<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 [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
DAYTON HUDSON CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $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(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
DAYTON HUDSON CORPORATION
[LOGO] 777 Nicollet Mall
Minneapolis, Minnesota 55402
612/370-6948
April 19, 1995
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Dayton Hudson Corporation to be held in Minneapolis at The Children's Theatre
on Wednesday, May 24, 1995, 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 Dayton Hudson.
Sincerely,
[SIGNATURE OF ROBERT J. ULRICH]
Robert J. Ulrich
Chairman of the Board
<PAGE>
DAYTON HUDSON CORPORATION
[LOGO] 777 Nicollet Mall
Minneapolis, Minnesota 55402
Telephone: (612) 370-6948
Notice of Annual Meeting
of Shareholders
May 24, 1995
- -----------------------------------------------------------------------------
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 24, 1995, 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 LLP as independent auditors.
(3) To approve for purposes of federal tax law an amended short-term
incentive plan based on objective performance goals.
(4) To approve the Director Stock Option Plan of 1995.
(5) To act upon any other business that may properly come before the meeting,
including a shareholder proposal.
Holders of record of Common Stock and Series B ESOP Convertible Preferred
Stock at the close of business on March 31, 1995 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.
[SIGNATURE OF JAMES T. HALE]
JAMES T. HALE
Secretary
Approximate Date of Mailing of Proxy Material:
April 19, 1995
<PAGE>
DAYTON HUDSON CORPORATION
777 NICOLLET MALL, MINNEAPOLIS, MINNESOTA 55402
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 24, 1995
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 24, 1995, 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 I directors for
three-year terms expiring in 1998 and until their successors are elected. The
four nominees are Rand V. Araskog, Roger L. Hale, Michele J. Hooper and John
R. Walter.
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 III directors whose terms expire at the 1997 Annual Meeting, four of
whom are Class II directors whose terms expire at the 1996 Annual Meeting,
and five of whom are Class I directors whose terms expire at this Annual
Meeting. Robert A. Burnett, a Class I director, is not seeking re-election,
since his retirement date under current Board policies would be July 1995. As
a result, the Board of Directors will consist of twelve members, four of whom
will be Class I directors.
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.
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.
Trujillo who was elected by the Board of Directors on October 12, 1994. 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, 1995. See page 28 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 63 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
RAND V. ARASKOG Chief Operating Officer in 1978. He was elected President and
Class I Chief Executive Officer in 1979 and Chairman in 1980. He is a
Nominee for term director of Alcatel Alstham, Dow Jones & Company, Inc., ITT
expiring in 1998 Corporation and Shell Oil Corporation. (1)(3)(5)
Picture of Robert A. Burnett is retired Chairman and Chief Executive Officer 67 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
ROBERT A. BURNETT Operating Officer in 1973. He was Chief Executive Officer from
Class I 1977 to 1989. He was Chairman from 1988 to 1992. He is a director
Term expires of ITT Corporation, Meredith Corporation, Midwest Resources, Inc.
May 1995 and Whirlpool Corporation. (1)(3)(4)
Picture of Livio D. DeSimone is Chairman and Chief Executive Officer of 3M, 58 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 General Mills, Inc., 3M and Vulcan Materials Corporation.
Term expires in 1996 (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 Chairman and Chief Executive Officer of PepsiCo 50 1990
Roger A. Enrico Worldwide Restaurants and is Vice Chairman of PepsiCo, Inc., a
appears here domestic and international beverage and food business. He joined
PepsiCo in 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 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
Worldwide Foods. In 1993, he was elected Vice Chairman of PepsiCo,
ROGER A. ENRICO Inc. and in 1994 Chairman and Chief Executive Officer of PepsiCo
Class II Worldwide Restuarants. He is a director of PepsiCo, Inc. and The
Term expires in 1996 Prudential Insurance Company of America. (1)(3)(5)
Picture of William W. George is President and Chief Executive Officer of 52 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)
Picture of Roger L. Hale is President and Chief Executive Officer of Tennant 60 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
ROGER L. HALE Vice President, International and in 1975, he was elected President
Class I and Chief Operating Officer. He was elected Chief Executive Officer
Nominee for term in 1976. He is a director of First Bank System, Inc. and Tennant
expiring in 1998 Company. (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 65 1986
Betty Ruth Hollander Officer of Omega Technologies, Inc., a manufacturer of scientific
appears here measurement and control devices and systems, technical publishing
and industrial and commercial real estate development. She founded
BETTY RUTH Omega Engineering, Inc. and was elected President in 1962. She
HOLLANDER was elected Chairman and Chief Executive Officer of The Omega Group,
Class III Inc. in 1978. She is a director of the People's Bank and the People's
Term expires in 1997 Bank Trustees. (1)(3)(4)
Picture of Michele J. Hooper is Corporate Vice President, International 43 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,
MICHELE J. HOOPER a unit of Baxter Corporation. In 1992, she became President,
Class I International Business Group, Caremark International, Inc. and
Nominee for term in 1993, she became Corporate Vice President, International
expiring in 1998 Businesses, Caremark International, Inc. (1)(2)(5)
Picture of Mary Patterson McPherson is President of Bryn Mawr College. She 59 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
MARY PATTERSON became President in 1978. She is a director of Bell Telephone Company
MCPHERSON of Pennsylvania. (1)(2)(4)(6)
Class III
Term expires in 1997
Picture of Solomon D. Trujillo is President and Chief Executive Officer of 43 1994
Solomon D. Trujillo U S West Marketing Resources Group, the regional, national and
appears here international directory publishing, information services and
software business of U S West. He joined Mountain Bell in 1974
and held various management positions before being named Vice
President and Chief Executive Officer of Mountain Bell New Mexico
SOLOMON D. in 1984. He served as Vice President and General Manager of the
TRUJILLO Small Business Services Market Unit of U S West from 1987 until
Class III he was elected President and Chief Executive Officer of U S West
Term expires in 1997 Marketing Resources Group in 1992. (1)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION AGE SINCE
---- ------------------------------------------ --- --------
<S> <C> <C> <C>
Picture of Robert J. Ulrich is Chairman and Chief Executive Officer of the 51 1993
Robert J. Ulrich Corporation and Chairman and Chief Executive Officer of Target,
appears here a division 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
the Department Store Division. Later that year he was named President
ROBERT J. ULRICH of Target. He became Chairman and Chief Executive Officer of Target
Class III in 1987. He was elected Chief Executive Officer of the Corporation
Term expires in 1997 on April 13, 1994 and Chairman on July 1, 1994. (1)
Picture of John R. Walter is Chairman and Chief Executive Officer of R.R. 48 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
Nominee for term and R.R. Donnelley & Sons Company. (1)(2)(4)(6)
expiring in 1998
Picture of Stephen E. Watson is President of the Corporation and Chairman 50 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.
