<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
DAYTON HUDSON CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
DAYTON HUDSON CORPORATION
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii),
14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy
pursuant to Exchange Act Rule 14a-6(i)(3).
[_] Fee computed on table below per Exchange
Act Rules 14a-6(1)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: (1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
[_] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the date
of its filing.
(1) Amount Previously Paid:
- -------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- -------------------------------------------------------------------------------
(3) Filing Party:
- -------------------------------------------------------------------------------
(4) Date Filed:
- -------------------------------------------------------------------------------
<PAGE>
[LOGO OF DAYTON HUDSON CORPORATION]
DAYTON HUDSON CORPORATION
777 Nicollet Mall
Minneapolis, Minnesota 55402
612/370-6948
April 20, 1994
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Dayton Hudson
Corporation to be held in Minneapolis at The Children's Theatre on Wednesday,
May 25, 1994, beginning at 9:30 a.m. I encourage you to attend. Whether or
not you plan to attend the meeting, I urge you to vote your proxy.
On behalf of your Board of Directors and employees, thank you for your
continued support of and interest in Dayton Hudson.
Sincerely,
/s/ Kenneth A. Macke
Kenneth A. Macke
Chairman of the Board
<PAGE>
[LOGO OF DAYTON HUDSON CORPORATION]
DAYTON HUDSON CORPORATION
777 Nicollet Mall
Minneapolis, Minnesota 55402
Telephone: (612) 370-6948
Notice of Annual Meeting
of Shareholders
May 25, 1994
____________________________________________________________________________
To Our Shareholders:
The Annual Meeting of Shareholders of Dayton Hudson Corporation will be held
at The Children's Theatre, Minneapolis Institute of Arts, 2400 3rd Avenue South,
Minneapolis, Minnesota, on Wednesday, May 25, 1994, at 9:30 a.m., Central
Daylight Time, for the following purposes:
(1) To elect four directors for three-year terms.
(2) To approve the appointment of Ernst & Young as independent auditors.
(3) To approve for purposes of federal tax law two new short-term incentive
plans based on objective performance goals.
(4) To act upon any other business that may properly come before the
meeting, including certain shareholder proposals.
Holders of record of Common Stock and Series B ESOP Convertible Preferred
Stock at the close of business on April 1, 1994 will be entitled to vote at
the meeting and any adjournment thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY IN THE
REPLY ENVELOPE PROVIDED AS SOON AS POSSIBLE. YOUR COOPERATION IN SIGNING AND
RETURNING YOUR PROXY PROMPTLY WILL HELP AVOID FURTHER SOLICITATION EXPENSE TO
YOUR CORPORATION.
/s/ James T. Hale
JAMES T. HALE
Secretary
Approximate Date of Mailing of Proxy Material:
April 20, 1994
<PAGE>
DAYTON HUDSON CORPORATION
777 NICOLLET MALL, MINNEAPOLIS, MINNESOTA 55402
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 1994
The Board of Directors of Dayton Hudson Corporation (the "Corporation")
solicits the enclosed Proxy for the Annual Meeting of Shareholders to be held
at The Children's Theatre, Minneapolis Institute of Arts, 2400 3rd Avenue
South, Minneapolis, Minnesota, on Wednesday, May 25, 1994, at 9:30 a.m.,
Central Daylight Time, and for any adjournment thereof. Shares represented by
proxies in the form solicited will be voted. Proxies may be revoked at any
time before being exercised by filing with the Secretary of the Corporation a
proxy dated at a later time or a written revocation dated after the date of
the proxy.
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
Proxies solicited by the Board of Directors will, unless otherwise
directed, be voted for the election of four nominees to serve as Class III
directors for three-year terms expiring in 1997 and until their successors are
elected. The four nominees are Betty Ruth Hollander, Kenneth A. Macke, Mary
Patterson McPherson and Robert J. Ulrich.
The Corporation's Restated Articles of Incorporation, as amended, provide
that the business and affairs of the Corporation shall be managed by or under
the direction of a Board of Directors consisting of not less than five nor
more than twenty-one persons. Directors are divided into three classes.
Directors of one class are elected each year for a term of three years. The
Board of Directors currently consists of thirteen members, four of whom are
Class II directors whose terms expire at the 1996 Annual Meeting, five of
whom are Class I directors whose terms expire at the 1995 Annual Meeting, and
four of whom are Class III directors whose terms expire at this Annual
Meeting.
The Board of Directors has no reason to believe that any of the nominees is
not available or will not serve if elected. If for any reason any nominee
becomes unavailable for election, the Board of Directors may designate
substitute nominees, in which event the shares represented by the proxy cards
returned to the Corporation will be voted for such substitute nominees, unless
an instruction to the contrary is indicated on the proxy card. If elected, Mr.
Macke has announced that he will resign as a director on July 1, 1994 at the
time he retires as Chairman of the Board.
All of the nominees are now directors. All of the present directors were
elected to the Board of Directors by the shareholders, except for Mr. Ulrich
who was elected by the Board of Directors on September 8, 1993. The Board of
Directors held seven meetings during the last fiscal year, one of which was a
two-day meeting.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock and Series B ESOP Convertible Preferred Stock of the Corporation
present and entitled to vote on the election of directors is required for
election to the Board of Directors of each of the four director nominees. For
this purpose, a shareholder who abstains with respect to the election of
directors is considered to be present and entitled to vote on the election of
directors at the meeting, and is in effect casting a negative vote, but a
shareholder (including a broker) who does not give authority to a proxy to vote,
or withholds authority to vote, on the election of directors shall not be
considered present and entitled to vote on the election of directors.
1
<PAGE>
Following is information regarding the nominees and directors, including
information furnished by them as to their principal occupations and the
number of shares of Common Stock of the Corporation beneficially owned by
them as of April 1, 1994. See page 27 for stock ownership table.
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION AGE SINCE
---- ------------------------------------------ --- --------
<S> <C> <C> <C>
Picture of Rand V. Araskog is Chairman of the Board and Chief Executive 62 1982
Rand V. Araskog Officer of ITT Corporation, a diversified multinational
appears here company. He served in the Office of the Secretary of Defense
from 1954 to 1960. From 1960 to 1966, he worked in the
defense, space and aeronautical fields with Honeywell Inc. He
joined ITT in 1966 and advanced through various management
positions. He was elected Senior Executive Vice President and
Chief Operating Officer in 1978. He was elected President and
Chief Executive Officer in 1979 and Chairman in 1980. He is a
Rand V. Araskog director of Alcatel Alstham, Dow Jones & Company, Inc., ITT
Class I Corporation, The New York Stock Exchange, Inc. and Shell Oil
Term expires in 1995 Corporation. (1)(3)(5)(6)
Picture of Robert A. Burnett is retired Chairman and Chief Executive Officer 66 1983
Robert A. Burnett of Meredith Corporation, a media company engaged in printing,
appears here publishing, broadcasting and real estate. He joined Meredith in
1952. He was appointed Advertising Director of its Better Homes
and Gardens magazine in 1961. He was elected Vice President in
1961, Executive Vice President in 1971 and President and Chief
Operating Officer in 1973. He was Chief Executive Officer from
Robert A. Burnett 1977 to 1989. He was Chairman from 1988 to 1992. He is a director
Class I of ITT Corporation, Meredith Corporation, Midwest Resources, Inc.
Term expires in 1995 and Whirlpool Corporation. (1)(3)(4)(6)
Picture of Livio D. DeSimone is Chairman and Chief Executive Officer of 3M, 57 1987
Livio D. DeSimone a diversified manufacturer. He joined 3M in 1957 and held various
appears here international and domestic positions. He was elected Area Vice
President, Latin America in 1975; Vice President in 1979; and
Executive Vice President in 1981. He was elected Chairman and Chief
Livio D. DeSimone Executive Officer in 1991. He is a director of Cargill, Incorporated,
Class II Cray Research, Inc., General Mills, Inc., 3M and Vulcan Materials
Term expires in 1996 Corporation. (1)(2)(5)(6)
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION AGE SINCE
---- ------------------------------------------ --- --------
<S> <C> <C> <C>
Picture of Roger A. Enrico is Vice Chairman of PepsiCo, Inc., a domestic and 49 1990
Roger A. Enrico international beverage and food business. He joined PepsiCo in
appears here 1971 and advanced through various management positions including
Vice President of Marketing at Frito-Lay, Area Vice President/South
Latin America for Pepsi-Cola International and President of
Frito-Lay/Japan for PepsiCo Foods International. He was President
and Chief Executive Officer of Pepsi-Cola USA from 1983 to May
1986 when he became President and Chief Executive Officer of
Pepsi-Cola Company. He was President and Chief Executive Officer
of PepsiCo Worldwide Beverages from 1986 to 1990. He was Chairman
and Chief Executive Officer of Frito-Lay from 1990 to 1992. In
1992, he was elected Chairman and Chief Executive Officer of PepsiCo
Roger A. Enrico Worldwide Foods. In 1993, he was elected Vice Chairman of PepsiCo,
Class II Inc. He is a director of Bank One, Texas, N.A., PepsiCo, Inc. and
Term expires in 1996 The Prudential Insurance Company of America. (1)(3)(5)(6)
Picture of William W. George is President and Chief Executive Officer of 51 1993
William W. George Medtronic, Inc., a therapeutic medical device company. He served
appears here in the United States Department of Defense from 1966 to 1968 and
worked in the United States Department of the Navy from 1968 to
1969. From 1969 to 1978, he worked for Litton Industries, Inc.,
serving as president of Litton Microwave Cooking Products from
1973 to 1978. He was elected to various officer positions at Honeywell,
Inc. from 1978 to 1989, including President, Europe from 1980 to
1983, President, Industrial Automation & Controls from 1987 to
1988 and President, Space & Aviation Controls from 1988 to 1989.
He was elected President and Chief Operating Officer of Medtronic
William W. George in 1989 and was elected President and Chief Executive Officer in
Class II 1991. He is a director of Medtronic, Inc., Toro Company and Valspar
Term expires in 1996 Corporation. (1)(2)(4)(6)
Picture of Roger L. Hale is President and Chief Executive Officer of Tennant 59 1982
Roger L. Hale Company, an industrial equipment manufacturer. He is also Vice
appears here Chairman of the Executive Committee of the Board of Directors of
the Corporation. He joined Tennant in 1961. He was appointed Assistant
to the President in 1963 and was elected Vice President and director,
systems and corporate development in 1968. In 1972, he was elected
Vice President, International and in 1975, he was elected President
Roger L. Hale and Chief Operating Officer. He was elected Chief Executive Officer
Class I in 1976. He is a director of First Bank System, Inc., Tennant Company
Term expires in 1995 and The St. Paul Companies, Inc. (1)(3)(5)(6)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION AGE SINCE
---- ------------------------------------------ --- --------
<S> <C> <C> <C>
Picture of Betty Ruth Hollander is Chairman of the Board and Chief Executive 64 1986
Betty Ruth Officer of The Omega Group, Inc., a manufacturer of scientific
Hollander measurement and control devices and systems, technical publishing
appears here and industrial and commercial real estate development. She founded
Omega Engineering, Inc. and was elected President in 1962. She
was elected Chairman and Chief Executive Officer of The Omega Group,
Betty Ruth Inc. in 1978. She is a director of the People's Bank and the People's
Hollander Bank Trustees. (1)(3)(4)(6)
Class III
Nominee for term
expiring in 1997
Picture of Michele J. Hooper is Corporate Vice President, International 42 1990
Michele J. Hooper Businesses, Caremark International, Inc., a health care company.
appears here She joined Baxter Healthcare Corporation in 1976 and served in
various management positions before being named Vice President,
Corporate Planning for Baxter International in 1984. In 1988, she
was elected President of Baxter Healthcare Corporation, Canada.
From 1991 to 1992 she was President, Alternate Site International,
a unit of Baxter Corporation. In 1992, she became President,
Michele J. Hooper International Business Group, Caremark International, Inc. and
Class I in 1993, she became Corporate Vice President, International
Term expires in 1995 Businesses, Caremark International, Inc. (1)(2)(5)(6)
Picture of Kenneth A. Macke is Chairman of the Board and Chairman of the 55 1979
Kenneth A. Macke Executive Committee of the Corporation. He joined Dayton's as
appears here a merchandise trainee in 1961 and advanced through various
management positions at Dayton's and Target. In 1977, he was
elected Chairman and Chief Executive Officer of Target and
Senior Vice President of the Corporation. He served as
President of the Corporation from 1981 to 1984. In 1982, he
was elected Chief Operating Officer of the Corporation. In 1983,
he was elected Chief Executive Officer. In 1984, he was elected
Kenneth A. Macke Chairman of the Board. He was elected Chairman of the Executive
Class III Committee in 1985. Mr. Macke was Chief Executive Officer until
Nominee for term April 13, 1994. He is a director of First Bank System, Inc.,
expiring in 1997 General Mills, Inc. and Unisys Corporation. (1)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION AGE SINCE
---- ------------------------------------------ --- --------
<S> <C> <C> <C>
Picture of Mary Patterson McPherson is President of Bryn Mawr College. She 58 1988
Mary Patterson joined Bryn Mawr College as an Assistant, Fellow and Lecturer in
McPherson 1961. She became Assistant Dean in 1964, Associate Dean in 1969
appears here and Dean, Undergraduate College in 1970. She became an Associate
Professor in 1970. She was Acting President from 1976 to 1977 and
became President in 1978. She is a director of Bell Telephone Company
Mary Patterson of Pennsylvania. (1)(2)(4)(6)
McPherson
Class III
Nominee for term
expiring in 1997
Picture of Robert J. Ulrich is Chief Executive Officer of the Corporation 50 1993
Robert J. Ulrich and Chairman and Chief Executive Officer of Target, a division
appears here of the Corporation. Mr. Ulrich began his retailing career as a
merchandising trainee at Dayton's in 1967 and advanced through
various management positions. In 1981, Mr. Ulrich was named Executive
Vice President of Dayton's and later that year was named President
and Chief Executive Officer of Diamond's, a former operating company
of the Corporation. In 1984, Mr. Ulrich was named President of
Robert J. Ulrich the Department Store Division. Later that year he was named President
Class III of Target. He became Chairman and Chief Executive Officer of Target
Nominee for term in 1987. He was elected Chief Executive Officer of the Corporation
expiring in 1997 on April 13, 1994.
