investment
Plan for 1993 on behalf of Messrs. McPherson, Linehan, Corbett, Stewart and
Hennigan were $13,010, $12,942, $12,892, $12,892 and $12,858, respectively.
Amounts contributed under the nonqualified benefits restoration plan for
1993 on behalf of Messrs. McPherson, Linehan, Corbett, Stewart and Hennigan
were $22,035, $3,143, $2,062, $2,062 and $1,081, respectively. The amounts
contributed by the Company to the benefits restoration plan on behalf of
such persons are identical to the amounts which would have been contributed
pursuant to the Savings Investment Plan except for Internal Revenue Code
limitations.
</TABLE>
7
<PAGE>
STOCK OPTIONS
The following table contains information concerning stock options granted
during the fiscal year ended December 31, 1993 to the five most highly
compensated executive officers of the Company:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF
NO. OF TOTAL
SECURITIES OPTIONS/ SARS
UNDERLYING GRANTED TO PER SHARE GRANT DATE
OPTIONS/SARS EMPLOYEES IN EXERCISE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR PRICE DATE VALUE(2)
- - -------------------------------- ------------- ------------- ----------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
Frank A. McPherson.............. 40,200 12.3% $ 46.6875 March 8, 2003 $ 515,364
John C. Linehan................. 12,900 3.9% $ 46.6875 March 8, 2003 $ 165,378
Luke R. Corbett................. 12,900 3.9% $ 46.6875 March 8, 2003 $ 165,378
C.C. Stewart, Jr................ 12,900 3.9% $ 46.6875 March 8, 2003 $ 165,378
George R. Hennigan.............. 9,600 2.9% $ 46.6875 March 8, 2003 $ 123,072
<FN>
- - ------------------------
(1) All stock options granted in 1993 were non-statutory stock options. The
exercise price per share is 100% of the fair market value of a share of
Common Stock on the date of grant. No option expires more than ten years
from the date of grant. At or after the grant of an option, the Committee
may, in its discretion, grant a participant an SAR. An SAR is only
exercisable during the term of the associated option. No SARs were granted
in 1993. Options may also provide that, upon the commencement of any
tender offer for at least 25% of the outstanding Common Stock all options
and any accompanying SARs held for more than six months shall become
immediately exercisable in full. If an optionee and the Company have
previously agreed, the option shall be automatically repurchased by the
Company at its fair market value if any person has made a successful
tender offer for the Common Stock which, together with shares then owned
by such person, would be 25% or more of the outstanding shares of Common
Stock. The purchase price will generally be the difference between the
tender offer price and the exercise price of the option. All executive
officers of the Company have agreed to this automatic repurchase provision
with respect to all their options.
(2) The present value was computed in accordance with the Black-Scholes option
pricing model, as permitted by the rules of the Securities and Exchange
Commission. The Company believes, however, that it is not possible to
accurately determine the value of options at the time of grant using any
model, including Black-Scholes, since any valuation depends upon numerous
assumptions. The model assumes: (a) an option term of ten years; (b) an
interest rate of 5.98% that represents the interest rate on a U.S.
Treasury Bond with a maturity date corresponding to that of the option
term; (c) volatility calculated using daily stock prices for the year
prior to the grant date; and (d) dividends at the rate of $1.52 per share,
the total amount of dividends paid with respect to a share of stock in
1993.
</TABLE>
8
<PAGE>
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named
executives with respect to unexercised options/SARs held as of December 31,
1993. None of such officers exercised any options/SARs during 1993.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/
Options/SARs at SARs at December 31,
December 31, 1993 1993(1)
-------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- - ---------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Frank A. McPherson.................................. 46,933 54,301 $ 192,475 $ 102,725
John C. Linehan..................................... 33,766 16,434 $ 353,778 $ 24,322
Luke R. Corbett..................................... 26,866 15,134 $ 293,798 $ 15,364
C.C. Stewart, Jr.................................... 23,766 15,134 $ 10,173 $ 15,364
George R. Hennigan.................................. 14,266 13,168 $ 95,287 $ 14,013
<FN>
- - ------------------------
(1) Options/SARs are "in-the-money" if the fair market value of the Common
Stock exceeds the exercise price. At December 31, 1993, the closing price
of the Common Stock on the New York Stock Exchange was $45.25.