(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
5
<PAGE>
year, the Executive Committee held seven 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 their 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 the
independent directors identified above. 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 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 five
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 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 two 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.
6
<PAGE>
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>
Robert J. Ulrich 1994 981,525 750,000 247,124 39,671 0 178,590(7)
Chairman and Chief Executive 1993 842,796 206,357 247,664 12,821 158,852 143,198
Officer; Chairman and Chief 1992 735,713 556,550 0 8,360 152,494 87,756
Executive Officer of Target
Stephen E. Watson 1994 808,594 253,897 160,638 8,596 0 173,218(8)
President; Chairman and 1993 770,509 0 222,866 11,539 158,852 134,481
Chief Executive Officer of 1992 688,056 296,576 0 8,360 130,719 95,173
The Department
Store Division
Kenneth B. Woodrow 1994 498,375 343,749 43,280 12,605 0 79,035(9)
President of Target
Paul W. Sauser 1994 513,750 150,000 37,076 1,984 0 108,143(10)
President and
Chief Operating Officer
of Mervyn's
Gregg W. Steinhafel 1994 395,080 227,897 30,947 6,798 0 50,418(11)
Executive Vice President
Merchandising of Target
Kenneth A. Macke 1994 771,139 500,000 0 0 0 4,452,115(12)
Former Chairman and Chief 1993 1,149,076 0 495,250 25,642 529,353 224,198
Executive Officer 1992 1,097,307 819,428 0 16,719 435,708 158,405
</TABLE>
- -------------------------
(1) Significant amounts of both salary and bonus for the six 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 any previously
deferred amount automatically paid out in the eighth year following each
separate deferral. Payout from the plan cannot be made until retirement,
death or termination and the payout is automatic in the eighth year
following each separate deferral. Amounts deferred are subject to the same
bankruptcy rules as are the Corporation's general 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. Sauser, Mr. Woodrow and Mr. Steinhafel became
executive officers of the Corporation in fiscal 1994.
7
<PAGE>
(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 fiscal 1992 and 1993. 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. In
addition, Mr. Ulrich received a bonus for fiscal 1993 performance in
September, 1994. Such adjustment was paid after final 1993 financial
results for applicable benchmark companies were available.
For fiscal 1994, executive officers of the Corporation and certain other
members of management of the Corporation and its operating companies were
eligible for incentive bonuses under the Personal Score Plan, the PTOC Plan
and the ROI Plan. Information regarding these plans is found in the Report
of the Compensation Committee.
(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 the date of grant. 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 rights holdings at the end of the 1994 fiscal year (based on the
closing price at the end of the fiscal year) is as follows:
<TABLE>
<CAPTION>
NUMBER VALUE
------ --------
<S> <C> <C>
Robert J. Ulrich........................ 6,512 $449,328
Stephen E. Watson....................... 5,034 347,346
Kenneth B. Woodrow...................... 1,381 95,289
Paul W. Sauser.......................... 2,398 165,462
Gregg W. Steinhafel..................... 935 64,515
Kenneth A. Macke........................ 2,405 165,945
</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 1990 grant to be paid in 1994 was 0% 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.
(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.
8
<PAGE>
- Amounts categorized by the SEC as reportable interest on compensation
deferred in current and previous years.
(7) Includes
$ 5,721 SRSP matching contribution
$ 39,351 deferred compensation credit for matching contributions which
could not be made to SRSP
$ 133,518 reportable interest on deferred compensation
(8) Includes
$ 6,960 SRSP matching contribution
$ 23,120 deferred compensation credit for matching contributions which
could not be made to SRSP
$ 143,138 reportable interest on deferred compensation
(9) Includes
$ 6,067 SRSP matching contribution
$ 16,637 deferred compensation credit for matching contributions which
could not be made to SRSP
$ 56,331 reportable interest on deferred compensation
(10) Includes
$ 6,050 SRSP matching contribution
$ 19,216 deferred compensation credit for matching contributions which
could not be made to SRSP
$ 44,127 reportable interest on deferred compensation
$ 38,750 market value of interest on loan -- See footnote (13)
(11) Includes
$ 5,978 SRSP matching contribution
$ 8,814 deferred compensation credit for matching contributions which
could not be made to SRSP
$ 35,626 reportable interest on deferred compensation
(12) $ 3,992 SRSP matching contribution
$ 88,123 reportable interest on deferred compensation
$ 100,000 legal fees
$ 300,000 consulting fees
$3,060,000 severance
$ 900,000 Office expense accrued on the Corporation's books (Mr. Macke is
entitled to be reimbursed for office expenses up to $100,000
per year until 2003)
(13) The Corporation loaned Mr. Sauser $500,000, secured by a second deed of
trust on the home he purchased in California. Mr. Sauser transferred to
California at the Corporation's request. The 15 year note bears no
interest. No principal payments have been made on the note.
