Edgar Filing: KERR MCGEE CORP /DE

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant /X/
Filed by a party other than the Registrant / /

Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12

KERR-MCGEE CORPORATION
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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/X/ No fee required.

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2/28/02 -- PRELIMINARY PROXY MATERIALS -- SUBJECT TO COMPLETION

NOTICE OF 2002
ANNUAL MEETING OF
STOCKHOLDERS AND
PROXY STATEMENT

2002
[LOGO]
KERR-MCGEE CORPORATION

_________, 2002
--------------------------- Dear Stockholders:

---------------------------
On behalf of the Board of Directors, it is my
pleasure to invite you to Kerr-McGee Corporation's
Tuesday, May 14, 2002 2002 Annual Meeting of Stockholders, which will be
9:00 a.m. held on Tuesday, May 14, 2002, in the Robert S.
Kerr Auditorium, Kerr-McGee Center, 123 Robert S.
123 Robert S. Kerr Avenue Kerr Avenue, Oklahoma City, Oklahoma.
Oklahoma City, Oklahoma
Attached is the Notice of Meeting and Proxy
Statement, which describes in detail the five
matters on which you are being asked to vote. Also
enclosed is Kerr-McGee's 2001 Annual Report.

Your vote is important no matter how many
shares you own. Regardless of whether you plan to
attend the meeting, I encourage you to promptly
vote by telephone or Internet or complete and
return the enclosed proxy card to ensure that your
shares will be represented at the meeting.

Sincerely yours,

Luke R. Corbett,
Chairman and Chief Executive Officer

2/28/02 -- PRELIMINARY PROXY MATERIALS -- SUBJECT TO COMPLETION

[LOGO] KERR-MCGEE CORPORATION
P. O. Box 25861 o OKLAHOMA CITY, OKLAHOMA 73125

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Our Stockholders:

Kerr-McGee Corporation's 2002 Annual Meeting of Stockholders will be
held at 9:00 a.m. on Tuesday, May 14, 2002, at the Robert S. Kerr Auditorium,
Kerr-McGee Center, 123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma.

At the meeting, Stockholders will act on the following matters:

1. ELECTION OF THREE DIRECTORS;
2. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT PUBLIC
ACCOUNTANTS;
3. APPROVAL OF THE 2002 ANNUAL INCENTIVE COMPENSATION
PLAN;
4. APPROVAL OF THE 2002 LONG TERM INCENTIVE PLAN; AND
5. APPROVAL OF THE AMENDMENT OF THE AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF KERR-MCGEE OPERATING
CORPORATION.

These matters are described in detail in the Proxy Statement. The
Board of Directors recommends a vote FOR Items 1 through 5.

Stockholders of record of Kerr-McGee Corporation common stock at the
close of business on March 15, 2002, are entitled to receive notice of and to
vote at the meeting.

It is important that your shares be represented at the meeting.
Regardless of whether you plan to attend the meeting, please vote by telephone
or Internet or complete and return the proxy card in the enclosed envelope as
soon as possible.

Sincerely,

Gregory F. Pilcher
Senior Vice President,
General Counsel and Secretary

KERR-MCGEE CORPORATION
KERR-MCGEE CENTER
P. O. BOX 25861
OKLAHOMA CITY, OKLAHOMA 73125

PROXY STATEMENT FOR THE
2002 ANNUAL MEETING OF STOCKHOLDERS
ON MAY 14, 2002 AT 9 A.M.

The accompanying proxy is solicited on behalf of the Board of
Directors (the "Board") of Kerr-McGee Corporation (the "Company"). This Proxy
Statement and the accompanying form of proxy are first being mailed to
Stockholders on March 25, 2002.

Stockholders of record may appoint proxies to vote their shares in
one of three ways:

1. Via Internet pursuant to the instructions on the Proxy Card;
2. Calling the toll-free number on the enclosed Proxy Card; or
3. Signing, dating and mailing the enclosed Proxy Card in the envelope
provided.

Proxies will be voted as directed, unless revoked at or before the
Annual Meeting on May 14, 2002. Any Stockholder who attends the Annual
Meeting and elects to vote in person may at the meeting revoke a previously
designated proxy. Otherwise, a Stockholder must advise the Corporate
Secretary in writing of the revocation of a proxy.

Under Section 216 of the Delaware General Corporation Law and the
Kerr-McGee Corporation ByLaws (the "ByLaws"), a majority of the shares of the
common stock of the Company, 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 and the amendment of the Certificate of
incorporation of Kerr-McGee Operating Corporation, 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. 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. Approval of the amendment of the
Certificate of Incorporation of Kerr-McGee Operating Corporation requires the
affirmative vote of a majority of the shares of the common stock of the
Company. Abstentions will have the effect of votes against a proposal, and
broker nonvotes have no effect on the vote.

VOTING SECURITIES

The Company's only class of voting securities is its common stock
having a par value of $1.00 per share ("Common Stock"), of which there were
__________ shares outstanding as of the close of business on March 15, 2002,
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 treasury stock, which will not be voted.

CORPORATE REORGANIZATION

On August 1, 2001, in connection with its acquisition of HS
Resources, Inc., the Company completed a holding company reorganization in
which Kerr-McGee Operating Corporation, which was formerly known as
Kerr-McGee Corporation, changed its name and became a wholly owned subsidiary
of the Company. Reference in this Proxy Statement to the Company includes
business and Board activity conducted by the former Kerr-McGee Corporation
before it reorganized as a subsidiary of the Company and changed its name to
Kerr-McGee Operating Corporation.

AGENDA FOR ANNUAL MEETING

Five items of business are scheduled for the 2002 Annual Meeting, as
follows:

1. Election of Three Directors;
2. Ratification of the appointment of [_____________________] as
the Company's independent public accountants;
3. Approval of the 2002 Annual Incentive Compensation Plan;
4. Approval of the 2002 Long Term Incentive Plan; and
5. Approval of the Amendment of the Amended and Restated
Certificate of Incorporation of Kerr-McGee Operating Corporation.

All five of these items are discussed below.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS YOU VOTE "FOR" EACH OF THESE
ITEMS.

ITEM NO. 1

ELECTION OF DIRECTORS

The Board of Directors has nominated Matthew R. Simmons, Nicholas J.
Sutton and Ian L. White-Thomson for election as Directors for a term expiring
at the 2005 Annual Meeting and in each case until their respective successors
are elected and qualified. The nominees are currently Directors of the
Company whose terms expire at the 2002 Annual Meeting. John J. Murphy
attained the age of 70 before the 2002 Annual Meeting, and is therefore not
standing for reelection to the Board.

The Board of Directors has fixed the number of Directors at 11
following the retirement of Mr. Murphy on May 14, 2002. The Company's
Certificate of Incorporation and ByLaws provide that Directors shall be
divided into three classes serving staggered three-year terms.

None of the nominees are related to any executive officer of the
Company, its subsidiaries, limited liability companies or affiliates. 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.

Biographical and other information about each of the nominees is set
forth in this Proxy Statement beginning on Page __ under "Director
Information".

At the Annual Meeting the stockholders will vote on the election of
each of the nominees to the Board. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE ELECTION TO THE BOARD OF EACH OF THE NOMINEES.

DIRECTOR INFORMATION

The following contains information concerning the Company's directors,
including the three nominees standing for election at the Annual Meeting and
the director who is retiring from the Board as of the Company's 2002 Annual
Meeting of Stockholders. All information is as of March 1, 2002. Information
about each director's ownership of Company common stock is contained on Page __
under the caption "Security Ownership". Information about director compensation
is contained on Page __ under the caption "Information About the Board of
Directors - Compensation".

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NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
(FOR A TERM ENDING 2005)
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MATTHEW R. SIMMONS, 58, is President of Simmons & Company
International, a specialized investment banking firm that serves the
worldwide energy services industry, a position he has held since the
firm's founding in 1974. Mr. Simmons has served on the Company's Board
of Directors since 1999. He chairs the Board's Executive Compensation
Committee and is a member of the Board's Audit, Finance and Nominating
Committees.
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NICHOLAS J. SUTTON, 57, was founder, Chairman and Chief Executive
Officer of HS Resources, Inc., an independent energy company from 1978
to August 2001, when the company was acquired by Kerr-McGee
Corporation. Mr. Sutton has served on the Company's Board of Directors
since January 2002. He is a member of the Board's Executive
Compensation and Public Responsibility Committees.
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IAN L. WHITE-THOMSON, 65, retired as Chairman of the Board of U. S.
Borax, Inc., a provider of borax and borate products, in June 1999,
after serving in that position since 1996. In addition, he was
President and Chief Executive Officer of U. S. Borax, Inc. from 1988 to
1999, and Chief Executive Officer of Rio Tinto Borax Ltd. from 1995 to
June 1999. In September of 2001, Mr. White-Thomson retired as
Executive Director of the Los Angeles Opera, a position he had held
since 2000. Mr. White-Thomson has served on the Company's Board of
Directors since 1999. He chairs the Board's Public Responsibility
Committee and is a member of the Board's Audit and Executive
Compensation Committees.
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CONTINUING DIRECTORS
(TERM EXPIRES AT THE 2003 ANNUAL MEETING)
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SYLVIA A. EARLE, 66, is Chair of Deep Ocean Exploration and Research,
Inc., a position she has held since 1992, and since 1998 has been
Explorer-in-Residence for the National Geographic Society. Dr. Earle
has been a member of the Company's Board of Directors since 1999. She
chairs the Board's Nominating Committee and is a member of the Board's
Executive Compensation and Public Responsibility Committees.
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MARTIN C. JISCHKE, 60, is President of Purdue University, a position he
has held since 2000. He was President of Iowa State University from
1991 to 2000. Dr. Jischke has served on the Company's Board of
Directors since 1993. He is a member of the Board's Executive
Compensation and Nominating Committees. Dr. Jischke also serves on the
Board of Directors of Wabash National Corporation.
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LEROY C. RICHIE, 60, is Chairman and Chief Executive Officer of Q
Standards World Wide, Inc., a provider of publication and library
services for technical standards, a position he has held since 2000.
From 1999 to 2000 he served as Chairman and Chief Executive Officer of
Capitol Coating Technologies, Inc. He was President of Intrepid World
Communications from 1998 to 1999. From 1990 through 1997, Mr. Richie
was Vice President and General Counsel for Automotive Legal Affairs of
Chrysler Corporation. Mr. Richie has served on the Company's Board of
Directors since 1998. He chairs the Board's Audit Committee and is a
member of the Board's Executive Compensation, Finance and Nominating
Committees. Mr. Richie serves on the Board of Directors of Infiniti,
Inc. He also serves on the Board of Directors of the companies in the
Seligman family of investment companies, with the exception of Seligman
Cash Management Fund, Inc.
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CONTINUING DIRECTORS
(TERM EXPIRES AT THE 2004 ANNUAL MEETING)
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WILLIAM E. BRADFORD, 67, is retired from Halliburton Company, a
provider of energy and energy services, where he served as Chairman of
the Board from 1998 to 2000. From 1996 to 1998, Mr. Bradford served as
Chairman of the Board and Chief Executive Officer of Dresser
Industries, Inc., now merged with Halliburton Company. Mr. Bradford
has served on the Company's Board of Directors since 1999. He chairs
the Board's Finance Committee and is a member of the Board's Executive
Compensation and Nominating Committees. Mr. Bradford also serves on
the Board of Directors of Valero Energy Corporation.
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LUKE R. CORBETT, 55, is Chairman of the Board and Chief Executive
Officer of the Company. He has served in that capacity since May 1999
and also from February 1997 to February 1999. Between February 1999
and May 1999, he served as Chief Executive Officer, and from 1995 to
1997, he served as President and Chief Operating Officer. Mr. Corbett,
a member of the Company's Board of Directors since 1995, is an ex
officio member of the Board's Finance and Public Responsibility
Committees. He also serves on the Boards of Directors of OGE Energy
Corp., BOK Financial Corporation and Noble Drilling Corporation.
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DAVID C. GENEVER-WATLING, 56, is President of GW Enterprises LLC, an
investment and management firm, a position he has held since 1998. From
1997 to 2000, he was a Managing Director of SMG Management L.L.C., an
investment firm, and from 1992 to 1995, he served as President and
Chief Executive Officer of General Electric Industrial and Power
Systems. Mr. Genever-Watling has served on the Company's Board of
Directors since 1999. He is a member of the Board's Executive
Compensation and Public Responsibility Committees.
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WILLIAM C. MORRIS, 63, is Chairman of the Board of J. & W. Seligman &
Co. Incorporated, Chairman of the Board of Tri-Continental Corporation
and Chairman of the Boards of the companies in the Seligman family of
investment companies, positions he has held since 1988. He also is
Chairman of the Board of Carbo Ceramics, Inc., a position he has held
since 1987. Mr. Morris has served on the Company's Board of
Directors since 1977. He is a member of the Board's Executive
Compensation, Finance and Public Responsibility Committees.
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FARAH M. WALTERS, 57, is President and Chief Executive Officer of
University Hospitals Health System, Cleveland, Ohio, a position she has
held since 1992. Ms. Walters has served on the Company's Board of
Directors since 1993. She is a member of the Board's Audit, Executive
Compensation and Public Responsibility Committees. Ms. Walters also
serves on the Board of Directors of PolyOne Corporation.
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RETIRING DIRECTOR
(TERM EXPIRES AT THE 2002 ANNUAL MEETING)
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JOHN J. MURPHY, 70, retired as Chairman of the Board of Dresser
Industries, Inc., a provider of hydrocarbon energy products and
services, in 1996 after serving in that position since 1983. From
January 1997 to 2000, he was a Managing Director of SMG Management
L.L.C., an investment firm. Mr. Murphy has served on the Company's
Board of Directors since 1990 and will retire from the Board on May
14, 2002. He is a member of the Board's Audit, Executive Compensation
and Finance Committees. Mr. Murphy also serves on the Boards of
Directors of Carbo Ceramics, Inc.; PepsiCo Inc.; W. R. Grace & Co.;
and Shaw Industries, Ltd.
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SECURITY OWNERSHIP

The following table sets forth the number of shares of Common Stock
beneficially owned as of December 31, 2001, by each director and nominee, each
of the executive officers named in the Summary Compensation Table and all
directors and officers as a group, and the percentage represented by such
shares of the total Common Stock outstanding on that date:

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NUMBER OF SHARES PERCENT OF
NAME OR GROUP BENEFICIALLY OWNED CLASS
------------- ------------------ ----------

William E. Bradford 13,030 (1) (2) *
Luke R. Corbett 578,270 (2)
Sylvia A. Earle 5,619 (2)
David C. Genever-Watling 12,324 (1) (2)
Martin C. Jischke 6,195 (1) (2)
William C. Morris 42,266 (2)
John J. Murphy 3,003 (1) (2)
Leroy C. Richie 4,149 (1) (2)
Matthew R. Simmons 13,120 (1) (2)
Nicholas J. Sutton 160,102
Farah M. Walters 7,527 (1) (2)
Ian L. White-Thomson 8,666 (1) (2)
Kenneth W. Crouch 96,684 (2)
Gregory F. Pilcher 48,639 (2)
Robert M. Wohleber 51,401 (2)
William P. Woodward 87,607 (2)

All directors and executive
officers as a group, including
those named above 1,172,964 (1) (2) 1.17%

------------------------
* The percentage of shares beneficially owned by any single director, nominee
or executive officer does not exceed 1%.
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(1) Includes shares in the Stock Deferred Compensation Plan for
Non-Employee Directors.