</TABLE>
RETIREMENT PLANS
The Company maintains retirement plans for all employees, including
officers. The following table shows the estimated pension benefits payable to a
covered participant at normal retirement age under the Company's qualified
defined benefit pension plan, as well as the nonqualified benefits restoration
plan that provides benefits that would otherwise be denied participants by
reason of certain Internal Revenue Code limitations on qualified plan benefits,
based on remuneration that is covered under the plans and years of service with
the Company and its subsidiaries:
RETIREMENT PLAN TABLE
<TABLE>
<CAPTION>
15 Years 20 Years 25 Years 30 Years 35 Years
Average Annual Compensation Service Service Service Service Service
- - ------------------------------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$250,000.................................. $ 58,178 $ 77,570 $ 96,963 $ 116,356 $ 135,748
$300,000.................................. $ 70,178 $ 93,570 $ 116,963 $ 140,356 $ 163,748
$350,000.................................. $ 82,178 $ 109,570 $ 136,963 $ 164,356 $ 191,748
$400,000.................................. $ 94,178 $ 125,570 $ 156,963 $ 188,356 $ 219,748
$450,000.................................. $ 106,178 $ 141,570 $ 176,963 $ 212,356 $ 247,748
$500,000.................................. $ 118,178 $ 157,570 $ 196,963 $ 236,356 $ 275,748
$550,000.................................. $ 130,178 $ 173,570 $ 216,963 $ 260,356 $ 303,748
$600,000.................................. $ 142,178 $ 189,570 $ 236,963 $ 284,356 $ 331,748
$650,000.................................. $ 154,178 $ 205,570 $ 256,963 $ 308,356 $ 359,748
$700,000.................................. $ 166,178 $ 221,570 $ 276,963 $ 332,356 $ 387,748
</TABLE>
9
<PAGE>
Covered compensation under the retirement plans consists of salary and bonus
plus pre-tax Section 125 and 401(k) benefit contributions, based on the highest
36 consecutive months over the previous 120 months prior to retirement. Amounts
shown have been computed on a straight-life annuity basis. As of December 31,
1993, Mr. McPherson had 31 years of credited service; Mr. Linehan -- 8; Mr.
Corbett -- 8; Mr. Stewart -- 3; and Mr. Hennigan -- 14.
Pursuant to the Company's Supplemental Executive Retirement Plan ("SERP"),
effective January 1, 1991, certain key senior executives are eligible to receive
supplemental retirement benefits. The SERP is a defined benefits plan and is
administered by the Executive Compensation Committee (the "Committee").
Management recommends to the Committee employees for participation in the SERP
and the Committee then selects the participants. Eligible employees may receive
benefits under the SERP upon retirement on or after age 62, upon retirement
prior to age 62 if the employee is disabled or dies or, upon a change of control
of the Company if termination of service from the Company occurs under certain
circumstances. Benefits under the SERP equal a specified percentage of an
eligible employee's final average monthly compensation at retirement in the form
of a monthly income for life payable as an actuarially equivalent tax equalized
lump sum. Generally, the SERP benefit at retirement is calculated by determining
the excess of (i) the eligible employee's final average monthly compensation as
determined under the SERP multiplied by a specified percentage over (ii) the sum
of the anticipated monthly primary social security benefit payable to the
eligible employee and the monthly amounts payable to the eligible employee under
certain qualified and nonqualified defined benefit pension plans maintained by
the Company and by former employers of such employee. The specified percentage
ranges from 55% to 70%, depending on the age at which the employee retires and
the reason for the retirement. As of December 31, 1993, the estimated lump sum
SERP benefit payable upon retirement for the executive officers named in the
Summary Compensation Table, assuming (i) retirement at age 62; (ii) the
specified percentage is 55% and (iii) salaries are maintained at their current
level, are: Mr. McPherson -- $160,645; Mr. Linehan -- $579,115; Mr. Corbett --
$500,707; and Mr. Stewart -- $493,944.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Messrs. Corbett, Linehan,
Hennigan and certain other executive officers not named in the Summary
Compensation Table (the "Employment Agreements"). The Employment Agreements will
expire on January 31, 1996 and presently provide for minimum annual salaries of
$270,000 for Mr. Linehan, $300,000 for Mr. Corbett and $235,000 for Mr.
