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
[X]    Definitive Proxy Statement                Commission Only (as permitted
[ ]    Definitive Additional Materials           by Rule 14a-6(e)(2))
[ ]    Soliciting Materials Pursuant to Section 240.14a-11(c) or Section
       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) 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>

[LOGO GOES HERE]               NL Industries, Inc.
                              Three Lincoln Centre
                                5430 LBJ Freeway
                                   Suite 1700
                            Dallas, Texas 75240-2697




                                         April 16, 2004


Dear Shareholder:

     You are cordially invited to attend the 2004 Annual Meeting of Shareholders
of NL Industries,  Inc., which will be held on Thursday,  May 20, 2004, at 10:15
a.m.,  local time,  at NL's offices  located at Three Lincoln  Centre,  5430 LBJ
Freeway,  Suite 1700, Dallas, Texas. The matters to be acted upon at the meeting
are described in the attached Notice of Annual Meeting of Shareholders and Proxy
Statement.

     Whether or not you plan to be at the meeting,  please complete,  date, sign
and  return  the  proxy  card or  voting  instruction  form in the  accompanying
envelope as promptly as possible to ensure 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,


                                                /s/ Harold C. Simmons
                                                Harold C. Simmons
                                                Chairman of the Board

<PAGE>

                               NL Industries, Inc.
                              Three Lincoln Center
                                5430 LBJ Freeway
                                   Suite 1700
                            Dallas, Texas 75240-2697





                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

                             TO BE HELD MAY 20, 2004


To the Shareholders of NL Industries, Inc.:



     NOTICE IS HEREBY GIVEN that the 2004 Annual  Meeting of  Shareholders  (the
"Annual  Meeting")  of NL  Industries,  Inc.,  a  New  Jersey  corporation  (the
"Company" or "NL"), will be held on Thursday, May 20, 2004, at 10:15 a.m., local
time, at NL's offices located at Three Lincoln Centre,  5430 LBJ Freeway,  Suite
1700, Dallas, Texas, for the following purposes:

1.   To  elect  six  directors  to  serve  until  the  2005  Annual  Meeting  of
     Shareholders and until their successors are duly elected and qualified; and

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

     The Board of  Directors  of the  Company set the close of business on March
29,  2004 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 plan to be at the meeting, please complete, date, sign and return the proxy
card or voting instruction form in the accompanying envelope as promptly as
possible to ensure that your shares are represented at the Annual Meeting and
voted in accordance with your wishes. 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,

                                   /s/ Robert D. Graham
                                   Robert D. Graham
                                   Vice President, General Counsel and Secretary

Dallas, Texas

April 16, 2004

<PAGE>

                               NL INDUSTRIES, INC.
                              THREE LINCOLN CENTRE
                          5430 LBJ FREEWAY, SUITE 1700
                            DALLAS, TEXAS 75240-2697

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

                                 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 Directors") of NL Industries,
Inc., a New Jersey corporation (the "Company" or "NL"), for use at the Company's
2004 Annual  Meeting of  Shareholders  to be held at 10:15 a.m.,  local time, on
Thursday,  May 20, 2004, at NL's offices located at Three Lincoln  Centre,  5430
LBJ Freeway,  Suite 1700,  Dallas,  Texas 75240-2697,  and at any adjournment or
postponement  thereof (the "Annual Meeting").  The accompanying Notice of Annual
Meeting of Shareholders,  this proxy statement,  the accompanying  proxy card or
voting instructions form and NL's Annual Report to Shareholders,  which includes
NL's Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (the
"Annual Report"),  are first being mailed to the holders of the Company's Common
Stock, $.125 par value per share ("Common Stock"), on or about April 16, 2004.

                            PURPOSE OF ANNUAL MEETING

     At the Annual  Meeting,  shareholders of the Company will consider and vote
upon (i) the election of six directors to serve until the Company's  2005 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 other business expected to come before
the Annual Meeting.

                  QUORUM, VOTING RIGHTS AND PROXY SOLICITATION

     The record  date set by the Board of  Directors  for the  determination  of
shareholders  entitled to notice of, and to vote at, the Annual  Meeting was the
close of business on March 29, 2004 (the "Record Date").  As of the Record Date,
there were issued and outstanding  48,323,984 shares of Common Stock. Each share
of Common Stock  entitles the holder to one vote on all matters that come before
the Annual  Meeting.  The presence,  in person or by proxy,  of the holders of a
majority of the 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.  Shares of Common  Stock  that are voted to abstain  from any  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.

     If a quorum is present,  a plurality of the affirmative votes of the Common
Stock represented and entitled to be voted at the Annual Meeting is necessary to
elect each director of NL. The accompanying proxy card or voter instruction form
provides  space for a shareholder  to withhold  authority to vote for any of the
nominees for the Board of Directors. Neither shares as to which the authority to
vote on the election of directors has been withheld nor broker/nominee non-votes
will be counted as affirmative  votes to elect director nominees to the Board of
Directors.  However,  since  director  nominees  need only receive the vote of a
plurality of the votes represented and entitled to vote at the Annual Meeting, a
vote  withheld  from a  particular  nominee will not affect the election of that
nominee.

<PAGE>

     Except as may be provided in the Company's Amended and Restated Certificate
of Incorporation (the  "Certificate"),  if a quorum is present,  the approval of
any other matter that may properly  come before the Annual  Meeting will require
the affirmative vote of a majority of the votes represented and entitled to vote
at the Annual Meeting. Shares of Common Stock that are voted to abstain from any
other  business  coming before the Annual Meeting and  broker/nominee  non-votes
will not be counted as votes for or against any such other matter.

     Unless  otherwise  specified,  the agents  designated  in the proxy card or
voting  instruction  form will  vote the  shares  represented  by a proxy at the
Annual  Meeting  "FOR" the election of the nominees for director of the Board of
Directors  and, to the extent  allowed by the federal  securities  laws,  in the
discretion  of the agents on any other matter that may properly  come before the
Annual Meeting.

     EquiServe Trust Company N.A. or its successor  ("EquiServe"),  the transfer
agent  and  registrar  for NL  Common  Stock  as of the  Record  Date,  has been
appointed  by  the  Board  of  Directors  to  ascertain  the  number  of  shares
represented,  receive  proxies  and  ballots,  tabulate  the vote  and  serve as
inspector of election at the Annual Meeting (the  "Inspector of Election").  All
proxies  and  ballots  delivered  to  EquiServe  shall be kept  confidential  by
EquiServe in accordance with the terms of the Company's By-Laws.

     Each holder of record of Common Stock giving the proxy  enclosed  with this
proxy  statement  may  revoke it at any time  prior to the  voting at the Annual
Meeting by delivering  to EquiServe a written  revocation of the proxy or a duly
executed  proxy  bearing a later  date or by  voting  in  person  at the  Annual
Meeting.  Attendance by a shareholder  at the Annual  Meeting will not in itself
constitute the revocation of such shareholder's proxy.

     The Board of Directors is making this proxy  solicitation.  NL will pay all
expenses related to the solicitation, including charges for preparing, printing,
assembling and distributing all materials delivered to shareholders. In addition
to the solicitation by mail, directors, officers and regular employees of NL may
solicit  proxies by telephone or in person,  for which such persons will receive
no additional compensation. NL has retained The Altman Group, Inc. to aid in the
distribution  of  this  proxy  statement  and  related  materials  at a cost  NL
estimates at $1,000.  Upon  request,  NL will  reimburse  banking  institutions,
brokerage  firms,  custodians,  trustees,  nominees  and  fiduciaries  for their
reasonable  out-of-pocket  expenses incurred in distributing proxy materials and
voting  instructions to the beneficial owners of Common Stock that such entities
hold of record.

                                       2
<PAGE>

                               CONTROLLED COMPANY

     Valhi,  Inc.  ("Valhi") and Tremont LLC, a wholly owned subsidiary of Valhi
("Tremont"),  are the direct  holders of 62.4% and 21.1%,  respectively,  of the
outstanding shares of the Common Stock as of the Record Date. Together Valhi and
Tremont  own 83.5% of the  outstanding  shares of the  Common  Stock.  Valhi and
Tremont are each related to Contran Corporation  ("Contran").  Harold C. Simmons
may be deemed to control Valhi, Tremont and Contran.

     Valhi and Tremont  have  indicated  their  intention  to have their  shares
represented  at the Annual  Meeting and voted "FOR" the  election of each of the
nominees for the Board of Directors.  If Valhi alone attends the Annual  Meeting
in person or by proxy and votes as  indicated,  the Annual  Meeting  will have a
quorum present and the shareholders will elect all the nominees for the Board of
Directors.

     Because  of  the  Common  Stock  ownership  of  Valhi  and  Tremont,  NL is
considered  a  controlled  company  under the listing  standards of the New York
Stock  Exchange (the "NYSE").  Pursuant to the listing  standards,  a controlled
company may choose not to have a majority of independent directors,  independent
compensation,  nominating  or corporate  governance  committees  or charters for
these committees.  NL has chosen not to have a majority of independent directors
or an independent  nominating or corporate  governance  committee.  The Board of
Directors  believes  that  the full  Board  of  Directors  best  represents  the
interests of all of NL's shareholders and that it is appropriate for all matters
that would be considered by a nominating or corporate governance committee to be
considered  and  acted  upon  by the  full  Board  of  Directors.  Applying  the
requirements  of  the  NYSE  listing  standards,  the  Board  of  Directors  has
determined  that three of its  directors  are  independent  and have no material
relationship  with NL.  While the  members of NL's  Management  Development  and
Compensation committee (the "MD&C Committee") currently satisfy the independence
requirements of the NYSE listing standards,  NL has chosen not to satisfy all of
the NYSE listing  standards  for a  compensation  committee.  See  "Meetings and
Committees"  for more  information  on the committees of the Board of Directors.
See also  "Shareholder  Proposals for the 2005 Annual Meeting" for a description
of NL's policies and procedures for shareholder nominations of directors.

                              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 of  Directors.  The Board of
Directors  has  currently  set the number of directors at seven.  The  directors
elected at the Annual  Meeting will hold office until the 2005 Annual Meeting of
Shareholders  and until their successors are duly elected and qualified or their
earlier removal, resignation or death.

     All of the nominees are  currently  directors of NL whose terms will expire
at the Annual Meeting.  All of the nominees have agreed to serve if elected.  If
any nominee is not available for election at the Annual Meeting, a proxy will be
voted  "FOR" an  alternate  nominee to be  selected  by the Board of  Directors,
unless the shareholder executing such proxy withholds authority to vote for such
nominee.  The Board of Directors  believes that all of its present nominees will
be available for election at the Annual Meeting and will serve if elected. There
is currently a vacancy in one  directorship  on the Board of Directors,  and the
Board of Directors is seeking an appropriate candidate to fill this vacancy.


     THE  BOARD  OF  DIRECTORS  RECOMMENDS  A VOTE  "FOR"  THE  ELECTION  OF THE
FOLLOWING NOMINEES FOR DIRECTOR.

                                       3
<PAGE>

Nominees For Director

     The respective  nominees for election as directors of NL for terms expiring
at  the  2005  Annual  Meeting  of  Shareholders  have  provided  the  following
information.

     Cecil H.  Moore,  Jr.,  age 64, has been a director  of NL since  September
2003.  Mr.  Moore is  currently a private  investor and retired from KPMG LLP in
2000  after 37 years in which he served  in  various  capacities  with the firm.
Among other positions, he served as managing partner of the firm's Dallas, Texas
business unit from 1990 to 1999. Prior to 1990, Mr. Moore was  partner-in-charge
of the audit and accounting  practice of the firm's Dallas,  Texas business unit
for 12 years. He is a member of NL's audit committee (the "Audit Committee") and
on the board of directors and audit committee of Kronos Worldwide, Inc. ("Kronos
Worldwide"). Mr. Moore is also a director of Perot Systems Corporation.

     Glenn R. Simmons, age 76, has been a director of NL since 1986. Mr. Simmons
has been vice  chairman of the board of Valhi and  Contran  since prior to 1999.
Mr. Simmons is also a director of Kronos  Worldwide.  Mr. Simmons is chairman of
the board of Keystone  Consolidated  Industries,  Inc., a steel  fabricated wire
products,  industrial  wire and  carbon  steel rod  company  that is  related to
Contran ("Keystone"), and CompX International, Inc., a manufacturer of ergonomic
computer  support systems,  precision ball bearing slides and security  products
that is related to Valhi  ("CompX").  Mr. Simmons is also a director of Titanium
Metals Corporation ("TIMET"), an integrated producer of titanium metals products
that is related to Valhi. In February 2004,  Keystone filed a voluntary petition
for  reorganization  under  federal  bankruptcy  laws.  Mr.  Simmons has been an
executive  officer or director of various companies related to Valhi and Contran
since 1969. He is a brother of Harold C. Simmons.

     Harold C.  Simmons,  age 72,  has served as chief  executive  officer of NL
since July  2003,  chairman  of the board of NL since 1987 and a director  of NL
since  1986.  Mr.  Simmons  has been  chairman of the board of Valhi and Contran
since prior to 1999 and was chief executive  officer of Valhi from prior to 1999
to 2002. Mr. Simmons is also chairman of the board and chief  executive  officer
of Kronos  Worldwide.  Mr. Simmons has been an executive  officer or director of
various  companies  related to Valhi and Contran  since 1961.  Mr.  Simmons is a
brother of Glenn R. Simmons.