(2) Includes shares issuable upon the exercise of outstanding stock options
that are exercisable within 60 days of December 31, 2001: 5,648 shares
for Mr. Genever-Watling; 2,327 shares each for Mr. Bradford, Ms. Earle
and Mr. White-Thomson; and 666 shares each for Mr. Jischke, Mr. Morris,
Mr. Murphy, Mr. Richie, Mr. Simmons and Ms. Walters; 460,900 shares for
Mr. Corbett; 70,333 shares for Mr. Crouch; 30,599 shares for Mr.
Pilcher; 38,332 shares for Mr. Wohleber; 63,900 shares for Mr.
Woodward; and 825,254shares for all directors and executive officers as
a group.

INFORMATION ABOUT THE
BOARD OF DIRECTORS

OPERATIONS AND MEETINGS

During 2001 the Board held six meetings, with each director attending
75% or more of the aggregate number of meetings of the Board and of the
committees of the Board on which each such director served.

Directors discharge their responsibilities not only by attending Board
and committee meetings but also through communication with the Chairman and
other members of management about matters of interest and concern to the
Company.

COMPENSATION

Directors who are not employees of the Company are paid an annual
retainer fee of $30,000 and a fee of $1,000 for each Board meeting and
committee meeting attended. Committee Chairs are paid an annual fee of $3,000.
Under the 2000 Kerr-McGee Corporation Long Term Incentive Plan approved by
Stockholders at the 2000 Annual Meeting, non-employee Directors also receive an
annual grant of 400 shares of restricted Common Stock and options to purchase
2,000 shares of common stock at the market price prevailing on the date of the
grant. Directors are reimbursed for travel expenses and lodging.

Pursuant to the Deferred Compensation Plan for Non-Employee Directors,
any director who is not an employee of the Company may elect to defer any cash
compensation until such person ceases to be a director, after which the
deferred compensation, together with interest, will be paid in cash either in a
single lump sum payment or in ten equal annual installments, at the direction
of the Director, as determined at the time of enrollment in the Deferred
Compensation Plan.

Under the Stock Deferred Compensation Plan for Non-Employee Directors,
any director who is not an employee of the Company may elect to defer
compensation 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. Stock
acquired pursuant to this nonqualified plan may not be distributed until 185
days after a participant ceases being a director.

COMMITTEES

The Board has established and currently maintains an Audit Committee,
an Executive Compensation Committee, a Finance Committee, a Nominating
Committee and a Public Responsibility Committee, as standing committees.

The Board established the Audit Committee in November 1973 to oversee
the Company's financial reporting process. All members of the Committee are
independent as defined under the Listing Standards of the New York Stock
Exchange. The Committee is currently comprised of the following directors, none
of whom are employees of the Company or its affiliates: Leroy C. Richie
(Chair), John J. Murphy, Matthew R. Simmons, Farah M. Walters and Ian L.
White-Thomson. The Audit Committee had two formal meetings in 2001. In
addition, the Chair of the Audit Committee held conference calls each quarter
with the Company's independent public accountants and with the Company's Chief
Accounting Officer in conjunction with the release of quarterly

earnings. The Report of the Audit Committee begins on Page ___. The Audit
Committee's Charter has been adopted by the Board of Directors and was attached
to the 2001 Proxy Statement.

The Executive Compensation Committee reviews the salaries determined
by the Chief Executive Officer for all officers of the Company and recommends
to the full Board such changes as it may deem appropriate. In addition, the
Executive Compensation Committee or a subcommittee thereof determines the
incentive compensation awards for all officers, and recommends to the Board of
Directors the salary of the Chief Executive Officer. The Executive Compensation
Committee or a subcommittee thereof also administers the Annual Incentive
Compensation Plan, the Long Term Incentive Plan, the Executive Deferred
Compensation Plan and the Supplemental Executive Retirement Plan. The Executive
Compensation Committee is currently comprised of the following directors, none
of whom are employees of the Company or its affiliates: Matthew R. Simmons
(Chair), William E. Bradford, Sylvia A. Earle, David C. Genever-Watling, Martin
C. Jischke, William C. Morris, John J. Murphy, Leroy C. Richie, Nicholas J.
Sutton, Farah M. Walters and Ian L. White-Thomson. The Committee met three
times in 2001. The report of the Executive Compensation Committee begins on
Page ___.

The Finance Committee reviews the annual budget and makes
recommendations to the full Board regarding budget and financial matters. The
Finance Committee currently consists of the following directors: William E.
Bradford (Chair), William C. Morris, John J. Murphy, Leroy C. Richie and
Matthew R. Simmons. Luke R. Corbett, Chairman of the Board and Chief Executive
Officer, is an ex officio member. The Committee met twice in 2001.

The Nominating Committee recommends nominees for election to the Board
of Directors. The Nominating Committee will consider recommendations for the
position of director submitted by Stockholders in writing in accordance with
the Company's ByLaws to the Corporate Secretary, Kerr-McGee Corporation, P.O.
Box 25861, Oklahoma City, Oklahoma 73125. To make a nomination, Stockholders
should contact the Corporate Secretary to obtain a copy of the ByLaws. The
Nominating Committee currently consists of the following directors, none of
whom are employees of the Company or its affiliates: Sylvia A. Earle (Chair),
William E. Bradford, Martin C. Jischke, Leroy C. Richie and Matthew R. Simmons.
The Committee met one time in 2001.

The Public Responsibility Committee meets when necessary to review and
make recommendations to the Board of Directors regarding corporate governance
and related matters as and when such matters arise. The Public Responsibility
Committee consists of the following directors: Ian L. White-Thomson (Chair),
Sylvia A. Earle, David C. Genever-Watling, William C. Morris, Nicholas J.
Sutton and Farah M. Walters. Luke R. Corbett, Chairman of the Board and Chief
Executive Officer, is an ex officio member. The Committee did not meet in 2001 .

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the year 2001, Carbo Ceramics, Inc., provided goods and
services to the Company in the ordinary course of business totaling $412,248.
William C. Morris is Chairman of the Board and controlling stockholder of Carbo
Ceramics, Inc.

Nicholas J. Sutton performed consulting services for the Company
during 2001 and received $375,000 as compensation for such services. Mr. Sutton
ceased his consulting services at the end of 2001, prior to becoming a director
of the Company.

ITEM NO. 2

RATIFICATION OF THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors has appointed [__________________], an
independent public accounting firm, as the Company's independent public
accountants for 2002 in accordance with the recommendation of the Audit
Committee. Arthur Andersen LLP served as the Company's independent public
accountants for the year ended December 31, 2001.

At the Annual Meeting, the Stockholders will vote on the ratification
of the appointment of [___________________] as independent public accountants
for 2002.

Representatives of Arthur Andersen LLP will be present at the Annual
Meeting to make a statement if they desire to do so and will be available to
respond to appropriate questions from Stockholders.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF [___________________] AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS.

If the appointment of [______________________] is not ratified by the
Stockholders, if [___________________] ceases to act as the Company's
independent public accountants, or if the Board of Directors removes
[___________________] as the Company's independent public accountants, the
Board will appoint another independent public accounting firm. The engagement
of a new independent public accounting firm for 2003 will be subject to
ratification by the Stockholders at the 2003 Annual Meeting.

ITEM NO. 3

APPROVAL OF THE 2002 ANNUAL INCENTIVE COMPENSATION PLAN

The Board of Directors has approved and recommends that the
stockholders vote for the approval of the 2002 Kerr-McGee Corporation Annual
Incentive Compensation Plan (the "2002 AICP"). The Board of Directors believes
"at risk" compensation is a significant factor in stimulating executive
performance to increase stockholder value. The 2002 AICP is designed to link
pay and performance by providing the Company's officers with the opportunity to
receive an annual cash award based on the achievement of pre-established
performance goals.

The 2002 AICP is structured to ensure that any amounts in excess of $1
million paid under the 2002 AICP to the Chief Executive Officer or any of the
four other highest paid officers of the Company qualify as performance-based
compensation deductible for federal income tax purposes under Section 162(m) of
the Internal Revenue Code of 1986 ("IRS Code") as amended, and the applicable
regulations. Stockholder approval is required to satisfy the requirements of
IRS Code Section 162(m).

The 2002 AICP will afford greater flexibility in the form and payment
of awards to meet changing business needs. The Board's approval and
recommendation of the 2002 AICP follows a review and evaluation of the
Company's existing compensation plans and a comparison with incentive
compensation plans offered by other comparable companies to their key
employees. A summary of the 2002 AICP appears below and is qualified by
reference to the full text of the 2002 AICP, which is included in this Proxy
Statement as Exhibit A.

At the Annual Meeting the Stockholders will vote on the approval of
the 2002 AICP. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
APPROVAL OF THE 2002 KERR-MCGEE CORPORATION ANNUAL INCENTIVE COMPENSATION PLAN.

SUMMARY OF 2002 ANNUAL INCENTIVE COMPENSATION PLAN

TERM

If approved by the Stockholders, the 2002 AICP will be effective as
of May 14, 2002, and will continue until terminated by the Board. The 2002
AICP will replace the existing AICP that was approved by the stockholders in
1998, except that the 1998 AICP will continue to govern any payments that may
be made for the 2001 plan year.

PURPOSE

The 2002 AICP links pay and performance by providing the Company's
officers with an opportunity to receive an annual cash award based upon the
achievement of pre-established performance goals. The performance goals are
determined by a Committee of the Board of Directors and are intended to align
the interests of plan participants with those of the Company and its
shareholders.

ADMINISTRATION

The 2002 AICP will be administered by a committee of the Board of
Directors comprised solely of two or more members who qualify as "outside
directors" under IRS Code Section 162(m) (the "Committee"). Currently, that
Committee will be a subcommittee of the Board's Executive Compensation
Committee. Subject to the terms of the 2002 AICP, the Committee will have the
authority to determine the size, terms and conditions of awards under the
2002 AICP, to construe and interpret the 2002 AICP, to amend the terms and
conditions of any outstanding award to the extent such terms and conditions
are within the sole discretion of the Committee as provided in the 2002 AICP,
and to make all other determinations which may be necessary or advisable for
administration of the 2002 AICP.

ELIGIBILITY

All elected officers of the Company as of the last day of a Plan
Year, at or above the level of corporate Vice President, are eligible to
participate in the 2002 AICP for that Plan Year.

AWARDS UNDER THE 2002 AICP

Not later than 90 days after the beginning of each fiscal year, the
Committee will select one or more performance measures, establish written
performance goals with respect to each selected performance measure and
determine the award opportunities for that fiscal year.

The performance measures may be based on any combination of
corporate, division and/or individual goals. For each performance measure,
the Committee will establish performance goals which will be used to
determine award opportunities. For example, the Committee may establish
various levels of Company pretax income as performance goals and link each
such performance goal to an award opportunity. The performance measures,
performance goals and award opportunities may vary among officers and from
year to year. The Committee may establish minimum levels of performance goal
achievement below which awards will not be paid.

As soon as practicable after the end of the fiscal year, the
Committee will assess

performance to determine AICP awards for each of the Company's officers.

The 2002 AICP provides that the maximum award payable to any officer
in connection with any one fiscal year shall not exceed $3,000,000.
Additionally, the total of awards payable for one Plan Year to proxy-named
officers shall not exceed 1.5% of the Company's cash flow as calculated by
the Committee for the immediately preceding fiscal year and the award payable
to any one proxy-named officer under the 2002 AICP for a Plan Year shall not
exceed 0.5% of the Company's cash flow as calculated by the Committee for the
immediately preceding fiscal year.

The 2002 AICP provides that the performance measures that may serve
as determinants of an officer's award opportunities may consist of financial
and operating measures of the Company or its divisions such as pretax income,
net income, earnings per share, revenues, expenses, return on assets, return
on equity, return on investment, net profit margin, operating profit margin,
operating cash flow, total stockholder return, capitalization, liquidity,
reserve adds or replacement, finding and development costs, results of
customer satisfaction surveys and other measures of quality, safety,
productivity or process improvement, or other measures as determined by the
Committee. Performance goals may be determined solely by reference to the
performance of the Company, its subsidiaries or limited liability companies,
or any division or unit of the Company, or they may be based upon comparisons
of any of the performance measures relative to other companies. In assessing
a performance goal with respect to any of these performance measures, the
Committee may exclude the impact of any event or occurrence which the
Committee determines should appropriately be excluded, such as a
restructuring or other nonrecurring charge, an event either not directly
related to the operations of the Company or not within the reasonable control
of the Company's management, or a change in accounting standards required by
U. S. generally accepted accounting principles.

As provided in the 2002 AICP, the Committee has negative discretion
to reduce or eliminate any or all final awards that would otherwise be paid.
However, the Committee may not exercise discretion to increase the award
otherwise payable to an officer.

