<PAGE>   1
 
                                  SCHEDULE 14A
                                 (RULE 14A-101)
 
                    INFORMATION REQUIRED IN PROXY STATEMENT
 
                            SCHEDULE 14A INFORMATION
 
          PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
                EXCHANGE ACT OF 1934 (AMENDMENT NO.           )
 
     Filed by the Registrant [ ]
     Filed by a Party other than the Registrant [ ]
     Check the appropriate box:
     [x] Preliminary Proxy Statement       [ ] Confidential, for Use of the
                                               Commission Only (as permitted by
                                               Rule 14a-6(e)(2))
     [ ] Definitive Proxy Statement
     [ ] Definitive Additional Materials
     [ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
 
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                (Name of Registrant as Specified in its Charter)
                               KIRBY CORPORATION
- --------------------------------------------------------------------------------
    (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)(l) and
         0-11.
 
     (1) Title of each class of securities to which transaction applies:
 
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     (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 the 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:
 
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     (2) Form, Schedule or Registration Statement No.:
 
- --------------------------------------------------------------------------------
     (3) Filing Party:
 
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     (4) Date Filed:
 
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<PAGE>   2
 
                               KIRBY CORPORATION
                             (A NEVADA CORPORATION)
                        1775 ST. JAMES PLACE, SUITE 200
                                 P. O. BOX 1745
                             HOUSTON, TX 77251-1745
 
                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                           TO BE HELD APRIL 15, 1997
 
To the Stockholders:
 
     NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of
Kirby Corporation ("Kirby") will be held at the J. W. Marriott Houston Hotel,
5150 Westheimer, Houston, Texas, on the 15th day of April, 1997, at 10:00 A.M.
(local time) for the following purposes:
 
          1. To elect eight (8) directors to hold office until the next annual
     election of directors by stockholders or until their respective successors
     shall have been duly elected and shall have qualified;
 
          2. To consider and act upon a proposal to approve the 1996 Employee
     Stock Option Plan for Kirby Corporation; and
 
          3. To transact such other business that may properly come before the
     meeting or any adjournment(s) thereof.
 
     The Board of Directors has fixed the close of business on March 3, 1997, as
the Record Date for the determination of stockholders entitled to notice of and
to vote at such meeting or any adjournment(s) thereof. Only stockholders of
record at the close of business on the Record Date are entitled to notice of and
to vote at such meeting. The stock transfer books will not be closed.
 
                                          BY ORDER OF THE BOARD OF DIRECTORS
 
                                          HENRY GILCHRIST, SECRETARY
 
Dated: March 5, 1997
 
- -------------------------------------------------------------------------------
PLEASE MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE PAID
ENVELOPE PROMPTLY, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. IF YOU
LATER DESIRE TO REVOKE YOUR PROXY FOR ANY REASON, YOU MAY DO SO IN THE MANNER
DESCRIBED IN THE ATTACHED PROXY STATEMENT.
- -------------------------------------------------------------------------------

<PAGE>   3
 
                               KIRBY CORPORATION
 
                            ---------------------
                               PROXY STATEMENT FOR
                         ANNUAL MEETING OF STOCKHOLDERS
                           TO BE HELD APRIL 15, 1997
                             ---------------------
 
                    SOLICITATION AND REVOCABILITY OF PROXIES
 
     This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of Kirby Corporation ("Kirby"), a Nevada corporation, for the
1997 Annual Meeting of Stockholders to be held on April 15, 1997 and any
adjournment(s) thereof at the time and place and for the purposes set forth in
the accompanying Notice of Annual Meeting of Stockholders.
 
     The executive offices of Kirby are located at 1775 St. James Place, Suite
200, Houston, Texas 77056. Kirby's mailing address is P. O. Box 1745, Houston,
Texas 77251-1745.
 
     The Notice of Annual Meeting of Stockholders, this Proxy Statement, the
proxy card and Kirby's Annual Report to Stockholders, which includes Kirby's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996, are
first being mailed to stockholders on or about March 10, 1997.
 
     The Record Date for determination of stockholders entitled to vote in
person or by proxy at the Annual Meeting was the close of business on March 3,
1997. As of the close of business on March 3, 1997 there were 24,265,036
outstanding shares of Kirby Common Stock, par value $0.10 per share (the "Common
Stock").
 
     Each outstanding share of Common Stock entitles the holder to one vote on
all matters to be acted upon at the meeting. The presence, in person or by
proxy, of the holders of a majority of the issued and outstanding shares of
Common Stock entitled to vote at the meeting is necessary to constitute a quorum
to transact business. Assuming the presence of a quorum, the affirmative vote of
(i) a plurality of the votes cast in the election of directors is required for
the election of directors and (ii) a majority of the shares of Common Stock
present and voting at the meeting is required for approval of the 1996 Employee
Stock Option Plan for Kirby Corporation (the "1996 Employee Plan"). Abstentions
and broker non-votes will be counted for purposes of determining a quorum, but
shall not be counted as voting for purposes of determining whether a nominee or
proposal has received the necessary number of votes for election of the nominee
or approval of the proposal.
 
     When proxies in the accompanying form are properly executed and received,
the shares represented thereby will be voted at the Annual Meeting in accordance
with the directions noted thereon; if no direction is indicated, such shares
will be voted for the election of the directors named in this Proxy Statement,
in favor of Proposal 2 set forth in the Notice of Annual Meeting of Stockholders
and the proxies will use their discretion with respect to any matters referred
to in Proposal 3 set forth in the Notice.
 
     Whether or not you expect to be personally present at the meeting, you are
requested to mark, date, sign and return the enclosed proxy card. Any
stockholder giving a proxy in the form of the accompanying proxy card has the
right to revoke the proxy by presenting a duly executed proxy bearing a later
date, by attending the meeting and voting in person or by written notification
to the Secretary of Kirby prior to the meeting.
 
     In addition to proxy soliciting material mailed to the stockholders,
officers and employees of Kirby may communicate with stockholders personally or
by telephone, telegraph, telephone facsimile or by mail to solicit their proxy.
Kirby has also retained the services of Corporate Investor Communications, Inc.
("CIC"), Carlstadt, New Jersey, to assist in the solicitation of proxies for a
fee estimated at $5,000 plus out-of-pocket expenses. Brokerage houses and other
custodians, nominees and fiduciaries will, in connection with shares of Common
Stock registered in their names, be requested to forward solicitation material
to the beneficial owners of such shares and to secure their voting instructions.
The costs of such solicitation will be borne by Kirby.

<PAGE>   4
 
                         ELECTION OF DIRECTORS (ITEM 1)
 
     The Bylaws of Kirby provide that the Board of Directors shall consist of
not fewer than three (3) nor more than fifteen (15) members and that the number
of directors, within such limits, shall be determined by resolution of the Board
of Directors at any meeting or by the stockholders at the Annual Meeting. By
resolution of the Board of Directors at its January 21, 1997 meeting, the number
of directors constituting the Board of Directors was set at eight (8).
 
     Unless otherwise instructed by Kirby's stockholders, the persons named in
the enclosed proxy card will vote the shares represented by such proxy for the
election of the eight (8) nominees named in this Proxy Statement to hold office
until the next Annual Meeting of Stockholders or until their respective
successors shall have been duly elected and shall have qualified. No
circumstances are presently known that would render any nominees named herein
unable or unwilling to serve. Should any of them become unavailable for
nomination or election or refuse to be nominated or to accept election as a
director of Kirby, then the persons named as proxies in the enclosed proxy card
intend to vote the shares represented in such proxy for the election of such
person or persons as may be nominated or designated by the Board of Directors.
 
     The following nominees constitute the current Board of Directors of Kirby:
 

<TABLE>
<CAPTION>
                                                           SHARES OF
                                                          COMMON STOCK
                     NOMINEE, AGE,                        BENEFICIALLY
                 PRINCIPAL OCCUPATION,                      OWNED ON          PERCENT
                  SERVICE AS DIRECTOR,                      MARCH 3,         OF COMMON
                  OTHER DIRECTORSHIPS                       1997(1)          STOCK(1)
                 ---------------------                    ------------       ---------
<S>                                                       <C>                <C>
George F. Clements, Jr.; age 71; Independent Oil and Gas
  Producer and Private Investor.........................      26,000(2)        *
  Mr. Clements has served as a director of Kirby since
  1985.
C. Sean Day; age 47; President and Chief Executive
  Officer of Navios Corporation.........................       6,500(3)        *
  Mr. Day has served as a director of Kirby since
  January 1996.
William M. Lamont, Jr.; age 48; Personal Investments....      19,142(2)(4)     *
  Mr. Lamont has served as a director of Kirby since
  1979.
George A. Peterkin, Jr.; age 69; Chairman of the Board
  of Directors of Kirby.................................     832,086(5)         3.3%
  Mr. Peterkin has served as a director of Kirby since
  1973, as Chairman of the Board of Kirby since April
  1995 and served as President of Kirby from 1973 to
  April 1995.
J. H. Pyne; age 49; President and Chief Executive
  Officer of Kirby......................................     213,482(6)        *
  Mr. Pyne has served as a director of Kirby since 1988,
  as President and Chief Executive Officer of Kirby
  since April 1995, and served as Executive Vice
  President of Kirby from 1992 to April 1995.
Robert G. Stone, Jr.; age 74; Personal Investments......     161,450(2)(7)(8)   *
  Mr. Stone has served as a director of Kirby since
  1983, as Chairman Emeritus of Kirby since April 1995
  and served as Chairman of the Board of Kirby from 1983
  to April 1995. Mr. Stone currently serves as a
  director of Core Industries, Inc., Nova Care Inc.,
  Russell Reynolds Associates, Inc., Tandem Computers
  Inc. and Tejas Gas Corp. He also serves as director
  emeritus of The Chubb Corporation, Corning
  Incorporated, The Pittston Company, The Japan Fund,
  Inc. and various funds managed by Scudder Stevens &
  Clark, Inc.
</TABLE>

 
                                        2

<PAGE>   5

<TABLE>
<CAPTION>
                                                           SHARES OF
                                                          COMMON STOCK
                     NOMINEE, AGE,                        BENEFICIALLY
                 PRINCIPAL OCCUPATION,                      OWNED ON          PERCENT
                  SERVICE AS DIRECTOR,                      MARCH 3,         OF COMMON
                  OTHER DIRECTORSHIPS                       1997(1)          STOCK(1)
                 ---------------------                    ------------       ---------
<S>                                                       <C>                <C>
Thomas M. Taylor; age 54; President of Thomas M. Taylor
  & Co..................................................   2,490,500(3)(9)     10.0%
  Mr. Taylor has served as a director of Kirby since
  January 1996. Mr. Taylor currently serves as a
  director of La Quinta Inns, Inc., TPI Enterprises,
  Inc. and John Wiley & Sons, Inc.
J. Virgil Waggoner; age 69; Vice Chairman of Sterling
  Chemicals, Inc. ......................................      22,000(2)        *
  Mr. Waggoner has served as a director of Kirby since
  1993. Mr. Waggoner currently serves as a director of
  Sterling Chemicals, Inc. and Mail-Well Corporation
</TABLE>

 
- ---------------
 
 *  Less than 1%.
 
(1) Except as otherwise indicated, each of the persons named has sole voting and
    dispositive power with respect to the shares reported. The number of shares
    and percentage of ownership of Common Stock for each of the persons named
    assumes that shares of Common Stock issuable to such person upon the
    exercise of stock options within sixty days subsequent to the Record Date
    are outstanding.
 
(2) Includes 16,000 shares issuable pursuant to stock options exercisable within
    sixty days subsequent to the Record Date.
 
(3) Includes 6,500 shares issuable pursuant to stock options exercisable within
    sixty days subsequent to the Record Date.
 
(4) Does not include 409,069 shares owned beneficially and of record by his
    wife, Mary Noel Lamont, or 505,171 shares owned by trusts of which Ms.
    Lamont is the beneficiary, of which all 919,240 shares Mr. Lamont disclaims
    any beneficial ownership.
 
(5) Includes 151,250 shares issuable pursuant to stock options exercisable
    within sixty days subsequent to the Record Date. Also includes 136,500
    shares owned by thirteen trusts for which Mr. Peterkin is trustee and the
    beneficiaries of which are four of his grandchildren, two grandnieces, one
    grandnephew and two of the grandchildren of his wife, Nancy G. Peterkin. Mr.
    Peterkin disclaims beneficial ownership of the shares held by such trusts.
 
(6) Includes 162,500 shares issuable pursuant to stock options exercisable
    within sixty days subsequent to the Record Date. Does not include 100 shares
    of which Mr. Pyne is custodian for his son, Samuel H. Pyne, under the
    Uniform Gifts to Minors Act or 100 shares owned by Samuel H. Pyne, of which
    all 200 shares Mr. Pyne disclaims beneficial ownership.
 
(7) Does not include 6,405 shares owned by a trust of which Mr. Stone is the
    trustee and of which he has a contingent remainder interest and 10,000
    shares owned by a trust of which Mr. Stone is trustee. Also does not include
    16,000 shares owned by his wife. Mr. Stone disclaims beneficial ownership of
    the foregoing shares.
 