     General  Thomas P. Stafford  (retired),  age 73, served as a director of NL
from  1984  to  1986  and was  re-appointed  in  2000.  General  Stafford  was a
co-founder of, and has been affiliated with, Stafford, Burke and Hecker, Inc., a
Washington-based consulting firm, since 1982. He was selected as an astronaut in
1962,  piloted  Gemini  VI in 1965 and  commanded  Gemini  IX in 1966.  In 1969,
General  Stafford was named Chief of the  Astronaut  Office and was the Apollo X
commander  for the first  lunar  module  flight to the moon.  He  commanded  the
Apollo-Soyuz  joint  mission  with the  Soviet  cosmonauts  in 1975.  After  his
retirement  from the United States Air Force in 1979 as Lieutenant  General,  he
became chairman of Gibraltar Exploration Limited, an oil and gas exploration and
production  company,  and served in that  position  until  1984,  when he joined
General  Technical  Services,  Inc., a consulting  firm.  He is chairman of NL's
Audit Committee and MD&C Committee.

     Steven L.  Watson,  age 53, has served as a director of NL since 2000.  Mr.
Watson has been  president  and a director of Valhi and  Contran  since 1998 and
chief  executive  officer of Valhi since 2002.  Mr. Watson is also a director of
CompX,  Keystone,  Kronos  Worldwide  and  TIMET.  Mr.  Watson  has served as an
executive  officer or director of various companies related to Valhi and Contran
since 1980.

     Terry N.  Worrell,  age 59, has served as a  director  of NL since  October
2003. Mr. Worrell has been a private investor with Worrell Investments,  Inc., a
real estate investment  company,  since 1989. From 1974 to 1989, Mr. Worrell was
president and chief executive officer of Sound Warehouse of Dallas Inc., a chain
of retail music stores. Mr. Worrell also serves on NL's Audit Committee and MD&C
Committee.  Mr. Worrell is a trust manager of Regency Centers  Corporation and a
trust  manager of  Crescent  Real  Estate  Equities  Company,  both real  estate
investment trusts.

         See also "Certain Relationships and Transactions."

                                       4
<PAGE>

                             MEETINGS AND COMMITTEES

     The Board of  Directors  held seven  meetings  and took action by unanimous
written  consent in lieu of a meeting  on five  occasions  in 2003.  Each of the
directors  participated  in more than 75% of the total number of meetings of the
Board of Directors  and  committees on which he served that were held during his
period of service  in 2003.  It is NL's  policy  that each  director  attend its
annual meeting of shareholders,  which is generally held immediately  before the
annual meeting of the Board of Directors.  All members of the Board of Directors
attended NL's 2003 annual shareholders meeting.

     The  Board  of  Directors  has   established  the  following  two  standing
committees:

     Audit  Committee.  The Audit  Committee  assists  the  Board of  Directors'
oversight  responsibilities  relating to the financial  accounting and reporting
processes  and  auditing  processes  of NL.  The  responsibilities  of the Audit
Committee  are more  specifically  set  forth  in the  Audit  Committee  charter
attached as Appendix A to this Proxy Statement. Applying the requirements of the
NYSE  listing  standards  and  Securities  and Exchange  Commission  (the "SEC")
regulations, as applicable, the Board of Directors has determined that:

     o    Each  member  of the  Audit  Committee  is  financially  literate  and
          independent and has no material relationship with NL; and

     o    Mr. Cecil H. Moore, Jr. is the "Audit Committee financial expert."

     The Audit Committee held eleven meetings and took action by written consent
in lieu of a meeting on one occasion in 2003.  The current  members of the Audit
Committee are General Stafford  (chairman),  and Messrs.  Moore and Worrell.  No
member of the Audit  Committee  serves on more than three public  company  audit
committees.  For further  information  on the role of the Audit  Committee,  see
"Audit Committee Report."

     Management   Development   and   Compensation   Committee.   The  principal
responsibilities  of the MD&C  Committee are to review and make  recommendations
regarding  executive  compensation,  to administer and grant awards under the NL
Industries,  Inc. 1998 Long-Term  Incentive  Plan (the "1998 Plan"),  to approve
certain annual  compensation  awards, to provide oversight,  take action or make
recommendations  to the Board of Directors  regarding  NL's  employee,  pension,
welfare and fringe benefit plans or programs,  including  decisions with respect
to the management, disposition, or investment of plan assets and the appointment
of investment  managers/advisors  and to monitor  investment  performance of the
assets of the plans,  and to administer such other  compensation  matters as the
Board of  Directors  may from time to time direct.  The Board of  Directors  has
determined that each member of the MD&C Committee is  independent,  applying the
requirements of the NYSE listing standards.  The MD&C Committee held one meeting
and took action by written consent in lieu of a meeting on one occasion in 2003.
Its current members are General  Stafford  (Chairman) and Mr. Worrell.  The MD&C
Committee does not have a written charter.

     The Board of  Directors  is expected  to elect the members of the  standing
committees at the Board of Directors  annual meeting  immediately  following the
Annual Meeting. The Board of Directors has previously established, and from time
to time  may  establish,  other  committees  to  assist  it in  discharging  its
responsibilities.

                                       5
<PAGE>

                        EXECUTIVE OFFICERS OF THE COMPANY

     Set forth below is certain  information  regarding the Company's  executive
officers.  Biographical  information  with  respect to Mr.  Simmons is set forth
above under "Election of Directors."

<TABLE>
<CAPTION>
  Name                    Age       Position(s)
  ---------------------  ----  -------------------------------------------------
  <S>                    <C>   <C>
  Harold C. Simmons       72   Chairman of the Board and Chief Executive Officer
  James W. Brown          47   Vice President and Controller
  Robert D. Graham        48   Vice President, General Counsel and Secretary
  Gregory M. Swalwell     47   Vice President, Finance
  John A. St. Wrba        47   Vice President and Treasurer
  Kelly D. Luttmer        40   Tax Director
</TABLE>

     James W. Brown has served as vice president and controller of NL and Kronos
Worldwide  since December  2003.  From 1998 to 2002, he served as vice president
and chief financial officer of Software Spectrum,  Inc. ("SSI"). SSI is a global
business-to-business   software   services  provider  that  is  a  wholly  owned
subsidiary of Level 3 Communications, Inc. From 1991 to 2002, SSI was a publicly
held  corporation.  From  1994 to 1998,  Mr.  Brown  served  as vice  president,
corporate accounting of Affiliated Computer Services, Inc.

     Robert  D.  Graham  has  served  as vice  president,  general  counsel  and
secretary of NL since July 2003, vice  president,  general counsel and secretary
of Kronos Worldwide since August 2003 and as vice president of Valhi and Contran
since 2002.  From 1997 to 2002, Mr. Graham served as an executive  officer,  and
most recently as executive vice president and general counsel, of SSI. From 1985
to 1997,  Mr. Graham was a partner in the law firm of Locke Purnell Rain Harrell
(A Professional Corporation), a predecessor to Locke Liddell and Sapp LLP.

     Gregory M. Swalwell has served as vice president,  finance of NL since July
2003,  vice  president,  finance of Kronos  Worldwide since August 2003 and vice
president and controller of Valhi and Contran since prior to 1999. Mr.  Swalwell
has served in accounting  positions with various  companies related to Valhi and
Contran since 1988.

     John A. St. Wrba has served as vice  president  and  treasurer  of NL since
February 2003 and treasurer of Kronos  Worldwide  since August 2003. He was NL's
assistant  treasurer  from 2002 to 2003. He served as NL's  assistant  treasurer
from prior to 1998 until 2000. From 2000 until 2002, he was assistant  treasurer
of Kaiser Aluminum & Chemical Corporation.

     Kelly D.  Luttmer  has served as tax  director  of NL since July 2003,  tax
director of Kronos  Worldwide  since  August 2003 and tax  director of Valhi and
Contran since 1998.  Ms.  Luttmer has served in tax  accounting  positions  with
various companies related to Valhi and Contran since 1989.

                                       6
<PAGE>

                               SECURITY OWNERSHIP

     Ownership of NL Common Stock.  The following table and  accompanying  notes
set forth as of the  Record  Date the  beneficial  ownership,  as defined by the
regulations  of the SEC,  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
person  listed in the  Summary  Compensation  Table  below,  and (d) all current
executive  officers  and  directors  of NL as a group.  See note (4)  below  for
information  concerning  individuals  and  entities  that may be  deemed  to own
indirectly and beneficially those shares of Common Stock held directly by Valhi,
as  reported in the table  below.  All  information  is taken from or based upon
ownership  filings made by such persons with the SEC or information  provided by
such persons to NL.

<TABLE>
<CAPTION>
                                                           NL Common Stock
                                        ------------------------------------------------------
                                              Amount and Nature                   Percent
     Name of Beneficial Owner             of Beneficial Ownership (1)           of Class (2)
------------------------------------    ------------------------------       -----------------
<S>                                     <C>                                  <C>
Harold C. Simmons (3)                                 12,000  (4)                           *
    Valhi, Inc. (3)                               30,135,390  (4)                       62.4%
    Tremont LLC (3)                               10,215,541  (4)                       21.1%
    Spouse (3)                                        69,475  (4)                           *
                                        ---------------------
                                                  40,432,406  (4)                       83.7%

Cecil H. Moore, Jr.                                      -0-                              -0-
Glenn R. Simmons                                      12,000  (4)(5)                        *
Gen. Thomas P. Stafford (ret.)                        10,000  (6)                           *
Steven L. Watson                                      11,000  (4)(7)                        *
Terry N. Worrell                                         -0-                              -0-
Gregory M. Swalwell                                      -0-  (4)                         -0-
John A. St. Wrba                                         -0-                              -0-
J. Landis Martin                                         -0-                              -0-
Dr. Lawrence A. Wigdor                                90,800  (8)                           *
David B. Garten                                       11,000  (9)                           *

All current directors and executive
    officers of the Company
    as a group
    (11 persons)                                  40,465,406  (4)(5)(6)(7)              83.7%
</TABLE>
------------
*  Less than 1%.

(1)       Except as otherwise noted, the listed entities,  individuals and group
          have sole  investment  power and sole voting power as to all shares of
          Common Stock set forth opposite their names.  The number of shares and
          percentage  of  ownership  of Common  Stock  for each  person or group
          assumes  the  exercise  by such  person  or  group  (exclusive  of the
          exercise  by others) of stock  options  that such  person or group may
          exercise within 60 days subsequent to the Record Date.

                                       7
<PAGE>

(2)       The  percentages  are  based on  48,323,984  shares  of  Common  Stock
          outstanding as of the Record Date.

(3)       The business address of Valhi,  Tremont and Harold C. Simmons is Three
          Lincoln  Centre,   5430  LBJ  Freeway,   Suite  1700,  Dallas,   Texas
          75240-2697.

(4)       Valhi is the  direct  holder of 100% of the  membership  interests  of
          Tremont.  Valhi  Group,  Inc.  ("VGI"),   National  City  Lines,  Inc.
          ("National"),  Contran,  the  Harold  Simmons  Foundation,  Inc.  (the
          "Foundation"),  the  Contran  Deferred  Compensation  Trust No. 2 (the
          "CDCT No. 2") and The Combined  Master  Retirement  Trust (the "CMRT")
          are the direct holders of approximately  77.6%, 9.1%, 3.1%, 0.9%, 0.4%
          and 0.1%,  respectively,  of the  outstanding  shares of Valhi  Common
          Stock, par value $0.01 per share (the "Valhi Common Stock"). National,
          NOA, Inc. ("NOA") and Dixie Holding Company ("Dixie  Holding") are the
          direct holders of approximately 73.3%, 11.4% and 15.3%,  respectively,
          of the outstanding Common Stock of VGI. Contran and NOA are the direct
          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  direct   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 direct holder of 100% of the outstanding  Common Stock of Dixie
          Holding. Contran is the holder of 100% of the outstanding Common Stock
          of Dixie Rice and approximately  88.9% of the outstanding Common Stock
          of Southwest.

          Substantially  all of  Contran's  outstanding  voting stock is held by
          trusts   established   for  the  benefit  of  certain   children   and
          grandchildren  of  Harold  C.  Simmons  (the  "Trusts"),  of which Mr.
          Simmons is the sole  trustee.  As sole  trustee of each of the Trusts,
          Mr.  Simmons has the power to vote and direct the  disposition  of the
          shares of Contran stock held by each of the Trusts.

          Harold C.  Simmons is the  chairman  of the board and chief  executive
          officer of each of NL and Kronos  Worldwide  and the  chairman  of the
          board of each of Tremont,  Valhi, VGI,  National,  NOA, Dixie Holding,
          Dixie Rice, Southwest and Contran.

          The Foundation  directly holds  approximately  0.9% of the outstanding
          shares  of  Valhi  Common  Stock.   The  Foundation  is  a  tax-exempt
          foundation organized for charitable purposes. Harold C. Simmons is the
          chairman of the board of the Foundation.

          The CDCT No. 2 directly holds  approximately  0.4% of the  outstanding
          shares of Valhi Common Stock. U.S. Bank National Association serves as
          the trustee of the CDCT No. 2. Contran  established  the CDCT No. 2 as
          an  irrevocable  "rabbi  trust" to assist  Contran in meeting  certain
          deferred  compensation  obligations that it owes to Harold C. Simmons.
          If the CDCT No. 2 assets are insufficient to satisfy such obligations,
          Contran must satisfy the balance of such obligations.  Pursuant to the
          terms of the CDCT No. 2, Contran  retains the power to vote the shares
          held by the CDCT No. 2, retains dispositive power over such shares and
          may be deemed the indirect beneficial owner of such shares.