9
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (8)
----------------------------------------------------- ----------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED OR BASE
GRANTED TO EMPLOYEES PRICE EXPIRATION
NAME (#)(1) IN FISCAL YEAR ($/SH) DATE 0% ($) 5% ($) 10% ($)
- ---- ---------- -------------- -------- ---------- ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert J. Ulrich 3,306(2) 20% 75.625 4/13/04 0 1,886,753 4,781,149
3,306(3) 75.625 4/13/04
3,306(4) 75.625 4/13/04
3,306(5) 75.625 4/13/04
26,447(6) 75.625 4/13/04
Stephen E. Watson 2,149(2) 4% 75.625 4/13/04 0 408,826 1,035,990
2,149(3) 75.625 4/13/04
2,149(4) 75.625 4/13/04
2,149(5) 75.625 4/13/04
Kenneth B. Woodrow 579(2) 6% 75.625 4/13/04 0 110,101 279,004
579(3) 75.625 4/13/04
578(4) 75.625 4/13/04
579(5) 75.625 4/13/04
10,290(7) 77.75 6/08/04 0 503,181 1,275,034
Paul W. Sauser 496(2) 1% 75.625 4/13/04 0 94,359 239,112
496(3) 75.625 4/13/04
496(4) 75.625 4/13/04
496(5) 75.625 4/13/04
Gregg W. Steinhafel 413(2) 3% 75.625 4/13/04 0 78,617 199,220
414(3) 75.625 4/13/04
413(4) 75.625 4/13/04
413(5) 75.625 4/13/04
5,145(7) 77.75 6/08/04 0 251,591 637,517
Kenneth A. Macke 0
</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, (except one option granted each to Mr. Ulrich, Mr. Woodrow and Mr.
Steinhafel, which are fully exercisable in 5 years), 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 13, 1995.
(3) Exercisable April 13, 1996.
(4) Exercisable April 13, 1997.
(5) Exercisable April 13, 1998.
(6) Exercisable April 13, 1999.
(7) Exercisable June 8, 1999.
(8) 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>
Robert J. Ulrich 31,920 1,349,016 35,914 73,428 316,436 40,494
Stephen E. Watson 3,323 157,012 104,227 24,140 1,837,905 40,494
Kenneth B. Woodrow 0 0 20,071 16,647 457,727 10,123
Paul W. Sauser 0 0 6,190 10,426 41,462 29,489
Gregg W. Steinhafel 0 0 6,928 12,539 86,328 8,099
Kenneth A. Macke 0 0 203,617 34,364 3,334,409 80,978
</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>
Robert J. Ulrich 9,918 4 fiscal years 3,967 -- 9,918
Stephen E. Watson 6,447 4 fiscal years 2,579 -- 6,447
Kenneth B. Woodrow 1,736 4 fiscal years 694 -- 1,736
Paul W. Sauser 1,488 4 fiscal years 595 -- 1,488
Gregg W. Steinhafel 1,240 4 fiscal years 496 -- 1,240
Kenneth A. Macke 0
</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.
Mr. Ulrich and Mr. Watson, 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. Woodrow, Mr. Sauser
and Mr. Steinhafel were not participants 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
11
<PAGE>
schedule which provides longer income continuation to those participants with
higher grade levels. Mr. Woodrow, Mr. Sauser and Mr. Steinhafel participate
in the SMG Income Continuance Policy.
All executive officers who are members of the Corporation's Senior Management
Group are covered by one of these policies. Both policies include offset
provisions for certain 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 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 $ 36,150 $ 48,200 $ 60,250 $ 62,750 $ 65,250
400,000 75,150 100,200 125,250 130,250 135,250
600,000 114,150 152,200 190,250 197,750 205,250
800,000 153,150 204,200 255,250 265,250 275,250
1,000,000 192,150 256,200 320,250 332,750 345,250
1,200,000 231,150 308,200 385,250 400,250 415,250
1,400,000 270,150 360,200 450,250 467,750 485,250
1,600,000 309,150 412,200 515,250 535,250 555,250
1,800,000 348,150 464,200 580,250 602,750 625,250
2,000,000 387,150 516,200 645,250 670,250 695,250
</TABLE>
Currently under ERISA, as amended, the maximum annual amount that can be paid
under the Qualified Pension Plans to any individual is $120,000, 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. Ulrich, 27 years; Mr. Watson, 21 years; Mr. Woodrow, 25
years; Mr. Sauser, 26 years; and Mr. Steinhafel, 15 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
12
<PAGE>
members of the Senior Management Group, participate in a program whereby such
person's survivor will receive the equivalent of a joint and 100% surviving
spouse option with no reduction from the life only pension amount, payable to
the officer for as long as he or she lives. 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.
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 Corporate Operating
Committee (the "COC 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.
Ulrich's fiscal 1994 performance as Chairman of the Board and CEO. The
Compensation Committee together with all other outside directors prepared an
annual written performance evaluation of Mr. Ulrich's fiscal 1994 performance
and determined Mr. Ulrich's performance score. In addition to evaluating Mr.
Ulrich in his role as CEO, the outside directors also specifically evaluated
his performance as Chairman of the Board. Factors used by the outside
directors to evaluate Mr. Ulrich's performance as CEO included management
succession planning, strategic planning, organizational development, and
formulation of major corporate policies. In his role as Chairman of the
Board, Mr. Ulrich was evaluated on factors such as chairing effective
meetings of the Board of Directors and the Executive Committee, keeping the
Board fully informed of the condition of the Corporation, developing sound
corporate governance policies, and working with the directors to effectively
use their talents to the best strategic advantage of the Corporation.
The written evaluation was reviewed with Mr. Ulrich and constituted 50% of
the weighting for his annual incentive bonus compensation. The remaining 50%
of Mr. Ulrich's incentive compensation was based on the Corporation's
financial performance as further described under Short-Term Incentive
Compensaton. In addition, Mr. Ulrich's performance was discussed with him in
a meeting with all of the independent directors. The Compensation Committee
also adopts a "Bonus Matrix" which assigns varying bonus percentages based on
the participant's job grade and Personal Score. The bonus amount for each
participant under the Personal Score Plan 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 Personal Score Plan. For
example, if the participant is participating in the
13
<PAGE>
Personal Score Plan at 50%, the result is multiplied by 1/2. Mr. Ulrich's bonus
percentage is applied against his base salary.
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 1994 written performance appraisal scores and incentive bonuses of the
executive officers were approved by the Compensation Committee.
BASE SALARY
In April, 1994, the Compensation Committee approved Mr. Ulrich's base salary.
When the Compensation Committee considered Mr. Ulrich'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 Compensation Committee set Mr. Ulrich'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 payout 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 Plans, executive officers of the
Corporation and certain other members of the senior management of the
Corporation and its operating companies were eligible for annual incentive
bonuses for fiscal 1994.