(8) Includes 25,000 shares issuable pursuant to the Stone Option (hereinafter
    defined) exercisable within sixty days subsequent to the Record Date, of
    which 5,000 shares are contingent upon Mr. Stone being re-elected to the
    Board of Directors at the 1997 Annual Meeting of Stockholders.
 
(9) Includes 2,484,000 shares owned by Portfolio A Investors, L.P. ("PAI"). Mr.
    Taylor may be deemed to be the beneficial owner of the shares held by PAI
    because he is the sole stockholder of Trinity Capital Management, Inc.,
    which is the sole general partner of TF Investors, L.P., which is the sole
    general partner of Trinity I Fund, L.P., which is the sole stockholder of
    Portfolio Associates, Inc., which is the sole general partner of PAI.
 
                                        3

<PAGE>   6
 
     Each person named in the table above has been engaged in his respective
principal occupation for the past five years, except for J. Virgil Waggoner, who
served as President and Chief Executive Officer of Sterling Chemicals, Inc.
until August 1996. No director nominees are related to another nominee nor to
any executive officer of Kirby or its subsidiaries or affiliates.
 
     Mr. Henry Gilchrist, Secretary and General Counsel, served as a director of
Kirby from 1976 to June 1987. In July 1987, he was elected by the Board of
Directors to serve as an Advisory Director of Kirby. In his capacity as an
Advisory Director, Mr. Gilchrist is invited to attend meetings of the Board of
Directors and to participate in Board discussions. However, Mr. Gilchrist is not
entitled to vote on matters submitted for Board approval and is not involved in
the administration or management of Kirby. Mr. Gilchrist also serves as an
advisory member of the Compensation Committee of the Board of Directors. See
"Board and Committee Meetings." Mr. Gilchrist is invited to attend these
Committee meetings and participate in Committee discussions, but is not entitled
to vote on matters submitted for Committee approval. The selection of advisory
directors and advisory committee members is made by the Board of Directors, and
stockholders do not have a vote on these selections. Mr. Gilchrist is a member
of the law firm of Jenkens & Gilchrist, a Professional Corporation. During the
period from January 1, 1996 to December 31, 1996, Kirby retained such firm to
perform various legal services. Kirby expects to retain Jenkens & Gilchrist, a
Professional Corporation, to perform legal services in 1997.
 
TRANSACTIONS WITH DIRECTORS AND OFFICERS
 
     During 1996, Kirby and one or more of its subsidiaries provided marine
transportation services to Navios Corporation or its subsidiaries. Mr. C. Sean
Day, a director of Kirby, is President and Chief Executive Officer of Navios
Corporation. Such services were provided in the ordinary course of business of
Kirby and Navios Corporation and were entered into on an arm's-length basis. In
1996, the dollar value of such transactions was approximately $143,000. Kirby
anticipates that similar services will be rendered in 1997.
 
     During 1996, Kirby and one or more of its subsidiaries provided marine
transportation services to Sterling Chemicals, Inc. or its subsidiaries. Mr. J.
Virgil Waggoner, a director of Kirby, is the Vice Chairman and former President
of Sterling Chemicals, Inc. Such services were provided in the ordinary course
of business of Kirby and Sterling Chemicals, Inc. and were entered into on an
arm's-length basis. In 1996, the dollar amount of such transactions was
approximately $468,463. Kirby anticipates that similar services will be rendered
in 1997.
 
BOARD AND COMMITTEE MEETINGS
 
     During 1996, there were six meetings of the Board of Directors. No director
attended fewer than 75% of the aggregate of all meetings of the Board of
Directors and of the committees of the Board on which such director served,
except for C. Sean Day who attended four of the six meetings of the Board of
Directors.
 
     Audit Committee -- Kirby's Audit Committee presently consists of three
nonemployee directors: George F. Clements, Jr. (Chairman), C. Sean Day and J.
Virgil Waggoner. During 1996, the Audit Committee held four meetings. The Audit
Committee meets with representatives of management, Kirby's independent public
accountants and with the internal audit staff and discusses with each group
independently of the other any recommendations or matters that either considers
to be of significance. The Audit Committee reviews with the independent public
accountants and management the plan and scope of the audit for each year, the
status of the audit during the year, the results of such audit when completed
and the fees for services performed. The Audit Committee also reviews with
management, Kirby's internal auditor and the independent public accountants, the
adequacy of the system of internal controls and recommendations made by the
independent public accountants as to changes in accounting procedures and
internal accounting controls. In addition, the Audit Committee is responsible
for reviewing and monitoring the performance of non-audit services by Kirby's
independent public accountants and for recommending the engagement or discharge
of Kirby's independent public accountants.
 
     Compensation Committee -- Kirby's Compensation Committee presently consists
of five nonemployee directors: William M. Lamont, Jr. (Chairman), George F.
Clements, Jr., Robert G. Stone, Jr., Thomas M.
 
                                        4

<PAGE>   7
 
Taylor and J. Virgil Waggoner. Henry Gilchrist also serves on the Compensation
Committee as an Advisory Member. During 1996, the Compensation Committee held
eight meetings. The Compensation Committee reviews the salaries, bonuses and
other forms of compensation for officers and key employees of Kirby and makes
recommendations to the Board of Directors with respect thereto. In addition, the
Compensation Committee also administers all of the Kirby Stock Option Plans and
grants stock options under Kirby's Stock Option Plans except those Plans as to
which grants of options are automatic and those as to which no additional
options may be granted.
 
     Executive Committee -- Kirby's Executive Committee is presently composed of
Robert G. Stone, Jr., George A. Peterkin, Jr., J. H. Pyne and William M. Lamont,
Jr. Kirby's Executive Committee has all the powers and authorities of the Board
of Directors in the management and business affairs of Kirby when the Board is
not in session, except the power or authority to fill vacancies in the
membership of the Board of Directors, amend the Bylaws of Kirby or fill
vacancies in the membership of the Executive Committee. The Executive Committee
did not hold any formal meetings in 1996.
 
     The Board of Directors of Kirby does not have a standing nominating
committee.
 
DIRECTOR COMPENSATION
 
     Directors who were not otherwise employed by Kirby, as well as the Advisory
Director, were paid an annual retainer, were paid additional fees for attendance
at each meeting and were awarded stock option rights. The following table
discloses for each Director such information for the year ended December 31,
1996.
 
             NONEMPLOYEE DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
 

<TABLE>
<CAPTION>
                                          CASH COMPENSATION                   SECURITY GRANTS
                                 ------------------------------------   ----------------------------
                                                                                       NUMBER OF
                                  ANNUAL      MEETING     CONSULTING     NUMBER        SECURITIES
                                 RETAINER       FEES      FEES/OTHER       OF          UNDERLYING
             NAME                FEE($)(1)   ($)(2)(3)      FEES($)     SHARES(#)   OPTIONS/SAR'S(#)
             ----                ---------   ----------   -----------   ---------   ----------------
<S>                              <C>         <C>          <C>           <C>         <C>
George F. Clements, Jr.........  $ 12,500      $1,000             --          --         16,000
                                             $500 - 750
C. Sean Day....................    10,000      1,000             --           --          6,500
                                             500 - 750
William M. Lamont, Jr..........    12,500      1,000             --           --         16,000
                                             500 - 750
Thomas M. Taylor...............    10,000      1,000             --           --          6,500
                                             500 - 750
Robert G. Stone, Jr............    10,000      1,000             --           --         36,000
                                             500 - 750
J. Virgil Waggoner.............    10,000      1,000             --           --         16,000
                                             500 - 750
</TABLE>

 
- ---------------
 
(1) The Chairmen of the Audit and Compensation Committees each receive $2,500
    per year in addition to the $10,000 annual director fee.
 
(2) Directors and Advisory Directors are paid a fee of $1,000 for attendance at
    each meeting of the Board of Directors and are also paid a fee of $750 for
    attendance at each meeting of a committee; provided, however, that if a
    committee meets on the same day and at the same place as a meeting of the
    Board of Directors, the attendance fee for such committee meeting was $500.
 
(3) Directors and Advisory Directors are reimbursed for reasonable expenses
    incurred for attendance at the meetings.
 
                                        5

<PAGE>   8
 
     J. Peter Kleifgen and C. W. Murchison, III, former directors of Kirby, did
not stand for reelection as directors at the April 16, 1996 Annual Meeting.
Between January 1, 1996 and April 16, 1996, Mr. Kleifgen and Mr. Murchison each
received $2,500 in retainer fees and $2,500 in meeting fees.
 
DIRECTOR STOCK OPTION PLAN
 
     Kirby has in effect three director plans, the 1989 Director Stock Option
Plan of Kirby Exploration Company, Inc. (the "1989 Director Plan"), the 1994
Nonemployee Director Stock Option Plan of Kirby Corporation (the "1994 Director
Plan") and the 1993 Nonqualified Stock Option of Kirby Corporation for Robert G.
Stone, Jr. (the "Stone Option"). The purpose of the director plans is to advance
the interest of Kirby by providing additional incentives to attract and retain
qualified and competent nonemployee directors, upon whose efforts and judgment
the success of Kirby (including its subsidiaries) is largely dependent.
 
     The 1989 Director Plan provides for the one-time granting to directors of
Kirby who are not employees of Kirby or its subsidiaries of Nonincentive Stock
Options to purchase Common Stock ("1989 Director Options") and the use of
already owned Common Stock as payment for the exercise price of 1989 Director
Options.
 
     The grant of 1989 Director Options under the 1989 Director Plan is
automatic. Pursuant to the 1989 Director Plan, each nonemployee director who was
a director on July 25, 1989, the date of adoption of the 1989 Director Plan,
received a 1989 Director Option that expires on July 25, 1999, and Mr. Waggoner
received a Director Option on July 20, 1993 that expires on July 20, 2003, each
exercisable for 10,000 shares of Common Stock at the fair market value of such
Common Stock on the date of grant.
 
     The Board of Directors adopted an amendment of the 1989 Director Plan
effective January 18, 1994 and such amendment was approved by the stockholders
on April 19, 1994. The amendment reduced the number of stock options
automatically granted to future directors from 10,000 shares of Common Stock to
5,000 shares of Common Stock.
 
     Messrs. Day and Taylor received 1989 Director Options on January 16, 1996
that expire on January 16, 2006, each exercisable for 5,000 shares of Common
Stock at the fair market value of such Common Stock on the date of grant. Any
future nonemployee director of Kirby (who was not previously a director of
Kirby) will be granted a 1989 Director Option for 5,000 shares of Common Stock
on the date such nonemployee director is elected as a director, at an exercise
price equal to the fair market value of the Common Stock on the date of grant.
The 1989 Director Plan does not provide for any other grants of 1989 Director
Options. The 1989 Director Options are fully exercisable after the date of
grant. Unless terminated earlier, each of the 1989 Director Options expires ten
years after date of grant.
 
     Currently, Messrs. Clements, Lamont and Stone each hold 1989 Director
Options currently exercisable for 10,000 shares of Common Stock at $7.5625 per
share. Mr. Waggoner holds a 1989 Director Option currently exercisable for
10,000 shares of Common Stock at $18.625 per share and Messrs. Day and Taylor
each hold 1989 Director Options currently exercisable for 5,000 shares of Common
Stock at $16.625 per share.
 
     The 1994 Director Plan provides for the automatic granting to directors or
advisory directors of Kirby who are not employees of Kirby or its subsidiaries
of Nonqualified Stock Options to purchase Common Stock ("1994 Director Options")
and the use of already owned Common Stock as payment for the exercise price of
1994 Director Options.
 
     Pursuant to the 1994 Director Plan, each nonemployee director or advisory
director who was a director or advisory director on January 18, 1994, the date
of the adoption of the 1994 Director Plan, received a 1994 Director Option to
purchase 1,500 shares of Common Stock. On the first business day immediately
following the date of each Annual Meeting of Stockholders of Kirby, beginning
with the 1994 meeting, each nonemployee director who was, or is, a director or
advisory director on such date, received, and will receive, a 1994 Director
Option for 1,500 shares of Common Stock at the fair market value of such Common
Stock on such date. The 1994 Director Options are fully exercisable on or after
the six-month anniversary of the date of
 
                                        6

<PAGE>   9
 
grant. Unless terminated earlier, each of the 1994 Director Options granted
expires ten years after the date of grant.
 
     Currently, Messrs. Clements, Lamont, Stone, Waggoner and Gilchrist each
hold 1994 Director Options currently exercisable for 1,500 shares of Common
Stock at $21.375 per share, 1,500 shares of Common Stock at $21.0625 per share,
1,500 shares of Common Stock at $16.6875 per share and 1,500 shares of Common
Stock at $17.9375 per share. Currently, Mr. Day and Mr. Taylor each hold 1994
Director Options currently exercisable for 1,500 shares of Common Stock at
$17.9375.
 
