SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
ONEOK, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
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Notes:
ONEOK, Inc.
Notice of Annual Meeting
and
Proxy Statement
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May 17, 2001
[LOGO OF ONEOK]
100 West Fifth Street Tulsa, Oklahoma 74103
[LOGO of ONEOK]
April 11, 2001
Dear Shareholder:
You are cordially invited to attend the annual meeting of ONEOK, Inc. at
10:00 a.m. on Thursday, May 17, 2001, at ONEOK Plaza, 100 West Fifth Street,
Tulsa, Oklahoma 74103-4298.
We look forward to greeting personally as many of our shareholders as
possible at the meeting. The matters to be voted on at the meeting are stated
in the Notice of Annual Meeting of Shareholders and are described in the Proxy
Statement. A report on the operations of ONEOK, Inc. will be presented.
We know that most of our shareholders are unable personally to attend the
annual meeting. Therefore, proxies are solicited so that each shareholder has
an opportunity to vote by proxy. You can authorize a proxy by signing, dating,
and returning the enclosed proxy card. Shareholders whose stock is registered
in their name may also authorize a proxy by telephone or over the Internet.
Instructions for using these convenient services are set forth with this Proxy
Statement and on the proxy card. I urge you to submit your proxy as soon as
possible so that you can be sure your shares will be voted.
Regardless of the number of shares you own, your vote is important. Thank
you for your continued interest in ONEOK, Inc.
Very truly yours,
/s/ David Kyle
David Kyle
Chairman of the Board, President,
and Chief Executive Officer
Notice of Annual Meeting
of Shareholders
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On Thursday, May 17, 2001, ONEOK, Inc. will hold its annual meeting of
shareholders at the ONEOK Plaza, 100 West Fifth Street, Tulsa, Oklahoma 74103-
4298. The meeting will begin at 10:00 a.m.
Only shareholders who owned stock at the close of business on March 19,
2001, can vote at this meeting or any adjournments that may take place. At the
meeting we will consider:
(1) the election of three directors (Class A) to serve for a three-year
term, and the election of one director (Class B) to serve until
2002;
(2) an amendment to the ONEOK, Inc. Certificate of Incorporation to
increase authorized capital stock and split up the outstanding
common stock on a two-for-one basis;
(3) approving the reservation of 1,450,000 additional shares of common
stock for issuance under the ONEOK, Inc. Long-Term Incentive Plan;
(4) ratifying the appointment of our principal independent auditors for
the 2001 Fiscal Year; and
(5) other business properly presented at the meeting.
Your Board of Directors recommends that you vote in favor of the four
proposals outlined in this Proxy Statement.
Included with this Proxy Statement is a copy of ONEOK's 2000 Annual Report
to all shareholders.
By Order of the Board of Directors,
/s/ Deborah B. Barnes
Deborah B. Barnes
Vice President, Secretary, and Associate
General Counsel
April 11, 2001
Voting Methods
The accompanying Proxy Statement describes important issues affecting ONEOK,
Inc. If you are a shareholder of record, you have the right to vote your shares
in person at the meeting or to appoint a proxy through the internet, by
telephone, or by mail. You may revoke your proxy any time before the annual
meeting. Please help us save time and postage costs by appointing a proxy via
the internet or by telephone. Each method is generally available 24 hours a day
and will ensure that your proxy is confirmed and posted immediately.
When you appoint a proxy by telephone, proxy card, or via the internet, you
appoint David L. Kyle and Deborah B. Barnes as your representatives at the
annual meeting, and they will vote your shares as you have instructed them.
To appoint a proxy:
1. Via the Internet
a. Go to the web site at "http://www.eproxyvote.com/oke", 24 hours a
day, 7 days a week.
b. Enter the control number that appears in the proxy card box, just
below the perforation. This process is designed to verify
shareholders through the use of the control number and allows you
to vote your shares and to confirm that your instructions have
been properly recorded.
c. Follow the simple instructions.
d. Appointing a proxy through the internet is also available to
shareholders who hold their shares in the Direct Stock Purchase
and Dividend Reinvestment Plan of ONEOK, Inc. and the Thrift Plan
for Employees of ONEOK, Inc. and Subsidiaries.
e. If you appoint a proxy via the internet, you do not have to mail
your proxy card.
2. By telephone
a. On a touch-tone telephone, call toll-free 1-877-PRX-VOTE (1-877-
779-8683) 24 hours a day.
b. Enter the control number that appears in the proxy card box, just
below the perforation. This process is designed to verify
shareholders through the use of the control number and allows you
to vote your shares and to confirm that your instructions have
been properly recorded.
c. Follow the simple recorded instructions.
d. Appointing a proxy via the telephone is also available to
shareholders who hold their shares in the Direct Stock Purchase
and Dividend Reinvestment Plan of ONEOK, Inc. and the Thrift Plan
for Employees of ONEOK, Inc. and Subsidiaries.
e. If you appoint a proxy via the telephone, you do not have to mail
your proxy card.
3. By mail
a. Mark your selection on the proxy card.
b. Date and sign your name exactly as it appears on your proxy card.
c. Mail the proxy card in the enclosed postage-paid envelope.
If your shares are held in the name of a bank, broker or other holder of
record, you will receive instructions from the holder of record that you must
follow in order for your shares to be voted.
Your vote is important. Thank you for voting.
Table of Contents
for the Proxy Statement
Page
Quorum and voting........................................................ 1
Questions and answers.................................................... 2-4
Proposals you may vote on................................................ 5-8
Nominees for the Board of Directors/Continuing Directors................. 9-11
Statement on corporate governance........................................ 12
Committee structure and membership roster................................ 12-13
Report of the Audit Committee............................................ 14
Fees paid to independent auditor......................................... 15
Directors' compensation.................................................. 16
Directors' and officers' ownership of ONEOK, Inc. stock.................. 17-18
Executive compensation: Report of the Compensation Committee............. 19-22
Stock performance graph.................................................. 23
Executive compensation, pension plans & other arrangements
Summary compensation table............................................ 24-25
Option grant table....................................................... 26
Aggregated option/SAR exercises and year-end values...................... 27
Pension plans............................................................ 28
ONEOK, Inc. supplemental executive retirement plan....................... 29
Change in control and termination agreements............................. 30-31
Section 16(a) beneficial ownership reporting compliance.................. 32
Other matters............................................................ 32
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Proxy Statement
The approximate date of the mailing of this Proxy Statement and proxy card is
April 11, 2001. This solicitation of proxies is being made by the Board of
Directors' of ONEOK, Inc.
Quorum and voting
Record Date. The record date for the meeting is March 19, 2001. Only
shareholders of record at the close of business on that date are entitled to
notice of, and to vote at, the meeting.
Voting Stock. The only class of stock entitled to be voted at the meeting is
ONEOK's common stock. At the close of business on the record date, there were
29,651,274 shares of common stock outstanding and entitled to be voted at the
meeting, and the holders of those shares will be entitled to one vote per
share.
Quorum and Votes Required. A quorum is a majority of the outstanding shares,
which may be present at the meeting or represented by proxy. There must be a
quorum for the meeting to be held. Directors are elected by a plurality of the
shares voted. Proposal #2 must receive the affirmative vote of a majority of
the outstanding shares of common stock entitled to vote for adoption of the
proposed amendment in order to be adopted. Proposals #3 and #4 must receive the
affirmative vote of a majority of the shares present in person or by proxy to
be adopted. If you appoint a proxy, even if you abstain from voting, you will
be considered part of the quorum.
Adjourned Meeting. If a quorum is not present at the scheduled time of the
meeting, the shareholders who are represented may adjourn the meeting until a
quorum is present. If the time and place of the adjourned meeting are announced
at the time the adjournment is taken, no other notice will be given. If the
adjournment is for more than thirty (30) days, or if a new record date is set
for the adjourned meeting, a notice will be given to each shareholder of record
entitled to vote at the meeting. An adjournment will have no effect on the
business that may be conducted at the meeting.
Voting of Shares Held in Street Name by Your Broker. Brokerage firms have
authority under New York Stock Exchange Rules to vote customers' unvoted shares
on certain "routine" matters, including the election of directors. If you do
not appoint a proxy to vote your shares, your brokerage firm may either vote
your shares on routine matters or leave your shares unvoted. We encourage you
to provide instructions to your brokerage firm by appointing a proxy to vote
your shares. This ensures your shares will be voted at the meeting. When a
brokerage firm votes its customers' unvoted shares on routine matters, these
shares are counted for purposes of the vote and for purposes of establishing a
quorum to conduct business at the meeting. A brokerage firm, however, cannot
vote customers' shares on non-routine matters. Accordingly, these shares
(sometimes referred to as "broker non-votes") are considered not entitled to
vote on the non-routine matters.
Abstentions and Broker Non-Votes. If you abstain from voting, your shares will
nevertheless be included in the number of shares represented for purposes of
determining whether a quorum is present. Because directors are elected by a
plurality of the votes, an abstention would have no effect on the outcome of
the vote on proposal #1--Election of Directors, and thus, is not offered as a
voting option for that proposal. However, abstentions are effectively treated
in the tally of votes against proposals #2, #3, and #4.
Tabulation of Votes. ONEOK's transfer agent will be responsible for tabulating
and certifying the votes.
Default Voting. If you properly authorize a proxy in paper form, electronically
via the internet, or by telephone, but do not indicate any voting instructions,
your shares will be voted as follows:
. Proposal 1 -- Election of Directors -- FOR all nominees.
. Proposal 2 -- Approval of amending the ONEOK, Inc. Certificate of
Incorporation to increase authorized capital stock and split up the
outstanding common stock on a two-for-one basis -- FOR.
. Proposal 3 -- Approval of the reservation of 1,450,000 additional
shares of common stock for issuance under the ONEOK, Inc. Long-Term
Incentive Plan -- FOR.
. Proposal 4 -- Ratification of the appointment of our principal
independent auditors for the 2001 Fiscal Year -- FOR.
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Questions and answers
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1. Q: Who can attend the Annual Meeting?
A: All shareholders on March 19, 2001, may attend. If your shares are
held by your broker, often referred to as "in street name", just
bring a copy of your brokerage account statement or a proxy card
which you can get from your broker.
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2. Q: Who are the largest principal shareholders?
A: As of March 19, 2001, the record date, the following are known to
be the beneficial owners of more than five percent (5%) of any
class of ONEOK's voting securities:
Title of class and name & address of beneficial owner
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Common stock: Amount and Nature of Percentage of
Ownership Class
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Bank of Oklahoma, N.A.
Trustee for the Thrift Plan for
Employees of ONEOK, Inc. and
Subsidiaries
P.O. Box 2300
Tulsa, OK 74192 3,202,264 10.80%
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Westar Capital Inc./1/
818 Kansas Avenue
Topeka, KS 66612-1217 2,166,273 7.31%
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Preferred stock (Series A):
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Western Resources, Inc./1/
818 Kansas Avenue
Topeka, KS 66612-1217 19,946,448 100%
/1/Westar Capital Inc. is an affiliate of Western Resources, Inc.
As of 03/19/01 Western Resources, Inc. and its affiliates,
owned approximately 45% of the outstanding shares of the
capital stock of ONEOK. Holders of the outstanding convertible
preferred stock are not entitled to vote on any matters being
considered at this annual meeting.
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3. Q: How do I vote?
A: You may vote in person at the meeting or appoint a proxy by mail,
via the internet, or by phone to vote your shares. Following the
Notice of Annual Meeting is a description of the Voting Methods
available this year. As outlined on Page 1, "Quorum and Voting", if
you return a signed card but do not provide voting instructions,
your shares will be voted for the four proposals.
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4. Q: How do I revoke my vote?
A: You have the right to revoke your proxy at any time before the
meeting by:
(1) notifying ONEOK's Corporate Secretary in writing;
(2) authorizing a different proxy via the internet;
(3) authorizing a different proxy by telephone;
(4) voting in person; OR
(5) returning a later-dated proxy card.
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5. Q: Is my vote confidential?
A: Proxy cards, ballots and voting tabulations that identify
individual shareholders are mailed and returned directly to First
Chicago Trust Company of New York, a Division of EquiServe, and
handled in a manner that protects your voting privacy. It is
ONEOK's policy to protect the confidentiality of shareholder votes
throughout the voting process. In this regard, the vote of any
shareholder will not be disclosed to ONEOK's Directors, officers or
employees, except:
. to meet legal requirements;
. or to assert or defend claims for or against ONEOK;
. or except in those limited circumstances where
(1) a proxy solicitation is contested;
(2) a shareholder writes comments on a proxy card; or
(3) a shareholder authorizes disclosure.
Both the tabulators and inspectors of election have been, and will
remain, independent of ONEOK. Nothing in this policy prohibits
shareholders from disclosing the nature of their votes to ONEOK's
Directors, officers or employees, or impairs voluntary
communication between ONEOK and its shareholders, nor does this
policy prevent ONEOK from ascertaining which shareholders have
voted or from making efforts to encourage shareholders to vote.
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6. Q: How is ONEOK, Inc. common stock in the Thrift Plan voted?
A: Thrift Plan votes receive the same confidentiality as all other
shares voted. If you hold shares of ONEOK, Inc. common stock
through the Thrift Plan, you must instruct the ONEOK, Inc. trustee,
Bank of Oklahoma, N.A. how to vote your shares. If you do not
authorize a proxy by mail, electronically via the internet, or by
telephone, or return it with an unclear voting designation, or with
no voting designation at all, then the trustee will vote the shares
in your account in proportion to the way the other Thrift Plan
participants voted their shares.
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7. Q: How will voting on any other business be conducted?
A: Although we do not know of any business to be considered at the
2001 annual meeting other than the proposals described in this
Proxy Statement, if any other business is properly presented at the
annual meeting, your signed proxy card gives authority to David L.
Kyle, ONEOK's Chairman of the Board, President, and Chief Executive
Officer; and Deborah B. Barnes, Vice President, Secretary, and
Associate General Counsel, to vote on these matters at their
discretion.
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8. Q: What shares are included on the proxy card(s)?
A: The shares on your proxy card(s) represent ALL of your shares,
including those in ONEOK's Direct Stock Purchase and Dividend
Reinvestment Plan and shares held in custody for your account by
Bank of Oklahoma, N.A. as trustee for the Thrift Plan for Employees
of ONEOK, Inc. and Subsidiaries. If you do not authorize a proxy by
mail, electronically via the internet, or by telephone, your
shares, except for those held in the Thrift Plan, will not be
voted. See Question #6 for an explanation of the voting procedures
for the Thrift Plan shares.
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9. Q: What does it mean if I receive more than one proxy card?
A: If your shares are registered differently and are in more than one
account, you will receive more than one proxy card and Proxy
Statement. Sign and return all proxy cards to ensure that all your
shares are voted. We encourage you to have all accounts registered
in the same name and address whenever possible. Also, you can
request that only one Proxy Statement and one Annual Report be
mailed to the same address. You can accomplish this by contacting
our transfer agent, First Chicago Trust Company of New York, a
Division of EquiServe, at 1-888-764-5595.
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10. Q: When are the shareholder proposals for inclusion in the Proxy
Statement for the next Annual Meeting due?
A: All shareholder proposals to be considered for inclusion in next
year's Proxy Statement must be submitted in writing to the
Corporate Secretary of ONEOK, Inc., 100 West Fifth Street, Tulsa,
OK 74103-4298 by December 12, 2001. ONEOK will determine whether or
not to include such proposal in the Proxy Statement according to
applicable law. It is recommended that proposals be sent by
certified mail, return receipt requested.
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11. Q: What out-of-pocket costs will ONEOK incur in soliciting proxies?
A: Morrow & Co., Inc. was hired to assist in the distribution of proxy
materials and solicitation of votes for $8,500, plus out-of-pocket
expenses. We also reimburse brokerage houses and other custodians,
nominees, and fiduciaries for their reasonable out-of-pocket
expenses for forwarding proxy and solicitation materials to
shareholders. The cost of soliciting proxies will be borne by
ONEOK, Inc.
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12. Q: Who is soliciting my proxy?
A: The Board of Directors of ONEOK, Inc. is sending you this Proxy
Statement in connection with its solicitation of proxies for use at
ONEOK's 2001 annual meeting of Shareholders. Certain directors,
officers and employees of ONEOK also may solicit proxies on our
behalf by mail, telephone, fax or in person.
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Proposals you may vote on
1. Election of three Directors in Class A -- term ending 2004 and one
Director in Class B -- term endng 2002.
There are 4 director nominees for election this year. The nominees for
directors are:
. Douglas T. Lake, Class A;
. Douglas Ann Newsom, Ph.D., Class A;
. J. D. Scott, Class A; and
. John B. Dicus, Class B.
Detailed information on each is provided on page 9. Following the death
of Mr. Brummett, effective August 28, 2000, the Board of Directors was
reduced to 11 members. The Board is divided into three Classes (A, B, and
C) which following Mr. Brummett's passing, consisted of 3 members in
Class A and 4 members in each of Classes B and C. Effective February 14,
2001, upon Mr. Howard R. Fricke's resignation from the Board, a vacancy
was created in Class B, and the Board of Directors elected Mr. Dicus to
fill that vacancy. Each Class is elected for a term of three years, with
the term of one class expiring at each annual meeting of shareholders.
The By-laws provide that a person cannot be elected or re-elected to the
Board after the person's 70th birthday.
Your Board unanimously recommends a vote FOR each of these directors.
2. Approval of amending the ONEOK, Inc. Certificate of Incorporation to
increase authorized capital stock and split up the outstanding common
stock on a two-for-one basis.
Proposal -- The Board of Directors proposes that the shareholders amend
the Certificate of Incorporation, as amended, to increase the number of
authorized shares, as follows:
Present Proposed
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Common Stock, par value $0.01 per share 100,000,000 300,000,000
Preferred Stock, par value $0.01 per share 100,000,000 100,000,000
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Total 200,000,000 400,000,000
In addition, the Board proposes the split up of the issued and
outstanding shares of common stock on a two-for-one-basis. The split up
will not change the Preferred Stock. See Exhibit A for a copy of the
proposed resolution to be considered at the meeting of shareholders.