In addition to the Personal Score Plan, for fiscal 1994, the Corporation had
two financial performance based incentive plans, PTOC (pre-tax operating
contribution) and ROI (return on investment).
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 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
performance goals.
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 expenses.
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
14
<PAGE>
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.
The bonus amount for each participant whose operating company uses a non-
pooled basis 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), except Mr.
Ulrich whose base salary is used, 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.
The bonus amount for each participant whose operating company uses a pooled
basis 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 is 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.
Target is the only operating company that uses a pooled basis.
ROI Plan. To receive an incentive bonus for fiscal 1994 performance under
the ROI Plan the Corporation's or the relevant operating company's financial
performance had to be at or within the top 50% of the benchmark group of 20
of the top-performing companies in retailing.
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 adopted the relevant ROI standards and selected the
Benchmark Group for use under the ROI Plan and set payout levels for varying ROI
Scores achieved.
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. The Compensation
Committee selected the "Benchmark Group" of companies for purposes of comparing
the operating company and/or Corporation's ROI performance versus ROI standard
for fiscal 1994. 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.
The bonus amount for each participant whose operating company uses a non-
pooled basis is calculated by taking the participant's bonus percentage from the
Bonus Matrix, multiplying it by
15
<PAGE>
his or her Midpoint of Salary Range (the midpoint of the salary range
of a participant's job grade level), except Mr. Ulrich whose base salary is
used, 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.
The bonus amount for each participant whose operating company uses a pooled
basis 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 is 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.
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.
Target is the only operating company that uses a pooled basis.
Mr. Ulrich's bonus for fiscal 1994 was based on 50% Personal Score Plan, 25%
PTOC Plan-Corporation and 25% ROI Plan-Corporation. Mr. Watson's, Mr. Woodrow's,
Mr. Sauser's and Mr. Steinhafel's bonuses were based on 33 1/3% Personal Score
Plan, 33 1/3% PTOC Plan and 33 1/3% ROI Plan. Mr. Ulrich's bonus was $532,453
Personal Score Plan, $106,519 PTOC Plan and $111,028 ROI Plan. Mr. Watson's
bonus was $155,597 Personal Score Plan, $33,643 PTOC Plan and $64,657 ROI Plan.
Mr. Woodrow's bonus was $129,682 Personal Score Plan, $163,886 PTOC Plan and
$50,181 ROI Plan. Mr. Sauser's bonus was $150,000, a guaranteed bonus. Mr.
Steinhafel's bonus was $86,036 Personal Score Plan, $108,760 PTOC Plan and
$33,101 ROI Plan.
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 1994 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 1994 the Compensation Committee determined that the non-stock
option portion of the long-term incentive plan 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
16
<PAGE>
compensation to shareholder value by giving these executives an incentive to
remain with the Corporation until retirement.
Performance Shares
All of the COC 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. No performance share payout was made in
1994 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 1990 grant
covering the period of 4 fiscal years ending in 1994, was 0% 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 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 COC
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 1994, 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. Except for the option
grants listed below, the options are exercisable 25% after the first year,
with an additional 25% after each of the next 3 years. One option grant to
each of Mr. Ulrich, Mr. Woodrow and Mr. Steinhafel is exercisable after five
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
17
<PAGE>
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") prohibits 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 pre-
established, 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 proposal regarding the amended
short-term compensation plan contained in this Proxy Statement, the Corporation
believes amounts payable under that plan will 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 COC 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
18
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 Index $100 $108.39 $132.99 $147.06 $166.00 $166.88
Dayton Hudson Corporation $100 $112.25 $113.93 $138.99 $120.19 $128.14
S&P Retail Stores-Composite $100 $117.33 $163.95 $195.69 $188.61 $174.65
- -------------------------------------------------------------------------------------------
</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, 1990, 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 at then current prices. The Corporation
pays the brokerage fees for such purchases. Non-employee directors also
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
compensated 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 that are 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 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
19
<PAGE>
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 LLP as independent auditors of the accounts of the Corporation and its
subsidiaries for the fiscal year ending February 3, 1996. Ernst & Young LLP
has been employed in this capacity by the Corporation since 1931. The
Corporation has been advised by Ernst & Young LLP 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 LLP 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 LLP AS
INDEPENDENT AUDITORS.
20
<PAGE>
PROPOSAL NUMBER THREE
APPROVAL OF AMENDED SHORT-TERM INCENTIVE PLAN
Background. Prior to fiscal 1995, the Corporation had three short-term
incentive plans: Personal Score, PTOC and ROI. Those plans combined
subjective (Personal Score) and objective performance (PTOC and ROI) measures
to evaluate participant performance, and are described in the Report of the
Compensation Committee. The Corporation has terminated the ROI Plan and has
amended its Executive Incentive Plan so that it now has objective performance
measures based upon PTOC (pre-tax operating contribution) and EVA(R)
(Economic Value Added(R)). The Compensation Committee believes that the new
EVA performance measure in combination with the PTOC performance measure will
promote the Corporation's pay for performance philosophy.
The shareholders of the Corporation must approve the Executive Incentive Plan,
as amended, in order to exclude incentive compensation earned under that plan
from the deductibility limitation of Section 162(m). If the shareholders fail to
approve this plan, no bonuses will be awarded under it. Any incentive
compensation earned under the Personal Score Plan is subject to the Section
162(m) limitation on the deductibility of executive compensation in excess of
$1,000,000 as described in the Compensation Committee report.
The Compensation Committee determines which executives participate in each of
the plans and the percentage of participation in each plan. With respect to
fiscal 1995, Mr. Ulrich will participate 50% based on the Personal Score Plan,
25% based on the PTOC Plan-Corporation and 25% based on the EVA Plan-
Corporation. Messrs. Watson, Sauser, Woodrow, and Steinhafel 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 EVA Plan. Corporate executive officers will participate
using the same percentage as Mr. Ulrich and operating company executive
officers using the same percentage as Mr. Watson, Mr. Sauser, Mr. Woodrow and
Mr. Steinhafel. The non-SMG executive officer will participate 100% in the
Personal Score Plan. The financial performance of the operating companies'
executive officers will be based on their respective operating company's PTOC
and EVA performance and the financial performance of the other executive
officers will be based on the weighted average roll-up of the PTOC and EVA
performance of all operating companies.