          The CMRT directly holds  approximately  0.1% of the outstanding shares
          of Valhi  Common  Stock.  Valhi  established  the CMRT to  permit  the
          collective  investment  by master  trusts that  maintain the assets of
          certain  employee  benefit  plans Valhi and related  companies  adopt.
          Harold C.  Simmons is the sole trustee of the CMRT and a member of the
          trust  investment  committee for the CMRT.  Valhi's board of directors
          selects the trustee and members of the trust investment  committee for
          the CMRT.  Harold C. Simmons,  Glenn R. Simmons,  Steven L. Watson, J.
          Landis Martin,  Lawrence A. Wigdor,  David B. Garten and certain other
          executive  officers of the Company are  participants in one or more of
          the employee  benefit plans that invest through the CMRT. Each of such
          persons disclaims  beneficial  ownership of all the shares held by the
          CMRT,  except to the extent of his or her individual vested beneficial
          interest, if any, in the assets held by the CMRT.

                                       8
<PAGE>

          By virtue of the holding of the offices,  the stock  ownership and his
          services as trustee, all as described above, (a) Harold C. 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 shares  directly held by certain of such other  entities.  However,
          Mr.  Simmons  disclaims  such  beneficial   ownership  of  the  shares
          beneficially  owned  directly or indirectly  by any of such  entities,
          except to the extent of his vested  beneficial  interest,  if any,  in
          shares held by the CMRT and his interest as a beneficiary  of the CDCT
          No. 2. Mr. Harold Simmons disclaims beneficial ownership of all shares
          of Common Stock that Valhi or Tremont directly holds.

          All directors and executive  officers of NL who are also  directors or
          executive officers of Valhi or Tremont disclaim  beneficial  ownership
          of the shares of Common Stock that Valhi or Tremont directly hold.

          Harold C.  Simmons'  spouse is the  direct  owner of 69,475  shares of
          Common Stock and 35,233 shares of Kronos  Worldwide  Common Stock. Mr.
          Simmons may be deemed to share indirect  beneficial  ownership of such
          shares. Mr. Simmons disclaims all such beneficial ownership.

          Harold C.  Simmons  directly  holds  12,000  shares  of  Common  Stock
          (including  stock options  exercisable for 6,000 shares within 60 days
          of the Record Date).

          Valmont  Insurance  Company  ("Valmont"),  NL and a  subsidiary  of NL
          directly  hold  1,000,000,  3,522,967  and  1,186,200  shares of Valhi
          Common Stock, respectively.  Valhi is the direct holder of 100% of the
          outstanding  Common Stock of Valmont.  Pursuant to Delaware law, Valhi
          treats the shares that Valmont,  NL and NL's subsidiary  directly hold
          as treasury stock for voting purposes, and for purposes of calculating
          the  percentage  ownership of the  outstanding  shares of Valhi Common
          Stock as of the Record Date in this proxy  statement,  such shares are
          not deemed outstanding.

          The business address of Valhi, Tremont LLC, VGI, National,  NOA, Dixie
          Holding, the CMRT, the Foundation and Contran is Three Lincoln Centre,
          5430 LBJ Freeway,  Suite 1700, Dallas, Texas 75240-2697.  The business
          address  of Dixie Rice is 600  Pasquiere  Street,  Gueydan,  Louisiana
          70542. The business  address of Southwest is 402 Canal Street,  Houma,
          Louisiana 70360.

(5)       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.

(6)       The shares of Common Stock shown as  beneficially  owned include 6,000
          shares which  General  Thomas P.  Stafford has the right to acquire by
          exercise of options within 60 days of the Record Date.

(7)       The shares of Common Stock shown as  beneficially  owned include 4,000
          shares of Common  Stock  which Mr.  Watson has the right to acquire by
          exercise of options within 60 days of the Record Date.

(8)       The shares of Common Stock shown as beneficially  owned include 89,800
          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.

(9)       The shares of Common Stock shown as beneficially  owned include 11,000
          shares of Common  Stock  which Mr.  Garten has the right to acquire by
          exercise of options within 60 days of the Record Date.

     The  Company  understands  that Valhi 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.  NL may  similarly  consider
acquisitions  of Common Stock and  acquisitions  or  dispositions  of securities
issued by related entities.

                                       9
<PAGE>

     The Company further understands that Valhi has pledged  approximately 62.0%
of its shares of Common Stock to secure bank borrowings by Valhi. Foreclosure by
the  lender on this  pledge in the event of Valhi's  default on the loan,  which
Valhi has advised the Company is unlikely,  may at a subsequent date result in a
change in control of the Company.

     Ownership of Valhi and Kronos  Worldwide  Common Stock. The following table
and accompanying notes set forth as of the Record Date the beneficial ownership,
as defined above, of Valhi Common Stock and Kronos  Worldwide  Common Stock held
by (a) each  director or nominee for  director of NL, (b) each person  listed in
the Summary Compensation Table below, and (c) all current executive officers and
directors  of NL as a  group.  All  information  is  taken  from or  based  upon
ownership  filings made by such persons with the SEC or information  provided by
such persons to NL.

<TABLE>
<CAPTION>
                                                     Valhi                               Kronos Worldwide
                                                 Common Stock                              Common Stock
                                     -----------------------------------------   ---------------------------------
                                          Amount and                             Amount and Nature
                                     Nature of Beneficial        Percent of         of Beneficial       Percent of
Name of Beneficial Owner                 Ownership (1)          Class (1)(2)        Ownership (1)       Class (1)(3)
------------------------             ---------------------     ---------------   ------------------    -----------
<S>                                  <C>                       <C>               <C>                   <C>
Harold C. Simmons                            3,383  (4)               *                3,042  (4)            *
   Valhi Group, Inc.                    92,739,554  (4)             77.6%                -0-  (4)           -0-
   National City Lines, Inc.            10,891,009  (4)             9.1%                 -0-  (4)           -0-
   Contran Corporation                   4,142,600  (4)(5)          3.5%                 -0-  (4)           -0-
   Valhi, Inc.                                 N/A                   N/A          16,029,146  (4)          32.8%
   Tremont LLC                                 -0-  (4)              -0-           5,180,738  (4)          10.6%
   NL Industries, Inc.                         -0-  (4)              -0-          24,702,400  (4)          50.5%
   Other                                 1,215,000  (4)             1.0%              35,233  (4)            *
                                     --------------                              ---------------
                                       108,991,546  (4)             91.2%         45,950,559  (4)          93.9%

Cecil H. Moore, Jr.                            -0-                   -0-                 -0-                -0-
Glenn R. Simmons                            13,247  (4)(6)            *                2,071  (4)            *
Gen. Thomas P. Stafford (ret.)                 -0-                   -0-               2,028                 *
Steven L. Watson                           117,246  (4)(7)            *                3,549  (4)            *
Terry N. Worrell                               -0-                   -0-                 -0-                -0-
Gregory M. Swalwell                         96,166  (4)(8)            *                  -0-  (4)           -0-
John A. St. Wrba                               -0-                   -0-                 -0-                -0-
J. Landis Martin                                 4                    *                  -0-                -0-
Dr. Lawrence A. Wigdor                         -0-                   -0-                 107                 *
David B. Garten                                -0-                   -0-               1,000                 *
All current directors and
   executive officers of NL
   as a group
   (11 persons)                        109,280,809  (4)(5)(6)(7)(9)91.3%          45,958,208  (4)         93.9%
</TABLE>
------------
*  Less than 1%.

                                       10
<PAGE>

(1)       Except as otherwise noted, the listed  individuals and group have sole
          investment  power and sole  voting  power as to all  shares  set forth
          opposite their names. The number of shares and percentage of ownership
          for each person or group  assumes the exercise by such person or group
          (exclusive  of others) of stock  options that such person or group may
          exercise within 60 days subsequent to the Record Date.

(2)       The percentages are based on 119,466,678  shares of Valhi Common Stock
          outstanding  as of the Record Date.  For purposes of  calculating  the
          outstanding  shares  of  Valhi  Common  Stock as of the  Record  Date,
          1,000,000,  3,522,967 and 1,186,200  shares of Valhi Common Stock held
          by Valmont, NL and a subsidiary of NL, respectively, are excluded from
          the amount of Valhi  Common  Stock  outstanding.  Pursuant to Delaware
          corporate  law,  Valhi  treats  these  excluded  shares  held by these
          majority owned subsidiaries as treasury stock for voting purposes.

(3)       The percentages are based on 48,943,049  shares of Kronos Common Stock
          outstanding as of the Record Date.

(4)       Excludes  certain  shares  that  such  individual  may  be  deemed  to
          indirectly and beneficially own as to which such individual  disclaims
          beneficial ownership.  See footnote (4) to the "Ownership of NL Common
          Stock" table.

(5)       Includes  439,400 shares of Valhi Common Stock the CDCT No. 2 directly
          holds.

(6)       The shares of Valhi Common Stock shown as  beneficially  owned include
          2,383  shares  of  Valhi  Common  Stock  held  in  Glenn  R.  Simmons'
          individual  retirement  account.  The Valhi  shares  also  include 800
          shares  held in a  retirement  account  for Mr.  Simmons'  wife,  with
          respect to all of which  beneficial  ownership  is  disclaimed  by Mr.
          Simmons.

(7)       The shares of Valhi Common Stock shown as  beneficially  owned include
          2,035  shares  of  Valhi  Common  Stock  held in  Steven  L.  Watson's
          individual  retirement account.  The Valhi shares also include 100,000
          shares that Mr. Watson has the right to acquire by exercise of options
          within 60 days from the Record Date.

(8)       The shares of Valhi Common Stock shown as  beneficially  owned include
          1,166  shares of Valhi  Common  Stock held in  Gregory  M.  Swalwell's
          individual  retirement  account.  The Valhi shares also include 95,000
          shares  that Mr.  Swalwell  has the right to  acquire by  exercise  of
          options within 60 days of the Record Date.

(9)       The shares of Valhi  Common Stock shown as  beneficially  owned by all
          current  directors  and executive  officers as a group include  62,600
          shares of Valhi Common Stock that the other executive  officers in the
          group have the right to acquire by exercise of options  within 60 days
          of the Record Date.

                                       11
<PAGE>

                COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
                              AND OTHER INFORMATION

Compensation of Directors

     Directors of NL are entitled to receive  compensation for their services as
directors.  Prior to May 20, 2003,  directors  received  quarterly  retainers of
$3,750,  plus a fee of $1,000  per day for  attendance  at  meetings  (including
telephonic  meetings) of the Board of Directors or its  committees  and for each
other day spent on NL business at the request of the Board of  Directors  or the
chairman of the board.

     Beginning on May 20, 2003, directors received quarterly retainers of $5,000
plus a fee of $1,000 per day for  attendance at meetings  (including  telephonic
meetings) of the Board of Directors or its committees and for each other day for
services rendered at the request of the Board of Directors or its committees not
related to meetings of the Board of Directors or its committees.  Directors also
received quarterly retainers of $500 for each committee on which they served.

     If any director dies while  serving on the Board of  Directors,  his or her
designated  beneficiary  or estate will be  entitled to receive a death  benefit
equal to the amount of the annual retainer then in effect.  Throughout the year,
NL  reimbursed  its  directors  for  reasonable  expenses  incurred in attending
meetings  and in the  performance  of other  services  rendered on behalf of the
Board of Directors or its committees. In addition,  General Stafford receives an
annual  payment of $15,000 as a result of his service on the Board of  Directors
in the period prior to 1987.

     Directors  who received  fees for serving on the Board of Directors and who
were  entitled to receive the death benefit in 2003 are Messrs.  G. Simmons,  H.
Simmons,   Moore,   Watson,   Worrell,   and  General  Stafford.   See  "Certain
Relationships and Transactions."

     On  May  20,  2003,   the  Board  of  Directors  also  changed  the  equity
compensation  paid  to  the  non-employee  directors.  The  Board  of  Directors
terminated the annual grant of stock options to the non-employee directors,  but
authorized annual grants of shares of Common Stock to the non-employee directors
on the date of each annual  shareholders  meeting as determined by the following
formula  based on the  closing  price of a share of Common  Stock on the date of
grant.

<TABLE>
<CAPTION>

      Range of Closing Price Per                     Shares of Common
      Share on the Date of Grant                    Stock to Be Granted
      --------------------------                    -------------------
      <S>                                           <C>
         Under $5.00                                       2,000
         $5.00 to $9.99                                    1,500
         $10.00 to $20.00                                  1,000
         Over $20.00                                         500
</TABLE>

     As a result of the $16.22 per share  closing  price of Common  Stock on May
20, 2003, each non-employee  director received a grant of 1,000 shares of Common
Stock. Current directors who received the stock grant are Messrs. G. Simmons, H.
Simmons and Watson, and General Stafford.

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 NL
and its  subsidiaries for services  rendered to NL and its  subsidiaries  during
2003,  2002  and 2001 by NL's  chief  executive  officer,  two  other  executive
officers,  the former chief  executive  officer and two other  former  executive
officers.

                                       12
<PAGE>

<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE


                                                                                  Long-Term
                                                                                Compensation(1)
                                                                                ---------------
                                        Annual Compensation(1)                      Awards
                                  ------------------------------------------        ------
     Name and                                                  Other Annual        Securities           All Other
Principal Position       Year      Salary        Bonus(2)     Compensation(3)   Underlying Options   Compensation(4)
------------------       ----     --------      ---------     ---------------   ------------------   --------------
                                    ($)            ($)             ($)                 (#)                 ($)
<S>                      <C>      <C>           <C>           <C>               <C>                  <C>
Harold C. Simmons        2003      992,830            -0-            -0-                 -0-                 -0-
Chairman of the Board
and Chief Executive
Officer (5)

Gregory M. Swalwell      2003      154,000            -0-            -0-                 -0-                 -0-
Vice President,
Finance (6)

John A. St. Wrba         2003      154,167        182,900         43,203                 -0-              18,496
Vice President
and Treasurer (7)

J. Landis Martin         2003      575,000            -0-           390                  -0-              72,400
Former President and     2002      600,000        600,000         2,875                  -0-             102,400
Chief Executive          2001      600,000        600,000        67,806              100,000             152,040
Officer (8)

Dr. Lawrence A.          2003      915,833        922,000           532                  -0-             114,375
Wigdor                   2002      750,000        750,000            68                  -0-             186,848
Former Executive Vice    2001      750,000      1,350,000         2,729              100,000             351,658
President (9)

David B. Garten          2003      425,000        425,000           -0-                  -0-             108,343
Former Vice President,   2002      425,000        425,000           -0-                  -0-              82,342
General Counsel and      2001      425,000        525,000           -0-               50,000              93,309
Secretary (10)
</TABLE>

(1)       No shares of restricted  stock were granted,  and no payouts under any
          long-term incentive plans (as defined by applicable federal securities
          regulations)  were  made  during  2003,  2002  or  2001  to the  named
          executive  officers.   Therefore  the  column  for  such  compensation
          otherwise required by applicable  federal  securities  regulations has
          been omitted.