Summary of Outstanding and Proposed Shares -- As of February 28, 2001,
29,648,172 shares of common stock (excluding treasury stock) were
outstanding. Also as of that date, an additional 32,755,686 shares of
common stock are deemed issued or are currently reserved for issuance
under various benefit and other plans or reserved for conversion of the
outstanding Series A Preferred Stock, leaving 37,596,142 shares available
for issuance for other purposes.
Approving a two-for-one stock split without authorizing additional shares
of common stock would substantially deplete the number of shares
available for future issuance by the Board. The Board has therefore
unanimously recommended that the shareholders amend Article Four of the
Certificate of Incorporation, as amended, to increase the number of
shares of common stock authorized for issuance from 100,000,000 shares to
300,000,000 shares. The Board believes that such a capital structure will
appropriately reflect the present and future needs of the Company. This
would give the Board the ability to issue an additional 200,000,000
shares of common stock from time to time as the Board deems necessary.
The Stock Split Up -- If the shareholders approve the proposed amendment,
the stock split up will apply to shares of common stock issued and
outstanding as of the close of business on the date the Certificate of
Amendment is properly filed (the Record Date). The Company anticipates
that this will take place on May 23, 2001. Certificates for additional
shares resulting from the stock split up will be mailed to all
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holders of common stock entitled thereto as promptly as convenience
permits after the Record Date. The Company anticipates that such mailing
date will be June 11, 2001. The Company will apply to the New York Stock
Exchange for listing of the additional shares of common stock resulting
from the stock split up.
The cost of trading the same dollar amount of common stock after the
stock split may be greater than the cost of trading that amount prior to
the split up. However, the exact effect cannot be stated because
brokerage commissions vary.
The Company is advised by tax counsel that the proposed stock split will
not result in any gain or loss for federal income tax purposes to holders
of the common stock.
The Increase in Authorized Shares -- Except for reserved shares, the
Company has no specific plans, understandings or arrangements for the
issuance of any additional shares of common stock. The Company believes,
however, that if an increase in the authorized number of shares of common
stock were to be postponed until a specific need arose, the delay and
expense to obtain approval of the Company's stockholders at that time
could significantly impair the Company's ability to meet its objectives.
Upon approval of this proposal, the additional common stock will be
available for issuance by the Board without any further action by the
stockholders, except as otherwise required by the Certificate of
Incorporation, applicable law or the rules of any stock exchange on which
the common stock is listed.
The proposed increase in the authorized number of shares of common stock
could have a number of effects on the Company's stockholders, depending
on the exact nature and circumstances of any actual issuance of the
authorized shares. An issuance of additional shares by the Company could
adversely affect the value of the common stock. For example, an issuance
could dilute the earnings per share and book value per share of all
outstanding shares of the Company's capital stock, which in turn could
adversely affect the price per share of the common stock.
In addition, the increase could have an anti-takeover effect, in that
additional shares could be issued (within the limits imposed by
applicable law) in one or more transactions that could make a change in
control or takeover of the Company more difficult. For example,
additional shares could be issued by the Company to dilute the stock
ownership or voting rights of persons seeking to obtain control of the
Company. Similarly, the issuance of additional shares to certain persons
allied with the Company's management could have the effect of making it
more difficult to remove the Company's current management by diluting the
stock ownership or voting rights of persons seeking to cause such
removal. While the proposed amendment could have potential anti-takeover
effects, the Board has not proposed the amendment as a result of any
specific effort or takeover threat currently perceived by the Board.
Moreover, the Board does not currently intend to propose additional anti-
takeover measures in the foreseeable future.
Required Approval -- The affirmative vote of a majority of the
outstanding shares of common stock entitled to vote is required for
adoption of the proposed amendment.
Your Board unanimously recommends a vote FOR amending the ONEOK, Inc.
Certificate of Incorporation
3. Approval of the reservation of 1,450,000 additional shares of common stock
for issuance under the ONEOK, Inc. Long-Term Incentive Plan.
The Proposed Amendment -- The ONEOK, Inc. Long-Term Incentive Plan, (the
"Plan") provides competitive incentives to enable the Company to attract,
retain and reward key employees and non-employee directors. It gives key
employees and non-employee directors an interest parallel to the
interests of the shareholders.
-6-
As of February 28, 2001, 2,445,200 shares of the Company's common stock have
been authorized for issuance under the Plan. Also, as of that date, 1,682,150
shares have been issued, deemed issued or are subject to issuance under
presently outstanding options, phantom stock awards or restricted stock awards
under the Plan, leaving 763,050 shares available for issuance under the Plan as
of February 28, 2001.
The Board believes that a 1,450,000 increase in the number of shares of common
stock available for issuance under the Plan is desirable and in the best
interest of the Company. Therefore, on February 15, 2001, the Board adopted an
amendment to the Plan, subject to shareholder approval, increasing the number
of shares of the Company's common stock authorized to be issued under the Plan
from 2,445,200 to 3,895,200 (an increase of 1,450,000 shares).
The Plan--The Plan authorizes the Executive Compensation Committee, (the
"Committee"), of the Board to grant eligible employees options to purchase
common stock as follows:
. Incentive Stock Options--options to purchase shares which qualify under
Section 422 of the Internal Revenue Code of 1986, (the "Code"), as amended;
. Non-Statutory Stock Options--options to purchase shares that do not qualify
under the Code.
The Plan also authorizes the Committee to grant eligible employees:
. Stock bonus awards;
. Restricted stock awards; and
. Performance unit awards.
The Plan also authorizes the Committee to grant awards to non-employee
directors.
The Plan gives the Committee flexibility to adapt the Company's equity-based
compensation practices to the changing business and regulatory environment
under which it operates.
The Plan will remain in effect until stock incentives have been granted for all
shares of common stock authorized to be issued or the Plan is terminated by the
Board. In accordance with the Code, no Incentive Stock Options may be granted
after August 17, 2005.
See Exhibit B for a summary of the material features of the Plan, subject to
the actual text of the Plan, which is included as Exhibit C.
Specific Benefits--The future number, amount and type of awards to be received
by or allocated to eligible persons under the Plan cannot be determined at this
time. If the additional 1,450,000 shares contemplated by this proposal had been
available for Plan purposes in 2000, the Company expects that awards would not
have been substantially different from those reported in the Summary
Compensation Table and Option Grant Table under "Executive Compensation," on
pages 24 through 26 below.
Market Value of a Share of Common Stock--The market value of a share of common
stock on March 19, 2001, the latest practicable date before publication of this
proxy statement was $41.15. That market value was calculated as the average of
the high and low sale prices of a share of common stock in consolidated trading
on the date in question as reported by The Wall Street Journal or another
reputable source designated by the Committee.
Required Approval -- Approval of this proposal requires the affirmative vote of
the holders of a majority of the shares of common stock present in person or
represented by proxy and entitled to vote at the meeting.
Your Board unanimously recommends a vote FOR approval of the proposal to
reserve additional shares for issuance under the ONEOK, Inc. Long-Term
Incentive Plan.
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4. Ratify the appointment of KPMG LLP as principal independent auditor.
The Audit Committee has recommended, and the Board has approved, the
appointment of KPMG LLP as our principal independent auditor for the 2001
Fiscal Year subject to shareholder ratification. KPMG has unrestricted
access to the Audit Committee to discuss audit findings and other
financial matters. Representatives of KPMG will attend the annual meeting
to answer appropriate questions. They also may make a statement.
Audit services provided by KPMG during the 2000 Fiscal Year included an
audit of ONEOK's consolidated financial statements, audits of the
financial statements of certain ONEOK affiliates, and audits of employee
benefit plan financial statements. In addition, KPMG provided various
non-audit services to ONEOK during the 2000 Fiscal Year. See page 15 for
more details.
Required Approval--Approval of this proposal requires the affirmative vote of
the holders of a majority of the shares of common stock present in person or
represented by proxy and entitled to vote at the meeting.
Your Board unanimously recommends a vote FOR the approval of KPMG's appointment
as independent auditor for 2001.
-8-
Nominees for the Board of Directors
Class A -- Term ending 2004
Douglas T. Lake Director since 1998
Age 50
[PHOTO]
Mr. Lake, Executive Vice President and Chief Strategic Officer
of Western Resources, Inc., became a director of ONEOK, Inc.
in October 1998. He joined Western Resources, Inc. in
September 1998. Mr. Lake was with Bear Stearns & Co., Inc.
from 1995 through 1998, where he last served as Senior
Managing Director of the Investment Banking Department. He was
a Managing Director with Dillon Read & Co., Inc. from 1991
through 1995. Mr. Lake is currently Chairman of the Board of
Protection One, Inc. and a director of Western Resources, Inc.
and Guardian International, Inc.
Douglas Ann Newsom, Ph.D. Director since 1982
Age 67
[PHOTO]
Dr. Newsom has been a Professor within the Department of
Journalism at Texas Christian University, Fort Worth, Texas,
since 1969, and taught as an adjunct professor during 1968. In
addition to her teaching position, Dr. Newsom is a textbook
author and public relations counselor. Ms. Newsom has been a
member of the Advisory Council of the Gas Technology Institute
for sixteen years. Ms. Newsom also serves as a Director of the
Catholic Charities, Diocese of Ft. Worth.
J. D. Scott Director since 1979
Age 69
[PHOTO]
Mr. Scott served as President, Chief Executive Officer and
Chairman of the Board of ONEOK Inc. from January 1987 until he
retired in 1994.
Class B -- Term ending 2002
John B. Dicus Director since 2001
Age 39
[PHOTO]
Mr. Dicus is President and Chief Operating Officer and a
Director of Capitol Federal Savings Bank and Capitol Federal
Financial, where he has served in various officer positions
since 1985. He also serves as a Director for Protection One,
Inc., Heartland Community Bankers Association, American
Investors Life, Financial Benefit Life, and Title Midwest,
Inc. Mr. Dicus serves as Board Chairman for the United Way of
Greater Topeka and as a Director for the Kansas Children's
Service League.
-9-
Continuing Directors
Class B -- Term ending 2002
William M. Bell Director since 1981
Age 65
[PHOTO]
Mr. Bell is currently President and a director of Bank One,
Oklahoma, N.A. He has been involved in all facets of
commercial banking, retail banking, real estate finance, and
fiduciary services. Mr. Bell served as president and chairman
of Liberty Mortgage Company (predecessor to Bank One), which
he founded in 1966. In 1987, he was elected chairman of The
Liberty National Bank and Trust Company of Oklahoma City and,
in 1988, became its president and chief executive officer. He
serves on the boards of numerous civic and business
organizations and not-for-profit associations.
Douglas R. Cummings Director since 1989
Age 71
[PHOTO]
Mr. Cummings was President and co-owner of Cummings Oil
Company, Oklahoma City, Oklahoma, from 1972 to December 1998.
He has been Chairman of the Board of Cummings Oil since
January 1, 1999. He is an officer or director of numerous
civic and business organizations and not-for-profit
associations.
David L. Kyle Director since 1995
Age 48
[PHOTO]
Mr. Kyle is the Chairman of the Board, President and Chief
Executive Officer of ONEOK, Inc. He was employed by Oklahoma
Natural Gas Company in 1974 as an engineer trainee. He served
in a number of positions prior to being elected Vice President
of Gas Supply September 1, 1986, and Executive Vice President
May 17, 1990. He was elected President of Oklahoma Natural Gas
Company on September 1, 1994. He was elected President of
ONEOK Inc. effective September 1, 1997, and was elected
Chairman of the Board and appointed the Chief Executive
Officer of ONEOK, Inc. August 28, 2000.
-10-
Continuing Directors
Class C -- Term ending 2003
Edwyna G. Anderson Director since 1995
Age 71
[PHOTO]
Mrs. Anderson served as General Counsel of Duquesne Light
Company from September 1988 until retirement in October 1994.
She also served as Special Counsel to the President of
Duquesne Light Company from October 1994 until March 1995,
when she retired from that position.
William L. Ford Director since 1981
Age 58
[PHOTO]
Mr. Ford has served as President of Shawnee Milling Company
since 1979. He serves on the boards of numerous civic and
business organizations and not-for-profit associations.
Bert H. Mackie Director since 1989
Age 58
[PHOTO]
Mr. Mackie has been with Security National Bank, Enid,
Oklahoma, since 1962, and is currently President and a
director. Mr. Mackie serves on the boards of numerous civic
and business organizations including the Executive Committee
and Board of Trustees of the Oklahoma Foundation for
Excellence.
Gary D. Parker Director since 1991
Age 55
[PHOTO]
Mr. Parker, a certified public accountant, is also the
majority shareholder of Moffitt, Parker & Company, Inc., and
has been President of the firm since 1982. He is a director of
First Muskogee Financial Corp. of Muskogee, Oklahoma.
-11-
Statement on corporate governance
The Corporate Governance Guidelines of the Board of Directors of ONEOK, Inc.
are intended to embody the principles by which the Board operates, and are not
intended to be a code of regulations, but rather a statement of intention. The
Guidelines were adopted by the Board in March of 1999. Key areas of the
Guidelines and principal functions of the Board are:
. Review succession planning and CEO performance evaluation;
. Review compensation and stock ownership; and
. Review the structure and operations of the Board.
The Board of Directors believes that corporate governance is a continuing
process and these Guidelines are reviewed periodically and may change from time
to time as conditions warrant.
Committee structure and membership roster
Committee structure: The Board has established the following standing
committees: Charters have been adopted by these Committees as indicated.
. The Audit Committee examines accounting processes and reporting systems,
assesses the adequacy of internal controls and risk management, reviews and
approves ONEOK's financial disclosures, and evaluates the performance and
recommends the appointment of independent auditors. The Audit Committee has
adopted, and operates under, a charter included as Appendix A to this Proxy
Statement.
. The Executive Committee acts on behalf of the Board during intervals
between meetings of the Board and reports to the Board at its next regular
meeting on any actions taken. This committee has the power to act on major
matters where it deems action appropriate, providing a degree of flexibility
and ability to respond to time-sensitive business and legal matters without
calling a special Board meeting. It is ONEOK's practice to seek ratification by
the Board for the actions taken by the Executive Committee. The Executive
Committee has adopted, and operates under, a charter.
. The Executive Compensation Committee reviews ONEOK's executive
compensation programs to ensure the attraction, retention and appropriate
reward of executive officers, to motivate their performance in the achievement
of ONEOK's business objectives, and to align the interests of executive
officers with the long-term interests of ONEOK's shareholders. This Committee
reviews and makes recommendations to the Board on employee and director
compensation, personnel policies, programs, and plans. The Executive
Compensation Committee has adopted, and operates under, a charter.
. The Nominating and Corporate Governance Committee ensures an appropriate
structure for management succession and development, and an effective process
for director selection and tenure by making recommendations on the Board's
organization and practices and by aiding in identifying and recruiting director
candidates. The Committee also establishes and reviews issues of corporate
governance. The Committee considers nominees recommended by shareholders for
service on the Board of Directors. Recommendations should be sent to the
Corporate Secretary at the address shown on the front of this Proxy Statement.
The Nominating and Corporate Governance Committee has adopted, and operates
under, a charter.
-12-
Committee membership roster as of March 19, 2001:
Executive Nominating and
Name Audit Compensation Corporate Governance Executive
- -------------------------------------------------------------------------------------------
E. G. Anderson M M M
- -------------------------------------------------------------------------------------------
W. M. Bell M M M
- -------------------------------------------------------------------------------------------
D. R. Cummings M M M
- -------------------------------------------------------------------------------------------
J. B. Dicus M M
- -------------------------------------------------------------------------------------------
W. L. Ford C M M
- -------------------------------------------------------------------------------------------
D. L. Kyle C
- -------------------------------------------------------------------------------------------
D. T. Lake M M
- -------------------------------------------------------------------------------------------
B. H. Mackie M C M
- -------------------------------------------------------------------------------------------
D. A. Newsom M M M
- -------------------------------------------------------------------------------------------
G. D. Parker C M M
- -------------------------------------------------------------------------------------------
J. D. Scott M M M
- -------------------------------------------------------------------------------------------
Number of
committee 3 5 3 0
meetings in Fiscal
Year 2000
C = Chairperson
M = Member
-13-
Report of the Audit Committee
The Board of Directors of ONEOK, Inc. (the "Company") adopted a written Audit
Committee Charter, a copy of which is included as APPENDIX A to this proxy
statement. All members of the Audit Committee are independent as defined in
Section 303.01(B)(2)(a) and (3) of the New York Stock Exchange's listing
standards.
The Audit Committee has reviewed and discussed with the Company's management
and KPMG LLP, the Company's independent auditor, the audited financial
statements of the Company contained in the Company's Annual Report to
Stockholders for the year ended December 31, 2000. The Audit Committee has also
discussed with the Company's independent auditor the matters required to be
discussed pursuant to SAS No. 61 (Codification of Statements on Auditing
Standards, Communication with Audit Committees).
The Audit Committee has received and reviewed the written disclosures and the
letter from KPMG LLP required by Independence Standards Board Standard No. 1
(titled, "Independence Discussions with Audit Committees"), and has discussed
with KPMG LLP their independence. The Audit Committee has also considered
whether the provision of information technology services and other non-audit
services to the Company by KPMG LLP is compatible with maintaining their
independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, filed with the U.S. Securities and Exchange Commission.
Respectfully submitted by the members of the Audit Committee of the Board of
Directors:
/s/ Gary D. Parker, Chair /s/ William M. Bell, Vice Chair
/s/ Edwyna G. Anderson /s/ Douglas R. Cummings
/s/ Douglas T. Lake /s/ Douglas Ann Newsom
/s/ J. D. Scott
-14-
Fees paid to independent auditor
Audit Fees -- KPMG LLP has billed the Company $877,000, in the aggregate, for
professional services rendered by KPMG LLP for the audit of the Company's
annual financial statements for the fiscal year ended December 31, 2000 and the
reviews of the interim financial statements included in the Company's Forms 10-
Q filed during the fiscal year ended December 31, 2000.
Financial Information Design and Implementation Fees -- No professional
services described in paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X were
rendered by KPMG LLP during the fiscal year ended December 31, 2000.
All Other Fees -- KPMG LLP has billed the Company $201,000, in the aggregate,
for services rendered by KPMG LLP for all services (other than those covered
above under "Audit Fees" and "Financial Information Systems Design and
Implementation Fees") during the fiscal year ended December 31, 2000.
