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 SS. 240.14a-11(c) or SS. 240.14a-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)(4) and 0-11.
     1)   Title of each class of securities to which transaction applies:
     2)   Aggregate number of securities to which transaction applies:
     3)   Per unit price or other underlying value of transaction computed 
          pursuant  to  Exchange  Act Rule 0-11 (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 26, 1999


Dear Shareholder:

     You are cordially invited to attend the 1999 Annual Meeting of Shareholders
of NL Industries, Inc., which will be held on Tuesday, May 4, 1999 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 4, 1999

To the Shareholders of NL Industries, Inc.:

     NOTICE IS HEREBY GIVEN that the 1999 Annual  Meeting of  Shareholders  (the
"Annual  Meeting")  of NL  Industries,  Inc.,  a  New  Jersey  corporation  (the
"Company" or "NL"), will be held on Tuesday, May 4, 1999, 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 2000  Annual  Meeting of
        Shareholders and until their successors are duly elected and qualified;

     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
17,  1999 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, 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 26, 1999


<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 1999 Annual
Meeting of  Shareholders  to be held at 10:00 a.m.  (C.D.T.) on Tuesday,  May 4,
1999, 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 2, 1999.


                            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  2000
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.  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 17, 1999
(the "Record  Date").  As of the Record Date,  there were issued and outstanding
51,826,139 shares of Common Stock, each of which entitles the holder to one vote
on all matters that come before the Annual Meeting.  Valhi,  Inc.  ("Valhi"),  a
diversified company engaged in the titanium dioxide pigments, component products
(ergonomic  computer support systems,  precision ball bearing slides and locking
systems), titanium metals products, and waste management industries, and Tremont
Corporation  ("Tremont"),  a holding  company engaged in the titanium metals and
titanium dioxide pigments industries, held approximately 58%



<PAGE>



and 20%,  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 "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 each 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 and of
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,  a division of  EquiServe  ("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 58% AND 20%, 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
2000 Annual Meeting of Shareholders or until his successor shall have been



<PAGE>



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.

      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 2000 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 49, has been a director of NL since 1995.  He
has  served  as Chief  Executive  Officer  and  Chairman  of the  Board of CompX
International  Inc.  ("CompX"),  a leading  manufacturer  of ergonomic  computer
support  systems,  precision  ball  bearing  slides and  locking  systems  and a
majority-owned  subsidiary of Valhi,  since February 1998, as President of CompX
since  January  1999,  and as a  director  of CompX  since  December  1997.  Mr.
Compofelice was Vice President and Chief Financial Officer of NL from 1994 until
1998.  Mr.  Compofelice  served as  Executive  Vice  President of Valhi and Vice
President and Chief Financial  Officer of Tremont from 1994 until February 1998.
From February 1996 until  February  1998,  Mr.  Compofelice  also served as Vice
President,  Chief Financial  Officer and, except for a period from March 1996 to
July 1996, has served as a director of Titanium Metals Corporation ("TIMET"), an
integrated  producer of titanium  metals products which is 39%-owned by Tremont,
since February 1996.

      J. LANDIS MARTIN,  age 53, 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 1994.
Mr. Martin also has served as Chairman of the Board of TIMET since prior to 1994
and Chief Executive Officer of TIMET since 1995. From prior to 1994 to 1994, Mr.
Martin  also served as Chairman of the Board,  Chief  Executive  Officer,  and a
director of Baroid  Corporation  ("Baroid"),  a company engaged in the petroleum
services industry that was acquired by Dresser Industries,  Inc.  ("Dresser") in
January 1994.  Dresser was acquired by Halliburton  Company  ("Halliburton")  in
1998.  Mr. Martin is a director of Halliburton  and of Apartment  Investment and
Management Corporation, a real estate investment trust.

      KENNETH R. PEAK, age 53, has been a director of NL since 1989. Since prior
to 1994,  Mr.  Peak has been  President  of Peak  Enernomics,  Inc.,  an  energy
industry  consulting  firm.  Mr. Peak  serves as a director  of Cheniere  Energy
Company,  an  oil  and  gas  exploration   company,  and  EarthCare  Company,  a
nonhazardous  liquid waste service 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 71, has been a director of NL since 1986. Mr. Simmons
is Chairman of the Board of Keystone Consolidated Industries, Inc. ("Keystone"),
a steel fabricated wire products,  industrial wire and carbon steel rod company.
Since prior to 1994,  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  93% of the outstanding  common stock of Valhi and
47% of the outstanding common stock of Keystone.  Mr. Simmons is also a director
of Tremont,  CompX, and TIMET. 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 67,  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 1994 and was
President  of Valhi and  Contran  from 1994 until  1998.  Mr.  Simmons is also a
director of Tremont.  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.



<PAGE>



     LAWRENCE  A.  WIGDOR,  age 57,  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"),  a wholly-owned subsidiary of NL involved in
the titanium  dioxide pigments  business,  since prior to 1994 and was President
and Chief Executive Officer of Rheox, Inc. ("Rheox"), a wholly-owned  subsidiary
of NL involved in the specialty chemicals business, since prior to 1994 until it
was sold in January 1998.

      ELMO R. ZUMWALT,  JR., age 78, has been a director of NL since 1987. He is
a retired United States 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 1994.  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,  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.