An officer's award opportunities will be established as a function
of the officer's base salary. For this purpose, an officer's base salary is
not reduced by any voluntary salary reductions or any salary reduction
contributions made to any salary reduction plan, defined contribution plan or
other deferred compensation plans of the Company. Base Salary does not
include any payments under the 2002 AICP or any other Company bonus plan, and
does not include compensation in the form of stock options, incentive pay or
special awards.

In the event that changes are made to Code Section 162(m) or the
regulations thereunder to permit greater flexibility with respect to any
Award Opportunities under the 2002 AICP, the Committee may exercise such
greater flexibility consistent with the terms of the 2002 AICP without regard
to the restrictive provisions of the 2002 AICP.

PAYMENT OF AWARDS

Awards under the 2002 AICP are payable within 75 days after the
award is approved by the Committee. Subject to the terms of the Company's
Executive Deferred Compensation Plan ("the EDCP"), an officer eligible to
participate in the EDCP may defer the receipt of some or all of the officer's
award. If all or a portion of an officer's award is not deductible by the
Company under Section 162(m), the Committee may, in its discretion, require
that payment of the nondeductible portion of such award be deferred under a
Company sponsored deferred compensation plan.

If before an award is actually paid to an officer with respect to a
performance period the officer ceases to be a regular, full time employee of
the Company for a reason other than death, total disability or retirement,
the officer's eligibility under the 2002 AICP shall terminate and no award
will be paid. In the event a participating officer (who was an officer as of
the first day of a Plan Year) terminates employment due to death, total
disability or retirement, such officer shall be entitled to a pro rata
portion of the award calculated based on the actual base salary earned by
such officer. An officer who becomes eligible for the 2002 AICP during the
Plan Year will be eligible for a pro-rata award based upon his or her
compensation while an eligible officer.

AMENDMENTS

The Board of Directors may modify, amend, suspend or terminate the
2002 AICP at any time.

CHANGE IN CONTROL

Except as otherwise provided in an officer's continuity agreement,
in the event of a change in control of the Company, each officer will, in the
sole discretion of the Committee, receive a payment of the officer's
incentive award for the fiscal year during which the change in control
occurs. In these circumstances, the Committee will determine the award based
on performance during the fiscal year until the date of the change in
control. This award will be paid to the officer within 75 days after the
effective date of the change in control.

A change in control occurs (a) upon a change in any two year period
in a majority of the members of the Board of Directors of the Company, as
defined in the 2002 AICP, (b) if any person becomes the beneficial owner,
directly or indirectly, of 25% or more of the Company's outstanding Common
Stock, (c) upon the consummation of a merger or consolidation of the Company
with any other corporation, a sale of 50% or more of the Company's assets,
the liquidation or dissolution of the Company or a combination of the
foregoing transactions ("Transactions") other than a Transaction immediately
following which the shareholders 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 of the surviving corporation(s), or (d) if a
majority of the members of the Board of Directors in office immediately prior
to a proposed transaction determine by written resolution that such proposed
transaction, if taken, will be deemed a change in control and such proposed
transaction is effected.

OTHER MATTERS

As discussed above, awards that may be paid under the 2002 AICP for
fiscal 2002 and future years are dependent on the attainment of performance
goals established annually by the Committee, as well as the Committee's
authority, subject to the terms of the 2002 AICP, to reduce or eliminate such
awards. Accordingly, the amounts, if any, that may be paid under the 2002
AICP in the future cannot presently be determined. If the Stockholders do not
approve the 2002 AICP, no payments will be made under the 2002 AICP, and the
1998 AICP will continue in effect. The Executive Compensation Committee will
review the Company's executive compensation program in light of such vote and
the principles described in its Report on Executive Compensation.

ITEM NO. 4

APPROVAL OF THE 2002 LONG TERM INCENTIVE PLAN

The Board of Directors has approved and recommends that the
stockholders vote for the approval of the Kerr-McGee Corporation 2002 Long
Term Incentive Plan (the "2002 Plan") to replace the 2000 Long Term Incentive
Plan (the "2000 Plan"). The Board believes the 2002 Plan will enhance the
Company's ability to attract and retain outstanding employees and
non-employee directors. The 2002 Plan is designed to ensure that amounts paid
and stock issued upon exercise of stock options under the 2002 Plan qualify
as performance-based compensation that is deductible under IRS Code Section
162(m).

The Board's approval and recommendation of the 2002 Plan follows a
review and evaluation of the Company's existing compensation plans and a
comparison of those plans with the programs offered by comparable companies.
While the 2002 Plan represents, in part, a continuation of the Company's
stock option program, which has been in effect since 1950, it also provides
flexibility in the form and payment of awards to meet changing business needs.

The 2002 Plan includes provisions which provide for the grant or
award of (a) stock options, (b) stock appreciation rights (SARs), (c)
restricted stock and (d) performance awards. The 2002 Plan would permit total
equity awards over the life of the 2002 Plan of up to 7,000,000 shares,
subject to the following limits:

(a) Aggregate limits on shares 1,750,000
designated for restricted
stock and performance
awards to employees

(b) Aggregate limits on shares 300,000
designated for stock
options and restricted
stock to non-employee
directors, of which no more
than 100,000 shares may be
restricted stock

If the 2002 Plan is approved, the current 2000 Plan will be
terminated, except as to outstanding options and restricted stock, which will
remain subject to the terms of the 2000 Plan. A summary of the 2002 Plan
appears below and is qualified by reference to the full text of the 2002
Plan, which is included in this Proxy Statement as Exhibit B.

At the Annual Meeting the stockholders will vote on the approval of
the 2002 Plan. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
APPROVAL OF THE 2002 LONG TERM INCENTIVE PLAN.

SUMMARY OF THE 2002 LONG TERM INCENTIVE PLAN

TERM

If approved by the Stockholders, the 2002 Plan will be effective as
of May 14, 2002. The 2002 Plan will terminate on May 13, 2012, unless
terminated earlier by the Board of Directors. Termination of the 2002 Plan
will not affect grants made prior to termination, but grants may not be made
after termination.

PURPOSE

The purpose of the 2002 Plan is to align the personal financial
interests of key employees and non-employee directors with the Company's
stockholders. The 2002 Plan includes provisions for stock options, restricted
stock, stock appreciation rights ("SARs") and performance awards.

ADMINISTRATION

The 2002 Plan will be administered by a committee of the Board of
Directors comprised solely of two or more members who qualify as "outside
directors" under IRS Code Section 162(m) (the "Committee"). Currently, that
Committee will be a subcommittee of the Board's Executive Compensation
Committee. Subject to the terms of the 2002 Plan, the Committee will have
authority (i) to determine the employees eligible to participate in the 2002
Plan, (ii) to determine the form and terms of, and the conditions and
restrictions applicable to, grants and awards under the 2002 Plan, (iii) to
adopt rules and regulations with respect to the administration of the 2002
Plan, (iv) to amend or rescind such rules and regulations and make such other
determinations as the Committee deems necessary or appropriate, (v) to amend
the terms and conditions of any outstanding grant or award to the extent such
terms and conditions are within the sole discretion of the Committee as
provided in the 2002 Plan, subject to limitations otherwise applicable under
the 2002 Plan including those contained in Article XIII which among other
limitations prohibit the repricing of options without further stockholder
approval, and (vi) take any action that the Committee deems necessary to
comply with any government laws or regulatory requirements.

ELIGIBILITY

Eligibility under the 2002 Plan is limited to employees of the
Company and its affiliates and the Company's non-employee directors. The
Committee, in its sole discretion, shall determine which employees are
eligible to participate in the 2002 Plan, and only those employees identified
by the Committee as able to affect the equity value of the Company through
significant contributions to Company profitability and growth will be
selected for participation. The Company currently estimates that
approximately 650 employees will participate in the 2002 Plan.

SECURITIES SUBJECT TO THE 2002 PLAN

The maximum number of shares of Common Stock that may be issued
under the 2002 Plan in satisfaction of exercised options or SARs issued as
restricted stock or issued under the Performance Plan may not exceed, in the
aggregate, 7,000,000. No more than 1,750,000 of the 7,000,000 shares
available under the 2002 Plan may be used for grants of restricted stock and
performance awards to eligible employees. In addition, no more than a total
of 300,000 of the 7,000,000 shares under the 2002 Plan may be used for grants
of restricted stock and stock options to non-

employee directors, and no more than 100,000 of the 300,000 shares available
to non-employee directors may be granted in the form of restricted stock. If
any stock option granted pursuant to the 2002 Plan terminates, expires or
lapses, or any restricted shares of Common Stock granted pursuant to the 2002
Plan are forfeited, any shares of Common Stock subject to such option or
restricted stock will again be available for grant unless, in the case of
stock options granted under the 2002 Plan, related SARs have been exercised.
Because the grant of awards under the 2002 Plan is at the discretion of the
Committee, it is not possible to indicate what awards will be made to persons
eligible for participation in the 2002 Plan.

In the event of a stock split, merger, reorganization,
recapitalization, stock dividend or other event described under the terms of
the 2002 Plan, the Committee will make appropriate adjustments to the number
of shares subject to grants or awards previously made to participants, in the
exercise price per share of stock options previously granted to participants
and in the number and kinds of shares which may be distributed under the 2002
Plan. Appropriate adjustments will also be made by the Committee in the terms
of SARs to reflect any change with respect to the number of issued and
outstanding shares of Common Stock.

STOCK OPTIONS

The 2002 Plan authorizes grants of stock options to non-employee
directors and eligible employees from time to time as determined by the
Committee. Subject to the limits of the 2002 Plan, the Committee may grant
options under the 2002 Plan for such number of shares and having such terms
as the Committee designates; however, the maximum number of options that may
be granted to any one employee may not exceed 1,750,000 over the life of the
2002 Plan.

Under the terms of the 2002 Plan, the Committee shall specify
whether or not any option is intended to be an incentive stock option
("Incentive Stock Option") as described in Section 422 of the IRS Code or a
nonstatutory or nonqualified stock option ("Nonqualified Stock Option"). The
aggregate value of Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by an individual during any calendar year
under all Company plans may not exceed $100,000. Incentive Stock Options may
not be exercised more than ten years from the date of grant, and Nonqualified
Stock Options may not be exercised more than ten years and one day from the
date of grant. The Committee may provide for options to be exercisable in
installments during the term of the option and the Committee may also
accelerate the time at which an installment portion of an outstanding option
may be exercisable.

Each stock option shall have an exercise price that is not less than
the fair-market value of the Common Stock on the date the option is granted.
Payment for shares received upon exercise of a stock option may be made by an
optionee in cash, shares of Common Stock, shares of Common Stock subject to
restrictions, a combination of the foregoing, through a cashless exercise
with a broker, or, in the discretion of the Committee, by the Company
withholding shares of Common Stock equal in value to the exercise price of
the stock option.

A stock option will terminate and may no longer be exercised three
months after an optionee ceases to be an employee or non-employee director
for any reason other than

total disability, death or retirement (as defined under the 2002 Plan).

In the event an employee ceases employment due to total disability,
death (including death within three months after termination of employment)
or retirement, all outstanding options at the time of such employee's
termination of employment will vest and shall be exercisable during the
remaining term of the option, not to exceed four years, as set forth in the
option agreement.

If a non-employee director's service is terminated by reason of
total disability, death or retirement, outstanding options will vest and
remain exercisable for the remaining term of the option.

In the event of an employee or non-employee director's death while
in service of the Company, all outstanding options at the time of the
optionee's death (including, as to employees, death within three months after
termination of employment) shall be exercisable within the remainder of the
applicable term of the option thereafter by the executor or administrator of
the deceased optionee's estate or 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.

Under no circumstances will any option be exercisable after it has
terminated or expired.

STOCK APPRECIATION RIGHTS

The 2002 Plan also authorizes the Committee to affix SARs to stock
options either at the time the option is granted or at any date prior to the
option's expiration. SARs provide an Optionee the right to surrender all or a
portion of an option and receive from the Company a payment, in shares of
Common Stock, cash, or a combination thereof, equal to the excess of the
fair-market value of the shares of Common Stock for which the SAR is
exercised over the aggregate option exercise price of such shares under the
related option at the time of surrender. In addition, each outstanding SAR
will be automatically exercised on the day prior to the expiration of the
related option if the fair-market value of the Common Stock on such date
exceeds the relevant option exercise price. SARs are exercisable only to the
extent that the related options are exercisable. The exercise of any option
will result in an immediate forfeiture of its related SAR, and the exercise
of a SAR will cause an immediate forfeiture of its related option.

RESTRICTED STOCK

The Committee will determine the nature and extent of the
restrictions on grants of restricted stock, the duration of such
restrictions, and any circumstances under which restricted shares will be
forfeited; however, the maximum number of shares of restricted stock that may
be awarded to any one individual is 400,000 over the life of the 2002 Plan.
Restricted shares will be deposited with the Company during the period of any
restriction thereon and, except as otherwise provided by the Committee during
any such period of restriction, recipients shall have all of the rights of a
holder of Common Stock, including but not limited to voting rights and the
right to receive dividends. The Committee may establish rules concerning the
impact of the termination of employment (by reason of retirement, total
disability, death or otherwise) on the applicability of any outstanding
restrictions.

PERFORMANCE AWARDS

The 2002 Plan permits the Committee to grant performance awards to
eligible employees under the 2002 Plan from time to time. Performance awards
may include performance units valued by reference to financial measures or
property other than Common Stock and performance shares valued by reference
to shares of Common Stock.

Under the terms of the 2002 Plan, the Committee will establish the
time period of not less than one year over which performance will be measured
(the "Performance Period") and the criteria to be used by the Committee to
evaluate the Company's performance with respect to each Performance Period.
Such criteria may include financial or operating measures of the Company or
its divisions, such as pretax income, net income, earnings per share,
revenue, expenses, return on assets, return on equity, return on investment,
net profit margin, operating profit margin, operating cash flow, total
stockholder return, capitalization, liquidity, reserve adds or replacement,
finding and development costs, results of customer satisfaction surveys and
other measures of quality, safety, productivity, cost management or process
improvement or other criteria established by the Committee, or they may be
based on the Company's performance compared with one or more selected
companies. Payment of earned performance awards may be made to participants
in cash, Common Stock, restricted Common Stock, other property or a
combination of the foregoing as determined by the Committee.