-15-
Directors' compensation
ONEOK annually benchmarks directors' compensation and strives to pay at the
median for companies of comparable size in its industry.
During Fiscal 2000, thirteen meetings were held by the Board of Directors. All
directors, except Mr. Fricke, attended at least seventy-five percent (75%) of
the meetings of the Board of Directors and committees on which such directors
served. The total amount of directors' fees paid in Fiscal 2000 was $657,313.
Executive officers are not paid for their services as directors. As a part of
their annual retainer, each director received 200 shares of common stock, the
value of which is reflected in the total reported.
In Fiscal 2000, $213,036 of the total amount paid for directors' fees was
deferred under the Deferred Compensation Plan for Non-Employee Directors. All
non-employee directors are eligible to participate in this Plan. In January
each year the non-employee directors may elect to have all, or a portion of,
the annual stock retainer, annual cash retainer, and meeting fees payable by
ONEOK deferred. Deferred amounts are treated either as phantom stock or as a
cash deferral.
Phantom stock deferrals will be treated as though the deferred amount is
invested in ONEOK common stock at the fair market value on the date the
retainer and/or fees are earned. Phantom stock earns the equivalent of
dividends, reinvested at the fair market value on the payment date of each
common stock dividend declared. Phantom stock accounts are representative of
shares of common stock which can be issued to a non-employee Director under the
ONEOK, Inc. Long-Term Incentive Plan, but are deferred until settlement in
shares of common stock at an elected deferral date. See page 17 for phantom
stock ownership.
Cash deferrals will be credited with interest at the investment return rate
determined by the Executive Compensation Committee annually.
In January 2000, the Board created a special committee to review issues
relating to the now-terminated agreement to merge with Southwest Gas
Corporation. That committee was chaired by Gary D. Parker, and committee
members were paid the same fee for each meeting as standing committees
received; however, an additional $300 per hour, per director was paid for each
hour in excess of a four-hour meeting and for each hour spent on committee
business in addition to the four-hour meeting time. In total, $130,500 was paid
to this Committee for activities in fiscal year 2000.
The following table summarizes the compensation of ONEOK's directors:
Director's compensation table
Type of compensation Cash Stock based
- --------------------------------------------------------------------------
Annual Retainer $22,500 200 shares
- --------------------------------------------------------------------------
Annual Retainer for Committee Chair $ 3,500
- --------------------------------------------------------------------------
Board or Committee Attendance Fee (per meeting)--in
person $ 1,200
Board or Committee Attendance Fee (per meeting)--by
telephone $ 600
-16-
Directors' & officers'
ownership of ONEOK, Inc. stock
The following table shows how much ONEOK, Inc. common stock each named
executive officer and director owned as of December 31, 2000. No director or
executive officer beneficially owns more than 1% of the common stock, and
directors and executive officers as a group beneficially own approximately 2.3%
of the common stock.
Directors' & officers' stock ownership
Total of shares of
Shares of Directors' common stock
common deferred beneficially owned plus
stock compensation Directors' deferred
Name and Address of beneficially plan phantom compensation plan
Beneficial Owner/1/ owned/2/ stock/3/ phantom stock
- ------------------------------------------------------------------------------
Edwyna G. Anderson 397 425 822
William M. Bell/4/ 2,946 2,590 5,536
Larry W. Brummett/5/, /7/ 161,373 -- 161,373
Douglas R. Cummings 2,200 2,092 4,292
John B. Dicus/6/ -- -- --
Eugene N. Dubay/7/ 33,367 -- 33,367
William L. Ford/8/ 4,318 5,206 9,524
Howard R. Fricke/9/ -- 3,738 3,738
John A. Gaberino, Jr./7/,
/10/ 21,649 -- 21,649
James C. Kneale/7/, /11/ 32,090 -- 32,090
David L. Kyle/7/ 85,121 -- 85,121
Douglas T. Lake 9,078 238 9,316
Bert H. Mackie 2,287 2,092 4,379
Douglas Ann Newsom/12/ 2,603 20 2,623
Gary D. Parker/13/ 4,762 818 5,580
J.D. Scott/7/ 129,202 -- 129,202
Christopher R. Skoog/7/ 24,244 -- 24,244
Stanton L. Young/14/ 62,700 -- 62,700
- ------------------------------------------------------------------------------
All directors and
executive officers as a
group including those
named above 671,709 17,219 688,928
-17-
Notes to stock ownership table:
/1/ All of ONEOK's directors and named executive officers may be contacted at
ONEOK, Inc. 100 West Fifth Street, Tulsa, OK 74103-4298.
/2/ This column includes ONEOK, Inc. stock held by directors and officers, or
by members of their families for which the directors and officers have sole
or shared voting or investment power, shares of common stock they hold in
the ONEOK, Inc. Direct Stock Purchase and Dividend Reinvestment Plan, and
ONEOK, Inc. securities directors and officers have the right to acquire
within 60 days of December 31, 2000.
/3/ Phantom stock has a value equal to shares of common stock, but phantom
stock has no voting rights or other shareholder rights. See Director's
Compensation on page 16 for further information concerning the Deferred
Compensation Plan for Non-Employee Directors. Phantom stock suffers all the
risks, and enjoys all the rewards, of changes in the price of common stock.
/4/ Includes 723 shares held in the Bell Family 1982 Revocable Trust.
/5/ Mr. Brummett passed away on August 24, 2000. His holdings reflect the
number of shares he held as of that date. Upon his death, all of the non-
qualified stock options immediately vested, and the total includes those
shares of stock his estate has the right to acquire within 60 days of
December 31, 2000.
/6/ Mr. Dicus was elected to the Board of ONEOK, Inc. effective February 15,
2001, at which time he received a pro-rated portion of the annual stock
retainer in the amount of 167 shares.
/7/ The amounts shown include shares of ONEOK, Inc. common stock:
. Which the following persons have the right to acquire as a result of
the exercise of stock options within 60 days after December 31, 2000
under the ONEOK, Inc. Long-Term Incentive Plan;
. In the custody of the Trustee for the Thrift Plan for Employees of
ONEOK, Inc. and Subsidiaries as of December 31, 2000; and
. Shares of restricted stock which were granted under the ONEOK, Inc.
Long-Term Incentive Plan as of October 21, 1999. These shares are
restricted and vest in full after a three-year period. The named
individuals have voting rights for these shares and these shares earn
dividends:
Exercisable Held by the
Executive Officer/Director within 60 Days Thrift Plan Restricted Stock
Larry W. Brummett 110,479 20,396 3,831
Eugene N. Dubay 18,000 6,040 4,210
John A. Gaberino, Jr. 5,550 10,195 4,210
James C. Kneale 8,962 13,667 2,105
David L. Kyle 29,951 29,903 9,895
J. D. Scott 0 80,947 0
Christopher R. Skoog 12,725 3,577 4,947
All directors and executive officers
as a group (including those named
above): 207,667 221,417 37,863
/8/ Includes 1,196 shares owned by the 1979 Leslie A. Ford Trust, of which
William L. Ford is a trustee. Mr. Ford disclaims beneficial ownership of
these shares.
/9/ Mr. Fricke resigned from the Board on February 14, 2001. On that date Mr.
Fricke had accumulated 3,882 shares of Phantom Stock under the ONEOK, Inc.
Deferred Compensation Plan for Non-Employee Directors. The 3,882 shares of
Phantom Stock were converted to common stock holdings upon Mr. Fricke's
resignation.
/10/Includes 113 shares held by Mrs. John A. Gaberino, Jr. Mr. Gaberino
disclaims beneficial ownership of these shares.
/11/Includes 4,745 shares held by Mrs. James C. Kneale and 690 shares held by
Mr. Kneale's daughter. Mr. Kneale disclaims beneficial ownership of these
shares.
/12/Includes 1,200 shares held by Ms. Newsom's spouse, who passed away in
January 2001. Ms. Newsom disclaims beneficial ownership of these shares,
and at his passing she ceased to have any pecuniary interest in these
shares.
/13/Includes 470 shares held by Mrs. Gary D. Parker. In addition, Mr. Parker
holds 1,400 shares in trust as the Trustee of the Phillip Wilkinson
Irrevocable Trust under agreement dated 07/13/95.
/14/Mr. Young retired from the ONEOK, Inc. Board of Directors effective April
20, 2000.
-18-
Executive compensation:
Report of the Compensation Committee
The Committee's Responsibilities: The Executive Compensation Committee of the
Board ("the Committee") has responsibility for reviewing, and recommending to
the full Board of Directors, the Company's executive compensation programs to
ensure:
. the attraction, retention and appropriate reward of executive officers;
. to motivate their performance in the achievement of the Company's business
objectives; and
. to align the interests of executive officers with the long-term interests of
the Company's shareholders.
The Committee is composed entirely of outside directors. The purpose of this
report is to summarize the philosophical principles, specific program
objectives, and other factors considered by the Committee in reaching its
recommendations regarding the executive compensation of the Named Executive
Officers.
Compensation Philosophy: The Company's executive compensation program is based
on the belief that the interests of executives should be closely aligned with
those of the shareholders. The Committee has adopted a framework of principles
for the management compensation program which:
. attracts the best talent to ONEOK;
. encourages executives to manage from the perspective of owners with an
equity stake in the Company;
. motivates individuals to perform at their highest levels;
. encourages strong financial and operational performance of the Company and
creates shareholder value by maintaining a portion of executives' total
compensation at risk;
. rewards outstanding achievement; and
. retains the leadership and skills necessary for building long-term
shareholder value.
Compensation Methodology: ONEOK strives to provide a comprehensive executive
compensation program that is competitive and performance-based in order to
attract and retain superior executive talent. Annually, the Committee reviews
market data for two components of executive compensation: (1) annual cash
compensation, and (2) long-term incentive compensation. To assist in
benchmarking the competitiveness of its compensation programs, ONEOK
participates in executive compensation surveys and utilizes independent
compensation consultants. Because the Committee believes that the Company's
direct competition for executive talent is broader than the companies that are
included in the S&P Utilities Index which is used in the Performance Graph on
page 23, the surveys utilized include the American Gas Association Executive
Compensation Survey, the Effective Compensation Oil and Gas Industry
Compensation Survey, the Hewitt Associates Energy Traders Compensation Survey,
the Towers Perrin Compensation Survey of Energy Marketing and Trader Positions,
and the Watson Wyatt Worldwide Top Management Compensation Survey.
Components of Compensation:
. Annual Cash Compensation: Annual cash compensation for the Named Executive
Officers, as well as all executive officers, consists of two components,
base salary and a variable, at-risk incentive.
Annual base salary is designed to compensate executives for their level of
responsibility, experience, sustained individual performance, and
contribution to the Company. The Committee recommends to the Board all
salary increases for executive officers. The goal is to compensate
executives within the 90th percentile of the average salaries paid for
similar positions by ONEOK's peers as identified through published surveys,
company documents, and other sources.
Annual incentive awards were previously issued under the Key Employee Annual
Incentive Plan. Effective January 1, 2000, the Committee elected to
terminate the Key Employee Annual Incentive Plan (the "AI Plan") and
approved the adoption of the ONEOK, Inc. Annual Officer Incentive Plan (the
"Officer Incentive Plan"). The purpose of the Officer Incentive Plan is to
provide certain officers of ONEOK, Inc. with a direct financial interest in
the performance and profitability of the Company and to reward performance.
The Officer Incentive Plan is administered by the Committee in accordance
with stated purposes and the Committee recommends to the full Board of
Directors, based on recommendations of the CEO, all awards under the Officer
Incentive Plan.
-19-
The Officer Incentive Plan is designed to allow the Company's officers the
opportunity to earn compensation that is above average when compared to
ONEOK's peers if ONEOK achieves outstanding results compared to those peers
and to targeted objectives.
Incentive criteria are established by the Committee and include achievement
of certain corporate and unit performance goals as well as individual
performance criteria as benchmarks for Incentive Awards.
Criteria Weight
-----------------------------
Earnings per share 35%
-----------------------------
Shareholder appreciation 35%
-----------------------------
Return on invested capital 30%
Individual performance criteria includes:
. problem analysis; . planning and organizational ability;
. directing; . decision-making;
. utilization of human, capital, & material
resources; . time management;
. initiation of, and response, to change; . communication and team relations;
. personal actions.
The Bonus column of the Summary Compensation Table on page 24 contains the
annual incentives earned for Fiscal 2000 for each of the Named Executive
Officers.
. Long-term Incentive Compensation: On August 20, 1998, the Committee
recommended to the full Board that it amend and restate the Key Employee
Stock Plan. The amendments included changing the name to the ONEOK, Inc.
Long-Term Incentive Plan (the "LTI Plan"), increasing the number of shares
subject to the LTI Plan, modifying the definition of certain terms governing
the granting of stock incentives, and providing for payment of non-employee
director compensation in the form of stock awards. The LTI Plan was approved
by the shareholders on January 21, 1999, and will remain in effect until all
shares authorized to be issued as stock incentives have been granted or
until the Board terminates the LTI Plan.
The purpose of the LTI Plan is to provide incentives to enable the Company
to attract, retain, and reward certain employees and to give such employees
an interest parallel to the interests of the Company's shareholders. The
LTI Plan is administered by the Committee, and the Committee reviews and
recommends to the full Board of Directors, after recommendation of the CEO,
all long-term incentive awards. The Committee is authorized to make all
decisions and interpretations required to administer and execute the LTI
Plan. Participation in the LTI Plan is limited to certain employees of
ONEOK, Inc. who are in a position to contribute significantly to the growth
and profitability of the Company, its divisions, and subsidiaries.
The LTI Plan authorizes the Committee to grant stock incentives to
participating certain employees in a variety of forms including: (1)
Incentive Stock Options, (2) Non-Statutory Stock Options, (3) Restricted
Stock Awards, and (4) Performance Awards. In 1995, 1996, 1997, and 1998,
these awards were granted as non-statutory stock options. In 1999, these
awards were granted as non-statutory stock options and/or restricted stock.
In determining the number of stock options and/or restricted stock awarded,
the Committee reviewed a survey detailing the 50th percentile of grant
values of long-term incentives in the utility sector, and it also
considered the participant's past performance. The table below details the
grants that have been made from the LTI Plan and the balance remaining
available for grant as of December 31, 2000:
-20-
Date # of # of Shares First exercisable Date Expiration date
Employees
-----------------------------------------------------------------------------
11/16/95 57 107,400 11/16/96 11/16/05
-----------------------------------------------------------------------------
10/10/96 63 100,700 10/10/97 10/10/06
-----------------------------------------------------------------------------
10/16/97 82 199,000 10/16/98 10/16/07
-----------------------------------------------------------------------------
01/16/98 37 45,200 01/16/99 01/16/08
-----------------------------------------------------------------------------
10/15/98 143 284,100 10/15/99 10/15/08
-----------------------------------------------------------------------------
10/21/99
Stock Options 142 308,700 10/21/00 10/21/09
-----------------------------------------------------------------------------
10/21/99
Restricted
stock 44 66,300 10/21/02 10/21/09
-----------------------------------------------------------------------------
05/15/00*
Stock Options 1 4,000 05/15/01 05/15/10
-----------------------------------------------------------------------------
05/15/00*
Restricted
Stock 1 2,000 05/15/03 05/15/10
-----------------------------------------------------------------------------
Total Remaining Available for Grant as of 12/31/00: 1,321,933
*This out-of-cycle grant was made to Mr. John W. Gibson upon his employment
with ONEOK.
Due to the transition last year to a December 31st fiscal year end, no
options or restricted stock were granted in Fiscal 2000 other than the
grant detailed above for Mr. Gibson.
Stock Options have an exercise price equal to the fair market value of
common stock on the date of grant. The options granted in 1995, 1996, 1997,
and in January of 1998 are exercisable beginning one year from the date of
grant. In 1998 the Committee modified the Non-Statutory Stock Option
Agreement to allow stock options granted under that Agreement to become
exercisable beginning one year after the date of grant in four equal annual
installments.
Stock Options may include a restoration feature, by which options are
granted to replace shares that are surrendered by participants as full or
partial payment to the Company of the purchase price of shares being
acquired through the exercise of the stock option or shares that are
surrendered to satisfy the tax obligations incident to the exercise of an
option. Each restored option shall have an option price equal to the fair
market value of the Common Stock on the date of grant of the restored
option and shall expire on the stated expiration date of the original
option.
The LTI Plan does not allow for the repricing of stock options.
Chief Executive Officer Compensation: This Committee meets annually to review
the Board of Directors' evaluation of the Chief Executive Officer's ("CEO")
performance. The Committee uses this performance evaluation, the surveys
previously mentioned, and the C.A. Turner Utility Report on financial and stock
performance in considering the CEO's compensation. When reviewing the surveys
and financial data, the Committee factors in that ONEOK's CEO also serves the
Company as Chairman of the Board. Categories in which performance is evaluated
include: (1) leadership, (2) strategic planning, (3) financial issues, (4)
management and operations, (5) human resources, and (6) communications.
Larry W. Brummett
. Annual cash compensation: Mr. Brummett passed away on August 24, 2000.
The Committee recommended, and the Board of Directors approved
retroactively, a base salary amount of $625,000. The actual salary he
received in Fiscal 2000 was $416,667.
Annual incentive compensation for Mr. Brummett was based on attainment
of annual performance goals for the Company, and on Mr. Brummett's
individual objectives and performance as reviewed by the Committee.
Based on these criteria, Mr. Brummett was awarded $550,000 representing
57% of his compensation that related to the Company's performance
during the fiscal year.
-21-
. Long-term incentive compensation: On October 21, 1999, Mr. Brummett
received a non-statutory stock option grant of 35,100 shares of stock at
a purchase price of $29.1563 per share. Upon his death on August 24,
2000, this option became fully vested and the legatees, representatives,
or heirs may exercise the option within 36 months of his death. Also, on
October 21, 1999, Mr. Brummett was granted 13,200 shares of restricted
stock which would vest in full on October 21, 2002. Under the terms of
the Restricted Stock Agreement, upon Mr. Brummett's death, 10/36ths of
this grant, or 3,831 shares of the balance including applicable
dividends, vested.
David L. Kyle
. Annual Cash Compensation: Upon his election as Chief Executive Officer
and Chairman of the Board, the Committee recommended, and the Board of
Directors approved, a base salary amount of $490,000. Because Mr. Kyle
was paid at his previously approved salary for the first eight months of
2000, the actual salary he received in Fiscal 2000 was $486,736.