      See also "Certain Relationships and Transactions."


                             MEETINGS AND COMMITTEES

      The Board held five meetings and took action by unanimous  written consent
in lieu of a  meeting  on  thirteen  occasions  in 1998.  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 1998.

      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.

      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 1998. 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.  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 two
occasions  in 1998.  Its current  members are Mr.  Peak,  Chairman,  and Admiral
Zumwalt.

     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 1998.  The  current  members of the
Nominations Committee are Mr. Glenn Simmons,  Chairman,  Admiral Zumwalt and Mr.
Peak. The Nominations



<PAGE>



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  regarding the Company's  executive
officers.  Biographical  information with respect to Messrs.  Simmons and Martin
and Dr. Wigdor is set forth above under "Election of Directors."

<TABLE>
<CAPTION>

             Name                   Age            Position(s)
<S>                                  <C>   <C>

  Harold C. Simmons.............     67    Chairman of the Board

  J. Landis Martin..............     53    President and Chief Executive Officer

  Dr. Lawrence A. Wigdor........     57    Executive Vice President; President 
                                           and Chief Executive Officer of Kronos

  Susan E. Alderton.............     47    Vice President, Chief Financial
                                           Officer and Treasurer

  David B. Garten...............     47    Vice President, General Counsel and 
                                           Secretary

  Robert D. Hardy...............     38    Vice President, Controller, Assistant 
                                           Treasurer and Assistant Secretary
</TABLE>

      SUSAN E.  ALDERTON has been Chief  Financial  Officer of the Company since
February  1998 and Vice  President  and  Treasurer of the Company since prior to
1994. Ms. Alderton has been a director of Tremont since prior to 1994.

      DAVID B. GARTEN has been Vice President,  General Counsel and Secretary of
the Company since prior to 1994.

      ROBERT D. HARDY has been Vice  President,  Controller of the Company since
March 1999, Assistant Treasurer since May 1995 and Assistant Secretary since May
1998.  From prior to 1994 to February  1998,  Mr. Hardy served as the  Company's
Director of Taxes, and from February 1998 to March 1999 served as Vice President
- Tax.


                               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 Securities and Exchange  Commission  (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



<PAGE>

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.                                30,135,390(3)               58.1%
   Three Lincoln Centre
   5430 LBJ Freeway
   Suite 1700
   Dallas, TX 75240
Tremont Corporation                        10,215,541(3)               19.7%
   1999 Broadway
   Suite 4300
   Denver, CO 80202
Joseph S. Compofelice                         218,992(4)                --
J. Landis Martin                              642,732(5)                1.2%
Kenneth R. Peak                                10,825(6)                --
Glenn R. Simmons                                4,800(3)(7)             --
Harold C. Simmons                              72,475(3)(8)             --
Dr. Lawrence A. Wigdor                        417,131(9)                --
Admiral Elmo R. Zumwalt, Jr.                    8,400(10)               --
Susan E. Alderton                             115,477(11)               --
David B. Garten                               205,709(12)               --
Robert D. Hardy                                38,598(13)               --
All directors and executive officers
   of the Company as a group
   (10 persons)                             1,735,139(3)(4)(5)(6)(7)    3.3% 
                                              (8)(9)(10)(11)(12)(13)
</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   81.9%,   9.5%  and  1.0%,
     respectively, of the outstanding common stock, $.01 par value per share, of
     Valhi,  Inc.  (the  "Valhi  Common  Stock").   Valhi,  the  Harold  Simmons
     Foundation,  Inc.  (the  "Foundation"),  the Company and Valmont  Insurance
     Company  ("Valmont")  hold  approximately   48.4%,  3.9%,  0.6%  and  0.5%,
     respectively,  of the outstanding  common stock, $1.00 par value per share,
     of Tremont (the "Tremont Common Stock"). Valhi is the holder of 100% of the
     outstanding common stock of Valmont.  National, NOA, Inc. ("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  88.8% and 66.3% of the outstanding
     common stock of Southwest and Dixie Rice,  respectively.  Substantially all
     of Contran's  outstanding voting stock is held either by trusts established
     for the benefit of certain of Harold C. Simmons' children and grandchildren
     (the  "Trusts"),  of which  Harold C.  Simmons is the sole  trustee,  or by
     Harold C.  Simmons  directly.  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 all Contran  shares except for those he
     holds directly.

<PAGE>

     The  Combined   Master   Retirement   Trust  (the  "Master   Trust")  holds
     approximately  0.1% or less 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, a director of Tremont,
     and  Chairman of the Board and Chief  Executive  Officer of Contran,  Dixie
     Rice, Southwest,  Dixie Holding, NOA, National, VGI and Valhi. 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  except to the  extent of his
     individual  vested  beneficial  interest  in the assets  held by the Master
     Trust.

     The shares of Valhi Common Stock described  above as beneficially  owned by
     Contran include  approximately  0.2% of the outstanding  Valhi Common Stock
     that is directly held by the Contran Deferred Compensation Trust No. 2 (the
     "CDCT No. 2").  Boston Safe Deposit and Trust Company  serves as trustee of
     the CDCT No. 2 (the  "Trustee").  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.  Pursuant to the terms of the CDCT No. 2,
     Contran (i) retains the sole power to vote the Valhi  Common  Stock held by
     the CDCT No. 2, (ii) retains  dispositive power over such shares, and (iii)
     may be deemed the indirect  beneficial owner of such shares.  However,  Mr.
     Simmons  disclaims  such  beneficial  ownership of the shares  beneficially
     owned by the  CDCT  No.  2,  except  to the  extent  of his  interest  as a
     beneficiary of CDCT No. 2.