     The Stone Option provides for the grant to Robert G. Stone, Jr., on July
20, 1993, subsequently approved by the stockholders on April 19, 1994, of a
Nonqualified Stock Option exercisable for 25,000 shares of Common Stock at an
exercise price of $18.625 per share and the use of already owned Common Stock as
payment for the exercise price of the Stone Option. The purpose of the Stone
Option is to provide an incentive to retain Mr. Stone as Chairman Emeritus of
the Board of Kirby or as a member of the Board of Directors of Kirby. The Stone
Option vested 20%, or 5,000 shares of Common Stock, on January 20, 1994, 20% on
April 19, 1994, the date of the 1994 Annual Stockholders Meeting, 20% on April
18, 1995, the date of the 1995 Annual Stockholders Meeting, 20% on April 16,
1996, the date of the 1996 Annual Stockholders Meeting, and will vest the
remaining 20% on April 15, 1997, the date of the 1997 Annual Stockholders
Meeting, if following such meeting Mr. Stone is a member of the Board of
Directors of Kirby.
 
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     The following table and notes thereto set forth certain information as of
March 3, 1997 concerning persons known to Kirby to own beneficially 5% or more
of Kirby's outstanding Common Stock together with information concerning
beneficial ownership by Kirby's highest paid nondirector executive officers who
received cash compensation in excess of $100,000 for 1996 and Kirby's directors
and executive officers as a group.
 

<TABLE>
<CAPTION>
                                             SHARES OF
                                            COMMON STOCK
                                            BENEFICIALLY      PERCENT OF
                                              OWNED ON          COMMON
                  NAME                    MARCH 3, 1997(1)     STOCK(1)
                  ----                    ----------------    ----------
<S>                                       <C>                 <C>
Portfolio A Investors, L. P. ...........     2,484,000(2)       10.0%
Luther King Capital Management
  Corporation...........................     2,304,181(3)        9.2%
GeoCapital Corp. .......................     1,538,900(4)        6.2%
Brian K. Harrington.....................       102,800(5)        *
Ronald C. Dansby........................        76,250(6)        *
Dorman L. Strahan.......................        38,500(7)        *
Directors and executive officers as a
  group (12 in number)..................     4,025,411(8)       16.2%
</TABLE>

 
- ---------------
 
  * Less than 1%
 
(1) Except as otherwise indicated, each of the persons named has sole voting and
    dispositive power with respect to the shares reported. The number of shares
    and percentage of ownership of Common Stock for each of the persons named
    assumes that shares of Common Stock issuable upon the exercise of stock
    options within sixty days subsequent to the Record Date are outstanding.
 
(2) Based on the Schedule 13D, dated October 27, 1995, and amendments thereto,
    dated November 29, 1995, January 17, 1996, January 18, 1996 and August 15,
    1996, filed by PAI with the Securities and Exchange Commission ("SEC"). The
    address of PAI is 201 Main Street, Suite 2600, Fort Worth, Texas 76102.
 
(3) Based on the Schedule 13G, dated January 21, 1997, filed by Luther King
    Capital Management ("LKCM") with the SEC, and subsequent information
    acquired by the Company. These shares comprise 2,301,881 shares owned by
    various portfolios LKCM manages and 2,300 shares owned by LKCM's officers
    and employees and their relatives. The address of LKCM is 301 Commerce
    Street, Suite 1600, Fort Worth, Texas 76102.
 
                                        7

<PAGE>   10
 
(4) Based on the Schedule 13G, dated February 15, 1997, filed by GeoCapital
    Corp. ("GeoCapital") with the SEC, and subsequent information acquired by
    the Company. The address of GeoCapital is 767 Fifth Avenue, 45th Floor, New
    York, New York 10153.
 
(5) Includes 97,500 shares issuable pursuant to stock options exercisable within
    sixty days subsequent to the Record Date.
 
(6) Includes 76,250 shares issuable pursuant to stock options exercisable within
    sixty days subsequent to the Record Date.
 
(7) Includes 38,500 shares issuable pursuant to stock options exercisable within
    sixty days subsequent to the Record Date.
 
(8) Includes 650,500 shares that directors and executive officers have the right
    to acquire within sixty days subsequent to the Record Date through the
    exercise of stock options. Also includes 2,484,000 shares owned by Portfolio
    A Investors, L.P.
 
COMPENSATION OF EXECUTIVE OFFICERS
 
     The total cash compensation paid for each of the three years ended December
31, 1994, 1995 and 1996 to Mr. Pyne, Kirby's Chief Executive Officer, and the
other four most highly paid executive officers who received cash compensation in
excess of $100,000 for 1996 (collectively, the "named Executive Officers") is
set forth in the following Summary Compensation Table.
 
                           SUMMARY COMPENSATION TABLE
 

<TABLE>
<CAPTION>
                                                                        LONG-TERM
                                                                       COMPENSATION
                                                                          AWARDS
                                              ANNUAL COMPENSATION      ------------
              NAME AND                        --------------------       OPTIONS/      ALL OTHER
         PRINCIPAL POSITION            YEAR   SALARY($)   BONUS($)         SARS       COMPENSATION
         ------------------            ----   ---------   --------     ------------   ------------
<S>                                    <C>    <C>         <C>          <C>            <C>
J. H. Pyne...........................  1996   $309,360    $     --(1)     475,000       $    --(2)
  President, Director and Chief        1995    288,674     120,000         25,000        87,537
  Executive Officer                    1994    239,360     120,000         25,000        16,787
George A. Peterkin, Jr...............  1996    234,360          --(1)      61,000            --(2)
  Chairman of the Board                1995    283,046     100,000         25,000        38,650
  of Directors                         1994    339,360     150,000         25,000        16,125
Brian K. Harrington..................  1996    180,560          --(1)      97,000            --(2)
  Senior Vice President and            1995    173,960      64,000         15,000        27,042
  Treasurer                            1994    167,360      70,000         15,000        13,409
Ronald C. Dansby.....................  1996    193,560          --(1)     164,000            --(2)
  President -- Inland Division         1995    186,360      85,000         25,000        26,324
                                       1994    176,360      85,000             --        13,351
Dorman L. Strahan....................  1996    135,760          --(1)      82,000            --(2)
  President -- Diesel Repair Division  1995    129,160      50,000         22,000        16,789
                                       1994    124,360      52,000             --        17,729
</TABLE>

 
- ---------------
 
(1) Bonuses for the 1996 year, payable in 1997, have not been determined as of
    the date of this Proxy Statement.
 
(2) Represents the aggregate value of Kirby's contributions under Kirby's Profit
    Sharing Plan, 401(k) Plan and Excess Benefit Plan. Kirby's contributions
    under these deferred contributions plans for the 1996 year have not been
    determined as of the date of this Proxy Statement, except for Kirby's
    matching contributions under Kirby's 401(k) Plan pursuant to which Kirby's
    matching contributions to the individual accounts were as follows: $4,500
    each to J. H. Pyne, George A. Peterkin, Jr., Brian K. Harrington and Ronald
    C. Dansby and $3,707 to Dorman L. Strahan.
 
                                        8

<PAGE>   11
 
     The following table discloses for each of the named Executive Officers
options granted during the year ended December 31, 1996. The amounts shown for
each of the named Executive Officers as potential realizable values for such
options are based on assumed annual rates of stock price appreciation of 0%, 5%
and 10% over the full ten year term of the options. The amounts shown as
potential realizable value for all stockholders as a group represent the
corresponding increases in the market value of 24,777,736 outstanding shares of
Common Stock held by all stockholders as of December 31, 1996. No gain to the
optionees is possible without an increase in the stock price that would benefit
all stockholders proportionately. These potential realizable values are based
solely on arbitrarily assumed rates of appreciation required by applicable SEC
regulations. Actual gains, if any, on stock option exercises are dependent on
the future performance of the Common Stock and overall market conditions. There
can be no assurance that the amounts reflected in this table will be achieved.
 
                     OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
 

<TABLE>
<CAPTION>
                                                                                 POTENTIAL REALIZED VALUE AT ASSUMED
                                                                                     ANNUAL RATES OF STOCK PRICE
                                            INDIVIDUAL GRANTS                      APPRECIATION FOR OPTION TERM(4)
                           ---------------------------------------------------   ------------------------------------
                                           % OF TOTAL                              0%          5%            10%
                                          OPTIONS/SARS   EXERCISE                ANNUAL      ANNUAL         ANNUAL
                           OPTIONS/SARS    GRANTED TO    OR BASE                 GROWTH      GROWTH         GROWTH
                             GRANTED      EMPLOYEES IN    PRICE     EXPIRATION    RATE        RATE           RATE
           NAME                (#)        FISCAL YEAR     ($/SH)       DATE      ($)(3)      ($)(3)         ($)(3)
           ----            ------------   ------------   --------   ----------   ------   ------------   ------------
<S>                        <C>            <C>            <C>        <C>          <C>      <C>            <C>
J. H. Pyne................    25,000(1)       2.60%      $16.4375   01-15-2006    $  0    $    393,330   $    869,723
                             450,000(2)      46.83%         19.50   11-05-2006       0       5,701,815     14,276,880
George A. Peterkin, Jr....    20,000(1)       2.08%       16.4375   01-15-2006       0         314,664        695,778
                              41,000(2)       4.27%         19.50   11-05-2006       0         519,499      1,300,782
Brian K. Harrington.......    15,000(1)       1.56%       16.4375   01-15-2006       0         235,998        521,834
                              82,000(2)       8.53%         19.50   11-05-2006       0       1,038,997      2,601,565
Ronald C. Dansby..........   164,000(2)      17.07%         19.50   11-05-2006       0       2,077,995      5,203,130
Dorman L. Strahan.........    82,000(2)       8.53%         19.50   11-05-2006       0       1,038,997      2,601,565
All stockholders as a
  group...................    N/A              N/A          19.75(5)    N/A       N/A      307,756,826(5)  779,913,929(5)
</TABLE>

 
- ---------------
 
(1) These options become exercisable 25% after one year, 50% after two years,
    75% after three years and 100% after four years of the date of grant. The
    exercise price for these options may be paid with already owned shares of
    Common Stock. No stock appreciation rights were granted with these stock
    options.
 
(2) These options become exercisable as follows:
 
     (a) 50% of the option shares on or after the first day following completion
         of a period of twenty (20) consecutive business days on which the fair
         market value of the Common Stock exceeds $28.73 per share, but only
         where such period is completed prior to the fourth (4th) anniversary of
         the date of grant.
 
     (b) 100% of the option shares on or after the first day following
         completion of a period of twenty (20) consecutive business days on
         which the fair market value of the Common Stock exceeds $30.88 per
         share, but only where such period is completed prior to the fourth
         (4th) anniversary of the date of grant.
 
     (c) 100% of the total option shares on or after the ninth (9th) anniversary
         of the date of grant.
 
(3) For stock options, the value is based on the exercise price per share of
    Common Stock, which was the average of the high and low sales price per
    share of Common Stock on the date of the grant on the American Stock
    Exchange through October 14, 1996 and on the New York Stock Exchange
    ("NYSE") beginning October 15, 1996, as reported by The Wall Street Journal.
 
(4) Potential Realized Value amounts for named Executive Officers have been
    calculated by multiplying the exercise price by the annual appreciation rate
    shown (compounded for the ten-year term of the options), subtracting the
    exercise price per share and multiplying the gain per share by the number of
    shares covered by the options. The derived Potential Realized Value is the
    nominal undiscounted future value not adjusted for inflation.
 
                                        9

<PAGE>   12
 
(5) For stockholders as a group, the value is based on $19.75 per share of
    Common Stock, which was the closing price per share of Common Stock on
    December 31, 1996 on the NYSE as reported by The Wall Street Journal and
    24,777,736 outstanding shares of Common Stock as of December 31, 1996.
 
     The following table discloses for each of the named Executive Officers the
values of their options at December 31, 1996. During the year ended December 31,
1996, no Executive Officers exercised stock options.
 
            AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
                      DECEMBER 31, 1996 OPTION/SAR VALUES
 

<TABLE>
<CAPTION>
                                                   NUMBER OF SECURITIES          VALUE OF UNEXERCISED
                                                  UNDERLYING UNEXERCISED             IN-THE-MONEY
                                                       OPTIONS/SARS                  OPTIONS/SARS
                                                  AT DECEMBER 31, 1996(#)     AT DECEMBER 31, 1996($)(1)
                                                ---------------------------   ---------------------------
                     NAME                       EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
                     ----                       -----------   -------------   -----------   -------------
<S>                                             <C>           <C>             <C>           <C>
J. H. Pyne....................................    136,250        513,750      $1,322,578      $160,859
George A. Peterkin, Jr........................    126,250         99,750       1,435,078       144,297
Brian K. Harrington...........................     80,000        122,000         639,375        99,375
Ronald C. Dansby..............................     70,000        189,000         572,344        78,906
Dorman L. Strahan.............................     33,500        103,500         194,719        62,656
</TABLE>

 
- ---------------
 
(1) Based on $19.75 per share of Common Stock, which was the closing price per
    share of Common Stock on December 31, 1996 on the NYSE as reported by The
    Wall Street Journal. The amounts reflect the value of the options
    accumulated over a ten-year period.
 