Picture of John R. Walter is Chairman and Chief Executive Officer of R.R. 47 1991
John R. Walter Donnelley & Sons Company, a provider of printing and printing related
appears here services. He joined R.R. Donnelley in 1969. He was elected Executive
Vice President -- Operations in 1986. He was elected President
John R. Walter in 1987, and was elected Chairman and Chief Executive Officer in
Class I 1989. He is a director of Abbott Laboratories, Deere & Company
Term expires in 1995 and R.R. Donnelley & Sons Company. (1)(2)(4)(6)
Picture of Stephen E. Watson is President of the Corporation and Chairman 49 1990
Stephen E. Watson and Chief Executive Officer of its Department Store Division. He
appears here joined Dayton's in 1973 as a merchandising trainee and advanced
through various management positions. In 1982, he was named Executive
Vice President for merchandising and marketing. He became President
of Hudson's in 1984. He was named President of the Department Store
Division in 1985 and later that year became Chairman and Chief
Stephen E. Watson Executive Officer of the Department Store Division. He was elected
Class II Executive Vice President of the Corporation in 1989 and President
Term expires in 1996 in 1990. He is a director of Norwest Corporation.
</TABLE>
- --------------------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
5
<PAGE>
(3) Member of the Compensation Committee.
(4) Member of the Corporate Responsibility Committee.
(5) Member of the Finance Committee.
(6) Member of the Nominating Committee
Executive Committee
The Executive Committee of the Board of Directors is elected by the
directors. The Executive Committee consists of the Chairman of the Board of
the Corporation and all the independent directors. The members of the
Executive Committee are identified above. During the last fiscal year, the
Executive Committee held four meetings. The Executive Committee reviews the
Compensation Committee's recommendations on performance and compensation of
all senior corporate officers and certain other senior executives within the
Corporation. As part of its responsibilities, the independent director
members of the Executive Committee conduct the annual evaluation of the Chief
Executive Officer of the Corporation. The Executive Committee also reviews
the compensation policies and practices of the Corporation and it monitors
the Corporation's managerial capabilities and requirements.
Nominating Committee
The Board of Directors has a Nominating Committee, consisting of all the
independent directors. The Nominating Committee held two meetings during the
last fiscal year. The Nominating Committee considers the qualifications of
and recommends each candidate and incumbent for election as a director of the
Corporation and nominates candidates to fill Board vacancies. The Board of
Directors created the Nominating Committee so that the selection of directors
would be made solely by the independent directors.
The Nominating Committee will consider nomination by a shareholder of a
candidate for election as a director of the Corporation. Any shareholder who
wishes the Nominating Committee to consider a candidate should submit a
written request and related information to the Nominating Committee no later
than December 31 of the calendar year preceding the next Annual Meeting of
Shareholders (currently held in May). Under the Corporation's Restated
Articles of Incorporation, as amended, if a shareholder plans to nominate a
person as a director at a meeting, the shareholder is required to place a
proposed director's name in nomination by written request received by the
Secretary of the Corporation at least 60 days prior to an annual or special
meeting, together with the written consent of such person to serve as a
director.
Compensation Committee
The Board of Directors has a Compensation Committee, consisting of the
independent directors identified above. The Compensation Committee held four
meetings during the last fiscal year. The Compensation Committee reviews
management proposals regarding compensation programs, plans and guidelines,
focusing on a "pay for performance" compensation philosophy. The Compensation
Committee reviews the performance of all senior corporate officers and
certain other senior executives within the Corporation and recommends their
compensation based on their performance. The Compensation Committee also
determines awards and payouts under the Corporation's long-term incentive
plan and makes certain determinations regarding short-term incentive
compensation.
Audit Committee
The Board of Directors has an Audit Committee, consisting of the independent
directors identified above. The Audit Committee held two meetings during the
last fiscal year. In designating the members of the Audit Committee, the
Board specifically evaluates their independence of judgment according to
guidelines published by the New York Stock Exchange. The Audit Committee,
among other duties, reviews the overall audit scope, plans for internal and
independent audits, the Corporation's internal controls, emerging accounting
issues, officer and director expenses, audit fees and retirement plans. The
Audit Committee meets individually with the internal auditors and
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<PAGE>
independent auditors, without management present, to discuss the results of
their audits. The Audit Committee encourages the internal and independent
auditors to communicate closely with the Audit Committee.
Finance Committee
The Board of Directors has a Finance Committee, consisting of the
independent directors identified above. The Finance Committee met three times
during the last fiscal year. The duties of the Finance Committee include
reviewing the financial policies and performance objectives of the Corporation
and reviewing the financing requirements of the Corporation.
Corporate Responsibility Committee
The Board of Directors has a Corporate Responsibility Committee, consisting
of the independent directors identified above. The Corporate Responsibility
Committee held two meetings during the last fiscal year. The duties of the
Corporate Responsibility Committee include review and evaluation of the public
affairs and community development programs of the Corporation and its operating
companies. The Corporate Responsibility Committee also reviews and evaluates the
community giving programs of the Corporation, its operating companies and the
Dayton Hudson Foundation and annually recommends the charitable gift of the
Corporation to the Foundation.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual ----------------------------
Compensation Awards Payouts
------------------- ---------------------------- -------
Restricted Securities LTIP All Other
Bonus Stock Underlying Payouts Compensation
Name and Principal Position Year Salary ($)(1) ($)(1)(2) Awards ($)(3) Options (#) ($)(4) ($)(5)(6)
- --------------------------- ----- ------------- ---------- ------------- ----------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kenneth A. Macke(12) 1993 1,149,076 0 495,250 25,642 529,353 224,198(7)
Chairman and Chief 1992 1,097,307 819,428 0 16,719 435,708 158,405
Executive Officer 1991 1,097,307 0 0 27,096 398,118
Robert J. Ulrich 1993 842,796 0 247,664 12,821 158,852 143,198(8)
Chairman and Chief 1992 735,713 556,550 0 8,360 152,494 87,756
Executive Officer of Target 1991 713,363 0 0 10,839 727,665
Stephen E. Watson, 1993 770,509 0 222,866 11,539 158,852 134,481(9)
President; Chairman and 1992 688,056 296,576 0 8,360 130,719 95,173
Chief Executive Officer of 1991 670,260 0 0 10,839 671,124
The Department
Store Division
Joseph C. Vesce 1993 646,251 0 123,832 6,411 92,708 80,131(10)
Chairman and 1992 553,596 0 0 18,968 78,513 62,119
Chief Executive Officer
of Mervyn's
Henry T. DeNero 1993 610,000 0 148,629 7,693 0 48,423(11)
Vice Chairman 1992 412,308 166,667 0 25,079 0 263,562
</TABLE>
- ------------------------
(1) Significant amounts of both salary and bonus for the five named executive
officers were not actually received. Receipt of such amounts was deferred
through the Corporation's Deferred Compensation Plan. Under this Plan,
participants elect to defer a minimum per year of $5,000 of their
compensation and a maximum per year of 25% of base salary and 100% of
incentive bonuses up to an aggregate total of $250,000, plus the amount
paid out in the eighth year following each separate deferral. Payout from
the plan cannot be made until retirement, death, termination or in the
eighth year following each separate deferral. Amounts deferred are subject
to the same bankruptcy rules as are the Corporation's general
7
<PAGE>
debt obligations. Deferred amounts accrue interest on an annual basis, a
portion of which is categorized as reportable by the Securities and
Exchange Commission (SEC) proxy rules. Further information regarding
reportable interest is provided in the footnotes below. Mr. Vesce became an
executive officer of the Corporation in June, 1992. Mr. DeNero became an
executive officer of the Corporation in April, 1992.
(2) Executive officers of the Corporation and certain other members of
management of the Corporation and its operating companies were eligible for
an incentive bonus under the Corporation's Executive Incentive Plan ("EIP")
during the years reflected in the Summary Compensation Table. The amount,
if any, of the incentive bonus was based on (1) the Corporation's or the
relevant operating company's financial results and (2) the individual
executive's performance. Further information regarding the EIP is included
in the Report of the Compensation Committee. Mr. DeNero joined the
Corporation after the start of fiscal 1992. His offer of employment
included a guaranteed fiscal 1992 bonus prorated based on his employment
date, which is reflected in the table. In addition, all recipients of a
bonus under the EIP for fiscal 1992 performance, including Mr. Macke, Mr.
Ulrich and Mr. Watson, received an adjustment to their bonus for fiscal
1992 performance in September, 1993. Such adjustment was paid after final
1992 financial results for applicable benchmark companies were available.
(3) Amounts reflected in the Restricted Stock Awards column reflect rights
to receive restricted stock of the Corporation based on the closing price
of the Corporation's Common Stock on April 14, 1993. The restrictions on
this right to receive restricted stock require the executive to remain an
employee of the Corporation for 4 years. Upon expiration of the 4-year
period, the shares are then issued and put into escrow and are generally
restricted until retirement. The holders of rights to receive restricted
stock do not hold voting or dividend rights until after the shares are
issued. Further information regarding restricted stock is included in the
Report of the Compensation Committee. The number and value of restricted
stock holdings at the end of the 1993 fiscal year (based on the closing
price at the end of the fiscal year) is as follows:
<TABLE>
<CAPTION>
Number Value
------ ---------
<S> <C> <C>
Kenneth A. Macke 6,411 $422,325
Robert J. Ulrich 3,206 211,195
Stephen E. Watson 2,885 190,049
Joseph C. Vesce 1,603 105,598
Henry T. DeNero 1,924 126,744
</TABLE>
(4) Amounts reflect earnouts of performance shares under the Dayton Hudson
Corporation Executive Long Term Incentive Plan of 1981, as amended ("1981
Option Plan"). Based on competitive performance, performance share earnout
of the 1989 grant paid in 1993 was 64% of the performance shares granted.
The Report of the Compensation Committee includes a description of the 1981
Option Plan.
(5) The Corporation has an Excess Long-Term Disability Program for certain
key executives, including those executive officers individually listed
above. The program is designed in conjunction with the employee-paid broad-
based group disability plan (non-taxable benefit of $78,000 maximum per
individual per year). Taxable excess disability benefits are paid according
to a schedule based on compensation with the objective to replace total
after-tax income of approximately 80% at a compensation level of $50,000
per year decreasing to approximately 40% at a compensation level of
$2,000,000 per year. In order to receive excess benefits, the executive
must be participating under the group disability plan. The actual cost to
the Corporation would be the taxable disability payments. No claims for
benefits have ever been filed under the Excess Long-Term Disability
Program. No compensation is assumed for this program since the incremental
cost to the Corporation of this benefit cannot be determined actuarily.
8
<PAGE>
(6) The amounts reported below include the following:
- Matching contributions to the Dayton Hudson Corporation Supplemental
Retirement, Savings, and Employee Stock Ownership Plan ("SRSP") which all
participating employees receive.
- Amounts credited to the Deferred Compensation Plan for matching
contributions that could not be made to the SRSP because of limitations
imposed by the Internal Revenue Code.
- Amounts categorized by the SEC as reportable interest on compensation
deferred in current and previous years.
(7) Includes
$ 8,355 SRSP matching contribution
$ 73,869 deferred compensation credit for matching contributions which
could not be made to SRSP
$141,974 reportable interest on deferred compensation
(8) Includes
$ 9,673 SRSP matching contribution
$ 49,402 deferred compensation credit for matching contributions which
could not be made to SRSP
$ 84,123 reportable interest on deferred compensation
(9) Includes
$ 8,134 SRSP matching contribution
$ 29,868 deferred compensation credit for matching contributions which
could not be made to SRSP
$ 96,479 reportable interest on deferred compensation
(10) Includes
$ 7,988 SRSP matching contribution
$ 16,850 deferred compensation credit for matching contributions which
could not be made to SRSP
$ 55,293 reportable interest on deferred compensation
(11) Includes
$ 8,994 SRSP matching contribution
$ 6,861 deferred compensation credit for matching contributions which
could not be made to SRSP
$ 32,568 reportable interest on deferred compensation
(12) Mr. Macke announced his retirement as Chief Executive Officer of the
Corporation effective April 13, 1994. Mr. Macke will continue as Chairman
of the Board and Chairman of the Executive Committee until July 1, 1994, at
which time he will resign as a director of the Corporation. As part of Mr.
Macke's retirement arrangement, the Corporation has agreed to make certain
cash payments to Mr. Macke aggregating approximately $4,160,000, and, as
permitted by the relevant benefit plans, to extend certain option exercise
and performance share award periods and to prorate certain restricted stock
awards. Mr. Macke has also agreed to act as a consultant to the Corporation
between July 2, 1994 and December 31, 1994, and will receive a monthly fee
of $50,000 for such services. Mr. Macke will also be entitled to a bonus
for the current fiscal year of $500,000, payable in fiscal 1995, and to an
office allowance. Pursuant to currently vested interests, Mr. Macke will
also receive additional payments pursuant to the terms of the Corporation's
Deferred Compensation Plan, Pension Plans and related excess benefit plans,
and the SRSP, referred to elsewhere in this Proxy Statement.
9
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (6)
----------------------------------------------------- ---------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED OR BASE
GRANTED TO EMPLOYEES PRICE EXPIRATION
NAME (#)(1) IN FISCAL YEAR ($/SH) DATE 0% ($) 5% ($) 10% ($)
- ---- ---------- ---------------- -------- ---------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Kenneth A. Macke 6,411(2) 12% 78.00 4/14/03 0 1,257,740 3,187,557
6,410(3) 78.00 4/14/03
6,411(4) 78.00 4/14/03
6,410(5) 78.00 4/14/03
Robert J. Ulrich 3,205(2) 6% 78.00 4/14/03 0 628,870 1,593,779
3,206(3) 78.00 4/14/03
3,205(4) 78.00 4/14/03
3,205(5) 78.00 4/14/03
Stephen E. Watson 2,885(2) 6% 78.00 4/14/03 0 565,988 1,434,413
2,885(3) 78.00 4/14/03
2,884(4) 78.00 4/14/03
2,885(5) 78.00 4/14/03
Joseph C. Vesce 1,603(2) 3% 78.00 4/14/03 0 314,460 796,951
1,603(3) 78.00 4/14/03
1,602(4) 78.00 4/14/03
1,603(5) 78.00 4/14/03
Henry T. DeNero 1,923(2) 4% 78.00 4/14/03 0 377,342 956,317
1,924(3) 78.00 4/14/03
1,923(4) 78.00 4/14/03
1,923(5) 78.00 4/14/03
- ----------------------
</TABLE>
(1) Under the 1981 Option Plan each option was granted at the market value of
the underlying Common Stock on the date of grant and has a 10-year term. The
options are exercisable 25% after the first year, with an additional 25%
after each of the next 3 years. The Report of the Compensation Committee
includes additional information regarding the 1981 Option Plan.