In the event a performance plan participant is involuntarily
terminated without cause or terminates employment due to death, total
disability or retirement after completing at least 50% of the Performance
Period for an award, the participant will be entitled to a pro rata portion
of the award if the Committee determines the indicators of performance are
met.

The cash or fair market value of Common Stock covered by all
performance awards granted under the 2002 Plan during a calendar year will
not exceed 1.5% of the average cash flow for the Company for the three fiscal
years immediately preceding the grant, as calculated by the Committee, and
the cash or fair market value of Common Stock covered by all performance
awards granted to an individual under the 2002 Plan during a calendar year
will not exceed 0.5% of the average cash flow for the Company for the three
fiscal years immediately preceding the grant, as calculated by the Committee.

DEFERRAL OF PAYMENT

Subject to the terms of the Company's Executive Deferred
Compensation Plan (the "EDCP"), an officer or other key employee eligible to
participate in the EDCP may defer the receipt of some or all of the cash or
Common Stock receivable pursuant to a stock option, SAR or restricted stock.

AMENDMENT

The Board may at any time terminate or amend the 2002 Plan in any
respect, except that the Board may not, without further approval of the
Stockholders, amend the 2002 Plan so as to (i) increase the number of shares
of Common Stock which may be issued under the 2002 Plan (except for
adjustments in the number of shares permitted with respect to certain
mergers, consolidations or recapitalizations as described under "Securities
Subject to the 2002 Plan" above); (ii) change terms of the 2002 Plan relating
to the establishment of the exercise prices under options granted; (iii)
extend the duration of the 2002 Plan beyond May 13, 2012; or (iv) increase
the maximum dollar amount of

Incentive Stock Options which an individual Optionee may exercise during any
calendar year beyond that permitted in the IRS Code and applicable rules and
regulations of the U. S. Treasury Department. No amendment or termination of
the 2002 Plan may, without the consent of an affected participant, alter or
impair any of the rights or obligations under any options or other rights
theretofore granted such participant under the 2002 Plan.

CHANGE IN CONTROL

In the event of a change in control, any outstanding options or SARs
that have not yet vested shall vest effective as of such date, restrictions
on restricted stock shall lapse, and participants who have previously been
awarded performance awards shall earn no less than the participant would have
earned if the performance period terminated as of such date.

A change in control occurs (a) upon a change in any two year period
in a majority of the members of the Board of Directors of the Company, as
defined in the 2002 Plan, (b) if any person becoming the beneficial owner,
directly or indirectly, of 25% or more of the Company's outstanding Common
Stock, (c) upon the consummation of a merger or consolidation of the Company
with any other corporation, a sale of 50% or more of the Company's assets,
liquidation or dissolution of the Company or combination of the foregoing
transactions ("Transactions") other than a Transaction immediately following
which the shareholders 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 of the surviving corporation(s), or (d) if a
majority of the members of the Board of Directors in office immediately prior
to a proposed transaction determine by written resolution that such proposed
transaction, if taken, will be deemed a change in control and such proposed
transaction is effected.

FEDERAL INCOME TAX EFFECTS

The federal income tax consequences applicable to the Company in
connection with an Incentive Stock Option, Nonqualified Stock Option, SAR,
restricted stock or performance award are complex and depend, in large part,
on the surrounding facts and circumstances. Under current federal income tax
laws, a participant will generally recognize income with respect to grants of
restricted stock, stock options, SARs or performance awards, as follows:

(a) PAYMENTS IN RESPECT OF PERFORMANCE AWARDS. Any cash and/or
the fair market value of any Common Stock received as payments in
respect of performance awards under the 2002 Plan will constitute
ordinary income to the employee in the year in which paid, and the
Company will be entitled to a deduction in the same amount.

(b) INCENTIVE STOCK OPTIONS. The grant of an Incentive Stock
Option will not result in any immediate tax consequences to the Company
or the optionee. An optionee will not realize taxable income, and the
Company will not be entitled to any deduction, upon the timely exercise
of an Incentive Stock Option, but the excess of the fair-market value
of the Common Stock acquired over the option price will be an item of
tax preference for purposes of the alternative minimum tax. If the
optionee does not dispose of the Common Stock acquired within one year
after its receipt (or within two years after the date the option was
granted), gain or loss realized

on the subsequent disposition of the Common Stock will be treated as
long-term capital gain or loss and the Company will not be entitled to
any deduction. If the optionee disposes of the Common Stock acquired
less than one year after its receipt (or within two years after the
option was granted), the optionee will realize ordinary income in an
amount equal to the lesser of (i) the excess of the fair-market value
of the Common Stock acquired on the date of exercise over the exercise
price, or (ii) if the disposition is a taxable sale or exchange, the
amount of any gain realized. Upon such a disqualifying disposition,
the Company will be entitled to a deduction in the same amount and at
the same time as the optionee realizes such ordinary income. Any amount
realized by the optionee in excess of the fair market value of the
Common Stock on the date of exercise will be taxed to the optionee as
capital gain.

(c) NONQUALIFIED STOCK OPTIONS. The grant of a Nonqualified
Stock Option will not result in any immediate tax consequences to the
Company or the optionee. Upon the exercise of a Nonqualified Stock
Option, the optionee will generally realize ordinary income. However,
an employee who is subject to the restrictions of Section 16(b) of the
Securities Exchange Act of 1934 with respect to the stock acquired will
realize as ordinary income at the time of the lapse of the restrictions
an amount equal to the excess of the fair market value of the Common
Stock at the time of such lapse over the option price, unless the
employee elects to be taxed on the date of exercise. The Company will
be entitled to a deduction at the same time as, and in an amount equal
to, the income realized by the optionee.

(d) STOCK APPRECIATION RIGHTS. Upon the exercise of any SAR,
any cash received and the fair-market value on the exercise date of any
Common Stock received will constitute ordinary income to the grantee.
The Company will be entitled to a deduction in the same amount and at
the same time.

(e) RESTRICTED STOCK. An employee generally will not realize
taxable income upon an award of restricted stock. However, an employee
who receives restricted stock, either as a grant or in payment of a
performance award, will realize as ordinary income at the time of the
lapse of the restrictions an amount equal to the fair market value of
the Common Stock at the time of such lapse unless the employee elects
to realize ordinary income on the date of receipt of the restricted
Common Stock. At the time the employee realizes ordinary income, the
Company will be entitled to deduct the same amount as the ordinary
income realized by the employee.

(f) IRS CODE SECTION 162(m). Payments or grants (excluding
restricted stock) under the 2002 Plan are intended to qualify as
"qualified performance-based compensation" under the Code and the
applicable regulations.

ACCOUNTING

During the period that SARs are outstanding, the Company will accrue as
an expense the amount, if any, by which the fair-market value of the Common
Stock exceeds the exercise price of any related option.

ITEM NO. 5

APPROVAL OF AMENDMENT OF THE AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF KERR-MCGEE OPERATING CORPORATION

On August 1, 2001, in connection with its acquisition of HS
Resources, Inc., the Company completed a holding company reorganization in
which Kerr-McGee Operating Corporation ("Sub"), which was formerly known as
Kerr-McGee Corporation, changed its name and became a wholly owned subsidiary
of the Company. This reorganization was conducted in accordance with Section
251(g) of the Delaware General Corporation Law and did not require the
approval of Sub's stockholders. In connection with the reorganization and
pursuant to the requirements of Section 251(g), Sub's Certificate of
Incorporation was amended to add the following Article:

" SIXTEENTH: Other than the election or removal of directors of the
Corporation, any act or transaction by or involving the Corporation
that requires under the General Corporation Law of the State of
Delaware or this Amended and Restated Certificate of Incorporation the
approval of the stockholders of the Corporation shall, pursuant to
Section 251(g)(7)(i) of the General Corporation Law of the State of
Delaware, require, in addition, the approval of the stockholders of
Kerr-McGee Corporation by the same vote that is required by the General
Corporation Law of the State of Delaware and/or this Amended and
Restated Certificate of Incorporation."

This provision requires Sub, in addition to obtaining the vote of
its sole stockholder, the Company, to also obtain the vote of the Company's
stockholders before Sub takes certain actions requiring stockholder approval,
such as a merger, a sale of all or substantially all of its assets, an
amendment to its certificate of incorporation or its corporate dissolution.
Absent a provision like Article Sixteenth, there is no general requirement
under Delaware law that stockholders of a parent entity vote on transactions
involving the parent entity's wholly owned subsidiaries. There is no such
provision in the certificates of incorporation of any of the Company's other
subsidiaries and, as discussed above, no such provision was included in the
Certificate of Incorporation of Sub prior to its reorganization.

The Company may, from time to time, find it desirable to merge Sub
with another of Company's subsidiaries, sell all or substantially all of
Sub's assets to another of Company's subsidiaries, or take other actions
involving Sub of the types described in the preceding paragraph. Unless
Article Sixteenth is deleted, such actions would require a vote of the
Company's stockholders before such actions could be undertaken. Scheduling
such a vote, whether at a regular annual shareholders meeting or at a special
meeting, would delay the completion of the desirable actions and add to their
cost. In order to avoid such delay and cost, and to provide maximum
flexibility and efficiency under the existing holding company structure, the
Company proposes to eliminate Article Sixteenth from Sub's Amended and
Restated Certificate of Incorporation. Following the

removal of this provision from Sub's Certificate of Incorporation,
stockholders of the Company will continue to have the voting rights typically
provided to stockholders of a holding company by Delaware law.

If the proposed Amendment is approved by the Company's stockholders,
only a vote of Sub's sole stockholder, the Company, would be required in
connection with any matter that requires stockholder approval under Sub's
certificate of incorporation or Delaware law.

The Board of Directors believes that the deletion of Article
Sixteenth of Sub's Amended and Restated Certificate of Incorporation will
allow the Company to manage its entire organization more efficiently and
effectively. The affirmative votes of a majority of the shares of the common
stock of the Company are required for approval of this amendment to Sub's
Amended and Restated Certificate of Incorporation. If the stockholders
approve this proposed amendment, the Company intends to promptly effect the
change by filing or causing to be filed an appropriate amendment to Sub's
Amended and Restated Certificate of Incorporation with the State of Delaware.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE APPROVAL OF THE AMENDMENT TO THE AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION OF KERR-MCGEE OPERATING CORPORATION.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee oversees the Company's financial reporting
process on behalf of the Board of Directors. Management has the primary
responsibility for the financial statements and the reporting process
including the systems of internal controls.

In fulfilling its oversight responsibilities, the Committee reviewed
with management the audited financial statements contained in the Annual
Report. The review included a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in the financial
statements.

The Company's independent public accountants are responsible for
expressing an opinion on the conformity of the audited financial statements
with generally accepted accounting principles. The Committee reviewed with
Arthur Andersen LLP, the Company's independent public accountants, Arthur
Andersen LLP's judgment as to the quality, not just the acceptability, of the
Company's accounting principles and such other matters as are required to be
discussed with the Committee under generally accepted auditing standards. The
Committee also discussed with Arthur Andersen LLP, the independent public
accountants' independence from management and the Company, including the
matters contained in the written disclosures required by the Independence
Standards Board. The Committee considered whether the provision of non-audit
services by the Company's independent public accountants is compatible with
maintaining the accountants' independence.

The Committee discussed with both the Company's internal auditors
and the independent public accountants the overall scope and plans for their
respective audits. The Committee met with both the internal auditors and the
independent public accountants, with and without management present, to
discuss the results of their examinations, their evaluations of the Company's
internal controls, and the overall quality of the Company's financial
reporting.

Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Annual Report on Form 10-K for the year ended
2001 for filing with the Securities and Exchange Commission. The Committee
also recommended to the Board the appointment of [__________________] as the
Company's independent public accountants for 2002. Submitted By:

AUDIT COMMITTEE

Leroy C. Richie, Chair
John J. Murphy
Matthew R. Simmons
Farah M. Walters
Ian L. White-Thomson

FEES PAID TO THE INDEPENDENT PUBLIC ACCOUNTANTS

During calendar year 2001, the Company retained Arthur Andersen LLP,
the Company's independent public accountants, to provide services in the
following categories and amounts:

Audit Fees $
-------------
Information Technology
Consulting Fees $ --
------------
All other fees
Audit and Accounting (1) $
------------
Tax
------------
Other
------------

Total Other Fees $
------------

Total Fees $
============

(1) These amounts represent fees for audits of benefit plans, acquisition
assistance and work performed in connection with registration statements.

EXECUTIVE COMPENSATION AND OTHER INFORMATION

The report of the Executive Compensation Committee of the Board is
set out below, together with other information regarding the compensation of
certain executive officers of the Company.

REPORT OF EXECUTIVE COMPENSATION COMMITTEE

The Executive Compensation Committee (the "Committee") is comprised
of all directors who are not employees of the Company or its affiliates. The
Committee or a subcommittee thereof is responsible for administering
compensation programs that make it possible for the Company to attract and
retain employees with the skills and attitudes necessary to provide the
Company with a fully competitive and capable management.

The Executive Compensation Committee seeks to provide competitive
levels of total compensation for the Company's key executives through a mix
of base salaries, annual incentive pay, long term incentives and other
benefits. The Committee believes that incentive or "at risk" compensation is
a key ingredient in motivating executive performance to maximize stockholder
value and align executive performance with Company objectives and stockholder
interests. The Committee targets total compensation to be competitive at the
third quartile level of a peer group of comparable energy and chemical
companies, which includes companies constituting the Standard & Poor's
Domestic Integrated Oil Index and the Standard & Poor's Oil Producers Index
referred to in the Performance Graph on Page ___, as well as other comparable
energy and chemical companies selected with the assistance of an independent
consulting firm to be representative of the Company's size and business
activities (the "Comparison Group"). Since the Company has a substantial
amount of its business outside the United States, its compensation policies
must also be internationally competitive and flexible. This enables the
Company to attract and retain high-quality management and to compete globally.