The basic features of the Executive Incentive Plan, as amended, are summarized
below. However, this summary narrative is qualified in its entirety by the
Executive Incentive Plan set forth in Exhibit A.
EIP as Amended. The Executive Incentive Plan measures an operating company's
and/or the Corporation's performance against annually pre-determined goals
based upon PTOC and/or EVA to determine how and whether bonuses will be paid.
The outside directors set annual PTOC and EVA goals in conjunction with
establishing other financial performance goals for the operating companies
and the Corporation. The Compensation Committee then uses the PTOC and EVA
goals to establish the PTOC and EVA bonus ranges for use in conjunction with
the Executive Incentive Plan and determines what level of bonuses will be
paid if PTOC and EVA performance falls within the relevant bonus ranges.
Eligibility. Participation in the Executive Incentive Plan is limited to
upper level executive employees of the Corporation and the operating
companies. The Compensation Committee determines which Corporate employees
are eligible or, in the case of employees of operating companies, the class
of upper level executives that is eligible. Approximately 100 executive
employees are eligible to participate in the Executive Incentive 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.
Definition of EVA. "EVA" (economic value added) is PTOC after taxes less a
Capital Charge. A "Capital Charge" is the cost of capital invested in the
business operation, adjusted for the maturity of the assets employed by such
business operation.
- --------------------
(R)Economic Value Added and EVA are registered trademarks.
21
<PAGE>
Determination of Bonus Amounts. Bonuses may be determined and awarded on the
basis of PTOC and/or EVA. The "PTOC Score" and/or "EVA Score" for the fiscal
year are determined from performance schedules, approved by the Compensation
Committee, that designate a score for each varying level of PTOC and EVA
performance, respectively, achieved by an operating company and/or the
Corporation. The Compensation Committee also adopts a "PTOC Bonus Matrix" and
an "EVA Bonus Matrix" which assign varying bonus percentages based on the
participant's job grade and PTOC Score and/or "EVA 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 relevant 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% and the
EVA Plan at 50%, the PTOC result is multiplied by 1/4 and the EVA result is
multiplied by 1/2.
Pooled Bonuses. The bonus amount for each participant is calculated in the
same manner as for the non-pooled bonuses, however all related bonus amounts
are added together to form a bonus pool. The bonus payable to each
participant under the Executive Incentive Plan will be based on a ratio of
his or her bonus to all bonuses earned 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 Executive Incentive 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 Executive Incentive 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, EVA 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 Executive
Incentive 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 1994 if the Executive Incentive Plan and the 1995 Director Option Plan
had been in effect in such year based on assumptions noted in the table.
Amounts payable in fiscal 1995 cannot be determined because the result
depends on year-end 1995 performance of the Corporation and/or operating
companies.
22
<PAGE>
NEW PLAN BENEFITS
(BENEFITS PAYABLE ASSUMING THE PLANS WERE IN EFFECT IN FISCAL 1994)
<TABLE>
<CAPTION>
EXECUTIVE INCENTIVE PLAN
---------------------------------------------
PTOC (1) EVA (2) 1995 DIRECTOR OPTION PLAN
---------------------- ------------------- -------------------------
DOLLAR NUMBER DOLLAR NUMBER DOLLAR NUMBER
NAME AND POSITION VALUE $ OF UNITS VALUE $ OF UNITS VALUE $ OF UNITS
- ----------------- ---------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Ulrich $ 106,519 (3) (2) (3) (5) (5)
Chairman and Chief
Executive Officer; Chairman and Chief
Executive Officer of Target
Stephen E. Watson $ 33,643 (3) (2) (3) (5) (5)
President; Chairman and Chief
Executive Officer of the Department
Store Division
Kenneth B. Woodrow $ 163,886 (3) (2) (3) (5) (5)
President of Target
Paul W. Sauser 0 (3) (2) (3) (5) (5)
President and Chief
Operating Officer of Mervyn's
Gregg W. Steinhafel $ 108,760 (3) (2) (3) (5) (5)
Executive Vice President
Merchandising of Target
Kenneth A. Macke 0 (3) (2) (3) (5) (5)
Former Chairman and
Chief Executive Officer
Executive Group (14 persons) $ 728,988 (3) (2) (3) (5) (5)
Non-Executive Director Group (4) (4) (4) (4) $550,000 6,897(6)
(11 persons)
Non-Executive Officer $1,586,891 (3) (2) (3) (5) (5)
Employee Group (86 persons)
</TABLE>
- -----------------------
(1) Actual awards since PTOC was in effect in fiscal 1994.
(2) The dollar amount for fiscal 1995 cannot be determined until the year is
over. Since no EVA goals were set for fiscal 1994, no amount can be
calculated. The EVA goals for 1995 are much higher than would have been set
for 1994. If the EVA goals set for 1995 were in effect in fiscal 1994 no
bonus would have been paid.
(3) Units are not applicable to the Plan.
(4) Non-Executive Directors do not participate in the Plan.
(5) Employees do not participate in the Plan.
(6) Assumes options were issued at the Corporation's 1994 Annual Meeting.
The affirmative vote of a majority of the voting power of the shares present
and entitled to vote is required for the Executive Incentive Plan, as
amended, 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 EXECUTIVE INCENTIVE PLAN, AS AMENDED.
23
<PAGE>
PROPOSAL NUMBER FOUR
APPROVAL OF DIRECTOR STOCK OPTION PLAN OF 1995
The purpose of the Director Stock Option Plan of 1995 (the "1995 Director
Plan") is to advance the interim performance and long-term growth of the
Corporation by offering long-term incentives, in addition to current
compensation and other benefits, to outside directors of the Corporation.
Directors who are employees of the Corporation are not eligible to
participate in the 1995 Director Plan. The basic features of the 1995
Director Plan are summarized below, however, this summary narrative is
qualified in its entirety by the Director Stock Option Plan of 1995 as set
forth in Exhibit B.