(2) Exercisable April 14, 1994.
(3) Exercisable April 14, 1995.
(4) Exercisable April 14, 1996.
(5) Exercisable April 14, 1997.
(6) SEC rules require the information set forth in the 5% and 10% columns.
The actual gains, if any, on stock option exercises depend on the future
stock price of the Corporation's Common Stock. Since there is no means of
accurately predicting the future price of the Corporation's Common Stock, no
determination can be made as to the value of a stock option at the time of
the grant.
10
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION> Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at Fiscal Year End at Fiscal Year End
Acquired on Value (#) ($)
Exercise Realized ---------------------------- ----------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth A. Macke 21,859 809,475 124,681 113,300 2,071,253 848,009
Robert J. Ulrich 0 0 58,754 42,837 1,209,217 41,931
Stephen E. Watson 0 0 51,454 71,640 1,023,331 678,726
Joseph C. Vesce 0 0 14,833 33,708 232,682 20,965
Henry T. DeNero 0 0 0 32,772 0 167,716
</TABLE>
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Performance or
Number of Other Period Estimated Future Payouts
Shares, Units Until Under Non-Stock Price-Based Plans
or Other Maturation ---------------------------------------------
Name Rights (#)(1) or Payout Threshold (#) Target(2) Maximum (#)(3)
- ---- ------------- --------------- ------------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Kenneth A. Macke 19,231 4 fiscal years 7,692 -- 19,231
Robert J. Ulrich 9,616 4 fiscal years 3,846 -- 9,616
Stephen E. Watson 8,654 4 fiscal years 3,462 -- 8,654
Joseph C. Vesce 4,808 4 fiscal years 1,923 -- 4,808
Henry T. DeNero 5,770 4 fiscal years 2,308 -- 5,770
</TABLE>
- --------------------
(1) The Executive Long-Term Incentive Plan provides for the potential of
earning awards of Corporation Common Stock during a performance cycle of
4 fiscal years. As performance shares are earned at the end of each
performance period of 4 fiscal years, the Common Stock earned is issued and
put into escrow and is generally restricted until retirement. Further
information regarding performance shares is included in the Report of the
Compensation Committee.
(2) There is no "Target" level of performance as that term is defined by the
SEC for purposes of amounts payable pursuant to performance shares.
(3) Maximum performance shares to be issued if competitive performance
targets are reached.
Income Continuance Policy
No officer of the Corporation is a party to an employment contract with the
Corporation. As an alternative to the use of such contracts, the Corporation
has adopted an Income Continuance Policy and a Senior Management Group (SMG)
Income Continuance Policy for certain officers of the Corporation.
All executive officers named in the tables above (except Mr. DeNero and Mr.
Macke, after his retirement), together with others, are participants under
the Income Continuance Policy. In 1988, the Income Continuance Policy was
amended to exclude additional participants under the Policy. Mr. DeNero was
not a participant under the Policy at the time it was amended. In the event a
participant's employment is terminated by management, the participant's
compensation (salary and bonus) continues for a period of 18 to 24 months,
depending on his or her length of service. If the participant's service with
the Corporation is less than 3 years, the continuation is for 18 months; over
8 years, the continuation is for 24 months; and between 3 and 8 years, an
amount determined by a schedule (more than 18 months but less than 24
months).
Participants under the SMG Income Continuance Policy are members of the
Corporation's Senior Management Group who are not participants under the
Income Continuance Policy. The policy is similar to the Income Continuance
Policy, except its time parameters are based on the participant's salary
grade. Compensation may extend from 12 months to 24 months, based on a
schedule which provides longer income continuation to those participants with
higher grade levels. Mr. DeNero participates in the SMG Income Continuance
Policy.
11
<PAGE>
All executive officers who are members of the Corporation's Senior Management
Group, except Mr. Macke after his retirement, are covered by one of these
policies. Both policies include offset provisions for other compensation from
the Corporation and non-disparagement and non-competition requirements. Both
policies provide that the policies cannot be terminated or future benefits be
reduced under them unless two years prior notice has been given to the
persons eligible under the terms of the respective policies. Both policies
also provide that any executive who terminates employment or is terminated
within two years of a Change in Control (as defined in the 1981 Option Plan)
will be paid the present value of payments immediately after termination.
Amounts Paid Upon Termination
When an executive terminates his or her employment with the Corporation, the
executive will receive payments as set forth in the plans from his or her
deferred compensation plan(s), the SRSP and pension plans. The executive may
also be entitled to exercise options and, in certain circumstances, receive
performance shares and restricted stock under the 1981 Option Plan. Further
information regarding performance shares and restricted stock is provided in
the Report of the Compensation Committee.
Pension
All executive officers and other employees of the Corporation and its
subsidiaries who have worked over 1,000 hours in a year and are at least 21
years of age are initially covered by the Corporation's Pension Plans. The
following table shows the annual benefits that will be made under the
Corporation's Pension Plans at age 65, on a life only basis, given the years
of service and compensation set forth below:
Pension Plan Table
<TABLE>
<CAPTION>
Average 15 Years 20 Years 25 Years 30 Years 35 Years
Compensation of Service of Service of Service of Service of Service
- ------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 36,300 $ 48,400 $ 60,500 $ 63,000 $ 65,500
400,000 75,300 100,400 125,500 130,500 135,500
600,000 114,300 152,400 190,500 198,000 205,500
800,000 153,300 204,400 255,500 265,500 275,500
1,000,000 192,300 256,400 320,500 333,000 345,500
1,200,000 231,300 308,400 385,500 400,500 415,500
1,400,000 270,300 360,400 450,500 468,000 485,500
1,600,000 309,300 412,400 515,500 535,500 555,500
1,800,000 348,300 464,400 580,500 603,000 625,500
2,000,000 387,300 516,400 645,500 670,500 695,500
2,200,000 426,300 568,400 710,500 738,000 765,500
2,400,000 465,300 620,400 775,500 805,500 835,500
</TABLE>
Currently under ERISA, as amended, the maximum annual amount that can be paid
under the Qualified Pension Plans to any individual is $118,800, unless
grandfathered under prior limits. Amounts in excess of that maximum are paid
under separate plans. In addition, the Corporation has supplemental plans
that use the same formula the Qualified Pension Plans use to pay benefits on
compensation that is excluded from the Qualified Pension Plans formula by
ERISA. The years of present credited service for benefit purposes of the
Corporation's executive officers named in the Summary Compensation Table are
as follows: Mr. Macke, 32 years; Mr. Ulrich, 26 years; Mr. Watson, 20 years;
Mr. Vesce, 18 years; and Mr. DeNero, 2 years. Average Compensation is the
average cash remuneration, including deferred compensation, for the highest
five consecutive calendar years of credited service in the last ten years.
The compensation reflected in the Summary Compensation Table is cash
compensation, including deferred compensation, for the fiscal year. If the
employment of a participant is terminated prior to age 55, his or her pension
will be less than the amount shown in the table, even if commencement of
benefit payments is deferred until age 65. The amounts set forth in the table
are not subject to any deductions for Social Security benefits or other
offset amounts. All executive officers, who are members of the Senior
12
<PAGE>
Management Group, participate in a program whereby such persons will receive
the equivalent of a joint and 100% surviving spouse option with no reduction
from the life only pension amount. Normally the life only amount would be
reduced by approximately 20% for this option. The percentage reduction
depends on age differentials. The Corporation also has a supplemental plan
that treats certain of its Senior Management Group as being 5 years older,
but not older than 65, for purposes of the actuarial reduction of pension
benefits at early retirement. All excess and supplemental plans pay the lump
sum present value of their respective benefits in the year following
retirement. The pension table reflects amounts payable under all pension
plans, whether qualified or non-qualified supplemental plans.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Corporation has a pay for performance compensation philosophy for its
management employees, including its executive officers. The total
compensation plan for executive officers of the Corporation includes base
salary, the opportunity for an annual incentive bonus, long-term incentive
compensation and benefits.
It is the responsibility of the Compensation Committee to develop and
administer the total compensation plan for executive officers of the
Corporation. In addition, the Compensation Committee reviews compensation
levels of executive officers who are members of the Senior Management Group
("the Executive Officers") and evaluates the performance of top management,
including the five highest paid executive officers. Individual written
performance appraisals are given annually to each executive officer,
including the Chief Executive Officer (CEO).
Reflecting the pay for performance philosophy of the Corporation, the
compensation policies established by the Compensation Committee provide that
a portion of the annual compensation of each executive officer is contingent
upon the financial performance of the Corporation or relevant operating
company, as well as the individual performance of the executive officer.
Performance Evaluations
The Compensation Committee, together with all other outside directors,
established the performance criteria it planned to use to evaluate Mr.
Macke's fiscal 1993 performance as Chairman of the Board and CEO. The
Compensation Committee did not prepare an annual written performance
evaluation of Mr. Macke's fiscal 1993 performance and did not determine Mr.
Macke's performance score since Mr. Macke informed the Compensation Committee
that he planned to retire.
All other executive officers of the Corporation received performance
appraisals based on prescribed objectives (such as succession planning and
strategy execution), key job responsibilities and financial performance. The
fiscal 1993 written performance appraisal scores of the Executive Officers
were approved by the Compensation Committee. No short-term incentive
compensation has been paid to executive officers for fiscal 1993 performance;
however, the individual performance scores of all executive officers would
have entitled each of them to an incentive bonus, if the 1993 financial
performance score had been above the threshold.
Base Salary
In April, 1993, the Compensation Committee approved an increase to Mr.
Macke's base salary, resulting in a new base salary of $1,159,200. The
Compensation Committee had previously frozen Mr. Macke's base salary at its
1990 level for three years, and increased his potential for incentive
compensation, starting in fiscal 1990. When the Compensation Committee
considered Mr. Macke's base salary, it reviewed two established annual
third-party retail compensation surveys covering approximately 90 retailers
throughout the United States (the "Competitive Surveys"). Many, but not all,
of the companies included in the performance graph are included in the
Competitive Surveys. The Compensation Committee also received information on
base salaries and other compensation from a review of proxy statements of
competitive retailers (the "Proxy Survey"). The
13
<PAGE>
Compensation Committee set Mr. Macke's base salary at approximately the median
of the base salaries for CEOs of these retailers, adjusted for the size of the
companies.
Base salaries of the other executive officers of the Corporation are based on
competitive practices, and are at approximately the median of base salary
plus annual incentive bonus when compared with domestic, non-food retailers,
adjusted for the size of the companies. The Competitive Surveys are used to
determine base salaries. Executive Officers receive a higher base salary than
the industry average because the threshold for pay out of short-term
incentive compensation by the Corporation is set at a higher level than it is
for a majority of competitive retailers. Increases in base salary result from
promotional increases reflecting job scope changes and from merit increases
determined by the executive's performance score, the executive's position in
the salary range and company performance. Merit increase guidelines are
established each year based on the performance of the relevant operating
company or the Corporation and current economic and marketplace conditions.
Once overall guidelines are established and an individual performance score
is assigned, the actual percentage increase is affected by the executive's
position in the salary range for his or her grade, that is, the lower the
placement in the range the greater the percentage increase.
Short-Term Incentive Compensation
Under the Corporation's Executive Incentive Plan, executive officers of the
Corporation and certain other members of the senior management of the
Corporation and its operating companies were eligible for an annual incentive
bonus for fiscal 1993. No executive officer of the Corporation, including Mr.
Macke, has been paid an incentive bonus for fiscal 1993 performance.
To receive an incentive bonus for fiscal 1993 performance the Corporation's
or the relevant operating company's financial performance had to be at or
within the top 45% of the benchmark group of 20 of the top-performing
companies in retailing. Based on currently available information regarding
the 20 benchmark companies, no incentive bonus has been paid to any executive
officer. While it is clear that executives at Mervyn's, the Department Store
Division, and Corporate Staff will not receive an incentive bonus for fiscal
1993 performance, it is possible that executives at Target, including Mr.
Ulrich, could receive an incentive bonus for fiscal 1993 performance after
financial information is finalized and released by the 20 benchmark
companies.
Selection of the 20 benchmark companies was based on a minimum asset
capitalization of $1.0 billion and a strong record of financial performance.
The 20 companies included in the comparative group are reviewed annually as
their performance changes, as mergers and acquisitions occur and as new
competitors emerge. Many, but not all, of the 20 companies are included as
comparison companies in the performance graph included in this proxy
statement.
Measures of financial performance for fiscal 1993 were return on investment
versus a return on investment standard, which is a financial hurdle rate
adjusted for investment growth ("ROI"), and earnings growth. The measures of
financial performance at each operating company were weighted as follows:
Target, 50% ROI and 50% earnings growth; Mervyn's, 70% ROI and 30% earnings
growth; and the Department Store Division, 60% ROI and 40% earnings growth.
With respect to Mr. Macke, financial performance was an investment weighted
roll-up of all of the operating companies' financial performance. The
financial performance of each operating company's chief executive officer was
determined by the performance of their individual operating company.
If threshold levels of financial and personal performance had been achieved,
short-term incentive compensation would have been paid to executive officers
and compensation would have increased as relative performance increased. If
the Corporation had achieved a threshold financial performance and assuming
Mr. Macke achieved a threshold personal performance score in fiscal 1993, Mr.
Macke would have received a bonus of 40% of his base salary.
Although incentive plan scores were weighted between the financial
performance of the Corporation or the relevant operating company and the
executive's individual performance, no executive officer was eligible to
receive a bonus unless the threshold financial performance was achieved.