     The Foundation directly holds approximately 3.9% of the outstanding Tremont
     Common Stock and 0.5% of the outstanding Valhi Common Stock. The Foundation
     is a tax-exempt  foundation  organized for charitable  purposes.  Harold C.
     Simmons is the  chairman  of the board and chief  executive  officer of the
     Foundation  and may be deemed  to  control  the  Foundation.  Mr.  Simmons,
     however,   disclaims  beneficial  ownership  of  any  shares  held  by  the
     Foundation.

(4)   The shares of Common Stock shown as beneficially owned include (i) 167,800
      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 and 1998 Long-Term Performance Incentive Plans of NL Industries, Inc.
      (the "1989 Incentive Plan" and the "1998 Incentive  Plan",  respectively),
      (ii) 7,192  shares  credited  to Mr.  Compofelice's  account  under the NL
      Industries,  Inc.  Retirement Savings Plan (the "Savings Plan"), and (iii)
      44,000 shares held by Mr. Compofelice and his wife as joint tenants.

(5)   The shares of Common Stock shown as beneficially owned include (i) 418,000
      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 1989
      Incentive  Plan and (ii) 14,591 shares  credited to Mr.  Martin's  account
      under the Savings Plan.

(6)   The shares of Common Stock shown as  beneficially  owned include (i) 5,000
      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 the 1998 Incentive 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  include  2,000
      shares  which  Glenn R.  Simmons  has the right to acquire by  exercise of
      options within 60 days of the Record Date under the 1998 Incentive Plan.

(8)   The  shares  of  Common  Stock  shown as  beneficially  owned by Harold C.
      Simmons  include  69,475 shares held by Mr.  Simmons' wife with respect to
      which beneficial ownership is disclaimed by Mr. Simmons and 2,000 shares
<PAGE>

      which Mr.  Simmons has the right to acquire by exercise of options  within
      60 days of the Record Date under the 1998 Incentive Plan.

(9)   The shares of Common Stock shown as  beneficially  owned  include  301,600
      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
      1989 Incentive Plan.

(10)  The shares of Common  Stock  shown as  beneficially  owned  include  5,000
      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 under the
      Director Plan and the 1998 Incentive Plan.

(11)  The shares of Common Stock shown as beneficially  owned include (i) 62,400
      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 1989
      Incentive Plan, and (ii) 11,920 shares credited to Ms. Alderton's  account
      under the Savings Plan.

(12)  The shares of Common Stock shown as beneficially owned include (i) 145,200
      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 1989
      Incentive Plan, and (ii) 15,574 shares  credited to Mr.  Garten's  account
      under the Savings Plan.

(13)  The shares of Common Stock shown as beneficially  owned include (i) 22,200
      shares of Common  Stock which  Robert D. Hardy has the right to acquire by
      exercise  of  options  within 60 days of the  Record  Date  under the 1989
      Incentive  Plan,  and (ii) 3,898 shares  credited to Mr.  Hardy'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.


<TABLE>
<CAPTION>

                                   Tremont Common Stock                Valhi Common Stock         
                                -----------------------------      -------------------------------
                                 Amount and                         Amount and
                                 Nature of                          Nature of
            Name of              Beneficia         Percent          Beneficial          Percent
      Beneficial Owner           Ownership(1)    of Class (2)       Ownership (1)     of Class (2)
      ----------------           ------------    ------------       -------------     ------------
<S>                             <C>                 <C>          <C>                      <C>

Joseph S. Compofelice             5,000(3)           --             50,000(8)(9)          --
J. Landis Martin                210,421(4)          3.3%            25,000                --
Kenneth R. Peak                     -0-              --                -0-                --
Glenn R. Simmons                    534(5)(10)       --            425,833(5)(9)(10)      --
Harold C. Simmons                 3,747(5)(6)        --            530,383(5)(9)(11)      --
Dr. Lawrence A. Wigdor              -0-              --                -0-                --
Admiral Elmo R. Zumwalt, Jr.        -0-              --                -0 -               --
Susan E. Alderton                 7,876(12)          --                -0-                --
David B. Garten                  12,000(7)           --                -0-                --
Robert D. Hardy                     318              --             15,000(9)             --
All directors and executive
   officers of the Company      239,896(3)(4)(5)    3.8%         1,046,216(5)(9)          --
   as a group (10 persons)            (6)(7)(12)                        (10)(11)

</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 of Valhi Common
      Stock held by NL and 1,000,000 shares of Valhi Common Stock held by

<PAGE>

      Valmont are excluded  from the amount of Valhi Common  Stock.  The Company
      understands  that,  pursuant to Delaware law,  Valhi treats these excluded
      shares as treasury stock for voting purposes.

(3)   The shares of Tremont Common Stock shown as  beneficially  owned by Joseph
      S.  Compofelice  represent  5,000 shares Mr.  Compofelice has the right to
      acquire by the exercise of options within 60 days of the Record Date.

