SCHEDULE 14A INFORMATION
                       Proxy Statement Pursuant to Section 14(a) of the
                                Securities Exchange Act of 1934

Filed by Registrant:                        [X]
Filed by a Party other than the Registrant  [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement      [ ] Confidential, for Use of the Commission
                                         Only as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12


-------------------------------------------------------------------------------
                                NL INDUSTRIES, INC.

               (Name of Registrant as Specified in Its Charter)

--------------------------------------------------------------------------------
     (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)(1) and 0-11.

      1)  Title of each class of securities to which transaction applies:

      2)  Aggregate number of securities to which transaction applies:

      3)  Per unit  price  or other  underlying  value of  transaction  computed
          pursuant  to  Exchange  Act Rule 0-11 (set  forth  amount on which the
          filing fee is calculated and state how it was determined):

      4)  Proposed maximum aggregate value of transaction:

      5)  Total fee paid:

[  ]  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
      number, or the Form or Schedule and the date of its filing.

      1)  Amount Previously Paid:

      2)  Form, Schedule or Registration Statement No.:

      3)  Filing Party:

      4)  Date Filed:




<PAGE>


                             NL Industries, Inc.
                      16825 Northchase Drive, Suite 1200
                             Houston, Texas 77060



                                March 31, 1997



Dear Shareholder:

      You  are  cordially   invited  to  attend  the  1997  Annual   Meeting  of
Shareholders  of NL Industries,  Inc.,  which will be held on Wednesday,  May 7,
1997,  at 10:00 a.m.  (C.D.T.)  at the offices of Valhi,  Inc.  located at Three
Lincoln Centre, 5430 LBJ Freeway,  Suite 1700, Dallas, Texas. In addition to the
matters to be acted upon at the  meeting,  which are  described in detail in the
attached Notice of Annual Meeting of Shareholders and Proxy  Statement,  we will
update you on the Company. I hope that you will be able to attend.

      Whether or not you plan to be at the meeting, please complete,  date, sign
and return the proxy card or voting  instruction  form  enclosed with this Proxy
Statement  promptly so that your shares are represented at the Meeting and voted
in accordance with your wishes.  Your vote,  whether given by proxy or in person
at the Meeting,  will be held in confidence by the Inspector of Election for the
meeting in accordance with NL's By-laws.


                                          Sincerely,





                                          J. Landis Martin
                                          President and Chief Executive Officer


<PAGE>




                              NL Industries, Inc.
                      16825 Northchase Drive, Suite 1200
                             Houston, Texas 77060

                   NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

                            To Be Held May 7, 1997

To the Shareholders of NL Industries, Inc.:

      NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of  Shareholders  (the
"Annual  Meeting")  of NL  Industries,  Inc.,  a  New  Jersey  corporation  (the
"Company"  or "NL"),  will be held on  Wednesday,  May 7,  1997,  at 10:00  a.m.
(C.D.T.) at the offices of Valhi, Inc. located at Three Lincoln Centre, 5430 LBJ
Freeway, Suite 1700, Dallas, Texas, for the following purposes:

      1. To elect seven  directors  to serve  until the 1998  Annual  Meeting of
         Shareholders and until their successors are duly elected and qualified;
         and

      2. To transact such other  business as may properly come before the Annual
         Meeting or any adjournment or postponement thereof.

      The Board of  Directors  of the Company set the close of business on March
19,  1997 as the  record  date (the  "Record  Date")  for the  determination  of
shareholders  entitled  to notice of, and to vote at, the Annual  Meeting.  Only
holders  of  record of NL's  common  stock,  $.125 par value per share  ("Common
Stock"),  at the close of business on the Record Date are entitled to notice of,
and to vote at, the Annual Meeting.  The Company's stock transfer books will not
be closed following the Record Date.

      You are cordially invited to attend the Annual Meeting. Whether or not you
expect to attend the Annual Meeting in person,  please complete,  sign, date and
mail the enclosed  proxy card or voting  instruction  form promptly so that your
shares may be represented and voted at the Annual  Meeting.  You may revoke your
proxy by following the procedures set forth in the accompanying Proxy Statement.
If you  choose,  you may vote in person at the Annual  Meeting  even  though you
previously submitted your proxy.

                                By order of the Board of Directors,



                                David B. Garten
                                Vice President, Secretary and General Counsel


Houston, Texas
March 31, 1997

<PAGE>


                               NL Industries, Inc.
                       16825 Northchase Drive, Suite 1200
                              Houston, Texas 77060

                            ------------------------
                                 PROXY STATEMENT
                            ------------------------


                               GENERAL INFORMATION

      This Proxy Statement and the accompanying proxy card or voting instruction
form are being furnished in connection  with the  solicitation of proxies by and
on behalf of the Board of Directors (the "Board") of NL Industries,  Inc., a New
Jersey corporation (the "Company" or "NL"), for use at the Company's 1997 Annual
Meeting of Shareholders to be held at 10:00 a.m.  (C.D.T.) on Wednesday,  May 7,
1997, at the offices of Valhi,  Inc.  located at Three Lincoln Centre,  5430 LBJ
Freeway,  Suite  1700,  Dallas,  Texas  75240-2697,  and at any  adjournment  or
postponement  thereof  (the  "Annual  Meeting").  This Proxy  Statement  and the
accompanying  proxy card or voting  instruction  form were  first  mailed to the
holders  of the  Company's  common  stock,  $.125 par  value per share  ("Common
Stock"), on or about April 4, 1997.


                            PURPOSE OF ANNUAL MEETING

      At the Annual Meeting,  shareholders of the Company will consider and vote
upon (i) the  election  of seven  directors  to serve until the  Company's  1998
Annual Meeting of Shareholders  and until their  successors are duly elected and
qualified,  and (ii) such other  business as may properly come before the Annual
Meeting.  The  Company is not aware of any  business  to come  before the Annual
Meeting other than the election of directors.


                  QUORUM AND VOTING RIGHTS; PROXY SOLICITATION

      The  presence  in person or by proxy of the  holders of a majority  of the
votes represented by the outstanding  shares of Common Stock entitled to vote at
the Annual  Meeting  is  necessary  to  constitute  a quorum for the  conduct of
business at the Annual Meeting. Director nominees will be elected by a plurality
of the votes  cast.  Except as may be  provided  in the  Company's  Amended  and
Restated Certificate of Incorporation (the "Certificate"), any other matter that
may be submitted to a shareholder  vote will require the  affirmative  vote of a
majority of the votes cast at the Annual  Meeting.  Shares of Common  Stock that
are voted to  abstain  from  business  coming  before  the  Annual  Meeting  and
broker/nominee  non-votes  will be counted as being in  attendance at the Annual
Meeting for purposes of determining whether a quorum is present, but will not be
counted as votes for or against any matter coming before the Annual Meeting. The
accompanying  proxy card provides space for a shareholder to withhold voting for
any or all nominees for the Board of Directors.  Because director  nominees must
receive a plurality  of the votes cast at the Annual  Meeting,  a vote  withheld
from a particular nominee will not affect the election of that nominee.

      The record date for  determination of shareholders  entitled to notice of,
and to vote at, the Annual  Meeting is the close of  business  on March 19, 1997
(the "Record  Date").  As of the Record Date,  there were issued and outstanding
51,144,014  shares of Common Stock, each of which is entitled to one vote on all
matters  that  come  before  the  Annual  Meeting.   Valhi,  Inc.  ("Valhi"),  a
diversified  company  engaged in the  chemicals,  component  products  and waste
management industries,  and Tremont Corporation  ("Tremont"),  a holding company
engaged in the titanium metals and chemicals industries,  held approximately 56%
and 18%,  respectively,  of the outstanding shares of the Common Stock as of the
Record Date and have indicated their intention to have their shares  represented
at the  Annual  Meeting.  Both  Valhi and  Tremont  are  affiliates  of  Contran
Corporation  ("Contran").  See "Security Ownership" and 

<PAGE>

"Election of Directors." If the shares of Common Stock held by Valhi and Tremont
together or the shares of Common  Stock held by Valhi alone are  represented  at
the Annual Meeting, a quorum will be present.

      All shares of Common Stock  represented by properly executed proxies will,
unless such proxies have been  previously  revoked,  be voted in accordance with
the  instructions  indicated  in  such  proxies.  If no  such  instructions  are
indicated,  such  shares  will be voted  (i)  "FOR"  the  election  of the seven
nominees for  director,  and (ii) in the  discretion of the proxy holders on any
other matter that may  properly  come before the Annual  Meeting.  Any holder of
Common Stock has the unconditional  right to revoke his or her proxy at any time
prior to the  voting  thereof  at the  Annual  Meeting  by (i)  filing  with the
Company's  Secretary written  revocation of his or her proxy, (ii) giving a duly
executed  proxy  bearing a later date,  or (iii)  voting in person at the Annual
Meeting.  Attendance by a shareholder  at the Annual  Meeting will not in itself
revoke his or her proxy.

      This  proxy   solicitation  is  made  by  and  on  behalf  of  the  Board.
Solicitation  of  proxies  for use at the  Annual  Meeting  may be made by mail,
telephone or in person,  by  directors,  officers  and regular  employees of the
Company.   Such  persons  will  receive  no  additional   compensation  for  any
solicitation   activities.   The  Company  will  request  banking  institutions,
brokerage  firms,  custodians,  trustees,  nominees and  fiduciaries  to forward
solicitation  materials to the beneficial  owners of Common Stock held of record
by such entities, and the Company will, upon the request of such record holders,
reimburse  reasonable  forwarding  expenses.  The costs of preparing,  printing,
assembling  and mailing the Proxy  Statement,  proxy card or voting  instruction
form and all materials used in the solicitation of proxies from  shareholders of
the Company,  and all clerical and other expenses of such solicitation,  will be
borne by the Company.

      First Chicago Trust  Company of New York ("First  Chicago"),  the transfer
agent and  registrar for the Common  Stock,  has been  appointed by the Board to
serve as inspector of election  (the  "Inspector  of Election") to determine the
number of shares of Common Stock  represented  and voted at the Annual  Meeting.
All proxies and ballots delivered to First Chicago shall be kept confidential by
First Chicago in accordance with the terms of the Company's By-laws.


      IT IS THE INTENTION OF THE AGENTS DESIGNATED IN THE ENCLOSED PROXY CARD TO
VOTE "FOR" THE  ELECTION OF ALL SEVEN  NOMINEES FOR  DIRECTOR  IDENTIFIED  BELOW
UNLESS  AUTHORITY  IS WITHHELD BY THE  SHAREHOLDER  GRANTING  THE PROXY.  IF ANY
NOMINEE BECOMES UNAVAILABLE TO SERVE FOR ANY REASON, THE PROXY WILL BE VOTED FOR
A  SUBSTITUTE  NOMINEE OR  NOMINEES  TO BE  SELECTED  BY THE  BOARD,  UNLESS THE
SHAREHOLDER WITHHOLDS AUTHORITY TO VOTE FOR THE ELECTION OF DIRECTORS. VALHI AND
TREMONT, WHICH HOLD APPROXIMATELY 56% AND 18%, RESPECTIVELY,  OF THE OUTSTANDING
COMMON STOCK, HAVE INFORMED THE COMPANY THAT THEY INTEND TO VOTE THEIR SHARES IN
FAVOR OF THE NOMINEES SET FORTH IN THIS PROXY  STATEMENT.  VALHI'S AND TREMONT'S
VOTES  TOGETHER,  OR VALHI'S  VOTES  ALONE,  ARE  SUFFICIENT  TO ELECT ALL SEVEN
NOMINEES.