14
<PAGE>
Mr. Macke's fiscal 1993 incentive plan score was to be weighted equally
between the score of his individual written performance appraisal and the
Corporation's financial performance relative to the benchmark group. The
fiscal 1993 incentive plan scores of the other named executive officers were
weighted as follows: Mr. DeNero, 50% on his individual written performance
appraisal and 50% on the Corporation's financial performance; and Mr. Ulrich,
Mr. Watson, and Mr. Vesce 30% on their individual written performance
appraisals and 70% on their respective operating company's financial
performance. Other Executive Officers had incentive plan scores that were
weighted 40% on their individual written performance appraisals and 60% on
the Corporation's financial performance.
Long-Term Incentive Compensation
The Compensation Committee determines the amount of options, performance
shares and restricted stock to issue annually by using guidelines based on
studies of outside expert compensation consultants. The Compensation
Committee reviews the Competitive Surveys and Proxy Survey and sets its
grants at approximately the median of competitive companies of similar size.
The Compensation Committee, using the Competitive Surveys and Proxy Survey,
determines the grant size for the CEO and other executive officers. The
Compensation Committee then creates several long-term incentive pools: one
for each operating company and the corporate staff. The size of the pool
varies with the Corporation's or relevant operating company's performance,
that is, the better the performance, the larger the pool. However, the
precise size of each pool is based on the subjective judgment of the
Compensation Committee. The Compensation Committee determined in 1993 that
for certain corporate executives, including all Executive Officers, the
amount of the pool granted to them would be divided as follows: options, 50%;
performance shares, 37.5%; and restricted stock, 12.5%. Individual awards
from the pool are based on the individual's responsibilities, performance,
future potential and previous grants.
For fiscal 1993 the Compensation Committee modified the non-stock option
portion of the long-term incentive plan. The modifications generally require
participants to continue as employees of the Corporation until retirement in
order to ultimately receive the performance shares and restricted stock
granted under the plan. In addition, one year's notice of retirement is
generally required to allow for orderly management succession. This action
was intended to tie the executive's compensation to shareholder value by
giving these executives an incentive to remain with the Corporation until
retirement.
Performance Shares
All of the Executive Officers participate in the performance share component
of the Executive Long Term Incentive Plan of 1981. The primary purpose of
performance shares is to offer incentive to participating officers to achieve
long-term performance of the Corporation or the individual operating company.
The plan provides for the potential of earning awards of Corporation Common
Stock during a performance cycle of 4 fiscal years. The performance share
payout in 1993 was based on the Corporation's financial performance over the
performance cycle of 4 fiscal years using ROI and earnings growth as measured
against certain benchmark companies. The benchmark companies used were the
same companies used for the short-term incentive plan. The financial
performance score for each of the 4 years was averaged. As with short-term
incentive compensation, a threshold level of performance is required before
any payout occurs. A matrix is used to determine the actual payout amount.
The payout for the fiscal 1989 grant covering the period of 4 fiscal years
ending in 1993, was 64% of the grant.
Beginning with the 1993 performance share grant potentially payable in 1997,
additional restrictions have been added to grants of performance shares. As
performance share grants are earned at the end of each performance period of
4 fiscal years, the Common Stock earned is issued and put into escrow and
restricted until retirement. Any participant who terminates employment prior
to early retirement (age 55 and 5 years of service) and fails to meet certain
requirements forfeits all the Common Stock held in escrow. If the executive
terminates employment after age 55, and provides the Corporation with one
year's notice of retirement, 100% of the Common Stock is released to the
executive. In such cases, if the executive fails to give one year's notice,
the shares
15
<PAGE>
are forfeited unless the Plan Committee approves the release of all or part of
the shares. If the executive is terminated, qualifies for early retirement under
the Corporation's pension plans and receives payments under the Corporation's
Income Continuance Policies ("ICP"), 100% of the Common Stock is paid to the
executive. If the executive terminates other than for early retirement and
receives an ICP (but is not part of a reduction in force), 50% of the Common
Stock is released to the executive. If the executive does not receive an ICP the
executive forfeits all the shares. If at any time the executive's termination is
a result of death, total and permanent disability, reduction in force or Change
of Control, 100% of the Common Stock is released to the executive. Recipients
hold voting and dividend rights for all shares held in escrow during the
restriction period; however, they may not sell or assign the shares.
Restricted Stock
Beginning in 1993, certain executives of the Corporation, including all
Executive Officers, received rights to receive restricted Common Stock of the
Corporation. The restrictions on this right to receive restricted stock
require the executive to remain an employee of the Corporation for an
additional 4 years. Upon expiration of the 4-year period, the shares are then
issued and put into escrow and restricted until retirement. Release from
escrow is under the same terms as described above for performance shares.
After the shares are issued and put into escrow, holders of restricted stock
hold voting and dividend rights during the restriction period; however, they
may not sell or assign the shares.
Stock Options
During 1993, the Compensation Committee also considered and made stock option
grants to each of the executive officers of the Corporation, based on the
individual's responsibilities, performance, future potential and previous
grants. Each option was granted at the market value of the underlying Common
Stock on the date of grant and has a 10-year term. The options are
exercisable 25% after the first year, with an additional 25% after each of
the next 3 years.
CORPORATE GOVERNANCE AND CERTAIN TAX CONSEQUENCES OF PLANS
As part of its corporate governance responsibilities, the Compensation
Committee, together with all the other outside directors, has established
certain measures of performance for Executive Officers, including the CEO,
that it believes are critical to the overall performance of the Corporation.
Certain measures of performance, such as succession planning and strategic
planning, are vital to the long-term performance of the Corporation.
Beginning in 1994, section 162(m) of the Internal Revenue Code of 1986 (the
"Code") will prohibit the Corporation from deducting as compensation expense
amounts exceeding $1,000,000 a year for certain officers, unless the payment
of such compensation is based on preestablished, objective performance goals
approved by the shareholders. A significant part of executive compensation
will meet the Code requirement for deductibility. If the shareholders approve
the two proposals regarding incentive compensation contained in this Proxy
Statement, the Corporation believes amounts payable under those plans will
also be deductible. A portion of such compensation, however, will continue to
be based on critical, subjective measures that may cause certain compensation
not to be deductible under the Code. The Compensation Committee and the other
outside directors strongly believe that their ability to evaluate the
performance of Executive Officers, including the CEO, on vital subjective
performance measures outweighs the Code's limitation on such deductibility.
No member of the Compensation Committee is a current or former officer or
employee of the Corporation or any of its subsidiaries.
COMPENSATION COMMITTEE
Robert A. Burnett, Chairman
Rand V. Araskog Roger L. Hale
Roger A. Enrico Betty Ruth Hollander
16
<PAGE>
Comparison of Five-Year Cumulative Total Shareholder Return
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Fiscal Year
<S> <C> <C> <C> <C> <C> <C>
1988 1989 1990 1991 1992 1993
Dayton Hudson Corp. $100 $138.30 $155.24 $157.57 $192.23 $166.22
S&P 500 Index $100 $114.46 $124.07 $152.22 $168.33 $190.00
S&P Retail Stores-Composite $100 $114.84 $134.75 $188.28 $224.74 $216.61
</TABLE>
The graph above compares the cumulative total shareholder return on the
Common Stock of the Corporation for the last five fiscal years with
cumulative total return on the S&P 500 Index and the S&P Retail Composite
Index over the same period. The graph assumes the investment of $100 in the
Corporation's Common Stock, the S&P 500 Index and the S&P Retail Composite
Index on January 31, 1989, and reinvestment of all dividends.
Director Compensation
Directors who are not employees of the Corporation are paid an annual fee of
$25,000, plus $1,000 for each directors' meeting or committee meeting they
attend. Directors may defer receipt of their fees. If they do, their fees are
credited with interest at a fluctuating rate. Directors may also direct the
Corporation to forward their fees to their broker to purchase Common Stock of
the Corporation for their account. The Corporation pays the brokerage fees
for such purchases. In 1993, directors also received $5,000 of restricted
stock of the Corporation. Beginning in 1994, directors will receive $10,000
of restricted stock of the Corporation each year. The Vice Chairman of the
Executive Committee receives an additional $10,000 of restricted stock of the
Corporation each year. Employee directors are not paid separately for
services as a director or committee member but receive their regular
compensation as employees. Non-employee directors also receive merchandise
discounts of varying amounts at the stores of each of the Corporation's
operating companies. Pursuant to the Internal Revenue Code the non-employee
directors' discounts that exceed the standard employee discount, which total
discounts equaled $958,418 during 1993, are reported as taxable income. The
cost of the discount to the Corporation is substantially less than that
amount since the discount is calculated against the retail price rather than
the cost of goods. Beginning in January, 1994 the non-employee directors'
discount was changed and is now the same as the discount employees of each
operating company receive.
The Board has a policy requiring members to retire from the Board upon
reaching age 68 or after serving 15 years as a non-employee director. Upon a
substantial change in principal
17
<PAGE>
employment a director is required to offer his or her resignation. As part of
this overall program, the Corporation has a policy of paying outside directors
who resign as directors by reason of age, serving 15 years, physical disability
or substantial change in principal employment an amount equal to the director's
annual fee as a director at the time of resignation for a period that is the
lesser of the director's years of service or 15 years. The present value of the
amount is paid in a lump sum in the year following resignation, except that in
the case of a Change in Control such amounts are payable immediately. In
addition, if a non-employee director dies while in office or before receiving
payment, the director's beneficiary will receive the payment. In the case of a
director who dies while in office, the beneficiary will receive the payment the
director would have received had the director resigned the day before his or her
death.
Certain Transactions
The Corporation and operating companies have transactions in the ordinary
course of business with unaffiliated corporations of which certain of the
non-employee directors are officers. The Corporation does not consider the
amounts involved in such transactions material in relation to its business
and believes that any such amounts are not material in relation to the
business of such other unaffiliated corporations or the interests of the
non-employee directors involved.
PROPOSAL NUMBER TWO
Appointment of Auditors
Proxies solicited by the Board of Directors will, unless otherwise directed,
be voted to approve the appointment by the Board of Directors of Ernst &
Young as independent auditors of the accounts of the Corporation and its
subsidiaries for the fiscal year ending January 28, 1995. Ernst & Young has
been employed in this capacity by the Corporation since 1931. The Corporation
has been advised by Ernst & Young that they are independent certified public
accountants with respect to the Corporation within the meaning of the
Securities Exchange Act of 1934 and the rules and regulations promulgated
under such act.
A representative from Ernst & Young will be at the Annual Meeting and will
have the opportunity to make a statement if such representative so desires
and will be available to respond to questions during the meeting.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT THE SHAREHOLDERS OF
THE CORPORATION VOTE TO APPROVE THE APPOINTMENT OF ERNST & YOUNG AS
INDEPENDENT AUDITORS.
18
<PAGE>
APPROVAL OF TWO SHORT-TERM INCENTIVE PLANS
Prior to fiscal 1994, the Corporation had one short-term incentive plan. That
plan combined subjective and objective performance measures to evaluate
participant performance, and is described in the Report of the Compensation
Committee. As a result of the $1,000,000 limitation on the deduction of
executive compensation imposed by the newly enacted Section 162(m) of the
Internal Revenue Code, the Board of Directors has decided to segregate
bonuses that are earned on the basis of preestablished objective performance
goals and to request shareholder approval for the incentive plans providing
for these bonuses so that the limitation on deductibility will not apply. If
the shareholders fail to approve these plans, the bonuses that are earned
will be subject to the Section 162(m) limitation. The Corporation believes
that the requirements of Section 162(m) require only shareholder approval of
the performance goal under which compensation is to be paid in order to avoid
the application of the limits on deductibility and does not require
shareholder approval for adoption of the plan in order for the plan to be
effective, although the Internal Revenue Service appears to take a contrary
position. Further information regarding Section 162(m) is included in the
Report of the Compensation Committee under the heading "Corporate Governance
and Certain Tax Consequences of Plans."
The Corporation has terminated its existing short-term incentive plan and has
adopted and implemented three new short-term incentive plans under which
executive incentive compensation will be determined for fiscal 1994. These
plans are: a Personal Score Plan, which has subjective performance measures,
and two plans which have objective performance measures: the PTOC Plan
(pre-tax operating contribution) and the ROI Plan (return on investment).
The shareholders of the Corporation must approve the PTOC Plan and the ROI
Plan as they have been adopted and implemented in order to exclude incentive
compensation earned under these plans from the deductibility limitation of
Section 162(m). Any incentive compensation earned under the Personal Score
Plan is subject to the Section 162(m) limitation.
The Compensation Committee determines which executives participate in each of
the plans and the percentage of participation in each plan. With respect to
fiscal 1994, Mr. Ulrich (beginning in April, 1994, when he was elected CEO)
and Mr. DeNero will participate 50% based on the Personal Score Plan, 25%
based on the PTOC Plan and 25% based on the ROI Plan. Mr. Ulrich (until
April, 1994), Mr. Watson and Mr. Vesce will participate 33 1/3 % based on the
Personal Score Plan, 33 1/3 % based on the PTOC Plan and 33 1/3 % based on
the ROI Plan. Other executive officers who are part of the Senior Management
Group (SMG) will participate using the same percentage as Mr. DeNero. The
non-SMG executive officer will participate 100% in the Personal Score Plan.
The financial performance of the operating companies' chief executive
officers will be based on their respective operating company's ROI and PTOC
performance and the financial performance of the other executive officers
will be based on the weighted average roll-up of the ROI and PTOC performance
of all operating companies.
The basic features of both the PTOC Plan and the ROI Plan are summarized
below, however these summary narratives are qualified in their entirety by
the PTOC Plan set forth in Exhibit A and the ROI Plan set forth in Exhibit B,
which shall control in each plan's interpretation.
PROPOSAL NUMBER THREE
APPROVAL OF THE PTOC PLAN
The PTOC Plan measures an operating company's and/or the Corporation's
performance against annually pre-determined PTOC goals to determine how and
whether bonuses will be paid. The outside directors set PTOC goals in
conjunction with establishing other financial performance goals, such as
sales and return on investment, for the operating companies and the
Corporation. The Compensation Committee then uses the PTOC goals to establish
the PTOC bonus range for use in conjunction with the PTOC Plan and determines
what level of bonuses will be paid if PTOC performance falls within the PTOC
bonus range.
19
<PAGE>
Eligibility. Participation in the PTOC Plan is limited to upper level
executive employees of the Corporation and the operating companies. The
Compensation Committee determines which employees are eligible or, in the
case of employees of operating companies, the class of upper level executives
that are eligible. Approximately 100 executive employees are eligible to
participate in the PTOC Plan.
