UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission File Number 1-3939
KERR-McGEE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
A Delaware Corporation 73-0311467
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Kerr-McGee Center, Oklahoma City, Oklahoma 73125
(Address of Principal Executive Offices and Zip Code)
Registrant's telephone number, including area code (405) 270-1313
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Number of shares of common stock, $1.00 par value, outstanding as of April 30,
2000: 94,136,448
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
(Millions of dollars, except per-share amounts) 2000 1999
-----------------------
<S> <C> <C>
Sales $875.6 $ 488.6
------ -------
Costs and Expenses
Costs and operating expenses 277.0 225.4
Selling, general and administrative expenses 50.0 52.7
Depreciation and depletion 170.6 131.2
Exploration, including dry holes and
amortization of undeveloped leases 44.0 28.8
Taxes, other than income taxes 30.2 15.3
Merger costs - 155.1
Interest and debt expense 57.2 44.7
------ -------
Total Costs and Expenses 629.0 653.2
------ -------
246.6 (164.6)
Other Income 28.6 14.0
------ -------
Income (Loss) before Income Taxes 275.2 (150.6)
Taxes on Income (90.0) 44.1
------ -------
Income (Loss) before Change in Accounting Principle 185.2 (106.5)
Cumulative Effect of Change in Accounting Principle
(net of benefit for income taxes of $2.2) - (4.1)
------ -------
Net Income (Loss) $185.2 $(110.6)
====== =======
Net Income (Loss) per Common Share
Basic -
Income before cumulative effect of change in
accounting principle $ 2.04 $ (1.23)
Cumulative effect of change in accounting principle - (.05)
------ -------
Total $ 2.04 $ (1.28)
====== =======
Diluted -
Income before cumulative effect of change in
accounting principle $ 1.94 $ (1.23)
Cumulative effect of change in accounting principle - (.05)
------ -------
Total $ 1.94 $ (1.28)
====== =======
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<CAPTION>
March 31, December 31,
(Millions of dollars) 2000 1999
----------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 724.9 $ 266.6
Notes and accounts receivable 524.3 500.9
Inventories 282.7 280.9
Deposits and prepaid expenses 105.5 112.2
--------- ---------
Total Current Assets 1,637.4 1,160.6
--------- ---------
Property, Plant and Equipment 11,831.0 11,049.3
Less reserves for depreciation,
depletion and amortization 7,103.6 6,964.4
--------- ---------
4,727.4 4,084.9
--------- ---------
Investments and Other Assets 829.8 653.7
--------- ---------
$ 7,194.6 $ 5,899.2
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 210.5 $ 9.0
Accounts payable 261.7 403.7
Long-term debt due within one year 21.5 20.1
Other current liabilities 485.4 407.3
--------- ---------
Total Current Liabilities 979.1 840.1
--------- ---------
Long-Term Debt 2,910.1 2,496.0
--------- ---------
Deferred Credits and Reserves 1,252.3 1,070.7
--------- ---------
Stockholders' Equity
Common stock, par value $1 - 300,000,000
shares authorized, 101,067,501 shares issued at
3-31-00 and 93,494,186 shares issued at 12-31-99 101.0 93.5
Capital in excess of par value 1,640.3 1,284.0
Preferred stock purchase rights .9 .5
Restricted stock 5.0 .2
Retained earnings 718.6 576.0
Accumulated other comprehensive income 92.8 45.4
Common shares in treasury, at cost - 6,931,990
shares at 3-31-00 and 7,010,790 at 12-31-99 (383.4) (387.8)
Deferred compensation (122.1) (119.4)
--------- ---------
Total Stockholders' Equity 2,053.1 1,492.4
--------- ---------
$ 7,194.6 $ 5,899.2
========= =========
The "successful efforts" method of accounting for oil and gas exploration and
production activities has been followed in preparing this balance sheet.
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
(Millions of dollars) 2000 1999
-------------------------
<S> <C> <C>
Operating Activities
Net income (loss) $ 185.2 $(110.6)
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation, depletion and amortization 184.3 141.5
Dry hole costs 17.1 4.8
Deferred income taxes (21.4) 3.5
(Gain) loss on sale and retirement of assets (.3) 1.8
Noncash items affecting net income 8.2 148.1
Other net cash used in operating activities (102.1) (127.0)
------- -------
Net Cash Provided by Operating Activities 271.0 62.1
------- -------
Investing Activities
Capital expenditures (108.7) (139.1)
Acquisitions (566.5) -
Other investing activities (2.8) (8.8)
------- -------
Net Cash Used in Investing Activities (678.0) (147.9)
------- -------
Financing Activities
Issuance of long-term debt 926.2 619.3
Repayment of long-term debt (594.0) (345.3)
Increase (decrease) in short-term borrowings 201.5 (24.5)
Issuance of common stock 366.8 -
Dividends paid (38.9) (21.2)
Other financing activities - (41.9)
------- -------
Net Cash Provided by Financing Activities 861.6 186.4
------- -------
Effects of Exchange Rate Changes on Cash and Cash Equivalents 3.7 (13.1)
------- -------
Net Increase in Cash and Cash Equivalents 458.3 87.5
Cash and Cash Equivalents at Beginning of Period 266.6 121.0
------- -------
Cash and Cash Equivalents at End of Period $ 724.9 $ 208.5
======= =======
The accompanying notes are an integral part of this statement.
</TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
A. The condensed financial statements included herein have been prepared by
the company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission and, in the opinion of management,
include all adjustments, consisting only of normal recurring accruals,
necessary to present fairly the resulting operations for the indicated
periods. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations. Although the company believes that the disclosures are
adequate to make the information presented not misleading, it is suggested
that these condensed financial statements be read in conjunction with the
financial statements and the notes thereto included in the company's latest
annual report on Form 10-K.
B. Effective January 1, 1999, the company adopted Statement of Position (SOP)
No. 98-5, "Reporting on the Costs of Start-Up Activities." The SOP requires
costs of start-up activities to be expensed as incurred. Unamortized
start-up costs at the beginning of the year were required to be recognized
as cumulative effect of a change in accounting principle, which increased
the first-quarter 1999 after-tax loss by $4.1 million.