(2)       Unless  otherwise  noted,  reflects amounts paid each year pursuant to
          the Variable  Compensation Plan and, for 2001,  special  discretionary
          bonuses. See "Compensation Committee Report on Executive Compensation"
          below.

(3)       With  respect to Mr. St. Wrba,  the amount shown in the "Other  Annual
          Compensation"  column for 2003 includes  $42,200 for  reimbursement of
          relocation  costs  incurred in connection  with his  relocation to the
          Company's headquarters in Dallas, Texas and payment for certain income
          tax he  incurred  as a result of such  reimbursement  and  $1,003  for
          health club dues. With respect to Mr. Martin and Dr. Wigdor,  includes
          the amount which  exceeds  120% of the  applicable  federal  long-term
          interest  rate  accrued on deferred  compensation.  In the case of Mr.
          Martin,  in 2001,  the amount  shown  included  $8,114 of such  excess
          interest and $50,518 in value  attributed  to the use of the Company's
          aircraft by him.

                                       13
<PAGE>

(4)       "All Other  Compensation"  amounts shown below  represent (i) matching
          contributions  made or accrued by the Company  pursuant to the savings
          feature of the Savings Plan,  (ii)  retirement  contributions  made or
          accrued  by the  Company  pursuant  to the  Savings  Plan,  (iii) life
          insurance  premiums paid by the Company,  and (iv) amounts paid by the
          Company under the Supplemental  Executive  Retirement Plan ("SERP") in
          2003,  2002 and 2001. In 2001,  the MD&C  Committee  directed that the
          Company amend the SERP to provide for the  distribution of the accrued
          balance in each SERP  participant's  account and the payment of future
          SERP benefits to participants as accrued,  thus reducing the Company's
          interest costs. In connection with the amendment,  in 2001 the Company
          paid $1,761,661,  $1,739,924,  and $481,164, to Dr. Wigdor and Messrs.
          Martin and Garten, respectively,  which represented the accrued vested
          balance in each of their SERP  accounts with  interest.  These accrued
          amounts were previously reported as compensation in the years accrued.
          Amounts  shown below with  respect to Mr. St. Wrba are  reflected  for
          2003 only, the first year in which he became an executive officer.

<TABLE>
<CAPTION>

                                               Year          Martin          Wigdor         Garten        St. Wrba
                                            -----------    ------------    -----------    -----------    -----------
         <S>                                <C>            <C>             <C>            <C>            <C>
         Savings Match ($)                     2003               -0-          8,000          8,000          6,860
                                               2002             8,000          8,000          8,000            N/A
                                               2001             6,800          6,800          6,800            N/A

         Retirement Contribution ($)           2003            14,400         16,600         11,000          8,000
                                               2002            14,400         16,600         11,000            N/A
                                               2001            12,240         14,110          9,350            N/A

         Life Insurance ($)                    2003               -0-          6,109          3,342          1,916
                                               2002               -0-         10,248          3,342            N/A
                                               2001               -0-         10,248          2,909            N/A

         SERP ($)                              2003            58,000         83,666         86,001          1,720
                                               2002            80,000        152,000         60,000            N/A
                                               2001           133,000        320,500         74,250            N/A
</TABLE>

(5)       For all of 2003,  Harold C.  Simmons was an  employee of Contran.  Mr.
          Simmons  became chief  executive  officer  effective July 17, 2003 and
          provides  executive  officer  services  to NL  pursuant  to  the  2003
          intercorporate services agreement between Contran and NL (the "Contran
          ISA").  The amount  shown as his 2003  salary  consists of $951,000 in
          fees NL paid  pursuant to the Contran ISA that relate to the  services
          he rendered to NL and its  subsidiaries in 2003 and $41,830 in fees NL
          paid to Mr. Simmons in the form of cash and shares of Common Stock for
          his services as a director in 2003.

(6)       For all of 2003,  Gregory  M.  Swalwell  was a Contran  employee.  Mr.
          Swalwell  became an  executive  officer  effective  July 17,  2003 and
          provides executive officer services to NL pursuant to the Contran ISA.
          The  amount  shown  as his  2003  salary  represents  the fees NL paid
          pursuant to the Contran ISA that relate to the services he rendered to
          NL and its subsidiaries in 2003.

(7)       John A. St. Wrba became an  executive  officer  effective  December 8,
          2003.  Beginning  January  1,  2004,  Mr.  St.  Wrba  became a Contran
          employee and provides his executive officer services to NL pursuant to
          the Contran  ISA.  The amount shown in the table as the 2003 bonus for
          Mr. St.  Wrba  includes  $75,000  paid to him as a  one-time  bonus in
          connection  with  his  relocation  to the  Company's  headquarters  in
          Dallas, Texas.

(8)       During  2003,  2002 and 2001,  Mr.  Martin also served as an executive
          officer of Tremont and TIMET and was  compensated  directly by Tremont
          and TIMET. Mr. Martin resigned as an executive officer of NL effective
          July 8, 2003 and elected to receive early  retirement  benefits  under
          the NL pension plan as of that date.  From July to December  2003, Mr.
          Martin  served as a consultant to NL. Of the amount shown in the table
          as the 2003 salary for Mr. Martin, $325,000 represents the salary paid
          to him for his 2003  services  while he was an employee,  and $250,000
          represents the amount paid to him for his 2003 services while he was a
          consultant. See "-- Martin Consulting Arrangement."

                                       14
<PAGE>

(9)       Dr. Wigdor  resigned as an executive  officer  effective July 26, 2003
          and elected to receive early retirement  benefits under the NL pension
          plan as of that date. Dr. Wigdor  currently  serves as a consultant to
          Kronos  Worldwide  with  ongoing  management  involvement  in the TiO2
          operations  conducted by Kronos Worldwide.  Of the amount shown in the
          table as the 2003  salary  for Dr.  Wigdor,  $495,833  represents  the
          salary Kronos Worldwide paid to him for his 2003 services while he was
          an employee,  and $420,000 represents the amount Kronos Worldwide paid
          to him for his 2003  services  while he was a  consultant.  The amount
          shown in the table as the 2003 bonus for Dr. Wigdor represents amounts
          Kronos  Worldwide  paid  him  for his  2003  services  while  he was a
          consultant,  which are  comparable  to 2003  bonus  payments.  See "--
          Wigdor Compensatory Arrangement.

(10)      Mr. Garten resigned as an executive  officer  effective July 22, 2003.
          The  amount  shown  in the  table  as the 2003  bonus  for Mr.  Garten
          consists  of  $425,000  paid to him as a  severance/bonus  payment  in
          connection with his resignation from the Company.

No Grants of Stock Options or Stock Appreciation Rights

     No stock options or stock appreciation rights were granted to NL directors,
executive officers or employees during 2003.

Stock Option Exercises and Holdings

         The following table provides information with respect to the persons
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, 2003. No stock appreciation rights have been
granted by the Company.

                                       15
<PAGE>

      AGGREGATED STOCK OPTION EXERCISES IN 2003 AND 12/31/03 OPTION VALUES

<TABLE>
<CAPTION>
                                                                           Number of                      Value of
                                   Shares                            Securities Underlying              Unexercised,
                                  Acquired                            Unexercised Options           In-the-Money Options
                                     on              Value         at 12/31/03 (Exercisable/      at 12/31/03 (Exercisable/
          Name(1)                 Exercise       Realized (2)            Unexercisable)              Unexercisable) (3)
-----------------------------    ------------    --------------    ---------------------------    --------------------------
                                     (#)             ($)                      (#)                            ($)
<S>                              <C>             <C>               <C>                            <C>
Harold C. Simmons
NL Stock Options                      -0-                -0-            8,000  /       -0-            40,330  /
                                                                                                                     -0-
J. Landis Martin
NL Stock Options                   33,200            109,915          301,400  /       -0-           429,830  /
                                                                                                                     -0-
Dr. Lawrence A. Wigdor
NL Stock Options                      -0-                -0-          154,000  /   159,600           181,772  /  640,245

David B. Garten
NL Stock Options                   27,000             83,496           73,000  /    57,000            75,586  /  175,537

Gregory M. Swalwell
Valhi Stock Options                   -0-                -0-           85,400  /    16,000           450,300  /   57,360
</TABLE>

(1)       Mr. St. Wrba did not  exercise  any stock  options in 2003 and did not
          hold any stock options at 12/31/03.

(2)       The value is based on the difference between the exercise price of the
          individual   stock  options  and  the  closing  sales  price  of  such
          underlying  Common Stock as of the date of exercise as reported on the
          NYSE.

(3)       The value is based on the difference between the exercise price of the
          individual stock options and the closing sales price of the underlying
          Common Stock as reported on the NYSE on December 31, 2003. The closing
          sales  price for Common  Stock on December  31,  2003 was $11.70.  The
          closing  sales price for Valhi  Common  Stock on December 31, 2003 was
          $14.96.

Pension Plan

     The Retirement  Program of NL Industries,  Inc. for its U.S. employees (the
"Pension Plan") provides lifetime retirement benefits to eligible employees.  In
1996,  the Company  approved the  suspension  of all future  accruals  under the
salaried component of the Pension Plan. The Pension Plan covers Messrs.  Martin,
Wigdor and Garten.  Following  their  resignations in July 2003, each of Messrs.
Martin and  Wigdor  elected to receive  their  retirement  benefits  at an early
retirement age.  Beginning April 2004, Mr. Martin will receive a monthly payment
of $2,513 for the remainder of his life.  Dr.  Wigdor began  receiving a monthly
payment  amount of $2,428 in August 2003,  which will continue for the remainder
of his life. The estimated accrued annual benefit payable under the Pension Plan
upon  retirement  at normal  retirement  age for Messrs.  St. Wrba and Garten is
$1,840 and $26,410, respectively.

Martin Consulting Arrangement

     Following his  resignation as an executive  officer of NL in July 2003, Mr.
Martin  entered into a  consultancy  arrangement  with NL, which  terminated  in
December 2003.  Pursuant to such  consulting  arrangement,  Mr. Martin  received
payments of $50,000 monthly plus reimbursement of business expenses.

Wigdor Compensatory Arrangement

     Concurrently  with his  resignation  as an executive  officer of NL in July
2003, Dr. Wigdor entered into a consultancy  arrangement  with Kronos  Worldwide
pursuant to which Dr. Wigdor provides ongoing  management  involvement in Kronos
Worldwide's TiO2 operations.  Dr. Wigdor received $461,000 on August 1, 2003 and
monthly  payments of $84,000  beginning on August 1, 2003.  On February 1, 2004,
Dr. Wigdor  received a payment under the arrangement of $461,000 based on Kronos
Worldwide having achieved 2003 segment profit (as Kronos Worldwide  defines that
term  internally) in excess of $130 million.  Beginning in 2004, Dr. Wigdor will
receive  annual  discretionary  bonuses that are no less than the average  bonus
paid to the three executives of NL and Kronos Worldwide  combined  receiving the
highest  paid  bonuses  for 2004 and 2005,  respectively,  excluding  NL's chief
executive  officer.  Under the consultancy  arrangement,  as amended in February
2004,  if Kronos  Worldwide  terminates  the  consultancy  arrangement  prior to
December 31,  2006,  Dr.  Wigdor will receive  twelve  months  compensation  and
medical and dental coverage through December 31, 2006 and, if terminated in 2004
or after, a pro-rata  portion of his  discretionary  bonus for the year in which
the  termination  occurs.  The  arrangement  provides Dr.  Wigdor  various other
benefits, such as medical and dental benefits and office and secretarial support
at Kronos Worldwide's New Jersey office.

                                       16
<PAGE>

                   EQUITY COMPENSATION PLAN INFORMATION

     The  following  table  provides  summary  information  with respect to NL's
equity  compensation  plans under which NL's equity  securities may be issued to
employees or nonemployees (such as directors,  consultants,  advisers,  vendors,
customers,  suppliers and lenders) in exchange for  consideration in the form of
goods or services.

<TABLE>
<CAPTION>
                                         Column (A)                   Column (B)                   Column (C)
                                --------------------------    -------------------------    -------------------------
                                                                                             Number of Securities
                                                                                            Remaining Available for
                                                                                             Future Issuance Under
                                Number of Securities to be    Weighted-Average Exercise    Equity Compensation Plans
                                  Issued Upon Exercise of       Price of Outstanding        (Excluding Securities
                                   Outstanding Options,               Options,                  Reflected in
      Plan Category                Warrants and Rights           Warrants and Rights             Column (A))
--------------------------      --------------------------    -------------------------    -------------------------
<S>                             <C>                           <C>                          <C>
Equity compensation plans
approved by security
holders                                 1,140,000                       $9.22                      3,864,500

Equity compensation plans
not approved by security
holders                                       -0-                         -0-                            -0-
                                --------------------------    -------------------------    -------------------------
         Total                          1,140,000                       $9.22                      3,864,500

</TABLE>

                                       17
<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 SEC,  the NYSE,  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, 2003.