Definition of PTOC. "PTOC" (pre-tax operating contribution) is FIFO
(first-in, first-out) gross margin dollars less operating expenses and other
expenses plus other income. It excludes LIFO (last-in, first-out) provision,
interest and corporate expense.
Determination of Bonus Amounts. The "PTOC Score" for the fiscal year is
determined from a schedule, approved by the Compensation Committee, that
designates a score for each varying level of PTOC performance achieved by an
operating company and/or the Corporation. The Compensation Committee also
adopts a "Bonus Matrix" which assigns varying bonus percentages based on the
participant's job grade and PTOC Score. Bonuses are then determined under a
non-pooled or pooled calculation at the discretion of the Compensation
Committee.
Non-Pooled Bonuses. The bonus amount for each participant is calculated by
taking the participant's bonus percentage from the Bonus Matrix, multiplying
it by his or her Midpoint of Salary Range (the midpoint of the salary range
of a participant's job grade level) and then multiplying that result by the
participant's percentage of participation in the PTOC Plan. For example, if
the participant is participating in the PTOC Plan at 25%, the result is
multiplied by 1/4.
Pooled Bonuses. The bonus amount for each participant is calculated in the
same manner as for the non-pooled bonuses, however all related bonuses are
added together to form a bonus pool. The bonus payable to each participant
under the PTOC Plan will be based on a ratio of his or her bonus to all
bonuses paid under the Personal Score Plan. The percentage determined by that
ratio will be multiplied by the bonus pool.
In order to receive a bonus under the PTOC Plan a participant's score under
the Personal Score Plan must equal or exceed a minimum score set by the
Compensation Committee.
The maximum bonus payable under the PTOC Plan is equal to 250% of the salary
of the CEO or named executive officer, as the case may be, set forth in the
previous year's Proxy Statement. If the CEO or named executive officer held a
different office or was not employed in his or her position for the full year
covered by that Proxy Statement, the maximum bonus is 250% of the highest
salary reported in such year. Provided, however, in either case the aggregate
of all bonuses paid to the CEO or named executive officer under any
combination of the PTOC Plan, ROI Plan and Personal Score Plan may not exceed
250% of the relevant salary. The aggregate of all bonuses paid to any other
executive not listed above under any combination of the PTOC Plan, ROI Plan
and Personal Score Plan may not exceed 250% of his or her base salary.
Set forth below is a table that shows bonuses that would have been paid in
fiscal 1993 if the PTOC Plan, the ROI Plan and the Personal Score Plan had
been in effect in such year based on assumptions noted in the table. Amounts
payable in fiscal 1994 cannot be determined because the result depends on
year-end 1994 performance of the Corporation and/or operating companies and,
in the case of the ROI Plan, similar performance of selected competitors.
20
<PAGE>
NEW PLANS BENEFITS
(Benefits payable assuming the plans were in effect in fiscal 1993)
<TABLE>
<CAPTION>
PTOC Plan ROI Plan Personal Score Plan
---------------------- ---------------------- -----------------------
Dollar Number Dollar Number Dollar Number
Name and Position Value $(1) of Units Value $(4) of Units Value $(5) of Units
- ----------------- ---------- -------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Kenneth A. Macke
Chairman and Chief Executive
Officer $-0- (3) $ -0- (3) (5) (3)
Robert J. Ulrich
Chairman and Chief Executive
Officer of Target $-0- (3) $ 82,243 (3) $ 148,038 (3)
Stephen E. Watson
President; Chairman and Chief
Executive Officer of the
Department Store Division $-0- (3) $ -0- (3) $ 55,390 (3)
Joseph C. Vesce
Chairman and Chief Executive
Officer of Mervyn's $-0- (3) $ -0- (3) $ -0- (3)
Henry T. DeNero
Vice Chairman $-0- (3) $ -0- (3) $ 86,719 (3)
Executive Group $-0- (3) $ 82,243 (3) $ 440,315 (3)
Non-Executive Director Group (2) (2) (2) (2) (2) (2)
Non-Executive Officer Employee
Group $-0- (3) $528,585 (3) $1,838,828 (3)
</TABLE>
- -----------------
(1) If the PTOC goals set for 1994 were in effect in 1993, no bonus would
have been paid.
(2) Non-Executive Directors do not participate in the Plan.
(3) Units are not applicable to the Plans.
(4) The calculations were made based on ROI versus ROI standard and the
Benchmark Group performance used in the fiscal 1993 Executive Incentive
Plan. A description of that plan is included in the Report of the
Compensation Committee under the heading "Short-Term Incentive
Compensation." Only Target executives would have received a bonus under the
ROI Plan.
(5) The calculations were based on fiscal 1993 personal performance scores
and salaries and the 1994 allocation of percent of bonus attributable to the
Personal Score Plan. Due to his announced retirement, Mr. Macke did not
receive a 1993 personal performance score.
The affirmative vote of a majority of the voting power of the shares present
and entitled to vote is required for the PTOC Plan to be approved by
shareholders. Abstentions are treated as present and entitled to vote and
broker non-votes are treated as not present and not entitled to vote.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT THE SHAREHOLDERS OF
THE CORPORATION VOTE TO APPROVE THE PTOC PLAN.
21
<PAGE>
PROPOSAL NUMBER FOUR
APPROVAL OF THE ROI PLAN
The ROI Plan measures performance and determines bonuses for participants
based on the operating company and/or Corporation's ROI performance versus
ROI standard compared to similar performance of a Benchmark Group of
companies. The outside directors set ROI standards for the operating
companies. The Compensation Committee adopts the relevant ROI Standards and
selects the Benchmark Group for use under the Plan and sets payout levels for
varying ROI Scores achieved.
Eligibility. Participation in the ROI Plan is limited to upper level
executive employees of the Corporation and the operating companies. The
Compensation Committee determines which employees are eligible or, in the
case of employees of operating companies, the class of upper level executives
that are eligible. Approximately 100 executives are eligible to participate
in the ROI Plan.
Definition of ROI and ROI Standard. "ROI" (return on investment) is net
earnings before LIFO provision and financing costs expressed as a percentage
of average investment.
"ROI Standard" is an ROI hurdle rate objective that is calculated annually
under a formula adopted by the Compensation Committee that reflects the
actual growth rate of new store investment of the applicable company.
Determination of Bonus Amounts. Each year the Compensation Committee selects
the "Benchmark Group" of companies for purposes of comparing the operating
company and/or Corporation's ROI performance versus ROI Standard for the
applicable fiscal year. An "ROI Score" is determined from a schedule approved
by the Compensation Committee that designates a score for each varying level
of performance of ROI versus ROI Standard achieved by the operating company
and/or Corporation versus the Benchmark Group. The Compensation Committee
also adopts a "Bonus Matrix" which assigns varying bonus percentages based on
the participants' job grade level and ROI Scores. Bonuses are then determined
under a non-pooled or pooled calculation based on the discretion of the
Compensation Committee.
Non-Pooled Bonuses. The bonus amount for each participant is calculated by
taking the participant's bonus percentage from the Bonus Matrix, multiplying
it by his or her Midpoint of Salary Range (the midpoint of the salary range
of a participant's job grade level) and then multiplying that result by the
percentage of participation in the ROI Plan. For example, if the participant
is participating in the ROI Plan at 33 1/3 %, the result is multiplied by 1/3.
Pooled Bonuses. The bonus amount for each participant is calculated in the
same manner as for the non-pooled bonuses, and all related bonuses are added
together to form a pool. The bonus for each participant payable under the ROI
Plan will be based on a ratio of his or her bonus to all bonuses paid under
the Personal Score Plan. The percentage determined by that ratio is
multiplied by its bonus pool.
In order to receive a bonus under the ROI Plan, a participant's score under
the Personal Score Plan must equal or exceed a minimum set by the
Compensation Committee.
22
<PAGE>
The maximum bonus payable under the ROI Plan is equal to 250% of the salary
of the CEO or named executive officer, as the case may be, set forth in the
previous year's Proxy Statement. If the CEO or named executive officer held a
different office or was not employed in his or her position for the full year
covered by that Proxy Statement, the maximum bonus is 250% of the highest
salary reported in such year. Provided, however, in either case the aggregate
of all bonuses paid to the CEO or named executive officer under any
combination of the ROI Plan, PTOC Plan and Personal Score Plan may not exceed
250% of the relevant salary. The aggregate of all bonuses paid to any other
executive not listed above under any combination of the ROI Plan, PTOC Plan
and Personal Score Plan may not exceed 250% of his or her base salary.
The introduction to the table titled "New Plans Benefits" and the table in
Proposal Number Three relating to the PTOC Plan also applies to this
proposal.
The affirmative vote of a majority of the voting power of the shares present
and entitled to vote is required for the ROI Plan to be approved by
shareholders. Abstentions are treated as present and entitled to vote and
brokers non-votes are treated as not present and not entitled to vote.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT THE SHAREHOLDERS OF
THE CORPORATION VOTE TO APPROVE THE ROI PLAN.
SHAREHOLDER PROPOSALS
The Corporation has received two shareholder proposals for inclusion in this
proxy statement. Each proposal is set forth below, together with the
proponent's statement in support of the proposal and the Corporation's
reasons for its opposition to the proposal. The name and address of each
proponent, and the number of shares of Common Stock held by each proponent
will be furnished by the Corporation to any person, orally or in writing as
requested, promptly upon receipt of an oral or written request.
SHAREHOLDER PROPOSAL CONCERNING A CLASSIFIED BOARD
[Proposal 5 on the accompanying proxy card]
Shareholder's Proposal and Statement
"BE IT RESOLVED: That the shareholders of Dayton Hudson Corporation
("Company") urge that the Board of Directors take the necessary steps, in
compliance with Minnesota state law, to declassify the Board of Directors for
the purpose of director elections. The Board declassification shall be done
in a manner that does not affect the unexpired terms of directors previously
elected.
SUPPORTING STATEMENT
"The election of corporate directors is the primary avenue in the American
corporate governance system for shareholders to influence corporate affairs
and exert accountability on management. We strongly believe that our
Company's financial performance is closely linked to its corporate governance
policies and procedures, and the level of management accountability they
impose. Therefore, as shareholders concerned about the value of our
investment, we are very disturbed by our Company's current system of electing
only one-third of the Board of Directors each year. We believe this
staggering of director terms prevents shareholders from annually registering
their views on the performance of the Board collectively and each director
individually.
"Concerns that the annual election of all directors would leave our Company
without experienced Board members in the event that all incumbents are voted
out is unfounded. If the owners should choose to replace the entire board, it
would be obvious that the incumbent directors' contributions were not valued.
Additionally, concerns that the annual election of all directors
23
<PAGE>
would expose shareholders to takeover attempts at below full value is also
unfounded. Our Company's poison pill is a virtually insurmountable takeover
defense which forces potential acquires to negotiate offers with the Board.
"Most alarming is that the staggered Board can help insulate directors and
senior executives from the consequences of poor performance by denying
shareholders the opportunity to replace an entire Board if that Board pursues
failed policies. The "Comparison of Five Year Cumulative Total Shareholder
Return" chart on page 15 of our Company's 1993 proxy statement indicates that
Dayton Hudson has underperformed the S&P Retail Composite Index by almost 20%
over the past five years. Underperformance relative to our Company's peer
group is primarily attributable to mismanagement, not market forces.
"We strongly believe that allowing shareholders to annually register their
views on the performance of the Board collectively and each director
individually is one of the best methods to insure that our Company will be
managed in the best interests of the shareholders.
"We urge you to VOTE FOR this proposal."
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT THE SHAREHOLDERS OF
THE CORPORATION VOTE AGAINST THIS RESOLUTION.
-------
Corporation's Statement of Opposition
In 1988, the shareholders of the Corporation, upon the recommendation of the
Board of Directors, voted to amend the Corporation's Restated Articles of
Incorporation to provide for a Board of Directors divided into three classes
of directors serving staggered three-year terms. The shareholders of the
Corporation adopted the amendment by a plurality vote. The Board of Directors
continues to believe that a classified board provides important benefits to
the Corporation. Continuity and stability in the policies formulated by the
Board are enhanced by having directors who serve three-year rather than
one-year terms. As a classified board, the Board can represent more
effectively the interests of the Corporation's shareholders, including
responding to circumstances created by demands or actions by a minority
shareholder or group.
This shareholder resolution does not propose an amendment to the
Corporation's Restated Articles of Incorporation but, instead, seeks to have
the Board take the necessary steps, in compliance with Minnesota law, to
require an annual election of directors. Such steps would, however, require
the directors to submit a proposed amendment to the Restated Articles of
Incorporation of the Corporation to the shareholders for approval, and the
affirmative vote of the holders of not less than 75% of the votes entitled to
be cast by the holders of all outstanding shares of voting stock would be
necessary for approval.
The affirmative vote of the holders of a majority of the shares present and
entitled to vote is required for adoption of the resolution. Abstentions are
treated as present and entitled to vote and brokers non-votes are treated as
not present and not entitled to vote.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT THE SHAREHOLDERS OF
THE CORPORATION VOTE AGAINST THIS RESOLUTION.
-------
24
<PAGE>
SHAREHOLDER PROPOSAL CONCERNING EQUAL EMPLOYMENT AND
AFFIRMATIVE ACTION REPORT
[Proposal 6 on the accompanying proxy card]
Shareholders' Proposal and Statement
"Resolved: That the shareholders of Dayton Hudson Corporation ("Company")
hereby request that the Board of Directors prepare a report on progress on
equal employment and affirmative action at our Company, at reasonable cost
and omitting confidential information. The report shall be available to
shareholders and employees by September 1994 and shall include the following:
1. A description of the Company's progress in the areas of equal employment
opportunity and affirmative action. This description should summarize the
data in the Company's EEO-1 report and be printed in its next Annual
Report.
2. A summary description of progress on the part of the Company in its efforts
to purchase goods and services from minority- and female-owned business
enterprises.
3. A description of any policies and programs favoring the purchase of goods
and services from minority- and/or female-owned business enterprises.
4. A description of any policies and programs oriented specifically toward
increasing the number of managers who are qualified females and/or belong
to a racial minority group.
5. A general description of how the Company publicizes its equal employment
opportunity and affirmative action policies and programs to merchandise
suppliers and service providers.