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities." The
statement requires recording all derivative instruments as assets or
liabilities, measured at fair value. The standard is effective for fiscal
years beginning after June 15, 2000. The company is currently evaluating
the impact the standard will have on the company's results of operations;
however, management believes it will not be material due to the limited
amount of derivative and hedging activities in which the company currently
engages.
C. Net cash provided by operating activities reflects cash payments for income
taxes and interest as follows:
Three Months Ended
March 31,
(Millions of dollars) 2000 1999
----------------------
Income tax payments $70.5 $49.0
Less refunds received (20.5) (58.1)
----- -----
Net income tax payments (refunds) $50.0 $(9.1)
===== =====
Interest payments $29.7 $22.8
===== =====
D. During the first quarter of 2000 and 1999, comprehensive income (loss) was
$232.6 million and $(124.8) million, respectively.
The company has certain investments that are considered to be available for
sale. The company also has debt that is exchangeable into equity securities
of an investee that are considered available for sale. These financial
instruments are carried in the Consolidated Balance Sheet at fair value,
which is based on quoted market prices. The company had no securities
classified as held to maturity or trading at March 31, 2000, or December
31, 1999. At March 31, 2000, and December 31, 1999, available for sale
securities for which fair value can be determined are as follows:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
-------------------------------- --------------------------------
Gross Gross
Unrealized Unrealized
Fair Holding Fair Holding
Value Cost Gain (Loss) Value Cost Gain
----- ---- ----------- ----- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Equity securities $483.4 $208.8 $274.6 $327.2 $208.8 $118.4
Exchangeable debt 409.6 330.3 (79.3) 327.2 330.3 3.1
U.S. government obligations -
Maturing within one year 7.1 7.1 - 4.7 4.7 -
Maturing between one year
and four years 9.0 9.1 .1 11.1 10.9 .2
------ ------
Total $195.4 $121.7
====== ======
</TABLE>
E. Investments in equity affiliates totaled $56.1 million at March 31, 2000,
and $59 million at December 31, 1999. Equity income related to the
investments is included in Other Income in the Consolidated Statement of
Income and totaled $5.6 million and $2.3 million for the three months ended
March 31, 2000 and 1999, respectively.
F. The following table sets forth the computation of basic and diluted
earnings (loss) per share (EPS) for the three-month period ended March 31,
2000 and 1999.
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------------------------------------------
2000 1999
-------------------------------- --------------------------------
(In millions, except Per-Share Per-Share
per-share amounts) Income Shares Income (Loss) Income Shares Income (Loss)
------ ------ ------------- ------ ------ -------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $185.2 90.7 $2.04 $(110.6) 86.4 $(1.28)
===== ======
Effect of Dilutive Securities:
5 1/4% convertible debentures 3.0 5.4 - -
7 1/2% convertible debentures 2.3 1.8 - -
Stock options - .2 - -
------ ---- ------- ----
Diluted EPS $190.5 98.1 $1.94 $(110.6) 86.4 $(1.28)
====== ==== ===== ======= ==== ======
</TABLE>
G. CONTINGENCIES
WEST CHICAGO -
In 1973, a wholly owned subsidiary, Kerr-McGee Chemical Corporation, closed
the facility at West Chicago, Illinois, that processed thorium ores.
Kerr-McGee Chemical Corporation now operates as Kerr-McGee Chemical LLC
(Chemical). Operations resulted in low-level radioactive contamination. In
1979, Chemical filed a plan with the Nuclear Regulatory Commission (NRC) to
decommission the facility. The NRC transferred jurisdiction over the
facility to the State of Illinois (the State) in 1990. Following is the
current status of various matters associated with the West Chicago site.
Closed Facility - In 1994, Chemical, the City of West Chicago (the City)
and the State reached agreement on the initial phase of the decommissioning
plan for the closed West Chicago facility, and Chemical began shipping
material from the site to a licensed permanent disposal facility.
In February 1997, Chemical executed an agreement with the City as to the
terms and conditions for completing the final phase of decommissioning
work. The State has indicated approval of this agreement and has issued
license amendments authorizing much of the work. Chemical expects most of
the work to be completed within four years.
In 1992, the State enacted legislation imposing an annual storage fee equal
to $2 per cubic foot of byproduct material located at the closed facility.
The storage fee cannot exceed $26 million per year, and any storage fee
payments must be reimbursed to Chemical as decommissioning costs are
incurred. Chemical has been fully reimbursed for all storage fees paid
pursuant to this legislation. In June 1997, the legislation was amended to
provide that future storage fee obligations are to be offset against
decommissioning costs incurred but not yet reimbursed.
Offsite Areas - The U.S. Environmental Protection Agency (EPA) has listed
four areas in the vicinity of the West Chicago facility on the National
Priority List that the EPA promulgates under authority of the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (CERCLA)
and has designated Chemical as a potentially responsible party in these
four areas. Two of the four areas are presently being studied to determine
the extent of contamination and the nature of any remedy. These two are
known as the Sewage Treatment Plant and Kress Creek. The EPA previously
issued unilateral administrative orders for the other two areas (known as
the residential areas and Reed-Keppler Park), which require Chemical to
conduct removal actions to excavate contaminated soils and ship the soils
elsewhere for disposal. Without waiving any of its rights or defenses,
Chemical is conducting the cleanup of the two areas for which unilateral
administrative orders have been issued. Cleanup at the park site is
essentially complete.
Judicial Proceedings - In December 1996, a lawsuit was filed against the
company and Chemical in Illinois state court on behalf of a purported class
of present and former West Chicago residents. The lawsuit seeks damages for
alleged diminution in property values and the establishment of a medical
monitoring fund to benefit those allegedly exposed to thorium wastes
originating from the former facility. The case was removed to federal
court. The court has preliminary approved a settlement that would resolve
the litigation on a class-wide basis. Final court approval is pending.
Government Reimbursement - Pursuant to Title X of the Energy Policy Act of
1992 (Title X), the U.S. Department of Energy is obligated to reimburse
Chemical for certain decommissioning and cleanup costs in recognition of
the fact that much of the facility's production was dedicated to United
States government contracts. Title X was amended in 1998 to increase the
amount authorized to $140 million plus inflation adjustments. Through April
30, 2000, Chemical has been reimbursed approximately $88 million under
Title X. These reimbursements are provided by congressional appropriations.