Annual incentive compensation for Mr. Kyle is based on attainment of
annual performance goals for the Company, and on Mr. Kyle's individual
objectives and performance as reviewed by the Committee. Based on these
criteria, Mr. Kyle was awarded $645,000 representing 57% of his
compensation that related to the Company's performance during the
fiscal year.
. Long-term Incentive Compensation: On October 21, 1999, Mr. Kyle received
a non-statutory stock option grant of 17,800 shares of stock at a
purchase price of $29.1563 per share. On October 21, 2000, 4,450 shares
of stock under this grant became exercisable, and the remaining portion
of the grant will vest equally over the next three years. Also, on
October 21, 1999, Mr. Kyle was granted 9,400 shares of restricted stock
which will vest in full on October 21, 2002.
Internal Revenue Service Limitations on Deductibility of Executive
Compensation: Federal law restricts the deductibility, for federal income tax
purposes, of certain executive compensation above a specified threshold. In
2000, no Corporate executives received compensation reaching the threshold. In
the Committee's judgment, the potential for non-deductibility of such
compensation is either nonexistent or not material. The Committee intends to
take into account these tax law provisions in structuring and administering the
Company's executive compensation in future years.
Compensation Committee Interlock and Insider Participation: There are none.
Respectfully submitted by the members of the Executive Compensation Committee
of the Board of Directors:
/s/ William L. Ford, Chair /s/ Douglas R. Cummings, Vice Chair
/s/ William M. Bell /s/ Douglas T. Lake
/s/ Bert H. Mackie /s/ Douglas Ann Newsom
/s/ Gary D. Parker
-22-
Stock performance graph
Comparison of 64 month cumulative total return*
Among ONEOK, Inc., the S&P 500 Index
And the S&P Utilities Index
[GRAPH]
*$100 Invested on 8/31/95 in stock or index- including reinvestment of
dividends.
1995 1996 1997 1998 1999 2000
- ------------------------------------------------------------------
. ONEOK, Inc. 100.00 131.38 161.72 155.30 167.00 272.96
- ------------------------------------------------------------------
. S&P 500 Index 100.00 118.73 167.00 180.51 252.40 256.33
- ------------------------------------------------------------------
. S&P Utilities Index 100.00 113.15 125.26 156.82 176.40 253.65
Notes to stock performance graph:
1 The S&P Utilities Index is comprised of the following: AES Corp.;
Allegheny Energy Inc.; Ameren Corp.; American Electric Power; Calpine
Corp; CINergy Corp.; CMS Energy; Coastal Corp.; Consolidated Edison
Holdings; Constellation Energy Group; Dominion Resources; DTE Energy Co.;
Duke Energy; Dynegy Inc.; Edison International; El Paso Corp; Enron Corp.;
Entergy Corp.; Exelon Corp.; FPL Group; FirstEnergy Corp.; GPU Inc.;
KeySpan Corp.; Kinder Morgan, Inc.; Niagara Mohawk Holdings Inc.; NICOR
Inc.; NiSource Inc.; ONEOK, Inc.; Peoples Energy; PG&E Corp.; Pinnacle
West Capital; PPL Corporation; Progress Energy, Inc.; Public Service
Enterprise Inc.; Reliant Energy; Sempra Energy; Southern Co.; TXU Corp.;
Williams Cos; Xcel Energy Inc.
2 Assuming that the value of the investment in ONEOK common stock and each
index was $100 on August 31, 1995, and that all dividends were reinvested,
this graph compares ONEOK's cumulative total return (i.e., based on common
stock price and dividends), plotted on an annual basis, with the S&P 500
Stock Index, a performance indicator of the overall stock market and the
S&P Utilities Index.
3 The information provided in this Performance Graph and in the Executive
Compensation Report of the Compensation Committee on Pages 19-22 should
not be considered soliciting material. Also, it should not be considered
to be filed with the Securities and Exchange Commission or to be subject
to Regulations 14A or 14C, other than as provided in Item 402 of
Regulation S-K, or to the liabilities of Section 18 of the Securities
Exchange Act of 1934. Unless specific reference is made to such sections
in a filing, the information should not be incorporated by reference into
any such filing under the Securities Act of 1933 or the Securities Act of
1934. Also, the stock performance as shown on the Performance Graph should
not be interpreted as a prediction of future stock performance.
-23-
Executive compensation, pension plans & other arrangements
Summary compensation table
Long-term compensation
-------------------------------
Annual compensation Awards Payouts
Securities
Restricted underlying
Other annual stock options/ LTIP All other
Name and principal Salary/2/ Bonus compensation award(s)/3/ SARs/4/ Payouts compensation/5/
position Year/1/ ($) ($) ($) ($) # ($) ($)
- ------------------------------------------------------------------------------------------------------------------
L. W. Brummett FY 2000 $428,667 $550,000 None None None None $27,964
Chairman of the Board SY 1999 165,333 0 None $384,863 35,100 None 9,800
and Chief Executive FY 1999 489,667 181,700 None None 31,200 None 20,325
Officer thru 08/24/00 FY 1998 435,800 634,900 None None 44,179/6/ None 12,800
D. L. Kyle FY 2000 $502,736 $645,000 None None 11,715/6/ None $31,112
Chairman of the Board, SY 1999 118,667 0 None $274,069 17,800 None 7,000
President and FY 1999 354,669 114,500 None None 21,000 None 14,412
Chief Executive Officer FY 1998 317,472 400,000 None None 30,801/6/ None 12,800
E. N. Dubay FY 2000 $250,000 $185,000 None None None None $15,000
President - Kansas SY 1999 83,333 0 None $116,625 8,000 None 5,000
Gas Service Company FY 1999 234,667 48,100 None None 12,000 None 12,910
FY 1998 201,233 209,900 None None 10,000 None 10,000
J. A. Gaberino, Jr. FY 2000 $240,000 $205,000 None None None None $14,400
Senior Vice President SY 1999 80,000 0 None $116,625 8,000 None 7,110
and General Counsel FY 1999 235,000 38,500 None None 7,100 None 9,762
FY 1998 131,250 78,400 None None None None 0
J. C. Kneale FY 2000 $242,500 $255,000 None None 4,803/6/ None $14,400
Senior Vice President, SY 1999 80,000 0 None $58,313 8,000 None 7,686
Treasurer, and Chief FY 1999 216,676 48,100 None None 6,500 None 12,300
Financial Officer/7/ FY 1998 191,677 167,900 None None 9,965/6/ None 9,234
C. R. Skoog FY 2000 $205,008 $215,000 None None None None $13,002
President - ONEOK SY 1999 60,000 11,700 None $137,035 5,300 None 4,140
Energy Marketing and FY 1999 166,000 39,400 None None 4,200 None 9,840
Trading Company FY 1998 152,533 116,000 None None 4,300 None 9,152
/1/Last year the Company changed its fiscal year-end from August 31st to
December 31st. The period shown as SY1999 refers to the four (4) months
ending December 31, 1999. The periods identified as FY1999 and FY1998 refer
to fiscal years ended August 31st. Therefore, compensation data is
presented for Fiscal 2000 (ending December 31, 2000), Fiscal 1999 (ending
August 31, 1999), the four-month transition period ended December 31, 1999,
and Fiscal 1998 (ending August 31, 1998).
/2/This column includes fees paid to Messrs. Brummett, Kyle, and Kneale for
serving on the Board of Directors of Magnum Hunter Resources, Inc. ONEOK
Resources Company currently owns approximately 21% of Magnum Hunter
Resources, Inc. The table below shows the dollar amounts included for
Fiscal 2000:
FY2000
-------
L. W. Brummett $12,000
D. L. Kyle $16,000
J. C. Kneale $ 2,500
3 Restricted stock was granted under the ONEOK, Inc. Long-Term Incentive Plan
on October 21, 1999. Other than the out-of-cycle grant to Mr. John W.
Gibson, not a named executive officer, upon his employment May 15, 2000, no
shares were granted during Fiscal 2000. These shares are restricted for a
period of three years. During the "vesting" period, dividends are paid to
participants on a non-preferential basis, and are reinvested in additional
shares of restricted stock. The values reflected above represent the number
of shares granted times the grant price of $29.1563. Dividends accrued
throughout the year and the year-end value of these restricted shares are
also indicated below:
Closing Price of a
Shares Dividends Total # of shares Share of Unrestricted Value as of
Granted Accrued in 2000 Held at 12/31/00 Stock as of 12/31/00 12/31/00
------- ---------------- ----------------- --------------------- -----------
L. W. Brummett 13,200 592 13,792
-9,961 forfeited at death
------
3,831 $48.13 $184,386.03
D. L. Kyle 9,400 495 9,895 $48.13 $476,246.35
E. N. Dubay 4,000 210 4,210 $48.13 $202,627.30
J. A. Gaberino, Jr. 4,000 210 4,210 $48.13 $202,627.30
J. C. Kneale 2,000 105 2,105 $48.13 $101,313.65
C. R. Skoog 4,700 247 4,947 $48.13 $238,099.11
/4/No Stock Appreciation Rights ("SARs") were granted in Fiscal 2000 to any of
the named executive officers.
-24-
/5/The table below shows the components of this column for Fiscal 2000:
ONEOK match to ONEOK, Inc. Employee
ONEOK match to Thrift Plan Non-Qualified Deferred Compensation Plan
-------------------------- ----------------------------------------
FY 2000 FY 2000
L. W. Brummett $10,200.00 $17,764.00
D. L. Kyle 10,200.00 20,912.00
E. N. Dubay 10,200.00 4,800.00
J. A. Gaberino, Jr. 10,200.00 4,200.00
J. C. Kneale 10,200.00 4,200.00
C.R. Skoog 10,200.00 2,802.00
/6/ A portion of the securities underlying these grants are restored or
"reloaded" options. The stock option agreements provide that an additional
option may be granted if, and when, the optionee exercises all or part of
the option using common stock to pay the purchase price of the option or
to satisfy tax obligations incident to the exercise of the option. The
restored option will be exercisable for the number of shares tendered to
pay the option price or to satisfy any tax obligation, and will be
exercisable at any time after the expiration of a period of six (6) months
following the date of grant (or at any other time as determined by ONEOK)
and will expire on the expiration date of the original grant. The number
of restored options included in these grants are as follows:
L. W. Brummett Grants for FY 1998 include:
11,662 shares at an exercise price of $35.75 Expires 11-16-05
7,517 shares at an exercise price of $35.75 Expires 10-10-06
D. L. Kyle Grants for FY 1998 include:
5,919 shares at an exercise price of $35.75 Expires 11-16-05
1,369 shares at an exercise price of $35.75 Expires 11-16-05
6,013 shares at an exercise price of $35.75 Expires 10-10-06
Grants for FY 2000 include:
8,660 shares at an exercise price of $42.47 Expires 10-16-07
3,055 shares at an exercise price of $42.47 Expires 10-21-09
J. C. Kneale Grants for FY 1998 include:
1,391 shares at an exercise price of $42.53 Expires 11-16-05
1,974 shares at an exercise price of $34.03 Expires 10-10-06
Grants for FY 2000 include:
4,803 shares at an exercise price of $42.19 Expires 10-16-07
/7/ Mr. Kneale's title as of 12/31/00 was Vice President, Treasurer, and Chief
Financial Officer. He was elected Senior Vice President as of 01/18/01.
-25-
Option grant table
The following table represents additional information concerning the option
awards shown in the Summary compensation table for Fiscal Year 2000. These
options to purchase common stock were granted to the Named Executive Officers
under the ONEOK, Inc. Long-Term Incentive Plan.
Option grants in Fiscal Year 2000 ending 12/31/00/1/
Potential realizable value
at assumed annual rates of
stock price appreciation
Individual grants for option term/2/
- --------------------------------------------------------------------------------------------------------
Securities Percent of
underlying total options Exercise
options granted to or base
granted/3/ employees price Expiration
Name Date Number in fiscal year ($/share) date 5% 10%
L. W. Brummett FY 2000 N/A 0.00% $ 0.00 N/A N/A N/A
D. L. Kyle 11/28/00 3,055 9.69% $42.47 10/21/09 $ 70,511 $ 173,163
11/28/00 8,660 27.47% $42.47 10/16/07 $ 146,757 $ 340,917
E. N. Dubay FY 2000 N/A 0.00% $ 0.00 N/A N/A N/A
J. A. Gaberino, Jr. FY 2000 N/A 0.00% $ 0.00 N/A N/A N/A
J. C. Kneale 11/27/00 4,803 15.23% $42.19 10/16/07 $ 80,893 $ 187,928
C. R. Skoog FY 2000 N/A 0.00% $ 0.00 N/A N/A N/A
Notes to option grant table:
/1/No Stock Appreciation Rights ("SARs") were granted in Fiscal 2000.
/2/These amounts represent assumed rates of appreciation only and are not
intended to forecast future appreciation of the common stock price. Actual
gains, if any, on stock option exercises depend on the future performance
of the common stock and overall market conditions. There can be no
assurances that the potential values reflected in this table will be
achieved.
/3/Other than the out-of-cycle grant to Mr. John W. Gibson, not a named
executive officer, upon his employment May 15, 2000, no shares were granted
during Fiscal 2000. The options reflected are "restored" options. The stock
option agreements provide that an additional option may be granted if, and
when, the optionee exercises all or part of an option using common stock to
pay the purchase price of the option or to satisfy tax obligations incident
to the exercise of the option. The restored option will be exercisable for
the number of shares tendered to pay the option price or to satisfy any tax
obligation, and will be exercisable at any time after the expiration of a
period of six (6) months following the date of grant (or at any other time
as determined by ONEOK) and will expire on the expiration date of the
original grant. Each option was awarded with an exercise price equal to the
fair market value of a share of ONEOK, Inc., common stock on the date of
the grant.
-26-
Aggregated option/SAR exercises and year-end values
The following table shows information for the Named Executive Officers,
concerning:
. exercises of stock options and SARs/1/ during Fiscal 2000; and
. the amount and values of unexercised stock options and SARs as of
December 31, 2000.
Aggregated options/SAR exercises in 2000 and year-end option/SAR values
Number of securities Value of unexercised in-
underlying unexercised the-
options at fiscal year end money options at fiscal
(#) year end ($)/2/
Shares
acquired
on Value
exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($)
L. W. Brummett 0 0 110,479/3/ 0 $1,819,624 $0.00
D. L. Kyle 15,800 $173,450 29,951 35,565 $429,545 $493,911
E. N. Dubay 0 0 18,000 12,000 $292,250 $204,375
J. A. Gaberino, Jr. 0 0 5,550 9,550 $89,825 $170,075
J. C. Kneale 6,253 $61,162 8,962 14,053 $130,741 $199,646
C. R. Skoog 0 0 12,725 6,075 $247,958 $109,148
/1/No Stock Appreciation Rights ("SARs") were granted in Fiscal 2000.
/2/Based on per share price for ONEOK, Inc. common stock at fiscal year end
(FY) of $49.2188 per share. The price reflects the average of the high and
low trading price on the New York Stock Exchange on December 31, 2000.
/3/All of Mr. Brummett's options became fully vested and exercisable by his
estate upon his death on 08/24/00.
-27-
Pension plans
This table shows the estimated annual retirement benefits payable to a covered
participant based upon the final average pay formulas of the Retirement Plan
for Employees of ONEOK, Inc. and Subsidiaries/1/. The estimates assume that
benefits are received in the form of a single life annuity.
Estimated annual benefits under final-average earnings
/2/ /3/ /4/ /5/
---------------------------------------------------------------
15 Years 20 Years 25 Years 30 Years 35 Years
--------------------------------------------------------------------------
$125,000 $33,930 $45,240 $56,550 $67,860 $79,170
--------------------------------------------------------------------------
$150,000 $41,242 $54,990 $68,737 $82,485 $96,232
--------------------------------------------------------------------------
$175,000 $48,555 $64,740 $80,925 $97,110 $113,295
--------------------------------------------------------------------------
$200,000 $55,867 $74,490 $93,112 $111,735 $130,357
--------------------------------------------------------------------------
$225,000 $63,180 $84,240 $105,300 $126,360 $147,420
--------------------------------------------------------------------------
$250,000 $70,492 $93,990 $117,487 $140,985 $164,482
--------------------------------------------------------------------------
$300,000 $98,362 $113,490 $141,862 $170,235 $198,607
--------------------------------------------------------------------------
$400,000 $114,367 $152,490 $190,612 $228,735 $266,857
--------------------------------------------------------------------------
$450,000 $128,992 $171,990 $214,987 $257,985 $300,982
--------------------------------------------------------------------------
$500,000 $143,617 $191,490 $239,362 $287,235 $335,107
Notes to the pension benefits table:
/1 /The Retirement Plan for Employees of ONEOK, Inc. and Subsidiaries is a
tax-qualified, defined-benefit pension plan under both the Internal Revenue
Code of 1986, as amended, and the Employee Retirement Income Security Act
of 1974, as amended. Benefits become vested and non-forfeitable after
completion of five years of continuous employment. A vested participant
receives the retirement benefit at retirement age under the Retirement
Plan, unless separating earlier from service, in which case the retirement
benefit is actuarially reduced for early commencement. Benefits are
calculated at retirement date based on credited service, limited to a
maximum of 35 years, and final average earnings. Credited years of service
under these plans for the Named Executive Officers as of December 31, 2000
are as follows: L. W. Brummett (deceased 8/24/00), 26 years and 2 months;
D. L. Kyle, 26 years and 6 months; E. N. Dubay, 4 years and 8 months; J. A.
Gaberino, Jr., 2 years and 11 months; J. C. Kneale, 19 years and 8 months;
and C. R. Skoog, 5 years and 5 months.
/2/ For purposes of the above table, the annual Social Security Covered
Compensation benefit ($35,100) was used in the excess benefit calculation.
/3/ Under the Internal Revenue Code, the annual compensation of each employee
to be taken into account under the Retirement Plan cannot exceed $150,000,
adjusted for increases in the cost of living, for plan years beginning
after December 31, 1993. The maximum amount for 2000, as adjusted, is
$170,000.