BASE SALARIES

In reviewing and determining base salaries for executive officers,
the Committee annually reviews current competitive market compensation data
of the Comparison Group prepared by an independent consulting firm. The
Committee's policy is to set executive officers' base salaries at or near the
third quartile of base salaries of the Comparison Group to enable the Company
to attract and retain key executives. The Committee takes into consideration
individual performance, based on the Committee's evaluation of the
performance of the Chief Executive Officer, and the Chief Executive Officer's
evaluation of the performance of other executive officers, as well as job
related experience and tenure. No specific weight is assigned to any
individual factor in determining salaries.

ANNUAL INCENTIVE COMPENSATION

The Company's Annual Incentive Compensation Plan (the "AICP") is an
incentive compensation plan for Company officers that provides incentive

compensation based on the performance of the Company's operating divisions
relative to the performance of peer comparison groups. Performance thresholds
established annually by the Committee or a subcommittee thereof must be
achieved before officers qualify for AICP awards.

Each year, an award target is established for each executive
officer. Award targets are based on each officer's level of responsibility
and targets the third quartile of the Comparison Group competitive data. In
2001, award targets ranged from 45% to 100% of base salary. An executive
officer may receive up to 200% of the officer's award target if performance
objectives are exceeded and the officer's performance excels. The amount of
an officer's award may be reduced or eliminated based on the officer's
individual performance. The Committee or a subcommittee thereof will
determine AICP awards for 2001 in May 2002, based on five measurement
criteria.

During 2001, the Company continued to profitably grow its core
businesses, while returning solid earnings to the bottom line. At year-end
2001, the Company had increased its total assets to $11 billion or $109 per
common share, reflecting an increase of 35% in the per share value from
year-end 2000. Similarly, the Company increased total assets net of total
debt to $6.4 billion or $64 per common share, an increase of 15% in the per
share value over the year ago period.

Earnings before special items and changes in accounting principles
for the year ended December 31, 2001, reached $542 million or $5.26 per
share. Average daily production volumes of oil and natural gas increased
during the year to 297,000 barrels of equivalent and unit production costs
decreased to $4.45/BOE, helping to partially offset the impact of lower
commodity prices and the depressed economy's impact on operating profit from
the chemical unit.

Kerr-McGee's oil and gas exploration and production activities
generated operating profits that were the second highest in the Company's
history. Continued success from the oil and gas unit's exploration program
coupled with strategic acquisitions enabled the Company to replace more than
490% of its production during the year, with more than 290% coming from the
drill bit.

During the year, the oil and gas unit drilled a record 79
exploratory and appraisal wells with a 63% success rate. The discoveries
include 10 new fields. The newly discovered fields are located primarily in
the Company's existing core areas in the North Sea and the deep water of the
Gulf of Mexico.

During the year, the Company approved development plans for the
deepwater Gunnison discovery in the Gulf of Mexico and the Maclure field in
the North Sea. Development plans currently also are being prepared for the
Red Hawk discovery in the Gulf of Mexico, with development of the Tullich
area in the North Sea already underway in early 2002.

The oil and gas unit also achieved significant milestones on several
project developments during the year. At its

100%-owned Leadon field in the U. K. Sector of the North Sea, first oil was
achieved in November 2001, just 15 months after Board approval of the
project. In the deepwater of the Gulf of Mexico, Kerr-McGee installed the
world's first truss spar at its 50%-owned Nansen field in 3,700 feet of
water. Kerr-McGee also installed a twin truss spar at its 30% owned Boomvang
field.

The Company supplemented the oil and gas unit's drilling success
with the $1.8 billion acquisition of HS Resources in August 2001. The
acquisition provides additional balance to the Company's oil and gas
portfolio from a risk, geographic and product standpoint. The transaction
added 1.3 TCFe of proved gas equivalents and offers additional potential from
more than 800 BCFe of probable and possible reserves.

Kerr-McGee grew its gross acreage inventory during 2001 by more than
50% to 82 million acres. Virtually all of the increase was associated with
high-potential deepwater plays. Kerr-McGee's worldwide deepwater acreage now
represents about 75% of the Company's total acreage inventory. Among
independent oil companies, Kerr-McGee remains the largest leaseholder overall
in the Gulf of Mexico, as well as in the Gulf's prolific deepwaters.

The Company achieved these milestones while continuing to operate
safely and in an environmentally friendly manner. Kerr-McGee was awarded the
nation's top safety and environmental award - The National Safety Award for
Excellence (SAFE) - by the U. S. Department of the Interior's Mineral
Management Service. This is the Company's third SAFE award in five years. The
Company also received the Australian Petroleum Production and Exploration
Association's safety award for its drilling operations in Australia.

Kerr-McGee's chemical operations introduced a market leading
plastics grade, CR-840. This product is currently superior to products
offered by the Company's competitors and will be a key part of the Company's
strategy with respect to the global markets for plastics.

During 2001, the Company acquired the remaining 20% interest in two
TiO2 production facilities in Europe from Bayer AG and completed the
expansion of its pigment plant in Australia. These activities increased the
Company's net TiO2 production capacity by 2% to 547,500 tonnes annually and
effectively positions the Company to meet future increases in demand for
product orders.

Also in 2001, the Chemical unit successfully field tested new
technology, which allows for expansion of raw pigment capacity with low
incremental capital cost.

The Company further expanded its chemical business in April 2001
when the Company entered into a 50-50 joint venture with Hydro-Quebec to
produce and sell new lithium metal polymer batteries, which establishes a
platform for the Company to compete in the developing market for hybrid
electric vehicles.

LONG TERM INCENTIVES

The Committee believes that ownership of Company stock by the
Company's executive officers promotes commitment to the long-term success of
the Company. Stock ownership guidelines expressed as a multiple of each
officer's base salary have been established for the Company's executive
officers. The Committee or a subcommittee thereof periodically reviews the
guidelines and each officer's stock ownership.

The Stockholders previously approved the use of Company stock in the
form of stock options and restricted stock awards to provide long-term
incentive compensation for the Company's key executives. The Committee
believes that the use of stock-based compensation to establish a direct
relationship between the compensation of executives and the value of the
Company's stock helps assure continued alignment between the interests of the
executive officers and the interests of the Company and its shareholders. The
Committee believes that equity incentives are an important tool for
attracting and retaining key employees by rewarding long term management
performance based on objectively measured results.

The aggregate value of stock options and restricted stock granted to
each executive officer, including the Chief Executive Officer, is based on a
percentage of the individual officer's salary. The percentage is set annually
by the Committee or a subcommittee thereof after considering each officer's
performance, level of responsibility and prior awards. The Committee relies
on surveys and reports by an independent consulting firm as to competitive
awards made within the Comparison Group and targets the third quartile of the
Comparison Group. The number of stock options granted in 2001 to Mr. Corbett
and the next four highest paid executive officers is set forth in the Option
Grants Table on Page ___. The amount of restricted stock granted in 2001 to
Mr. Corbett and the next four highest paid executive officers is set forth in
the Summary Compensation Table on Page ___.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

The Chief Executive Officer's compensation is determined in
accordance with the policies described above. In recommending Mr. Corbett's
base salary, the Committee considers competitive salaries of Chief Executive
Officers for comparable energy and chemical companies within the Comparison
Group as compiled by an independent consulting firm. On the Committee's
recommendation, the Board increased Mr. Corbett's annual base salary to
$1,025,000 on January 8, 2001. However, base salary in excess of $1 million
for 2001 was deferred into the Company's Executive Deferred Compensation Plan.

Mr. Corbett's incentive compensation under the AICP for 2001 will be
determined in May 2002, based on five measurement criteria. The Committee or
a subcommittee thereof will consider the Company's substantial
accomplishments under Mr. Corbett's leadership in 2001, with no specific
weight assigned to any single accomplishment for his discretionary
compensation.

Under Mr. Corbett's leadership, the Company continued to profitably
grow the Company's two core businesses in a difficult global economy. At the
end of 2001, the total assets of the Company increased to $11 billion or $109
per common share, reflecting an increase of 35% in the per share value from
year-end 2000. Total assets net of total debt also increased to $6.4 billion
or $64 per common share, reflecting an increase of 15% in the per share value
during the year. Year end earnings before special items and changes reached
$542 million or $5.26 per share. Average daily oil and gas production
increased to 297,000 barrels of equivalent and unit production costs
decreased to $4.45/BOE.

Continued success from the Company's exploration and production
program along with strategic acquisitions resulted in total production
replacement of more than 490% with 290% coming from the drill bit. The
Company acquired HS Resources in August for $1.8 billion, providing the
Company with additional balance to its oil and gas portfolio from a risk,
geographic and production standpoint.

In addition, the Company acquired the remaining 20% interest in two
TiO2 production facilities in Europe from Bayer AG and completed its
expansion of the pigment plant in Australia, increasing net TiO2 production
capacity by 2% to 547,500 tonnes annually.

The Committee believes that executive compensation arrangements for
2001 appropriately reflect its policy to set executive compensation so that
the interests of the Company's executive officers are aligned with the
interests of the Company's Stockholders.

FEDERAL INCOME TAX DEDUCTIBILITY

Section 162(m) of IRS Code generally limits the corporate deduction
on compensation paid to the Chief Executive Officer and to the next four
highest paid officers to $1 million each during any fiscal year unless such
compensation meets certain performance-based requirements. In May 1998, the
Company's AICP was approved by Stockholders. The Committee believes that
incentive compensation paid under the plan constitutes "performance based"
compensation that is exempt from the deduction limit.

The Company's Long Term Incentive Plan was approved by Stockholders
on May 9, 2000. The Committee expects that all income derived from stock
options granted in 2001 to executive officers will qualify as
performance-based compensation as defined under Section 162(m).

SUBMITTED BY:

EXECUTIVE COMPENSATION COMMITTEE
--------------------------------
Matthew R. Simmons, Chairman
William E. Bradford
Sylvia A. Earle
David C. Genever-Watling
Martin C. Jischke
William C. Morris
John J. Murphy
Leroy C. Richie
Nicholas J. Sutton
Farah M. Walters
Ian L. White-Thomson

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table contains individual compensation information for the
Chief Executive Officer and for the next four highest paid executive officers
for services rendered in all capacities for the fiscal years ended December
31, 2001, 2000 and 1999.

--------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE

LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------------- --------------------------
NO. OF
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARD(S)(2)(6) OPTIONS(3) COMPENSATION (4)
------------------ ---- ------ ----- --------------- -------------- ---------- ----------------

Luke R. Corbett, 2001 $1,019,712 * $73,800 $2,277,188 150,000 $ 61,183
Chairman of the 2000 892,596 $1,100,000 66,750 1,897,500 150,000 53,556
Board and Chief 1999 717,500 730,000 ----- 0 75,000 43,050
Executive Officer

Kenneth W. Crouch, 2001 447,885 * ----- 390,375 40,000 26,873
Senior Vice President, 2000 395,769 325,000 ----- 316,250 35,000 23,746
Exploration & Production 1999 293,077 250,000 ----- 0 17,500 15,877

William P. Woodward, 2001 427,038 * ----- 357,844 40,000 25,622
Senior Vice President, 2000 357,461 295,000 ----- 284,625 25,000 21,448
Chemical 1999 291,923 230,000 ----- 0 17,500 17,515

Robert M. Wohleber,(5) 2001 418,096 * ----- 357,844 35,000 25,086
Senior Vice President and 2000 375,000 305,000 ----- 126,500 15,000 22,500
Chief Financial Officer 1999 25,962 20,000 ----- 232,500 25,000 1,558

Gregory F. Pilcher, 2001 372,673 * ----- 292,781 25,000 22,360
Senior Vice President, 2000 292,424 260,000 ----- 253,000 25,000 17,545
General Counsel and 1999 195,968 110,000 ----- 0 0 11,758
Secretary
--------------------------------------------------------------------------------------------------------------------

* Bonus will be determined in May 2002.
See "Report on Executive Compensation on Page ___.

(1) Perquisite or other personal benefits received from the Company that
exceed reporting thresholds established by Securities and Exchange
Commission regulations.

(2) Restricted stock grants are valued based on the closing price of the
stock on the New York Stock Exchange on the date of grant.

(3) The Company has never granted Stock Appreciation Rights ("SARs") not
attached to a stock option and has not granted SARs attached to stock
options since January 1991.

(4) Consists of 401(k) plan contributions by the Company pursuant to the
Employee Stock Ownership Plan and amounts

contributed under the nonqualified benefits restoration plan. Company
contributions pursuant to the Employee Stock Ownership Plan for 2001
were $10,200 each to Messrs. Corbett, Crouch, Woodward, Wohleber and
Pilcher. Amounts contributed under the nonqualified benefits
restoration plan for 2001 on behalf of Messrs. Corbett, Crouch,
Woodward, Wohleber and Pilcher were: $50,983, $16,673, $15,422, $14,886
and $12,160, respectively. The amounts contributed by the Company to
the non-qualified benefits restoration plan on behalf of such persons
are identical to the amounts that would have been contributed pursuant
to the Employee Stock Ownership Plan except for IRS Code limitations.

(5) Mr. Wohleber began employment with the Company on December 1, 1999, as
Chief Financial Officer.

(6) As of December 31, 2001, the aggregate number of shares of restricted
stock held by the named officers and the market value of that stock,
based on the closing price of the Company's Common Stock on the New
York Stock Exchange on December 31, 2001 were: Luke R. Corbett, 65,000
shares, $3,562,000; Kenneth W. Crouch, 11,000 shares, $602,800; William
P. Woodward, 10,000 shares, $548,000; Robert M. Wohleber, 11,500
shares, $630,200; and Gregory F. Pilcher, 8,500 shares, $465,800.
Dividends are paid to the holders of restricted stock.