                              ELECTION OF DIRECTORS

      The Certificate  provides for a Board of Directors  consisting of not less
than seven and not more than  seventeen  persons,  as such number is  determined
from time to time by a majority of the entire  Board.  The Board has  determined
that it shall consist of seven members.

      At the  Annual  Meeting,  holders  of Common  Stock will be asked to elect
seven  nominees  to the Board,  each to serve for a one year term  ending at the
1998  Annual  Meeting of  Shareholders  or until his  successor  shall have been
elected and qualified or until his earlier resignation, removal or death. All of
the nominees are currently  directors of the Company and have agreed to serve if
elected.
<PAGE>

  THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES IDENTIFIED BELOW.


Nominees for Director

      The  information  provided  below  has  been  provided  by the  respective
nominees  for  election  as  directors  for a term  expiring  at the 1998 Annual
Meeting of  Shareholders  of the  Company.  Each of the  following  nominees for
election is currently a director of the Company whose term expires at the Annual
Meeting.

      JOSEPH S. COMPOFELICE, age 47, has been Vice President and Chief Financial
Officer of NL since 1994, and a director of NL since 1995. Mr.  Compofelice  has
served  as  Executive  Vice  President  of Valhi  and Vice  President  and Chief
Financial  Officer of Tremont since 1994.  Since February 1996, Mr.  Compofelice
also has served as Vice  President,  Chief  Financial  Officer and, except for a
period from March 1996 to July 1996, a director of Titanium  Metals  Corporation
("TIMET"), an integrated producer of titanium metals products which is 30% owned
by Tremont. From prior to 1992 to 1993, Mr. Compofelice served as Vice President
and Chief Financial Officer of Baroid Corporation ("Baroid"),  a company engaged
in the petroleum  services  industry  which was acquired by Dresser  Industries,
Inc. ("Dresser") in January 1994.

      J. LANDIS MARTIN,  age 51, has been President and Chief Executive  Officer
of NL since 1987,  and a director of NL since 1986. He has served as Chairman of
the Board, President and Chief Executive Officer of Tremont since prior to 1992.
Mr.  Martin  also has served as  Chairman  of the Board of TIMET  since prior to
1992,  Chief Executive  Officer of TIMET since 1995, and President of TIMET from
January  1995 to  February  1996.  From prior to 1992 to 1994,  Mr.  Martin also
served as  Chairman of the Board,  Chief  Executive  Officer,  and a director of
Baroid.  Mr.  Martin is a director of Dresser and of  Apartment  Investment  and
Management Corporation, a real estate investment trust.

      KENNETH R. PEAK, age 51, has been a director of NL since 1989. Since prior
to 1992,  Mr.  Peak has been  President  of Peak  Enernomics,  Inc.,  an  energy
industry  consulting  firm.  Mr.  Peak  serves as a  director  of AMERAC  Energy
Corporation,  an oil and gas exploration  company. He serves as Chairman of NL's
Audit Committee and Management  Development and Compensation  Committee and is a
member of NL's Nominations Committee.

      GLENN R.  SIMMONS,  age 69,  has been a  director  of NL since  1986.  Mr.
Simmons is  Chairman  of the Board of  Keystone  Consolidated  Industries,  Inc.
("Keystone"),  a wire products,  industrial wire and steel rod products company.
Since prior to 1992,  Mr.  Simmons has been Vice  Chairman of the Board of Valhi
and Contran,  a diversified  holding  company which directly and through related
entities holds  approximately  92% of the outstanding  common stock of Valhi and
38% of the outstanding common stock of Keystone.  Mr. Simmons is also a director
of  Tremont  and Vice  Chairman  of the Board and a  director  of  Valcor,  Inc.
("Valcor"), a wholly-owned subsidiary of Valhi engaged in the component products
industry.  Mr. Simmons has been an executive  officer and/or director of various
companies related to Valhi and Contran since 1969. He serves as Chairman of NL's
Nominations Committee. He is a brother of Harold C. Simmons.

      HAROLD  C.  SIMMONS,  age 65,  has been a  director  of NL since  1986 and
Chairman  of the Board of NL since 1987.  He has been  Chairman of the Board and
Chief  Executive  Officer of Valhi and Contran  since prior to 1992 and has been
President  of Valhi and Contran  since 1994.  Mr.  Simmons is also a director of
Tremont and  Chairman of the Board,  President  and Chief  Executive  Officer of
Valcor.  Mr. Simmons has been an executive  officer  and/or  director of various
companies  related to Valhi and Contran  since 1964. He is a brother of Glenn R.
Simmons.

      LAWRENCE  A.  WIGDOR,  age 55,  has been a  director  and  Executive  Vice
President of NL since 1992.  Dr. Wigdor has been  President and Chief  Executive
Officer of Kronos,  Inc. ("Kronos") and President and Chief Executive Officer of
Rheox,  Inc.  ("Rheox"),  each a  wholly-owned  subsidiary of NL, since prior to
1992.

      ELMO R. ZUMWALT,  JR., age 76, has been a director of NL since 1987. He is
a retired United States 

<PAGE>

Navy Admiral and served as Chief of Naval  Operations  and a member of the Joint
Chiefs of Staff from 1970 to 1974.  He has been  President of Admiral  Zumwalt &
Consultants,  Inc., a  Washington-based  consulting  firm,  since prior to 1992.
Admiral  Zumwalt  is  a  director  of  Magellan  Aerospace  Corporation,  Dallas
Semiconductor  Corporation,  and IDT  Corporation.  He is also  Chairman  of the
International  Consortium  for  Research  on the Health  Effects  of  Radiation,
Chairman of the Marrow  Foundation  and Chairman of the Ethics and Public Policy
Center and a member of the  President's  Foreign  Intelligence  Advisory  Board.
Admiral  Zumwalt is a member of NL's  Management  Development  and  Compensation
Committee, Audit Committee, and Nominations Committee.

      For information  concerning legal  proceedings to which certain  directors
are  parties  and  other  matters,   see  "Certain   Litigation"   and  "Certain
Relationships and Transactions."


                             MEETINGS AND COMMITTEES

      The Board held four meetings and took action by written consent in lieu of
a meeting on four occasions in 1996. Each of the directors  participated in more
than 75% of the total number of meetings of the Board and committees on which he
served  that were held  during  1996,  and each of the  directors  executed  all
written consents of the Board during the year.

      The Board has established three standing committees, an Audit Committee, a
Management  Development and Compensation  Committee and a Nominations Committee,
all of which are composed  entirely of individuals  who are not employees of the
Company. As described below, the Stock-Based  Compensation Committee,  which was
established  by the  Board in  February  1996,  was  terminated  by the Board in
October  1996  following  changes in the rules of the  Securities  and  Exchange
Commission (the "Commission").

      Audit Committee. The principal responsibilities of the Audit Committee are
to recommend to the Board the selection of the firm of independent  auditors; to
review the plan and results of the independent audit engagement, the program for
internal auditing,  the system of internal  accounting controls and the internal
audit results;  to review and approve the professional  services provided by the
independent auditors;  and to direct and supervise special audit inquiries.  The
Committee held two meetings in 1996. The current  members of the Audit Committee
are Mr. Peak, Chairman, and Admiral Zumwalt.

      Management   Development  and   Compensation   Committee.   The  principal
responsibilities of the Management Development and Compensation Committee are to
review and make recommendations  regarding executive  compensation  policies and
periodically review and approve or make  recommendations with respect to matters
involving  executive  compensation,  to  take  action  or  to  review  and  make
recommendations to the Board regarding  employee benefit plans or programs,  and
to serve as a counseling  committee  to the Chief  Executive  Officer  regarding
matters  of key  personnel  selection,  organization  strategies  and such other
matters as the Board may from time to time  direct.  Except for the period  from
February 1996 to October  1996,  the  Management  Development  and  Compensation
Committee also has been responsible for reviewing and approving stock option and
other stock-based  compensation  awards under the Company's incentive plans. The
Management  Development  and  Compensation  Committee held two meetings and took
action by written  consent in lieu of a meeting on three  occasions in 1996. Its
current members are Mr. Peak, Chairman, and Admiral Zumwalt.

      Stock-Based Compensation Committee. The Stock-Based Compensation Committee
existed from February 1996 to October 1996. Its principal  responsibility was to
review and approve stock options or other stock-based  compensation awards under
the Company's incentive plans. The Stock-Based  Compensation  Committee held one
meeting in 1996.  Its  members  were Mr.  Peak,  Chairman,  Admiral  Zumwalt and
General  Thomas  P.  Stafford.  General  Stafford  served  as a  member  of  the
Management  Development and Compensation Committee in 1995 and until he became a
member of the Stock-Based  Compensation Committee in February 1996. Except for a
period in 1986,  General  Stafford served as a director of NL from 1984 to 1989.
General Stafford currently serves as a director of Tremont and TIMET.

<PAGE>

      Nominations Committee.  The principal  responsibilities of the Nominations
Committee are to review and make  recommendations  to the Board  regarding  such
matters  as the size and  composition  of the Board and  criteria  for  director
nominations,  director  candidates,  the term of office of  directors,  and such
other  related  matters  as the  Board  may  request  from  time  to  time.  The
Nominations  Committee  held one  meeting in 1996.  The  current  members of the
Nominations Committee are Mr. Glenn Simmons,  Chairman,  Admiral Zumwalt and Mr.
Peak.  The  Nominations  Committee  made  its  recommendations  to the  Board of
Directors with respect to the election of directors at the Annual  Meeting.  The
Nominations  Committee  will consider  recommendations  by  shareholders  of the
Company   with   respect  to   nominees   for   election  as  director  if  such
recommendations  are  submitted  in writing to the  Secretary of the Company and
received not later than December 31 of the year prior to the next annual meeting
of shareholders,  and are accompanied by a full statement of qualifications  and
confirmation of the recommended nominees' willingness to serve.

      The Board has previously established, and from time to time may establish,
other committees to assist it in discharging its responsibilities.

                        EXECUTIVE OFFICERS OF THE COMPANY

      Set forth below is certain  information  relating to the current executive
officers  of the  Company.  Biographical  information  with  respect  to Messrs.
Simmons,  Martin  and  Compofelice  and Dr.  Wigdor  is set  forth  above  under
"Election of Directors."