Hennigan. See "Change of Control Arrangements," below. Mr. McPherson and Mr.
Stewart do not have employment agreements.
CHANGE OF CONTROL ARRANGEMENTS
With respect to Messrs. McPherson, Linehan, Corbett, Stewart and Hennigan as
well as certain other executive officers, the Company has agreed to provide
certain benefits in the event of a "change of control" (as defined) of the
Company. If a change of control of the Company occurs, the executive whose
employment is subsequently terminated for any reason other than death,
disability or "cause" (as defined), or who subsequently terminates employment
for "good reason" (as defined), will be entitled to receive a maximum lump sum
cash payment equal to
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three times the executive's annual base salary. Additionally, upon such
termination, the executive will be entitled to receive amounts that he or she
would otherwise have been entitled to under the SERP with the specified
percentage multiplier being 70%, as described under "Retirement Plans," above.
The Company also has made provision under its benefits restoration plan for the
crediting of additional years of age and service to certain executive officers,
including those named in the Summary Compensation Table, whose employment is
terminated under the circumstances described above following a change of control
of the Company. If an executive who has been granted options and the Company
have previously agreed, options shall be automatically repurchased by the
Company if any person has made a successful tender offer for the Common Stock
which, together with shares then owned by such person, would be 25% or more of
the outstanding shares of Common Stock. The purchase price will generally be the
difference between the tender offer price and the exercise price of the options.
All executive officers of the Company have agreed to this automatic repurchase
provision with respect to all their options. In addition, in the event any
person acquires 25% or more of the outstanding Common Stock, restrictions on
shares of restricted stock shall lapse.
REPORT ON EXECUTIVE COMPENSATION
The Executive Compensation Committee is responsible for adopting and
administering compensation programs that make it possible for Kerr-McGee to
attract and retain men and women with the skills and attitudes necessary to
provide the Company with a fully competitive and hopefully superior management.
Its members are William C. Morris (Chairman), Bennett E. Bidwell, Earnest H.
Clark, Jr., Robert S. Kerr, Jr., John J. Nevin and Farah M. Walters, each of
whom is a non-employee director.
The Committee reviews the salaries and incentive pay awards as recommended
by the Chief Executive Officer for all officers of the Company and its
subsidiaries. It recommends to the full Board such changes as it may deem
appropriate. The Committee recommends, but does not fix the cash compensation of
the Chief Executive Officer, which is determined by all of the independent
non-employee directors. Set forth below is the report on the Company's executive
compensation policies for 1993 and how they affected the Company's Chief
Executive Officer and the Company's other executive officers (including the four
other highest paid officers).
The Company seeks to provide fully competitive levels of total compensation
for its key executives through a mix of base salaries, short-term incentives,
long-term incentives and other benefits. Total compensation is targeted to be
competitive at the median level of a peer group of comparable energy and
chemical companies, which includes companies constituting the S & P Oil
Integrated Domestic Index referred to in the Performance Graph on page 14, as
well as other comparable energy and chemical companies.
BASE SALARIES
In determining base salaries for executive officers, the Committee annually
evaluates the executive's position within their respective salary range. A job
grade is assigned to each executive based upon level of job responsibility.
Salary ranges for job grades are reviewed annually, and adjusted as may be
necessary based on recognizing the results of competitive studies of a peer
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group of comparable energy and chemical companies, which includes the companies
within the S&P Oil Integrated Domestic Index. The Committee's policy is to set
executive officers base salaries at or near the median of salaries provided by
the peer group to enable the Company to attract and retain key employees. When
salary increases are made, the Committee also takes into consideration, although
no specific weight is assigned to any individual factor, the individual's
performance based on the CEO's evaluation of the executive officer's performance
or the Committee's evaluation of the CEO's performance and the executive
officer's current and prior job related experience. As described under
"Employment Agreements" on page 10 certain executives have employment agreements
with the company which provide for minimum annual salaries equal to their
current salary. Such minimum salaries can be, and have been, increased but
cannot be decreased.
SHORT-TERM INCENTIVES
The Company's Annual Incentive Compensation Plan provides an opportunity for
key executives to earn supplemental incentive compensation each year if the
Company's profit targets are met or exceeded. Before supplemental incentive
awards are made, the Company must earn a minimum return on average capital
employed ("ROACE") in an amount established by the Committee at the beginning of
the year. No supplemental incentive compensation awards were made for 1993
because the Company did not attain its ROACE goal. The size of the award is
directly related to the amount by which the threshold ROACE is exceeded and the
position and performance of the individual executive officer. The total awards
granted in any given year may not exceed 1.7% of pretax income, before
extraordinary/unusual items.