/4/ Amounts are estimates only and would be subject to adjustment based on
rules and regulations applicable to the method of distribution and survivor
benefit options selected by the retiree. Retirement benefits would be
actuarially reduced for retirement prior to age 65.
/5/ The compensation covered by the Retirement Plan benefit formula is the
basic salary paid to an employee within the employee's final average
earnings. The final average earnings means the employee's highest earnings
during any sixty consecutive months during the last 120 months of
employment. For any employee named or shown in the Summary compensation
table who retires with vested benefits under the Plan, the compensation
shown as "salary" in the Summary compensation table could be considered
covered compensation in determining benefits, except that the Plan benefit
formula takes into account only a fixed percentage of final average
earnings which is uniformly applied to all employees. The amount of covered
compensation that may be considered in calculating retirement benefits is
also subject to limitations in the Internal Revenue Code of 1986, as
amended, applicable to the Plan.
-28-
ONEOK, Inc. supplemental executive
retirement plan
The following table sets forth the estimated benefits payable upon retirement
at age 65 to a covered participant under the Supplemental Executive Retirement
Plan ("SERP"). The estimates assume that a covered participant is fully vested.
The amounts shown would be reduced for commencement prior to age 60. SERP
benefits are offset by benefits payable under the Retirement Plan.
Estimated annual benefits at indicated age of retirement
--------------------------------------------------------------------------
50 and under 55 60 65 and over
- -----------------------------------------------------------------------------------------
$125,000 $62,500 $70,000 $73,563 $77,125
- -----------------------------------------------------------------------------------------
$150,000 $75,000 $84,000 $88,275 $92,550
- -----------------------------------------------------------------------------------------
$175,000 $87,500 $98,000 $102,988 $107,975
- -----------------------------------------------------------------------------------------
$200,000 $100,000 $112,000 $117,700 $123,400
- -----------------------------------------------------------------------------------------
$225,000 $112,500 $126,000 $132,413 $138,825
- -----------------------------------------------------------------------------------------
$250,000 $125,000 $140,000 $147,125 $154,250
- -----------------------------------------------------------------------------------------
$300,000 $150,000 $168,000 $176,550 $185,100
- -----------------------------------------------------------------------------------------
$400,000 $200,000 $224,000 $235,400 $246,800
- -----------------------------------------------------------------------------------------
$450,000 $225,000 $252,000 $264,825 $277,650
- -----------------------------------------------------------------------------------------
$500,000 $250,000 $280,000 $294,250 $308,500
The SERP covers certain elected or appointed officers of ONEOK, and certain
other highly compensated employees in the management of ONEOK. Participants are
selected by the CEO, or in the case of the CEO by the Board of Directors.
Benefits payable to participating employees under the SERP are based upon a
specified percentage (reduced for early retirement) of the highest 36
consecutive month's compensation of the employee's last 60 months of service.
. SERP benefits less the benefit payable under the Retirement Plan;
. Pension benefits from the Retirement Plan.
The SERP will, in any case, pay a benefit equal to the benefit which would be
payable to the participant under the Retirement Plan if the limitations imposed
by the Internal Revenue Code Sections 401(a)(17) and 415(b) were not
applicable, less the benefit payable under the Retirement Plan with such
limitations. Benefits under the SERP are paid coincidentally with the payment
of benefits under the Retirement Plan or as the administrative committee may
determine.
ONEOK has begun funding this benefit in a Rabbi Trust.
The Board of Directors may amend or terminate the SERP at any time; however,
benefits to current participants may not be reduced.
-29-
Change in control and termination agreements
During 2001, ONEOK, Inc. amended its termination agreements with each of its
named executive officers to standardize the change in control provisions with
ONEOK's other documents. Each of the termination agreements has a three-year
term, but will be extended automatically in one-year increments unless ONEOK
provides notice to the officer that it does not wish to extend the term at
least 90 days before the January 1 preceding the initial termination date of
the agreement.
Under the termination agreements, severance payments and benefits are payable
if there is a change in control of ONEOK and the officer's employment is
terminated without "just cause" or for "good reason" at any time during the
three years after the change in control, or for Mr. Kyle, for any reason by the
executive within twelve months of the change in control. In general, these
severance benefits include:
. a lump sum payment in an amount equal to three times the officers' current
annual compensation, plus a prorated portion of the officers' short-term
incentive compensation;
. accelerated vesting of retirement and other benefits under ONEOK's SERP;
. continuation of welfare benefits for thirty-six (36) months;
. for Mr. Kyle, gross up payments to cover any excise taxes due if any
portion of his severance payments constitute excess parachute payments; and
. for each of the other named executive officers, severance payments will be
reduced if the net after-tax benefit to such named executive officer
exceeds the net after-tax benefit if such reduction were not made. ONEOK
will make gross up payments to such officers only if the severance
payments, as reduced, are later deemed to constitute excess parachute
payments.
Calculated using base salary and bonus levels during 2000, and assuming a
December 31, 2000 change in control and termination date, payments under the
termination agreements (excluding any gross up payments) with ONEOK's named
executive officers would have been: D. L. Kyle, $6,374,980; E. N. Dubay,
$2,089,430; J. A. Gaberino, Jr., $2,024,257; J. C. Kneale, $3,109,012; and C.
R. Skoog, $1,521,469.
Under each termination agreement, a change in control will occur upon:
. The acquisition by any "person" of beneficial ownership of 20% or more of
the outstanding voting securities of ONEOK, except (1) voting securities
acquired in "non-control acquisitions," including an employee benefit plan
maintained by ONEOK or one if its direct or indirect majority-owned
subsidiaries or affiliates (a "related person") and ONEOK or a related
person; and (2) voting securities acquired in "non-control transactions"
(defined below);
. A change in the composition of ONEOK's existing board of directors, after
which the incumbent directors (or their designees) no longer constitute at
least a majority of the members of the board of directors of ONEOK or any
parent corporation that results from a merger;
. The consummation of a merger, consolidation or reorganization with or into
the ONEOK or in which securities of ONEOK are issued (a "merger"), except
mergers that are non-control transactions. A "non-control transaction"
occurs when (1) immediately after the merger, ONEOK's stockholders
beneficially own at least 50% of the outstanding voting securities of the
surviving entity or its parent; as long as no other third party
beneficially owns 50% of the outstanding voting securities of the surviving
corporation; (2) ONEOK's incumbent directors before the merger constitute
at least a majority of the board of the surviving entity or its parent; and
(3) no person, other than (a) ONEOK or its related persons, (b) an employee
benefit plan maintained by ONEOK or its related persons, or (c) any person
who, immediately before the merger, owned 30% or more of ONEOK's
outstanding voting securities, has beneficial ownership of 30% or more of
the outstanding voting securities of the surviving entity or its parent.
. A complete liquidation or dissolution of ONEOK; or
. The sale or other disposition of all or substantially all of ONEOK's assets
to any person, except (1) transfers to a related person; (2) transfers
under conditions that would constitute a non-control transaction, with the
disposition of assets being regarded as a merger for this purpose; and (3)
the distribution to ONEOK's stockholders of the stock of a related person
or any other assets.
-30-
Special Exceptions. Acquisitions of ONEOK voting securities over the 20%
threshold will not trigger a change in control if:
. the acquisition occurs as a result of the acquisition of voting securities
by ONEOK that reduces that total number of shares then outstanding and
increases the proportional number of shares beneficially owned by each
shareholder (e.g., a stock buyback program);
. within five business days after a change in control would have occurred,
the shareholder who has acquired 20% or more of ONEOK's voting securities
divests itself of sufficient shares to fall below 20%; or
. after a person discovers or is notified by ONEOK that its acquisition of
shares would have triggered a change in control, the person notifies the
board of directors that it acquired the shares inadvertently, and within
two business days after such notification, the person divests itself of a
sufficient number of shares to fall below 20%.
Western Resources Exception. A change in control will not occur if:
. Western Resources and/or its affiliates (the "shareholder group") acquire
beneficial ownership of 20% or more of ONEOK's voting stock under the terms
of the Shareholder Agreement, until the earlier of (a) the termination of
the Shareholder Agreement or (b) the successful consummation of a Buyout
Tender Offer as defined in Section 3.6(b) of the Shareholder Agreement;
. the equity securities of ONEOK owned by the shareholder group are
restructured with the approval of a majority of the members of ONEOK's
existing board (excluding nominees of Western Resources).
-31-
Section 16(a) beneficial ownership reporting compliance
ONEOK believes that during Fiscal 2000 all Securities and Exchange Commission
filings of its officers, directors and ten percent shareholders complied with
the requirements of Section 16 of the Securities Exchange Act, based on a
review of forms filed, or written notice that no annual forms were required,
except for one transaction for a sale of stock made by Mr. James C. Kneale's
spouse, which was reported late on a Form 4 filed for November, 2000.
Mr. Kneale disclaims ownership of these shares.
Other matters
We do not know of other matters that are likely to be brought before the
meeting.
By order of the Board of Directors,
/s/ Deborah B. Barnes
Deborah B. Barnes
Vice President, Secretary, and Associate General Counsel
Tulsa, OK
April 11, 2001
-32-
EXHIBIT A
Resolutions to Approve Amending the ONEOK, Inc. Certificate of Incorporation
to Increase Authorized Capital Stock and Split Up the Outstanding Common Stock
on a Two-for-One Basis
WHEREAS, the Board of Directors of the Corporation deems it advisable and in
the best interest of the Corporation to amend the Certificate of Incorporation,
as previously amended, to increase the authorized capital stock of the
Corporation; and
WHEREAS, the Board of Directors of the Corporation deems it advisable and in
the best interest of the Corporation to split the Common Stock, par value $0.01
per share, of the Corporation (the "Common Stock"), such that the number of
shares of Common Stock shall increase by a ratio of two-for-one, through the
issuance of one additional share of Common Stock for each share of Common Stock
outstanding or held in the Treasury of the Company;
RESOLVED, that the Board of Directors of ONEOK, Inc. hereby proposes and
declares it advisable that the Certificate of Incorporation of said
Corporation, as previously amended and now in effect, be further amended to
provide that the total number of authorized shares of Common Stock of the
Corporation be increased and changed from 100,000,000 shares, par value $0.01
per share, to 300,000,000 shares, par value $0.01 per share, and that the
outstanding shares of Common Stock be split on a two-for-one basis by the
issuance of one additional share of Common Stock for each share of Common Stock
outstanding or held in the Treasury of the Company, and that the first
paragraph of Article FOURTH of said Certificate of Incorporation, as amended,
be stricken and replaced with two new paragraphs reading as follows:
"The total number of shares of all classes of capital stock which the
Corporation shall have authority to issue is 400,000,000 shares divided
into two classes, of which 100,000,000 shares, par value $0.01 per
share, shall be designated Preferred Stock and 300,000,000 shares, par
value $0.01 per share, shall be designated Common Stock."
"Each share of Common Stock of the Corporation, par value of $0.01 per
share, issued and outstanding or held in the treasury of the
Corporation, is hereby reclassified and changed into two fully paid and
nonassessable shares of Common Stock of the Corporation, par value of
$0.01 per share, and each holder of record of a certificate for one or
more shares of Common Stock of the Corporation as of the close of
business on the date this amendment becomes effective shall be entitled
to receive as soon as practicable, and without surrender of such
certificate a certificate or certificates representing one additional
share of Common Stock for each one share of Common Stock represented by
the certificate of such holder."
RESOLVED, that the Board of Directors hereby directs that the above proposed
amendment to the Certificate of Incorporation, as amended, to increase the
number of authorized shares of capital stock of the Corporation and to split
the outstanding shares of Common Stock of the Corporation as described above be
considered by the Shareholders of the Corporation at the next Annual Meeting of
the Shareholders to be held on May 17, 2001, the notice for such meeting to
contain a brief summary of the changes to be effected by said amendment.
RESOLVED, that in the event the Shareholders of the Corporation, at the
Annual Meeting to be held on May 17, 2001, authorize the amendment to the
Certificate of Incorporation, as amended, which will increase the number of
authorized shares of capital stock of the Corporation, and authorize the split
of the outstanding shares of Common Stock of the Corporation as proposed at
this meeting, the proper officers of the Corporation be, and they hereby are,
authorized to effect the initial issuance of certificates for an aggregate of
such number of shares of Common Stock of the Corporation, par value $0.01 per
share, as may be required to effect such split, such certificates to be duly
countersigned and duly registered by First Chicago Trust Company of New York,
Transfer Agent and Registrar, and to deliver said certificates to the holders
of the issued and outstanding shares of Common Stock of the Corporation of
record on the record date, as promptly thereafter as practicable.
RESOLVED, that in the event the Shareholders of the Corporation, at the
Annual Meeting to be held on May 17, 2001, authorize the amendment to the
Certificate of Incorporation as amended, as described above, the Treasurer of
the Corporation is hereby authorized to transfer from paid in capital (surplus)
an amount equal to the total then-outstanding aggregate par value of the
Corporation, such that the par value for each share of Common Stock of the
Corporation shall remain $0.01 per share.
RESOLVED, that in the event the Shareholders authorize the proposed
amendment of the Certificate of Incorporation, as amended, and the split of the
outstanding shares of Common Stock of the Corporation, this Corporation shall
make application to the New York Stock Exchange for the listing on said
Exchange of such additional shares of Common Stock of the Corporation, par
value $0.01 per share, as may be necessary to be issued to the holders of
outstanding Common Stock of the Corporation as a result of the split of the
Common Stock and such additional shares as may be necessary to be held in
reserve for issuance with respect to any of the Corporation's benefit plans,
convertible securities or other similar obligations of the Corporation, and the
Chairman of the Board, the President, the Senior Vice-President and General
Counsel, any Vice-President, the Treasurer, or the Secretary (hereinafter
referred to as the Corporation's Officers) be, and they hereby are, authorized
to execute for and on behalf of this Corporation said applications to the New
York Stock Exchange and likewise to execute and deliver for filing therewith
any and all documents or agreements relating thereto which may be necessary in
connection with the requirements of said Exchange for listing said shares, and
the Corporation's Officers enumerated above be, and hereby are, authorized to
appear before the Committees on Listing of said Exchange if such an appearance
is required.
RESOLVED, that said Transfer Agent is hereby empowered and directed to take
any and all such other and further action in connection with any of the
foregoing which it shall be instructed to do in writing by the Corporation's
Officers enumerated above, and said Transfer Agent may rely on such
instructions, may confer with Counsel for this Corporation and shall not be
liable for any action taken in good faith in accordance with the instructions
of the Corporation's Officers or upon the advice of such Counsel.
RESOLVED, that all actions relating to the issuance of the additional shares
of Common Stock of the Corporation, resulting from the proposed stock split,
shall be subject to the proposed amendment to the Certificate of Incorporation,
as amended, required in order for such stock split to become effective.
RESOLVED, that the proper officers of this Corporation be, and they hereby
are, and each of them hereby is, authorized, empowered, and directed to do or
cause to have done all such acts and things, sign and deliver all such papers,
and make all such payments as may be deemed necessary or advisable at any time
or from time to time, in order to carry out and give effect to the full extent
and purposes of the resolutions adopted at this meeting.
RESOLVED, that it is the intention of the Board of Directors to continue its
present policies in regard to the declaration of quarterly cash dividends and
that the approval or disapproval by the Shareholders of the proposed amendment
of the Certificate of Incorporation, as amended, to split the outstanding
shares of the Common Stock of the Corporation will have no material effect on
such policy except for a downward adjustment to the dividend rate to reflect
additional shares issued as a result of any stock split, the present policy of
the Board of Directors being to make changes from time to time in the amount of
the quarterly cash divided on the Common Stock of the Corporation considering
available earnings, the Corporation's financial requirements, and other facts
governing the payment of such dividends.
EXHIBIT B
SUMMARY OF THE MATERIAL FEATURES OF THE
ONEOK, INC. LONG-TERM INCENTIVE PLAN (the "Plan")
The purposes of the Plan are to provide competitive incentives that will
enable the Company to attract, retain, motivate and reward key employees and
non-employee directors, and to give key employees and non-employee directors an
interest parallel to the interest of ONEOK's shareholders.
The Plan authorizes the Executive Compensation Committee of the Board of
Directors (the "Committee") to grant eligible employees options to purchase
shares of ONEOK, Inc. common stock, $0.01 par value, which qualify for the
special tax treatment according to Incentive Stock Options under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), as well as options
to purchase shares of common stock which do not so qualify (non-statutory stock
options). The Plan also authorizes the Committee to grant eligible employees
stock bonus awards, restricted stock awards, and performance unit awards, and
to grant non-employee directors stock awards. The variety of stock incentive
awards authorized to be granted under the Plan, as well as the discretion which
the Plan confers upon the Committee to determine the terms and conditions of
the awards, are intended to give the Committee flexibility to adapt ONEOK's
equity-based compensation practices to the changing business and regulatory
environment in which it operates.
The Plan will remain in effect until stock incentives have been granted with
respect to all shares of common stock authorized to be issued or transferred
under the Plan or until the Plan is sooner terminated by the Board of
Directors. In accordance with applicable provisions of the Code, no Incentive
Stock Options may be granted under the Plan after August 17, 2005.
Shares issued or transferred pursuant to stock incentives granted under the
Plan may be authorized and unissued shares or treasury shares or any
combination thereof. The Plan authorizes ONEOK to issue or transfer sufficient
shares of common stock to a trust (including a grantor trust) at any time,
including upon or in contemplation of a Change in Control, as defined below, to
satisfy its obligations under any then-outstanding awards previously granted
under the Plan (including stock options), in which case the shares may be
treated as authorized and issued shares which are held in the trust with full
dividend and voting rights, whether or not the related awards are then vested
or exercisable. The maximum number of shares of common stock with respect to
which stock options or other stock incentives may be granted to an employee
during any year is 150,000 shares. Shares that cease to be issuable under an
award because of termination, expiration, cancellation, or forfeiture of the
award, or because of the employees' failure to satisfy the terms and conditions
of the award will not count against the foregoing limitations and may again be
awarded under the Plan. The Plan provides for the number and class of shares
authorized to be issued or transferred under the Plan, the maximum number and
class of shares with respect to which stock options or other stock incentives
may be granted to any employee, the number and class of shares subject to
outstanding grants, and the exercise price of outstanding stock options to be
adjusted equitably to prevent dilution or enlargement of rights in the event of
recapitalizations, stock splits, stock dividends, mergers, and similar
transactions.