<TABLE>
<CAPTION>

             Name                   Age            Position(s)

  <S>                                <C>   <C>                     
  Harold C. Simmons.............     65    Chairman of the Board

  J. Landis Martin..............     51    President and Chief Executive Officer

  Dr. Lawrence A. Wigdor........     55    Executive Vice President; President and Chief 
                                           Executive Officer of Kronos and Rheox

  Joseph S. Compofelice.........     47    Vice President and Chief Financial Officer

  Susan E. Alderton.............     45    Vice President and Treasurer

  David B. Garten...............     45    Vice President, General Counsel and Secretary

  Dennis G. Newkirk.............     46    Vice President and Controller
</TABLE>

      Susan E.  Alderton has been Vice  President  and  Treasurer of the Company
since prior to 1992. Ms.  Alderton has been a director of Tremont since prior to
1992.

      David B. Garten has been Vice President,  General Counsel and Secretary of
the Company since prior to 1992.  From prior to 1992 to 1993,  Mr. Garten served
as Vice  President  and  General  Counsel of Tremont and since prior to 1992 has
served as Assistant Secretary of Tremont.

      Dennis G. Newkirk has been Vice  President  and  Controller of the Company
since prior to 1992.

<PAGE>

                               SECURITY OWNERSHIP

      Ownership of NL Common Stock. The following table and  accompanying  notes
set  forth as of the  Record  Date  the  beneficial  ownership,  as  defined  by
regulations of the Commission,  of Common Stock held by (a) each person or group
of  persons  known by NL to  beneficially  own more  than 5% of the  outstanding
shares of Common  Stock,  (b) each  director or nominee for  director of NL, (c)
each executive officer of NL listed on the Summary Compensation Table below, and
(d) all executive  officers and  directors of NL as a group.  See note (3) below
for  information  concerning  individuals  and  entities  which may be deemed to
indirectly  beneficially own those shares of Common Stock directly  beneficially
held by Valhi and Tremont, as reported in the table below. No securities of NL's
subsidiaries are beneficially  owned by any director,  nominee for director,  or
officer of NL.  Information  concerning  ownership of equity  securities of NL's
parent  companies is contained in note (3) below and the table under the caption
"Ownership of Valhi and Tremont  Common Stock" below.  All  information is taken
from or based upon ownership filings made by such persons with the Commission or
information provided by such persons to NL.

<TABLE>
<CAPTION>

                                                                 NL Common Stock
                                           ------------------------------------------------
         Name of                           Amount and Nature of                   Percent
   Beneficial Owner                        Beneficial Ownership(1)              of Class(2)
   ----------------                        -----------------------              -----------

<S>                                                 <C>                          <C>  
Valhi, Inc.                                         28,416,910(3)                55.6%
   Three Lincoln Centre
   5430 LBJ Freeway
   Suite 1700
   Dallas, TX 75240
Tremont Corporation                                  9,064,780(3)                17.7%
   1999 Broadway
   Suite 4300
   Denver, CO 80202
Joseph S. Compofelice                                  123,240(4)                  --
J. Landis Martin                                       917,626(5)                 1.8%
Kenneth R. Peak                                          6,825(6)                  --
Glenn R. Simmons                                         6,800(3)                  --
Harold C. Simmons                                       69,475(3)(7)               --
Dr. Lawrence A. Wigdor                                 451,498(8)                  --
Admiral Elmo R. Zumwalt, Jr.                             4,400(9)                  --
Susan E. Alderton                                      147,491(10)
David B. Garten                                        222,937(11)                 --
All directors and executive officers
   of the Company as a group
   (10 persons)                                      2,123,880(3)(4)(5)(6)(7)(8)  4.2%
                                                              (9)(10)(11)(12)
</TABLE>
---------

(1)   All beneficial ownership is sole and direct unless otherwise noted.

(2)   No percent of class is shown for holdings of less than 1%.

(3)   Valhi Group,  Inc.  ("VGI"),  National City Lines,  Inc.  ("National") and
      Contran  are  the  holders  of  approximately   74.9%,   10.0%  and  6.9%,
      respectively,  of the outstanding  common stock, $.01 par value per share,
      of Valhi, Inc. (the "Valhi Common Stock").  VGI, National and Contran hold
      approximately  35.2%,  4.7% and  3.2%,  respectively,  of the  outstanding
      common stock,  $1.00 par value per share,  of Tremont (the "Tremont Common
      Stock"). In addition,  NL and Valmont hold 0.5% and 0.4% of Tremont Common
      Stock.  National,  NOA,  Inc.  

<PAGE>

      ("NOA") and Dixie  Holding  Company  ("Dixie  Holding") are the holders of
      approximately  73.3%,  11.4% and 15.3%,  respectively,  of the outstanding
      common  stock of VGI.  Contran  and NOA are the  holders of  approximately
      85.7%  and  14.3%,  respectively,  of  the  outstanding  common  stock  of
      National. Contran and Southwest Louisiana Land Company, Inc. ("Southwest")
      are the holders of  approximately  49.9% and 50.1%,  respectively,  of the
      outstanding common stock of NOA. Dixie Rice Agricultural Corporation, Inc.
      ("Dixie  Rice") is the holder of 100% of the  outstanding  common stock of
      Dixie Holding.  Contran is the holder of approximately  88.7% and 54.3% of
      the  outstanding  common stock of Southwest and Dixie Rice,  respectively.
      Substantially  all of  Contran's  outstanding  voting stock is held by two
      trusts  established  for the benefit of Harold C.  Simmons'  children  and
      grandchildren  (the  "Trusts"),  of which  Harold C.  Simmons  is the sole
      trustee. As sole trustee of the Trusts, Harold C. Simmons has the power to
      vote and direct the disposition of the shares of Contran common stock held
      by  each  of  the  Trusts.  Mr.  Simmons,  however,  disclaims  beneficial
      ownership of such Contran shares.

      The Combined Master  Retirement Trust (the "Master Trust") holds less than
      1% of the  outstanding  shares of Valhi  Common  Stock and Tremont  Common
      Stock. The Master Trust was formed to permit the collective  investment by
      trusts that maintain the assets of certain  employee benefit plans adopted
      by Valhi and related  companies.  Harold C. Simmons is the sole trustee of
      the Master Trust and the sole member of the trust investment committee for
      the  Master  Trust.  The  trustee  and  members  of the  trust  investment
      committee for the Master Trust are selected by Valhi's Board of Directors.
      Harold C.  Simmons and Glenn R.  Simmons  are members of Valhi's  Board of
      Directors  and are  participants  in one or more of the  employee  benefit
      plans  which  invest  through  the  Master  Trust.  Each of such  persons,
      however,  disclaims  beneficial  ownership  of the shares of Valhi  Common
      Stock and Tremont  Common  Stock held by the Master  Trust,  except to the
      extent of his individual vested beneficial  interest in the assets held by
      the Master Trust.

      Harold C.  Simmons  is  Chairman  of the Board of NL and  Chairman  of the
      Board,  President and Chief Executive  Officer of Contran,  Dixie Holding,
      NOA,  National,  VGI and Valhi.  Mr. Simmons is also Chairman of the Board
      and Chief Executive Officer of Dixie Rice and Southwest, and a director of
      Tremont. By virtue of the holding of such offices, the stock ownership and
      his service as trustee,  all as described  above,  (a) Mr.  Simmons may be
      deemed to control such entities,  and (b) Mr. Simmons, and certain of such
      entities  may be deemed to possess  indirect  beneficial  ownership of the
      Common  Stock  directly  beneficially  owned by Valhi and  Tremont and the
      shares of Valhi Common Stock and Tremont  Common Stock held by Contran and
      its subsidiaries.  However,  Mr. Simmons disclaims beneficial ownership of
      the shares of Common  Stock,  Valhi Common Stock and Tremont  Common Stock
      beneficially owned, directly and indirectly, by such entities.

      The  shares of Valhi  Common  Stock  described  above as owned by  Contran
      include  approximately 0.2% of the outstanding Valhi Common Stock directly
      held by the Contran Deferred  Compensation Trust No. 2 (the "CDCT No. 2").
      NationsBank  of  Texas,  N.A.  serves  as  trustee  of the CDCT No. 2 (the
      "Trustee"). The shares of Tremont Common Stock described above as owned by
      Contran include approximately 2.1% of the outstanding Tremont Common Stock
      directly held by the CDCT No. 2. Contran  established the CDCT No. 2 as an
      irrevocable  "rabbi trust" to assist Contran in meeting  certain  deferred
      compensation  obligations  that it owes to Harold C. Simmons.  If the CDCT
      No. 2 assets are  insufficient to satisfy such  obligations,  Contran must
      satisfy the balance of such  obligations.  Under the terms of the CDCT No.
      2,  Contran (i) retains the sole power to vote the Valhi  Common Stock and
      Tremont Common Stock held by the CDCT No. 2, (ii) shares dispositive power
      over such shares with the  Trustee,  and (iii) may be deemed the  indirect
      beneficial owner of such shares.

(4)   The shares of Common Stock shown as beneficially  owned include (i) 87,000
      shares of  Common  Stock  which  Joseph  S.  Compofelice  has the right to
      acquire by exercise of options within 60 days of the Record Date under the
      1989 Long Term  Performance  Incentive  Plan of NL  Industries,  Inc. (the
      "Incentive Plan"), (ii) 5,240 shares credited to Mr. Compofelice's account
      under the NL  Industries,  Inc.  Retirement  Savings  Plan  (the  "Savings
      Plan"),  and (iii) 30,000 shares held by Mr.  Compofelice  and his wife as
      joint tenants.

(5)   The shares of Common Stock shown as beneficially owned include (i) 835,288
      shares of Common Stock which J. Landis  Martin has the right to acquire by
      exercise of options  within 60 days of the Record Date under the Incentive
      Plan or predecessor plans, and (ii) 11,673 shares credited to Mr. Martin's
      account under the Savings Plan.

<PAGE>


(6)   The shares of Common Stock shown as  beneficially  owned include (i) 3,000
      shares of Common  Stock which  Kenneth R. Peak has the right to acquire by
      exercise of options  within 60 days of the Record Date  pursuant to the NL
      Industries,  Inc.  1992  Non-Employee  Director  Stock  Option  Plan  (the
      "Director  Plan"),  and (ii) 21 shares of Common Stock held by Mr.  Peak's
      wife with respect to which Mr. Peak disclaims beneficial ownership.

(7)   The  shares  of  Common  Stock  shown as  beneficially  owned by Harold C.
      Simmons  constitute shares held by Mr. Simmons' wife with respect to which
      beneficial ownership is disclaimed by Mr. Simmons.

(8)   The shares of Common Stock shown as  beneficially  owned  include  381,998
      shares of Common  Stock  which Dr.  Lawrence  A.  Wigdor  has the right to
      acquire by exercise of options within 60 days of the Record Date under the
      Incentive Plan.

(9)   The shares of Common  Stock  shown as  beneficially  owned  include  4,000
      shares of Common Stock which Admiral Elmo R. Zumwalt, Jr. has the right to
      acquire by exercise of options  within 60 days of the Record Date pursuant
      to the Director Plan.