OTHER MATTERS
The company's current and former operations involve management of regulated
materials and are subject to various environmental laws and regulations.
These laws and regulations will obligate the company to clean up various
sites at which petroleum, chemicals, low-level radioactive substances or
other materials have been disposed of or released. Some of these sites have
been designated Superfund sites by the EPA pursuant to CERCLA. The company
and/or its subsidiaries are also a party to a number of legal proceedings
involving environmental and/or other matters pending in various courts and
agencies.
The company provides for costs related to contingencies when a loss is
probable and the amount is reasonably estimable. It is not possible for the
company to reliably estimate the amount and timing of all future
expenditures related to environmental and legal matters and other
contingencies because of:
- the difficulty of predicting cleanup requirements and estimating cleanup
costs;
- the uncertainty in quantifying liability under environmental laws that
impose joint and several liability on all potentially responsible
parties;
- the continually changing nature of environmental laws and regulations,
and the uncertainty inherent in legal matters.
As of March 31, 2000, the company has recorded reserves totaling $189
million for cleaning up and remediating environmental sites, reflecting the
reasonably estimable costs for addressing these sites. This includes $117
million for the West Chicago sites. Management believes, after consultation
with general counsel, that currently the company has reserved adequately
for contingencies. However, additions to the reserves may be required as
additional information is obtained that enables the company to better
estimate its liability, including liability at sites now under review, but
cannot now reliably estimate the amount of future additions to the
reserves. Cumulative expenditures at all sites from inception through
March 31, 2000, total $687 million.
H. During the second quarter of 2000, the company finalized the agreements
with Kemira Oyj of Finland to purchase its titanium dioxide pigment
operations in Savannah, Georgia, and Botlek, the Netherlands, for $403
million. The acquisition was accounted for under the purchase method of
accounting for business combinations.
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
Comparison of 2000 Results with 1999 Results
CONSOLIDATED OPERATIONS
Net income in the first quarter 2000 totaled $185.2 million, compared with a net
loss of $110.6 million in the first quarter of the prior year. First-quarter
2000 operating profit was $328.4 million, compared with $51.3 million in the
same 1999 quarter. The increase in operating profit was primarily due to higher
crude oil and natural gas sales prices, higher crude oil and titanium dioxide
pigment sales volumes and lower pigment production costs. Partially offsetting
were higher depreciation and depletion expense, higher exploration expense,
higher exploration and production operating expenses, lower natural gas sales
volumes and lower pigment sales prices.
Other expense for the first quarter of 2000 totaled $53.2 million, compared with
$201.9 million in the same 1999 period. The decrease was primarily due to the
1999 merger costs and higher equity income, partially offset by lower foreign
currency transaction gains and higher net interest expense.
The income tax provision was $90 million for the 2000 first quarter, which
includes a benefit of $9.5 million related to prior year foreign taxes, compared
with a tax benefit of $44.1 million for the 1999 period. The 1999 first-quarter
amount included a $44.6 million tax benefit related to the $155.1 million in
merger costs.
SEGMENT OPERATIONS
Following is a summary of sales and operating profit and a discussion of major
factors influencing the results of each of the company's business segments for
the first quarter of 2000, compared with the same period last year.
Three Months Ended
March 31,
(Millions of dollars) 2000 1999
-------------------
Sales
Exploration and production $638.1 $ 285.8
Chemicals - Pigment 184.6 150.1
Chemicals - Other 52.9 52.6
------ -------
875.6 488.5
All other - .1
------ -------
Total Sales $875.6 $ 488.6
====== =======
Operating Profit
Exploration and production $292.1 $ 23.2
Chemicals - Pigment 32.3 26.6
Chemicals - Other 4.0 1.5
------ -------
Total Operating Profit 328.4 51.3
Other Expense (53.2) (201.9)
------ -------
Income (Loss) before Income Taxes 275.2 (150.6)
Taxes on Income (90.0) 44.1
------ -------
Income (Loss) before Change in Accounting Principle 185.2 (106.5)
Cumulative Effect of Change in Accounting
Principle, Net of Income Taxes - (4.1)
------ -------
Net Income (Loss) $185.2 $(110.6)
====== =======
Exploration and Production -
Operating profit for the first quarter of 2000 was $292.1 million, compared with
$23.2 million for the same 1999 period. The higher operating profit resulted
from increases in crude oil and natural gas sales prices and higher crude oil
sales volumes, partially offset by higher depreciation and depletion expense,
higher exploration expenses, higher operating expense and lower natural gas
sales volumes.
Revenues were $638.1 million and $285.8 million for the three months ended March
31, 2000 and 1999, respectively. The following table shows the company's average
crude oil and natural gas sales prices and volumes for the first quarter of 2000
and 1999.
<TABLE>
<CAPTION>
Three Months Ended Percent
March 31, Increase
2000 1999 (Decrease)
----------------------------------------
<S> <C> <C> <C>
Crude oil sales (thousands of bbls/day)
Domestic
Offshore 57.6 50.2 15
Onshore 17.6 19.1 (8)
North Sea 124.1 96.8 28
Other International 12.6 16.4 (23)
------ ------
Total 211.9 182.5 16
====== ======
Average crude oil sales price (per barrel)
Domestic
Offshore $25.41 $ 9.73 161
Onshore 27.71 11.23 145
North Sea 26.47 11.60 128
Other International 24.00 8.83 172
Average $26.14 $10.89 140
Natural gas sold (MMCF/day)
Domestic
Offshore 294 347 (15)
Onshore 169 165 2
North Sea 71 58 22
------ ------
Total 534 570 (6)
====== ======
Average natural gas sales price (per MCF)
Domestic
Offshore $ 2.59 $ 1.67 55
Onshore 2.84 1.61 76
North Sea 2.09 2.52 (17)
Average $ 2.60 $ 1.91 36
</TABLE>
Chemicals - Pigment
Operating profit in the 2000 first quarter was $32.3 million on revenues of
$184.6 million, compared with operating profit of $26.6 million on revenues of
$150.1 million for the same 1999 quarter. First-quarter 2000 operating profit
increased due to higher sales volumes and lower production costs, partially
offset by lower sales prices.