                       CODE OF BUSINESS CONDUCT AND ETHICS

     NL has adopted a code of business conduct and ethics that applies to all of
NL's  directors,  officers and employees,  including  NL's  principal  executive
officer,   principal  financial  officer,   principal   accounting  officer  and
controller. Any person may obtain a copy of the code, without charge, by sending
a written  request to NL's  corporate  secretary at NL Industries,  Inc.,  Three
Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2697. Only the
Board of  Directors  may amend  the code.  The code  shall be  included  on NL's
website at  www.nl-ind.com in accordance with the NYSE listing  standards.  Only
the Audit  Committee or other  committee of the Board of Directors with specific
delegated  authority may grant a waiver of the code. NL will disclose amendments
to, or waivers of, the code as required by law and the  applicable  rules of the
NYSE.

                         CORPORATE GOVERNANCE GUIDELINES

     NL intends to adopt corporate  governance  guidelines that will comply with
the NYSE  listing  standards.  NL will  also make the  guidelines  and its audit
committee charter available on NL's website at www.nl-ind.com in accordance with
the NYSE  listing  standards.  Any  person  will be able to obtain a copy of the
guidelines  (when adopted) or the audit committee  charter,  without charge,  by
sending a written  request to NL's corporate  secretary at NL Industries,  Inc.,
Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2697.

                                       18
<PAGE>

                             AUDIT COMMITTEE REPORT

     The Audit  Committee  of the Board of Directors of NL is comprised of three
directors  and  operates  under  a  written  charter  adopted  by the  Board  of
Directors.  All members of the Audit Committee meet the  independence  standards
established  by the Board of Directors and the NYSE and  promulgated  by the SEC
under the  Sarbanes-Oxley  Act of 2002. The Board of Directors adopted revisions
to the Audit  Committee's  charter in  February  2004.  The new Audit  Committee
charter is included as Appendix A to this proxy statement, and shall be included
on NL's website at www.nl-ind.com in accordance with the NYSE listing standards.

     NL's  management is responsible for preparing NL's  consolidated  financial
statements in accordance with accounting  principles  generally  accepted in the
United States of America ("GAAP").  NL's independent  auditor is responsible for
auditing NL's  consolidated  financial  statements  in accordance  with auditing
standards  generally accepted in the United States of America and for expressing
an opinion on the conformity of NL's financial  statements  with GAAP. The Audit
Committee  assists the Board of Directors in fulfilling  its  responsibility  to
oversee management's  implementation of NL's financial reporting process. In its
oversight role, the Audit Committee reviewed and discussed the audited financial
statements  with  management  and with the  firm of  PricewaterhouseCoopers  LLP
("PwC"), the Company's independent auditor for 2003.

     The Audit  Committee met privately with PwC and discussed any issues deemed
significant by the  independent  auditor,  including the required  matters to be
discussed by Statement of Auditing  Standards No. 61,  Communication  with Audit
Committee,  as  amended.  PwC  has  provided  to  the  Audit  Committee  written
disclosures  and the letter  required  by  Independence  Standards  Board No. 1,
Independence  Discussions  with  Audit  Committees,   and  the  Audit  Committee
discussed with PwC that firm's independence.  The Audit Committee also concluded
that  PwC's  provision  of  non-audit  services  to NL  and  its  affiliates  is
compatible with PwC's independence.

     Based upon the foregoing considerations, the Audit Committee recommended to
the Board of Directors that the audited financial statements be included in NL's
Annual Report on Form 10-K for 2003.

     The  foregoing  report is  respectfully  submitted  by members of the Audit
Committee of the Board of Directors:


  Gen. Thomas P. Stafford (Ret.)                Terry N. Worrell
  Chairman of the Audit Committee               Member of the Audit Committee
  and Independent Director                      and Independent Director

  Cecil H. Moore, Jr.
  Member of the Audit Committee and
  Independent Director

                                       19
<PAGE>

                           INDEPENDENT AUDITOR MATTERS

     Independent  Auditor.  PwC served as NL's independent  auditor for the year
ended  December  31,  2003,  and has been  appointed  to review  NL's  quarterly
unaudited  consolidated  financial  statements  to be included in its  Quarterly
Reports on Form 10-Q for the first three  quarters of 2004.  NL expects that PwC
will be considered for appointment to audit NL's annual  consolidated  financial
statements for the year ending December 31, 2004. Representatives of PwC are not
expected to attend the Annual Meeting.

     Fees Paid to PwC.  The  following  table shows the  aggregate  fees PwC has
billed or is expected to bill to NL and its subsidiaries  for services  rendered
for 2002 and 2003.

<TABLE>
<CAPTION>
                                                          Audit Related                    All Other
               Entity (1)                Audit Fees (2)      Fees (3)     Tax Fees (4)      Fees (5)        Total
---------------------------------------  --------------   -------------   ------------     ---------    -----------
<S>                                      <C>              <C>             <C>              <C>          <C>
NL and Subsidiaries
    2002...............................  $      83,967    $    34,167     $      -0-       $    -0-     $   118,134
    2003...............................        395,211         57,183            -0-            -0-         452,394

Kronos Worldwide and Subsidiaries
    2002...............................      1,534,425         77,134         41,826          2,206       1,655,591
    2003...............................        834,399         73,773        124,873            -0-       1,033,045

Total
    2002...............................      1,618,392        111,301         41,826          2,206       1,773,725
    2003...............................      1,229,610        130,956        124,873            -0-       1,485,439
</TABLE>
--------------------

(1)       Fees are  reported  without  duplication.

(2)       Fees for the following services:

          (a)  Audits of consolidated  year-end  financials  statements for each
               year;

          (b)  Reviews of the unaudited quarterly financial statements appearing
               in Forms 10-Q for each of the first three quarters of each year;

          (c)  Consents and assistance with  registration  statements filed with
               the SEC;

          (d)  Normally provided  statutory or regulatory filings or engagements
               for each year; and

          (e)  The estimated  out-of-pocket  costs PwC incurred in providing all
               of such  services  for  which  PwC is  reimbursed.

(3)       Fees for  assurance  and related  services  reasonably  related to the
          audit or review of financial  statements for each year. These services
          include employee  benefit plan audits,  accounting  consultations  and
          attest  services   concerning   financial   accounting  and  reporting
          standards and advice concerning internal controls.

(4)       Fees for tax compliance, tax advice and tax planning services.

(5)       Fees  for  all  services  not  described  in  the  other   categories,
          consisting of certain payroll administration services.

     Preapproval  Policies and  Procedures.  The Audit  Committee  has adopted a
preapproval  policy,  a copy of which is  attached  as  Appendix B to this proxy
statement.  As of May  6,  2003  the  Audit  Committee  became  responsible  for
preapproving  every  engagement of PwC to perform audit or nonaudit  services on
behalf of NL or any of its subsidiaries.  Since May 6, 2003, the Audit Committee
preapproved all of PwC's services. Accordingly, there were no services for which
the de minimus exception, as defined in Section 202 of the Sarbanes-Oxley Act of
2002, was applicable.

                                       20
<PAGE>

            COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     During 2003,  NL made changes to its executive  management.  As a result of
the changes, in 2003 NL's current executive officers (other than Mr. John A. St.
Wrba) provided their services to NL pursuant to the 2003 intercorporate services
agreement between NL and Contran (the "2003 Contran/NL ISA"), which was approved
by NL's then  independent  directors,  comprised of Dr. R. Gerald  Turner,  Gen.
Stafford  (ret.)  and Mr.  George  E.  Poston  (collectively,  the  "Independent
Directors").

     The Board of Directors, with directors other than the Independent Directors
abstaining,  considered  and  approved  the  terms of the 2003  Contran/NL  ISA,
pursuant  to which  Contran  provided  certain  services  to NL,  including  the
advisory  services of Mr. Harold C. Simmons.  No amendment was added to the 2003
Contran/NL ISA to reflect the increased scope of services provided following the
change in  executive  management.  The  amount of the fee NL pays under the 2003
Contran/NL ISA for a person who provides services to NL represents,  in the view
of the Board of Directors,  the reasonable equivalent of "compensation" for such
services.

     In  considering  the  2003   Contran/NL  ISA,  the  Independent   Directors
considered the overall fee to be charged to NL under the 2003 Contran/NL ISA for
the services  provided to NL. No specific  formulas,  guidelines  or  comparable
positions were  considered in determining  the amount of such fee, nor was there
any specific  relationship  between NL's current or future  performance  and the
level of such fee.

     During 2003, the MD&C Committee reviewed and approved  compensation actions
involving  executive  officers of NL, other than the chief  executive  officer's
base salary.  With respect to the chief  executive  officer's  base salary,  the
Board of Directors  reviewed and approved any changes after a recommendation  by
the MD&C Committee.

     Historically,  NL's cash compensation  system with respect to its executive
officers,  including the chief  executive  officer,  generally  consisted of two
primary components: base salary and annual variable compensation provided by the
Variable Compensation Plan. Through the use of the foregoing and other incentive
compensation  arrangements,  the MD&C  Committee  sought to  achieve a  balanced
compensation  package that would 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.

     In  2003,  the MD&C  Committee  reviewed  and  acted  on the  former  chief
executive  officer's  recommendations  regarding  changes in base  salaries  for
certain  executive  officers.  The former  chief  executive  officer  made these
recommendations  after  consultation  with  the  chairman  of the  board.  These
recommendations and the MD&C Committee's actions regarding base salaries in 2003
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.  In 2003,  the former chief
executive  officer's  base salary was not changed nor set based on any  specific
relationship to NL's financial performance.

     During  2003,  the MD&C  Committee  established  awards  under the Variable
Compensation  Plan to the executive  officers at the time, other than the former
chief executive officer. The awards were contingent on NL achieving certain 2003
operating  income  goals.  No NL  executive  officer,  other than Mr. St.  Wrba,
received   any  variable   compensation   award  for  2003  under  the  Variable
Compensation Plan.

     For 2003,  NL's former chief  executive  officer did not become entitled to
receive a  discretionary  bonus due to his  resignation  in July 2003. For 2003,
certain former executive officers, including Dr. Wigdor and Mr. Garten, received
payments  in  connection  with their  resignations  from the  Company  that were
comparable  to  the  amounts  they  would  have  received   under  the  Variable
Compensation Plan.

     The  MD&C  continues  to  administer   matters  regarding  the  stock-based
compensation of NL's executive officers. With regard to stock-based compensation
(e.g.  stock bonuses,  stock  options,  restricted  stock or stock  appreciation
rights,  among  other types of  stock-based  compensation)  the chief  executive
officer makes recommendations to the MD&C Committee and it determines whether to
grant   the   recommended   stock-based   compensation.   Consistent   with  its
determination in 2003, the MD&C Committee does not currently anticipate granting
stock-based  compensation  to anyone  other than annual  grants of stock to NL's
nonemployee directors, including the chief executive officer, for their services
as directors.

                                       21
<PAGE>

     Section  162(m) of the Code  generally  disallows a tax deduction to public
companies  for  compensation  over  $1.0  million  paid to the  company's  chief
executive officer and four other most highly compensated  executive officers. It
is NL's  general  policy  to  structure  the  performance-based  portion  of the
compensation of its executive officers in a manner that enhances NL's ability to
deduct  fully  such  compensation.   In  2004,  NL  will  not  have  a  Variable
Compensation Plan.

     The following individuals,  in the capacities indicated,  hereby submit the
foregoing report.


  Gen. Thomas P. Stafford (Ret.)             Terry N. Worrell
  Chairman of the MD&C Committee             Member of the MD&C Committee
  and Independent Director                   and Independent Director

                                       22
<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 500 Stock Index and the S&P Diversified  Chemicals Index
for the period  commencing  December 31, 1998 and ending  December 31, 2003. 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.


                                [PERFORMANCE GRAPH OMITTED]

<TABLE>
<CAPTION>
                                                                         December 31,
                                             ----------------------------------------------------------------------
                                              1998        1999         2000         2001         2002         2003
                                             ------      ------       ------       ------       ------       ------
<S>                                          <C>         <C>          <C>          <C>          <C>          <C>
NL Industries, Inc.                          $100         $109         $183          $122         $157         $266
S&P 500 Stock Index                           100          121          110            97           76           97
S&P Diversified Chemicals Index               100          119          107           100           97          122
</TABLE>

                                       23
<PAGE>

                     CERTAIN RELATIONSHIPS AND TRANSACTIONS

Relationships with Related Parties

     As set forth under the caption  "Security  Ownership,"  Harold C.  Simmons,
through Valhi,  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,  tax sharing agreements,
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 the transactions described above.
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.  In connection  with these  activities NL may
consider  issuing   additional   equity   securities  or  incurring   additional
indebtedness.  NL acquisition activities may in the future include participation
in the acquisition or restructuring activities conducted by other companies that
may be deemed to be controlled by Mr.  Simmons.  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.

     Certain directors and executive officers of Contran,  Valhi,  TIMET, CompX,
Keystone and Kronos  Worldwide also serve as directors or executive  officers of
NL.  Such  relationships  may lead to  possible  conflicts  of  interest.  These
possible  conflicts  of  interest  may arise from the duties of loyalty  owed by
persons  acting  as  corporate  fiduciaries  to  two  or  more  companies  under
circumstances  in which such companies may have adverse  interests.  No specific
procedures are in place that govern the treatment of  transactions  among NL and
related entities,  although such entities may implement  specific  procedures as
appropriate  for  particular   transactions.   In  addition,   under  applicable
principles  of law, in the absence of  shareholder  ratification  or approval by
directors  who may be deemed  disinterested,  transactions  involving  contracts
among  companies  under common  control must be fair to all companies  involved.
Furthermore,  directors owe  fiduciary  duties of good faith and fair dealing to
all shareholders of the companies for which they serve.