(10)  The shares of Common Stock shown as beneficially owned include (i) 107,382
      shares of Common Stock which Susan E. Alderton has the right to acquire by
      exercise of options  within 60 days of the Record Date under the Incentive
      Plan, and (ii) 11,858 shares credited to Ms. Alderton's  account under the
      Savings Plan.

(11)  The shares of Common Stock shown as beneficially owned include (i) 178,000
      shares of Common  Stock  which David B. Garten has the right to acquire by
      exercise of options  within 60 days of the Record Date under the Incentive
      Plan, and (ii) 14,937 shares  credited to Mr.  Garten's  account under the
      Savings Plan.

(12)  In  addition  to the  foregoing,  the  shares  of  Common  Stock  shown as
      beneficially  owned by the  directors  and  executive  officers as a group
      include (i) 128,000  shares of Common Stock which the remaining  executive
      officer of the  Company  has the right to acquire by  exercise  of options
      within 60 days of the Record Date under the Incentive  Plan or predecessor
      plans, and (ii) 14,588 shares credited to such  executive's  account under
      the Savings Plan.

      Ownership  of Valhi and Tremont  Common  Stock.  The  following  table and
accompanying notes set forth as of the Record Date (i) the beneficial ownership,
as defined above, of Valhi Common Stock held by (a) each director or nominee for
director  of NL,  (b)  each  executive  officer  of NL  listed  in  the  Summary
Compensation  Table below, and (c) all executive officers and directors of NL as
a group, and (ii) the beneficial ownership,  as defined above, of Tremont Common
Stock held by (a) each  director  or nominee  for  director  of NL, and (b) each
executive officer of NL listed in the Summary  Compensation Table below, and (c)
all executive officers and directors of NL as a group. See note (3) to the table
following the caption  "Ownership of NL Common  Stock"  above,  for  information
concerning individuals and entities who may be deemed to indirectly beneficially
own those  shares of Common  Stock  directly  beneficially  held by Tremont  and
Valhi.  Except  as  described  in note (3)  above  and the  table  below and the
accompanying   notes,  no  equity   securities  of  NL's  parent  companies  are
beneficially owned by any director, nominee for director or executive officer of
NL. All  information is taken from or based upon ownership  filings made by such
persons with the Commission or information provided by such persons to NL.




<PAGE>

<TABLE>
<CAPTION>

                                                   Tremont Common Stock                   Valhi Common Stock
                                            -------------------------------     --------------------------------------

                                            Amount and                          Amount and
                                            Nature of                           Nature of
            Name of                         Beneficial           Percent        Beneficial                 Percent
      Beneficial Owner                      Ownership(1)       of Class (2)     Ownership (1)            of Class (2)
      ----------------                      ------------       ------------     -------------            ------------

<S>                                         <C>                    <C>          <C>                          <C>
Joseph S. Compofelice                        25,000(3)              --             30,000(9)(10)              --
J. Landis Martin                            190,918(4)             2.5%           345,000(10)                 --
Kenneth R. Peak                                 -0-                 --                 -0-                    --
Glenn R. Simmons                                534(5)              --            693,683(5)(10)(11)          --
Harold C. Simmons                             3,747(5)(6)           --            730,383(5)(10)(12)          --
Dr. Lawrence A. Wigdor                           -0-                --                 -0-                    --
Admiral Elmo R. Zumwalt, Jr.                     -0-                --                 -0-                    --
David B. Garten                              11,000(7)              --                 -0-                    --
Susan E. Alderton                            12,189(8)              --                 -0-                    --
All directors and executive
   officers of the Company                  243,388(3)(4)(5)       3.2%         1,794,066(5)(10)             1.6%
   as a group (10 persons)                         (6)(7)(8)                             (11)(12)

</TABLE>
---------

(1)   All beneficial ownership is sole and direct unless otherwise noted.

(2)   No percent of class is shown for holdings of less than 1%. For purposes of
      calculating  the percent of class owned  1,186,200  shares (1.0%) of Valhi
      Common Stock held by NL and  1,000,000  shares (.8%) of Valhi Common Stock
      held by Valmont Insurance Company ("Valmont"),  a wholly-owned  subsidiary
      of Valhi,  are excluded from the amount of Valhi Common Stock  outstanding
      pursuant to Delaware law.

(3)   The shares of Tremont Common Stock shown as  beneficially  owned by Joseph
      S.  Compofelice  include (i) 15,000 shares which Mr.  Compofelice  has the
      right to acquire by exercise of options  within 60 days of the Record Date
      under  the 1988 Long  Term  Performance  Incentive  Plan of  Tremont  (the
      "Tremont  Incentive Plan"), and (ii) 10,000 shares held by Mr. Compofelice
      and his wife as joint tenants.

(4)   The shares of  Tremont  Common  Stock  shown as  beneficially  owned by J.
      Landis  Martin  include  60,000  shares of Tremont  Common Stock which Mr.
      Martin has the right to acquire by exercise  of options  within 60 days of
      the Record Date under the Tremont  Incentive  Plan, and 510 shares held by
      the trustee for the benefit of Mr.  Martin  under the Savings  Plan.  Such
      shares include 2,300 shares held by Mr.  Martin's wife,  1,900 shares held
      by the  Martin  Children's  Trust No. II for which Mr.  Martin is the sole
      trustee and 100 shares held by Mr. Martin's daughter,  with respect to all
      of which beneficial ownership is disclaimed by Mr. Martin.

(5)   See note (3) to the table following "Ownership of NL Common Stock" above.

(6)   The shares of Tremont Common Stock shown as  beneficially  owned by Harold
      C.  Simmons  consist of shares held by Mr.  Simmons'  wife with respect to
      which beneficial ownership is disclaimed by Mr. Simmons.

(7)   The shares of Tremont Common Stock shown as beneficially owned by David B.
      Garten  include 10,500 shares which Mr. Garten has the right to acquire by
      exercise  of options  within 60 days of the Record  Date under the Tremont
      Incentive Plan.

(8)   The shares of Tremont Common Stock shown as beneficially owned by Susan E.
      Alderton  include 9,886 shares which Ms. Alderton has the right to acquire
      by exercise of options within 60 days of the Record Date under the Tremont
      Incentive  Plan, and 11 shares held for the benefit of Ms.  Alderton under
      the Savings Plan.

<PAGE>

(9)   Includes 10,000 shares of Valhi Common Stock held by Joseph S. Compofelice
      and his wife as joint tenants.

(10)  Includes  shares of Valhi Common Stock  registered  in such  person's name
      which are  restricted.  Also included are shares that such person or group
      could  acquire  upon the exercise of stock  options  within 60 days of the
      Record  Date.  During such 60-day  period,  options for 650,000  shares of
      Valhi  Common  Stock are  exercisable  by Harold C.  Simmons,  options for
      640,000 shares of Valhi Common Stock are  exercisable by Glenn R. Simmons,
      options for 300,000  shares of Valhi  Common Stock are  exercisable  by J.
      Landis  Martin,  options  for  20,000  shares  of Valhi  Common  Stock are
      exercisable  by Joseph S.  Compofelice,  and options for 20,000  shares of
      Valhi Common Stock are exercisable by the remaining  executive  officer of
      the Company,  all of which  shares are included in the amount  outstanding
      for purposes of calculating the percent of class owned by such persons.

(11)  Includes  4,383  shares of Valhi  Common  Stock held in Glenn R.  Simmon's
      individual retirement account,  1,000 shares of Valhi Common Stock held by
      Mr. Simmon's wife in trust for the benefit of their daughter, 3,000 shares
      held by Mr. Simmons' wife, and 800 shares held in a retirement account for
      Mr.  Simmon's wife, with respect to all of which  beneficial  ownership is
      disclaimed by Mr. Simmons.

(12)  Includes  77,000  shares of Valhi Common Stock held by Harold C.  Simmons'
      wife,  with respect to which  beneficial  ownership is  disclaimed  by Mr.
      Simmons.


      The Company  understands  that Valhi,  Tremont  and related  entities  may
consider acquiring or disposing of shares of Common Stock through open-market or
privately-negotiated   transactions,   depending   upon   future   developments,
including,  but not limited to, the  availability and alternative uses of funds,
the performance of the Common Stock in the market, an assessment of the business
of and prospects  for the Company,  financial  and stock market  conditions  and
other factors deemed  relevant by such entities.  The Company does not presently
intend,  and understands that neither Valhi nor Tremont  presently  intends,  to
engage in any  transaction or series of  transactions  which would result in the
Common  Stock  becoming  eligible  for  termination  of  registration  under the
Securities  Exchange  Act of 1934,  as  amended,  or  ceasing  to be traded on a
national securities exchange.


             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's  executive officers,  directors,  and persons who own beneficially
more than 10% of a registered class of the Company's  equity  securities to file
reports of ownership and changes in ownership with the Commission,  the New York
Stock  Exchange,  the Pacific Stock Exchange and the Company.  Based solely on a
review of copies of the  Section  16(a)  reports  furnished  to the  Company and
written  representations by certain reporting persons, the Company believes that
all  of the  Company's  executive  officers,  directors  and  greater  than  10%
beneficial  owners filed on a timely basis all reports  required during and with
respect to the fiscal year ended December 31, 1996.


                COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
                              AND OTHER INFORMATION

Compensation of Directors

      During  1996,  fees were paid to each  director who was not an employee of
the Company or a subsidiary of the Company.  Fees consist of an annual  retainer
of $15,000,  payable in quarterly  installments,  plus an attendance fee of $750
for each  meeting of the Board or a committee  at which the director is present.
Such  directors  also  receive  a fee of $750 per day for  each day  spent on NL
business  at the request of the Board or the  Chairman of the Board,  other than
the day of Board or committee meetings.  Directors are reimbursed for reasonable
expenses incurred in attending Board of Directors and committee meetings. If any
director who is not an officer or employee of NL or any  subsidiary or affiliate
of NL dies while in active service, his designated beneficiary or estate will be
entitled to receive a life 

<PAGE>

insurance benefit equal to the annual retainer then in effect. Current directors
receiving fees for serving on the Board of Directors in 1996 were Messrs.  Peak,
G. Simmons,  H. Simmons,  and Admiral Zumwalt.  See "Certain  Relationships  and
Transactions."


      In 1996, Admiral Zumwalt and Mr. Peak were each granted an option pursuant
to the Director Plan (as defined above) to purchase 1,000 shares of Common Stock
at an exercise price of $14.625 per share,  representing the last reported sales
price of Common Stock on the New York Stock Exchange  Composite Tape on the date
of grant.  Options  granted under the Director Plan become  exercisable one year
after the date of grant and expire on the fifth  anniversary  following the date
of grant.


Summary of Cash and Certain Other Compensation of Executive Officers

      The Summary  Compensation  Table set forth below provides  certain summary
information  concerning annual and long-term compensation paid or accrued by the
Company  to or on behalf of its Chief  Executive  Officer  and each of its other
four most highly compensated executive officers for services rendered during the
years ended December 31, 1996, 1995 and 1994.