Chemicals - Other
First-quarter 2000 operating profit was $4 million on revenues of $52.9 million,
compared with operating profit of $1.5 million on revenues of $52.6 million for
the same 1999 period. Operating profit for the 2000 period increased primarily
due to higher sales volumes and lower production costs for electrolytic
products.
Financial Condition
At March 31, 2000, the company's net working capital position was $658.3
million, compared with $37.6 million at March 31, 1999, and $320.5 million at
December 31, 1999. The current ratio was 1.7 to 1 at March 31, 2000, compared
with 1.0 to 1 at March 31, 1999, and 1.4 to 1 at December 31, 1999. The
company's percentage of net debt (debt less cash) to capitalization was 54% at
March 31, 2000, compared with 60% at December 31, 1999.
The company had unused lines of credit and revolving credit facilities of $1,399
million at March 31, 2000. Of this amount, $885 million and $347 million can be
used to support commercial paper borrowings of Kerr-McGee Credit LLC and
Kerr-McGee Oil (U.K) PLC, respectively.
On March 6, 2000, Kerr-McGee China Petroleum Ltd., a wholly owned subsidiary,
entered into a revolving credit agreement with several banks providing for
borrowings up to $100 million at varying rates through March 3, 2003. The
company is the guarantor of the agreement. A total of $60 million was
outstanding at March 31, 2000.
In January 2000, Kerr-McGee Pigments N.V., a wholly owned subsidiary, amended
its overdraft credit agreement with KBC Bank N.V. The previous agreement
provided for up to 500 million Belgian francs or equivalent foreign currency at
varying rates. The agreement was amended to increase the amount of borrowings
available to 700 million Belgian francs or equivalent foreign currency. The
company continues as guarantor of the agreement.
The company increased its shelf registration with the Securities and Exchange
Commission in January 2000 to offer up to $1.5 billion of debt securities,
preferred stock, common stock or warrants. In February 2000, under this
registration, the company issued 7.5 million shares of its common stock and $600
million of 5 1/4% convertible subordinated debentures due 2010, generating
nearly $1 billion in net proceeds to the company. A portion of these proceeds
was used to redeem short-term floating rate debt used for the $555 million
acquisition of Repsol S.A.'s North Sea oil and gas operations in January 2000
and the $403 million acquisition of Kemira Oyj's titanium dioxide pigment
operations in Savannah, Georgia, in April 2000 and Botlek, the Netherlands, in
May 2000.
On December 21, 1999, Kerr-McGee North Sea (U.K.) Ltd., a wholly owned
subsidiary, and the company entered into an agreement with the Royal Bank of
Canada and other financial institutions to provide up to 45,681,050 British
pounds sterling in the form of standby letters of credit. Amounts may be drawn
on the letters of credit through December 31, 2000.
First-quarter 2000 cash capital expenditures totaled $108.7 million, compared
with $139.1 million for the same period last year. Exploration and production
expenditures, principally in the Gulf of Mexico and North Sea, were 86% of the
2000 total. Chemical - pigment expenditures were 10% of the 2000 total. Chemical
- - other and corporate incurred the remaining 4% of the expenditures. Management
anticipates that the cash requirements for the next several years can be
provided through internally generated funds and selective borrowings.
Forward-Looking Information
Statements in this quarterly report regarding the company's or management's
intentions, beliefs or expectations are forward-looking statements within the
meaning of the Securities Litigation Reform Act. Future results and developments
discussed in these statements may be affected by numerous factors and risks,
such as the accuracy of the assumptions that underlie the statements, the
success of the oil and gas exploration and production program, drilling risks,
the market value of Kerr-McGee's products, uncertainties in interpreting
engineering data, demand for consumer products for which Kerr-McGee's businesses
supply raw materials, general economic conditions, and other factors and risks
discussed in the company's SEC filings. Actual results and developments may
differ materially from those expressed in this quarterly report.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The 2000 annual meeting of stockholders was held on May 9, 2000.
(b) Directors elected at the 2000 annual meeting were the following:
Sylvia A. Earle
Martin C. Jischke
Leroy C. Richie
Directors whose term of office continues after the 2000 annual
meeting were the following:
William E. Bradford
Luke R. Corbett
David C. Genever-Watling
Tom J. McDaniel
William C. Morris
John J. Murphy
Matthew R. Simmons
Farah M. Walters
Ian L. White-Thomson
(c) The following matters were voted upon at the annual meeting:
(1) Following are the directors elected at the 2000 annual meeting
and the tabulation of votes related to each nominee.
Votes
Affirmative Withheld
Sylvia A. Earle 82,016,299 558,282
Martin C. Jischke 81,932,364 642,762
Leroy C. Richie 81,930,326 644,800
(2) The stockholders ratified the appointment of Arthur Andersen
LLP as independent public accountant for 2000. Affirmative
votes were 82,145,423; negative votes were 148,966 and
abstentions were 280,737.
(3) The stockholders approved the 2000 Long Term Incentive Plan.
Affirmative votes were 72,088,303; negative votes were
9,950,120, and abstentions were 536,703.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits -
Exhibit No.
4.12 The company agrees to furnish to the Securities and Exchange
Commission, upon request, a copy of the Offering Memorandum
and Fourth Supplement to the August 1, 1982, Indenture dated
January 18, 2000, relating to the company's floating rate
notes due August 1, 2001, and the Fifth Supplement to the
August 1, 1982, Indenture dated February 11, 2000, relating to
the company's 5-1/4%, 10-year convertible subordinated
debentures due February 15, 2010. The total amount of
securities authorized under each of such instruments does not
exceed 10% of the total assets of the company and its
subsidiaries on a consolidated basis.
10.4 The 2000 Long Term Incentive Plan effective May 1, 2000.
27.0 Financial Data Schedule
(b) Reports on Form 8-K
On January 31, 2000, the company filed a report on Form 8-K
announcing the earnings for the company's fourth quarter and twelve
months ended December 31, 1999.