Certain Contractual Relationships and Transactions

     Intercorporate Services Agreement. NL is a party to intercorporate services
agreements  ("ISAs") with various related  parties  discussed  below.  Under the
ISAs,  employees  of  one  company  will  provide  certain  services,  including
executive  officer  services,  to the other company on a fee basis. Such charges
are based  upon  estimates  of the time  devoted  by  employees  (or in  certain
instances,  groups of  employees) of the provider of the services to the affairs
of the recipient, and the compensation of such persons.

     Under the 2003  Contran  ISA,  Contran  rendered  or  provided  for certain
executive,  management,  financial,  internal  audit,  accounting,  tax,  legal,
insurance, risk management, treasury, technical, consulting,  administrative and
other services to NL, including  executive officer services,  and NL rendered or
provided  certain risk management  services to Contran,  each on a fee basis. NL
paid Contran net fees of approximately $1.97 million for services rendered under
the Contran ISA in 2003,  which  represented  $2.27 million for services Contran
provided to NL less $300,000 for services NL provided to Contran.  NL expects to
pay approximately  $3.6 million in 2004 for services  performed  pursuant to the
Contran  ISA.  The  increase  in service  fees for 2004 is due to the  increased
executive and management  services to be performed by Contran as a result of the
change in 2003 to NL's executive  management  team. The Contran ISA, as amended,
has an initial term of twelve months  commencing  January 1, 2004 and thereafter
automatically  extends on a quarter-to-quarter  basis, subject to termination by
either  party  pursuant  to  written  notice   delivered  30  days  prior  to  a
quarter-end. Kronos Worldwide and Contran are also parties to an ISA under which
the Company  expects the 2004 service  fees to be  approximately  $4.3  million.
Amounts paid under the Contran ISA and Kronos  Worldwide ISA are approved by the
Company's independent  directors.  The Company pays directors' fees and expenses
separately to Harold C. Simmons,  Glenn R.  Simmons,  and Steven L. Watson.  See
"Compensation of Directors and Executive Officers and Other Information" above.

                                       24
<PAGE>

     The  Company  and TIMET are  parties to an ISA  whereby  the  Company  made
certain services  available to TIMET.  TIMET paid fees of approximately  $14,000
pursuant  to the TIMET ISA during  2003.  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.

     Insurance Matters. Contran and NL participate in a combined risk management
program.  Pursuant to the program,  Contran and certain of its  subsidiaries and
affiliates,  including  NL and  certain  of  its  subsidiaries  and  affiliates,
purchase certain of their insurance  policies as a group,  with the costs of the
jointly owned policies being apportioned among the participating companies. Tall
Pines Insurance Company ("Tall Pines"), Valmont and EWI RE, Inc. ("EWI") provide
for or broker  these  insurance  policies.  Tall Pines and  Valmont  are captive
insurance  companies wholly owned by Valhi,  and EWI is a reinsurance  brokerage
firm  wholly  owned by NL. A  son-in-law  of Harold C.  Simmons  serves as EWI's
chairman  of the board and chief  marketing  officer  and is  compensated  as an
employee of EWI.  Consistent  with  insurance  industry  practices,  Tall Pines,
Valmont and EWI receive commissions from insurance and reinsurance  underwriters
for the policies that they provide or broker.

     With respect to certain of such jointly  owned  insurance  policies,  it is
possible that unusually  large losses  incurred by one or more insureds during a
given  policy  period  could  leave the other  participating  companies  without
adequate  coverage under that policy for the balance of the policy period.  As a
result, Contran and certain of its subsidiaries or affiliates,  including NL and
certain of its  subsidiaries  or  affiliates,  have  entered into a loss sharing
agreement  under which any uninsured  loss is shared by those  entities who have
submitted claims under the relevant policy. NL believes the benefits in the form
of reduced premiums and broader coverage  associated with the group coverage for
such policies  justify the risks associated with the potential for any uninsured
loss.

     During 2003, Contran and its related parties paid premiums of approximately
$16.7  million for  policies  Tall Pines or Valmont  provided  or EWI  brokered,
including  approximately  $8.0 million paid by NL and Louisiana Pigment Company,
L.P., a partnership of which a subsidiary of NL and Huntsman  International  LLC
each  own  50%  ("LPC").   These  amounts  principally   included  payments  for
reinsurance  and insurance  premiums paid to unrelated  third parties,  but also
included  commissions paid to Tall Pines,  Valmont and EWI. In NL's opinion, the
amounts that NL and LPC paid for these  insurance  policies  and the  allocation
among NL and its affiliates of relative insurance premiums are reasonable and at
least as favorable to those they could have obtained through unrelated insurance
companies  or  brokers.  NL expects  that these  relationships  with Tall Pines,
Valmont and EWI will continue in 2004.

     Tax Sharing  Agreement.  The Company and its  qualifying  subsidiaries  are
included in the  consolidated  United States  federal tax return of Contran (the
"Contran  Tax  Group").  As a member of the Contran Tax Group,  the Company is a
party to a tax sharing agreement (the "Contran Tax Agreement").  The Contran Tax
Agreement provides that the Company computes its provision for U.S. income taxes
on a separate-company basis using the tax elections made by Contran. Pursuant to
the Contran  Tax  Agreement  and using the tax  elections  made by Contran,  the
Company  makes  payments to or receives  payments from Valhi in amounts it would
have paid to or received  from the  Internal  Revenue  Service had it not been a
member of the Contran Tax Group.  Refunds are limited to amounts previously paid
under the Contran Tax Agreement unless the Company was entitled to a refund from
the U.S. Internal Revenue Service on a separate-company  basis. During 2003, the
Company paid a net amount of approximately $4.3 million to Valhi pursuant to the
terms of the Contran Tax Agreement.

                                       25
<PAGE>

     Investment in Tremont  Corporation  and Tremont Group. At December 31, 2002
the Company owned 20% of Tremont Group,  Inc.  ("Tremont Group") and Valhi owned
the remaining 80%. At that time, Tremont Group's only asset was an 80% ownership
interest  in Tremont  Corporation.  The  Company's  stock of  Tremont  Group was
redeemable at the option of the Company for fair value based on the value of the
underlying  Tremont  Corporation  shares,  and  the  Company  accounted  for its
investment in Tremont Group as an available-for-sale marketable security carried
at fair value  based on the fair value of such  underlying  Tremont  Corporation
shares.  At December  31,  2002 the Company  also  directly  held 8,167  Tremont
Corporation shares.

     In February 2003 Valhi completed a series of merger  transactions  pursuant
to which, among other things,  Tremont Group and Tremont Corporation were merged
into a new wholly owned  subsidiary of Valhi.  Under these merger  transactions,
(i) Valhi issued 3.5 million shares of its Common Stock to the Company in return
for the Company's 20% ownership  interest in Tremont Group and (ii) Valhi issued
3.4 shares of its Common Stock (plus cash in lieu of  fractional  shares) to all
Tremont  Corporation  stockholders  (other  than  Valhi  and  Tremont  Group) in
exchange  for each  Tremont  Corporation  share held by such  stockholders.  The
Company received approximately 27,770 shares of Valhi Common Stock in the second
transaction. The number of shares of Valhi Common Stock issued to the Company in
exchange for the Company's 20% ownership  interest in Tremont Group was equal to
the Company's 20% pro-rata  interest in the Tremont  Corporation  shares held by
Tremont  Group,  adjusted for the same 3.4 exchange  ratio.  The shares of Valhi
Common Stock owned by the Company are restricted  securities under SEC Rule 144.
The shares of Valhi Common Stock cannot be voted by the Company  under  Delaware
corporate  law, but the Company  receives  dividends  from Valhi on these shares
when declared.

     Tremont  Corporation  Loan  Agreement.  Prior  to  2003,  NL  Environmental
Management Services,  Inc. ("EMS"), the Company's  majority-owned  environmental
management  subsidiary,  loaned  $13.4  million to Tremont  Corporation  under a
reducing  revolving  loan  agreement  that  matured in March 2003.  The loan was
approved by special  committees  of the Company's and EMS's boards of directors.
In October 2002 a special committee of the Board of Directors  approved new loan
terms proposed by Tremont  Corporation,  whereby Tremont  Corporation repaid the
outstanding  principal and interest balance on the EMS loan with proceeds from a
new $15 million revolving loan agreement with the Company. As such, the EMS loan
was extinguished  and cancelled.  Similar to the EMS loan, the Company's loan to
Tremont  Corporation  bears  interest  at prime plus 2% (with  interest  payable
quarterly), and is collateralized by the 10.2 million shares of Common Stock and
the 5.1  million  shares of  Kronos  Worldwide  Common  Stock  owned by  Tremont
Corporation.  The loan is due  December 31,  2004,  with no  principal  payments
required prior to that date. The maximum amount available to Tremont Corporation
under the  revolving  loan  agreement is $15 million.  The  creditworthiness  of
Tremont  Corporation is dependent in part on the value of the Company as Tremont
Corporation's interest in the Company is its most substantial asset. At December
31,  2003,  no  amounts  were  outstanding   under  this  facility  and  Tremont
Corporation had $15 million of borrowing availability. As a result of the merger
of  Tremont  Corporation  with  Valhi in  February  2003  discussed  above,  the
revolving loan  agreement is now between a wholly owned  subsidiary of Valhi and
NL.

     Trust Loan  Agreement.  Prior to 2003,  a wholly  owned  subsidiary  of EMS
loaned $20  million to the Harold C.  Simmons  Family  Trust No. 2 (the  "Family
Trust") under a $25 million revolving credit agreement. The loan was approved by
special  committees of the  Company's  and EMS's boards of  directors.  The loan
bears interest at the prime rate, is due on demand upon sixty days notice and is
collateralized by 13,749 shares, or approximately 35%, of Contran's  outstanding
Class A voting  Common Stock and 5,000 shares,  or 100%,  of Contran's  Series E
Cumulative  preferred  stock,  both of which are owned by the Family Trust.  The
value of this  collateral  is  dependent  in part on the value of the Company as
Contran's interest in the Company, through its beneficial ownership of Valhi, is
one of Contran's more  substantial  assets.  In 2003, the Family Trust repaid $4
million  principal  amount of the revolving  credit  agreement.  At December 31,
2003,  $11 million was available for  additional  borrowing by the Family Trust,
and the outstanding loan balance was $14 million.

                                       26
<PAGE>

     Other Matters.  During 2003, Dr. Wigdor's sister-in-law was employed by the
Company  and  was  paid  $42,302,  and  received  customary  employee  benefits,
including medical insurance. She continues to be employed by the Company.

                  SHAREHOLDER PROPOSALS FOR 2005 ANNUAL MEETING

     Shareholders  may submit  proposals on matters  appropriate for shareholder
action at NL's annual shareholder meetings, consistent with rules adopted by the
SEC. NL must  receive  such  proposals  not later than  December  18, 2004 to be
considered for inclusion in the proxy  statement and form of proxy card relating
to the Annual Meeting of Shareholders in 2005.

     The Board of Directors will consider the director  nominee  recommendations
of  NL   shareholders.   The  Board  of  Directors   has  no  specific   minimum
qualifications for director  candidates.  The Board of Directors will consider a
potential  director  nominee's  ability to  satisfy  the need,  if any,  for any
required  expertise  on the  Board  of  Directors  or  one  of  its  committees.
Historically,  NL management has recommended  director  nominees to the Board of
Directors.  Because  under the NYSE  listing  standards NL may be deemed to be a
controlled company,  the Board of Directors believes that it is appropriate that
NL  not  have  any  additional   policies  or  procedures  with  regard  to  the
consideration of director candidates recommended by its shareholders.

     Proposals and nominations should be addressed to: Corporate  Secretary,  NL
Industries,  Inc., Three Lincoln Centre,  5430 LBJ Freeway,  Suite 1700, Dallas,
Texas 75240-2697.

                   COMMUNICATIONS WITH THE BOARD OF DIRECTORS

     Shareholders  who wish to communicate with the Board of Directors may do so
through the  following  procedures.  Shareholder  communications  not  involving
complaints or concerns regarding  accounting,  internal  accounting controls and
auditing matters related to NL ("Accounting Complaints or Concerns") may be sent
to NL's corporate  secretary at NL Industries,  Inc., Three Lincoln Centre, 5430
LBJ Freeway,  Suite 1700, Dallas, Texas 75240-2697.  Shareholder  communications
that relate to matters that are within the scope of the  responsibilities of the
Board of Directors and its committees, or summaries of such communications, will
be forwarded to the chairman of the Audit Committee.

     Accounting Complaints or Concerns, which may be made anonymously, should be
sent to NL's general counsel with a copy to NL's chief financial  officer at the
same address as the corporate secretary.  Accounting Complaints or Concerns will
be  forwarded to the chairman of the Audit  Committee.  NL will keep  Accounting
Complaints  or Concerns  confidential  and  anonymous,  to the extent  feasible,
subject to applicable law.  Information  contained in an Accounting Complaint or
Concern may be  summarized,  abstracted  and aggregated for purposes of analysis
and investigation.

                         2003 ANNUAL REPORT ON FORM 10-K

     A copy of the Company's  2003 Annual Report on Form 10-K, as filed with the
SEC,  may be  obtained  without  charge  by  writing:  Corporate  Secretary,  NL
Industries,  Inc., Three Lincoln Centre, 5430 LBJ Freeway,  Dallas, Texas 75240.
The Annual Report on Form 10-K may also be accessed on the Company's  website at
www.nl-ind.com.