STOCK OPTIONS

The following table contains information concerning stock options
granted during the fiscal year ended December 31, 2001, to the Chief
Executive Officer and the next four highest paid executive officers

---------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR

PERCENT
NO. OF OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO PER SHARE
OPTIONS EMPLOYEES IN EXERCISE GRANT DATE
NAME GRANTED (1) FISCAL YEAR 2001 PRICE EXPIRATION DATE PRESENT VALUE(2)
---------------------- ------------ ---------------- ---------- --------------- -----------------

Luke R. Corbett 150,000 14.64% $ 65.19 January 9, 2011 $ 3,381,000
Kenneth W. Crouch 40,000 3.90% 65.19 January 9, 2011 901,600
William P. Woodward 40,000 3.90% 65.19 January 9, 2011 901,600
Robert M. Wohleber 35,000 3.42% 65.19 January 9, 2011 788,900
Gregory F. Pilcher 25,000 2.44% 65.19 January 9, 2011 563,500
---------------------------------------------------------------------------------------------------------------

(1) All stock options granted in 2001 were nonqualified stock options. The
exercise price per option is 100% of the fair-market value of a share of
Common Stock on the date of grant. No option expires more than ten years and
one day from the date of grant. At or after the grant of an option, the
Executive Compensation Committee ("Committee") may, in its discretion, grant
a participant a SAR. A SAR is only exercisable during the term of the
associated option. No SARs were granted in 2001, nor have any been granted
since 1991. Upon a change in control, all options and any accompanying SARs
held for more than six months become immediately exercisable in full. For all
options granted in 2001, a change in control shall be deemed to have occurred
upon (a) a change in any two year period in a majority of the members of the
Board of Directors of the Company, as defined in the 2000 Plan, (b) any
person becoming the beneficial owner, directly or indirectly, of 25% or more
of the Company's outstanding Common Stock, (c) with certain exceptions, the
consummation of a merger or consolidation of the Company with any other
corporation, a sale of 50% or more of the Company's assets, liquidation or
dissolution of the Company or combination of the foregoing transactions
("Transactions") other than a Transaction immediately following which the
shareholders 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 of the surviving corporation(s), or (d) if a majority of
the members of the Board of Directors in office immediately prior to a
proposed transaction determine by written resolution that such proposed
transaction, if taken,

will be deemed a change in control and such proposed transaction is effected.

(2) The present value of stock option grants was computed in accordance with
the Black-Scholes option pricing model, with assumptions consistent with
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," as permitted by the rules of the Securities and
Exchange Commission. Key assumptions used under the Black-Scholes model
include: (a) an expected option term of 5.8 years, (b) interest rate of
4.99%, which represents the U.S. Treasury Strip Rate at the date of grant
with maturity corresponding to the expected option term, (c) stock price
volatility of 42.85% calculated using monthly stock prices for the 36 months
prior to the date of the grant, and (d) dividends at an average annual
dividend yield of 3.30%. Based on the Black-Scholes model, the value on
January 9, 2001, was $22.54 per option. The Company believes, however, that
it is not possible to accurately determine the value of options at the time
of grant using any option pricing model, including Black-Scholes. Use of any
option pricing model to value options requires assumptions about future
events that may prove to be inaccurate.

OPTION/SAR EXERCISES AND HOLDINGS

The following table contains information with respect to
options/SARs exercised during 2001 and the value of unexercised options/SARs
held as of December 31, 2001 for the Chief Executive Officer and the next
four highest paid executive officers.

------------------------------------------------------------------------------------------------------------------

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION/SAR VALUES

NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
DECEMBER 31, 2001 AT DECEMBER 31, 2001 (1)
------------------------- -------------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------

Luke R. Corbett 1,900 $ 44,116 338,300 275,000 $1,264,356 $ 364,530
Kenneth W. Crouch --------- --------- 39,499 69,168 85,052 85,067
William P. Woodward 6,500 206,115 36,400 62,501 82,286 85,067
Robert M. Wohleber --------- --------- 21,666 53,334 --------- ---------
Gregory F. Pilcher --------- --------- 13,933 41,667 6,329 ---------
------------------------------------------------------------------------------------------------------------------

(1) Options/SARs are "in the money" if the fair-market value of the Common
Stock exceeds the exercise price. At December 31, 2001, the closing price of
the Common Stock on the New York Stock Exchange was $54.80.

RETIREMENT PLANS

The Company maintains retirement plans for all employees, including
officers. The following table illustrates the pension benefits that may
accrue to executive officers under the Company's retirement plans assuming
various service periods. The table shows the estimated annual pension
benefits payable to a covered participant at normal retirement age. Pension
benefits include benefits payable under the Company's qualified defined
benefit plan and the Company's nonqualified benefits restoration plan (the
"BRP"). The BRP provides benefits that would be provided under the qualified
defined benefit plan but for certain IRS Code limitations on qualified plan
benefits.

-----------------------------------------------------------------------------------------------------------
RETIREMENT PLAN TABLE
-----------------------------------------------------------------------------------------------------------

AVERAGE ANNUAL 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE
---------------- ---------- ---------- ---------- ---------- ------------

$ 400,000 $ 97,235 $ 129,648 $ 162,059 $ 194,470 $ 209,470

600,000 147,235 196,314 245,393 294,471 316,971

800,000 197,235 262,981 328,726 394,471 424,471

1,000,000 247,236 329,648 412,060 494,471 531,971

1,200,000 297,236 396,315 495,393 594,471 639,471

1,400,000 347,236 462,982 578,727 694,471 746,971

1,600,000 397,236 529,648 662,060 794,472 854,472

1,800,000 447,236 596,315 745,394 894,472 961,972

2,000,000 497,236 662,982 828,727 994,472 1,069,472

2,200,000 547,236 729,649 912,061 1,094,472 1,176,972

2,400,000 597,236 796,316 995,394 1,194,472 1,284,472
---------------------------------------------------------------------------------------------------------------

Covered compensation under the retirement plans consists of salary,
bonus and pretax Section 125 and 401(k) benefit contributions, all based on
the highest 36 consecutive months out of the last 120 months prior to
retirement. Amounts shown are computed on a straight life annuity basis. As
of December 31, 2001, Mr. Corbett had 16 years of credited service; Mr.
Crouch, 27; Mr. Woodward, 29; Mr. Wohleber, 2; and Mr. Pilcher, 9.

The Company's Supplemental Executive Retirement Plan (the "SERP"),
adopted effective January 1, 1991, is a defined benefit plan administered by
the Executive Compensation Committee. The SERP, as amended, provides
supplemental retirement benefits to certain key senior

executives selected by the Executive Compensation Committee. Full benefits
are payable upon retirement on or after age 60. Reduced benefits are payable
upon retirement on or after age 52. SERP benefits are paid in an actuarially
determined lump sum calculated to approximate a life annuity. The amount of
the benefit is equal to a portion of the participant's final average monthly
compensation less the sum of (1) the participant's monthly primary social
security benefit and (2) the participant's monthly benefits payable under the
Company's other defined benefit plans. The portion of a participant's final
average monthly compensation used to determine SERP benefits varies from 40%
to 70% and depends on the participant's age at retirement and other factors.
As of December 31, 2001, the estimated lump sum SERP benefit payable upon
retirement to the executive officers named in the Summary Compensation Table,
assuming (i) retirement at age 60, and (ii) salaries are maintained at their
current level, is: Mr. Corbett, $7,668,414; Mr. Crouch, $1,513,874; Mr.
Woodward, $552,915; Mr. Wohleber, $1,385,681; and Mr. Pilcher, $922,619.

CONTINUITY AGREEMENTS

Continuity Agreements between the Company and its executive officers
and certain key employees, including Messrs. Corbett, Crouch, Woodward,
Wohleber and Pilcher, provide certain benefits in the event of a qualifying
termination that occurs in connection with a "change in control" of the
Company.

In the event of a qualifying termination of employment within two
years after a change in control, such executive will be entitled to receive:

- A lump sum cash payment equal to three times the executive's annual base
salary, bonuses and perquisites (with such perquisites calculated at 7% of
the executive's annual base salary);

- Any accrued but unpaid compensation (including the pro-rata amount of any
bonus); and

- An amount representing additional savings plan contributions for a
three-year period plus the present value of lost pension benefits under the
Company's qualified defined benefit pension plans after giving effect to
five years of credit for age and service in the benefit calculation.

If the payment made to the officer causes the officer to be subject to
an excise tax because the payment is a "parachute payment" (as defined in the
IRS Code), then the payment shall be grossed up to compensate the executive
for the excise tax. In addition, in the event of a qualifying termination,
the officer will be entitled to:

- A continuation of welfare benefits for up to three years;

- Outplacement services;

- Acceleration of vesting of all equity and equity-based awards; and

- Amounts that such officer would otherwise be entitled to receive under
Kerr-McGee's Supplemental Executive

Retirement Plan (SERP) described more fully in the "Retirement Plans".

A change in control means (a) a change in any two year period in a
majority of the members of the Board of Directors of the Company, as defined
in the Continuity Agreement, (b) any person becoming the beneficial owner,
directly or indirectly, of 25% or more of the Company's outstanding Common
Stock, (c) with certain exceptions, the consummation of a merger or
consolidation of the Company with any other corporation, a sale of 50% or
more of the Company's assets, liquidation or dissolution of the Company or
combination of the foregoing transactions ("Transactions") other than a
Transaction immediately following which the shareholders 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 of the
surviving corporation(s), or (d) if a majority of the members of the Board of
Directors in office immediately prior to a proposed transaction determine by
written resolution that such proposed transaction, if taken, will be deemed a
change in control and such proposed transaction is effected.

The Company also has made provision under its Benefits Restoration
Plan and the SERP 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 in control of the Company.

PERFORMANCE GRAPH

Set forth below is a line graph comparing the yearly percentage
change in the cumulative total return to Stockholders on the Company's Common
Stock against the cumulative total return of the Standard & Poors 500 Index,
Standard & Poor's Oil Producer's Index and the Standard & Poors Domestic
Integrated Oil Index for the five-year period 1997 through 2001. As a result
of the Company's divestiture of its oil refining business in 1995, Standard &
Poor's changed the Company's peer group designation in 2001 which resulted in
two peer group comparisons being reflected in this Proxy Statement. Future
Proxy Statements will reference only the S & P Oil Producer's Index as the
peer group comparison.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
KERR-MCGEE CORPORATION
S&P 500 INDEX AND S&P DOMESTIC INTEGRATED OIL INDEX

----------------------------------------------------------------------------------------
Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01
----------------------------------------------------------------------------------------

Kerr-McGee Corp. $100 $ 90 $ 57 $ 95 $106 $ 89
----------------------------------------------------------------------------------------
S&P Oil Producers' Index $100 $ 92 $ 63 $ 75 $119 $ 94
----------------------------------------------------------------------------------------
S&P Domestic Integrateds' Index $100 $119 $ 97 $120 $140 $147
----------------------------------------------------------------------------------------
S&P 500 $100 $133 $171 $207 $188 $166
----------------------------------------------------------------------------------------

STOCKHOLDER PROPOSALS

- Stockholder proposals for the 2003 Annual Meeting must be received
at the principal executive offices of the Company no later than
November 25, 2002, to be considered for inclusion in the Proxy
Statement and form of proxy relating to the Annual Meeting in 2003.

- For any other proposal that a shareholder wishes to have considered
at the 2003 Annual Meeting, the Company must have received written
notice of such proposal during the period beginning February 13,
2003, and ending March 5, 2003.

- Proposals which are not received by the dates specified will be
considered untimely. In addition, proposals must comply with the
ByLaws of the Company and the rules and regulations of the
Securities and Exchange Commission.

EXPENSE OF SOLICITATION

The cost of this proxy solicitation is being 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,
Internet, telephonic or facsimile communications or meetings with
Stockholders or their representatives by directors, officers and other
employees of the Company who will receive no additional compensation for
doing so.

OWNERSHIP OF STOCK OF
THE COMPANY

To the best of the Company's knowledge, no person beneficially owned
more than 5% of any class of the Company's outstanding voting securities at
the close of business on March 15, 2002, except as set forth below:

--------------------------------------------------------------------------------
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
-------------- ------------------- -------------------- --------

Common Stock ___________________ (1) _________ ___%
* Based on outstanding shares as of December 31, 2001 totaling __________
--------------------------------------------------------------------------------

(1) ---------------------------
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------
------------------------------

SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than 10%
of a registered class of the Company's equity securities to file with the
Securities and Exchange Commission (the "SEC") and the New York Stock
Exchange initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors
and Stockholders owning more than 10% are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.

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, 2001, the Company is not aware of any failure to comply
with applicable Section 16(a) filing requirements.

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
on such other matters at their discretion.

HOUSEHOLDING STATEMENT

Only one Proxy Statement and Annual Report may be delivered to
multiple stockholders sharing an address unless the Company receives contrary
instructions from one or more of the stockholders. Any stockholder at a
shared address to which a single copy of the Proxy Statement and Annual
Report have been sent who would like an additional copy of this Proxy
Statement and Annual Report or future copies of Proxy Statements and Annual
Reports may make a written or oral request to: UMB Bank, N.A., Securities
Transfer Division, P. O. Box 410064, Kansas City, Missouri 64141-0064 or call
800-884-4225. Similarly, any stockholders sharing an address and currently
receiving multiple copies of Proxy Statements and Annual Reports, may request
that only a single copy of a Proxy Statement and Annual Report is delivered
to them in the future.

Gregory F. Pilcher
SECRETARY

EXHIBIT A

KERR-MCGEE CORPORATION 2002 ANNUAL INCENTIVE COMPENSATION PLAN

ARTICLE I

ESTABLISHMENT AND PURPOSE

1.1 ESTABLISHMENT OF THE PLAN. Kerr-McGee Corporation, a
Delaware corporation (the "Company"), hereby establishes an annual incentive
compensation plan to be known as "The Kerr-McGee Corporation 2002 Annual
Incentive Compensation Plan (the "Plan"), as set forth in this document. The
Plan permits annual cash awards to Officers of the Company, based on the
achievement of pre-established performance goals.

The Plan is effective May 14, 2002 (the "Effective Date").
The Plan shall first apply to Awards for the 2002 Plan Year performance. The
Plan shall remain in effect until terminated as provided in Article V,
Section 5.8 herein.

1.2 PURPOSE. The purposes of the Plan are to:

(a) Provide incentives to achieve annual goals that are within
group and/or individual control and are considered key to the
Company's success;

(b) Encourage teamwork in various segments of the Company;

(c) Reward performance with pay that varies in relation to the
extent to which the pre-established goals are achieved; and

(d) Ensure all amounts paid under the Plan be "qualified
performance based compensation" within the meaning of Section
162(m) of the Code and its accompanying regulations.