COMPENSATION AGREEMENTS
 
     Dixie Carriers, Inc. has a Deferred Compensation Agreement with J. H. Pyne
in connection with his employment as President of Dixie. The agreement provides
for benefits to Mr. Pyne totaling $4,175 per month commencing upon the later of
his severance from the employment of Dixie or his 65th birthday and continuing
until the month of his death. If Mr. Pyne should die prior to receiving such
deferred compensation, the agreement provides for monthly payments to his
beneficiary for a period of sixty months. The agreement also provides that no
benefits will be paid if Mr. Pyne is terminated for cause (as defined in the
agreement).
 
     Kirby has an unfunded nonqualified Deferred Compensation Plan for Key
Employees which was adopted in October 1994, effective January 1, 1992. The
plan, which is designed primarily to provide additional benefits to eligible
employees to restore benefits to which they would be entitled under Kirby's
Profit Sharing Plan and 401(k) Plan were it not for certain limits imposed by
the Internal Revenue Code. The benefits under the Deferred Compensation Plan are
designed to restore benefits for employees being compensated in excess of
$150,000 per year. The following table discloses for the named Executive
Officers the amount of contributions to the Deferred Compensation Plan for the
1994 and 1995 years. Contributions for the 1996 year have not been determined as
of the date of this Proxy Statement.
 

<TABLE>
<CAPTION>
                                                                   DEFERRED
                                                              COMPENSATION PLAN
                                                              ------------------
                                                               1994       1995
                                                              -------    -------
<S>                                                           <C>        <C>
J. H. Pyne..................................................  $ 5,734    $22,375
George A. Peterkin, Jr......................................   15,966     21,402
Brian K. Harrington.........................................    2,229      2,530
Ronald C. Dansby............................................    3,147      4,675
</TABLE>

 
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
 
     The Board of Directors of Kirby has a standing Compensation Committee whose
functions are to (1) make recommendations to the Board of Directors regarding
compensation policies, including salary, bonuses and other compensation, (2)
administer all of the Kirby Stock Option Plans except the 1976 Employee Stock
Option Plan which is administered by the Board of Directors, and (3) grant stock
options
 
                                       10

<PAGE>   13
 
under Kirby's Stock Option Plans except those Plans as to which grants of
options are automatic and those as to which no additional options may be
granted. The Compensation Committee held eight meetings in 1996. In 1996, the
Board of Directors did not modify or reject in any material way any action or
recommendation of the Compensation Committee. The Compensation Committee is
composed of five members and one advisory member, none of whom are employees of
Kirby and all of whom are "Disinterested Persons" or "Outside Directors" as
defined in the various Kirby Stock Option Plans.
 
     Compensation of executive officers is based primarily on three elements:
(1) base salary, (2) annual incentives, such as bonuses, and (3) long-term
incentives, primarily stock options. The basic goal is to pay compensation
comparable to similar corporations, giving due regard to relative financial
performance, and to tie annual incentives and long-term incentives to corporate
performance and a return to the Kirby stockholders.
 
     With regard to base salary, the objective is to set compensation at
somewhat below the competitive median for similar positions in similar
companies, and the Compensation Committee believes that this has generally been
achieved.
 
     With regard to the annual cash incentives for an executive officer,
exclusive of base salary, the Compensation Committee attempts to set bonuses at
a level such that, with a positive performance by the executive officer, and a
certain level of profitability by Kirby, the total compensation for such
executive officer, being base salary plus annual cash incentives, should be
above the median total cash compensation of similar corporations and positions.
The Compensation Committee believes that total annual cash compensation above
the median for similar corporations and positions is appropriate since a
significant portion of each executive officer's total annual cash compensation
is at risk due to both individual as well as company performance factors.
 
     The executive officers of Kirby's marine transportation group are
considered for annual incentive bonuses based on a Return on Invested Capital
formula that calculates a bonus pool and then distributes such bonus pool to
executive officers based on company and individual performance.
 
     Annual incentive bonuses for corporate executive officers who do not work
for any of Kirby's operating groups are recommended by the Compensation
Committee and are determined by the nonmanagement members of the Board of
Directors. Major factors in determining these bonuses are the perceived
individual contributions and the correlation of such contributions to the
overall corporate performance, the level of bonuses paid to executive officers
in the marine transportation group and the strategic and financial performance
of Kirby.
 
     Stock options granted to executive officers and other Kirby employees have
been granted at a price equal to the fair market value of Common Stock on the
date of grant and, except for the Premium Stock Options referred to below,
generally vest in equal increments over a period of four years and, unless
earlier terminated, are for a period of ten years.
 
     The Compensation Committee's objective for long-term incentive compensation
for executive officers is the median for long-term incentive compensation of
similar corporations and positions, giving effect to Kirby's long-term
performance relative to its peers.
 
     In addition to retirement, health care and similar benefits, the primary
long-term incentives for executive officers are options under Kirby's Stock
Option Plans. Generally, in January or December of each year, stock option
awards have been considered by the Compensation Committee, which has made
recommendations to the Board of Directors; however, beginning February 1, 1994,
such stock option awards are made by the Compensation Committee. The
Compensation Committee believes that Kirby's long-term executive officer
compensation, as evidenced by the options granted to date, does not exceed the
value of stock options granted by similar companies to their executive officers
holding similar positions.
 
                                       11

<PAGE>   14
 
     In November 1996, Kirby adopted a Premium Stock Option Program and granted
Stock Options (the "Premium Stock Options") for a total of 901,000 shares to the
following key executives:
 

<TABLE>
<CAPTION>
                NAME                   NO. SHARES                      TITLE
                ----                   ----------                      -----
<S>                                    <C>          <C>
George A. Peterkin, Jr. .............    41,000     Chairman of the Board of Directors
J. H. Pyne...........................   450,000     President and Chief Executive Officer
Ronald C. Dansby.....................   164,000     President -- Inland Division
Brian K. Harrington..................    82,000     Senior Vice President and Treasurer
Dorman L. Strahan....................    82,000     President -- Diesel Repair Division
William G. Ivy.......................    41,000     Executive Vice President -- Inland Division
Mark R. Buese........................    41,000     Vice President -- Administration -- Kirby
                                                    Marine Transportation Corporation
                                        -------
                                        901,000
</TABLE>

 
     The exercise price of all such Premium Stock Options is $19.50 per share,
the fair market value of Common Stock on November 5, 1996, the date of grant.
 
     All options expire ten (10) years from Date of Grant and, subject to
continued employment, may be exercised as follows:
 
          (a) 50% of total option shares on or after the first day following
     completion of a period of twenty (20) consecutive business days on which
     the fair market value of the Common Stock exceeds $28.73 per share, but
     only where such period is completed prior to the fourth (4th) anniversary
     of the date of grant.
 
          (b) 100% of total option shares on or after the first day following
     completion of a period of twenty (20) consecutive business days on which
     the fair market value of the Common Stock exceeds $30.88 per share, but
     only where such period is completed prior to the fourth (4th) anniversary
     of the date of grant.
 
          (c) 100% of total option shares on or after the ninth (9th)
     anniversary of the date of grant.
 
     The Premium Stock Options have been granted under the Kirby 1994 Employee
Stock Option Plan and the new Kirby 1996 Employee Stock Option Plan, the latter
of which is being presented to the Kirby Stockholders for approval at the Annual
Meeting. If Kirby stockholders fail to approve the 1996 Plan by November 5,
1997, all Premium Stock Options, including those granted under the 1994 Employee
Stock Option Plan, will be null and void.
 
     The Compensation Committee believes that the Premium Stock Option Program
represents another step by the Committee in placing a greater proportion of the
compensation of Senior Executives at risk under an incentive program which is
clearly aligned with the creation of stockholder value. Prior to the ninth (9th)
anniversary of the date of grant, before an executive can exercise his option,
the price of the Common Stock must appreciate to the pre-established prices
higher than the price at the time of the grant. Thus, stockholders must realize
significant returns on their investment in order for management to receive any
gains on their options prior to the ninth (9th) anniversary.
 
     The Compensation Committee encounters certain difficulties in establishing
a peer group of companies for compensation comparison purposes because there are
few publicly traded marine transportation companies of similar size and none
with a similar service mix. Some other marine transportation companies are
limited partnerships or subsidiaries of larger public corporations, again making
comparisons difficult. The Compensation Committee also compares Kirby's
executive compensation to the executive compensation of similar-sized publicly
held industrial companies.
 
     Based on the report referred to below and other information available to
it, the Compensation Committee believes that Kirby's executive compensation is
consistent with the criteria set forth above. The Compensation Committee
recognizes that certain elements of executive compensation are determined on a
subjective basis;
 
                                       12

<PAGE>   15
 
however, the Compensation Committee believes that, since it is satisfied that
total executive compensation is not excessive, these procedures are better for
both Kirby and its executives than would be a rigid formula-driven system. The
Compensation Committee recognizes that external factors, such as flood waters,
low water levels, and other weather-related conditions, as well as the general
business climate and the demand for the movement of refined products and
industrial chemicals, impact Kirby's earnings, and the Compensation Committee
looks to longer-term results rather than endeavoring to equate compensation to
some annual percentage of earnings or increased earnings.
 
     On October 18, 1994, on the recommendation of the Compensation Committee,
the Board of Directors adopted an unfunded non-qualified Deferred Compensation
Plan for Key Employees effective January 1, 1992. The Plan was designed
primarily to provide additional benefits to eligible employees to restore
benefits to which they would be entitled under the Kirby Qualified Retirement
Program were it not for certain limits imposed by the Internal Revenue Code. The
Plan is designed to restore benefits for employees being compensated in excess
of $150,000 per annum.
 
     Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to any of the Chief Executive Officer and four other most highly
compensated executive officers. Certain performance-based compensation, however,
is specifically exempt from the deduction limit. Kirby does not have a policy
that requires or encourages the Compensation Committee to qualify stock options
or restricted stock awarded to executive officers for deductibility under
Section 162(m) of the Internal Revenue Code. However, the Compensation Committee
does consider the net cost to Kirby in making all compensation decisions.
 
     On the recommendation of the Compensation Committee, the 1996 base salary
compensation for J. H. Pyne, Kirby's Chief Executive Officer, was established at
$300,000 by the Kirby Board of Directors effective January 1, 1996. The $120,000
bonus paid to Mr. Pyne in 1996, which was earned in 1995, was determined by the
Kirby Board of Directors on April 16, 1996, on the recommendation of the
Compensation Committee.
 
     The Chief Executive Officer's base pay and bonus were generally based on
the same factors and criteria outlined above, being compensation paid to chief
executives of corporations of similar size, individual as well as corporate
performance and a general correlation with compensation of other executive
officers of Kirby. Certain other factors the Compensation Committee considered
in evaluating Kirby's corporate performance as it affected the Chief Executive
Officer's total annual cash compensation are discussed below.
 
     The Compensation Committee also granted in January 1996 Nonqualified Stock
Options to J. H. Pyne, Kirby's Chief Executive Officer, for 25,000 shares of
Common Stock. The Compensation Committee granted the stock options based on its
belief that stock options are a key element in Kirby's executive compensation
policy. The Compensation Committee grants stock options for executive officers
based on its evaluation of individual performance and Kirby's overall
performance. As stated, the Compensation Committee recognizes that there is a
significant subjective element in this procedure, but believes that such
procedure is better suited to Kirby than would be a formula-driven policy. Total
options outstanding at the end of 1996 were for 1,122,400 shares, excluding the
Premium Stock Options of Kirby, constituting 4.5% of the then outstanding Common
Stock of Kirby and 901,000 shares in the Premium Stock Option Program,
constituting 3.6% of the then outstanding Common Stock of Kirby, assuming all
such options were fully exercised. The Compensation Committee believes that
options in this amount are justified and are within the range of similar
corporations that consider stock options an important part of their executive
compensation package and that the options held by the Chief Executive Officer
are an appropriate portion of total options.
 
     In 1992, the Compensation Committee engaged a nationally recognized
consulting firm to assess the existing Executive Compensation Program and make
recommendations for changes. The study found that for the 1988-1992 period, the
profitability performance of Kirby versus a transportation peer group and versus
the S&P 400 had been well above the median and concluded that for the Chief
Executive Officer, in particular, and for the entire executive group, pay levels
were below levels justified by the performance of Kirby.
 
     As a result of the above report, the Compensation Committee reviewed its
policies and generally concluded that its base pay compensation policy was sound
(except that the Chief Executive Officer was then
 
                                       13

<PAGE>   16
 
under-compensated in light of the base pay compensation policy); the annual
incentive policy was satisfactory, but could be simplified so as to be better
understood by employees. In light of its conclusions, the Compensation Committee
developed, with the assistance of the nationally recognized consulting firm that
analyzed Kirby's compensation, a Corporate Policy and Procedures Memorandum for
an Incentive Bonus Program (the "Incentive Compensation Policy"), which was
adopted by the Board of Directors effective January 1, 1993.
 