The class of persons who are eligible to be selected to participate in the
Plan consists of any employee of ONEOK or its subsidiaries, including an
officer or member of the Board of Directors who is an employee, who the
Committee determines is in a position to contribute significantly to the growth
and profitability of, or to perform services of major importance to, ONEOK and
it subsidiaries, and any non-employee director. Non-employee directors may be
granted stock awards, instead of cash, for all or a part of their compensation
for service as a director of the Company. The approximate number of persons who
are eligible to be selected to participate in the Plan at the present time
includes 210 employees and 10 non-employee directors, and is subject to change.
The Plan is administered by the Committee which, within the parameters set
forth in the Plan, determines the type of awards to grant, selects participants
from the class of employees eligible to participate, determines the number of
shares of common stock to be awarded, and determines the terms and conditions
of the awards (including the exercise price of options). The Committee
interprets the Plan and is authorized to make all determinations and decisions
thereunder. Under the Plan, the Committee must consist of two or more members
of the Board of Directors, each of whom qualifies as a "non-employee director"
under Security and Exchange Commission (SEC) Rule 16b-3 and as an "outside
director" within the meaning of Section 162(m) of the Code, unless ONEOK's
Board of Directors determines otherwise.
Unless the Committee determines otherwise, transactions by executive
officers and directors under the Plan are intended to qualify for the
exemptions available under SEC Rule 16b-3, and awards granted to executive
officers are intended to qualify as "performance-based compensation" if such
qualification is necessary to preserve ONEOK's deduction for such awards under
Code Section 162(m). The Plan is specifically intended to give the Committee
authority to grant awards that will qualify as "performance-based compensation"
as well as awards that will not so qualify.
The Plan also authorizes the Committee, after a stock incentive has been
granted and without consideration, to waive any term or condition that could
have been omitted from the award when it was granted and to amend the award to
include or exclude any term or condition that could have been included or
excluded from the award when it was granted.
EXHIBIT C
ONEOK, INC.
LONG-TERM INCENTIVE PLAN
1.Purposes.
The purposes of this Plan are (a) to provide competitive incentives that
will enable the Company to attract, retain, motivate, and reward Key Employees
and Non-Employee Directors of the Company, and (b) to give the Company's Key
Employees and Non-Employee Directors an interest parallel to the interests of
the Company's shareholders generally.
2.Definitions.
Unless otherwise required by the context, the following terms, when used in
this Plan, shall have the meanings set forth in this Section 2.
(a)"Beneficiary" means a person or entity (including a trust or estate),
designated in writing by a Participant on such forms and in accordance with
such terms and conditions as the Committee may prescribe, to whom the
Participant's rights under the Plan shall pass in the event of the death of the
Participant.
(b)"Board" or a "Board of Directors" means the Board of Directors of the
Company, as constituted from time to time.
(c)A "Change in Control" shall mean the occurrence of any of the following:
(1)An acquisition (other than directly from the Company) of any voting
securities of the Company (the "Voting Securities") by any "Person" (as the
term person is used for purposes of Section 13(d) or 14(d) of the Exchange
Act), immediately after which such Person has "Beneficial Ownership" (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
(20%) or more of the then outstanding Shares or the combined voting power of
the Company's then outstanding Voting Securities; provided, however, in
determining whether a Change in Control has occurred pursuant to this Section
2(c), Shares or Voting Securities which are acquired in a "Non-Control
Acquisition" (as hereinafter defined) shall not constitute an acquisition which
would cause a Change in Control. A "Non-Control Acquisition" shall mean an
acquisition by (i) an employee benefit plan (or a trust forming a part thereof)
maintained by (A) the Company or (B) any company or other Person of which a
majority of its voting power or its voting equity securities or equity interest
is owned or controlled, directly or indirectly, by the Company (for purposes of
this definition, a "Related Entity"), (ii) the Company or any Related Entity,
or (iii) any Person in connection with a "Non-Control Transaction" (as
hereinafter defined);
(2)The individuals who, as of February 15, 2001, are members of the
Board of Directors (the "Incumbent Board"), cease for any reason to constitute
at least a majority of the members of the Board of Directors; or, following a
Merger which results in a Parent Company, the board of directors of the
ultimate Parent Company; provided, however, that if the election, or nomination
for election by the Company's common stockholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Plan, be considered as a member of the
Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board of Directors (a "Proxy Contest"), including by reason of
any agreement intended to avoid or settle any Election Contest or Proxy
Contest; or
(3)The consummation of:
(i)A merger, consolidation or reorganization with or into the
Company or in which securities of the Company are issued (a "Merger"), unless
such Merger is a "Non-Control Transaction." A "Non-Control Transaction" shall
mean a Merger where:
(A)the stockholders of the Company, immediately before such Merger, own
directly or indirectly immediately following such Merger at least fifty percent
(50%) of the combined voting power of the outstanding voting securities of (x)
the company resulting from such Merger (the "Surviving Company") if fifty
percent (50%) or more of the combined voting power of the then outstanding
voting securities of the Surviving Company is not Beneficially Owned, directly
or indirectly by another Person (a "Parent Company"), or (y) if there is one or
more Parent Companies, the ultimate Parent Company;
(B)the individuals who were members of the Incumbent Board immediately prior to
the execution of the agreement providing for such Merger constitute at least a
majority of the members of the board of directors of (x) the Surviving Company,
if there is no Parent Company, or (y) if there is one or more Parent Companies,
the ultimate Parent Company; and
(C)no Person other than (1) the Company, (2) any Related Entity, (3) any
employee benefit plan (or any trust forming a part thereof) that, immediately
prior to such Merger was maintained by the Company or any Related Entity, or
(4) any Person who, immediately prior to such Merger had Beneficial Ownership
of thirty percent (30%) or more of the then outstanding Voting Securities or
Shares, has Beneficial Ownership of thirty percent (30%) or more of the
combined voting power of the outstanding voting securities or common stock of
(x) the Surviving Company if there is no Parent Company, or (y) if there is one
or more Parent Companies, the ultimate Parent Company.
(ii)A complete liquidation or dissolution of the Company; or
(iii)The sale or other disposition of all or substantially all of
the assets of the Company to any Person (other than a transfer to a Related
Entity or under conditions that would constitute a Non-Control Transaction with
the disposition of assets being regarded as a Merger for this purpose or the
distribution to the Company's stockholders of the stock of a Related Entity or
any other assets).
Notwithstanding the foregoing,
(A)A Change in Control shall not be deemed to occur solely because any Person
(the "Subject Person") acquired Beneficial Ownership of more than the permitted
amount of the then outstanding Shares or Voting Securities if: (1) such
acquisition occurs as a result of the acquisition of Shares or Voting
Securities by the Company which, by reducing the number of Shares or Voting
Securities then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person, provided that if a Change in Control
would occur (but for the operation of this subparagraph) as a result of the
acquisition of Shares or Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Shares or Voting Securities which increases the percentage of
the then outstanding Shares or Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur, or (2) (a) within five
business days after a Change in Control would have occurred (but for the
operation of this subparagraph), or if the Subject Person acquired Beneficial
Ownership of twenty percent (20%) or more of the then outstanding Shares or the
combined voting power of the Company's then outstanding Voting Securities
inadvertently, then after the Subject Person discovers or is notified by the
Company that such acquisition would have triggered a Change in Control (but for
the operation of this subparagraph), the Subject Person notifies the Board of
Directors that it did so inadvertently, and (b) within two business days after
such notification, the Subject Person divests itself of a sufficient number of
Shares or Voting Securities so that the Subject Person is the Beneficial Owner
of less than twenty percent (20%) of the then outstanding Shares or the
combined voting power of the Company's then outstanding Voting Securities.
(B)A Change in Control shall not be deemed to occur if (1) the Shareholder
Group (as defined in the Shareholder Agreement) acquires Beneficial Ownership
of fifteen percent (15%) or more of the Company's Voting Securities pursuant to
the terms of the Shareholder Agreement, by and between WAI, Inc. (now known as
ONEOK, Inc.) and Western Resources, Inc. dated as of November 26, 1997 (the
"Shareholder Agreement"), until the earlier of (a) the termination of the
Shareholder Agreement or (b) the successful consummation of a Buyout Tender
Offer as defined in Section 3.6(b) of the Shareholder Agreement, but upon
either of such events, the acquisition or existence of such percentage of
Beneficial Ownership by Western Resources, Inc. or any of its affiliates shall
constitute a Change in Control or (2) the equity securities of the Company
owned by the Shareholder Group are in any manner restructured with the approval
of a majority of the members of the Incumbent Board (excluding Shareholder
Nominees, as defined in the Shareholder Agreement).
Notwithstanding anything in this Plan to the contrary, if an eligible Key
Employee's employment is terminated by the Company without Just Cause prior to
the date of a Change in Control but the eligible Key Employee reasonably
demonstrates that the termination (A) was at the request of a third party who
has indicated an intention or taken steps reasonably calculated to effect a
Change in Control or (B) otherwise arose in connection with, or in anticipation
of, a Change in Control which has been threatened or proposed, such termination
shall be deemed to have occurred after a Change in Control for purposes of this
Plan, provided a Change in Control shall actually have occurred.
(d)"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time. References to a particular section of the Code shall include
references to any related Treasury Regulations and to successor provisions.
(e)"Committee" means the Committee appointed by the Board of Directors to
administer the Plan pursuant to the provisions of section 11(a) below.
(f)"Common Stock" means common stock, $0.01 par value, of the Company.
(g)"Company" means ONEOK, Inc., an Oklahoma corporation, its successors and
assigns, or any division or Subsidiary thereof.
(h)"Director Fees" means all compensation and fees paid to a Non-Employee
Director by the Company for his services as a member of the Board of Directors.
(i)"Director Stock Award" means an award of ONEOK, Inc. Common Stock granted
to a Non-Employee Director.
(j)"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
(k)"Fair Market Value" on a particular date means the average of the high
and low sale prices of a share of Common Stock in consolidated trading on the
date in question as reported by The Wall Street Journal or another reputable
source designated by the Committee; provided that if there were no sales on
such date reported as provided above, the respective prices on the most recent
prior day for which a sale was so reported. In the case of an Incentive Stock
Option, if the foregoing method of determining Fair Market Value should be
inconsistent with section 422 of the Code, a "Fair Market Value" shall be
determined by the Committee in a manner consistent with such section of the
Code and shall mean the value as so determined.
(l)"General Counsel" means the General Counsel of the Company serving from
time to time.
(m)"Incentive Stock Option" means an option, including an Option as the
context may require, intended to qualify for the tax treatment applicable to
incentive stock options under section 422 of the Code.
(n)"Just Cause" shall mean the Key Employee's conviction in a court of law
of a felony, or any crime or offense in a court of law of a felony, or any
crime or offense involving misuse or misappropriation of money or property, the
Key Employee's violation of any covenant, agreement or obligation not to
disclose confidential information regarding the business of the Company (or a
division or Subsidiary); any violation by the Key Employee of any covenant not
to compete with the Company (or a division or Subsidiary); any act of
dishonesty by the Key Employee which adversely affects the business of the
Company (or a division or subsidiary); any willful or intentional act of the
Key Employee which adversely affects the business of, or reflects unfavorably
on the reputation of the Company (or a division or Subsidiary); the Key
Employee's use of alcohol or drugs which interferes with the Key Employee's
performance of duties as an employee of the Company (or a division or
Subsidiary); or the Key Employee's failure or refusal to perform the specific
directives of the Company's Board of Directors, or its officers which
directives are consistence with the scope and nature of the Key Employee's
duties and responsibilities with the existence and occurrence of all of such
causes to be determined by the Company in its sole discretion; provided, that
nothing contained in the foregoing provisions of this paragraph shall be deemed
to interfere in any way with the right of the Company (or a division or
Subsidiary), which is hereby acknowledged, to terminate the Key Employee's
employment at any time without cause.
(o)"Key Employee" means an employee of the Company, including an officer or
director who is such an employee, who the Committee determines is in a position
to contribute significantly to the growth and profitability of, or to perform
services of major importance to, the Company, its divisions and Subsidiaries.
(p)"Non-Employee Director" means a member of the Board of Directors of the
Company who is not an employee of the Company, and who qualifies as a "Non-
Employee Director" under the definition of that term in SEC Rule 16b-3.
(q)"Non-Statutory Stock Option" means an option, including an Option as the
context may require, which is not intended to qualify for the tax treatment
applicable to incentive stock options under section 422 of the Code.
(r)"Option" means an option granted under this Plan to purchase shares of
Common Stock. Options may be Incentive Stock Options or Non-Statutory Stock
Options.
(s)"Participant" means a Key Employee or Non-Employee Director who has been
granted a Stock Incentive.
(t)"Performance Unit Award" means an amount of cash or shares of Common
Stock or a combination of each, that will be distributed in the future if
continued employment and/or other performance objectives or contingencies
specified by the Committee are attained. Such other performance objectives may
include, without limitation, corporate, divisional or business unit financial
or operating performance measures and such other contingencies may include the
Participant's depositing with the Company, acquiring or retaining for
stipulation time periods specified amounts of Common Stock. The amount of the
award may but need not be determined by reference to the market value of Common
Stock.
(u)"Plan" means the ONEOK, Inc. Long-Term Incentive Plan set forth in these
pages, as amended from time to time.
(v)"Plan Year" means the calendar year beginning on January 1 and ending the
next December 31.
(w)"Restricted Stock Award" means shares of Common Stock which are issued or
transferred to a Participant under Section 5 below and which will become free
of restrictions specified by the Committee if continued employment and/or other
performance objectives or contingencies specified by the Committee are
attained. Such other performance objectives may include, without limitation,
corporate, divisional or business unit financial or operating performance
measures and such other contingencies may include the Participant's depositing
with the Company, acquiring or retaining for stipulated time periods specified
amounts of Common Stock.
(x)"SEC Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission promulgated under the Exchange Act, as such rule or any successor
rule may be in effect from time to time.
(y)"Section 16 Person" means a person subject to Section 16(b) of the
Exchange Act with respect to transactions involving equity securities of the
Company.
(z)"Shares" means the common stock, par value $.01 per share, of the Company
and any other securities into which such shares are changed or for which such
shares are exchanged.
(aa)"Stock Bonus Award" means an amount of cash or shares of Common Stock
which is distributed to a Participant or which the Committee agrees to
distribute in the future to a Participant in lieu of, or as a supplement to,
any other compensation that may have been earned by services rendered prior to
the date the distribution is made. The amount of the award may but need not be
determined by reference to the market value of Common Stock. Performance Unit
Awards and Restricted Stock Awards are specific types of Stock Bonus Awards.
(bb)"Stock Incentive" means an award granted under this Plan in one of the
forms provided for in Section 3.
(cc)"Subsidiary" means a corporation or other form of business association
of which shares (or other ownership interest) having more than 50 percent of
the voting power are or in the future become owned or controlled, directly or
indirectly, by the Company; provided, however, that in the case of an Incentive
Stock Option, the term "Subsidiary" shall mean a Subsidiary (as defined by the
preceding clause) which is also a "subsidiary corporation" as defined in
Section 424(f) of the Code.
3.Grants of Stock Incentives.
(a)Subject to the provisions of the Plan, the Committee may at any time, or
from time to time, grant Key Employees Stock Bonus Awards, which may but need
not be Performance Unit Awards or Restricted Stock Awards, and/or Options,
which may be Incentive Stock Options or Non-Statutory Stock Options.
(b)Subject to the provisions of the Plan, the Committee shall grant Director
Stock Awards to Non-Employee Directors in accordance with Section 7 of the
Plan. Notwithstanding anything else otherwise expressed or implied in the Plan,
no other form of Stock Incentive shall be granted to Non-Employee Directors
under the Plan, and in no event shall any grant of an Incentive Stock Option be
made to a Non-Employee Director.
(c)After a Stock Incentive has been granted,
(i)the Committee may waive any term or condition thereof that could
have been excluded from such Stock Incentive when it was granted, and
(ii)with the written consent of the affected Participant, may amend any
Stock Incentive after it has been granted to include (or exclude) any provision
which could have been included in (or excluded from) such Stock Incentive when
it was granted, and no additional consideration need be received by the Company
in exchange for such waiver or amendment.
4.Stock Subject to the Plan.
(a)The maximum number of shares of Common Stock authorized for issuance
under the Plan as of the initial adoption of the Plan on August 17, 1995 was
1,000,000. As of August 20, 1998, the Board authorized issuance under the Plan
of an additional 1,445,200 shares. As of February 15, 2001, the Board
authorized issuance under the Plan, subject to Shareholder approval of an
additional 1,450,000 shares, subject to the provisions below of paragraph 4(c)
and of Section 9; provided, that the maximum number of shares of Common Stock
with respect to which Options or other Stock Incentives may be granted or
issued to any employee under the Plan during any year is 150,000.
(b)Such shares may be authorized but unissued shares of Common Stock, shares
of Common Stock held in treasury, whether acquired by the Company specifically
for use under this Plan or otherwise, or shares issued or transferred to, or
otherwise acquired by, a trust pursuant to paragraph 12(d) below, as the
Committee may from time to time determine, provided, however, that any shares
acquired or held by the Company for the purposes of this Plan shall, unless and
until issued or transferred to a trust pursuant to paragraph 12(d) below or to
a Participant in accordance with the terms and conditions of a Stock Incentive,
be and at all times remain authorized but unissued shares or treasury shares
(as the case may be), irrespective of whether such shares are entered in a
special account for purposes of this Plan, and shall be available for any
corporate purpose.
(c)If any shares of Common Stock subject to a Stock Incentive shall not be
issued or transferred to a Participant and shall cease to be issuable or
transferable to a Participant because of the termination, expiration or
cancellation, in whole or in part, of such Stock Incentive or for any other
reason, or if any such shares shall, after issuance or transfer, be reacquired
by the Company because of the Participant's failure to comply with the terms
and conditions of a Stock Incentive or for any other reason, the shares not so
issued or transferred, or the shares so reacquired by the Company, as the case
may be, shall no longer be charged against the limitations provided for in
paragraph (a) above of this Section 4 and may again be made subject to Stock
Incentives; provided that the number of shares not so issued or transferred and
any such reacquired shares may again be made subject to Stock Incentives for
Section 16 Persons only if the General Counsel determines that doing so would
not jeopardize any exemption from Section 16 of the Exchange Act (including
without limitation SEC Rule 16b-3) for which the Company intends Section 16
Persons to qualify. If a Participant pays the purchase price of shares subject
to an Option by surrendering
shares of Common Stock in accordance with the provisions of paragraph 6(b)(iv)
below, the number of shares surrendered shall be added back to the number of
shares available for issuance or transfer under the Plan so that the maximum
number of shares that may be issued or transferred under the Plan pursuant to
paragraph 4(a) above shall have been charged only for the net number of shares
issued or transferred pursuant to the Option exercise.