(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 and 513 shares held by the trustee for the benefit of Mr.
      Martin under the Savings Plan.  Such shares also include 1,800 shares held
      by Mr. Martin's wife, 2,400 shares held by the Martin Children's Trust No.
      II for which Mr.  Martin is the sole trustee and 100 shares held by one of
      Mr. Martin's daughters,  with respect to all of which beneficial ownership
      is disclaimed by Mr. Martin.

(5)   Excludes certain shares which may be deemed to be indirectly  beneficially
      owned by such  individual as to which he disclaims  beneficial  ownership.
      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 3,747 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 11,500 shares which Mr. Garten has the right to acquire by
      exercise of options within 60 days of the Record Date.

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

(9)   Includes  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 450,000 shares of Valhi Common Stock are  exercisable
      by Harold C. Simmons, options for 410,000 shares of Valhi Common Stock are
      exercisable by Glenn R. Simmons, options for 40,000 shares of Valhi Common
      Stock are  exercisable  by Joseph S.  Compofelice,  and options for 15,000
      shares of Valhi Common Stock are  exercisable  by Robert D. Hardy,  all of
      which  shares are  included  in the amount  outstanding  for  purposes  of
      calculating the percent of class owned by such persons.

(10)  Includes  4,383  shares of Valhi  Common  Stock and 534  shares of Tremont
      Common Stock held in Glenn R. Simmons' individual  retirement account. The
      Valhi shares also include 3,000 shares held by Mr.  Simmons' wife, and 800
      shares held in a retirement account for Mr. Simmons' wife, with respect to
      all of which beneficial ownership is disclaimed by Mr. Simmons.

(11)  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.

(12)  The shares of Tremont Common Stock shown as beneficially owned by Susan E.
      Alderton  include 7,365 shares which Ms. Alderton has the right to acquire
      by  exercise  of options  within 60 days of the Record  Date and 11 shares
      held by the  trustee  for the  benefit of Ms.  Alderton  under the Savings
      Plan.

      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  that 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.



<PAGE>

             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 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, 1998, except for Valhi,  which filed one Form
4 late.

                COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
                              AND OTHER INFORMATION

COMPENSATION OF DIRECTORS

      During  1998,  fees were paid to each  director who was not an employee of
the Company or a subsidiary of the Company. Fees consisted of an annual retainer
of $15,000,  payable in  quarterly  installments  and 1,000  shares of NL Common
Stock granted  pursuant to the 1998  Incentive  Plan,  plus an attendance fee of
$1,000 for each  meeting of the Board or a committee  at which the  director was
present. Such directors also received a fee of $1,000 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 insurance benefit equal
to the annual retainer then in effect.  Directors  receiving fees for serving on
the Board of Directors in 1998 were Messrs.  Compofelice,  Peak, G. Simmons,  H.
Simmons, and Admiral Zumwalt. See "Certain Relationships and Transactions."

      In 1998, Messrs.  Compofelice,  Peak, G. Simmons, H. Simmons,  and Admiral
Zumwalt  were each  granted an option  pursuant  to the 1998  Incentive  Plan to
purchase  2,000 shares of Common Stock at an exercise price of $18.00 per share,
representing the last reported sales price of Common Stock on the New York Stock
Exchange  Composite  Tape  on  the  date  of the  grant.  These  options  become
exercisable one year after the date of grant and expire on the fifth anniversary
following the date of the 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, 1998, 1997 and 1996.  
<TABLE>
<CAPTION>

                                                                   SUMMARY COMPENSATION TABLE

                                                                                                        Long Term
                                          Annual Compensation (1)                                   Compensation (1)
                                          -----------------------                                        Awards
                                                                                                    ----------------

                                                                                    Other      Restricted Securities
Name and                                                                            Annual        Stock   Underlying   All Other
Principal Position                  Year      Salary         Bonus (2)           Compensation    Awards   Options     Compensation
                                               ($)              ($)                  (3)          ($)       (#)           (5)($)
-------------------------           ----      -------        ----------            ------        ------   ----------  ------------
<S>                                 <C>       <C>            <C>                   <C>            <C>     <C>           <C>
J. Landis Martin                    1998      500,000        2,750,000             20,127         -0-     120,000       318,600
President and Chief                 1997      500,000         750,000                -0-          -0-      90,000         9,600
Executive Officer (4)               1996      400,000           -0-                  -0-          -0-      45,000        85,000

Dr. Lawrence A. Wigdor              1998      650,000        2,175,000             11,283         -0-      90,000       266,307
Executive Vice President            1997      550,000         825,000                 121         -0-      75,000        14,124
                                    1996      550,000           -0-                 6,013         -0-      36,000       126,885

Susan E. Alderton                   1998      212,813         419,200                 -0-         -0-      30,000        44,783
Vice President,                     1997      178,500         166,800                 -0-         -0-      30,000         7,565
Chief Financial Officer,            1996      170,000           -0-                   -0-         -0-       9,000        10,452
and Treasurer

David B. Garten                     1998      250,000         575,000                 -0-         -0-      45,000        77,208
Vice President, Secretary           1997      250,000         375,000                 -0-         -0-      45,000        10,813
and General Counsel                 1996      250,000           -0-                   -0-         -0-      12,000        45,030

Robert D. Hardy                     1998      170,000         385,300                 -0-         -0-      30,000        39,624
Vice President and                  1997      130,000         84,500                  -0-         -0-      30,000        10,127
Controller                          1996      130,000           -0-                   -0-         -0-       5,000         5,062
</TABLE>
<PAGE>

(1)   No payouts under any long-term  incentive  plans (as defined by applicable
      federal  securities  regulations)  were made  during  1998,  1997 or 1996.
      Therefore  the  column  for  such  compensation   otherwise   required  by
      applicable federal securities regulations has been omitted.