     The Incentive Compensation Policy will be employed to determine bonuses
paid in 1997, based on 1996 performance. Although the Compensation Committee
continues to review its compensation policies and procedures for the stock
option grant program, the Compensation Committee believes that past and current
stock option grants are reasonable and appropriate.
 
     Other factors considered by the Compensation Committee relating to the
performance of Kirby's executive officers over time have been the successful
sale of the Kirby oil and gas business in 1988, the concentration of company
resources in the marine transportation and diesel repair field, which has
resulted in the acquisition of six large and several smaller companies between
1989 and 1996 and the strategic business plan which was devised in 1992 to
gradually divest Kirby's interest in Universal Insurance Company, a Puerto Rico
property and casualty insurance company. Such plan has resulted to date in the
receipt of $20 million of funds which were used in the expansion of Kirby's
transportation activities. It is anticipated that Kirby will receive an
additional $60 million in redemption payments for its remaining interest in
Universal over the next ten years. The above mentioned acquisitions and
continuing divestiture have resulted in Kirby's total assets increasing from
$172 million at December 31, 1988 to $525 million at December 31, 1996. The
Compensation Committee also believes that the executive officers have done a
commendable job in positioning Kirby for continued growth and profitability
based on customer acceptance, safety records, maintenance standards and the
acquisitions mentioned above. In 1995, Kirby's marine transportation operation
was recognized as "Best in Class" by the Department of Transportation. This
award, which emphasizes safety and environmental protection, was awarded to
Kirby after a vigorous review of the marine transportation industry conducted by
the United States Coast Guard.
 
                                            COMPENSATION COMMITTEE
 
                                            William M. Lamont, Jr., Chairman
                                            George F. Clements, Jr.
                                            Robert G. Stone, Jr.
                                            Thomas M. Taylor
                                            J. Virgil Waggoner
                                            Henry Gilchrist, Advisory Member
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     No member of the Compensation Committee is or has been an officer or
employee of Kirby or any of its subsidiaries or had any relationship requiring
disclosure pursuant to Item 404 of SEC Regulation S-K. Henry Gilchrist, a
non-voting Advisory Member of the Compensation Committee, is Secretary of Kirby,
but is not an employee of Kirby. In 1996, no executive officer of Kirby served
on the Compensation Committee, or as a director of another entity, one of whose
executive officers served on the Compensation Committee or on Kirby's Board of
Directors.
 
                                       14

<PAGE>   17
 
KIRBY COMMON STOCK PERFORMANCE GRAPH
 
     The following performance graph compares the five-year cumulative return of
Kirby's Common Stock with that of the S&P 500 and the Dow Jones Marine
Transportation Index:
 
                COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
                   AMONG KIRBY CORPORATION, THE S&P 500 INDEX
                 AND THE DOW JONES MARINE TRANSPORTATION INDEX
 

<TABLE>
<CAPTION>
        MEASUREMENT PERIOD            KIRBY CORPO-       S&P 500 INDEX        DOW JONES
      (FISCAL YEAR COVERED)              RATION                                MARINE
                                                                             TRANSPORTA-
                                                                                TION
<S>                                 <C>                <C>                <C>
12/91                                             100                100                100
12/92                                             108                108                 88
12/93                                             176                118                113
12/94                                             163                120                103
12/95                                             134                165                118
12/96                                             163                203                144
</TABLE>

 
     Each index assumes $100 invested at December 31, 1991, and is calculated
assuming quarterly reinvestment of dividends and quarterly weighting by market
capitalization.
 
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
     Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires Kirby's officers and directors, and persons who own
more than 10% of a registered class of Kirby's equity securities, to file
reports of ownership and changes of ownership with the SEC and the NYSE.
Officers, directors and greater than 10% shareholders of Kirby are required by
SEC regulation to furnish Kirby with copies of all Section 16(a) forms they
file.
 
     Based solely on the review of the copies of such forms received, or
confirmation from the reporting persons, Kirby believes that, from January 1,
1996 to December 31, 1996, all filing requirements under Section 16(a)
applicable to its officers, directors and greater than 10% beneficial owners
were complied with.
 
VOTE REQUIRED
 
     Assuming the presence of a quorum, the election of each of the nominees for
Director requires the affirmative vote of a plurality of the shares of Common
Stock represented and voting in person or by proxy at the 1997 Annual Meeting.
Proxies will be voted for each of the nominees or will be withheld in accordance
with specifications marked thereon, and, if no specification is made, will be
voted in favor of the election of each of the nominees.
 
                                       15

<PAGE>   18
 
     THE BOARD OF DIRECTORS OF KIRBY UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
ELECTION OF EACH OF THE INDIVIDUALS NOMINATED FOR ELECTION AS A DIRECTOR.
 
        PROPOSAL TO APPROVE THE 1996 EMPLOYEE STOCK OPTION PLAN (ITEM 2)
 
     On November 5, 1996, the Board of Directors adopted, subject to stockholder
approval, the 1996 Employee Plan, the text of which is attached as Exhibit A to
this Proxy Statement. Unless the 1996 Employee Plan is approved by the
Stockholders within twelve (12) months after November 5, 1996, the 1996 Employee
Plan and all options granted pursuant to the 1996 Employee Plan shall be null
and void. The material features of the 1996 Employee Plan are discussed below,
but the description is subject to, and is qualified in its entirety by, the full
text of the 1996 Employee Plan.
 
GENERAL
 
  Purpose
 
     The purpose of the 1996 Employee Plan is to advance the interest of Kirby
by providing an additional incentive to attract and retain qualified and
competent employees, upon whose efforts and judgment the success of Kirby
(including its subsidiaries) is largely dependent, through the encouragement of
stock ownership in Kirby by such employees. Unless the context otherwise
requires, references to Kirby shall mean Kirby and any corporation wherein Kirby
owns, directly or indirectly, 50% or more of the total combined voting power (a
"Subsidiary").
 
  Eligibility
 
     Those persons who are employees of Kirby are eligible to participate in the
1996 Employee Plan.
 
  Types of Options
 
     The 1996 Employee Plan authorizes the granting of incentive stock options
("1996 Incentive Options") to purchase Common Stock to eligible persons and the
granting of nonqualified stock options ("1996 Nonqualified Options") to purchase
Common Stock to eligible persons. Unless the context otherwise requires, the
term "1996 Employee Options" includes both 1996 Incentive Options and 1996
Nonqualified Options.
 
  Administration
 
     The 1996 Employee Plan will be administered by the Compensation Committee
of the Board of Directors or other committee thereof, as appointed by the Board
(the "Committee"), which shall consist of at least three members of the Board of
Directors, all of whom are "Outside Directors." The Committee in its sole
discretion shall determine the employees to be awarded 1996 Employee Options,
the number of shares subject thereto and the exercise price thereof, subject to
certain limitations. In addition, the determinations and the interpretation and
construction of any provision of the 1996 Employee Plan by the Committee shall
be final and conclusive. Currently, the Committee is the Compensation Committee.
 
  Shares of Common Stock Subject to the 1996 Employee Plan
 
     A total of 900,000 shares of Common Stock (subject to adjustment as
discussed below) have been reserved for sale upon exercise of 1996 Employee
Options granted under the 1996 Employee Plan. As of March 7, 1997, 1996 Employee
Options had been granted for 696,000 shares under the 1996 Employee Plan.
 
  Granting of 1996 Employee Options
 
     The Committee may grant 1996 Employee Options from time to time in its
discretion. On November 5, 1996, Premium Stock Options were granted to four
employees of Kirby at an exercise price per share of $19.50. It is impossible at
this time to indicate the name or positions of eligible persons who will receive
future
 
                                       16

<PAGE>   19
 
1996 Employee Options or the number of shares for which future 1996 Employee
Options will be granted to any eligible persons under the 1996 Employee Plan,
except that no eligible person may be granted a 1996 Employee Option in any one
calendar year which is exercisable for more than 450,000 shares.
 
  New Plan Benefit Table
 
     The table below shows certain benefits received pursuant to the Premium
Stock Options granted under the 1996 Employee Plan.
 

<TABLE>
<CAPTION>
                     NAME AND
                PRINCIPAL POSITION                  DOLLAR VALUE($)(1)    NUMBER OF UNITS(2)
                ------------------                  ------------------    ------------------
<S>                                                 <C>                   <C>
J. H. Pyne........................................          0                  450,000
  President, Director and Chief Executive Officer
Ronald C. Dansby..................................          0                  164,000
  President -- Inland Division
Brian K. Harrington...............................          0                   41,000
  Senior Vice President and Treasurer
Dorman L. Strahan.................................          0                   41,000
  President -- Diesel Repair Division
Executive Group...................................          0                  696,000
Non-Executive Director Group......................          0                     None
Non-Executive Officer Employee Group..............          0                     None
</TABLE>

 
- ---------------
 
(1) These Premium Stock Options are exercised at $19.50 per share, the fair
    market value of Kirby Common Stock on November 5, 1996, the date of grant.
    Among other conditions these options cannot be exercised unless the fair
    market value of the Common Stock is $28.73 per share for 20 consecutive
    business days within four years after the date of grant. The fair market
    value of the Common Stock on March 4, 1997 was $18.375 and, therefore, the
    Premium Stock Options have no current dollar value. See "Compensation
    Committee Report on Executive Compensation" elsewhere in this Proxy
    Statement for additional information.
 
(2) In addition, similar Premium Stock Options for a total of 205,000 shares
    were awarded under the 1994 Kirby Employee Plan to George A. Peterkin,
    Jr., -- 41,000 shares, Brian K. Harrington -- 41,000 shares, William G. Ivy,
    Executive Vice President -- Inland Division -- 41,000 shares, Dorman L.
    Strahan -- 41,000 shares, and Mark R. Buese, Vice
    President -- Administration -- Kirby Marine Transportation
    Corporation -- 41,000 shares. All Premium Stock Options now outstanding will
    become null and void if the 1996 Employee Plan is not approved by Kirby
    stockholders.
 
  Exercise Price of 1996 Employee Options
 
     The exercise price of 1996 Employee Options shall be any price determined
by the Committee; however, the exercise price may not be less than the fair
market value of the Common Stock at the date of grant. The $19.50 per share
exercise price for options granted on November 5, 1996, as noted above, was
based on the average of the high and low price per share of Common Stock on
November 5, 1996 on the NYSE as reported by The Wall Street Journal.
 
  Payment of Exercise Price
 
     Unless further limited in any 1996 Employee Option, the exercise price of a
1996 Employee Option shall be paid solely in cash, certified or cashier's check,
by money order, or, if either expressly permitted by the terms of a 1996
Employee Option or otherwise permitted by the Committee, in its sole discretion
at the time of exercise of a 1996 Employee Option, by delivery of already owned
shares of Common Stock having a fair market value equal to the exercise price,
or by delivery of a combination of cash and already owned shares of Common
Stock; provided, however, that where shares are used to pay all or a portion of
the exercise price, such shares were previously owned by the employee for a
period deemed acceptable to the Committee in its
 
                                       17

<PAGE>   20
 
sole discretion. The Committee, in its sole discretion, may accept a personal
check in full or partial payment of such exercise price. One purpose for
permitting delivery of Common Stock in full or partial payment of the exercise
price is to make it possible for the optionee to exercise his 1996 Employee
Option without the need for the sale of Common Stock already owned, which sale
could result in incurring capital gain (or loss) for federal income tax purposes
or potential Section 16(b) liability under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
 
  Nontransferability of 1996 Employee Options
 
     No 1996 Employee Option granted under the 1996 Employee Plan is assignable
or transferable otherwise than by will or by the laws of descent and
distribution. During the lifetime of an optionee, his 1996 Employee Option is
exercisable only by him or his guardian or legal representative.
 
  Exercisability of 1996 Employee Options
 
     In granting 1996 Employee Options, the Committee, in its sole discretion,
may limit the optionee's right to exercise all or any portion of a 1996 Employee
Option until one or more dates subsequent to the date of grant, or may condition
the exercise of a 1996 Employee Option to achievement of specific goals or
impose a combination of such limits.
 
     The Committee also has the right, exercisable in its sole discretion, to
accelerate the date on which all or any portion of a 1996 Employee Option may be
exercised.
 
     If any 1996 Employee Option is accelerated by the Committee, the number of
shares that can be acquired is limited to avoid the optionee having an "excess
parachute payment" as determined by Section 280G of the Internal Revenue Code of
1986, as amended (the "Code").
 
  Expiration of 1996 Employee Options
 
     The expiration date of a 1996 Employee Option will be determined by the
Committee at the time of the grant, but in no event will a 1996 Employee Option
be exercisable after the expiration of ten (10) years from the date of grant of
the 1996 Employee Option.
 
     If an optionee's employment is terminated for cause, all rights of such
optionee under the 1996 Employee Plan cease and the 1996 Employee Options
granted to such optionee become null and void for all purposes. The 1996
Employee Plan further provides that in most instances a 1996 Employee Option
must be exercised by the optionee within 30 days after the termination of an
optionee's employment with Kirby (for any reason other than termination for
cause, mental or physical disability or death), if and to the extent such 1996
Employee Option was exercisable on the date of such termination.
 