<TABLE>
<CAPTION>

                                                           SUMMARY COMPENSATION TABLE



                                                                                         Long Term
                                       Annual Compensation (1)                        Compensation (1)
                                       -----------------------                        ----------------
                                                                                           Awards
                                                                                           ------
                                                                                                 Securities
Name and                                                                       Restricted        Underlying          All Other
Principal Position           Year           Salary             Bonus (2)      Stock Awards        Options          Compensation
------------------           ----           ------             ---------      ------------       ---------         ------------
                                              ($)                 ($)            (5)($)             (#)               (6)($)
<S>                          <C>            <C>                <C>              <C>               <C>                 <C>   
J. Landis Martin             1996           400,000               -0-              -0-             45,000              85,000
President and Chief          1995           400,000            600,000             -0-                -0-              94,000
Executive Officer (3)        1994           400,000            600,000             -0-            195,000               9,000
Dr. Lawrence A. Wigdor       1996           550,000               -0-              -0-             36,000             126,885
Executive Vice President     1995           550,000            825,000             -0-                -0-             120,414
                             1994           450,000            675,000          532,500           100,000              12,357
Joseph S. Compofelice        1996           185,000               -0-              -0-             24,000              32,762
Vice President and Chief     1995           185,000            277,500             -0-             30,000              39,042
Financial Officer (4)        1994           166,856            250,300             -0-            125,000               9,950
David B. Garten              1996           250,000               -0-              -0-             12,000              45,027
Vice President, Secretary    1995           225,000            337,500             -0-                -0-              43,871
and General Counsel          1994           175,008            262,500          266,250            45,000               9,889
Susan E. Alderton            1996           177,500               -0-              -0-              9,000              10,455
Vice President and           1995           112,500            122,600             -0-                -0-              14,350
Treasurer                    1994           112,500            107,600          266,250            45,000               7,406
</TABLE>



(1)   No payouts under any long-term  incentive  plans (as defined by applicable
      federal  securities  regulations) were made during 1996, 1995 or 1994, and
      no other annual  compensation  payments  were made in 1996,  1995 or 1994.
      Therefore,  columns for such compensation otherwise required by applicable
      federal securities regulations have been omitted.

<PAGE>


(2)   Amounts paid pursuant to the Variable Compensation Plan. See "Compensation
      Committees' Report on Executive Compensation" below.

(3)   During 1996, 1995 and 1994, Mr. Martin also served as an executive officer
      of Tremont. In addition,  Mr. Martin has served as an executive officer of
      TIMET since 1995.  He also served as an executive  officer of Baroid until
      Baroid was acquired by Dresser in January 1994.  Mr. Martin is expected to
      continue to serve as an executive officer of NL, TIMET and Tremont in 1997
      and to be  compensated  directly by NL for services to NL and by TIMET for
      services  to TIMET and  Tremont.  Mr.  Martin is  expected  to continue to
      devote  approximately  one-half  of his  working  time  to his  duties  as
      President and Chief  Executive  Officer of NL. See "Certain  Relationships
      and Transactions."

(4)   Mr.  Compofelice  commenced  employment as an executive  officer of NL and
      Tremont in February  1994, as an executive  officer of Valhi in July 1994,
      and as an executive  officer of TIMET in February 1996. He was compensated
      directly by NL and TIMET and/or  Tremont for services to such companies in
      1996,  1995 and 1994.  NL was  credited  by Valhi for the  portion  of Mr.
      Compofelice's  salary earned for services  attributable  to Valhi in 1996,
      1995 and 1994 against the amount otherwise payable by NL to Valhi pursuant
      to  the  intercorporate  services  agreement  between  NL and  Valhi.  See
      "Certain  Relationships and Transactions."  Amounts paid in 1996, 1995 and
      1994 by NL to Mr.  Compofelice that were credited by Valhi are included in
      the table above.  Mr.  Compofelice  is expected to continue to serve as an
      executive  officer of NL,  Valhi,  TIMET and  Tremont  in 1997,  and to be
      compensated directly by NL for services to NL and by TIMET for services to
      TIMET and Tremont.  NL expects that Valhi will continue to credit NL under
      the above-referenced  intercorporate services agreement for the portion of
      Mr. Compofelice's  salary for services  attributable to Valhi in 1997. Mr.
      Compofelice is expected to continue to devote  approximately forty percent
      of his working time to his duties as Vice  President  and Chief  Financial
      Officer of NL.


(5)   In  February  1994,  pursuant  to the  terms of the  Incentive  Plan,  the
      Management Development and Compensation Committee awarded to the following
      named  executive  officers the  following  number of shares of  restricted
      Common Stock: Dr. Lawrence A. Wigdor, 60,000; David B. Garten, 30,000; and
      Susan E. Alderton,  30,000.  Such shares of restricted Common Stock vested
      in three equal  tranches of six,  twelve and  twenty-four  months from the
      date of  grant.  All of such  shares of Common  Stock are  vested  without
      restriction.

(6)   For 1996  represents  (i)  $4,385,  $1,512,  $1,277  and $445 of term life
      insurance  premiums  paid by the Company for the benefit of Dr. Wigdor and
      Messrs.  Compofelice and Garten and Ms. Alderton,  respectively,  and (ii)
      $85,000, $122,500,  $31,250, $43,750 and $10,010 accrued by the Company in
      an unfunded account for the benefit of Mr. Martin,  Dr. Wigdor and Messrs.
      Compofelice  and  Garten  and  Ms.  Alderton,   respectively,   under  the
      Supplemental  Executive  Retirement Plan for Executives and Officers of NL
      Industries,  Inc. (the "SERP"). For 1995 represents: (i) a contribution by
      the  Company of $6,930 to the  account of Ms.  Alderton  and $9,000 to the
      account of each of the other  named  executive  officer  under the Savings
      Plan, (ii) $3,914, $1,512, $1,121 and $389 of term life insurance premiums
      paid by the Company for the benefit of Dr. Wigdor and Messrs.  Compofelice
      and Garten and Ms. Alderton,  respectively,  and (iii) $85,000,  $107,000,
      $28,530,  $33,750 and $7,010  accrued by the Company in unfunded  accounts
      for the benefit of Messrs. Martin, Wigdor,  Compofelice and Garten and Ms.
      Alderton,  respectively,  under  the  SERP.  For  1994  represents:  (i) a
      contribution  by the Company of $7,031 to the account of Ms.  Alderton and
      $9,000 to the account of each of the other named  executive  officer under
      the  Savings  Plan,  and (ii)  $3,357,  $950,  $889 and $375 of term  life
      insurance  premiums  paid by the Company for the benefit of Dr. Wigdor and
      Messrs. Compofelice and Garten and Ms. Alderton, respectively.

<PAGE>


Stock Option Grants

      The following  table provides  information  with respect to the individual
grants to the executive  officers  named in the Summary  Compensation  Table set
forth above under the Incentive Plan (as defined above) during fiscal year 1996.


<TABLE>
<CAPTION>

                                       OPTION GRANTS IN LAST FISCAL YEAR
                                                                                       Potential Realizable Value
                                                                                       at Assumed Rates of Stock
                                            Percent of Total  Exercise or                     Appreciation for
                       Number of Securities Options Granted      Base                        Option Term (3)
        Name           Underlying Options   to Employees in    Price(2)     Expiration --------------------------
        ----             Granted (#)(1)     Fiscal Year       ($/Share)        Date
                       -------------------  ----------------  -----------   ----------   5% ($)       10% ($)
                                                                                         ------       -------
<S>                         <C>                  <C>            <C>          <C>         <C>          <C>
J. Landis Martin            15,000               20.70%         14.25        2/14/06     134,425      340,661
                            15,000                              15.75                    111,925      318,161
                            15,000                              17.25                     86,425      295,661
Lawrence A. Wigdor          12,000               16.56%         14.25        2/14/06     107,540      272,529
                            12,000                              15.75                     89,540      254,529
                            12.000                              17.25                     71,540      236,529
Joseph S. Compofelice        8,000               11.04%         14.25        2/14/06      71,693      181,686
                             8,000                              15.75                     59,693      169,686
                             8,000                              17.25                     47,693      157,686
David B. Garten              4,000                5.52%         14.25        2/14/06      35,846       90,843
                             4,000                              15.75                     29,846       84,843
                             4,000                              17.25                     23,846       78,843
Susan E. Alderton            3,000                4.14%         14.25        2/14/06      26,885       68,132
                             3,000                              15.75                     22,385       63,632
                             3,000                              17.25                     17,885       59,132

</TABLE>


(1)   Grants of options to purchase  shares of Common Stock under the  Incentive
      Plan vest over five years from February 14, 1996, the date of grant,  at a
      rate of 40% on the  second  anniversary  of the date of grant,  and 20% on
      each of the next three succeeding anniversary dates. The options expire on
      the tenth anniversary date of the date of grant.

(2)   Exercise  price of $14.25 is equal to the mean of the high and low  prices
      of the Common Stock on the New York Stock  Exchange  Composite Tape on the
      date of  grant;  exercise  prices of $15.75  and  $17.25  are equal to the
      foregoing  mean  price  on  the  date  of  grant  plus  $1.50  and  $3.00,
      respectively.

(3)   Pursuant  to the  rules  of the  Commission,  these  amounts  reflect  the
      calculations at assumed 5% and 10% appreciation  rates.  Such calculations
      are not  intended  to forecast  future  appreciation,  if any,  and do not
      necessarily  reflect the actual value,  if any, that may be realized.  The
      actual  value of such  options,  if any,  would be realized  only upon the
      exercise of such  options and depends upon the future  performance  of the
      Common Stock. No assurance can be made that the amounts reflected in these
      columns will be achieved.  The potential  realizable value was computed as
      the difference  between the appreciated  value (at the end of the ten-year
      term of the options) of the Common Stock into which the listed options are
      exercisable  and  the  aggregate  exercise  price  of  such  options.  The
      appreciated  value  per  share at the end of the  ten-year  term  would be
      $23.21 and $36.96 at the assumed 5% and 10% rates, respectively.

<PAGE>


Stock Option Exercises and Holdings

            The  following  table  provides  information  with  respect  to  the
executive officers named in the Summary  Compensation Table, as set forth above,
concerning  the exercise of options during the last fiscal year and the value of
unexercised  options held as of December 31, 1996.  One such  executive  officer
exercised options during 1996 as shown in the table below. No stock appreciation
rights have been granted under the Incentive Plan.