(2)   Amounts  paid  pursuant  to the  Variable  Compensation  Plan and  special
      discretionary  bonuses  paid in view of  contributions  to the sale of the
      Company's  rheological additives business.  See "Compensation  Committee's
      Report on Executive Compensation" below.

(3)  Amount which exceeds 120% of the applicable federal long-term interest rate
     accrued on deferred compensation.

(4)   During 1998, 1997 and 1996, Mr. Martin also served as an executive officer
      of Tremont  and TIMET.  Mr.  Martin is expected to continue to serve as an
      executive  officer of NL, TIMET and Tremont in 1999 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."

(5)   For 1998 represents (i) $5,207,  $672,  $1,108, and $574 of life insurance
      premiums paid by the Company for the benefit of Dr. Wigdor,  Ms. Alderton,
      and Messrs.  Garten and Hardy respectively,  (ii) a contribution of $9,600
      to the account of each of the named  executive  officers under the Savings
      Plan, and (iii) $251,500,  $34,511, $309,000, $66,500, and $29,450 accrued
      by the Company in unfunded  accounts  for the benefit of Dr.  Wigdor,  Ms.
      Alderton and Messrs. Martin, Garten, and Hardy, respectively, under the NL
      Supplemental Executive Retirement Plan ("SERP"). For 1997 represents:  (i)
      $4,524,  $440,  $1,213  and $527 of life  insurance  premiums  paid by the
      Company for the benefit of Dr. Wigdor,  Ms. Alderton,  and Messrs.  Garten
      and Hardy  respectively,  and (ii) a contribution of $7,125 to the account
      of Ms.  Alderton  and  $9,600 to the  account  of each of the other  named
      executive  officers  under the  Savings  Plan.  For 1996  represents:  (i)
      $4,385,  $442,  $1,280  and $462 of life  insurance  premiums  paid by the
      Company for the benefit of Dr. Wigdor,  Ms. Alderton,  and Messrs.  Garten
      and Hardy, respectively, and (ii) $122,500, $10,010, $85,000, $43,750, and
      $4,600, accrued by the Company in unfunded accounts for the benefit of Dr.
      Wigdor, Ms. Alderton, and Messrs. Martin, Garten and Hardy,  respectively,
      under the SERP.

STOCK OPTION GRANTS

      The following  table provides  information  with respect to the individual
stock option grants to the executive officers named in the Summary  Compensation
Table set forth above under the 1998 Incentive Plan during fiscal year 1998.


<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) 
                         Underlying Options       to Employees in     Price(2)    Expiration
     Name                  Granted (#)(1)           Fiscal Year       ($/Share)     Date                5% ($)            10% ($)
     ----                  --------------           -----------       ---------   ----------           -------            --------
<S>                           <C>                     <C>            <C>          <C>                  <C>                <C>
J. Landis Martin              40,000                  25.3%          17.9688      2/11/08              452,048            1,145,648
                              40,000                                 19.9688                           372,048            1,065,648
                              40,000                                 21.9688                           292,048              985,648

Lawrence A. Wigdor            30,000                  19.0%          17.9688      2/11/08              339,036              859,236
                              30,000                                 19.9688                           279,036              799,236
                              30,000                                 21.9688                           219,036              739,236

Susan E. Alderton             10,000                   6.3%          17.9688      2/11/08              113,012              286,412
                              10,000                                 19.9688                            93,012              266,412
                              10,000                                 21.9688                            73,012              246,412

David B. Garten               15,000                   9.5%          17.9688      2/11/08              169,518              429,618
                              15,000                                 19.9688                           139,518              399,618
                              15,000                                 21.9688                           109,518              369,618

Robert D. Hardy               10,000                   6.3%          17.9688      2/11/08              113,012              286,412
                              10,000                                 19.9688                            93,012              266,412
                              10,000                                 21.9688                            73,012              246,412

</TABLE>


<PAGE>

(1)   Grants of options to purchase  shares of Common Stock under the  Incentive
      Plan vest over five years from February 11, 1998, 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 $17.9688 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 $19.9688 and $21.9688 are equal to the
      foregoing  mean  price  on  the  date  of  grant  plus  $2.00  and  $4.00,
      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 $29.27
     and $46.61 at the assumed 5% and 10% rates, respectively.

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,  1998.  Four of those  executive
officers  exercised  options  during 1998 as shown in the table below.  No stock
appreciation rights have been granted under the 1989 or 1998 Incentive Plans.