Shares Subject to the Plan. The 1995 Director Plan provides that the total
number of shares of the Corporation's common stock, par value $1.00 per
share, available for issuance under all stock options awarded under the Plan
(the "Stock Options") shall not exceed 100,000 shares. Shares of common stock
covered by expired or terminated Stock Options may be used for subsequent
awards under the 1995 Director Plan. There is no preemptive right in
shareholders of the Corporation to subscribe to any additional issuance or
reissuance of the Corporation's securities.
Automatic Grant of Stock Options. The 1995 Director Plan provides for the
annual, automatic granting of a defined number of Stock Options to the
non-employee directors of the Corporation. Each person who is a member of the
Board of Directors as of the date of the Corporation's 1995 annual meeting,
and then annually thereafter each person who is a member of the Board of
Directors as of the second Wednesday in each succeeding month of April, will
automatically receive a non-qualified option to purchase the number of shares
of the Corporation's common stock determined by dividing $50,000 by the fair
market value of such stock on the date of grant.
Term and Price. All options granted under the 1995 Director Plan expire no
later than ten years and one day after the date of grant or on such earlier
date as the Plan Committee shall determine in the event of a reorganization.
The purchase price for the option stock is 100% of the fair market value of
the stock on the day the option is granted.
Waiting Period and Exercise. Options granted under the 1995 Director Plan may
be exercised, subject to their terms and conditions, in full or in part at
any time at least one year from date of grant.
Payment. Under the 1995 Director Plan, stock purchased pursuant to a Stock
Option must be paid for in full together with any applicable withholding
taxes before stock may be issued. Payment may be made in cash, by the
delivery of owned Corporation common stock or by a combination of cash and
Corporation common stock.
Termination of Employment or Death. A Stock Option issued under the 1995
Director Plan is generally exercisable only until the earlier of (i) five
years after the date the participant ceases to be a director of the
Corporation or (ii) ten years and one day after the date of grant of the
Stock Option. In the event of the death of a participant, the Stock Option is
exercisable by his or her heirs, provided that it must be exercised within
five years after the date of death or the life of the Stock Option, whichever
is less, but in no event less than one year after the date of death.
Antidilution and Reorganization Provisions. Under the 1995 Director Plan, the
Plan Committee may, in its discretion, make appropriate adjustments in the
number of shares and in the option price to give effect to adjustments made
in the number of shares of common stock of the Corporation effected through a
merger, consolidation, recapitalization, reclassification, combination,
spin-off, common stock dividend, stock split or other relevant change. If the
Corporation is reorganized, the 1995 Director Plan provides that the Plan
Committee shall provide certain alternatives to holders of Stock Options.
Change in Control. Under the 1995 Director Plan, in the event of a change in
control, all outstanding options granted under the Plan accelerate and are
exercisable in full for a period of 210 days after the change in control;
provided that no Stock Option can be exercised by a
24
<PAGE>
participant after the termination date of the option. Under the 1995 Director
Plan, a change in control includes a person or group becoming the beneficial
owner of 30% or more of the Voting Stock of the Corporation, certain changes of
a majority of the Board of Directors of the Corporation or approval by the
shareholders of the Corporation of certain agreements or plans of merger,
consolidation, stock exchange, disposition of substantially all assets,
liquidation or dissolution involving the Corporation.
Withholding. Under the 1995 Director Plan all distributions are subject to
any required withholding taxes and other withholdings. The Plan provides that
the required withholdings may be satisfied by the Corporation withholding of
cash payments for fractional shares, if any, in an amount equal to the
required withholding.
Rights as a Shareholder and Assignability. A participant has no rights as a
shareholder with respect to any shares covered by any Stock Options granted
until the date of issuance of a stock certificate. During the lifetime of the
participant, the Stock Option is exercisable only by the participant. A Stock
Option is transferable only by will or by reason of the laws of descent and
distribution.
Administration, Duration and Amendment. The Plan is administered by the Plan
Committee appointed by the Board of Directors. The present Plan Committee is
composed of members of the Board of Directors who are not officers or
employees of the Corporation and are not persons who have been an officer or
employee of the Corporation or a subsidiary or affiliate at any time within
the last year. The current Plan Committee is composed of the following
directors: Rand V. Araskog, Robert A. Burnett, Roger A. Enrico, Roger L. Hale
and Betty Ruth Hollander. The Plan Committee has no discretion regarding the
granting of stock options and it may not increase the number of shares
subject to the Plan nor alter or amend any terms, conditions or eligibility
requirements for options granted under the 1995 Director Plan. However, all
questions arising under the Plan, any Stock Option granted under the Plan, or
any rule, regulation or procedure adopted by the Plan Committee shall be
conclusively determined by the Plan Committee.
Federal Tax Consequences. A participant will realize no income at the time a
Stock Option is granted under the Plan, but generally at the time such Stock
Option is exercised, the participant will realize ordinary income in an
amount equal to the excess of the fair market value of the shares on the date
of exercise over the option price. Upon a disposition of such shares, the
difference between the amount received and the fair market value on the date
of exercise will generally be treated as long-term or short-term capital gain
or loss, depending on the holding period of the shares. The Corporation will
generally be entitled to a deduction for federal income tax purposes at the
same time and in the same amount as the participant is considered to have
realized ordinary income in connection with the exercise of the option.
Proceeds of Plan. Proceeds received from the sale of stock issued pursuant to
Stock Options granted under the 1995 Director Plan constitute general funds
of the Corporation.
The affirmative vote of a majority of the voting power of the shares present
and entitled to vote is required for the 1995 Director Stock Option 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 1995 DIRECTOR STOCK OPTION PLAN.
25
<PAGE>
SHAREHOLDER PROPOSAL
The Corporation has received a shareholder proposal for inclusion in this
proxy statement. The 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.
SHAREHOLDERS' PROPOSAL CONCERNING EQUAL EMPLOYMENT AND
AFFIRMATIVE ACTION REPORT
[PROPOSAL 5 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 1995 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/or female-owned
businesses.
3. A description of any policies and programs favoring the purchase of
goods and services from minority- and/or female-owned businesses.
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.
"This resolution received the support of 9.4% of votes cast last year.
"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 Company 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 into
our nation's workforce will be women and/or members of a racial minority. We
believe implementation of this resolution 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 bottom line.