"We believe this resolution will serve both our corporation and our society
by promoting fair and non-discriminatory employment practices and equal
employment opportunity. It is a prudent business practice for a retail
company to reflect the values of the people and communities it serves. The
vast majority of Dayton Hudson customers are either women or members of a
racial minority group. We believe it is in the Company's and shareholders'
interests for Dayton Hudson to delineate and publicize its commitment to
matters that are of concern to its core customer groups.
"Recent studies indicate that sound equal employment practices are quickly
becoming a necessity for major corporations such as Dayton Hudson. By the
beginning of the next century, the overwhelming majority of new entrants to
our nation's workforce will be women and/or members of a minority group. We
believe passage of these resolutions will give employees confidence in our
Company's commitment to their advancement and will attract new employees from
these groups. An ongoing review of purchases from minority- and female-owned
businesses will help our Company take full advantage of these traditionally
underutilized resources. In addition, Dayton Hudson will benefit from
publicizing its standards by becoming an example to companies with whom it
does business. This leadership should enhance our Company's image and its
bottom line.
"We believe that our Company and our country are challenged by problems
associated with race and sex discrimination. These problems are being
confronted every day in the public and private sectors. No corporation can
afford to ignore them.
"By supporting this resolution, shareholders can send a strong message to
Dayton Hudson that it must address these challenges in an open and forthright
manner. By responding to this request, the Company will be able to project
values attractive to employees, customers and shareholders alike.
"We urge Shareholders to VOTE FOR this proposal."
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT THE SHAREHOLDERS OF
THE CORPORATION VOTE AGAINST THIS RESOLUTION.
-------
25
<PAGE>
Corporation's Statement of Opposition
The Corporation believes that its employees should reflect the diversity of
the customers and communities it serves. To be competitive the Corporation
must attract and retain a diverse work force. The Corporation is fully
committed to complying with applicable equal employment opportunity laws. The
Corporation provides detailed statistical information on equal employment
opportunity to the federal government as required by law. In addition, the
various companies of the Corporation are equal opportunity employers and
communicate to their employees information regarding equal employment
opportunity and each company's commitment to equal employment opportunity.
The Corporation also supports economic development through the use of
minority and women-owned contractors and service providers. The Corporation
encourages and supports the efforts of all of its employees, suppliers and
vendors to adhere to these principles of corporate responsibility.
The Corporation believes that the reports and publicity requested by this
proposal would not enhance its commitment to equal employment opportunity and
creating a diverse workforce. The Corporation's commitment to such programs
is part of its ordinary business operations and, consequently, is part of the
job responsibilities of each executive. Both management and the Board of
Directors are entrusted with the obligation and opportunity to make such
programs successful. Providing reports and publicizing certain programs would
require time and expense without further enhancing these efforts.
The affirmative vote of a majority of the shares present and entitled to vote
is required for adoption of the resolution. Abstentions are treated as
present and entitled to vote and broker non-votes are treated as not present
and not entitled to vote.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT THE SHAREHOLDERS OF
THE CORPORATION VOTE AGAINST THIS RESOLUTION.
-------
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of Common Stock and Series B ESOP Convertible Preferred Stock of
record at the close of business on April 1, 1994 will be entitled to vote at
the meeting and any adjournment thereof. At the close of business on such
record date, the Corporation had outstanding 71,548,293 shares of Common
Stock and 424,514 shares of Series B ESOP Convertible Preferred Stock. Each
share of Common Stock has one vote and each share of Series B ESOP
Convertible Preferred Stock has ten votes. Common Stock and Series B ESOP
Convertible Preferred Stock vote as a single class, except as required by
law.
26
<PAGE>
Set forth below is information regarding equity securities of the Corporation
or any of its parents or subsidiaries owned beneficially (as defined by the SEC
for proxy purposes) by all directors and nominees, each of the named executive
officers, and all directors and executive officers of the Corporation as a group
on April 1, 1994:
<TABLE>
<CAPTION>
Amount and Nature
Name of Individual of Beneficial Ownership Percent
or Number of Title of ----------------------------------------- of
Persons in Group Class Owned (2)(3) Options (5) Total Class
-------------------- ----------- ------------ ----------- --------- -------
<S> <C> <C> <C> <C> <C>
Rand V. Araskog Common 20,692 20,692 *
Robert A. Burnett Common 5,559 5,559 *
Livio D. DeSimone Common 1,583(4) 1,583 *
Roger A. Enrico Common 2,420 2,420 *
William W. George Common 912 912 *
Roger L. Hale Common 1,018 1,018 *
Betty Ruth Hollander Common 5,482 5,482 *
Michele J. Hooper Common 687 687 *
Kenneth A. Macke(1) Common 110,860(4) 142,046 252,906(6) *
Mary Patterson McPherson Common 882 882 *
Robert J. Ulrich(1) Common 7,706 66,758 74,464(6) *
John R. Walter Common 571 571 *
Stephen E. Watson(1) Common 27,964 59,138 87,102(6) *
Henry T. DeNero(1) Common 0 1,923 1,923(6) *
Joseph C. Vesce(1) Common 8,247 18,243 26,490(6) *
All directors and executive
officers of the
Corporation as a group
(19 persons) Common 202,523 315,051 517,574(6) *
</TABLE>
- --------------------
*Less than 1%
(1) Executive officer.
(2) The persons listed have sole voting and investment power with respect to
the shares listed except as follows: Sole voting and investment power: Mr.
Araskog, 482 shares; Mr. DeSimone, 483 shares; Mr. Macke, 73,930 shares; and
Mr. Watson, 15,151 shares. The persons listed have shared voting and
investment power: Mr. Araskog, 20,210 shares; Mr. DeSimone, 500 shares; Mr.
Macke, 11,900 shares; and Mr. Watson, 3,890 shares. Restricted Stock owned
by directors is listed as sole voting and investment power.
(3) Includes shares of Common Stock held in the Corporation's Supplemental
Retirement, Savings, and Employee Stock Ownership Plan as of January 30,
1994.
(4) Includes shares of Common Stock owned as of April 1, 1994 by certain
family members as follows: Mr. DeSimone, 600 shares and Mr. Macke, 10,549
shares as to which shares each named individual disclaims beneficial
ownership.
(5) Shares that the named individuals may acquire on or before June 1, 1994
pursuant to options held by them under the Corporation's 1981 Option Plan.
(6) As of January 29, 1994, Mr. Macke owned 34 shares of Series B ESOP
Convertible Preferred Stock ("Preferred Stock"), Mr. Ulrich owned 37 shares
of Preferred Stock, Mr. Watson owned 36 shares of Preferred Stock, Mr.
DeNero owned 10 shares of Preferred Stock, Mr. Vesce owned 35 shares of
Preferred Stock and all directors and executive officers of the Corporation
owned 248 shares of Preferred Stock. Ownership of such Preferred Stock is
not reflected in the table above.
27
<PAGE>
The table below sets forth certain information, as to each person or entity
known to the Corporation to be the beneficial owner of more than 5 percent of
any class of the Corporation's voting securities:
<TABLE>
<CAPTION>
Name and Address Title of Number of Shares Percent
of Beneficial Owner Class Beneficially Owned of Class
------------------- -------- ------------------ --------
<S> <C> <C> <C>
First Bank System, Inc. Common 3,712,040(1) 5.19%
601 2nd Avenue South
Minneapolis, Minnesota 55402
FMR Corp. Common 4,792,535(2) 6.71%
82 Devonshire Street
Boston, Massachusets 02109
</TABLE>
- ----------------
(1) First Bank System, Inc. ("First Bank") reported its beneficial ownership
as of December 31, 1993 on a Schedule 13G filed with the Securities and
Exchange Commission. The filing indicates that First Bank has sole voting
power for 859,888 shares, shared voting power for 2,811,782 shares, sole
dispositive power for 748,878 shares and shared dispositive power for
2,882,714 shares. The shares reflected in the table include the Common Stock
equivalent of the unallocated shares of Series B ESOP Convertible Preferred
Stock held in the Dayton Hudson Corporation Supplemental Retirement,
Savings, and Employee Stock Ownership Plan Trust (the "Plan Trust"). An
affiliate of First Bank System, Inc. is the trustee of the Plan Trust.
As of December 31, 1993, in addition to the shares reflected in the table
the Plan Trust also held 2,029,944 shares of Common Stock of the Corporation
and 1,728,570 Common Stock equivalents of Series B ESOP Convertible
Preferred Stock allocated to employees of the Corporation.
(2) FMR Corp. ("FMR") reported its beneficial ownership as of December 31, 1993
on a Schedule 13G filed with the Securities and Exchange Commission. The
filing indicates that FMR has sole voting power for 302,279 shares, shared
voting power for 0 shares, sole dispositive power for 4,792,535 shares and
shared dispositive power for 0 shares.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires the Corporation's directors and
executive officers to file with the Securities and Exchange Commission and
the New York Stock Exchange reports of ownership and changes in ownership of
the Corporation's Common Stock, and the Corporation is required to identify
any of those persons who fail to file such reports on a timely basis. Kenneth
A. Macke did not timely report various charitable gifts totaling 1,108 shares
made during November, 1992.
ADDITIONAL INFORMATION
Policy on Confidential Voting
It is the policy of the Corporation that all shareholder meeting proxies,
ballots and voting tabulations of a shareholder are to be confidential, if
the shareholder has requested confidentiality on the proxy card or ballot.
If the shareholder so requests, no such document will be available for
examination nor will the particular vote of such shareholder be disclosed
prior to the tabulation of the final vote at the annual shareholder meeting
except (i) to meet applicable legal requirements; or (ii) to allow the
independent election inspectors to count and certify the results of the
shareholder vote; or (iii) where there is a proxy solicitation in opposition
to the Board of Directors, based upon an opposition proxy statement filed
with the Securities and Exchange Commission. The independent election
inspectors may at any time inform the Corporation whether or not a
shareholder has voted.
28
<PAGE>
Equal Employment Opportunity
The Corporation believes that its employees should reflect the diversity of
the customers and communities it serves. To be competitive the Corporation
must attract and retain a diverse work force. The Corporation is fully
committed to complying with applicable equal employment opportunity laws. The
Corporation also supports economic development through the use of minority
and women-owned contractors and service providers.
The Corporation provides detailed statistical information on equal employment
opportunity to the federal government as required by law. In addition, the
various companies of the Corporation are equal opportunity employers and
communicate to their employees information regarding equal employment
opportunity.
The Corporation encourages and supports the efforts of all of its employees,
suppliers and vendors to adhere to these principles of corporate
responsibility.
General
As of the date of this proxy statement, management knows of no matters that
will be presented for determination at the meeting other than those referred
to herein. If any other matters properly come before the meeting calling for
a vote of shareholders, it is intended that proxies in the enclosed form will
be voted in accordance with the judgment of the individual voting the
proxies.
Expenses in connection with the solicitation of proxies will be paid by the
Corporation. Proxies are being solicited principally by mail and by
telephone. Georgeson & Company, Inc. has been retained by the Corporation to
act as a proxy solicitor for a fee estimated not to exceed $20,000 plus
reimbursement of out-of-pocket expenses. In addition, directors, officers and
regular employees of the Corporation may solicit proxies personally, by
telephone, by fax or by special letter. The Corporation may reimburse
brokerage firms and others for their expenses in forwarding proxy materials
to the beneficial owners of shares of the Corporation.
The Annual Report of the Corporation for the fiscal year ended January 29,
1994, including financial statements, is enclosed.
Shareholder Proposal
Any shareholder proposals for the Corporation's 1995 Annual Meeting must be
received by the Corporation by December 21, 1994 in order to be included in
the proxy statement. The proposals also must comply with all applicable
statutes and regulations.
By Order of the Board of Directors
JAMES T. HALE
Secretary
Minneapolis, Minnesota
April 20, 1994
29
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EXHIBIT A
DAYTON HUDSON CORPORATION
EXECUTIVE INCENTIVE PLAN
(PTOC)
Article I
Sec. 1.1 Name. The name of the short term incentive plan set forth herein is
"Dayton Hudson Corporation Executive Incentive Plan (PTOC)". It is
sometimes hereinafter referred to as the "Plan". "Company" refers to
Dayton Hudson Corporation and its subsidiaries. Division refers to an
operating company, test strategy, staff group or other subdivision of
the Company.
Sec. 1.2 Compensation Policy and Plan Intent. The Plan has been designed to
provide financial incentives ("incentive bonuses") to designated upper
level executive employees, who through their efforts directly and
significantly impact the achievement of Company goals and objectives.
Such incentive bonuses are intended to reflect both the executive's
personal achievements therein, as well as the Division's or Company's
achievement of such goals and objectives.
Sec. 1.3 Eligibility. Participation in this Plan is restricted to those upper
level executive employees who, through their position and performance,
have a decided impact upon the performance of the Company and/or a
Division, and therefore upon the operating results of the Company. The
Compensation Committee shall determine which individuals or groups of
individuals by title or position or rank shall participate in the
Plan.
Divisions which participate in the Plan shall at times hereinafter be
referred to as "Participating Divisions". Executives participating in
the Plan are referred to as "participants" at times herein.
Those Divisions which do not participate in this Plan shall at times
hereinafter be referred to as "Non-Participating Divisions".