ARTICLE II

DEFINITIONS

Whenever used in the Plan, the following terms shall have the meanings
set forth below and, when the defined meaning is intended, the term is
capitalized:

(a) "AWARD OPPORTUNITY" means the various levels of incentive
award payouts which an Officer may earn under the Plan, including
Target Incentive Awards, as established by the Committee pursuant to
Article V, Sections 5.1 and 5.2 herein.

(b) "BOARD" or "BOARD OF DIRECTORS" means the Board of Directors
of the Company.

(d) "COMMITTEE" means a committee of two (2) or more members of the
Board of Directors, all of whom shall be "outside directors" within the
meaning of the Regulations under Code Section 162(m), appointed by the
Board to administer the Plan, pursuant to Article III herein.

(e) "COMPANY" means Kerr-McGee Corporation, a Delaware corporation
(including any and all Subsidiaries and Limited Liability Companies)
and any successor thereto.

(f) "EFFECTIVE DATE" means the date the Plan becomes effective, as set
forth in Article I, Section 1.1 herein.

(g) "EMPLOYEE" means a full time, salaried employee of the Company. The
term "Employee" shall not include a person hired as an independent
contractor, leased employee, consultant or a person otherwise
designated by the Company at the time of hire as not eligible to
participate in the Plan, even if such person is determined to be an
"employee" by any governmental or judicial authority.

(h) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.

(i) "FINAL AWARD" means the actual award earned during a Plan Year by
an Officer, as determined by the Committee.

(j) "LIMITED LIABILITY COMPANY" means any Limited Liability Company in
which the Company or a Subsidiary owns fifty percent (50%) or more of
the Limited Liability Company.

(k) "OFFICER" means an Employee who, as of the last day of the
applicable Plan Year, is an elected officer of the Company at or above
the level of Corporate Vice President, which may also be referenced in
the Plan as a Participant.

(l) "PLAN YEAR" means the Company's fiscal year.

(m) "RETIREMENT" means retirement of an Officer after attaining age and
service requirements of the Company's pension plan in which the Officer
participates. For this purpose, "service" shall be measured under the
rules for determining vesting service under the Kerr-McGee Corporation
Retirement Plan for U.S. Employees, determined as if the individual
were a participant in such plan.

(n) "SUBSIDIARY" means 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.

(o) "TARGET INCENTIVE AWARD" means the award, as established by the
Committee at a competitive level, which may be paid to an Officer when
"targeted" performance results are attained.

(p) "MAXIMUM INCENTIVE AWARD" means the award, as established by the
Committee which is intended to reward outstanding performance, and
which may be paid to an Officer

when outstanding performance results are attained; however, in no case
can the Maximum Incentive Award for an individual Officer exceed
$3,000,000.

(q) "TOTAL DISABILITY" 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

3.1 THE COMMITTEE. The Plan shall be administered by a Committee
which initially shall be a subcommittee of the Executive Compensation
Committee of the Board. Subject to the terms of this Plan, the Board may
appoint a successor Committee to administer the Plan. The members of the
Committee shall be appointed by, must be members of, and shall serve at the
discretion of the Board.

3.2 AUTHORITY OF THE COMMITTEE. Subject to the provisions herein,
the Committee shall have the full power to determine the size and types of
Award Opportunities and Final Awards, to determine the terms and conditions
of Award Opportunities in a manner consistent with the Plan, to construe and
interpret the Plan and any agreement or instrument entered into under the
Plan, to establish, amend or waive rules and regulations for the Plan's
administration, and (subject to the provisions of Article IV herein) to amend
the terms and conditions of any outstanding Award Opportunity to the extent
such terms and conditions are within the sole discretion of the Committee as
provided in the Plan. Further, the Committee shall make all other
determinations which may be necessary or advisable for the administration of
the Plan. As permitted by law, the Committee may delegate its authority
hereunder.

3.3 DECISIONS BINDING. All determinations and decisions of the
Committee as to any disputed question arising under the Plan, including
questions of construction and interpretation, shall be final, binding and
conclusive upon all parties.

ARTICLE IV

ELIGIBILITY AND PARTICIPATION

4.1 ELIGIBILITY. Each Officer who is an Officer as of the last day
of a Plan Year shall be eligible to participate in the Plan for that Plan
Year.

4.2 NO RIGHT TO PARTICIPATE. No Employee shall at any time have a
right to be selected for participation in the Plan despite having previously
participated in the Plan.

ARTICLE V

AWARD DETERMINATION

5.1 PERFORMANCE MEASURES AND PERFORMANCE GOALS. For each Plan
Year, the Committee shall establish ranges of attainment of the performance
goals which will correspond to various levels of Award Opportunities. Each
performance goal range shall include a level of performance at which one
hundred percent (100%) of the Target Incentive Award may be earned. In
addition, each range shall include levels of performance above and below the
one hundred percent (100%) performance level at which a greater or lesser
percent of the Target Incentive Award may be earned.

After the performance goals are established, the committee
will align the achievement of the performance goals with the Award
Opportunities (as described in Article V, Section 5.2 herein), such that the
level of achievement of the pre-established performance goals at the end of
the Plan Year will determine the Final Awards.

The Committee may establish one or more Company-wide
performance measures which must be achieved for any Officer to receive a
Final Award payment for that Plan Year.

Following the completion of each Plan Year, if the
performance goals were met, the Committee shall certify in writing prior to
payment of Final Awards that the performance goals for such Plan Year were
satisfied.

5.2 AWARD OPPORTUNITIES. No later than ninety (90) days after
the beginning of each Plan Year, the Committee shall establish, in writing,
Award Opportunities which correspond to various levels of achievement of the
pre-established performance goals. The established Award Opportunities may
vary in relation to the job classification of each Officer or among Officers
in the same job classification. Except as provided in Article V, Section 5.7
herein, Award Opportunities for Officers shall be established as a function
of each Officer's Base Salary (as defined below). No later than ninety (90)
days after the beginning of each Plan Year, the Committee shall establish, in
writing, various levels of Final Awards which may be paid with respect to
specified levels of attainment of the pre-established performance goals.

For purposes of this Article V, "Base Salary" shall mean,
as to any specific Plan Year, an Officer's actual base salary paid while an
Officer. Base salary shall not be reduced by any voluntary salary reductions
or any salary reduction contributions made to any salary reduction plan,
defined contribution plan or other deferred compensation plans of the
Company, but shall not include any payments under this Plan, the 1998, 2000
and 2002 Long Term Incentive Plans, or any other bonuses, incentive pay or
special awards. In the event an Employee becomes an Officer during the Plan
Year, then only the salary earned while an Officer will be taken into account
for awards under this Plan. The Officer shall be eligible to receive any
other applicable cash-based compensation from other Company bonus plans for
that part of the year in which he was not an Officer.

5.3 COMPUTATION OF FINAL AWARDS. Awards will be computed and
paid based on the attainment of the pre-established performance goals. Awards
for proxy-named Officers will be funded with up to 1.5% of cash flow in
aggregate with no more than 0.5% of cash flow being allocated to any
individual as calculated by the Committee. Subject to Section 5.7 herein, the
Committee may establish performance goals based on the Company's Pretax
Income, Net Income, Earnings Per Share, Revenue, Expenses, Return on

Assets, Return on Equity, Return on Investment, Net Profit Margin, Operating
Profit Margin, Operating Cash Flow, Total Stockholder Return, Capitalization,
Liquidity, Reserve Adds or Replacement, Finding and Development Costs,
Results of Customer Satisfaction Surveys and other measures of Quality,
Safety, Productivity, Cost Management or Process Improvement or other
measures the Committee approves. Such performance goals may be determined
solely by reference to the performance of the Company, a Subsidiary, a
Limited Liability Company or a division or unit of any of the foregoing, or
based upon comparisons of any of the performance measures relative to other
companies. The Committee may also exclude the impact of any event or
occurrence which the Committee determines should appropriately be excluded
such as, for example, a restructuring or other nonrecurring charge, an event
either not directly related to the operations of the Company or not within
the reasonable control of the Company's management, or a change in accounting
standards required by U. S. generally accepted accounting principles.

5.4 THRESHOLD LEVELS OF PERFORMANCE. The Committee may
establish minimum levels of performance goal achievement, below which no
payouts of Final Awards shall be made to any Officer.

5.5 NO MID-YEAR CHANGE IN AWARD OPPORTUNITIES. Except as
provided in Article V, Section 5.7 herein, each Officer's Final Award shall
be based exclusively on the Award Opportunity levels established by the
Committee pursuant to Article V, Section 5.2 above.

5.6 AWARD ADJUSTMENTS. The Committee shall have the discretion
to reduce or eliminate the amount of the Final Award otherwise payable to an
Officer.

5.7 POSSIBLE MODIFICATIONS. In the event that changes are made
to Code Section 162(m) or the Regulations thereunder (or their
interpretation) to permit greater flexibility with respect to any Award
Opportunities under the Plan, the Committee may exercise such greater
flexibility consistent with the terms of the AICP and, to the extent of such
changes, without regard to otherwise applicable restrictive provisions of the
AICP.

5.8 AMEND AND TERMINATE. The Board, without notice, at any
time, may modify or amend, in whole or in part, any or all of the provisions
of the Plan, or suspend or terminate it entirely.

ARTICLE VI

PAYMENT OF FINAL AWARDS

6.1 FORM AND TIMING OF PAYMENT. Unless a deferral election is
made by an Officer pursuant to Article VI, Section 6.2 herein, or deferral of
all or a portion of an Officer's Final Award is required by Article VI,
Section 6.3, each Officer's Final Award shall be paid within seventy-five
(75) days after the Award is approved in writing by the Committee.

6.2 VOLUNTARY DEFERRAL OF FINAL AWARD PAYOUTS. An Officer may
defer receipt of some or all payments otherwise due under the Plan pursuant
to the terms of a deferred compensation plan sponsored by the Company under
which such deferral is permitted.

6.3 DEFERRAL OF FINAL AWARD PAYOUTS. In the event that all or a
portion of an Officer's Final Award is not deductible by the Company due to
limits contained in Code Section 162(m) or

any successor Code Section, the Committee may, in its discretion, require
that payment of the nondeductible portion of such Final Award be deferred
under a deferred compensation plan sponsored by the Company.

ARTICLE VII

TERMINATION OF EMPLOYMENT

If before an Award is actually paid to an Officer with respect to a
Performance Period the Officer ceases to be a regular, full time employee of
the Corporation, any of its Subsidiaries or any of its Limited Liability
Companies for a reason other than death, Total Disability or Retirement, the
Officer's eligibility under the Plan shall terminate and no Award will be
paid. In the event a participating Officer (who was an officer as of the
first day of a Plan Year) terminates employment due to death, Total
Disability or Retirement, such Officer shall be entitled to a pro rata
portion of the Final Award calculated on actual Base Salary earned by such
Officer.

ARTICLE VIII

RIGHTS OF PARTICIPANTS

8.1 EMPLOYMENT. Nothing in the Plan shall interfere with or
limit in any way the right of the Company to terminate any Officer's
employment at any time, nor confer upon any Officer any right to continue in
the employ of the Company.

8.2 NONTRANSFERABILITY. No right or interest of any Officer in
the Plan shall be assignable or transferable, or subject to any lien,
directly, by operation of law or otherwise, including, but not limited to,
execution, levy, garnishment, attachment, pledge and bankruptcy.

ARTICLE IX

CHANGE IN CONTROL

In the event of a Change in Control, each Participant shall, in the
sole discretion of the Committee (except as otherwise provided in a
Participant's continuity agreement with the Company), receive a full payment
of the Participant's Target Incentive Award for the Plan Year during which
such Change in Control occurs, as determined by the Committee. In such
circumstances the Committee shall determine the Final Award based upon such
performance during the Plan year until the date of the Change in Control.
Such amounts shall be paid in cash to each participant within seventy-five
(75) days after the effective date of the Change in Control.

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 X

MISCELLANEOUS

10.1 GOVERNING LAW. The Plan, and all agreements hereunder,
shall be governed by and construed in accordance with the laws of the State
of Oklahoma.

10.2 WITHHOLDING TAXES. The Company shall have the right to
deduct from all payments under the Plan any foreign, federal, state or local
income or other taxes required by law to be withheld with respect to such
payments. Before payment of any Final Award may be deferred under Article VI,
the Company may require that the Officer pay or agree to withholding for any
foreign, federal, state or local income or other taxes which may be imposed
on any amount deferred.

10.3 GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular, and the singular shall include the plural.

10.4 SEVERABILITY. In the event any provision of the Plan shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan, and the Plan shall be construed
and enforced as if the illegal or invalid provision had not been included.

10.5 COSTS OF THE PLAN. All costs of implementing and
administering the Plan shall be borne by the Company.

10.6 SUCCESSORS. All obligations of the Company under the Plan
shall be binding upon and inure to the benefit of any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company.

10.7 OTHER PLANS. Nothing contained in this Plan shall prevent
the Board from adopting other or additional compensation arrangements,
subject to stockholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in
specific cases.

10.8 CONSTRUCTION. 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.

EXHIBIT B

KERR-MCGEE CORPORATION 2002 LONG TERM INCENTIVE PLAN

ARTICLE I

PURPOSE

The purpose of the 2002 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.

(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. A person may serve on the Committee only if he or she
is a "Non-Employee Director" for purposes of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, and satisfies the requirements of an
"outside director" for purposes of Code section 162(m).

(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 Non-Employee Directors thereof. The term "Employee"
shall not include a person hired as an independent contractor, leased
employee, consultant or a person otherwise designated by the Company at the
time of hire as not eligible to participate in the Plan, even if such person
is determined to be an "employee" by any governmental or judicial authority.