"We believe that challenges associated with race and sex discrimination are
confronted in the public and private sectors continually, including at our
Company. No corporation can afford to ignore these challenges.
26
<PAGE>
"By supporting this resolution, shareholders can send a strong message to
Dayton Hudson that it must address these issues 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."
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT THE SHAREHOLDERS OF
THE CORPORATION VOTE AGAINST THIS RESOLUTION.
-------
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 all 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. As a
result, the Corporation has been recognized nationally for its efforts to
promote the diversity of its employees and the communities where they live
and work.
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 March 31, 1995 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 71,719,871 shares of Common
Stock and 414,382 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.
27
<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, 1995:
<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 15,820 15,820 *
Robert A. Burnett Common 5,706 5,706 *
Livio D. DeSimone Common 1,711(4) 1,711 *
Roger A. Enrico Common 4,548 4,548 *
William W. George Common 1,540 1,540 *
Roger L. Hale Common 1,274 1,274 *
Betty Ruth Hollander Common 5,610 5,610 *
Michele J. Hooper Common 815 815 *
Mary Patterson McPherson Common 1,010 1,010 *
Solomon D. Trujillo Common 336 336 *
Robert J. Ulrich (1) Common 50,956 64,477 115,433(6) *
John R. Walter Common 699 699 *
Stephen E. Watson (1) Common 23,390 114,061 137,451(6) *
Kenneth B. Woodrow (1) Common 2,111 22,567 24,678(6) *
Paul W. Sauser (1) Common 988 7,964 8,952(6) *
Gregg W. Steinhafel(1) Common 2,920 11,622 14,542(6) *
Kenneth A. Macke Common 54,238(4) 220,981 275,219 *
All directors and executive
officers of the Corporation as
a group (25 persons) Common 212,061 499,392 711,453(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, 610 shares; Mr. DeSimone, 610 shares; Mr. Macke, 34,056 shares; and
Mr. Watson, 22,158 shares. The persons listed have shared voting and
investment power: Mr. Araskog, 15,210 shares; Mr. DeSimone, 501 shares; Mr.
Macke, 11,900 shares; and Mr. Watson, 1,232 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 28,
1995.
(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, 8,282
shares as to which shares each named individual disclaims beneficial
ownership.
(5) Shares that the named individuals may acquire on or before June 1, 1995
pursuant to options held by them under the Corporation's 1981 Option Plan.
(6) As of January 29, 1994, Mr. Ulrich owned 46 shares of Series B ESOP
Convertible Preferred Stock ("Preferred Stock"), Mr. Watson owned 46 shares
of Preferred Stock, Mr. Woodrow owned 47 shares of Preferred Stock, Mr.
Sauser owned 48 shares of Preferred Stock, Mr. Steinhafel owned 47 shares of
Preferred Stock and all directors and executive officers of the Corporation
owned 545 shares of Preferred Stock. Ownership of such Preferred Stock is
not reflected in the table above.
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No person or entity is known to the Corporation to be the beneficial owner of
more than 5 percent of any class of the Corporation's voting securities.
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. Raj
Joneja, Executive Vice President of Mervyn's, did not include 2,041 shares
owned indirectly by his spouse on his initial statement of beneficial
ownership filed October 1994. Roger A. Enrico did not timely report the
purchase of 1,000 shares made during November, 1994. Kenneth A. Macke did not
timely report the sale of 1,700 shares by a family member during November
1994. James T. Hale, Senior Vice President of the Corporation, did not timely
report the gift to family members of 635 shares in December 1994.
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.
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
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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 28,
1995, including financial statements, is enclosed.
SHAREHOLDER PROPOSALS
Any shareholder proposals for the Corporation's 1996 Annual Meeting must be
received by the Corporation by December 20, 1995 in order to be included in
the proxy statement. Under the Corporation's By-laws, as amended, if a
shareholder plans to propose an item of business to be considered at any
annual or special meeting of shareholders, that shareholder is required to
give notice of such proposal to the Secretary of the Corporation at least 60
days prior to the meeting and to comply with certain other requirements. 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 19, 1995
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EXHIBIT A
DAYTON HUDSON CORPORATION
EXECUTIVE INCENTIVE PLAN
(PTOC & EVA)
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 & EVA)". 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. Defined Incentive Bonus Terms
"Bonus Matrix"
The "Bonus Matrix" refers to either of two separate tables
setting forth figures which indicate with varying job grade
level classifications, the percentage of incentive bonus
attributable to each PTOC Score or EVA 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.
"Capital Charge"
"Capital Charge" is the cost of capital invested in the business
operation, adjusted for the maturity of the assets employed by
such business operation.
"EVA"
"EVA" (economic value added) is PTOC after taxes less a Capital
Charge.
"EVA Score"
The "EVA Score" is determined from a schedule that is approved
by the Compensation Committee that gives a score for the level
of EVA achieved by the Division and/or Company. The schedule may
be modified annually.
"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.
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"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.
"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.
b. Determination of Bonus Based Upon PTOC
(1) Compensation Policy and Intent of PTOC Bonuses
Incentive bonuses under the PTOC portion of the Plan are based
on the Division and/or Company PTOC for the Fiscal Year.
(2) Non-Pooled
Incentive bonuses for each participant will be calculated by
taking the participant's bonus percentage from the PTOC Bonus
Matrix, using his/her salary grade, and multiplying it by
his/her Midpoint of Salary Range.
(3) 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.
(4) 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.
(5) Selection of Pooled or Non-Pooled
The Compensation Committee will determine whether a Division
and/or Company is to be pooled or non-pooled.
c. Determination of Bonus Based Upon EVA
(1) Compensation Policy and Intent of EVA Bonuses
Incentive bonuses under the EVA portion of the Plan are based on
the Division and/or Company EVA for the Fiscal Year.
(2) Non-Pooled
A bonus pool is calculated by multiplying the percentage from
the Bonus Matrix using the EVA Score for each participant by the
participant's Midpoint of Salary Range.
(3) Pooled
A bonus pool is calculated by multiplying the percentage from
the Bonus Matrix using the EVA 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.
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(4) 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.