                                       27
<PAGE>

                                ADDITIONAL COPIES

     SEC rules permit a single set of annual reports and proxy  statements to be
sent to any household at which two or more shareholders reside if they appear to
be members of the same family. Each shareholder  continues to receive a separate
proxy card. This procedure,  referred to as householding,  reduces the volume of
duplicate  information  shareholders  receive and reduces  mailing and  printing
expenses.  A number of brokerage  firms have  instituted  householding.  Certain
beneficial  shareholders  who share a single  address may have received a notice
that only one annual  report and proxy  statement  would be sent to that address
unless any  shareholder at that address gave contrary  instructions.  If, at any
time,  a  shareholder  who holds  shares  through  a broker no longer  wishes to
participate  in  householding  and would  prefer to  receive  a  separate  proxy
statement  and related  materials,  or if such  shareholder  currently  receives
multiple  copies of the proxy  statement  and  related  materials  at his or her
address  and  would  like to  request  householding  of NL  communications,  the
shareholder  should  notify his or her broker.  Additionally,  NL will  promptly
deliver a separate  copy of NL's 2003 annual  report or this proxy  statement to
any shareholder at a shared address to which a single copy of such documents was
delivered, upon the written or oral request of the shareholder.

     To obtain copies of NL's 2003 annual report or this proxy statement without
charge,  please mail your request to,  Corporate  Secretary,  at NL  Industries,
Inc.,  Three  Lincoln  Centre,  5430 LBJ  Freeway,  Suite  1700,  Dallas,  Texas
75240-2697, or call 972.233.1700.

                                  OTHER MATTERS

     The Board of Directors  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.


Dallas, Texas

April 16, 2004

                                       28
<PAGE>

                                   APPENDIX A

                               NL Industries, Inc.

                             Audit Committee Charter

                            Adopted February 19, 2004
                                ----------------

                                   ARTICLE I.
                                     PURPOSE

         The audit committee assists the board of directors' oversight
responsibilities relating to the financial accounting and reporting processes
and auditing processes of the corporation. The audit committee shall assist in
the oversight of:

     -    the integrity of the corporation's financial statements;

     -    the corporation's compliance with legal and regulatory requirements;

     -    the independent auditor's qualifications and independence; and

     -    the  performance  of the  corporation's  internal  audit  function and
          independent auditor.


                                   ARTICLE II.
            RELATIONSHIP WITH MANAGEMENT AND THE INDEPENDENT AUDITOR

     Management  is  responsible  for  preparing  the  corporation's   financial
statements.  The corporation's  independent  auditor is responsible for auditing
the financial  statements.  The activities of the audit  committee are in no way
designed  to  supersede  or  alter  these  traditional   responsibilities.   The
corporation's  independent auditor and management have more time,  knowledge and
detailed  information about the corporation than do the audit committee members.
Accordingly,  the audit committee's role does not provide any special assurances
with regard to the corporation's financial statements.  Each member of the audit
committee,  in the performance of such member's duties, will be entitled to rely
in good faith upon the information, opinions, reports or statements presented to
the audit committee by any of the corporation's  officers or employees or by any
other person as to matters such member reasonably believes are within such other
person's  professional  or  expert  competence  and who has been  selected  with
reasonable care by or on behalf of the corporation.

                                  ARTICLE III.
                             AUTHORITY AND RESOURCES

     The audit  committee  shall have the authority  and resources  necessary or
appropriate  to discharge its  responsibilities.  The audit  committee  shall be
provided with full access to all books, records, facilities and personnel of the
corporation in carrying out its duties.  The audit committee shall have the sole
authority with regard to the independent  auditor as set forth in Article V, and
the authority to engage independent counsel and other advisors, as it determines
is necessary to carry out its duties. The corporation shall provide  appropriate
funding,  as the audit  committee  determines  is  necessary or  appropriate  in
carrying  out its  duties,  for the  committee  to  engage  and  compensate  the
independent auditor or legal counsel or other advisors to the committee,  and to
pay the committee's ordinary administrative expenses.

                                      A-1
<PAGE>
                                   ARTICLE IV.
                            COMPOSITION AND MEETINGS

     The board of  directors  shall set the number of directors  comprising  the
audit  committee  from time to time,  which number shall not be less than three.
The board of directors shall designate a chairperson of the audit committee. The
number of directors comprising the audit committee and the qualifications, which
members  will  all be  financially  literate  with at least  one  being an audit
committee  financial  expert,  and  independence  of each  member  of the  audit
committee shall at all times satisfy all applicable requirements, regulations or
laws,  including,  without  limitation,  the rules of any  exchange  or national
securities association on which the corporation's securities trade. Simultaneous
service  on more than  three  non-affiliated  public  company  audit  committees
requires a special  determination  by the board of  directors  and, if required,
disclosure  in  the  annual  proxy  statement.  The  board  of  directors  shall
determine, in its business judgment,  whether the members of the audit committee
satisfy all such requirements, regulations or laws.

     The audit  committee  shall meet at least  quarterly  and as  circumstances
dictate.  Regular  meetings of the audit  committee  may be held with or without
prior  notice  at such  time and at such  place as  shall  from  time to time be
determined by the chairperson of the audit committee,  any of the  corporation's
executive officers or the secretary of the corporation.  Special meetings of the
audit  committee  may be called by or at the  request of any member of the audit
committee,  any of the corporation's  executive  officers,  the secretary of the
corporation or the  independent  auditor,  in each case on at least  twenty-four
hours notice to each member.

     A majority of the audit committee members shall constitute a quorum for the
transaction of the audit  committee's  business.  The audit  committee shall act
upon the vote of a majority of its  members at a duly called  meeting at which a
quorum is present.  Any action of the audit  committee may be taken by a written
instrument signed by all of the members of the audit committee.  Meetings of the
audit committee may be held at such place or places as the audit committee shall
determine or as may be specified or fixed in the respective  notice or waiver of
notice for a meeting.  Members of the audit  committee may  participate in audit
committee proceedings by means of conference telephone or similar communications
equipment by means of which all persons  participating  in the  proceedings  can
hear each other, and such participation  shall constitute  presence in person at
such proceedings.

                                   ARTICLE V.
                                RESPONSIBILITIES

         To fulfill its responsibilities, the audit committee shall perform the
following activities.

Financial Disclosure

     -    Review  and  discuss  the   corporation's   annual  audited  financial
          statements and quarterly financial  statements with management and the
          independent  auditor,  and the corporation's  related disclosure under
          "Management's  Discussion  and  Analysis of  Financial  Condition  and
          Results of Operations."

     -    Recommend to the board of directors, if appropriate,  that the audited
          financial statements be included in the corporation's Annual Report on
          Form  10-K  to  be  filed  with  the  U.S.   Securities  and  Exchange
          Commission.

     -    Generally  discuss  (i.e., a discussion of the types of information to
          be disclosed and the type of  presentation to be made) with management
          and the independent  auditor, as appropriate,  earnings press releases
          and financial  information and earnings  guidance provided to analysts
          and rating  agencies.  The audit committee need not discuss in advance
          each earnings  release or each instance in which the  corporation  may
          provide earnings guidance.

     -    Prepare  such  reports of the audit  committee  for the  corporation's
          public disclosure documents as applicable requirements, regulations or
          laws may require from time to time, which includes the audit committee
          report as required by the U.S.  Securities and Exchange  Commission to
          be included in the corporation's annual proxy statement.

                                      A-2
<PAGE>

     -    Review significant  accounting and reporting issues,  including recent
          professional and regulatory pronouncements or proposed pronouncements,
          and understand their impact on the corporation's financial statements.

     -    Ascertain from officers signing  certifications  whether there existed
          any significant  deficiencies  or any material  weaknesses of internal
          control and any fraud.

Independent Auditor

     -    Appoint,  compensate,  retain and oversee (including the resolution of
          disagreements between management and the independent auditor regarding
          financial  reporting) the work of any independent  auditor engaged for
          the  purpose of  preparing  or issuing an audit  report or  performing
          other audit, review or attest services for the corporation.

     -    Provide  that the  independent  auditor  report  directly to the audit
          committee.

     -    Annually review the  qualifications,  independence  and performance of
          the independent auditor, including an evaluation of the lead partner

     -    Receive such reports and communications  from the independent  auditor
          and take such actions as are required by auditing standards  generally
          accepted in the United States of America or  applicable  requirements,
          regulations  or  laws,  including,  to the  extent  so  required,  the
          following:

               o    prior to the annual audit,  review with  management  and the
                    independent  auditor  the scope and  approach  of the annual
                    audit;

               o    review any changes in the independent auditor's scope during
                    the  audit,   and  after  the  annual  audit,   review  with
                    management  and  the  independent  auditor  the  independent
                    auditor's reports on the results of the annual audit;

               o    review with the  independent  auditor any audit  problems or
                    difficulties and management's response;

               o    review  with the  independent  auditor  prior to filing  the
                    audit   report  with  the  U.S.   Securities   and  Exchange
                    Commission  the  matters  required  to be  discussed  by the
                    Statement   on   Accounting   Standards   61,  as   amended,
                    supplemented or superseded; and

               o    at  least  annually,  obtain  and  review  a  report  by the
                    independent auditor describing:

                    *    the  independent  auditor's  internal  quality  control
                         procedures;

                    *    any material  issues raised by the most recent internal
                         quality  control  review,   or  peer  review,   of  the
                         independent  auditor or by any inquiry or investigation
                         by governmental or professional authorities, within the
                         preceding  five  years,  with  respect  to one or  more
                         independent  audits  carried  out  by  the  independent
                         auditor,  and any  steps  taken  to deal  with any such
                         issues; and

                    *    all relationships  between the independent  auditor and
                         the  corporation  in  order  to  assess  the  auditor's
                         independence,   including   the   written   disclosures
                         required by  Independence  Standards Board Standard No.
                         1, Independence  Discussions with Audit Committees,  as
                         amended, supplemented or superseded.

                                      A-3
<PAGE>

     -    Establish   preapproval   policies  and   procedures   for  audit  and
          permissible  non-audit  services provided by the independent  auditor.
          The audit committee shall be responsible for the preapproval of all of
          the  independent  auditor's  engagement fees and terms, as well as all
          permissible  non-audit  engagements  of the  independent  auditor,  as
          required by applicable  requirements,  regulations  or laws. The audit
          committee  may  delegate  to  one  or  more  of its  members  who  are
          independent  directors  the  authority  to  grant  such  preapprovals,
          provided  the  decisions  of any  such  member  to whom  authority  is
          delegated  shall be presented to the full audit  committee at its next
          scheduled meeting.

     -    Set clear  hiring  policies for  employees or former  employees of the
          independent auditor.

     -    Ensure  that  significant  findings  and  recommendations  made by the
          independent  auditor are received and discussed on a timely basis with
          the audit committee and management.

Other Responsibilities

     -    Discuss  periodically  with  management  the  corporation's   policies
          regarding risk assessment and risk management.

     -    Meet separately,  periodically, with management, the internal auditors
          (or other  personnel  responsible for the internal audit function) and
          the independent auditor.

     -    Establish  procedures  for the  receipt,  retention  and  treatment of
          complaints received by the corporation regarding accounting,  internal
          accounting controls or auditing matters,  including procedures for the
          confidential,  anonymous submission by employees of concerns regarding
          questionable accounting or auditing matters.

     -    Review  periodically  the reports and activities of the internal audit
          function and the  coordination of the internal audit function with the
          independent auditor.

     -    Conduct an annual evaluation of its own performance.

     -    Report   regularly  to  the  board  of  directors  on  its   oversight
          responsibilities set forth in Article I.

     -    Review and reassess this charter periodically.  Report to the board of
          directors any suggested changes to this charter.

     -    Meet  periodically  with officers of the  corporation  responsible for
          legal and regulatory compliance by the corporation.

                                   ARTICLE VI.
                                  MISCELLANEOUS

     The audit  committee  may from time to time  perform  any other  activities
consistent  with  this  charter,  the  corporation's   charter  and  bylaws  and
applicable  requirements,  regulations  or laws,  as the audit  committee or the
board of directors deems necessary or appropriate.


                                       ADOPTED BY THE BOARD OF DIRECTORS OF
                                       NL INDUSTRIES, INC. ON FEBRUARY 19, 2004.




                                       /s/ Robert D. Graham
                                       Robert D. Graham, Secretary

                                      A-4
<PAGE>

                                   APPENDIX B

                               NL Industries, Inc.

                       Audit Committee Preapproval Policy

                            Adopted February 19, 2004
                                ----------------

                      Section 1. -- Statement of Principles

     The Audit  Committee  is  required,  subject to any  de-minimus  exceptions
permitted by applicable law or regulation, to preapprove the audit and non-audit
services  performed  by the  independent  auditor  in order to  assure  that the
provision of such services do not impair the auditors' independence.

     This Policy applies to services provided by the accounting firm that serves
NL  Industries,  Inc.  and  its  subsidiaries  (the  "Company")  as its  primary
independent auditor, and any international affiliates thereof.

     Unless a type of  service  to be  provided  by the  independent  auditor is
subject to  preapproval  under  Sections 3 or 4 of this Policy,  it will require
specific  preapproval by the Audit Committee under Section 2 of this Policy.  In
addition,  any proposed  services subject to preapproval under Section 3 of this
Policy  that  exceeds the  applicable  preapproved  fee level will also  require
preapproval under either Section 2 or Section 4 of this Policy.  Notwithstanding
the foregoing,  the  preapproval  requirements  under this Policy is waived with
respect to the provision of permitted  non-Audit  Services to the extent allowed
by applicable law or regulation.