<TABLE>
<CAPTION>
                                  AGGREGATED OPTION EXERCISES IN 1998 AND 12/31/98 OPTION VALUES

                                                                             Number of Securities
                                                                            Underlying Unexercised      Value of Unexercised In-the-
                        Shares Acquired on                                  Options at 12/31/98(#)       Money Options at 12/31/98
      Name              Exercise (#)(1)        Value Realized ($)         Exercisable/Unexercisable    ($) Exercisable/Unexercisable

<S>                          <C>                    <C>                         <C>                           <C>
J. Landis Martin             324,000                3,351,751                   334,000/276,000               1,333,639/259,971
Lawrence A. Wigdor           170,000                2,054,375                   244,399/206,601                 352,499/161,568
Susan E. Alderton             85,000                1,038,750                    39,600/74,400                  158,625/69,030
David B. Garten               85,000                1,038,750                   115,800/106,200                 158,625/83,718
Robert D. Hardy                -0-                    -0-                        18,400/68,100                   90,225/45,697

</TABLE>


(1)   On September 23, 1998, the Company,  Tremont,  Dr. Wigdor,  Dennis Newkirk
      (the Company's former Controller),  and another of the Company's employees
      entered into an  agreement,  and the Company,  Valhi,  Messrs.  Martin and
      Garten and Ms.  Alderton  entered  into  another  agreement,  under  which
      Tremont purchased 26,028 shares of Common Stock from Dr. Wigdor and 63,856
      shares of Common  Stock from Mr.  Newkirk for an aggregate of $533,574 and
      $1,309,048,  respectively,  and Valhi  purchased  72,650  shares of Common
      Stock from Mr. Martin,  30,241 shares of Common Stock from Mr. Garten, and
      33,889  shares of Common  Stock  from Ms.  Alderton  for an  aggregate  of
      $1,489,325,  $619,941, and $694,725,  respectively.  Under the agreements,
      the sellers  delivered  certain  shares of Common  Stock to the Company in
      payment  of the  exercise  price  and  applicable  withholding  taxes  (as
      permitted by the 1989 Incentive  Plan), and the Company issued directly to
      Tremont and Valhi  certificates  representing  the  appropriate  number of
      shares of Common Stock purchased by them, respectively.

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



<PAGE>

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  Committee's  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 1998. The estimated  accrued annual benefits payable upon
retirement at normal  retirement age for Dr. Wigdor,  Ms. Alderton,  and Messrs.
Martin, Garten, and Hardy are $29,439,  $34,419,  $50,277, $26,410, and $12,348,
respectively.

SEVERANCE 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 executive  severance  agreement  also provides that the
following  payments  shall  be made to Mr.  Martin  in the  event  Mr.  Martin's
employment  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
(iii) certain other benefits.  The agreement provides that it shall be in effect
through December 31, 2000.

     Dr.  Wigdor 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 executive  severance  agreement  also provides that the
following  payments  shall  be made to Dr.  Wigdor  in the  event  Dr.  Wigdor's
employment  is  terminated  by the  Company  without  cause (as  defined  in the
agreement) or Dr. Wigdor  terminates  his  employment  with the Company for good
reason (as defined in the agreement): (i) the greater of two times Dr. Wigdor 's
annual base salary plus target bonus (which shall not be less than the amount of
his annual  salary) or Dr.  Wigdor'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 Dr.  Wigdor  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 Dr.  Wigdor's  account  under the Savings Plan for a
period of two years; (v) an amount equal to the vested and unvested  portions of
Dr.  Wigdor's  account  under the SERP;  and (vi) certain other  benefits.  This
agreement is automatically  extended for a one-year term commencing each January
1, unless the Company and Dr. Wigdor agree otherwise in writing.


            COMPENSATION COMMITTEE'S REPORT ON EXECUTIVE COMPENSATION

      The Company's Management  Development and Compensation Committee (the "MDC
Committee")  consists 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 the MDC Committee.

      The  MDC  Committee  reviews  and  recommends  compensation  policies  and
practices related to the Company's  executive  officers.  The MDC Committee also
was  responsible  for reviewing and approving all  compensation  actions  during
1998,  including  stock-based  compensation,  involving the Company's  executive
officers. However, any action in connection with the Chief Executive Officer's 



<PAGE>

(the  "CEO")  base  salary  is  reviewed   and   approved  by  the  Board  after
recommendation by the MDC Committee. See "Meetings and Committees."

      The Company's  executive  compensation  system generally consists of three
primary components:  base salary,  annual variable  compensation provided by the
Variable  Compensation  Plan, and the grant of stock options,  restricted  stock
and/or  stock  appreciation  rights.  Through  the  use  of the  foregoing,  the
Committee seeks 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  the  officers  to  maximize  annual  operating
performance and long-term shareholder value.

BASE SALARIES

      The MDC Committee reviews  recommendations by the CEO regarding changes in
base salaries for executive officers.  These recommendations are made by the CEO
after 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
1998 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 1998,  the MDC Committee  approved a
base  annual  salary  increase  for Dr.  Wigdor from  $550,000  to $650,000  and
recommended  that Ms. Alderton,  the Company's Vice President and Treasurer,  be
made the Company's  Chief  Financial  Officer and approved a base salary for Ms.
Alderton of $225,000,  and that Mr. Hardy,  the Company's  Director of Taxes, be
made a Vice  President and approved a base salary for Mr. Hardy of $170,000.  No
action was taken with respect to the base salaries of any of the other executive
officers of the Company.