On February 4, 2000, the company filed a report on Form 8-K
announcing the offering of approximately 9 million shares of common
stock and $300 million of 10-year convertible subordinated
debentures.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KERR-McGEE CORPORATION
Date May 12, 2000 By: (Deborah A. Kitchens)
------------ -------------------------------
Deborah A. Kitchens
Vice President and Controller
and Chief Accounting Officer
EXHIBIT 10.4
KERR-McGEE CORPORATION 2000 LONG TERM INCENTIVE PLAN
KERR-McGEE CORPORATION 2000 LONG TERM INCENTIVE PLAN
TABLE OF CONTENTS
Article Page
I Purpose.....................................1
II Definitions.................................1
III Administration..............................3
IV Eligibility.................................3
V Maximum Shares Available....................3
VI Stock Options...............................4
VII Stock Appreciation Rights...................6
VIII Restricted Stock Plan.......................7
IX Performance Plan............................7
X Adjustment Upon Changes in Stock ...........8
XI Change in Control...........................9
XII Miscellaneous..............................10
XIII Amendment and Termination..................11
XIV Duration of the Plan.......................12
KERR-McGEE CORPORATION 2000 LONG TERM INCENTIVE PLAN
Article I
Purpose
The purpose of the 2000 Kerr-McGee Corporation Long Term Incentive Plan
(the "Plan") is to provide incentive opportunities for non-employee directors
and key employees, and to align their personal financial interest with the
Company's stockholders. The Plan includes provisions for stock options, stock
and performance related awards.
Article II
Definitions
(a) "Award" shall mean the award which a Performance Plan Participant
is entitled to receive under the Performance Plan.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(d) "Company" shall mean Kerr-McGee Corporation and any successor
corporation by merger or otherwise.
(e) "Committee" shall mean a committee of two (2) or more members
of the Board appointed by the Board of Directors to administer the Plan pursuant
to Article III herein.
(f) "Employee" shall mean any person employed by the Company, a
Subsidiary or Limited Liability Company on a full-time salaried basis, including
officers and employee directors thereof.
(g) "Fair Market Value" of Stock shall mean the average of the highest
price and the lowest price at which Stock shall have been sold on the applicable
date as reported in the Wall Street Journal as New York Stock Exchange Composite
Transactions for that date. In the event that the applicable date is a date on
which there were no such sales of Stock, the Fair Market Value of Stock on such
date shall be the mean of the highest price and the lowest price at which Stock
shall have been sold on the last trading day preceding such date.
(h) "Incentive Stock Option" or "ISO" shall mean an Option grant which
meets or complies with the terms and conditions set forth in Section 422 of the
Code and applicable regulations.
(i) "Indicators of Performance" shall mean the criteria used by the
Committee to evaluate the Company's performance with respect to each Performance
Period as described in Article IX, Section (b) of this Plan.
(j) "Limited Liability Company" or "LLC" shall mean any Limited
Liability Company in which the Company or a Subsidiary owns fifty percent (50%)
or more of the Limited Liability Company.
(k) "Non-Employee Director" shall mean any person duly elected a
director of Kerr-McGee Corporation who is not an employee of the Company.
(l) "Option" or "Stock Option" shall mean a right granted under the
Plan to an Optionee to purchase a stated number of shares of Stock at a stated
exercise price.
(m) "Optionee" shall mean an Employee or Non-Employee Director who has
received a Stock Option granted under the Plan.
(n) "Performance Period" shall mean a period established by the
Committee of not less than one year, at the conclusion of which settlement will
be made with a Performance Plan Participant with respect to the Award.
(o) "Performance Plan Participant" shall mean any eligible Employee so
designated by the Committee.
(p) "Restricted Stock" shall mean Stock which is issued pursuant to
Article VIII of the Plan.
(q) "Restriction Period" shall mean that period of time as determined
by the Committee during which Restricted Stock is subject to such terms,
conditions and restrictions as shall be assigned by the Committee.
(r) "Retirement" shall mean retirement as defined in a policy approved
by the Company.
(s) "Stock" shall mean the common stock of the Company.
(t) "Stock Appreciation Right" or "SAR" shall mean a right granted in
connection with an Option in accordance with Article VII of the Plan.
(u) "Subsidiary" shall mean any corporation (other than the Company) in
which the Company, a Subsidiary or a Limited Liability Company of the Company
owns fifty percent (50%) or more of the total combined voting power of all
classes of stock.
(v) "Total Disability" and "Totally Disabled" shall normally have such
meaning as that defined under the Company's group insurance plan covering total
disability and determinations of Total Disability normally shall be made by the
insurance company providing such coverage on the date on which the employee,
whether or not eligible for benefits under such insurance plan, becomes Totally
Disabled. In the absence of such insurance plan, the Committee shall make such
determination.
Article III
Administration
Subject to such approvals and other authority as the Board may reserve
to itself from time to time, the Committee shall, consistent with the provisions
of the Plan, from time to time establish such rules and regulations and appoint
such agents as it deems appropriate for the proper administration of the Plan,
and make such determinations under, and such interpretations of, and take such
steps in connection with the Plan or the Options or SARs or the Restricted Stock
Plan or the Performance Plan as it deems necessary or advisable.
Each determination, interpretation, or other action made or taken
pursuant to the Plan by the Committee and/or the Board shall be final and shall
be binding and conclusive for all purposes and upon all persons.
Article IV
Eligibility
Those Employees who, in the judgment of the Committee, may contribute
to the profitability and growth of the Company, and all Non-Employee directors,
shall be eligible to receive Options, SAR's, grants of Restricted Stock and
Awards under the Plan.
Article V
Maximum Shares Available
The Stock to be distributed under the Plan may be either authorized and
unissued shares or issued shares of the Company, but grants of Restricted Stock
shall be made in treasury shares. The maximum amount of Stock which may be
issued under the Plan in satisfaction of exercised Options or SARs, issued as
Restricted Stock or issued under the Long Term Performance Plan shall not
exceed, in the aggregate, two million five hundred thousand (2,500,000) shares
of which no more may be granted, as follows:
(a) Restricted Stock for Performance Awards 450,000 shares
to Employees
(b) Stock Options and Restricted Stock to 300,000 shares
Non-Employee Directors, but no more
than 75,000 shares to Restricted Stock
Stock subject to an Option which for any reason is cancelled or terminated
without having been exercised, or Stock awarded as Restricted Stock which is
forfeited, shall again be available for grants and Awards under the Plan. Stock
not issued because the holder of any Option exercises the accompanying SAR shall
not again be subject to award by the Committee.