     Generally, if an optionee's termination of employment is due to mental or
physical disability, the optionee will have the right to exercise the 1996
Employee Option (to the extent otherwise exercisable on the date of termination)
for a period of one year from the date on which the optionee suffers the mental
or physical disability. If an optionee dies while actively employed by Kirby,
the 1996 Employee Option may be exercised (to the extent otherwise exercisable
on the date of death) within one year of the date of the optionee's death by the
optionee's legal representative or legatee. If the optionee dies following
termination of employment, but within either the 30 day period described in the
preceding paragraph, or during a period of disability, his beneficiary will have
at least six months to exercise the option.
 
     On or before the date of termination of a 1996 Nonqualified Option, the
Committee may extend the termination date of all or any part of such 1996
Nonqualified Option to a specified date not earlier than the termination dates
referred to above, or ten days after the date on which all sales restrictions,
if any, with respect to shares subject to such 1996 Nonqualified Option shall
lapse.
 
     In the event of a defined "Corporate Transaction," i.e., certain changes in
control, mergers or sales of substantially all of the assets of Kirby, the
Committee may cancel, effective on the date of the consummation
 
                                       18

<PAGE>   21
 
of such Corporate Transaction, all or any portion of a 1996 Employee Option that
remains unexercised on such date.
 
  Sales Restrictions
 
     Unless expressly provided to the contrary in a 1996 Employee Option, the
Committee may restrict the sale of all or any portion of shares subject to or
acquired through the exercise of a 1996 Nonqualified Option; provided that such
restriction shall not prevent the Optionee from selling an aggregate of 50,000
shares during a calendar month.
 
  Expiration of the 1996 Employee Plan
 
     The 1996 Employee Plan will expire on November 5, 2006 and any 1996
Employee Option outstanding on such date will remain outstanding until it has
either expired or has been fully exercised.
 
  Adjustments
 
     The 1996 Employee Plan provides for adjustments to the number of shares
with respect to which 1996 Employee Options may be granted, to the number of
shares subject to outstanding 1996 Employee Options and to the exercise price of
such outstanding 1996 Employee Options in the event of a declaration of a stock
dividend or any recapitalization resulting in a stock split-up, combination or
exchange of shares of Common Stock.
 
  Amendments
 
     The Committee may amend, suspend or terminate the 1996 Employee Plan at any
time subject to stockholder approval in certain instances, provided that such
action may not substantially impair the rights of an optionee under an
outstanding 1996 Employee Option without the optionee's written consent. The
Committee may not amend the 1996 Employee Plan without further stockholder
approval to increase the number of shares of Common Stock reserved for issuance,
to change the class of employees eligible to participate in the 1996 Employee
Plan, to permit the granting of 1996 Employee Options with more than a 10-year
term or to extend the termination date of the 1996 Employee Plan.
 
  Registration
 
     Kirby anticipates registering the shares issuable pursuant to the exercise
of 1996 Employee Options with the SEC in 1997.
 
  Stockholder Approval
 
     Approval of the 1996 Employee Plan by stockholders of Kirby is required by
Kirby's Board of Directors and as a condition for qualifying the 1996 Incentive
Options as such under the Code. Stockholder approval also is one of the
conditions of Rule 16b-3, a rule promulgated by the SEC that provides an
exemption from the operation of the "short-swing profit" recovery provisions of
Section 16(b) of the Exchange Act, with respect to Kirby's officers' and
directors' acquisition of 1996 Employee Options and the use of already owned
Common Stock as full or partial payment for the exercise price of options
granted under the 1996 Employee Plan. Finally, stockholder approval of the 1996
Employee Plan is required by NYSE as a condition for listing the additional
Common Stock that may be issued upon exercise of 1996 Employee Options.
 
FEDERAL INCOME TAX CONSEQUENCES
 
  Grants of 1996 Employee Options
 
     Under current tax laws the grant of a 1996 Employee Option will not be a
taxable event to the recipient optionee and Kirby will not be entitled to a
deduction with respect to such grant.
 
                                       19

<PAGE>   22
 
  Exercise of 1996 Nonqualified Options and Subsequent Sale of Stock
 
     Upon the exercise of a 1996 Nonqualified Option, an optionee will recognize
ordinary income at the time of exercise equal to the excess of the then fair
market value of the shares of Common Stock received over the exercise price. The
taxable income recognized upon exercise of a 1996 Nonqualified Option will be
treated as compensation income subject to withholding and Kirby will be entitled
to deduct as a compensation expense an amount equal to the ordinary income an
optionee recognizes with respect to such exercise. When Common Stock received
upon the exercise of a 1996 Nonqualified Option subsequently is sold or
exchanged in a taxable transaction, the holder thereof generally will recognize
capital gain (or loss) equal to the difference between the total amount realized
and the fair market value of the Common Stock on the date of exercise; the
character of such gain or loss as long-term or short-term capital gain or loss
will depend upon the holding period of the shares following exercise.
 
  Exercise of 1996 Incentive Options and Subsequent Sale of Stock
 
     The exercise of a 1996 Incentive Option will not be taxable to the
optionee, and Kirby will not be entitled to any deduction with respect to such
exercise. However, to qualify for this favorable tax treatment of incentive
stock options under the Code, the optionee may not dispose of the shares of
Common Stock acquired upon the exercise of a 1996 Incentive Option until after
the later of two years following the date of grant or one year following the
date of exercise, a disposition within such period being a "disqualifying
disposition." The surrender of shares of Common Stock acquired upon the exercise
of a 1996 Incentive Option in payment of the exercise price of a 1996 Employee
Option within the required holding period for incentive stock options under the
Code will be a disqualifying disposition of the surrendered shares. Upon any
subsequent taxable disposition of shares of Common Stock received upon exercise
of a qualifying 1996 Incentive Option, the optionee generally will recognize
long-term or short-term capital gain (or loss) equal to the difference between
the total amount realized and the exercise price of the 1996 Incentive Option.
 
     If a 1996 Employee Option that was intended to be an incentive stock option
under the Code does not qualify for favorable incentive stock option treatment
under the Code due the failure to satisfy the holding period requirements, the
optionee may recognize ordinary income in the year of the disqualifying
disposition. Provided the amount realized in the disqualifying disposition
exceeds the exercise price, the ordinary income an optionee shall recognize in
the year of a disqualifying disposition shall be the lowest of (i) the excess of
the amount realized over the exercise price or (ii) excess of the fair market
value of the Common Stock at the time of the exercise over the exercise price
and Kirby generally will be entitled to a deduction for the amount of ordinary
income recognized by the optionee. In addition, the optionee shall recognize
capital gain on the disqualifying disposition in the amount, if any, by which
the amount realized in the disqualifying disposition exceeds the fair market
value of the Common Stock at the time of the exercise. Such capital gain shall
be taxable as long-term, or short-term, capital gain, depending on the
optionee's holding period for such shares. Special tax rules apply where all or
a portion of the exercise price of the 1996 Employee Option is paid by delivery
of already owned shares.
 
     Notwithstanding the favorable tax treatment of 1996 Incentive Options for
regular tax purposes, as described above, for alternative minimum tax purposes,
a 1996 Incentive Option is generally treated in the same manner as a 1996
Nonqualified Option. Accordingly, an optionee must generally include as
alternative minimum taxable income for the year in which a 1996 Incentive Option
is exercised, the excess of the fair market value on the date of exercise of the
shares of Common Stock received over the exercise price. If, however, an
optionee disposes of Common Stock acquired upon the exercise of a 1996 Incentive
Option in the same calendar year as the exercise, only an amount equal to the
optionee's ordinary income for regular tax purposes with respect to such
disqualifying disposition will be recognized for the optionee's calculation of
alternative minimum taxable income in such calendar year.
 
VOTE REQUIRED FOR APPROVAL
 
     Assuming the presence of a quorum, the proposal to approve the 1996
Employee Plan adopted by the Board of Directors of Kirby requires the approval
by the holders of a majority of the shares of Common Stock
 
                                       20

<PAGE>   23
 
represented and voting in person or by proxy at the 1997 Annual Meeting. Proxies
will be voted for or against such proposal in accordance with specifications
marked thereon, and, if no specification is made, will be voted in favor of such
proposal.
 
     THE BOARD OF DIRECTORS OF KIRBY UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
PROPOSAL TO APPROVE THE 1996 EMPLOYEE STOCK OPTION PLAN FOR KIRBY CORPORATION.
 
                            OTHER BUSINESS (ITEM 3)
 
     The Board of Directors knows of no other business that may properly be, or
that is likely to be, brought before the meeting. If, however, any other matters
are properly presented, it is the intention of the persons named in the
accompanying form of Proxy to vote the shares covered thereby as in their
discretion they may deem advisable.
 
                RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
 
     KPMG Peat Marwick LLP served as Kirby's principal independent public
accountants during 1996 and will continue to serve as Kirby's principal
independent public accountants for the current year. Representatives of KPMG
Peat Marwick LLP are expected to be present at the 1997 Annual Meeting of
Stockholders, with the opportunity to make a statement if they desire to do so,
and are expected to be available to respond to appropriate questions.
 
                   DATE OF RECEIPT FOR STOCKHOLDER PROPOSALS
 
     Pursuant to Rule 14a-8 under the Securities and Exchange Act of 1934, as
amended, stockholders may present proper proposals for inclusion in Kirby's
Proxy Statement for consideration at its Annual Meeting of Stockholders by
submitting proposals to Kirby in a timely manner. In order to be so included for
the 1998 Annual Meeting, stockholder proposals must be received by Kirby no
later than November 14, 1997, and must otherwise comply with the requirements of
Rule 14a-8.
 
                                          BY ORDER OF THE BOARD OF DIRECTORS
 
                                          Henry Gilchrist
                                          Secretary
 
March 5, 1997
Houston, Texas
 
                                       21

<PAGE>   24
 
                                                                       EXHIBIT A
 
                        1996 EMPLOYEE STOCK OPTION PLAN
                                      FOR
                               KIRBY CORPORATION
 
     SECTION 1. Purpose. The purpose of this 1996 Employee Stock Option Plan for
Kirby Corporation is to advance the interests of Kirby Corporation, a Nevada
corporation (the "Company"), by providing an additional incentive to attract and
retain qualified and competent employees for the Company and its subsidiaries,
upon whose efforts and judgment the success of the Company is largely dependent,
through the encouragement of stock ownership in the Company by such persons.
 
     SECTION 2. Definitions. As used herein, the following terms shall have the
meaning indicated:
 
          (a) "Act" shall mean the Securities Exchange Act of 1934, as amended.
 
          (b) "Board" shall mean the Board of Directors of the Company.
 
          (c) "Business Day" shall mean (i) if the Shares trade on a national
     exchange, any day that the national exchange on which the Shares trade is
     open or (ii) if the Shares do not trade on a national exchange, any day
     that commercial banks in the City of New York are open.
 
          (d) "Commission" shall mean the Securities and Exchange Commission.
 
          (e) "Committee" shall mean the Compensation Committee of the Board or
     other committee, if any, appointed by the Board pursuant to Section 14.
 
          (f) "Common Stock" shall mean the Company's common stock, par value
     $0.10 per share.
 
          (g) "Company" shall mean Kirby Corporation, a Nevada corporation.
 
          (h) "Corporate Transaction" shall mean (i) any transaction (which
     shall include a series of transactions occurring within 60 days or
     occurring pursuant to a plan) that has the result that shareholders of the
     Company immediately before such transaction cease to own at least 51% of
     (x) the voting stock of the Company or (y) of any entity that results from
     the participation of the Company in a reorganization, consolidation,
     merger, liquidation or any other form of corporate transaction; (ii) a
     merger, consolidation, reorganization, liquidation or dissolution in which
     the Company does not survive; (iii) a sale, lease, exchange or other
     disposition of all or substantially all of the property and assets of the
     Company.
 
          (i) "Date of Grant" shall mean the date on which an Option is granted
     to an Eligible Person pursuant to Section 4.
 
          (j) "Director" shall mean a member of the Board.
 
          (k) "Eligible Person(s)" shall mean Employees.
 
          (l) "Extension Notice" shall mean the written notice to the Optionee
     described in Section 8(b).
 
          (m) "Employee(s)" shall mean those persons who are employees of the
     Company or a Subsidiary.
 
          (n) "Fair Market Value" shall mean:
 
             (i) If Shares are listed on a national securities exchange at the
        date of determining the Fair Market Value,
 
               (A) The mean of the high and low sales price on such exchange on
           the date of reference as reported in any newspaper of general
           circulation, or
 
               (B) If the Shares shall not have traded on such exchange on such
           date, the mean of the high and low sales price on such exchange on
           the next day prior thereto on which the Shares were so traded as
           reported in any newspaper of general circulation; or
 
                                       A-1

<PAGE>   25
 
             (ii) If Shares shall not be listed as provided in Subsection
        2(n)(i), a value determined by any fair and reasonable means prescribed
        by the Committee.
 