LONG-TERM INCENTIVES
The Company's shareholders have approved the use of restricted stock awards
and stock options to provide long-term incentives for the Company's key
executives. The Committee believes that the use of stock is an important key
employee retention tool and rewards long term management and job performance. It
also provides a direct relationship between the executive's compensation and the
stockholders' interests. The aggregate value of stock options granted to each
executive officer, including the Chief Executive Officer, is based upon a
percentage of the individual's salary. The percentage is set annually by the
Committee after considering independent consulting firm surveys and reports as
to the size of competitive awards made within the Company's industries, as well
as the individual's level of responsibility and a subjective performance
evaluation. For instance, information recently brought to the attention of the
Committee suggests that the stock option awards the Committee has been making
may be inadequate in years that restricted stock awards are not made. The
Committee has requested information on competitive practices in this area and
may increase awards in future years if the data indicates that doing so is
necessary to maintain fully competitive levels of executive compensation. The
amount and terms of prior awards were also considered by the Committee when
making 1993 awards. No restricted stock awards were made in 1993.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's compensation is determined in accordance with
the policies described above. Mr. McPherson's base salary for 1993 considers
competitive salaries of CEOs
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within a peer group of comparable energy and chemical companies, which includes
the companies within the S&P Oil Integrated Domestic Index referred to in the
performance graph on page 14. Mr. McPherson's annual salary was increased in
February of 1993 from $525,000 to $589,000 which places Mr. McPherson's salary
slightly below the median CEO salaries of the S&P Oil Integrated Domestic Index
companies and a peer group of comparable energy and chemical companies. His
previous annual salary of $525,000 had been effective since February 1991. As a
result of the Company not achieving its threshold ROACE, Mr. McPherson did not
receive an annual incentive compensation award for 1993. Mr. McPherson was
awarded 40,200 stock options in 1993 under the Long Term Incentive program. In
determining the award the Committee evaluated the stock awards granted to CEOs
by the peer group of companies, as well as other factors, including Mr.
McPherson's past individual performance in a difficult energy and chemical
business environment, his opportunity to affect the Company's future
performance, the timing and size of prior awards, the Company's performance in
achieving the seventh consecutive yearly increase in oil and natural gas
production on a barrel-equivalent basis, the sixth year in a row in which oil
and gas reserve additions exceeded production on a barrel-equivalent basis, a
reduction of oil and gas lifting costs for the third straight year, record
production from the Company's coal operations, and achieving top quality
certification of four chemical operations to ISO 9002 standards. No specific
weight was assigned by the Committee to any individual factor.
FEDERAL INCOME TAX DEDUCTIBILITY
The Company has not yet adopted a policy regarding the recently enacted $1
million annual limitation on the deduction by the Company of compensation paid
to any executive officer for federal income tax purposes. However, the Company
has determined that the impact of such limitation will be immaterial to the
Company with respect to 1994. The Company is evaluating this new Internal
Revenue Code requirement and the proposed tax regulations.
Submitted by:
EXECUTIVE COMPENSATION COMMITTEE
William C. Morris, Chairman
Bennett E. Bidwell
Earnest H. Clark, Jr.
Robert S. Kerr, Jr.
John J. Nevin
Farah M. Walters
OTHER INDEPENDENT NON-EMPLOYEE DIRECTORS
Richard D. Harrison
Martin C. Jischke
John J. Murphy
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<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Company's Common Stock for the last five fiscal years with the cumulative total
return of the S & P 500 Index and the S & P Oil Integrated Domestic Index over
the same period (assuming the investment of $100 in the Company's Common Stock,
the S & P 500 Index and the S & P Oil Integrated Domestic Index on December 31,
1988 with all dividends reinvested).
STOCKHOLDER PROPOSALS
Stockholder proposals for the 1995 annual meeting must be received at the
principal executive offices of the Company not later than December 1, 1994.