Article VI
Stock Options
(a) Grant of Options.
(i) The Committee may, at any time and from time to time prior
to December 31, 2009, grant Options under the Plan to eligible
Employees or Non-Employee Directors, for such numbers of shares and
having such terms as the Committee shall designate, subject however, to
the provisions of the Plan. The Committee will also determine the type
of Option granted (e.g. ISO, nonstatutory, other statutory Options as
from time to time may be permitted by the Code) or a combination of
various types of Options. Options designated as ISOs shall comply with
all the provisions of Section 422 of the Code and applicable
regulations. The aggregate Fair Market Value (determined at the time
the Option is granted) of Stock with respect to which ISOs are
exercisable for the first time by an individual during a calendar year
under all plans of the Company, any Subsidiary and any LLC shall not
exceed $100,000. The date on which an Option shall be granted shall be
the date of the Committee's authorization of such grant. Any individual
at any one time and from time to time may hold more than one Option
granted under the Plan or under any other Stock plan of the Company.
(ii) Each Option shall be evidenced by a Stock Option
Agreement in such form and containing such provisions consistent with
the provisions of the Plan as the Committee from time to time shall
approve.
(b) Exercise Price. The price at which shares of Stock may be
purchased under an Option shall not be less than 100% of the Fair Market Value
of the Stock on the date the Option is granted.
(c) Option Period. The period during which an Option may be exercised
shall be determined by the Committee; provided, that such period will not be
longer than ten years from the date on which the Option is granted in the case
of ISOs, and ten years and one day in the case of other Options. The date or
dates on which installment portion(s) of an Option may be exercised during the
term of an Option shall be determined by the Committee and may vary from Option
to Option. The Committee may also determine to accelerate the time at which
installment portion(s) of an outstanding Option may be exercised.
(d) Termination of Employment. An Option shall terminate and may no
longer be exercised three months after the Optionee ceases to be an Employee for
any reason other than Total Disability, death or Retirement. If an Optionee's
employment is terminated by reason of Total Disability or Retirement the vesting
provision will lapse and such Option may be exercised within the period, not to
exceed four years following such termination, specified by the Committee in the
instrument evidencing the Option. If the Optionee dies while in the employ of
the Company, a Subsidiary or LLC, or within three months after the termination
of such employment, the vesting provisions will lapse and such Option may,
within the lesser of one year after the Optionee's death or the term of the
option, be exercised by the legal representative of the Optionee's estate, or if
it has been distributed as part of the estate, by the person or persons to whom
the Optionee's rights under the Option shall pass by will or by the applicable
laws of descent and distribution. In no event may an Option be exercised to any
extent by anyone after the expiration or termination of the Option.
(e) Payment for Shares.
(i) The exercise price of an Option shall be paid to the
Company in full at the time of exercise at the election of the Optionee
(1) in cash, (2) in shares of Stock having a Fair Market Value equal to
the aggregate exercise price of the Option and satisfying such other
requirements as may be imposed by the Committee, (3) in shares of
Restricted Stock having a Fair Market Value equal to the aggregate
exercise price of the Option and satisfying such other requirements as
may be imposed by the Committee, (4) partly in cash and partly in such
shares of Stock or Restricted Stock, (5) to the extent permitted by the
Committee, through the withholding of shares of Stock (which would
otherwise be delivered to the Optionee) with an aggregate Fair Market
Value on the exercise date equal to the aggregate exercise price of the
Option or (6) through the delivery of irrevocable instructions to a
broker to deliver promptly to the Company an amount equal to the
aggregate exercise price of the Option. The Committee may limit the
extent to which shares of Stock or shares of Restricted Stock may be
used in exercising Options. No Optionee shall have any rights to
dividends or other rights of a stockholder with respect to shares of
Stock subject to an Option until the Optionee has given written notice
of exercise of the Option, paid in full for such shares of Stock and,
if applicable, has satisfied any other conditions imposed by the
Committee pursuant to the Plan.
(ii) If shares of Restricted Stock are used to pay the
exercise price of an Option, an equal number of shares of Stock
delivered to the Optionee upon exercise of an Option, shall be subject
to the same restrictions for the remainder of the Restriction Period.
(f) Annual Maximum Performance. Options granted to any one Optionee may
not exceed one hundred fifty thousand (150,000) shares of stock per calendar
year.
(g) Deferral of Gain. Optionees may elect to defer the gain from the
exercise of a Stock Option under the terms and conditions of the Kerr-McGee
Corporation Executive Deferred Compensation Plan.
Article VII
Stock Appreciation Rights
(a) Grant. The Committee may affix SARs to an Option, either at the
time of its initial granting to the Optionee or at a later date. The addition of
such SARs must be accomplished prior to the completion of the period during
which the Option may be exercised and such exercise period may not be extended
beyond that which was initially established. The Committee may establish SAR
terms and conditions at the time such SAR is established.
(b) Exercise.
(i) A SAR shall be exercisable at such time as may be
determined by the Committee and a SAR shall be exercisable only to the
extent that the related Option could be exercised. Upon the exercise of
a SAR, that portion of the Option underlying the SAR will be considered
as having been surrendered. A SAR shall be automatically exercised at
the end of the last business day prior to the stated expiration date of
the unexercised portion of the related Option if on such date the Fair
Market Value of Stock exceeds the Option exercise price per share.
(ii) The Committee may impose any other conditions upon the
exercise of a SAR, consistent with the Plan, which it deems
appropriate. Such rules and regulations may govern the right to
exercise SARs granted prior to the adoption or amendment of such rules
and regulations as well as SARs granted thereafter.
(iii) Upon the exercise of a SAR, the Company shall give to an
Optionee an amount (less any applicable withholding taxes) equivalent
to the excess of the Fair Market Value of the shares of Stock for which
the right is exercised on the date of such exercise over the exercise
price of such shares under the related Option. Such amount shall be
paid to the Optionee either in cash or in shares of Stock or both as
the Committee shall determine. Such determination may be made at the
time of the granting of the SAR and may be changed at any time
thereafter. No fractional shares of Stock shall be issued and the
Committee shall determine whether cash shall be given in lieu of such
fractional share or whether such fractional share shall be eliminated.