          (o) "Incentive Stock Option" shall mean an option that is an incentive
     stock option as defined in Section 422 of the Code.
 
          (p) "Internal Revenue Code" or "Code" shall mean the Internal Revenue
     Code of 1986 as it now exists or may be amended from time to time.
 
          (q) "Nonqualified Stock Option" shall mean an option that is not an
     incentive stock option as defined in Section 422 of the Code.
 
          (r) "Option" (when capitalized) shall mean any option granted under
     this Plan.
 
          (s) "Optionee" shall mean a person to whom an Option is granted or any
     successor to the rights of such Option under this Plan by reason of the
     death of such person.
 
          (t) "Outside Director" shall mean a Director who qualifies as an
     "outside director" under the regulations promulgated under Section 162(m)
     of the Code and as a "non-employee director" under Rule 16b-3 promulgated
     under the Securities Exchange Act of 1934, effective August 15, 1996.
 
          (u) "Plan" shall mean this 1996 Employee Stock Option Plan for Kirby
     Corporation.
 
          (v) "Restriction Notice" shall mean the written notice to the Optionee
     imposing Sales Restrictions as provided in Section 11(b).
 
          (w) "Sales Restrictions" shall mean such restrictions on an Optionee's
     (or the successor to the rights of the Optionee pursuant to Section 10)
     right to sell Shares acquired through the exercise of an Option which are
     imposed by the Committee, in its sole discretion, pursuant to a Restriction
     Notice as provided in Section 11(b); provided, however, that such Sales
     Restrictions shall not prevent an Optionee from selling an aggregate of
     50,000 such Shares during a calendar month.
 
          (x) "Share(s)" shall mean a share or shares of the Common Stock.
 
          (y) "Subsidiary" shall mean any corporation (other than the Company)
     in any unbroken chain of corporations beginning with the Company if, at the
     time of the granting of the Option, each of the corporations other than the
     last corporation in the unbroken chain owns stock possessing 50% or more of
     the total combined voting power of all classes of stock in one of the other
     corporations in such chain.
 
     SECTION 3. Shares and Options.
 
     (a) The Company may from time to time grant to Eligible Persons Options to
purchase an aggregate of up to Nine Hundred Thousand (900,000) Shares from
Shares held in the Company's treasury or from authorized and unissued Shares. If
any Option granted under the Plan shall terminate, expire, or be canceled or
surrendered as to any Shares, new Options may thereafter be granted covering
such Shares. An Option granted hereunder shall be either an Incentive Stock
Option or a Nonqualified Stock Option as determined by the Committee at the Date
of Grant of such Option and shall clearly state whether it is an Incentive Stock
Option or a Nonqualified Stock Option. Incentive Stock Options may only be
granted to persons who are Employees.
 
     (b) The aggregate Fair Market Value (determined at the Date of Grant of the
Option) of the Shares with respect to which any Incentive Stock Option is
exercisable for the first time by an Optionee during any calendar year under the
Plan and all such plans of the Company and any parent and subsidiary of the
Company (as defined in Section 425 of the Code) shall not exceed $100,000.
Further, no Eligible Person may be granted an Option under this Plan in any one
calendar year which covers more than 450,000 Shares.
 
     SECTION 4. Conditions for Grant of Options.
 
     (a) Each Option shall be evidenced by an option agreement that may contain
any term deemed necessary or desirable by the Committee, provided such terms are
not inconsistent with this Plan or any applicable law.
 
                                       A-2

<PAGE>   26
 
Optionees shall be those persons selected by the Committee from Eligible
Persons. Any person who files with the Committee, in a form satisfactory to the
Committee, a written waiver of eligibility to receive any Option under this Plan
shall not be eligible to receive any Option under this Plan for the duration of
such waiver.
 
     (b) In granting Options, the Committee shall take into consideration the
contribution the person has made or may make to the success of the Company or
its Subsidiaries and such other factors as the Committee shall determine. The
Committee shall also have the authority to consult with and receive
recommendations from officers and other personnel of the Company and its
Subsidiaries with regard to these matters. The Committee may from time to time
in granting Options under the Plan prescribe such other terms and conditions
concerning such Options as it deems appropriate, including, without limitation,
relating an Option to achievement of specific goals established by the Committee
or the continued employment of the Optionee for a specified period of time,
provided that such terms and conditions are not more favorable to an Optionee
than those expressly permitted herein.
 
     (c) The Committee in its sole discretion shall determine in each case
whether periods of military or government service shall constitute a
continuation of employment for the purposes of this Plan or any Option.
 
     SECTION 5. Exercise Price. The exercise price per Share of any Option shall
be any price determined by the Committee; provided, however, that the exercise
price for any Option shall not be less than one hundred percent (100%) of the
Fair Market Value per Share on the Date of Grant.
 
     SECTION 6. Exercise of Options. An Option shall be deemed exercised when
(i) the Company has received written notice of such exercise in accordance with
the terms of the Option, (ii) full payment of the aggregate exercise price of
the Shares as to which the Option is exercised has been made, and (iii)
arrangements that are satisfactory to the Committee in its sole discretion have
been made for the Optionee's payment to the Company of the amount, if any, that
the Committee determines to be necessary for the Company or Subsidiary employing
the Optionee to withhold in accordance with applicable federal or state income
tax withholding requirements. Unless further limited by the Committee in any
Option, the exercise price of any Shares purchased shall be paid solely in cash,
by certified or cashier's check, by money order, with Shares previously owned by
the Optionee for a period deemed acceptable to the Committee in its sole
discretion, but with such Shares only if either expressly permitted by the terms
of the Option Agreement or otherwise permitted by the Committee in its sole
discretion at the time of exercise, or by a combination of the above; provided,
however, that the Committee in its sole discretion may accept a personal check
in full or partial payment of any Shares. If the exercise price is paid in whole
or in part with Shares, the value of the Shares surrendered shall be their Fair
Market Value on the date received by the Company.
 
     SECTION 7. Exercisability of Options.
 
     (a) Any Option shall become exercisable in such amounts and at such
intervals as the Committee shall provide in any Option, except as otherwise
provided in this Section 7; provided in each case that the Option has not
expired on the date of exercise.
 
     (b) Except as otherwise provided in an Extension Notice, the expiration
date of an Option shall be determined by the Committee at the Date of Grant, but
in no event shall an Option be exercisable after the expiration of ten (10)
years from the Date of Grant.
 
     (c) The Committee may in its sole discretion accelerate the date on which
all or any part of any Option may be exercised.
 
     (d) Notwithstanding any provisions hereof to the contrary, if any Option is
accelerated under Section 7(c), the portion of such Option that may be exercised
to acquire Shares that the Optionee would not be entitled to acquire but for
such acceleration (the "Acceleration Shares"), is limited to that number of
Acceleration Shares that can be acquired without causing the Optionee to have an
"excess parachute payment" as determined under Section 280G of the Code,
determined by taking into account all of the Optionee's "parachute payments"
determined under Section 280G of the Code. If as a result of this Section 7(d),
the Optionee may not acquire all of the Acceleration Shares, then the
Acceleration Shares that
 
                                       A-3

<PAGE>   27
 
the Optionee may acquire shall be the last shares that the Optionee would have
been entitled to acquire had this Option not been accelerated.
 
     SECTION 8. Termination of Option Period.
 
     (a) Unless otherwise provided in any Option, or in an Extension Notice, the
unexercised portion of an Option shall automatically and without notice
terminate and become null and void at the time of the earliest to occur of the
following:
 
          (i) thirty (30) days after the date that Optionee ceases to be an
     Employee regardless of the reason therefor other than as a result of (x)
     death, (y) mental or physical disability as determined by a medical doctor
     satisfactory to the Committee or (z) termination for cause, in each of the
     cases described in (x), (y) and (z) the termination date of the Option
     being the date set forth in whichever of (ii), (iii) or (iv) apply;
 
          (ii) one (1) year after the date on which the Optionee ceases to be an
     Employee by reason of suffering a mental or physical disability as
     determined by a medical doctor satisfactory to the Committee;
 
          (iii) either (y) one (1) year after the date that Optionee ceases to
     be an Employee by reason of death of the Optionee, or (z) six (6) months
     after the date on which the Optionee shall die, if the Optionee's death
     shall occur during the thirty-day period described in Section 8(a)(i) or
     the one-year period described in Section 8(a)(ii);
 
          (iv) the date that Optionee ceases to be an Employee as a result of a
     termination for cause; and
 
          (v) the tenth (10th) anniversary of the Date of Grant of the Option.
 
     (b) Notwithstanding any provision of this Plan to the contrary, on or
before the date of termination of a Nonqualified Stock Option, the Committee, in
its sole discretion, may give the Optionee an Extension Notice extending the
termination date of all or any part of such Nonqualified Stock Option to any
date specified by the Committee in such Extension Notice which is not later than
the earlier of (i) the date described in Section 8(a)(v), or (ii) (10) days
after the date on which all of the Sales Restrictions (if any) with respect to
Shares subject to such Nonqualified Stock Option shall lapse.
 
     (c) Notwithstanding any provision of the Option to the contrary, including
without limitation any extension due to an Extension Notice, the Committee, in
its sole discretion, may, by giving written notice (a "Cancellation Notice")
cancel, effective upon the date of the consummation of a Corporate Transaction,
all or any part of such Option that remains unexercised for any reason on such
date. Such Cancellation Notice shall be given a reasonable period of time (but
not less than 15 days) prior to the proposed date of such cancellation, and may
be given either before or after shareholder approval of such transaction.
 
     SECTION 9. Adjustment of Shares.
 
     (a) If at any time while the Plan is in effect or unexercised Options are
outstanding, there shall be any increase or decrease in the number of issued and
outstanding Shares through the declaration of a stock dividend or through any
recapitalization resulting in a stock split-up, combination or exchange of
Shares, then and in such event,
 
          (i) appropriate adjustment shall be made in the maximum number of
     Shares then subject to being optioned under the Plan, so that the same
     proportion of the Company's issued and outstanding Shares shall continue to
     be subject to being so optioned; and
 
          (ii) appropriate adjustment shall be made in the number of Shares and
     the exercise price per Share thereof then subject to outstanding Options,
     so that the same proportion of the Company's issued and outstanding Shares
     shall remain subject to purchase at the same aggregate exercise price.
 
     (b) The Committee may change the terms of Options outstanding under this
Plan, with respect to the exercise price or the number of Shares subject to the
Options, or both, when, in the Committee's sole discretion, such adjustments
become appropriate by reason of any Corporate Transaction.
 
                                       A-4

<PAGE>   28
 
     (c) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with direct sale
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to the number of Shares reserved for issuance under the
Plan or the number of or exercise price of Shares then subject to outstanding
Options granted under the Plan.
 
     (d) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalization, reorganizations or other changes in the Company's
capital structure or its business; (ii) any merger or consolidation of the
Company; (iii) any issue by the Company of debt securities, or preferred or
preference stock that would rank above the Shares subject to outstanding
Options; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
 
     SECTION 10. Transferability of Options. An Option shall not be transferable
by the Optionee otherwise than by will or the laws of descent and distribution
and so long as an Optionee lives, only such Optionee or his guardian or legal
representative shall have the right to exercise an Option.
 
     SECTION 11. Issuance and Sale of Shares.
 
     (a) No person shall be, or have any of the rights or privileges of, a
stockholder of the Company with respect to any of the Shares subject to an
Option unless and until certificates representing such Shares shall have been
issued and delivered to such person. As a condition of any transfer of the
certificate for Shares, the Committee may obtain such agreements or
undertakings, if any, as it may deem necessary or advisable to assure compliance
with any provision of the Plan, the agreement evidencing the Option or any law
or regulation including, but not limited to, the following:
 
          (i) A representation, warranty or agreement by the Optionee to the
     Company at the time any Option is exercised that he or she is acquiring the
     Shares to be issued to him or her for investment and not with a view to, or
     for sale in connection with, the distribution of any such Shares;
 
          (ii) A representation, warranty or agreement by the Optionee to be
     bound by any legends that are, in the opinion of the Committee, necessary
     or appropriate to comply with the provisions of any securities laws deemed
     by the Committee to be applicable to the issuance of the Shares and are
     endorsed upon the Share certificates; and
 
          (iii) An agreement to allow the Company to retain possession of
     certificates evidencing any Shares acquired through the exercise of an
     Option which are subject to a Sales Restrictions.
 
     (b) Unless expressly provided to the contrary in the Option, the Committee
may, in its sole discretion, impose Sales Restrictions on all or any part of the
Shares subject to a Nonqualified Stock Option or acquired through the exercise
of a Nonqualified Stock Option, by delivering a written Restriction Notice to
the Optionee not later than ten (10) days following the exercise of such
Nonqualified Stock Option.
 