EXPENSE OF SOLICITATION
The cost of this proxy solicitation will be borne by the Company. To assist
in the proxy solicitation, the Company has engaged Georgeson & Co. for a fee of
$13,500 plus out-of-pocket expenses. The Company will reimburse brokers, banks
or other persons for reasonable expenses in sending proxy material to beneficial
owners. Proxies may be solicited through the mail,
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<PAGE>
through telephonic or telegraphic communications to, or through meetings with
stockholders or their representatives by directors, officers and other employees
of the Company who will receive no additional compensation therefor.
OWNERSHIP OF STOCK OF THE COMPANY
As of December 31, 1993 FMR Corp., 82 Devonshire Street, Boston,
Massachusetts 02109 reported on a Schedule 13G beneficial ownership of 5,825,443
shares of the Company's Common Stock (approximately 11.28% of the Company's
Common Stock outstanding on December 31, 1993)
As of December 31, 1993 Lazard Freres & Co., One Rockefeller Plaza, New
York, N.Y. 10020 reported on a Schedule 13G beneficial ownership of 3,667,594
shares of the Company's Common Stock (approximately 7.1% of the Company's Common
Stock outstanding on December 31, 1993).
To the best of the Company's knowledge, no other entity beneficially owned
more than 5% of any class of the Company's outstanding voting securities at the
close of business on March 18, 1994.
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission and the New York Stock Exchange initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than ten-percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on the information furnished to the
Company and written representations that no other reports were required, during
the fiscal year ended December 31, 1993 all applicable Section 16(a) filing
requirements were complied with.
OTHER MATTERS
The Company does not know of any matters to be presented at the meeting
other than those set out in the notice preceding this proxy statement. If any
other matters should properly come before the meeting, it is intended that the
persons named on the enclosed proxy will vote said proxy therein in their
discretion.
TOM J. MCDANIEL
SECRETARY
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KERR -- MCGEE CORPORATION
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
RAW DATA: 1988** 1989 1990 1991 1992 1993
- - ------------------------------------------ --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
KERR-McGEE CORPORATION.................... 0.0761 0.3772 -0.0893 -0.1078 -0.2086 0.0303
S&P 500................................... 0.1650 0.3159 -0.0311 0.3034 0.0761 0.1003
S&P Oil Integrated Domestic Index......... 0.1776 0.4385 -0.0497 -0.0643 0.0222 0.0542
POINTS PLOTTED ON GRAPH:
** Note: 1988 was the base year made equal to 100
KERR-McGEE CORPORATION.................... 100 138 126 112 135 139
S&P 500................................... 100 132 128 167 180 198
S&P Oil Integrated Domestic Index......... 100 144 137 128 131 138
</TABLE>
16
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KERR-McGEE CORPORATION
PROXY
Kerr-McGee Center
P.O. Box 25861
Oklahoma City, Oklahoma 73125
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Frank A. McPherson, Tom J. McDaniel,
and Russell G. Horner, Jr. and each of them, as Proxies, each with
the power to appoint his substitute, and hereby authorizes them to represent
and to vote, as designated below, all the shares of Common Stock of
Kerr-McGee Corporation held of record by the undersigned on March 18, 1994
at the Annual Meeting of Stockholders to be held on May 3, 1994 or any
adjournment thereof (1) as hereinafter specified on the matters as more
particularly described in the Company's proxy statement and (2) in their
discretion on any such other business as may properly come before the
meeting.
(CONTINUED ON BACK)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE "FOR" ITEMS 1 AND 2.
1. ELECTION OF DIRECTORS
Bennett E. Bidwell, Earnest H. Clark, Jr., Martin C. Jischke, Robert S.
Kerr, Jr., Frank A. McPherson, William C. Morris, John J. Murphy, John
J. Nevin, Farah M. Walters.
/ / FOR / / WITHHOLD / / WITHHOLD for the following only, write name(s):
2. Ratify the appointment of Arthur Andersen & Co. as the Company's
independent public accountants.
/ / FOR / / AGAINST / / ABSTAIN
The Proxies are authorized to vote in their discretion upon such other
business as may properly come before the meeting. If no direction is
given, this proxy will be voted FOR items 1 and 2.
Dated _________________, 1994
Signature _______________________________________________
Signature, if held jointly ______________________________
Please sign exactly as the name appears above. When signing as attorney,
executor, administrator, trustee or guardian, please give full title.
If a corporation, please sign full corporation name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