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  certain  executive  officers).  Awards are
based primarily on Kronos' achieving annual predetermined operating income goals
and  secondarily,  with  respect  to  certain  of  the  executive  officers,  on
individual  performance.  The Company's management 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 modifications it deems appropriate.  Based on
the business  plan for the year,  the MDC  Committee  sets the Company's and its
business segment's  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 1998  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 1998 ranged between 22% and 100% of base salary,


<PAGE>

depending  on the  executive.  If the  Maximum  Level is  reached  or  exceeded,
executives are eligible to receive the highest variable  compensation  payments,
and in 1998 the range of payments for which executives were eligible was between
35%  and  150%  of  base  salary,  depending  on the  executive.  In view of the
achievement of operating income above the Maximum Level during 1997, in 1998 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 along with certain  discretionary  bonuses in the bonus column
in the Summary  Compensation  Table set forth above. 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 1989 and 1998 Incentive  Plans further  support 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  Committee  believes  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 1998,
the MDC 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 MDC  Committee's  discretion  based on a
subjective    evaluation    regarding   each    executive's    performance   and
responsibilities.  In 1998,  the MDC  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 1998 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 MDC
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 1998 the MDC Committee granted options in three exercise-price
tranches.  One-third of such options granted in 1998 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 the Summary  Compensation  Table above.  Although  permitted
under the  Incentive  Plan,  the MDC Committee in 1998 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.  The MDC  Committee  has  established  goals for minimum  Common  Stock
ownership for executive  officers to encourage  executives to build their Common
Stock ownership.  The MDC Committee intends to take into consideration in making
grants of stock  options  after  1998,  among  other  things,  whether or not an
executive has achieved his or her ownership  goals,  with a new executive  being
allowed a period of 5 years over which to meet his or her goal.  The table below
shows the goals for the Company's  current  executive  officers at year-end 1998
for minimum Common Stock ownership and year-end market value of the actual share
ownership (excluding unexercised options) as a multiple of 1998 base salary.




<PAGE>

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

                                                        Actual           Goal
President and Chief Executive Officer                   6.36X             4X
Executive Vice President                                2.52X             3X
Vice Presidents: Chief Financial Officer                3.54X             3X
                 General Counsel                        3.43X             2X
                 Controller                              .17X             2X


SPECIAL DISCRETIONARY BONUSES

     Apart from the Variable  Compensation  Plan,  the MDC  Committee  may award
other bonuses as the  Committee  deems  appropriate  from time to time under its
general  authority  or under a  separate  discretionary  plan.  During  1998 the
Committee made awards of $2,000,000,  $1,200,000,  $300,000, $100,000, $200,000,
$200,000,   and  $100,000,   respectively,   to  Mr.  Martin,  Dr.  Wigdor,  Mr.
Compofelice,  Ms. Alderton, Mr. Garten, Mr. Hardy and Mr. Newkirk, the Company's
Controller  at  year-end,  in view of  their  contributions  to the  sale of the
Company's rheological additives business. Such awards are reflected in the bonus
column in the Summary  Compensation Table set forth above.  Significant portions
of the awards made to Mr. Martin and Dr. Wigdor were deferred by agreement  with
the Company. In addition, the Committee made an award of $25,500 to Ms. Alderton
in view of the  additional  time she  devoted  to  Company  matters  above  that
contemplated in her base salary.

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 of the Board of Directors.

                        Mr. Kenneth R. Peak (Chairman)
                        Admiral Elmo R. Zumwalt, Jr.



<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, 1993 and ending December 31, 1998.
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, 1993 and ending December 31, 1998.


<TABLE>
<CAPTION>
                        1993    1994    1995   1996    1997    1998
                        ----    ----    ----   ----    ----    ----
<S>                     <C>     <C>     <C>    <C>     <C>     <C>

NL Industries, Inc.     $100    $281    $269   $248    $311    $325
S & P 500               $100    $101    $139   $171    $229    $294
S & P Chemicals Index   $100    $116    $151   $200    $246    $224

</TABLE>




                      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 and Contran. 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, served as an executive officer of Tremont and TIMET and
as a director  of Tremont  and TIMET.  Mr.  Compofelice  served as an  executive
officer of Tremont and TIMET since 1998, and as a director of TIMET in 1998, and
has served since 1998 as assistant  treasurer of the Company.  In addition,  Mr.
Compofelice  served as an  executive  officer of Valhi in 1998.  Mr.  Garten has
served since 1990 as assistant secretary of Tremont, and Mr. Hardy has served as
assistant  treasurer  of Tremont  and TIMET since 1998.  Mr.  Martin  expects to
continue to serve in 1999 as an  executive  officer of TIMET 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. 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


<PAGE>



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  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  $980,000  in 1998 for  services  pursuant  to the Contran ISA and
expects to pay  approximately  the same  amount in 1999 for such  services.  The
Contran  ISA is subject to  automatic  renewal 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 made  available to Valhi
the services of Joseph S.  Compofelice  through February 1998, and the Company's
internal  audit  personnel.  In addition in 1998,  NL provided to Valhi  certain
insurance and risk management  services.  Mr. Compofelice served as an executive
officer  of Valhi in 1998.  The  Company  paid  total net fees of  approximately
$13,000  to  Valhi  for  services  provided  during  1998.  NL  expects  to  pay
approximately  the same amount for services in 1999. The Valhi ISA is subject to
automatic  renewal 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
certain services with respect to Tremont's tax, insurance, risk management, real
property,  internal audit and executive  secretarial needs. Tremont paid fees of
approximately  $87,200 to the Company for  services  pursuant to the Tremont ISA
during  1998.  The  Tremont  ISA is  subject  to  automatic  renewal  and may be
terminated by either party pursuant to a written notice  delivered 30 days prior
to a  quarter-end.  NL  expects  to receive  approximately  the same  amount for
services to be provided to Tremont in 1999.