Sec. 1.4 Transfer and Termination. A participant who transfers to another
Division of the Company, or who terminates employment for the purpose
of early or normal retirement from the Company, or who dies or becomes
disabled shall be eligible for incentive compensation at Plan Year end
if they were an actual participant in the plan at the commencement of
such Plan Year. The incentive bonus, when determined, pursuant to the
provisions hereof shall be prorated to reflect that portion of the
Plan Year (including all if such is the case) during which the
participant was enrolled and participating in the Plan as a
participant. Participants in this category will be treated in
accordance with the following guidelines:
a. Transfers Between Participating Divisions. In the event of a
transfer between then Participating Divisions, a pro rata share of
the incentive bonus shall be contributed by each Participating
Division if the participant has been designated as such in each
Participating Division from the commencement of the Plan Year, or
in the case of the successor Participating Division, from his/her
commencement of employment to Plan Year end.
b. Transfers Between Participating Division and Non-Participating
Division and Retirement, Death or Disability of Participating
Executive. In the event a participant transfers from a
Participating Division to a Non-Participating Division, a pro rata
incentive bonus calculated on the basis of the number of months (a
major portion of a month to be considered a whole month) during the
Plan Year the executive was a Participant in the Plan, over 12,
will be awarded in the due course of the Plan's administration. The
same formula shall be utilized for executives who transfer from
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a Non-Participating Division to a Participating Division. The same
method of calculating an incentive bonus shall also be utilized in
calculating incentive bonuses for participants who die, become
disabled or who retire from the Company during the year. Any such
incentive bonuses would be paid only in the normal course of
administration of the Plan.
c. New Executive Employees. Upon recommendation of the Chief
Administrative Officer or the Chief Executive Officer of a Division,
whichever is applicable, and following approval thereof by the
Chairman of the Company, a new executive employee who will have been
employed by a Participating Division prior to the end of a Plan Year
may be designated as a participant in the Plan, subject to the
conditions of the Plan.
d. Termination Other Than Retirement, Death or Disability. A
participant who terminates his/her employment during the Plan Year
for any reason other than retirement, death or disability, shall not
be eligible for and shall not receive an incentive bonus for the
subject Plan Year. A participant who terminates following the
completion of the subject Plan Year, but prior to the payout of such
incentive bonus shall receive the incentive bonus under procedures
which would, only for such purpose, treat them as still employed at
the time of the Plan payout.
e. Promotion or Job Change. A participant who has a promotion and/or a
job change during a Plan Year will have his/her incentive bonus
calculated using each grade level separately. The score and grade
level shall determine the bonus percentage and that percentage shall
be applied to the Midpoint of Salary Range while in the grade level.
The total incentive bonus will be the sum of the bonuses for each
grade level.
f. Market Pricing Adjustment. A participant whose grade level is
adjusted during the Plan Year due to a "market pricing adjustment"
will have his/her bonuses calculated for the entire period using the
adjusted grade. If a, b and/or e are applicable, those sections
shall also apply and this section f shall be applicable only for the
period that the "market pricing adjustment" relates to.
Sec. 1.5 Process For Determination of Incentive Bonuses
a. Compensation Policy and Intent of Plan
Incentive bonuses under the Plan are based on the Division and/or
Company PTOC for the Fiscal Year.
b. Defined Incentive Bonus Terms
"Bonus Matrix"
The "Bonus Matrix" is a table setting forth figures which indicate
with varying job grade level classifications, the percentage of
incentive bonus attributable to each PTOC Score in relationship to
the participant's Midpoint of Salary Range. The "Bonus Matrix" may
be changed from time to time at the election of the Compensation
Committee but any change in the Bonus Matrix shall have
prospective application only.
"Midpoint of Salary Range"
The "Midpoint of Salary Range" of a participant during the related
incentive bonus Fiscal Year is the midpoint for his/her job grade
as set forth in the salary range by job grade that is applicable.
"PTOC"
"PTOC" (pretax operating contribution) is FIFO Gross Margin
dollars less operating expenses and other expenses plus other
income. It excludes LIFO provision, interest and corporate
expense.
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"PTOC Score"
The PTOC Score is determined from a schedule that is approved by
the Compensation Committee that gives a score for the level of
PTOC achieved by the Division and/or Company. The schedule may be
modified annually.
c. Determination of Bonus
(1) Non-Pooled
Incentive bonuses for each participant will be calculated by
taking the participant's bonus percentage from the Bonus Matrix,
using his/her salary grade, and multiplying it by his/her
Midpoint of Salary Range.
(2) Pooled
A bonus pool is calculated by multiplying the percentage from
the Bonus Matrix using the PTOC Score for each participant by
the participant's Midpoint of Salary Range.
The incentive bonus for each participant will be based on a
ratio of his/her bonus to all bonuses paid under the Executive
Incentive Plan (Personal Score). The percentage determined by
that ratio will be multiplied by the bonus pool.
(3) Minimum Score
No bonus will be payable to a participant under this Plan unless
his/her personal score under the Executive Incentive Plan
(Personal Score) is equal to or higher than a minimum set by the
Division or the Compensation Committee.
(4) Selection of Pooled or Non-Pooled
The Compensation Committee will determine whether a Division
and/or Company is to be pooled or nonpooled.
d. Maximum Bonus
The maximum bonus payable under the Plan is equal to 250% of the
salary of the Chief Executive Officer (the "CEO") or named executive
officer, as the case may be, set forth in the previous year's Proxy
Statement. If the CEO or named executive officer held a different
office or was not employed in his/her position for the full year
covered by that Proxy Statement, the maximum bonus is 250% of the
highest salary rate reported in such year. Provided, however, in
either case the aggregate of all bonuses paid to the CEO or named
executive officer under any combination of the Plan, ROI Plan and
Personal Score Plan may not exceed 250% of the relevant salary. The
aggregate of all bonuses paid to any other executive not listed
above under any combination of the Plan, ROI Plan and Personal Score
Plan may not exceed 250% of his/her base salary.
ARTICLE II
Sec. 2.1 Payment of Bonus. Normally the total incentive bonus for a Fiscal
Year will be paid in cash as soon as administratively feasible after
the amount of the incentive bonus has been computed. However, any
participant who is a participant in a deferred compensation plan or
arrangement of the Company, may have his/her incentive bonus deferred
pursuant to that plan or arrangement.
ARTICLE III
Sec. 3.1 Beneficiary. Any incentive bonus payments which become distributable
after the death of a participant shall be distributed as they become
due to such person or persons, or other legal entity as the participant
may have designated in writing delivered to his/her Participating
Division's personnel office on an approved form. The participant may,
from
A-3
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time to time, revoke or change any such designation by writing
delivered to such Participating Division's personnel office on an
approved form. If there is no unrevoked designation on file with such
corporate personnel office at the participant's death, or if the person
or persons designated therein shall have all predeceased the
participant, such distributions shall be made to the participant's
spouse, or in the absence of a spouse, children and if the participant
has no spouse or children, to the participant's estate. If a
participant has deferred his/her incentive bonus pursuant to a plan or
arrangement, the plan or arrangement shall govern the beneficiary
designation.
ARTICLE IV
Sec. 4.1 Administration and Interpretation of Plan. This Plan shall be
interpreted by the Compensation Committee of the Company and its
interpretation shall be final and binding on participants,
Participating Divisions, and all other parties in Interest.
The Plan shall be administered by the Compensation Committee selected
by the Board of Directors. The Plan Committee reserves the right, from
time to time, to prescribe rules and regulations, not inconsistent with
the provisions of the Plan, and to modify or revoke such rules and
regulations at such time and in such manner as it may deem proper. A
copy of this Plan and all such rules and regulations will be supplied
to each person participating in the Plan and a copy of the then current
Plan shall be maintained in the Company's personnel office and at the
personnel office of each Participating Division and shall be available,
upon request, for review by any participant or his duly authorized
agent. All persons in the Plan shall be bound by the terms of the Plan
and of all rules and regulations pursuant thereto, all as now in effect
or hereafter amended, promulgated or passed which shall likewise be
maintained at the Company and each Participating Division personnel
office.
ARTICLE V
Sec. 5.1 Rights of Participants and Beneficiaries. The Plan is not an
employment agreement and does not assure or evidence to any degree the
continued employment or the claim to continued employment of any
participant for any time or period or job.
No participant or beneficiary shall, by virtue of this Plan, have any
interest in any specific asset or assets of the Company or any
Participating Division. A participant or beneficiary has only an
unsecured contract right to receive cash payments in accordance with
and at the times specified by the Plan.
No participant shall have the right or ability to assign, pledge, or
otherwise dispose of any part of an incentive bonus hereunder (except
as provided in Section 3.1 hereof).
ARTICLE VI
Sec. 6.1 Overview It is specifically understood that the Chairman of the
Board and Chief Executive Officer of the Company shall at all times
retain the authority to veto or rescind any appointment or designation
of an individual as a participant (except an Executive Officer) under
this Plan but it is the intent of the Plan that such authority shall be
exercised with restraint and only for circumstances deemed by said
officer to be of importance for preserving the integrity of the Plan's
policy and/or its performance.
ARTICLE VII
Sec. 7.1 Termination of Plan. This Plan may be amended or terminated at any
time by the Board of Directors of the Company. Such amendment or
termination, will not, without the participant's written consent,
affect his/her incentive bonus or bonuses previously earned.
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<PAGE>
ARTICLE VIII
Sec. 8.1 Miscellaneous Definitions.
a. "Compensation Committee": shall mean that committee of the Board of
Directors of the Company designated as such on January 12, 1994 or
as it is thereafter designated during the term hereof and if during
the term hereof no such named committee shall be designated by the
Board of Directors it shall mean the Committee of the Board most
nearly performing the duties of the Compensation Committee as
defined at the time of its elimination as a Board Committee.
b. "Plan Year": Plan Year shall be the applicable financial "Fiscal
Year" of the Company.
c. "Retire or Retirement": Retire or Retirement means a termination of
employment pursuant to an arrangement contained in any formal
private retirement plan or written agreement then in effect by the
Company or any participating Division relative to the subject
participant.
d. "Chairman": Chairman shall at all times refer to the incumbent
Chairman of the Board of Directors of the Dayton Hudson Corporation.
Article IX
Sec. 9.1 Miscellaneous Provisions
a. Headings. Headings at the beginning of sections hereof are for
convenience of reference, shall not be considered a part of the text
of the Plan, and shall not influence its construction.
b. Capitalized Definitions. Capitalized terms used in the Plan shall
have their meaning as defined in the Plan unless the context clearly
indicates to the contrary.
c. Gender. Any references to gender also include the opposite gender.
d. Use of Compounds of Word "Here". Use of the words "hereof",
"herein", "hereunder", or similar compounds of the word "here" shall
mean and refer to the entire Plan unless the context clearly
indicates to the contrary.
e. Construed as a Whole. The provisions of the Plan shall be construed
as a whole in such manner as to carry out the provisions thereof and
shall not be construed separately without relation to the context.
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EXHIBIT B
DAYTON HUDSON CORPORATION
EXECUTIVE INCENTIVE PLAN
(ROI)
Article I
Sec. 1.1 Name. The name of the short term incentive plan set forth herein is
"Dayton Hudson Corporation Executive Incentive Plan (ROI)". It is
sometimes hereinafter referred to as the "Plan". "Company" refers to
Dayton Hudson Corporation and its subsidiaries. Division refers to an
operating company, test strategy, staff group or other subdivision of
the Company.
Sec. 1.2 Compensation Policy and Plan Intent. The Plan has been designed to
provide financial incentives ("incentive bonuses") to designated upper
level executive employees, who through their efforts directly and
significantly impact the achievement of Company goals and objectives.
Such incentive bonuses are intended to reflect both the executive's
personal achievements therein, as well as the Division's or Company's
achievement of such goals and objectives.
Sec. 1.3 Eligibility. Participation in this Plan is restricted to those upper
level executive employees who, through their position and performance,
have a decided impact upon the performance of the Company and/or a
Division, and therefore upon the operating results of the Company. The
Compensation Committee shall determine which individuals or groups of
individuals by title or position or rank shall participate in the
Plan.
Divisions which participate in the Plan shall at times hereinafter be
referred to as "Participating Divisions". Executives participating in
the Plan are referred to as "participants" at times herein.
Those Divisions which do not participate in this Plan shall at times
hereinafter be referred to as "Non-Participating Divisions".
Sec. 1.4 Transfer and Termination. A participant who transfers to another
Division of the Company, or who terminates employment for the purpose
of early or normal retirement from the Company, or who dies or becomes
disabled shall be eligible for incentive compensation at Plan Year end
if they were an actual participant in the plan at the commencement of
such Plan Year. The incentive bonus, when determined, pursuant to the
provisions hereof shall be prorated to reflect that portion of the
Plan Year (including all if such is the case) during which the
participant was enrolled and participating in the Plan as a
participant. Participants in this category will be treated in
accordance with the following guidelines:
a. Transfers Between Participating Divisions. In the event of a
transfer between then Participating Divisions, a pro rata share of
the incentive bonus shall be contributed by each Participating
Division if the participant has been designated as such in each
Participating Division from the commencement of the Plan Year, or
in the case of the successor Participating Division, from his/her
commencement of employment to Plan Year end.
B-1
<PAGE>
b. Transfers Between Participating Division and Non-Participating
Division and Retirement, Death or Disability of Participating
Executive. In the event a participant transfers from a
Participating Division to a Non-Participating Division, a pro rata
incentive bonus calculated on the basis of the number of months (a
major portion of a month to be considered a whole month) during the
Plan Year the executive was a Participant in the Plan, over 12,
will be awarded in the due course of the Plan's administration. The
same formula shall be utilized for executives who transfer from a
Non-Participating Division to a Participating Division. The same
method of calculating an incentive bonus shall also be utilized in
calculating incentive bonuses for participants who die, become
disabled or who retire from the Company during the year. Any such
incentive bonuses would be paid only in the normal course of
administration of the Plan.
c. New Executive Employees. Upon recommendation of the Chief
Administrative Officer or the Chief Executive Officer of a
Division, whichever is applicable, and following approval thereof
by the Chairman of the Company, a new executive employee who will
have been employed by a Participating Division prior to the end of
a Plan Year may be designated as a participant in the Plan, subject
to the conditions of the Plan.
d. Termination Other Than Retirement, Death or Disability. A
participant who terminates his/her employment during the Plan Year
for any reason other than retirement, death or disability, shall
not be eligible for and shall not receive an incentive bonus for
the subject Plan Year. A participant who terminates following the
completion of the subject Plan Year, but prior to the payout of
such incentive bonus shall receive the incentive bonus under
procedures which would, only for such purpose, treat them as still
employed at the time of the Plan payout.
e. Promotion or Job Change. A participant who has a promotion and/or
a job change during a Plan Year will have his/her incentive bonus
calculated using each grade level separately. The score and grade
level shall determine the bonus percentage and that percentage
shall be applied to the Midpoint of Salary Range while in the
grade level. The total incentive bonus will be the sum of the
bonuses for each grade level.
f. Market Pricing Adjustment. A participant whose grade level is
adjusted during the Plan Year due to a "market pricing adjustment"
will have his/her bonuses calculated for the entire period using
the adjusted grade. If a, b and/or e are applicable, those sections
shall also apply and this section f shall be applicable only for
the period that the "market pricing adjustment" relates to.