(c) Expiration or Termination.
(i) Subject to (c)(ii), each SAR and all rights and
obligations thereunder shall expire on a date to be determined by the
Committee.
(ii) A SAR shall terminate and may no longer be exercised upon
the exercise, termination or expiration of the related Option.
Article VIII
Restricted Stock Plan
(a) At the time of making a grant of Restricted Stock or making payment
of an Award in Restricted Stock to an Employee or Non-Employee Director, the
Committee shall establish a Restriction Period and assign such terms, conditions
and other restrictions to the Restricted Stock as it shall determine applicable
to the Restricted Stock to be issued in settlement of such grant or Award.
(b) Restricted Stock will be represented by a Stock certificate
registered in the name of the Restricted Stock recipient. Such certificate,
accompanied by a separate duly endorsed stock power, shall be deposited with the
Company. The recipient shall be entitled to receive dividends during the
Restriction Period and shall have the right to vote such Restricted Stock and
all other stockholder's rights, with the exception that (i) the recipient will
not be entitled to delivery of the Stock certificate during the Restriction
Period, (ii) the Company will retain custody of the Restricted Stock during the
Restriction Period and (iii) a breach of the terms and conditions established by
the Committee pursuant to the Award will cause a forfeiture of the Restricted
Stock. Subject to Article VI, Section (e), Restricted Stock may be used to
exercise Options. The Committee may, in addition, prescribe additional
restrictions, terms and conditions upon or to the Restricted Stock.
(i) Termination of Employment. The Committee may establish
such rules concerning the termination of employment of a recipient of
Restricted Stock prior to the expiration of the applicable Restriction
Period as it may deem appropriate from time to time.
(ii) Restricted Stock Agreement. Each grant of, or payment of
an Award in, Restricted Stock shall be evidenced by a Restricted Stock
Agreement in such form and containing such terms and conditions not
inconsistent with the provisions of the Plan as the Committee from time
to time shall approve.
(c) The Committee shall not grant Restricted Stock in excess of
six hundred fifty thousand (650,000) shares of Stockduring the term of this
Agreement.
Article IX
Performance Plan
(a) Administrative Procedure. The Committee shall designate Employees
as Performance Participants to become eligible to receive Awards under the plan
and shall establish Performance Periods under the Performance Plan.
(b) Indicators of Performance. The Committee shall establish Indicators
of Performance applicable to the Performance Period. Indicators of Performance
are utilized to determine amount and timing of Awards, and may vary between
Performance Periods. Indicators of Performance may include, but shall not be
limited to, various financial and operating measures, and may be based on the
Company's performance compared to one or more selected companies during the same
Performance Period or may be related solely to the Company's performance during
the Performance Period, or a combination of such indicators. The Committee may
take into consideration, and make appropriate adjustments for, events occurring
during the Performance Period which the Committee concludes have affected the
performance of the Company or any selected company with respect to any of the
Indicators of Performance.
(c) Award Adjustment. Subject to the terms of the Plan, the Committee
may make adjustments in Awards to Performance Plan Participants.
(d) Performance Awards. Awards may be in the form of performance
shares, which are units valued by reference to shares of stock or performance
units, which are units valued by reference to financial measures or property
other than stock and shall be subject to such terms and conditions and other
restrictions as the Committee shall assign. At the time of making grants of
Awards, the Committee shall establish such terms and conditions as it shall
determine applicable to such Awards. Awards may be paid out in cash, Stock,
Restricted Stock, other property or combination thereof. Recipients of Awards
are not required to provide consideration other than the rendering of service.
(e) Partial Performance Period Participation. The Committee shall
determine the extent to which an Employee shall participate in a partial
Performance Period because of becoming eligible to be a Performance Plan
Participant after the beginning of such Performance Period.
Article X
Adjustment Upon Changes In Stock
The number of shares of Stock which may be issued pursuant to this
Plan, the number of shares covered by each outstanding Option, the Option
exercise price per share, the number of shares granted as Restricted Stock, and
the number of shares representing a Performance Plan Participant's Award under
the Performance Plan, shall be adjusted proportionately, and any other
appropriate adjustments shall be made, for any increase or decrease in the total
number of issued and outstanding Stock (or change in kind) resulting from any
change in the Stock or Options through a merger, consolidation, reorganization,
recapitalization, subdivision or consolidation of shares or other capital
adjustment or the payment of a Stock Dividend or other increase or decrease (or
change in kind) in such shares. In the event of any such adjustment, fractional
shares shall be eliminated. Appropriate adjustment shall also be made by the
Committee in the terms of SARs to reflect the foregoing changes.
Article XI
Change In Control
Notwithstanding anything to the contrary in the Plan, in the event of a
Change in Control:
(i) If during a Restriction Period(s) applicable to Restricted
Stock issued under the Plan, all restrictions imposed hereunder on such
Restricted Stock shall lapse effective the date of the Change in
Control;
(ii) If during a Performance Period(s) applicable to an Award
granted under the Plan, a Participant shall earn no less than the
number of performance shares or performance units which the participant
would have earned if the Performance Period(s) had terminated as of the
date of the Change in Control; or
(iii) Any outstanding Options or SAR that are not exercisable
shall become exercisable effective as of the date of a Change in
Control. If an Optionee's employment is terminated within 24 months of
the effective date of a Change in Control, to the extent that any
Option was exercisable at the time of the Optionee's termination of
employment, such Option may be exercised within four years following
the date of termination of employment.