                       Section 2. -- Specific Preapproval

     Subject to Sections 4 and 5 of this Policy,  the  following  describes  the
Audit and Audit-related  services to be provided by the independent auditor that
must have the specific preapproval of the Audit Committee before the independent
auditor can be engaged:

     -    Annual audits of the consolidated financial statements of the Company,
          attestation  services associated with the Company's system of internal
          control over financial  reporting and other services  associated  with
          the Company's Annual Report on Form 10-K;

     -    Quarterly review  procedures  associated with the Company's  unaudited
          interim   consolidated   financial   statements   and  other  services
          associated with the Company's Quarterly Reports on Form 10-Q;

     -    Services associated with registration  statements filed by the Company
          with  the  Securities  and  Exchange  Commission  ("SEC"),   including
          responding to SEC comment letters and providing comfort letters;

     -    Statutory audits or annual audits of the annual  financial  statements
          of subsidiaries of the Company;

     -    Quarterly  review  procedures of the interim  financial  statements of
          subsidiaries of the Company;

     -    Services associated with potential business  acquisitions/dispositions
          involving the Company;

     -    Any other services provided to the Company not specifically  described
          above or in Section 3 of this Policy; and

     -    Any material changes in terms,  conditions or fees with respect to the
          foregoing resulting from changes in audit scope,  Company structure or
          other applicable matters.

                                      B-1
<PAGE>

                  Section 3. -- Other Categories of Preapproval

     Audit-related   services  are  assurance  and  related  services  that  are
reasonably  related to the  performance  of the audit or review of the Company's
financial  statements and that are  traditionally  performed by the  independent
auditor.  The Audit Committee believes that the provision of all of the services
described  below  does  not  impair  the  independence  of  the  auditor  and is
consistent with the SEC's rules on auditor independence.

     Subject to Section 5 of this Policy,  the following  Audit,  Audit-related,
Tax and All Other services to be provided by the  independent  auditor will have
the  preapproval  of the Audit  Committee,  subject to the  limitation  that the
aggregate  fees for such  services  provided by the  independent  auditor in any
calendar year may not exceed the limits established by the Audit Committee.  The
Audit Committee will periodically  revise the list of pre-approved  services and
the fee limitation based on subsequent determinations as it deems appropriate.

-    Audit Services:

     o    Consultations  with  the  Company's  management  as to the  accounting
          and/or  disclosure  treatment  of  transactions  or events  and/or the
          actual or potential  impact of final or proposed  rules,  standards or
          interpretations of the SEC, the Financial  Accounting Standards Board,
          the Public  Company  Accounting  Oversight  Board or other  applicable
          domestic or international regulatory or standard-setting bodies; and

     o    Assistance  with  responding  to SEC comment  letters  received by the
          Company other than in connection  with a registration  statement filed
          with the SEC.

-    Audit-related Services:

     o    Consultations  with  the  Company's  management  as to the  accounting
          and/or  disclosure  treatment  of  transactions  or events  and/or the
          actual or potential  impact of final or proposed  rules,  standards or
          interpretations of the SEC, the Financial  Accounting Standards Board,
          the Public  Company  Accounting  Oversight  Board or other  applicable
          domestic or international regulatory or standard-setting bodies (note,
          under  SEC  rules,  some  consultations  may be  "audit"  rather  than
          "audit-related").

     o    Financial statement audits of employee benefit plans of the Company;

     o    Agreed-upon  or expanded  audit  procedures  related to the  Company's
          accounting  records  required to respond to or comply with  financial,
          accounting,  legal,  regulatory or contractual reporting requirements;
          and

     o    Internal   control  reviews  and  assistance  with  internal   control
          reporting  requirements  of the  Company (to the extent  permitted  by
          applicable rule or regulation).

-    Tax Services:

     o    Consultations with the Company's management as to the tax treatment of
          transactions  or events  and/or the actual or potential  tax impact of
          final or proposed laws, rules and regulations in U.S.  federal,  state
          and local and international jurisdictions;

     o    Consultations with the Company's management related to compliance with
          existing or proposed tax laws, rules and regulations in U.S.  federal,
          state and local and international jurisdictions;

     o    Assistance  in the  preparation  of and review of the  Company's  U.S.
          federal, state and local and international income, franchise and other
          tax returns;

                                      B-2
<PAGE>

     o    Assistance  with tax  inquiries,  audits and  appeals  of the  Company
          before the U.S. Internal Revenue Service and similar state,  local and
          international agencies;

     o    Consultations  with the Company's  management  regarding  domestic and
          international    statutory,    regulatory   or   administrative    tax
          developments;

     o    Transfer pricing and cost segregation studies of the Company; and

     o    Expatriate  tax  assistance  and  compliance  for the  Company and its
          employees.

-    Other Services:

     o    Assistance with corporate governance matters (including preparation of
          board minutes and resolutions) and assistance with the preparation and
          filing of documents (such as paperwork to register new companies or to
          de-register  existing  companies)  involving the Company with non-U.S.
          governmental  and regulatory  agencies,  provided,  however,  that the
          non-U.S.  jurisdiction  in which such  services are provided  does not
          require  that the  individual  providing  such  service  be  licensed,
          admitted or otherwise qualified to practice law.

     Any services provided by the independent  auditor under this Section of the
Policy  shall be  reported  to the full  Audit  Committee  by an  officer of the
Company  at the first  meeting of the Audit  Committee  held  subsequent  to the
engagement  of the  independent  auditor to provide such  services.  Such report
shall include detailed back-up documentation provided by the independent auditor
regarding the services provided.

                            Section 4. -- Delegation

     Subject to Section 5 of this  Policy,  the Audit  Committee  has  delegated
preapproval  authority to the Audit Committee  Chairman or his/her  designee for
(i) any  proposed  services  described in Section 3 of this Policy to the extent
that the aggregate fees for such services  provided by the  independent  auditor
during the then-current calendar year has exceeded the limits established by the
Audit  Committee or (ii) any other  proposed  services that are not described in
Section 3 of this Policy that the Audit Committee  Chairman or his/her  designee
determines  to be  appropriate  or necessary.  The Chairman or his/her  designee
shall report any  pre-approval  decisions  under this Section 4 of the Policy to
the full  Audit  Committee  at the first  meeting  of the Audit  Committee  held
subsequent to such pre-approval  decision. The Audit Committee does not delegate
its  responsibilities  to  pre-approve  services  performed  by the  independent
auditor to management.

                   Section 5. -- Prohibited Non-Audit Services

     The  following  is a list of non-audit  services for which the  independent
auditor is prohibited from providing to the Company under the terms of the SEC's
rules on auditor independence:

     -    Bookkeeping  or other services  related to the  accounting  records or
          financial statements of the Company;

     -    Financial information systems design and implementation;

     -    Appraisal    or    valuation    services,    fairness    opinions   or
          contribution-in-kind reports;

     -    Actuarial services;

     -    Internal audit outsourcing services;

     -    Management functions;

     -    Human resources;

     -    Broker, dealer, investment adviser or investment banking services;

                                      B-3
<PAGE>


     -    Legal  services  to the  extent  that the  jurisdiction  in which such
          services are provided  requires  that the  individual  providing  such
          service be licensed,  admitted or otherwise qualified to practice law;
          and

     -    Expert services unrelated to the audit.

                            Section 6. -- Procedures

     Applications  to provide  services  that require  preapproval  by the Audit
Committee  under Section 2 of this Policy,  or that require  preapproval  of the
Chairman of the Audit  Committee  or his/her  designee  under  Section 4 of this
Policy, must be made by an auditor in writing. Such an application,  which shall
include  detailed  back-up  documentation  provided by the  independent  auditor
regarding the services  provided,  shall be submitted to the Audit  Committee or
the Chairman of the Audit Committee, as applicable, for final resolution.

                        Section 7. -- Engagement Letters

     Engagement  of the  independent  auditor  under this  Policy to provide the
following  services must be evidenced  pursuant to a written  engagement  letter
with the independent auditor that must at least be signed by the Chairman of the
Audit Committee or his/her designee before the engagement can commence:

     -    Annual audits of the consolidated financial statements of the Company,
          attestation  services associated with the Company's system of internal
          control over financial  reporting and other services  associated  with
          the Company's Annual Report on Form 10-K;

     -    Quarterly review  procedures  associated with the Company's  unaudited
          interim   consolidated   financial   statements   and  other  services
          associated with the Company's Quarterly Reports on Form 10-Q;

     -    Services associated with registration  statements filed by the Company
          with  the  SEC,  including  responding  to  SEC  comment  letters  and
          providing comfort letters; and

     -    Any other  engagement as may be determined  from  time-to-time  by the
          Audit  Committee  or the  Chairman of the Audit  Committee  or his/her
          designee.

     Any other  engagement of the  independent  auditor under this Policy may be
evidenced pursuant to a written engagement letter with the independent  auditor,
as may be required by the Audit  Committee,  the Chairman of the Audit Committee
or his/her  designee,  the  independent  auditor  or an officer of the  Company,
before the engagement can commence.  Any such engagement  letter may, but is not
required  to, be signed  by the  Chairman  of the  Audit  Committee  or  his/her
designee.

                                      B-4
<PAGE>



                               NL Industries, Inc.
                              Three Lincoln Centre
                                5430 LBJ Freeway
                                   Suite 1700
                            Dallas, Texas 75240-2697

<PAGE>


Dear Shareholder:

NL Industries,  Inc. encourages you to take advantage of new and convenient ways
by which  you can vote your  shares.  You can vote  your  shares  electronically
through the internet or by telephone.  This  eliminates  the need to return this
proxy card.

1. To vote over the internet:

         o        Log on to the internet and go to the web site
                  http://www.eproxyvote.com/nl. Internet voting will be
                  available until 12:01 A.M. on May 20, 2004.

2. To vote over the telephone:

         o        On a touch-tone telephone call 1-877-PRX-VOTE (1-877-779-8683)
                  24 hours a day, seven days a week. Telephone voting will be
                  available until 12:01 A.M. on May 20, 2004.

         o        Non-U.S. shareholders should call 1-201-536-8073.

Your electronic vote authorizes the named proxies to vote in the same manner as
if you marked, dated and returned this proxy card. If you vote your shares
electronically, do not mail back this proxy card.

                  Your vote is important. Thank you for voting.

                                   DETACH HERE
--------------------------------------------------------------------------------
Proxy

                               NL Industries, Inc.
                              Three Lincoln Centre
                          5430 LBJ Freeway, Suite 1700
                            Dallas, Texas 75240-2697


 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF NL INDUSTRIES,
      INC. FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 20, 2004


The  undersigned  hereby appoints  Gregory M. Swalwell,  Robert D. Graham and A.
Andrew  R.  Louis,  and  each  of  them,  proxy  and  attorney-in-fact  for  the
undersigned,  with  full  power  of  substitution,  to  vote  on  behalf  of the
undersigned at the 2004 Annual  Meeting of  Shareholders  (the  "Meeting") of NL
Industries,  Inc., a New Jersey corporation ("NL"), to be held at NL's corporate
offices at Three Lincoln Centre, 5430 LBJ Freeway,  Suite 1700, Dallas, Texas on
Thursday,  May 20, 2004, at 10:15 a.m.  (local time),  and at any adjournment or
postponement of the Meeting, all of the shares of common stock, par value $0.125
per share, of NL standing in the name of the undersigned or that the undersigned
may be entitled to vote on the proposals set forth,  and in the manner directed,
on this proxy card.

      THIS PROXY MAY BE REVOKED AS SET FORTH IN THE NL PROXY STATEMENT THAT
                          ACCOMPANIED THIS PROXY CARD.

The proxies, if this card is properly executed, will vote in the manner directed
on this card. If no direction is made,  the proxies will vote "FOR" all nominees
named on the reverse  side of this card for  election as  directors  and, to the
extent allowed by the federal  securities laws, in the discretion of the proxies
as to all other  matters  that may  properly  come  before the  Meeting  and any
adjournment or postponement thereof.

 PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.


<PAGE>

NL Industries, Inc.
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8073
EDISON, NJ 08818-8073

Your vote is important.  Please vote immediately.

       Vote-by-Internet                       Vote-by-Telephone

Log on to the internet and go to          Call toll-free
http://www.eproxyvote.com/nl.             1/877/PRX-VOTE (1-877-779-8683)

Follow the easy steps outlined on         Follow the easy recorded instructions.
the secured website.

If you vote over the internet or by telephone, please do not mail you card.


            DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
--------------------------------------------------------------------------------
[ X ] Please mark votes as in this example.

This proxy, if properly executed, will be voted as specified below by you. If no
direction is given, this proxy will be voted "FOR" all nominees for directors
listed below and "FOR" proposal 2.

--------------------------------------------------------------------------------
The Board of Directors recommends a vote "FOR" all nominees for director listed
below and "FOR" proposal 2.
--------------------------------------------------------------------------------

1.       Election of Directors. (Please see reverse)

                           FOR                    WITHHOLD

         FOR                                                    WITHHOLD
         ALL              [  ]                      [  ]        FROM ALL
         NOMINEES                                               NOMINEES
         ----------------------------------------------
         For all nominees except as written above.

         Director Nominees:

         01  Cecil H. Moore, Jr,
         02  Glenn R. Simmons,
         03  Harold C. Simmons,
         04  General Thomas P. Stafford,
         05  Steven L. Watson, and
         06  Terry N. Worrell.

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

                  [  ]  FOR         [  ]  AGAINST          [  ]  ABSTAIN

Please sign exactly as the name that appears on this card.  Joint owners  should
each sign.  When  signing  other than in an  individual  capacity,  please fully
describe such  capacity.  Each signatory  hereby revokes all proxies  heretofore
given to vote at said Meeting and any adjournment or postponement thereof.

Signature:               Date:         Signature:               Date:
           ------------        -------            -------------       ----------