Sec. 1.5 Process For Determination of Incentive Bonuses
a. Compensation Policy and Intent of Plan
Incentive bonuses under the Plan are based on how the Division
and/or Company ROI performance versus its calculated ROI Standard
for the Fiscal Year compares to the ROI performance versus the
calculated ROI Standard of the companies in the Benchmark Group.
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<PAGE>
b. Defined Incentive Bonus Terms
"Bonus Matrix"
The "Bonus Matrix" is a table setting forth figures which
indicate with varying job grade level classifications, the
percentage of incentive bonus attributable to each ROI Score in
relationship to the participant's Midpoint of Salary Range. The
"Bonus Matrix" may be changed from time to time at the election
of the Compensation Committee but any change in the Bonus Matrix
shall have prospective application only.
"Midpoint of Salary Range"
The "Midpoint of Salary Range" of a participant during the
related incentive bonus fiscal year is the midpoint for his/her
job grade as set forth in the salary range by job grade that is
applicable.
"ROI"
"ROI", return on investment, is net earnings before the LIFO
provision and financing costs expressed as a percentage of
average investment.
"ROI Standard"
"ROI Standard" is an ROI hurdle rate objective that is calculated
annually by a formula established by the Compensation Committee
that reflects the actual growth rate of new store investment of
the applicable company.
"Benchmark Group"
"Benchmark Group" is the group of companies the Compensation
Committee selects for purposes of comparing the Division and/or
Company ROI Standard against for the applicable Fiscal Years.
"ROI Score"
The ROI Score is determined from a schedule that is approved by
the Compensation Committee that gives a score for the relative
performance of ROI versus ROI Standard achieved by the Division
and/or Company versus the Benchmark Group. The schedule may be
modified annually.
c. Determination of Bonus
(1) Non-PooIed
Incentive bonuses for each participant will be calculated by
taking the participant's bonus percentage from the Bonus
Matrix, using his/her salary grade and multiplying it by
his/her Midpoint of Salary Range.
(2) Pooled
An incentive bonus pool is calculated by multiplying the
percentage from the Bonus Matrix using the ROI Score for each
participant by the participant's Midpoint of Salary Range.
The incentive bonus for each participant will be based on a
ratio of his/her bonus to all bonuses paid under the Executive
Incentive Plan (Personal Score). The percentage determined by
that ratio will be multiplied by the bonus pool.
B-3
<PAGE>
(3) Minimum Score
No bonus will be payable to a participant under this Plan
unless his/her personal score under the Executive Incentive
Plan (Personal Score) is equal to or higher than a minimum set
by the Division or the Compensation Committee.
(4) Selection of Pooled or Non-Pooled
The Compensation Committee will determine whether a Division
and/or Company is to be pooled or nonpooled.
d. Maximum Bonus
The maximum bonus payable under the Plan is equal to 250% of the
salary of the Chief Executive Officer (the "CEO") or named
executive officer, as the case may be, set forth in the previous
year's Proxy Statement. If the CEO or named executive officer held
a different office or was not employed in his/her position for the
full year covered by that Proxy Statement, the maximum bonus is
250% of the highest salary rate reported in such year. Provided,
however, in either case the aggregate of all bonuses paid to the
CEO or named executive officer under any combination of the Plan,
Personal Score Plan and PTOC Plan may not exceed 250% of the
relevant salary. The aggregate of all bonuses paid to any other
executive not listed above under any combination of the Plan,
Personal Score Plan and PTOC Plan may not exceed 250% of his/her
base salary.
ARTICLE II
Sec. 2.1 Payment of Bonus. Normally the total incentive bonus for a Fiscal
Year will be paid in cash as soon as administratively feasible after
the amount of the incentive bonus has been computed. However, any
participant who is a participant in a deferred compensation plan or
arrangement of the Company, may have his/her incentive bonus deferred
pursuant to that plan or arrangement.
ARTICLE III
Sec. 3.1 Beneficiary. Any incentive bonus payments which become
distributable after the death of a participant shall be distributed as
they become due to such person or persons, or other legal entity as
the participant may have designated in writing delivered to his/her
Participating Division's personnel office on an approved form. The
participant may, from time to time, revoke or change any such
designation by writing delivered to such Participating Division's
personnel office on an approved form. If there is no unrevoked
designation on file with such corporate personnel office at the
participant's death, or if the person or persons designated therein
shall have all predeceased the participant, such distributions shall
be made to the participant's spouse, or in the absence of a spouse,
children and if the participant has no spouse or children, to the
participant's estate. If a participant has deferred his/her incentive
bonus pursuant to a plan or arrangement, the plan or arrangement shall
govern the beneficiary designation.
B-4
<PAGE>
ARTICLE IV
Sec. 4.1 Administration and Interpretation of Plan. This Plan shall be
interpreted by the Compensation Committee of the Company and its
interpretations shall be final and binding on participants,
Participating Divisions, and all other parties in interest.
The Plan shall be administered by the Compensation Committee selected
by the Board of Directors. The Plan Committee reserves the right from
time to time to prescribe rules and regulations, not inconsistent with
the provisions of the Plan, and to modify or revoke such rules and
regulations at such time and in such manner as it may deem proper. A
copy of this Plan and all such rules and regulations will be supplied
to each person participating in the Plan and a copy of the then
current Plan shall be maintained in the Company's personnel office and
at the personnel office of each Participating Division and shall be
available, upon request, for review by any participant or his duly
authorized agent. All persons in the Plan shall be bound by the terms
of the Plan and of all rules and regulations pursuant thereto, all as
now in effect or hereafter amended, promulgated or passed which shall
likewise be maintained at the Company and each Participating Division
personnel office.
ARTICLE V
Sec. 5.1 Rights of Participants and Beneficiaries. The Plan is not an
employment agreement and does not assure or evidence to any degree the
continued employment or the claim to continued employment of any
participant for any time or period or job.
No participant or beneficiary shall, by virtue of this Plan, have any
interest in any specific asset or assets of the Company or any
Participating Division. A participant or beneficiary has only an
unsecured contract right to receive cash payments in accordance with
and at the times specified by the Plan.
No participant shall have the right or ability to assign, pledge, or
otherwise dispose of any part of an incentive bonus hereunder (except
as provided in Section 3.1 hereof).
ARTICLE Vl
Sec. 6.1 Overview. It is specifically understood that the Chairman of the
Board and Chief Executive Officer of the Company shall at all times
retain the authority to veto or rescind any appointment or designation
of an individual as a participant (except an Executive Officer) under
this Plan but it is the intent of the Plan that such authority shall
be exercised with restraint and only for circumstances deemed by said
officer to be of importance for preserving the integrity of the Plan's
policy and/or its performance.
ARTICLE VII
Sec. 7.1 Termination of Plan. This Plan may be amended or terminated at any
time by the Board of Directors of the Company. Such amendment or
termination, will not, without the participant's written consent,
affect his/her incentive bonus or bonuses previously earned.
B-5
<PAGE>
ARTICLE VIII
Sec. 8.1 Miscellaneous Definitions.
a. "Compensation Committee": shall mean that committee of the Board
of Directors of the Company designated as such on January 12, 1994
or as it is thereafter designated during the term hereof and if
during the term hereof no such named committee shall be designated
by the Board of Directors it shall mean the Committee of the Board
most nearly performing the duties of the Compensation Committee as
defined at the time of its elimination as a Board Committee.
b. "Plan Year": Plan Year shall be the applicable financial "Fiscal
Year" of the Company.
c. "Retire or Retirement": Retire or Retirement means a termination
of employment pursuant to an arrangement contained in any formal
private retirement plan or written agreement then in effect by the
Company or any participating Division relative to the subject
participant.
d. "Chairman": Chairman shall at all times refer to the incumbent
Chairman of the Board of Directors of the Dayton Hudson
Corporation.
ARTICLE IX
Sec. 9.1 Miscellaneous Provisions
a. Headings. Headings at the beginning of sections hereof are for
convenience of reference, shall not be considered a part of the
text of the Plan, and shall not influence its construction.
b. Capitalized Definitions. Capitalized terms used in the Plan shall
have their meaning as defined in the Plan unless the context
clearly indicates to the contrary.
c. Gender. Any references to gender also include the opposite gender.
d. Use of Compounds of Word "Here". Use of the words "hereon",
"herein", "hereunder", or similar compounds of the word "here"
shall mean and refer to the entire Plan unless the context clearly
indicates to the contrary.
e. Construed as a Whole. The provisions of the Plan shall be
construed as a whole in such manner as to carry out the provisions
thereof and shall not be construed separately without relation to
the context.
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<PAGE>
Graphic Material Cross-Reference Page
Photographs of nominees and directors appear directly above each respective name
on pages 2, 3, 4 and 5.
<PAGE>
PROXY
DAYTON HUDSON CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS MAY 25, 1994
Kenneth A. Macke, Stephen E. Watson, Henry T. DeNero and James T. Hale, and each
of them, are hereby appointed proxies, with power of substitution to each, to
represent and to vote as designated below and on the reverse side hereof, all
shares of capital stock of Dayton Hudson Corporation, a Minnesota corporation,
held by the undersigned at the Annual Meeting of Shareholders to be held on May
25, 1994, and at any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS GIVEN IT WILL BE
VOTED FOR PROPOSALS SET FORTH IN ITEMS 1, 2, 3 AND 4 AND AGAINST THE PROPOSALS
SET FORTH IN ITEMS 5 AND 6 HEREOF. THIS PROXY MUST BE SIGNED AND RETURNED FOR
YOUR SHARES TO BE VOTED.
1. Election of Directors, Nominees:
Betty Ruth Hollander, Kenneth A. Macke, Mary Patterson McPherson and
Robert J. Ulrich.
(INSTRUCTION: To withhold authority to vote for any individual nominee or
a "substitute nominee", write that nominee's name or the words "substitute
nominee" on the space provided on the reverse side.)
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN THIS CARD ON THE REVERSE
SIDE AND RETURN THIS CARD.
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
0361
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2, 3 AND 4.
- --------------------------------------------------------------------------------
1. Election of Directors (see reverse) FOR WITHHELD
/_/ /_/
For, except withheld from the following nominee(s):
- ---------------------------
FOR AGAINST ABSTAIN
2. Ratification of Ernst & Young as
Independent Auditors /_/ /_/ /_/
3. Approval of the PTOC Plan /_/ /_/ /_/
4. Approval of the ROI Plan FOR AGAINST ABSTAIN
/_/ /_/ /_/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE SHAREHOLDER PROPOSALS
REGARDING:
FOR AGAINST ABSTAIN
5. Classified Board /_/ /_/ /_/
6. Equal Employment & Affirmative
Action Report /_/ /_/ /_/
- --------------------------------------------------------------------------------
7. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Mark here if you would like your voting instructions to be confidential pursuant
to the Dayton Hudson Corporation Policy on Confidential Voting described in the
1994 Proxy Statement. /_/
Signature(s) Date
-------------------------------------- ---------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
<PAGE>
DAYTON HUDSON CORPORATION
SUPPLEMENTAL RETIREMENT, SAVINGS, AND EMPLOYEE STOCK OWNERSHIP PLAN
VOTING INSTRUCTIONS TO TRUSTEE
I hereby instruct First Trust National Association, as Trustee of the Dayton
Hudson Corporation Supplemental Retirement, Savings, and Employee Stock
Ownership Plan (the "Plan"), to "vote", in the manner specified in the Plan, at
the Annual Meeting of the Shareholders of Dayton Hudson Corporation (the
"Company") to be held on May 25, 1994, and at any and all adjournments of said
meeting, all shares of Common Stock and Series B ESOP Convertible Preferred
Stock of the Company held in the Plan with respect to which I have authority to
direct voting.
I understand that if I complete this card and return it to the Trustee by May
15, 1994, the Trustee will vote, in accordance with my instructions, the shares
of the Company's Common Stock and Series B ESOP Convertible Preferred Stock
allocated to my accounts under the Plan.
The Trustee is hereby instructed to vote as indicated below on the following
proposals which are more fully described in the Company's Notice of Annual
Meeting of Shareholders and Proxy Statement dated April 20, 1994.
THESE INSTRUCTIONS, WHEN PROPERLY EXECUTED, WILL BE FOLLOWED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED PARTICIPANT. IF NO DIRECTION IS MADE, THE
TRUSTEE IS INSTRUCTED TO VOTE FOR PROPOSALS 1, 2, 3 AND 4 AND AGAINST PROPOSALS
5 AND 6. SHARES HELD IN THE PLAN FOR WHICH A VOTING INSTRUCTIONS TO TRUSTEE CARD
IS NOT RECEIVED WILL BE VOTED BY THE TRUSTEE IN THE SAME PROPORTION AS VOTES
ACTUALLY CAST BY PLAN PARTICIPANTS.
The undersigned understands that, in accordance with the terms of the Plan,
these instructions shall be held in the strictest confidence by the Trustee and
shall not be divulged or released to any person, including officers or employees
of the Company.
1. Election of Directors, Nominees:
Betty Ruth Hollander, Kenneth A. Macke, Mary Patterson
McPherson and Robert J. Ulrich.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee or a
"substitute nominee", write that nominee's name or the words "substitute
nominee" on the space provided on the reverse side.)
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
0361
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2, 3 AND 4.
- --------------------------------------------------------------------------------
1. Election of Directors (see reverse) FOR WITHHELD
/_/ /_/
For, except withheld from the following nominee(s):
- ---------------------------
FOR AGAINST ABSTAIN
2. Ratification of Ernst & Young as
Independent Auditors /_/ /_/ /_/
3. Approval of the PTOC Plan /_/ /_/ /_/
4. Approval of the ROI Plan FOR AGAINST ABSTAIN
/_/ /_/ /_/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE SHAREHOLDER PROPOSALS
REGARDING:
FOR AGAINST ABSTAIN
5. Classified Board /_/ /_/ /_/
6. Equal Employment & Affirmative
Action Report /_/ /_/ /_/
- --------------------------------------------------------------------------------
In its discretion, the Trustee is authorized to "vote," in the manner specified
in the Plan, the shares covered by this instruction upon such other business as
may properly come before the meeting.
Signature(s) Date
-------------------------------------- ---------------------
NOTE: Please sign exactly as name appears hereon.