<TABLE>
<CAPTION>

                        AGGREGATED OPTION EXERCISES IN 1996 AND 12/31/96 OPTION VALUES

                                                              Number of Securities
                                                              Underlying Unexercised      Value of Unexercised In-the-
                        Shares Acquired                       Options at 12/31/96(#)      Money Options at 12/31/96
        Name            on Exercise (#)    Value Realized($)  #Exercisable/Unexercisable  ($) Exercisable/Unexercisable
        ----            ---------------    -----------------  --------------------------  -----------------------------

<S>                          <C>              <C>                <C>                             <C>
J. Landis Martin              -0-                -0-             758,288/224,000                 516,000/383,625
Lawrence A. Wigdor            -0-                -0-             333,999/142,001                 380,497/255,752
Joseph S. Compofelice         -0-                -0-             50,000/129,000                  106,250/159,375
David B. Garten               -0-                -0-             156,000/61,000                  174,186/123,000
Susan E. Alderton            1,351            3,755.64            85,382/58,000                  174,186/123,000

</TABLE>


Pension Plan

      The  Retirement  Plan of NL Industries,  Inc. for its U.S.  employees (the
"Pension Plan") provides lifetime retirement benefits to eligible employees.  In
February 1996, the Company  approved the suspension of all future accruals under
the salaried  component of the Pension Plan  effective as of March 31, 1996 (the
"Suspension Date").  Salaried employees who were at least 21 years of age became
eligible to  participate  in the Pension  Plan if they  completed  at least five
months of service (as defined in the Pension  Plan) in a specified  twelve-month
period prior to the Suspension Date. Annually, prior to the Suspension Date, the
Board established, in its discretion, the amount of an employee's annual pension
benefit for the year based primarily on the employee's  total eligible  earnings
for that year and the Company's  financial  performance in  relationship  to its
annual  operating  plan for the previous  year.  To the extent that the minimum,
target,  or maximum level of operating  income  performance  were achieved,  the
employee earned an annual benefit equal to 1%, 2% or 3%,  respectively,  of such
employee's  total  base  salary  and  bonus,  up to the  limits set forth in the
Internal  Revenue  Code.  See  "Compensation  Committees'  Report  on  Executive
Compensation  - Variable  Compensation  Plan" below.  Such pension  benefits are
payable upon  retirement  and  attainment of ages specified in the Pension Plan.
The Pension Plan covers each executive officer named in the Summary Compensation
Table set forth above.  No amounts were paid or  distributed to any of the named
executive  officers in 1996. The estimated  accrued annual benefits payable upon
retirement at normal retirement age for Messrs. Martin, Wigdor, Compofelice, and
Garten and Ms.  Alderton  are  $50,239,  $29,438,  $9,293,  $26,405 and $32,145,
respectively.

Employment Agreements

      Mr.  Martin has entered into an  executive  severance  agreement  with the
Company  which  provides  that he may be terminated at any time by action of the
Board of  Directors.  The Company  and Mr.  Martin  have  amended the  executive
severance agreement originally entered into in December 1991 to provide that the
following  payments  shall be made to Mr.  Martin  in the  event  Mr.  Martin is
terminated  by the Company  without  cause (as defined in the  agreement) or Mr.
Martin terminates his employment with the Company for good reason (as defined in
the agreement):  (i) two times Mr. Martin's annual base salary plus target bonus
(which  shall not be less than the amount of his annual  salary);  (ii)  accrued
salary and bonus through the date of  termination;  and certain other  benefits.
The amended  agreement  provides that it shall be in effect through December 31,
2000.

      In connection with the commencement of Mr.  Compofelice's  employment with
the Company in February 1994, the MDC Committee (as defined below)  approved the
terms of an executive  severance agreement with Mr. Compofelice which have since
been incorporated into an executive  severance agreement which provides that Mr.
Compofelice  may be  terminated at any time by action of the Board of Directors.
The executive  severance  agreement  also  provides that the following  payments
shall be made to Mr.  Compofelice in the event Mr.  Compofelice is terminated by
the Company  without  cause (as  defined in the  agreement)  or Mr.  Compofelice
terminates  his  employment  with the Company for good reason (as defined in the
agreement):  (i) the greater of two times Mr.  Compofelice's  annual base salary
plus target bonus (which shall not be less than the amount of his annual salary)
or Mr.  Compofelice's  actual  salary  and  bonus  for the two  years  prior  to
termination;  (ii)  accrued  salary and bonus  through the date of  termination;
(iii) an  amount  in cash or  Common  Stock  equal to the fair  market  value of
outstanding  stock options granted to Mr.  Compofelice in excess of the exercise
price and unvested  restricted  stock  grants;  (iv) an amount equal to unvested
Company  contributions  together with an amount equal to the Company's  matching
contributions to Mr.  Compofelice's  account under the Savings Plan for a period
of two years;  (v) an amount  equal to the vested and  unvested  portions of Mr.
Compofelice's account under the SERP; and certain other benefits. This agreement
is automatically  extended for a one-year term commencing each January 1, unless
the Company and Mr. Compofelice agree otherwise in writing.

      In March  1995,  the MDC  Committee  approved  the  terms of an  executive
severance agreement with Dr. Wigdor on terms  substantially  similar to those in
the  agreement  between the Company and Mr.  Compofelice  described  above.  The
severance agreement replaces Dr. Wigdor's employment  agreement with the Company
that  expired.  Dr.  Wigdor and the Company have since entered into an executive
severance agreement that incorporates the foregoing terms.

Compensation Committee Interlocks and Insider Participation

      Mr. Martin, the Company's  President and Chief Executive Officer,  and Ms.
Alderton,  the Company's Vice President and Treasurer,  served as members of the
compensation  committee  of TIMET during a portion of 1996 prior to TIMET's June
1996 initial public offering. Two of TIMET's executive officers,  Messrs. Martin
and  Compofelice,  served as directors of the Company  during 1996.  Mr.  Martin
served during 1996 as a director and executive officer of TIMET and Tremont, and
he expects to continue to serve as an  executive  officer and  director of TIMET
and Tremont in 1997.  See "Certain Relationships and Transactions."




<PAGE>



            COMPENSATION COMMITTEES' REPORT ON EXECUTIVE COMPENSATION

      The Company's Management  Development and Compensation Committee (the "MDC
Committee")  consists  of,  and the  Stock-Based  Compensation  Committee  ("SBC
Committee" and collectively with the MDC Committee, the "Committees") during its
existence  consisted of,  individuals who are neither  officers nor employees of
the Company or its  subsidiaries  and who are not eligible to participate in any
of the employee benefit plans administered by such committees.

      The MDC Committee reviews and recommends  executive  officer  compensation
policies and  practices.  The MDC  Committee was  responsible  for reviewing and
approving  all   compensation   actions  during  1996,   excluding   stock-based
compensation, involving the Company's executive officers. However, any action in
connection  with the  Chief  Executive  Officer's  (the  "CEO")  base  salary is
reviewed and approved by the Board after recommendation by the MDC Committee. In
February  1996,  the Board  established  the SBC  Committee  for the  purpose of
reviewing and approving all actions involving the grant of stock options,  stock
appreciation  rights,  and restricted stock awards under the Incentive Plan. The
SBC Committee  was  responsible  for  reviewing  and  approving all  stock-based
compensation actions during 1996. See "Meetings and Committees."

      The Company's  compensation system with respect to its executive officers,
including the CEO,  consists of three primary  components:  base salary,  annual
variable  compensation pursuant to the Variable Compensation Plan, and the grant
of stock options,  restricted stock and/or stock appreciation rights pursuant to
the Incentive  Plan.  Through the use of the foregoing,  the Committees  seek to
achieve a balanced  compensation  package  that will  attract  and  retain  high
quality key  executives,  appropriately  reflect each such  executive  officer's
individual  performance,  contributions,  and general market value,  and provide
further incentives to such officers to maximize annual operating performance and
long-term shareholder value.

Base Salaries

      The MDC Committee reviews any recommendations of the CEO regarding changes
in base salaries for executive officers. Such recommendations are made after the
CEO's consultation with the Chairman of the Board.  Reviews regarding changes in
the base salaries of executive  officers occur no more frequently than annually.
When  recommendations  regarding  changes in base salary  levels are made by the
CEO, the MDC Committee may take such actions, including any modifications, as it
deems appropriate.  The CEO's recommendations and the MDC Committee's actions in
1996 were based  primarily  on a  subjective  evaluation  of past and  potential
future individual  performance and  contributions and alternative  opportunities
that might be available to the  executives in question.  The Committee  also had
available  to it  compensation  data  from  companies  employing  executives  in
positions  similar to those whose salaries were being reviewed as well as market
conditions  for  executives  in general  with  similar  skills,  background  and
performance  levels,  both inside and outside of the  chemicals  industry  (such
companies may include companies contained in the peer group index plotted on the
Performance  Graph  following  this report),  and other  companies  with similar
financial and business characteristics as the Company, or where the executive in
question has similar  responsibilities.  In 1996,  the MDC Committee  approved a
base annual  salary  increase for Ms.  Alderton from $150,000 to $170,000 (on an
annualized basis), for Mr. Garten from $225,000 to $250,000, and for Mr. Newkirk
from  $150,000  to  $170,000  based  on the  considerations  described  in  this
paragraph.  No action was taken with respect to the base  salaries of any of the
other executive officers of the Company, including the CEO.

Variable Compensation Plan

      Awards  under the Variable  Compensation  Plan  constitute  a  significant
portion of an executive's  potential  annual cash  compensation  (between 0% and
150% of base salary for the CEO and the  executive  officers).  Awards are based
primarily on the applicable  business  segment  achieving  annual  predetermined
operating income goals and secondarily, with respect to certain of the executive
officers,   on   individual   performance.   The  Company's   management   

<PAGE>

makes  recommendations  to the Board regarding the operating income plan for the
year after reviewing market conditions and the Company's operations, competitive
position,  marketing  opportunities,  and strategies  for  maximizing  financial
performance.  The Board approves this  recommendation  with any modifications it
deems  appropriate.  Based on the business plan for the year,  the MDC Committee
sets the Company's and its business  segments'  operating  income goals at three
levels which are designed to help focus the  Company's  executives  on achieving
superior annual operating results in light of existing  conditions:  a threshold
level,  which is the  minimum  operating  income  level for any award to be made
under the Variable  Compensation Plan (the "Minimum Level"), a target level (the
"Target  Level"),  and a maximum  level  (the  "Maximum  Level").  The  Variable
Compensation  Plan, in  combination  with base salary,  is designed to result in
executive  officers  and  other  eligible  participants  receiving  annual  cash
compensation below competitive  compensation  levels if the Minimum Level is not
achieved.

      Pursuant to the Variable  Compensation  Plan, if operating income is below
the Minimum  Level,  no variable  compensation  is paid. If the Minimum Level is
met, executive officers are eligible to receive variable  compensation  payments
that in 1996  ranged  between  14% and  60% of  base  salary,  depending  on the
executive.  If the Target Level is reached,  the range of variable  compensation
payments  is higher,  and in 1996 ranged  between  22% and 100% of base  salary,
depending  on the  executive.  If the  Maximum  Level is  reached  or  exceeded,
executives are eligible to receive the highest variable  compensation  payments,
and in 1996 the range of payments for which  executive were eligible was between
35%  and  150%  of  base  salary,  depending  on the  executive.  In view of the
achievement of operating income during 1995 above the Maximum Level, in 1996 the
MDC Committee  approved  Maximum Level payments under the Variable  Compensation
Plan to the  executive  officers,  including the CEO. Such awards to the CEO and
the four other highest paid executive  officers under the Variable  Compensation
Plan are  reported  in the bonus  column in the Summary  Compensation  Table set
forth above.