5.Stock Bonus Awards, Performance Unit Awards and Restricted Stock Awards.
Stock Bonus Awards, Performance Unit Awards and Restricted Stock Awards
shall be subject to the following provisions:
(a)A Key Employee may be granted a Stock Bonus Award, Performance Unit Award
or Restricted Stock Award, and a Non-Employee Director may be granted a
Director Stock Award, whether or not he or she is eligible to receive similar
or dissimilar incentive compensation under any other plan or arrangement of the
Company.
(b)Shares of Common Stock subject to a Stock Bonus Award may be issued or
transferred to a Participant at the time such Award is granted, or at any time
subsequent thereto, or in installments from time to time, and subject to such
terms and conditions, as the Committee shall determine. In the event that any
such issuance or transfer shall not be made to the Participant at the time such
Award is granted, the Committee may but need not provide for payment to such
Participant, either in cash or shares of Common Stock, from time to time or at
the time or times such shares shall be issued or transferred to such
Participant, of amounts not exceeding the dividends which would have been
payable to such Participant in respect of such shares (as adjusted under
Section 9) if such shares had been issued or transferred to such Participant at
the time such Award was granted.
(c)Any Stock Bonus Award, Performance Unit Award or Restricted Stock Award
may, in the discretion of the Committee, be settled in cash, on each date on
which shares would otherwise have been delivered or become unrestricted, in an
amount equal to the Fair Market Value on such date of the shares which would
otherwise have been delivered or become unrestricted; and the number of shares
for which such cash payment is made shall be added back to the maximum number
of shares available for use under the Plan, provided that the number of shares
for which such cash payment is made may be made subject to Stock Incentives for
Section 16 Persons only if the General Counsel determines that doing so would
not jeopardize any exemption from Section 16 of the Exchange Act (including
without limitation SEC Rule 16b-3) for which the Company intends Section 16
Persons to qualify.
(d)Stock Bonus Awards, Performance Unit Awards and Restricted Stock Awards
shall be subject to such terms and conditions, including, without limitation,
restrictions on the sale or other disposition of the shares issued or
transferred pursuant to such Award, and conditions calling for forfeiture of
the Award or the shares issued or transferred pursuant thereto in designated
circumstances, as the Committee shall determine; provided, however, that upon
the issuance or transfer of shares to a Participant pursuant to any such Award,
the recipient shall, with respect to such shares, be and become a shareholder
of the Company fully entitled to receive dividends, to vote and to exercise all
other rights of a shareholder except to the extent otherwise provided in the
Award. All or any portion of a Stock Bonus Award may but need not be made in
the form of a Performance Unit Award or a Restricted Stock Award.
(e)Each Stock Bonus Award, Performance Unit Award and Restricted Stock Award
shall be evidenced by a written instrument in such form as the Committee shall
determine, signed by an officer of the Company duly authorized to do so,
provided that such instrument is consistent with this Plan and incorporates it
by reference.
(f)Director Stock Awards shall be granted as determined by the Committee in
accordance with the provisions of Section 7, and as otherwise provided by this
Plan.
6.Options.
Options shall be subject to the following provisions:
(a)Subject to the provisions of Section 9, the purchase price per share
shall be, in the case of an Incentive Stock Option, not less than 100 percent
of the Fair Market Value of a share of Common Stock on the date the Incentive
Stock Option is granted (or in the case of any optionee who, at the time such
Incentive Stock Option is granted, owns stock possessing more than 10 percent
of the total combined voting power of all classes of stock of
his or her employer corporation or of its parent or subsidiary corporation, not
less than 110 percent of the Fair Market Value of a share of Common Stock on
the date the Incentive Stock Option is granted) and, in the case of a Non-
Statutory Stock Option, not less than the par value (if any) of a share of
Common Stock on the date the Non-Statutory Stock Option is granted. A Non-
Statutory Stock Option may (but need not) entitle the Participant to purchase
shares of Common Stock at any fixed discount specified by the Committee from
Fair Market Value on the date of purchase. Subject to the foregoing
limitations, the purchase price per share may, if the Committee so provides at
the time of grant of an Option, be indexed to the increase or decrease in an
index specified by the Committee.
(b)The purchase price of shares subject to an Option may be paid in whole or
in part (i) in cash, (ii) by bank-certified, cashier's or personal check
subject to collection, (iii) if so provided in the Option and subject to such
terms and conditions as the Committee may impose, by delivering to the Company
a properly executed exercise notice together with a copy of irrevocable
instructions to a stockbroker to sell immediately some or all of the shares
acquired by exercise of the Option and to deliver promptly to the Company an
amount of sale proceeds (or, in lieu of or pending a sale, loan proceeds)
sufficient to pay the purchase price, or (iv) if so provided in the Option and
subject to such terms and conditions as are specified in the Option, in shares
of Common Stock or other property surrendered to the Company. Property for
purposes of this paragraph shall include an obligation of the Company unless
prohibited by applicable law. Shares of Common Stock thus surrendered shall be
valued at their Fair Market Value on the date of exercise. Any such other
property thus surrendered shall be valued at its fair market value on any
reasonable basis established or approved by the Committee. If so provided in
the Option and subject to such terms and conditions as are specified in the
Option, in lieu of the foregoing methods of payment, any portion of the
purchase price of the shares to be issued or transferred may be paid by a
promissory note secured by pledge of the purchased shares in such form and
containing such provisions (which may but need not provide for interest and for
payment of the note at the election of the Participant in cash or in shares of
Common Stock or other property surrendered to the Company) as the Committee may
approve; provided that (A) if the Committee permits any such note to be paid by
surrender of shares of Common Stock, such shares shall be valued at their Fair
Market Value on the date of such surrender, and (B) if the Committee permits
any such note to be paid by surrender of other property, such other property
shall be valued at its fair market value on any reasonable basis established or
approved by the Committee, and (C) in the case of an Incentive Stock Option,
any such note shall bear interest at the minimum rate required to avoid
imputation of interest under federal income tax laws applicable at the time of
exercise and (D) any such note shall mature in ten years or such lesser period
as may be specified by the Committee.
(c)Options may be granted for such lawful consideration, including money or
other property, tangible or intangible, or labor or services received or to be
received by the Company, as the Committee may determine when the Option is
granted. Property for purposes of the preceding sentence shall include an
obligation of the Company unless prohibited by applicable law. Subject to the
foregoing and the other provisions of this Section 6, each Option may be
exercisable in full at the time of grant or may become exercisable in one or
more installments, at such time or times and subject to satisfaction of such
terms and conditions as the Committee may determine. The Committee may at any
time accelerate the date on which an Option becomes exercisable, and no
additional consideration need be received by the Company in exchange for such
acceleration. Unless otherwise provided in the Option, an Option, to the extent
it becomes exercisable, may be exercised at any time in whole or in part until
the expiration or termination of the Option.
(d)Each Option shall be exercisable during the life of the optionee only by
him or her or his or her guardian or legal representative, and after the death
only by his or her Beneficiary or, absent a Beneficiary, by his or her estate
or by a person who acquired the right to exercise the Option by will or the
laws of decent and distribution; provided that an Option of a Section 16 Person
and any Incentive Stock Option may be exercisable after death by a Beneficiary
only if such exercise would be, in the opinion of the General Counsel,
permissible under and consistent with SEC Rule 16b-3 or Section 422 of the
Code, as the case may be. Each Option shall expire at such time or times as the
Committee may determine, provided that notwithstanding any other provision of
this Plan, (i) no Option shall be exercisable after the tenth anniversary of
the date the Option was granted, and (ii) no Incentive Stock Option which is
granted to any optionee who, at the time such Option is granted, owns stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of his or her employer corporation or of its parent or
subsidiary corporation, shall be exercisable after the expiration of five (5)
years from the date such Option is granted. If an Option is granted for a term
of less than ten years, the Committee may, at any time prior to the expiration
of the Option, extend its term for a period ending not later than on the tenth
anniversary of the date the Option was granted, and no additional consideration
need be received by the Company in exchange for such extension. The Committee
may but need not provide for an Option to be exercisable after termination of
employment until its fixed expiration date (or until an earlier date or
specified event occurs).
(e)An Option may, but need not, be an Incentive Stock Option. All shares of
Common Stock which may be made subject to Stock Incentives under this Plan may
be made subject to Incentive Stock Options; provided that the aggregate Fair
Market Value (determined as of the time the Option is granted) of the stock
with respect to which Incentive Stock Options may be exercisable for the first
time by any Key Employee during any calendar year (under all plans, including
this Plan, of his or her employer corporation and its parent and subsidiary
corporations) shall not exceed $100,000 or such other amount as may apply under
the Code.
(f)Each Option shall be evidenced by a written instrument, signed by an
officer of the Company duly authorized to do so, which shall contain such terms
and conditions, and shall be in such form, as the Committee shall determine,
provided the instrument is consistent with this Plan and incorporates it by
reference. An Option, if so approved by the Committee, may include terms,
conditions, restrictions and limitations in addition to those provided for in
this Plan including, without limitation, terms and conditions providing for the
transfer or issuance of shares, on exercise of an Option, which may be non-
transferable and forfeitable to the Company in designated circumstances.
(g)The Committee may specify, at the time of grant of an Incentive Stock
Option or, with respect to a Non-Statutory Stock Option, at or after the time
of grant, that a Participant shall be granted a Non-Statutory Stock Option (a
"Restored Option") if and when (i) such Participant exercise all or part of an
Option, including a previously granted Restored Option, (an "Original Option")
by surrendering shares of Common Stock already owned by him or her in full or
partial payment of the Option price under such Original Option and/or (ii)
shares of Common Stock are surrendered or withheld to satisfy tax obligations
incident to the exercise of such Original Option. All Restored Options shall be
subject to the availability of shares of Common Stock under the Plan at the
time of such exercise. A Restored Option shall cover a number of shares of
Common Stock not greater than the number of shares of Common Stock surrendered
in payment of the option price under such Original Option and/or used to
satisfy any tax obligation incident to the exercise of such Original Option.
Each Restored Option shall have an option price equal to the Fair Market Value
of the Common Stock on the date of grant of the Restored Option and shall
expire on the stated expiration date of the Original Option. The date of grant
of a Restored Option shall be the date on which the exercise of the Original
Option or a previously granted Restored Option resulted in the grant of such
Restored Option. A Restored Option shall be exercisable at any time and from
time to time from or after the date of grant of the Restored Option (or as the
Committee in its sole discretion shall otherwise specify in the written
instrument evidencing the Restored Option). The written instrument evidencing a
Restored Option shall contain such other terms and conditions, which may
include a restriction on the transferability of the Common Stock received upon
the exercise of the Original Option or Restored Option, as the Committee in its
sole discretion may deem desirable.
(h)No Participant shall make any elective contribution or employee
contribution to the Plan (within the meaning of Treasury Regulation Section
1.401(k)-1(d)(2)(iv)(B)(4) during the balance of the calendar year after the
Participant's receipt of a hardship distribution from a plan of the Company or
a related party within the provisions of Code Sections 414(b), (c), (m) or (o)
containing a cash or deferred arrangement under Section 401(k) of the Code, or
during the following calendar year. The preceding sentence shall not apply if
and to the extend that the General Counsel determines it is not necessary to
qualify any such plan as a cash or deferred arrangement under Section 401(k) of
the Code.
(i)No Option shall be exercisable unless and until the Company (i) obtains
the approval of all regulatory bodies whose approval the General Counsel may
deem necessary or desirable, and (ii) complies with all legal requirements
deemed applicable by the General Counsel.
(j)An Option shall be considered exercised if and when written notice,
signed by the person exercising the Option and stating the number of shares
with respect to which the Option is being exercised, is received by the
Secretary on a properly completed form approved for this purpose by the
Committee, accompanied by full payment of the Option exercise price in one or
more of the forms authorized by the Committee and described in Section 6(b)
above for the number of shares to be purchased. No Option may at any time be
exercised with respect to a fractional share.
7.Director Stock Awards.
(a)Each Non-Employee Director Participant shall receive such portion of his
Director Fees in Common Stock as shall be established from time to time by the
Board, with the remainder of such Director Fees to be payable in cash or in
Common Stock as elected by the Non-Employee Director Participant in accordance
with paragraph 7(b), below.
(b)Each Non-Employee Director Participant shall have an opportunity to elect
to have the remaining portion of his Director Fees paid in cash or shares of
Common Stock or a combination thereof. Except for the initial election pursuant
to the adoption of the Plan with this Section 7 therein, or the Director's
election to the Board, any such election shall be made in writing and must be
made at least thirty (30) days before the beginning of the Plan Year in which
the services are to be rendered giving rise to such Director Fees and may not
be changed thereafter except by timely written election as to Director Fees for
services to be rendered in a subsequent Plan Year. In the absence of such an
election, such remaining portion of the Director Fees of a Non-Employee
Director shall be paid entirely in cash. Nothing contained in this paragraph
7(b) shall be interpreted in such a manner as would disqualify the Plan for
treatment as a "formula plan" under Rule 16b-3 pursuant to which the terms and
conditions of each transaction authorized by this Section 7 are fixed in
advance by the relevant terms and provisions thereof.
(c)The number of shares of Common Stock to be paid and distributed to a Non-
Employee Director under the provisions paragraphs 7(a) and (b), above, shall be
determined by dividing the dollar amount of his Director Fees (which the Board
has established, and/or such Non-Employee Director has elected) to be paid in
Common Stock on any payment date by the Fair Market Value of a share of Common
Stock on that date. Except as may otherwise be directed by the Committee, in
its sole discretion, the payment and distribution of such shares to a Non-
Employee Director shall be on or within five days after the date such Director
Fees would otherwise have been paid to him in cash.
8.Certain Change in Control, Termination of Employment and Disability
Provisions.
Notwithstanding any provision of the Plan to the contrary, any Stock
Incentive which is outstanding but not yet exercisable, vested or payable at
the time of a Change in Control shall become exercisable, vested and payable at
that time; provided that if such Change in Control occurs less than six months
after the date on which such Stock Incentive was granted and if the
consideration for which such Stock Incentive was granted consisted in whole or
in part of future services, then such Stock Incentive shall become exercisable,
vested and payable at the time of such Change in Control only if the
Participant agrees in writing (if requested to do so by the Committee in
writing) to remain in the employ of the Company or a Subsidiary at least
through the date which is six months after the date such Stock Incentive was
granted with substantially the same title, duties, authority, reporting
relationships and compensation as on the day immediately preceding the Change
in Control. Any Option affected by the preceding sentence shall remain
exercisable until it expires or terminates pursuant to its terms and
conditions. Subject to the foregoing provisions of this Section 8, the
Committee may at any time, and subject to such terms and conditions as it may
impose:
(a)authorize the holder of an Option to exercise the Option following the
termination of the Participant's employment with the Company and its
Subsidiaries, or following the Participant disability, whether or not the
Option would otherwise be exercisable following such event, provided that in no
event may an Option be exercised after the expiration of its term;
(b)grant Options which become exercisable only in the event of a Change in
Control;
(c)authorize a Stock Bonus Award, Performance Unit Award or Restricted Stock
Award to become non-forfeitable, fully earned and payable upon or following (i)
the termination of the Participant's employment with the Company and its
Subsidiaries, or (ii) the Participant's disability, whether or not the Award
would otherwise become non-forfeitable, fully earned and payable upon or
following such event;
(d)grant Stock Bonus Awards, Performance Unit Awards and Restricted Stock
Awards which become non-forfeitable, fully earned and payable only in the event
of a Change in Control; and
(e)provide in advance or at the time of Change in Control for cash to be
paid in settlement of any Option, Stock Bonus Award, Performance Unit Award or
Restricted Stock Award in the event of a Change in Control, either at the
election of the Participant or at the election of the Committee.
9.Adjustment Provisions.
In the event that any recapitalization, or reclassification, split up or
consolidation of shares of Common Stock shall be effected, or the outstanding
shares of Common Stock shall be, in connection with a merger or consolidation
of the Company or a sale by the Company of all or a part of its assets,
exchanged for a different number or class of shares of stock or other
securities or property of the Company or any other entity or person, or a
record date for determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in Common Stock or other property (other
than normal cash dividends) shall occur, (a) the number and class of shares or
other securities or property that may be issued or transferred pursuant to
Stock Incentives thereafter granted or that may be optioned or awarded under
the Plan to any Participant, (b) the number and class of shares or other
securities or property that may be issued or transferred under outstanding
Stock Incentives, (c) the purchase price to be paid per share under outstanding
and future Stock Incentives, and (d) the price to be paid per share by the
Company or a Subsidiary for shares or other securities or property issued or
transferred pursuant to Stock Incentives which are subject to a right of the
Company or a Subsidiary to reacquire such shares or other securities or
property, shall in each case be equitably adjusted; provided that with respect
to Incentive Stock Options any such adjustments shall comply with Sections 422
and 424 of the Code.
10.Effective Date and Duration of Plan.
The Plan shall be effective when it is first approved by the Board of
Directors, provided that the shareholders of the Company thereafter approve it
within one year of that date. If the Plan is not so approved by shareholders,
the Plan (and any Stock Incentive granted thereunder) shall be null, void and
of no force or effect. If so approved, the Plan shall remain in effect, and
Stock Incentives may be granted, until Stock Incentives have been granted with
respect to all shares authorized to be issued or transferred hereunder or until
the Plan is sooner terminated by the Board of Directors, and shall continue in
effect thereafter with respect to any Stock Incentives outstanding at that
time. In no event shall an Incentive Stock Option be granted under the Plan
more than ten (10) years from the date the Plan is first adopted by the Board,
or the date the Plan is approved by the shareholders of the Company, whichever
is earlier.