     SECTION 12. Options for 10% Shareholder. Notwithstanding any other
provisions of the Plan to the contrary, an Incentive Stock Option shall not be
granted to any person owning directly (or indirectly through attribution under
Section 425(d) of the Code) at the Date of Grant, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (or of
its parent or subsidiary [as defined in Section 425 of the Code] at the Date of
Grant) unless the exercise price of such Incentive Stock Option is at least 110%
of the Fair Market Value of the Shares subject to such Incentive Stock Option on
the Date of Grant, and the period during which the Incentive Stock Option may be
exercised does not exceed five (5) years from the Date of Grant.
 
     SECTION 13. Nonqualified Stock Options. Nonqualified Stock Options may be
granted hereunder by clearly and expressly designating them as such, and they
shall be subject to all terms and provisions hereof that
 
                                       A-5

<PAGE>   29
 
are not expressly stated as applying to Incentive Stock Options. If both
Incentive Stock Options and Nonqualified Stock Options are granted to an
Optionee, the right to exercise, to the full extent thereof, Options of either
type shall not be contingent in whole or in part upon the exercise of, or
failure to exercise, Options of the other type.
 
     SECTION 14. Administration of the Plan.
 
     (a) The Plan shall be administered by the Compensation Committee of the
Board or other committee thereof as appointed by the Board (herein called the
"Committee") consisting of not less than three (3) members of the Board, all of
whom are Outside Directors. Except for the powers set forth in Section 17 which
are expressly reserved to the Board, and such other limitations which are
imposed in writing by the Board or in resolutions adopted by the Board, the
Committee shall have all of the powers of the Board with respect to the Plan and
the Options. Any member of the Committee may be removed at any time, with or
without cause, by resolution of the Board and any vacancy occurring in the
membership of the Committee may be filled by appointment by the Board.
 
     (b) The Committee, from time to time, may adopt rules and regulations for
carrying out the purposes of the Plan. The determinations and the interpretation
and construction of any provision of the Plan by the Committee shall be final
and conclusive.
 
     (c) Any and all decisions or determinations of the Committee shall be made
either (i) by a majority vote of the members of the Committee at a meeting or
(ii) without a meeting by the written approval of a majority of the members of
the Committee.
 
     (d) Subject to the express provisions of this Plan, the Committee shall
have the authority, in its sole and absolute discretion (i) to adopt, amend, and
rescind administrative and interpretive rules and regulations relating to this
Plan or any Option; (ii) to construe the terms of this Plan or any Option; (iii)
as provided in Section 9(a), upon certain events to make appropriate adjustments
to the exercise price and number of Shares subject to this Plan and Options; and
(iv) to make all other determinations and perform all other acts necessary or
advisable for administering this Plan, including the delegation of such
ministerial acts and responsibilities as the Committee deems appropriate. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in this Plan or any Option in the manner and to the extent it
shall deem expedient to carry it into effect, and it shall be the sole and final
judge of such expediency. The Committee shall have full discretion to make all
determinations on the matters referred to in this Section 14(d), and such
determinations shall be final, binding and conclusive.
 
     SECTION 15. Government Regulations.
 
     This Plan, the Options and the obligations of the Company to sell and
deliver Shares under any Option, shall be subject to all applicable laws, rules
and regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
 
     SECTION 16. Miscellaneous.
 
     (a) The proceeds received by the Company from the sale of Shares pursuant
to an Option shall be used for general corporate purposes.
 
     (b) The grant of an Option shall be in addition to any other compensation
paid to the Optionee or other stock option plans of the Company or other
benefits with respect to the Optionee's position with the Company or its
Subsidiaries. The grant of an Option shall not confer upon the Optionee the
right to continue as an Employee, or interfere in any way with the rights of the
Company to terminate his or her status as an Employee.
 
     (c) None of the Company, the members of the Board or any member of the
Committee shall be liable for any act, omission, or determination taken or made
in good faith with respect to this Plan or any Option, and members of the Board
and the Committee shall, in addition to all other rights of indemnification and
reimbursement, be entitled to indemnification and reimbursement by the Company
in respect of any claim, loss, damage, liability or expense (including
attorneys' fees, the costs of settling any suit, provided such
 
                                       A-6

<PAGE>   30
 
settlement is approved by independent legal counsel selected by the Company, and
amounts paid in satisfaction of a judgment, except a judgment based on a finding
of bad faith) arising from such claim, loss, damage, liability or expense to the
full extent permitted by law and under any directors' and officers' liability or
similar insurance coverage that may from time to time be in effect.
 
     (d) Any issuance or transfer of Shares to an Optionee, or to his legal
representative, heir, legatee, or distributee, in accordance with the provisions
of this Plan or the applicable Option, shall, to the extent thereof, be in full
satisfaction of all claims of such persons under the Plan. The Committee may
require any Optionee, legal representative, heir, legatee or distributee as a
condition precedent to such payment or issuance or transfer of Shares, to
execute a release and receipt for such payment or issuance or transfer of Shares
in such form as it shall determine.
 
     (e) Neither the Committee nor the Company guarantees Shares from loss or
depreciation.
 
     (f) All expenses incident to the administration, termination, or protection
of this Plan or any Option, including, but not limited to, legal and accounting
fees, shall be paid by the Company; provided, however, the Company may recover
any and all damages, fees, expenses and costs arising out of any actions taken
by the Company to enforce its rights under this Plan or any Option.
 
     (g) Records of the Company shall be conclusive for all purposes under this
Plan or any Option, except to the extent a record is determined by the Committee
or the Board to be incorrect.
 
     (h) The Company shall, upon request or as may be specifically required
under this Plan or any Option, furnish or cause to be furnished all of the
information or documentation that is necessary or required by the Committee to
perform its duties and functions under this Plan or any Option.
 
     (i) The Company does not assume liability, and shall have no liability, to
any Optionee or his legal representatives, heirs, legatees or distributees for
any act of, or failure to act on the part of, the Company, the Committee, or the
Board, and by accepting an Option, an Optionee shall be deemed to release the
Company, the Board and the Committee and its agents, from any such liability.
 
     (j) If any provision of this Plan or any Option is held to be illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions of this Plan or any Option, but such provision shall be
fully severable, and the Plan or Option, as applicable, shall be construed and
enforced as if the illegal or invalid provision had never been included in the
Plan or Option, as applicable.
 
     (k) Whenever any notice is required or permitted under this Plan, such
notice must be in writing and personally delivered or sent by mail or delivery
by a nationally recognized courier service. Any notice required or permitted to
be delivered under an Option shall be deemed to be delivered on the date on
which it is personally delivered, or, if mailed, whether actually received or
not, on the third Business Day after it is deposited in the United States mail,
certified or registered, postage prepaid, addressed to the person who is to
receive it at the address that such person has previously specified by written
notice delivered in accordance with this Section 16(k) or, if by courier,
seventy-two (72) hours after it is sent, addressed as described in this Section
16(k). The Company or the Optionee may change, at any time and from time to
time, by written notice to the other, the address that the Company or Optionee
had previously specified for receiving notices. Until changed in accordance with
this Plan, the Company and the Optionee shall specify as its and his address for
receiving notices the address set forth in the Option pertaining to the Shares
to which such notice relates.
 
     (l) Any person entitled to notice under this Plan may waive such notice.
 
     (m) The titles and headings of Sections are included for convenience of
reference only and are not to be considered in construction of this Plan's
provisions.
 
     (n) All questions arising with respect to the provisions of this Plan shall
be determined by application of the laws of the State of Texas except to the
extent Texas law is preempted by federal law or Nevada corporate law that is
controlling. The obligation of the Company to sell and deliver Shares under this
Plan is subject to applicable laws and to the approval of any governmental
authority required in connection with the authorization, issuance, sale, or
delivery of such Shares.
 
                                       A-7

<PAGE>   31
 
     (o) Words used in the masculine shall apply to the feminine where
applicable, and wherever the context of this Plan dictates, the plural shall be
read as the singular and the singular as the plural.
 
     SECTION 17. Amendment and Discontinuation of the Plan. The Committee may
from time to time amend, suspend or terminate the Plan or any Option; provided,
however, that only the Board may amend the Plan to increase the number of Shares
subject to grant under the Plan, change the class of persons eligible to receive
Options, or change the provisions of Section 8(a)(v), provided further that no
amendment may alter any provision of the Plan or any Option without compliance
with any applicable shareholder approval requirements promulgated under the
Code, if applicable, or by any stock exchange or market on which the Common
Stock of the Company is listed for trading; and provided, further, that no
amendment, suspension or cancellation of the Plan or any Option issued hereunder
shall, except as specifically permitted in any Option or under the terms of the
Plan (including, without limitation, Sections 8(c) and 11(b)), substantially
impair any Option previously granted to any Optionee without the consent of such
Optionee.
 
     SECTION 18. Effective Date and Termination Date. The effective date of the
Plan is the date set forth below, on which date the Board adopted this Plan;
provided, however, if the Plan is not approved by the stockholders of the
Company within twelve (12) months after the effective date then, in such event,
the Plan and all Options granted pursuant to the Plan shall be null and void.
The Plan shall terminate on the tenth anniversary of the effective date.
 

<TABLE>
<S>                            <C>
ADOPTED BY THE BOARD:          November 5, 1996
EFFECTIVE DATE:                November 5, 1996
RATIFIED BY THE STOCKHOLDERS:  April   , 1997
</TABLE>

 
     Executed to evidence the 1996 Employee Stock Option Plan of Kirby
Corporation adopted by the Board on November 5, 1996 and the Stockholders on
April   , 1997.
 
                                          KIRBY CORPORATION
 
                                          By      /s/ G. STEPHEN HOLCOMB
                                            ------------------------------------
                                                    G. Stephen Holcomb,
                                                    Assistant Secretary
 
                                       A-8

<PAGE>   32
                                  KIRBY CORPORATION
                           1775 ST. JAMES PLACE, SUITE 200
                                    P.O. BOX 1745
                              HOUSTON, TEXAS 77251-1745

<TABLE>
<S>  <C>
                         THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF KIRBY CORPORATION.

 P   The undersigned hereby appoints George A. Peterkin, Jr., J. H. Pyne, G. Stephen Holcomb and Henry Gilchrist, and each of them,
     as Proxies, each with the power to appoint his substitute, and hereby authorizes each to represent and to vote, as designated
 R   below, all the shares of common stock, par value $0.10 per share, of Kirby Corporation (the "Company") held of record by the
     undersigned on March 3, 1997, the Record Date, at the Annual Meeting of Stockholders to be held on April 15, 1997, at the 
 O   J. W. Marriott Houston Hotel, 5150 Westheimer, Houston, Texas, at 10:00 A.M. (local time) and any adjournment(s) thereof.

 X   THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO
     DIRECTION IS MADE, THIS PROXY WILL VOTED FOR THE PERSONS LISTED IN ITEM 1 AND SHOULD ANY OF THEM BECOME UNAVAILABLE FOR
 Y   NOMINATION OR ELECTION OR REFUSE TO BE NOMINATED OR ACCEPT ELECTION AS A DIRECTOR OF THE COMPANY, THE PROXY WILL BE VOTED FOR
     THE ELECTION OF SUCH PERSON OR PERSONS AS MAY BE NOMINATED OR DESIGNATED BY THE BOARD OF DIRECTORS AND FOR PROPOSAL 2. THE
     PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTER REFERRED TO IN ITEM 3.

                                               (PLEASE DATE AND SIGN ON REVERSE SIDE)                                 -----------
                                                                                                                      SEE REVERSE
                                                                                                                          SIDE
                                                                                                                      -----------
</TABLE>


<PAGE>   33

/X/ Please mark votes as
    in this example.

Please mark boxes in blue or black ink.

The Board of Directors recommends a vote "FOR ALL" of the following Proposals:

1. To elect eight (8) directors to hold office until the next annual election
   of directors by stockholders or until their respective successors shall have
   been duly elected and shall have qualified;
   NOMINEES: George F. Clements, Jr., C. Sean Day, William M. Lamont, Jr.,
   George A. Peterkin, Jr., J. H. Pyne, Robert G. Stone, Jr., Thomas M. Taylor,
   J. Virgil Waggoner.

                            FOR             WITHHELD
                            / /                / /

   / / _____________________________________________________________________
       For all nominees except as noted above.

2. To consider and act upon a proposal to approve the 1996 Employee Stock
   Option Plan for Kirby Corporation.

                    FOR           AGAINST           WITHHELD
                    / /             / /                / /

3. In their discretion, the Proxies are authorized to vote upon such other
   business as may properly come before the meeting.

                    FOR           AGAINST           WITHHELD
                    / /             / /                / /


MARK HERE FOR ADDRESS
CHANGE AND NOTE AT LEFT  / /


                         Please execute this Proxy as your name(s) appear(s)
                         hereon. When shares are held by joint owners, both
                         should sign. When signing as attorney, executor,
                         administrator, trustee, guardian, or other fiduciary or
                         representative capacity, please set forth the full
                         title. If a corporation, please sign in full corporate
                         name by president or other authorized officer. If a
                         partnership, please sign in partnership name by
                         authorized person


                         Signature: ___________________________ Date ___________


                         Signature: ___________________________ Date ___________
 

                 PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY
                     PROMPTLY USING THE ENCLOSED ENVELOPE.