      Apart from the Variable  Compensation  Plan,  the MDC  Committee may award
other bonuses as the MDC Committee deems appropriate from time to time under its
general authority or under a separate  discretionary  plan. In addition,  target
levels for operating  income  performance were utilized by the MDC Committee and
the Board, as applicable,  for determining the  contributions  by the Company to
the  accounts  of eligible  participants,  including  the CEO and the  executive
officers,  under the Savings Plan,  the Pension Plan, and the SERP. See "Pension
Plan" above.

Stock-Based Compensation

      The  Incentive  Plan  further  supports the goal of  maximizing  long-term
shareholder value by providing for stock-based compensation,  the value of which
is directly related to increases in shareholder  value.  Stock option grants, in
particular,  are  considered  a  significant  element  of  the  Company's  total
compensation  package  for  the  CEO and the  other  executive  officers  of the
Company.  The  Committees  believe  that  compensation  linked  to  stock  price
performance  helps focus the executives'  attention on management of the Company
from the shareholders' perspective.

      Option grants are intended to provide  incentives to increase  shareholder
value in the future and to reward past  performance by the  executive.  In 1996,
the SBC Committee reviewed recommendations by the CEO regarding option grants to
executive  officers  other  than the CEO.  Options  were  granted  to  executive
officers,  including  the  CEO,  in the SBC  Committee's  discretion  based on a
subjective    evaluation    regarding   each    executive's    performance   and
responsibilities.  In 1996,  the SBC  Committee  included  in its  determination
regarding  the  number of  options  to be  granted  to each  executive  officer,
including  the CEO,  the  amount  and  terms  of  options  already  held by such
officers.  Grants made in 1996 are reported in the Option  Grants in Last Fiscal
Year Table set forth above.

      To help assure a focus on long-term creation of shareholder value, the SBC
Committee  granted ten year  options,  which vest 40%,  60%, 80% and 100% on the
second,  third,  fourth  and  fifth  anniversary  dates  of the  date of  grant,
respectively.  In 1996 the SBC Committee granted options in three exercise price
tranches.  One-third of such options granted in 1996 are exercisable at the fair
market value of the Common Stock on the date of grant. The remaining  two-thirds
of the options are  exercisable at levels that are above the market price on the
date of grant.  See 

<PAGE>

the Summary  Compensation  Table above.  Although  permitted under the Incentive
Plan,  the SBC  Committee  in 1996  did not  make or  recommend  any  grants  of
restricted stock, stock appreciation rights or other equity-based awards.

      To encourage growth in shareholder  value, the MDC Committee believes that
executives  who are in a  position  to make a  substantial  contribution  to the
long-term  success of the Company should have a significant stake in its ongoing
success.  In 1993, the MDC Committee  established the following  voluntary goals
for  minimum  Common  Stock  ownership  for  executive   officers  to  encourage
executives to build their Common Stock  ownership.  Executives are encouraged to
achieve these ownership goals over the next two years.  The table also shows the
year-end  market  value of the actual  share  ownership  (excluding  unexercised
options) as a multiple of 1996 base salary.


                                               Year-End Market Value of Share
                                          Ownership as a Multiple of Base Salary
                                          --------------------------------------

                                                        Actual           Goal
                                                        ------           ----

President and Chief Executive Officer                    2.2X             4X
Executive Vice President                                 1.4X             3X
Vice Presidents: Chief Financial Officer                 2.1X             3X
                 Controller                              2.9X             2X
                 General Counsel                         1.9X             2X
                 Treasurer                               2.5X             2X


Tax Code Limitation on Executive Compensation Deductions

             In 1993,  Congress amended the Internal Revenue Code to impose a $1
million  deduction limit on compensation paid to the CEO and the four other most
highly compensated  executive  officers of public companies,  subject to certain
transition   rules  and  exceptions  for  compensation   received   pursuant  to
non-discretionary   performance-based   plans   approved   by   such   company's
shareholders.  In  1996,  the  Board  and the  Company's  shareholders  approved
amendments to the Company's Variable  Compensation Plan and Incentive Plan which
permit compensation paid or awards or grants made to executives pursuant to such
plans to continue to qualify for deductibility by the Company.

             The foregoing  report on executive  compensation has been furnished
by the Company's MDC Committee and SBC Committee of the Board of Directors.

                        Mr. Kenneth R. Peak (Chairman)
                        General Thomas P. Stafford1
                        Admiral Elmo R. Zumwalt, Jr.







1 Member of the SBC Committee only.


<PAGE>




                                PERFORMANCE GRAPH

             Set forth below is a line graph  comparing the yearly change in the
cumulative total  shareholder  return on the Common Stock against the cumulative
total  return of the S & P  Composite  500 Stock  Index and the S & P  Chemicals
Index for the period commencing  December 31, 1991 and ending December 31, 1996.
The graph  shows the value at  December  31 of each year  assuming  an  original
investment  of $100 and  reinvestment  of dividends and other  distributions  to
shareholders.


[GRAPHIC OMITTED - GRAPH  DESCRIPTION] a line graph plotting the points shown in
the chart below which  compares the yearly  percentage  change in the cumulative
total shareholder return on the Common Stock against the cumulative total return
of the S & P Composite  500 Stock Index and S & P Chemical  Index for the period
commencing December 31, 1991 and ending December 31, 1996.


<TABLE>
<CAPTION>

                         1991       1992        1993       1994       1995       1996
                         ----       ----        ----       ----       ----       ----

<S>                      <C>        <C>         <C>        <C>        <C>        <C> 
NL Industries, Inc.      $100        $48        $47        $132       $127       $117
S & P 500                $100       $108        $119       $120       $165       $203
S & P Chemicals Index    $100       $109        $122       $141       $184       $243
</TABLE>




<PAGE>




                      CERTAIN RELATIONSHIPS AND TRANSACTIONS


Relationships with Related Parties

      As set forth under the caption  "Security  Ownership,"  Harold C. Simmons,
through  Valhi and  Tremont,  may be deemed to control NL. The Company and other
entities that may be deemed to be controlled by or affiliated  with Mr.  Simmons
sometimes  engage  in  (a)  intercorporate   transactions  such  as  guarantees,
management and expense  sharing  arrangements,  shared fee  arrangements,  joint
ventures,  partnerships,  loans, options, advances of funds on open account, and
sales,  leases and  exchanges  of assets,  including  securities  issued by both
related  and  unrelated  parties  and  (b)  common  investment  and  acquisition
strategies,   business   combinations,    reorganizations,    recapitalizations,
securities  repurchases,  and  purchases and sales (and other  acquisitions  and
dispositions)  of  subsidiaries,   divisions  or  other  business  units,  which
transactions  have involved both related and unrelated parties and have included
transactions  which  resulted  in the  acquisition  by one  related  party  of a
publicly-held equity interest in another related party. The Company from time to
time considers,  reviews and evaluates,  and understands that Contran, Valhi and
related entities consider,  review and evaluate,  such  transactions.  Depending
upon the business,  tax and other objectives then relevant,  including,  without
limitation  restrictions  under certain  indentures and other  agreements of the
Company,  it is possible  that the Company  might be a party to one or more such
transactions  in the  future.  It is the  policy  of the  Company  to  engage in
transactions  with related parties on terms,  in the opinion of the Company,  no
less favorable to the Company than could be obtained from unrelated parties.

      Harold C.  Simmons and Glenn R.  Simmons,  each a director of NL, are also
directors  of  Valhi.  Each of the  foregoing  persons  and Mr.  Martin  and Ms.
Alderton are directors of Tremont. Mr. Martin, the Company's President and Chief
Executive Officer,  and Mr. Compofelice,  the Company's Vice President and Chief
Financial  Officer,  served as  executive  officers  of Tremont and TIMET and as
directors  of Tremont (in the case of Mr.  Martin)  and TIMET  during  1996.  In
addition, Mr. Compofelice has served as an executive officer of Valhi since 1994
and Mr.  Garten has served  since 1990 as assistant  secretary  of Tremont.  Mr.
Martin expects to continue to serve in 1997 as an executive officer of TIMET and
Tremont and Mr. Compofelice expects to continue to serve in 1997 as an executive
officer of TIMET, Valhi and Tremont. Such management  interrelationships and the
existing  intercorporate   relationships  may  lead  to  possible  conflicts  of
interest.  These possible conflicts may arise from the duties of loyalty owed by
persons  acting  as  corporate  fiduciaries  of  two  or  more  companies  under
circumstances  where such companies may have adverse interests.  Mr. Compofelice
devotes  approximately forty percent of his working time to NL and the remainder
of  his  working  time  to  Valhi,   TIMET  and  Tremont.   Mr.  Martin  devotes
approximately  one-half  of his  working  time  to NL and the  remainder  of his
working time to TIMET and Tremont.  See "Certain  Contractual  Relationships and
Transactions" below.

      Although no specific  procedures are in place that govern the treatment of
transactions among the Company,  Valhi, TIMET, Tremont and related entities, the
boards of directors of the Company, Valhi, TIMET and Tremont include one or more
members who are not officers or directors of any other entity that may be deemed
to be related to the Company. Additionally,  under applicable principles of law,
in the absence of  shareholder  ratification  or approval  by  directors  of the
Company who may be deemed disinterested,  transactions involving contracts among
the Company and any other  companies  under common control with the Company must
be fair to all companies involved. Furthermore, each director and officer of the
Company owes fiduciary duties of good faith and fair dealing with respect to all
shareholders of the company or companies for which they serve.

Certain Contractual Relationships and Transactions

      Intercorporate Services Agreements. The Company and Contran are parties to
an intercorporate  services  agreement (the "Contran ISA") whereby Contran makes
available  to the Company the  services of Harold C. Simmons to consult with the
Company  and  assist in the  development  and  implementation  of the  Company's
strategic  plans and  

<PAGE>

objectives.   The  services  do  not  include  major   corporate   acquisitions,
divestitures  and other  special  projects  outside  the scope of the  Company's
business as it has been  conducted in the past.  NL paid  Contran  approximately
$400,000  in 1996 for  services  pursuant  to the Contran ISA and expects to pay
approximately  the same  amount in 1997 for such  services.  The  Contran ISA is
subject to termination  or renewal by mutual  agreement and may be terminated by
either  party  pursuant  to a  written  notice  delivered  30  days  prior  to a
quarter-end.  The Company  will  continue to pay  directors'  fees and  expenses
separately to Harold C. Simmons.  See  "Compensation  of Directors and Executive
Officers and Other Information" above.