11.Administration.
(a)The Plan shall be administered by a committee of the Board consisting of
two or more directors appointed from time to time by the Board. No person shall
be appointed to or shall serve as a member of such committee unless at the time
of such appointment and service he or she shall be a "Non-Employee Director,"
as defined in SEC Rule 16b-3. Unless the Board determines otherwise, the
Committee shall be comprised solely of "outside directors" within the meaning
of Section 162(m)(4)(C)(i) of the Code.
(b)The Committee may establish such rules and regulations, not inconsistent
with the provisions of the Plan, as it may deem necessary for the proper
administration of the Plan, and may amend or revoke any rule or regulation so
established. The Committee shall, subject to the provisions of the Plan, have
full power to interpret, administer and construe the Plan and any instruments
issued under the Plan and full authority to make all determinations and
decisions thereunder including without limitation the authority to (i) select
the Participants in the Plan, (ii) determine when Stock Incentives shall be
granted, (iii) determine the number of shares to be made subject to each Stock
Incentive, (iv) determine the type of Stock Incentive to grant, and (v)
determine the terms and conditions of each Stock Incentive, including the
exercise price, in the case of an Option, and (vi) approve any transaction
involving a Stock Incentive for a Section 16 Person (other than a
"Discretionary Transaction" as defined in SEC Rule 16b-3) so as to exempt such
transaction under SEC Rule 16b-3; provided, that any transaction under the Plan
involving a Section 16 Person also may be approved by the Board of Directors,
or may be approved or ratified by the stockholders of the Company, in the
manner that exempts such transaction under SEC Rule 16b-3. The interpretation
by the Committee of the terms and provisions of the Plan and any instrument
issued thereunder, and its administration thereof, and all action taken by the
Committee, shall be final, binding, and conclusive on the Company, its
stockholders, Subsidiaries, all Participants and employees, and upon their
respective Beneficiaries, successors and assigns, and upon all other persons
claiming under or through any of them.
(c)Members of the Board of Directors and members of the Committee acting
under this Plan shall be fully protected in relying in good faith upon the
advice of counsel and shall incur no liability except for gross or willful
misconduct in the performance of their duties.
12.General Provisions.
(a)Any provision of the Plan to the contrary notwithstanding, any Stock
Incentive issued under the Plan, including without limitation any Option, shall
not be transferable by the Participant other than by will or the laws of
descent and distribution or to a Beneficiary designated by the Participant,
unless the instrument evidencing the Stock Incentive expressly so provides (or
is amended to so provide) and is approved by the Committee; and any purported
transfer of an Incentive Stock Option to a Beneficiary, shall be effective only
if such transfer is, in the opinion of the General Counsel, permissible under
and consistent with SEC Rule 16b-3 or Section 422 of the Code, as the case may
be. Notwithstanding the foregoing, a Participant may transfer any Stock
Incentive granted under this Plan, other than an Incentive Stock Option, to
members of his or her immediate family (defined as his or her children,
grandchildren and spouse) or to one or more trusts for the benefit of such
immediate family members or partnerships in which such immediate family members
are the only partners if (and only if) the instrument evidencing such Stock
Incentive expressly so provides (or is amended to so provide) and is approved
by the Committee, and the Participant does not receive any consideration for
the transfer; provided that any such transferred Stock Incentive shall continue
to be subject to the same terms and conditions that were applicable to such
Stock Incentive immediately prior to its transfer (except that such transferred
Stock Incentive shall not be further transferable by the transferee inter
vivos, except for transfer back to the original Participant holder of the Stock
Incentive) and provided, further, that the foregoing provisions of this
sentence shall apply to Section 16 Persons only if the General Counsel
determines that doing so would not jeopardize any exemption from Section 16 of
the Exchange Act (including without limitation SEC Rule 16b-3) for which the
Company intends Section 16 Persons to qualify.
(b)Nothing in this Plan or in any instrument executed pursuant hereto shall
confer upon any person any right to continue in the employment of the Company
or a Subsidiary, or shall affect the right of the Company or a Subsidiary to
terminate the employment of any person at any time with or without cause.
(c)No shares of Common Stock shall be issued or transferred pursuant to a
Stock Incentive unless and until all legal requirements applicable to the
issuance or transfer of such shares have, in the opinion of the General
Counsel, been satisfied. Any such issuance or transfer shall be contingent upon
the person acquiring the shares giving the Company any assurances the General
Counsel may deem necessary or desirable to assure compliance with all
applicable legal requirements.
(d)No person (individually or as a member of a group) and no Beneficiary or
other person claiming under or through him, shall have any right, title or
interest in or to any shares of Common Stock (i) issued or transferred to, or
acquired by, a trust, (ii) allocated, or (iii) reserved for the purposes of
this Plan, or subject to any Stock Incentive except as to such shares of Common
Stock, if any, as shall have been issued or transferred to him. The Committee
may (but need not) provide at any time or from time to time (including without
limitation upon or in contemplation of a Change in Control) for a number of
shares of Common Stock, equal to the number of such shares subject to Stock
Incentives then outstanding, to be issued or transferred to, or acquired by, a
trust (including but not limited to a grantor trust) for the purpose of
satisfying the Company's obligations under such Stock Incentives, and, unless
prohibited by applicable law, such shares held in trust shall be considered
authorized and issued shares with full dividend and voting rights,
notwithstanding that the Stock Incentives to which such shares relate shall not
have been exercised or may not be exercisable or vested at that time.
(e)The Company and its Subsidiaries may make such provisions as they may
deem appropriate for the withholding of any taxes which they determine they are
required to withhold in connection with any Stock Incentive. Without limiting
the foregoing, the Committee may, subject to such terms and conditions as it
may impose, permit or require any withholding tax obligation arising in
connection with the grant, exercise, vesting, distribution or payment of any
Stock Incentive to be satisfied in whole or in part, with or without the
consent of the Participant, by having the Company withhold all or any part of
the shares of Common Stock that vest or would otherwise be distributed at such
time. Any shares so withheld shall be valued at their Fair Market Value on the
date of such withholding.
(f)Nothing in this Plan is intended to be a substitute for, or shall
preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or fringe benefits to
directors, officers or employees generally, or to any class or group of such
persons, which the Company or any Subsidiary now has or may hereafter lawfully
put into effect, including, without limitation, any incentive compensation,
retirement, pension, group insurance, stock purchase, stock bonus or stock
option plan.
(g)Any provision of the Plan to the contrary notwithstanding, except to the
extent that the Committee determines otherwise, (i) transactions by and with
respect to Section 16 Persons under the Plan are intended to qualify for any
applicable exemptions provided by SEC Rule 16b-3, and (ii) transactions with
respect to persons whose remuneration would not be deductible by the Company
but for compliance with the provisions of Code Section 162(m)(4)(C) are
intended to comply with the provisions of Code Section 162(m)(4)(C). The Plan
is also intended to give the Committee the authority to award Stock Incentives
that qualify as performance-based compensation under Code Section 162(m)(4)(C)
as well as Stock Incentives that do not so qualify. Every provision of the Plan
shall be administered, interpreted and constructed to carry out the foregoing
intentions and any provision that cannot be so administered, interpreted and
construed shall to that extent be disregarded.
(h)By accepting any benefits under the Plan, each Participant, and each
person claiming under or through him, shall be conclusively deemed to have
indicated his or her acceptance and ratification of, and consent to, all
provisions of the Plan and any action or decision under the Plan by the
Company, its agents and employees, and the Board of Directors and the
Committee.
(i)The validity, construction, interpretation and administration of the Plan
and of any determinations or decisions made thereunder, and the rights of all
persons having or claiming to have any interest therein or thereunder, shall be
governed by, and determined exclusively in accordance with, the laws of the
State of Delaware, but without giving effect to the principles of conflicts of
laws thereof. Without limiting the generality of the foregoing, the period
within which any action arising under or in connection with the Plan must be
commenced, shall be governed by the laws of the State of Delaware, without
giving effect to the principles of conflicts of laws thereof, irrespective of
the place where the act or omission complained of took place and of the
residence of any party to such action and irrespective of the place where the
action may be brought.
(j)The use of the masculine gender shall also include within its meaning the
feminine. The use of the singular shall include within its meaning the plural
and vice versa.
13.Amendment and Termination.
The Plan may be amended by the Board of Directors, without shareholder
approval, at any time and in any respect, unless shareholder approval of the
amendment in question is required under Oklahoma law, the Code (including
without limitation Code Section 422 and Proposed Treasury Regulation Section
1.422A9(b)(iv) thereunder), any applicable exemption from Section 16 of the
Exchange Act (including without limitation SEC Rule 16b-3) for which the
Company intends Section 16 Persons to qualify, any national securities exchange
or system on which the Stock is then listed or reported, by any regulatory body
having jurisdiction with respect to the Plan, or under any other applicable
laws, rules or regulations. The Plan may also be terminated at any time by the
Board of Directors. No amendment or termination of this Plan shall adversely
affect any Stock Incentive granted prior to the date of such amendment or
termination without written consent of the Participant.
APPENDIX A
AUDIT COMMITTEE CHARTER
Responsibilities:
To provide assistance to the Directors in fulfilling their responsibility to
the shareholders, potential shareholders, and the investment community relating
to corporate accounting, reporting practices of the Company, and the quality
and integrity of the financial reports of the Company. The Committee reviews
and reports to the Board on the quality and performance of ONEOK's internal and
external accountants and auditors, the reliability of its financial
information, the adequacy of its internal controls and policies, and the
corporate compliance process, initiating and/or approving appropriate changes
in any or all of these areas when necessary.
Structure and Membership Requirements:
Membership of the Committee shall consist of at least five members of the
Board of Directors who shall serve at the pleasure of the Board of Directors.
Committee members and the Committee chair shall be designated by the full Board
of Directors, upon the recommendation of the Nominating and Corporate
Governance Committee. All Committee members shall be independent of management
and the Company. Members of the Committee shall be considered independent if
they have no relationship that may interfere with the exercise of their
independence from management and the Company.
All Committee members shall possess a minimum level of financial literacy,
and at least one member of the Committee shall possess accounting or related
financial management expertise.
Processes: To accomplish its responsibilities, the Committee shall:
1. Provide an open avenue of communication among the internal auditors, the
independent accountant, and the Board of Directors.
2. Consult with management and recommend to the Board of Directors the
independent accountant to be nominated, approve the compensation of the
independent accountant, and review and approve the discharge of the
independent accountant.
3. Review the appointment, replacement, reassignment, or dismissal of the head
of internal audit.
4. Confirm and ensure the independence of the independent accountant in
accordance with Independence Standards Board Standard 1 "Independence
Discussions with Audit Committees." Review and discuss with the independent
accountant management consulting services and related fees provided by the
independent accountant, as well as other relationships that may impact their
objectivity and independence.
5. Confirm with the independent accountant that they are accountable to the
Board of Directors and the Committee.
6. In accordance with Codification of Statements on Auditing Standards ("SAS
61"), the Committee shall ensure that the independent accountant discloses
and discusses with the Committee the following:
a. methods used to account for significant unusual transactions;
b. the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance or
consensus;
c. the process used by management in formulating particularly sensitive
accounting estimates and the basis for the independent accountant's
conclusions regarding the reasonableness of those estimates; and
d. disagreements with management over the application of accounting
principles, the basis for management's accounting estimates, and the
disclosures in the financial statements.
7. Confirm and ensure the independence of the internal auditor.
8. Inquire of management, the head of internal audit, and the independent
accountant about significant risks or exposures, and assess the steps
management has taken to minimize such risk to the Company.
9. Consider in consultation with the independent accountant and the head of
internal audit, the audit scope and plans made by the internal auditors and
the independent accountant.
10. Review with management the rationale for employing audit firms other than
the principal independent accountant.
11. Review with the head of internal audit and the independent accountant the
coordination of audit efforts to assure completeness of coverage, reduction
of redundant efforts, and the effective use of audit resources.
12. Consider and review the following with the independent accountant and the
head of internal audit:
a. The adequacy of the Company's internal controls, including computerized
information system controls and security;
b. Any related significant findings and recommendations of the independent
accountant and internal audit, together with management's responses to
them.
13. Ensures that the independent accountant reviews the financial information
included in the Company's Quarterly Reports on Form 10-Q prior to filing
such reports with the Securities and Exchange Commission.
14. Review the following with management and the independent accountant at the
completion of the annual audit, but prior to release of financial
information to the public:
a. The Company's annual financial statements and related footnotes.
b. The independent accountant's audit of the financial statements and the
related report.
c. Any significant changes required in the independent accountant's audit
plan.
d. Any serious difficulties or disputes with management encountered during
the course of the audit.
e. Other matters related to the conduct of the audit which are to be
communicated to the Committee under generally accepted auditing
standards.
15. Consider and review the following with management and the head of internal
auditing:
a. Significant findings during the year and management's responses to them.
b. Any difficulties encountered in the course of the audits, including any
restrictions on the scope of work or access to required information.
c. Any changes required in the planned scope of the audit plan.
d. Budget and staffing of the internal audit department.
e. The charter for the internal audit department.
f. Internal audit's compliance with The Institute of Internal Auditors
Standards for the Professional Practice of Internal Auditing.
16. Review with management, the independent accountant, and the head of
internal audit filings with the SEC and other published documents
containing the Company's financial statements, and consider whether the
information contained in these documents is consistent with the information
contained in the financial statements.
17. Review with the head of internal auditing and the independent accountant
the results of their review of the Company's monitoring of compliance with
the Company's Code of Business Conduct and Conflict of Interest Policy.
18. Review legal and regulatory matters that may have a material impact on the
financial statements, related company compliance policies, and programs and
reports received from regulators.
19. Meet with the head of internal audit, the independent accountant, and
management in separate executive sessions to discuss any matters that the
Committee or these groups believe should be discussed privately with the
Committee.
20. Report Committee actions to the full Board of Directors with such
recommendations as the Committee may deem appropriate.
21. Prepare a report for inclusion in the Company's Proxy Statement that states
that this Committee has adopted a charter, has reviewed and discussed the
audited financial statements with management, has discussed with the
independent accountant the matters required to be discussed by SAS 61, has
received the written disclosures and the letter from the independent
accountant required by ISB Standard No. 1, and has discussed independence
with the independent accountant.
22. Perform such other functions as assigned by law, the Company's charter or
By-laws, or the Board of Directors.
Agenda Items
The activities of the Audit Committee are developed from year to year by the
Committee in consultation with management. The Committee shall meet as
frequently as circumstances require. The Committee may ask members of
management or others to attend the meetings and provide pertinent information
as necessary.
Please mark your votes
[X] as in the example.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder(s). If no direction is made, this Proxy will be
voted FOR Items 1, 2, 3, and 4.
- ---------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1, 2, 3, and 4.
- ---------------------------------------------------------------------------------------------------------------------
1. Election of three Directors in FOR WITHHELD Election of Director Nominees:
Class A and one Director in Class B All For All 01. Douglas T. Lake, Class A
Nominees Nominees 02. Douglas Ann Newsom, Ph.D., Class A
[_] [_] 03. J. D. Scott, Class A
04. John B. Dicus, Class B
For, except vote withheld from the following nominee(s):
_____________________________________________
- ---------------------------------------------------------------------------------------------------------------------
2. Approval of amending the ONEOK, FOR AGAINST ABSTAIN
Inc. Certificate of Incorporation [_] [_] [_]
to increase authorized capital
stock and split up the outstanding
common stock on a two-for-one basis
- ---------------------------------------------------------------------------------------------------------------------
3. Approval of the reservation of FOR AGAINST ABSTAIN
1,450,000 additional shares of [_] [_] [_]
common stock for issuance under
the ONEOK, Inc. Long-Term
Incentive Plan
- ---------------------------------------------------------------------------------------------------------------------
4. Ratify KPMG LLP as principal FOR AGAINST ABSTAIN
Independent Auditor [_] [_] [_]
- ----------------------------------------------------------------------------------------------------------
[_] Yes, I plan to attend the Annual Meeting.
[_] Comments/Address Change.
SIGNATURE(S) ____________________________________ DATE ______________________
NOTE: Please sign exactly as name appears on this proxy card. Joint owners
should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If signer is a
corporation, please sign full corporate name by a duly authorized officer.
ONEOK, Inc. encourages you to take advantage of a new and convenient way by
which you can vote your shares - by either telephone or the Internet.
- - By Telephone. On a touch-tone telephone call 1-877-PRX-VOTE (1-877-779-8683).
Listen to the recorded instructions, use the control number printed in the box
in the upper right corner of this proxy card to access the system, and use your
telephone key pad to vote.
- - Over the Internet. Access the web site at "http://www.eproxyvote.com/oke" and
follow the instructions posted on the web site.
Your vote by telephone or over the Internet authorizes the proxies named on the
front of this proxy card in the same manner as if you marked, signed, dated and
returned the proxy card. If you choose to vote your shares by either of these
electronic means, there is no need for you to mail back your proxy card.
Your vote is important. Thank you for voting.
Solicited on Behalf of the Board of Directors of
ONEOK, Inc.
100 West Fifth Street
Tulsa, Oklahoma 74103-4298
Annual Meeting of Shareholders - May 17, 2001
DAVID L. KYLE and DEBORAH B. BARNES, jointly or individually and with full power
of substitution, are authorized to represent and vote the shares of common
stock, $0.01 par value, of ONEOK, Inc. held of record by the undersigned on
March 19, 2001, at the Annual Meeting of Shareholders, and at any adjournment or
postponement thereof, as indicated on the reverse side.
This card also provides voting instructions for shares held in the ONEOK, Inc.
Direct Stock Purchase and Dividend Reinvestment Plan and the Thrift Plan for
Employees of ONEOK, Inc. and Subsidiaries as described under "Voting Methods" in
the accompanying Proxy Statement.
(Change of address/Comments)
___________________________________________
___________________________________________
___________________________________________
___________________________________________
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card)
Trustee's Authorization. The Undersigned Authorizes First Chicago Trust Company
of New York, a Division of EquiServe, to tabulate all shares of Common Stock of
the Company credited to the undersigned's account and the Trustee to vote all
shares of Common Stock under The Thrift Plan for Employees of ONEOK, Inc. and
Subsidiaries at the annual meeting in accordance with the instructions on the
reverse side.