       The Company and TIMET are parties to an intercorporate services agreement
(the "TIMET ISA") whereby the Company makes available to TIMET certain  services
with respect to TIMET's tax, insurance, risk management, real property, internal
audit and executive secretarial needs. TIMET paid fees of approximately $508,000
for services  pursuant to the TIMET ISA during 1998. The TIMET ISA is subject to
automatic  renewal and may be terminated  by either party  pursuant to a written
notice  delivered  30  days  prior  to a  quarter-end.  NL  expects  to  receive
approximately the same amount for services to be provided to TIMET in 1999.

      The Company and CompX are parties to an intercorporate  services agreement
(the "CompX ISA") whereby the Company makes available to CompX certain  services
with respect to CompX's  occupancy,  accounting,  computer  support and internal
audit needs.  CompX paid fees of approximately  $87,500 for services pursuant to
the CompX ISA during 1998. The CompX ISA is subject to automatic renewal and may
be terminated  by either party  pursuant to a written  notice  delivered 30 days
prior to a quarter-end.  NL expects to receive approximately the same amount for
services to be provided to CompX in 1999.

      INTEREST IN AIRCRAFT.  In February 1999,  the Company  purchased for $2.85
million a 25%  undivided  interest in an  aircraft.  The seller of the  aircraft
interest to the Company  reacquired the interest from TIMET in February 1999 for
$2.85 million. The purchase of the aircraft interest was unanimously approved by
the outside directors of the Board.

<PAGE>

      INSURANCE  BROKERAGE  COMMISSIONS.  EWI RE, Inc.  ("EWI") arranges for and
brokers certain of the Company's  insurance  policies and those of the Company's
50%-owned  joint venture.  Parties related to Contran own 90% of the outstanding
common  stock  of EWI,  and a  son-in-law  of  Harold  C.  Simmons  manages  the
operations of EWI. Consistent with insurance industry practices,  EWI receives a
commission from the insurance  underwriters for the policies that it arranges or
brokers.  The Company and its joint  venture paid an aggregate of  approximately
$3.0  million  for such  policies in 1998,  which  amount  principally  included
payments for  reinsurance  premiums  paid to third  parties,  but also  included
commissions paid to EWI. In the Company's opinion,  the amounts that the Company
and its joint  venture  paid for these  insurance  policies are  reasonable  and
similar to those the Company and its joint venture  could have obtained  through
an unrelated insurance broker. The Company expects that these relationships with
EWI will continue in 1999.

      TREMONT  REGISTRATION  RIGHTS  AGREEMENT.  In  connection  with  the  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.

     INSURANCE SHARING AGREEMENT. An 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 recoveries that such Tremont subsidiary receives from independent  reinsurers
that  relate to the NL  Liabilities.  As of  December  31,  1998 the Company had
current  accounts  payable to such  Tremont  subsidiary  of  approximately  $3.0
million with respect to such Agreement. In the first quarter of 1999 the Company
collateralized  letters  of credit  relating  to the NL  Liabilities  issued and
outstanding  on behalf of the insurance  subsidiary  of Tremont  pursuant to the
Insurance Sharing Agreement with $9.7 million of the Company's cash.

      See also Note (1) to the Aggregated Option Exercises Table on page 14.


                              INDEPENDENT ACCOUNTANTS

      The firm of  PricewaterhouseCoopers  LLP served as independent auditors of
the  Company  for the year  ended  December  31,  1998,  and is  expected  to be
considered  for  appointment  to serve for the year  ended  December  31,  1999.
Representatives  of  PricewaterhouseCoopers  LLP are not  expected to attend the
Annual Meeting.


                   SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING

      In order to be included in the Company's 2000 proxy  statement and form of
proxy, shareholder proposals for the 2000 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, 1999. All such proposals shall be treated
in accordance with applicable rules administered by the Commission.


                          1998 ANNUAL REPORT ON FORM 10-K

      A copy of the Company's 1998 Annual Report on Form 10-K, as filed with the
Commission,  may be  obtained  without  charge by  writing:  Investor  Relations
Department,  NL Industries,  Inc., 16825 Northchase Drive, Suite 1200,  Houston,
Texas 77060.

<PAGE>

                                   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 26, 1999




<PAGE>
                                         APPENDIX A

                                      NL INDUSTRIES, INC.

                              16825 NORTHCHASE DRIVE, SUITE 1200
                                     HOUSTON, TEXAS 77060

                     PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 4, 1999

The undersigned  hereby appoints David B. Garten and Robert D. Hardy 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 4, 1999, 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 your 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, Jr.


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  or  any
      adjournments or postponements 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