For purposes of the Plan, a "Change in Control" shall be deemed to have
occurred if :
(a) Any person ("Person") as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as used in
Section 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d)
of the Exchange Act, but excluding the Company and any subsidiary and any
employee benefit plan sponsored or maintained by the Company or any subsidiary
(including any trustee of such plan acting as trustee), directly or indirectly,
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), of securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities (other than indirectly
as a result of the Company's redemption of its securities); or
(b) The consummation of any merger or other business combination of the
Company, sale of 50% or more of the Company's assets, liquidation or dissolution
of the Company or combination of the foregoing transactions (the "Transactions")
other than a Transaction immediately following which the shareholder of the
Company and any trustee or fiduciary of any Company employee benefit plan
immediately prior to the Transaction own at least 60% of the voting power,
directly or indirectly, of (A) the surviving corporation in any such merger or
other business combination; (B) the purchaser or successor to the Company's
assets; (C) both the surviving corporation and the purchaser in the event of any
combination of Transactions; or (D) the parent company owning 100% of such
surviving corporation, purchaser or both the surviving corporation and the
purchaser, as the case may be; or
(c) Within any twenty-four month period, the persons who were directors
immediately before the beginning of such period (the "incumbent Directors")
shall cease (for any reason other than death) to constitute at least a majority
of the Board or the board of directors of a successor to the Company. For this
purpose, any director who was not a director at the beginning of such period
shall be deemed to be an Incumbent Director if such director was elected to the
Board by, or on the recommendation of or with the approval of, at least
two-thirds of the directors who then qualified as Incumbent Directors (so long
as such director was not nominated by a person who commenced or threatened to
commence an election contest or proxy solicitation by or on behalf of a Person
(other than the Board) or who has entered into an agreement to effect a Change
in Control or expressed an intention to cause such a Change in Control); or
(d) A majority of the members of the Board of Directors in office
immediately prior to a proposed transaction determine by a written resolution
that such proposed transaction, if taken, will be deemed a Change in Control and
such proposed Transaction is consummated.
Article XII
Miscellaneous
(a) Except as otherwise required by law, no action taken under the Plan
shall be taken into account in determining any benefits under any pension,
retirement, thrift, profit sharing, group insurance or other benefit plan
maintained by the Company or any Subsidiaries, unless such other plan
specifically provides for such inclusion.
(b) Except as provided in Section (c) of this Article XII, no Option or
SAR, grant of Restricted Stock or Award under this Plan shall be transferable
other than by will or the laws of descent and distribution. Any Option or SAR
shall be exercisable (i) during the lifetime of an Optionee, only by the
Optionee or, to the extent permitted by the Code, by an appointed guardian or
legal representative of the Optionee, and (ii) after death of the Optionee, only
by the Optionee's legal representative or by the person who acquired the right
to exercise such Option or SAR by bequest or inheritance or by reason of the
death of the Optionee.
(c) The Committee may, in its discretion, authorize all or a portion of
the Options to be granted to an Optionee to be on terms which permit transfer by
such Optionee to an immediate family member of the Optionee who acquires the
options from the Optionee through a gift or a domestic relations order. For
purposes of this Section (c), "family member" includes any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law,
including adoptive relationships, trusts for the exclusive benefit of these
persons and any other entity owned solely by these persons, provided that the
Stock Option Agreement pursuant to which such Options are granted must be
approved by the Committee and must expressly provide for transferability in a
manner consistent with this Section and provided further that subsequent
transfers of transferred options shall be prohibited except those in accordance
with Section (b) of this Article XII. Following transfer, any such options shall
continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer. The events of termination of employment of
Section (d) of Article VI hereof shall continue to be applied with respect to
the original Optionee, following which the options shall be exercisable by the
Transferee only to the extent and for the periods specified in Section (d) of
Article VI.
(d) The Company shall have the right to withhold from any settlement
hereunder any federal, state, or local taxes required by law to be withheld, or
require payment in the amount of such withholding. If settlement hereunder is in
the form of Stock, such withholding may be satisfied by the withholding of
shares of Stock by the Company, unless the Optionee shall pay to the Company an
amount sufficient to cover the amount of taxes required to be withheld, and such
withholding of shares does not violate any applicable laws, rules or regulations
of federal, state or local authorities.
(e) Transfer of employment between the Company, a Subsidiary or Limited
Liability Company, or between Limited Liability Companies and Subsidiaries shall
not constitute termination of employment for the purpose of the Plan. Whether
any leave of absence shall constitute termination of employment for the purposes
of the Plan shall be determined in each case by the Committee.
(f) All administrative expenses associated with the administration of
the Plan shall be borne by the Company.
(g) The titles and headings of the articles in this Plan are for
convenience of reference only and in the event of any conflict, the text of the
Plan, rather than such titles or headings, shall control.
(h) No grant or Award to an employee under the Plan or any provisions
thereof shall constitute any agreement for or guarantee of continued employment
by the Company and no grant or Award to a Non-Employee Director shall constitute
any agreement for or guarantee of continuing as a Non-Employee Director.
(i) The Committee shall have such duties and powers as may be necessary
to discharge its responsibilities under this Plan, including, but not limited
to, the ability to construe and interpret the Plan and resolve any ambiguities
with respect to any of the terms and provisions hereof as written and as applied
to the operation of the Plan.
Article XIII
Amendment And Termination
The Board may at any time terminate or amend this Plan in such respect
as it shall deem advisable, provided, the Board may not, without further
approval of the stockholders of the Company, amend the Plan so as to (i)
increase the number of shares of Stock which may be issued under the Plan,
except as provided for in Article X, or change Plan provisions relating to
establishment of the exercise prices under Options granted, (ii) extend the
duration of the Plan beyond the date approved by the stockholders or (iii)
increase the maximum dollar amount of ISOs which an individual Optionee may
exercise during any calendar year beyond that permitted in the Code and
applicable rules and regulations of the Treasury Department. No amendment or
termination of the Plan shall, without the consent of the Optionee or Plan
participant, alter or impair any of the rights or obligations under any Options
or other rights theretofore granted such person under the Plan.
Article XIV
Duration Of The Plan
The effective date of this Plan shall be May 1, 2000. If not sooner
terminated by the Board, this Plan shall terminate on April 30, 2010, but
Options and other rights theretofore granted and any Restriction Period may
extend beyond that date and the terms of the Plan shall continue to apply.
KERR-McGEE CORPORATION
By:
William E. Bradford
Director and Chair of the
Executive Compensation Committee
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This schedule contains summary financial information extracted from the
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Income for the period ending March 31, 2000, and is qualified in its entirety by
reference to such Form 10-Q.
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