(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 Restricted
Stock granted as performance-based compensation under Article VIII, Section
8.1 and each Performance Period for Awards as described in Article IX,
Section 9.2, including: the Company's Pretax Income, Net Income, Earnings Per
Share, Revenue, Expenses, Return on Assets, Return on Equity, Return on
Investment, Net Profit Margin, Operating Profit Margin, Cash Flow, Total
Stockholder Return, Capitalization, Liquidity, Reserve Adds or Replacement,
Finding and Development Costs, Production Volume, Results of Customer
Satisfaction Surveys and other measures of Quality, Safety, Productivity,
Cost Management or Process Improvement or other measures the Committee
approves. Such performance goals may be determined solely by reference to the
performance of the Company, a Subsidiary, a Limited Liability Company or a
division or unit of any of the foregoing, or based upon comparisons of any of
the performance measures relative to other companies. In establishing a
performance goal, the Committee may exclude the impact of any event or
occurrence which the Committee determines should appropriately be excluded
such as, for example, a restructuring or other nonrecurring charge, an event
either not directly related to the operations of the Company or not within
the reasonable control of the Company's management, or a change in accounting
standards required by U. S. generally accepted accounting principles.

(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
performance-based compensation will become vested and nonforfeitable or
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 of an Employee after
attaining age and service requirements of the Company pension plan in which
the employee participates. For this purpose, "service" for U.S. Employees
shall be measured under the rules for determining vesting service under the
Kerr-McGee Corporation Retirement Plan for U.S. Employees. "Retirement" for
Non-Employee Directors shall mean termination from service on the Board.

(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, provided that, with regard to Incentive Stock
Options, "Subsidiary" shall have the meaning provided under section 424(f) of
the Code.

(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 or in
the event the individual is a Non-Employee Director, the Committee shall make
such determination.

ARTICLE III

ADMINISTRATION

3.1 THE COMMITTEE. The Plan shall be administered by a Committee
which initially shall be a subcommittee of the Executive Compensation
Committee of the Board. 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.

3.2 AUTHORITY OF THE COMMITTEE. Subject to the provisions herein,
the Committee shall have the full power to determine the size and types of
Option, SAR and Restricted Stock grants and Awards, to determine the terms
and conditions of such grants and Awards in a manner consistent with the
Plan, to construe and interpret the Plan and any agreement or instrument
entered into under the Plan, to establish, amend or waive rules and
regulations for the Plan's administration, and to amend the terms and
conditions of any outstanding Option, SAR or Restricted Stock grant or Award
to the extent such terms and conditions are within the sole discretion of the
Committee as provided in the Plan and subject to the limitations and
restrictions otherwise applicable under the Plan including those contained in
Article XIII which among other restrictions prohibits the repricing of
options without further shareholder approval. Further, the Committee shall
make all other determinations which may be necessary or advisable for the
administration of the Plan. As permitted

by law, the Committee may delegate its authority hereunder. The Committee may
take any action consistent with the terms of the Plan which the Committee
deems necessary to comply with any government laws or regulatory requirements
of a foreign country, including, but not limited to, modifying the terms and
conditions governing any Options, SARs, Restricted Stock or Awards, or
establishing any local country plans as sub-plans to this Plan, each of which
may be attached as an appendix hereto.

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, SARs, 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 issued shares or unissued shares of the Company, including but not
limited to shares held as 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 Performance Plan shall not
exceed, in the aggregate, seven million (7,000,000) shares of which no more
may be granted, as follows:

(a) Restricted Stock and Performance Awards 1,750,000 shares
to Employees

(b) Stock Options and Restricted Stock to 300,000 shares
Non-Employee Directors, but no more
than 100,000 shares to Restricted Stock

Under the Plan, no Employee shall be awarded, during the term of the Plan
Restricted Stock covering more than 400,000 shares of Stock. No more than
1,750,000 Options may be granted to a single employee during the term of this
Plan.

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

6.1 GRANT OF OPTIONS.

(a) The Committee may, at any time and from time to time prior
to May 13, 2012, 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.

(b) 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.

6.2 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.

6.3 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.

6.4 TERMINATION OF SERVICE. An Option shall terminate and may no
longer be exercised three months after the Optionee ceases to be an Employee
or Non-Employee Director for any reason other than Total Disability, death or
Retirement. If an Employee's employment is terminated by reason of Total
Disability or Retirement all Options will vest and may be exercised within
the period not to exceed the lesser of four years following such termination
or the remaining term of the Option award. If a Non-Employee Director's
service is terminated by reason of Total Disability or Retirement, all
Options will vest upon separation from service to the Company and may be
exercised within the remainder of the Option's term. If the Optionee is an
Employee of the Company and 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 four years after the Optionee's death or the remaining term of the
Option award, 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. If the Optionee is a
Non-Employee Director

who dies while in the service of the Company, all Options will vest and such
Options may be exercised within the remainder of the term of the Option 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.

6.5 PAYMENT FOR SHARES.

(a) 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 (including restricted stock granted under a similar
plan of the Company) 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 (including restricted stock granted
under a similar plan of the Company), (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.

(b) 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.

ARTICLE VII

STOCK APPRECIATION RIGHTS

7.1 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.

7.2 EXERCISE.

(a) 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.

(b) 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.

(c) 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.

7.3 EXPIRATION OR TERMINATION.

(a) Subject to Article VII, Section 7.3(b), each SAR and all
rights and obligations thereunder shall expire on a date to be
determined by the Committee.

(b) A SAR shall terminate and may no longer be exercised upon
the exercise, termination, cancellation or expiration of the related
Option.

ARTICLE VIII

RESTRICTED STOCK PLAN

8.1 TERMS OF GRANT. 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. The Committee may designate whether
Restricted Stock granted to an employee is "performance-based compensation"
as that term is used in section 162(m) of the Code. The vesting of any such
Restricted Stock may be conditioned on the achievement of Indicators of
Performance during a Performance Period established by the Committee.

8.2 RESTRICTED STOCK - RIGHTS. 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 6.5, 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.

8.3 TERMINATION OF SERVICE. The Committee may establish such rules
concerning the termination of service of a recipient of Restricted Stock
prior to the expiration of the applicable Restriction Period as it may deem
appropriate from time to time provided, if an Employee or Non-Employee
Director terminates service by reason of Total Disability, death or
Retirement, the Restriction Period will continue and applicable restrictions
will lapse as if such Employee or Non-Employee Director had continued in
service of the Company. In the event of termination a Non-Employee Director
due to Total Disability, Death or Retirement, the Committee may choose to
provide a different vesting schedule for unvested Restricted Stock.

8.4 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.

ARTICLE IX

PERFORMANCE PLAN

9.1 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, provided that, as calculated by the Committee, (1) the Fair Market
Value of Stock or cash covered by all Awards granted under the Plan during a
calendar year shall not exceed 1.5% of the average cash flow for the Company
for the three fiscal years immediately preceding the grant, and (2) the Fair
Market Value of Stock or cash covered by all awards granted to an individual
under the Plan during a calendar year shall not exceed .5% of the average
cash flow for the Company for the three fiscal years immediately preceding
the grant.

9.2 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 and different Awards. The Indicators of
Performance may include such measures as the Company's Pretax Income, Net
Income, Earnings Per Share, Revenue, Expenses, Return on Assets, Return on
Equity, Return on Investment, Net Profit Margin, Operating Profit Margin,
Operating Cash Flow, Total Stockholder Return, Capitalization, Liquidity,
Reserve Adds or Replacement, Finding and Development Costs, Results of
Customer Satisfaction Surveys and other measures of Quality, Safety,
Productivity, Cost Management or Process Improvement or other measures the
Committee approves. Such performance goals may be determined solely by
reference to the performance of the Company, a Subsidiary, a Limited
Liability Company or a division or unit of any of the foregoing, or based
upon comparisons of any of the performance measures relative to other
companies. The Committee may also exclude the impact of any event or
occurrence which the Committee determines should appropriately be excluded
such as, for example, a restructuring or other nonrecurring charge, an event
either not directly related to the operations of the Company or not within
the reasonable control of the Company's management, or a change in accounting
standards required by U. S. generally accepted accounting principles.

9.3 AWARD ADJUSTMENT. Subject to the terms of the Plan, the
Committee may make downward adjustments in Awards to Performance Plan
Participants.

9.4 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 a combination thereof. Recipients of
Awards are not required to provide consideration other than the rendering of
service.

9.5 PARTIAL PERFORMANCE PERIOD PARTICIPATION. Subject to applicable
restrictions under section 162(m) of the Code, 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. In the event a Performance
Plan Participant is involuntarily terminated without cause or terminates
employment due to death, Total Disability or Retirement, after completing at
least 50% of the Performance Period for an Award, such Performance Plan
Participant shall be entitled to a pro rata portion of the Award if the
Indicators of Performance are met, payable in accordance with procedures
established by the Committee.

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. Except as otherwise determined by the Committee, no change
shall be made to an Incentive Stock Option under this Article X to the extent
it would constitute a "modification" under section 424(h)(3) of the Code.

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 as of 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:

ARTICLE XII

MISCELLANEOUS

12.1 EFFECT ON OTHER PLANS. 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.

12.2 TRANSFER RESTRICTIONS. Except as provided in Article X, Section
10.3, 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.

12.3 TRANSFER OF OPTIONS. 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 Article XII, Section 12.3,
"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
Article XII, Section 12.2. 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
Article VI, Section 6.4 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 Article
VI, Section 6.4.

12.4 WITHHOLDING TAXES. 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.

12.5 TRANSFER OF EMPLOYMENT. 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.

12.6 ADMINISTRATIVE EXPENSES. All administrative expenses associated
with the administration of the Plan shall be borne by the Company.

12.7 TITLES AND HEADINGS. 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.

12.8 NO GUARANTEE OF CONTINUED EMPLOYMENT. 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.

12.9 COMMITTEE DUTIES AND POWERS. 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.

12.10 PROCEEDS. The proceeds received by the Company from the sale
of Stock under the Plan shall be added to the general funds of the Company
and shall be used for corporate purposes as the Board shall direct.

12.11 GOVERNING LAW. The Plan shall be governed and construed in
accordance with the laws of Oklahoma, except to the extent that federal law
applies.

12.12 DEFERRAL OF GAIN. Employees who are eligible to participate in
the Kerr-McGee Corporation Executive Deferred Compensation Plan ("EDCP") may
elect to defer the gain from the exercise of a Stock Option, Stock
Appreciation Rights or lapse of Restricted Stock to the EDCP.

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; (ii) change Plan provisions
relating to establishment of the exercise prices under Options granted; (iii)
extend the duration of the Plan beyond the date approved by the stockholders;
or (iv) 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 14, 2002. If not sooner
terminated by the Board, this Plan shall terminate on May 13, 2012 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.

2/28/02 -- PRELIMINARY PROXY MATERIALS -- SUBJECT TO COMPLETION

KERR-MCGEE CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 2002

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Luke R. Corbett, Gregory F. Pilcher and Robert
M. Wohleber, 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
on the reverse side, all the shares of Common Stock of Kerr-McGee Corporation
held of record by the undersigned on March 15, 2002, at the Annual Meeting of
Stockholders to be held on May 14, 2002, 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.

--------------------------------------------------------------------------------
UNLESS VOTING BY TELEPHONE OR THE INTERNET,
PLEASE VOTE, DATE AND SIGN ON REVERSE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Please sign exactly as your name appears on the reverse side of this proxy
card. When signing as attorney, executor, administrator, trustee or guardian,
please give full title. If a corporation, please sign the full name of the
corporation by the president or other authorized officer. If a partnership,
please sign the name of the partnership by an authorized person.
--------------------------------------------------------------------------------

HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?

-------------------------------------- ---------------------------------------

VOTING INSTRUCTIONS

Kerr-McGee offers three convenient ways to vote your stock. You may vote your
stock 24 hours a day, 7 days a week, either using a touch-tone telephone or
through the Internet. You may also vote by mail. Your telephone or Internet vote
authorizes the named proxies to vote your stock in the same manner as if you
marked, signed and returned your proxy card.

TO VOTE BY PHONE: CALL TOLL-FREE ON A TOUCH-TONE TELEPHONE 1-800-758-6973
You will be asked to enter the Control Number located
on the reverse side of the proxy card above your name
and address. Then simply follow the instructions.
PLEASE NOTE THAT ALL VOTES BY TELEPHONE MUST BE
RECEIVED BY 5 P.M. (CENTRAL TIME) ON MAY 13, 2002.

TO VOTE BY INTERNET: GO TO THE WEB SITE ADDRESS:
HTTP://WWW.EPROXYVOTE.COM/KMG and follow the
instructions on the screen. You will be asked to enter
the Control Number located on the reverse side of this
card above your name and address. PLEASE NOTE THAT ALL
VOTES THROUGH THE INTERNET MUST BE RECEIVED BY 5 P.M.
(CENTRAL TIME) ON MAY 13, 2002.

TO VOTE BY MAIL: Simply mark, sign, date and detach your proxy card and
return it in the enclosed postage-paid envelope. IF
YOU ARE VOTING BY TELEPHONE OR THE INTERNET, PLEASE DO
NOT MAIL YOUR PROXY CARD. PLEASE NOTE THAT ALL VOTES
BY MAIL MUST BE RECEIVED BY 9 A.M. (CENTRAL TIME) ON
MAY 14, 2002.

YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.

/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE

------------------------------------- THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR ITEMS 1, 2, 3, 4 AND 5.
KERR-MCGEE CORPORATION FOR ALL WITHHOLD FOR ALL
------------------------------------- 1. Election of three Directors: NOMINEES FROM ALL EXCEPT

Mark box at right if an address (01) MATTHEW R. SIMMONS
change or comment has been noted / / (02) NICHOLAS J. SUTTON / / / / / /
on the reverse side of this card. (03) IAN L. WHITE-THOMSON

NOTE: If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of
the nominee(s) you do not support. Your shares will be voted for the
CONTROL NUMBER: remaining nominee(s).

FOR AGAINST ABSTAIN

2. Ratification of the appointment of
[________________] as the Company's / / / / / /
independent public accountants.

3. Approval of the 2002 Annual
Incentive Compensation Plan. / / / / / /

4. Approval of the 2002 Long Term
Incentive Plan. / / / / / /
------------
Please be sure to sign and date this Proxy. Date 5. Approval of the Amendment of the
-------------------------------------------------------- Amended and Restated Certificate
of Incorporation of Kerr-McGee / / / / / /
Operating Corporation.

---Shareholder sign here-----------Co-owner sign here---