      The Company and Valhi are parties to an intercorporate  services agreement
(the "Valhi ISA")  whereby  Valhi  renders  certain  management,  financial  and
administrative  services to the Company  and the Company  makes the  services of
Joseph S.  Compofelice and the Company's  internal audit personnel  available to
Valhi.  In addition in 1996,  NL provided to Valhi  certain  insurance  and risk
management  services.  Mr.  Compofelice serves as an executive officer of Valhi.
The Company  expects to receive  total net fees of  approximately  $30,000  from
Valhi for services  provided during 1996 after  receiving  credit for the amount
owed by Valhi to NL for the portion of Mr.  Compofelice's  salary earned in 1995
and 1996 for  services  attributable  to Valhi and for  certain  internal  audit
services  provided  to Valhi in 1995.  NL expects to receive a higher net amount
for  services  in 1997.  The Valhi ISA is subject to  termination  or renewal by
mutual  agreement and may be  terminated  by either party  pursuant to a written
notice delivered 30 days prior to a quarter-end.

      The  Company  and  Tremont  are  parties  to  an  intercorporate  services
agreement (the "Tremont ISA") whereby the Company makes available to Tremont and
TIMET certain  services with respect to Tremont's  and TIMET's  insurance,  risk
management,  real  property,  internal  audit and executive  secretarial  needs.
Tremont paid fees of approximately $161,000 to the Company for services pursuant
to the Tremont ISA during  1996.  In addition in 1996,  the Company  provided to
Tremont and TIMET certain tax services totaling approximately $100,000 for which
the  Company  expects to be  reimbursed  in 1997.  The Tremont ISA is subject to
termination  or  renewal  by mutual  agreement  for  succeeding  one-year  terms
commencing  January 1, 1996 and may be  terminated  at  anytime by either  party
pursuant  to 90 day prior  written  notice to the other  party.  NL  expects  to
receive  approximately  $100,000 for services to be provided to Tremont in 1997.
The Company expects to enter into a separate  intercorporate  services agreement
with TIMET in 1997,  and to receive  approximately  $350,000  for services to be
provided to TIMET in 1997.

      Tremont  Registration  Rights  Agreement.  In connection with the December
1991 purchase by Tremont of 7.8 million  shares of Common Stock from Valhi,  the
Company entered into a Registration  Rights Agreement  pursuant to which Tremont
received  certain  registration  rights with  respect to the  purchased  shares.
Unless all registration rights are exercised earlier,  such agreement expires in
December 2001.

      Valhi Stock  Options.  Certain  employees  of the Company  hold options to
purchase  Valhi  Common Stock under the terms of Valhi's  stock option plan.  At
December  31,  1996,  Messrs.  Martin,  Compofelice  and  Newkirk  and one other
employee held options to purchase  300,000,  50,000,  20,000 and 45,000  shares,
respectively,  of Valhi  Common Stock at exercise  prices  ranging from $4.76 to
$14.66 per share. With respect to all such employees except Mr. Compofelice, the
Company  has agreed to pay Valhi the  aggregate  difference  between  the option
price and the market value of Valhi's  Common Stock on the exercise date if such
options are exercised.

      Insurance Sharing Agreement.  An indirect insurance  subsidiary of Tremont
has assumed the obligations of the issuer of certain reinsurance  contracts that
relate to primary insurance  policies issued by a third-party  insurance company
in favor of Tremont and the  Company.  The  Company  and the  Tremont  insurance
subsidiary  are parties to an insurance  sharing  agreement with respect to such
reinsurance  contracts (the "Insurance Sharing  Agreement").  Under the terms of
the  Insurance  Sharing  Agreement,  the  Company  will  reimburse  the  Tremont
insurance  subsidiary  with  respect  to  certain  loss  payments  and  reserves
established by such Tremont  subsidiary that (a) arise out of claims against the
Company  and its  subsidiaries  (the "NL  Liabilities"),  and (b) are subject to
payment by such Tremont  subsidiary  under its  reinsurance  contracts  with the
third-party insurance company. Also pursuant to the Insurance Sharing Agreement,
the  Tremont  insurance  subsidiary  is to credit the  Company  with  respect to
certain underwriting profits or 

<PAGE>

recoveries that such Tremont  subsidiary  receives from  independent  reinsurers
that relate to the NL  Liabilities.  As of December  31,  1996,  the Company had
current  accounts  payable to such  Tremont  subsidiary  of  approximately  $3.6
million with respect to such Agreement.


                                CERTAIN LITIGATION

      In September  1996, a purported  shareholder  derivative suit was filed in
the Chancery Division of the New Jersey Superior Court,  Bergen County (Seinfeld
v. Simmons et al., Civ.  Action No.  C-336-96)  challenging  the Company's  1991
purchase of approximately  10.9 million shares of Common Stock from Valhi,  Inc.
in  connection  with a "Dutch  auction"  tender offer to all  shareholders.  The
complaint  names as  defendants  the Company,  Valhi,  and the seven persons who
served on the Company's Board of Directors in 1991. The complaint alleges, among
other things,  that the Company's purchase of shares in the Dutch auction was an
unfair and wasteful expenditure of the Company's funds that constituted a breach
of the defendants' fiduciary duties to the Company's shareholders. The complaint
seeks, among other things, rescission of the purchase from Valhi pursuant to the
Dutch auction and plaintiff has stated that damages sought are $149 million. The
Company and the other defendants have answered the complaint and have denied all
allegations of wrongdoing.  The Company  believes,  and understands that each of
the other defendants  believe,  that the complaint is without merit. The Company
intends,  and believes that each of the other defendants  intend,  to defend the
action vigorously. Trial is scheduled to begin in November 1997.

      In November 1991, a purported  derivative complaint was filed in the Court
of  Chancery  of the State of  Delaware,  New  Castle  County  (Kahn v.  Tremont
Corporation,  et al., No. 12339),  in connection with Tremont's  purchase of 7.8
million  shares  of NL's  outstanding  Common  Stock  from  Valhi in  1991.  The
complaint  named  as  defendants  Valhi  and all the  members  of the  Board  of
Directors of Tremont, including Messrs. Martin, Glenn Simmons and Harold Simmons
and Ms.  Alderton,  and alleged that  Tremont's  purchase of the Company  shares
constituted  a waste of  Tremont's  assets and a breach of  fiduciary  duties by
Tremont's  Board.  A trial in this matter was held in June 1995.  In March 1996,
the Court issued its opinion ruling in favor of the defendants,  concluding that
the purchase of the interest in NL was entirely  fair to Tremont.  Plaintiff has
appealed the decision to the Delaware  Supreme  Court which has not yet ruled on
the matter.


                              INDEPENDENT ACCOUNTANTS

      The firm of Coopers & Lybrand L.L.P. served as independent auditors of the
Company for the year ended  December 31, 1996,  and is expected to be considered
for  appointment to serve for the year ended December 31, 1997.  Representatives
of Coopers & Lybrand L.L.P. are not expected to attend the Annual Meeting.


                   SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING

      In order to be included in the Company's 1998 proxy  statement and form of
proxy, shareholder proposals for the 1998 annual meeting of shareholders must be
received at the principal  executive  offices of the Company,  16825  Northchase
Drive,  Suite 1200,  Houston,  Texas  77060,  Attention:  Mr.  David B.  Garten,
Secretary, not later than December 15, 1997. All such proposals shall be treated
in accordance with applicable rules administered by the Commission.





<PAGE>



                          1996 ANNUAL REPORT ON FORM 10-K

      A copy of the Company's 1996 Annual Report on Form 10-K, as filed with the
Commission,  is included as part of the Annual Report to Shareholders  mailed to
the shareholders with this Proxy Statement. An additional copy of such Form 10-K
may be obtained without charge by writing:  Investor  Relations  Department,  NL
Industries, Inc., 16825 Northchase Drive, Suite 1200, Houston, Texas 77060.


                                   OTHER MATTERS

      The Board does not know of any business  except as  described  above which
may be presented for  consideration  at the Annual Meeting.  If any business not
described  in this  Proxy  Statement  should  properly  come  before  the Annual
Meeting,  the persons  designated as agents in the enclosed proxy card or voting
instruction  form will vote on those  matters  in  accordance  with  their  best
judgment.


                                           NL INDUSTRIES, INC.

Houston, Texas
March 31, 1997



<PAGE>


                                         APPENDIX A

                                      NL INDUSTRIES, INC.

                              16825 NORTHCHASE DRIVE, SUITE 1200
                                     HOUSTON, TEXAS 77060

             PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 7, 1997

The undersigned hereby appoints David B. Garten, Lourdes T. Hernandez and Dennis
G. Newkirk and each of them, the proxy and attorney-in-fact for the undersigned,
with full power of  substitution  in each, to represent the  undersigned  and to
vote on behalf of the  undersigned at the Annual Meeting of  Shareholders  of NL
Industries,  Inc.  to be  held  on  May 7,  1997,  and  at  any  adjournment  or
postponement of such meeting (the "Annual Meeting"),  all shares of Common Stock
of NL  Industries,  Inc.  standing in the name of the  undersigned  or which the
undersigned  may be  entitled to vote on the  matters  described  on the reverse
side.

THIS PROXY IS SOLICITED  ON BEHALF OF THE BOARD OF  DIRECTORS OF NL  INDUSTRIES,
INC.

You are  encouraged  to specify your voting  choices by marking the  appropriate
boxes on the  reverse  side of this  card but you need not mark any boxes if you
wish to vote in  accordance  with the Board of Directors'  recommendations.  The
above-named  proxies cannot vote your shares unless you sign,  date and promptly
return this card.  Please use the enclosed  return  envelope.  This proxy may be
revoked by a proxy  accepted at a later date or otherwise as set forth in the NL
Proxy Statement which accompanied this proxy card.


                                                                    SEE REVERSE
                                                                        SIDE




<PAGE>


/X/     Please mark you votes as in this example

This  proxy,  if  properly  executed,  will be voted as  specified  below by the
shareholder,  if no  direction  is given,  this  proxy  will be voted  "FOR" all
nominees for Director listed below.

The Board of Directors  recommends a vote "FOR" all nominees for Director listed
below.

1.  Election of Directors.

    For      Withheld    Election of Directors.
    / /      / /           Nominees: Joseph S. Compofelice, J. Landis Martin
                           Kenneth R. Peak, Glenn R. Simmons, Harold C. Simmons,
                           Lawrence A. Wigdor, and Admiral Elmo R. Zumwalt



Withhold authority to vote for the following individual nominees:

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


2.      In their  discretion,  proxies  are  authorized  to vote upon other such
        business  as may  properly  come  before  the  Annual  Meeting  and  any
        postponement thereof.


        Please sign exactly as  shareholder's  name appears on this card.  Joint
        owners   should  each  sign.   When  signing  as   attorney,   executor,
        administrator, trustee or guardian, please give full title as such. If a
        corporation  or  partnership,  please sign full corporate or partnership
        name and sign authorized person's name and title.

        The undersigned  shareholder hereby revokes all proxies heretofore given
        by the undersigned to vote at the Annual Meeting or any  adjournments or
        postponements thereof.


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

                                     ------------------------------------------
                                     SIGNATURE(S)                        DATE


<PAGE>