(5) Selection of Pooled or Non-Pooled
The Compensation Committee will determine whether a Division
and/or Company is to be pooled or non-pooled.
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 this Plan and the
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 this Plan and the 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 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
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
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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.
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.
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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.
f. Shareholder Approval. No bonuses, awards or other compensation will
be granted or paid pursuant to this Plan unless and until this Plan
is approved by the affirmative vote of a majority of the voting
power of the shares present and entitled to vote at a meeting of the
Company's shareholders.
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EXHIBIT B
DAYTON HUDSON CORPORATION
DIRECTOR STOCK OPTION PLAN OF 1995
ARTICLE I
ESTABLISHMENT OF THE PLAN
1.1 The name of this plan shall be "The Dayton Hudson Corporation Director
Stock Option Plan of 1995" (hereinafter called the "Plan").
1.2 The purpose of the Plan is to advance the interim performance and
long-term growth of the Company by offering long-term incentives, in
addition to current compensation and other benefits, to outside directors
of the Company.
ARTICLE II
DEFINITIONS
2.1 Award. An "Award" is used at times in the Plan to refer to the act of
granting a Stock Option under the Plan.
2.2 Board. "Board" is the Board of Directors of the Company.
2.3 Code. "Code" is the Internal Revenue Code of 1986, as amended, as now in
force or as hereafter amended.
2.4 Company. "Company" is Dayton Hudson Corporation, a Minnesota
corporation, and any successor thereof.
2.5 Date of Grant. "Date of Grant" in 1995 shall be the date of the
Company's Annual Shareholder's meeting. Each year thereafter, Date of
Grant shall be the second Wednesday in the month of April.
2.6 Fair Market Value. "Fair Market Value" of a share of Company common
stock on any date is 100% of the mean between the high and low prices for
such stock as reported for such stock on the New York Stock Exchange
Composite Transactions Listing ("Composite Listing") on such date, or in
the absence of such report 100% of the mean between the high and low prices
of such stock on the New York Stock Exchange on such date or, if no sale
has been recorded on the Composite Listing or made on such Exchange on such
date, then on the last preceding date on which any such sale shall have
been made in the order of primacy above indicated.
2.7 Participant. A "Participant" is a member of the Board who is not an
employee of Company or any of its Subsidiaries.
2.8 Plan Committee. The "Plan Committee" is the Committee referenced in
Article VI hereof.
2.9 Plan Year. The "Plan Year" shall be a fiscal year of the Company falling
within the term of this Plan except for the first year of the Plan, for
which the Plan Year shall commence as of the effective date of the Plan and
terminate as of February 3, 1996.
2.10 Relevant Change Adjustments. Appropriate adjustments in the number of
shares and in the Stock Option price per share designated in Section 2.11
of this Article II, may be made by the Plan Committee, in its discretion
except as provided in Section 7.6 hereof, to give effect to adjustments
made in the number of shares of Company common stock through a merger,
consolidation, recapitalization, reclassification, combination, spin-off,
common stock dividend, stock split, or other relevant change.
2.11 Stock Option. A "Stock Option" is a right accruing in a Participant to
purchase from the Company one share of the Company's $1.00 par value common
stock at the Fair Market Value of such share of common stock on the Date of
Grant of the Stock Option, and
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containing the terms and conditions set forth or allowed under Article VI
hereof. Such Stock Option shall be a Non-Qualified Stock Options that are
not intended to qualify under Section 422 of the Code.
2.12 Subsidiary Corporation. For purposes of this Plan, the term "Subsidiary"
or "Subsidiary Corporation" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company, in which
each of the corporations other than the last corporation in the unbroken
chain owns stock possessing fifty percent or more of the total combined
voting power of all classes of stock in one of the other corporations in
such chain as determined at the point in time when reference is made to
such "Subsidiary" or "Subsidiary Corporation" in this Plan.
2.13 Change in Control. A "Change in Control" shall be deemed to have
occurred if:
(a) a majority of the directors of the Company shall be persons other
than persons
(i) for whose election proxies shall have been solicited by the
Board or
(ii) who are then serving as directors appointed by the Board to
fill vacancies on the Board caused by death or resignation
(but not by removal) or to fill newly-created directorships,
(b) 30% or more of the outstanding Voting Stock (as defined in Article
IV of the Restated Articles of Incorporation, as amended, of the
Company) of the Company is acquired or beneficially owned (as
defined in Article IV of the Restated Articles of Incorporation, as
amended, of the Company) by any person (as defined in Article IV of
the Restated Articles of Incorporation, as amended, of the
Company), or
(c) the shareholders of the Company approve a definitive agreement or
plan to
(i) merge or consolidate the Company with or into another
corporation (other than (1) a merger or consolidation with a
Subsidiary of the Company or (2) a merger in which the Company
is the surviving corporation and either (A) no outstanding
Voting Stock of the Company (other than fractional shares) held
by shareholders immediately prior to the merger is converted
into cash (except cash upon the exercise by holders of Voting
Stock of the Company of statutory dissenters' rights),
securities, or other property or (B) all holders of outstanding
Voting Stock of the Company (other than fractional shares)
immediately prior to the merger (except those that exercise
statutory dissenters' rights) have substantially the same
proportionate ownership of the Voting Stock of the Company or
its parent corporation immediately after the merger),
(ii) exchange, pursuant to a statutory exchange of shares of Voting
Stock of the Company held by shareholders of the Company
immediately prior to the exchange, shares of one or more
classes or series of Voting Stock of the Company for shares of
another corporation or other securities, cash or other
property,
(iii) sell or otherwise dispose of all or substantially all of the
assets of the Company (in one transaction or a series of
transactions) or
(iv) liquidate or dissolve the Company.
ARTICLE III
GRANTING OF STOCK OPTIONS
3.1 Automatic Grant of Stock Options. Each year on the Date of Grant each
Participant shall, without any Plan Committee action, automatically be
granted Stock Options, the number of which will be determined by dividing
$50,000 by the Fair Market Value on the Date of Grant.
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3.2 Notification to Participants and Delivery of Documents. As soon as
practicable after the Award, the Participant shall receive a Stock Option
exercisable for purchase of one share of the Company's $1.00 par value
common stock for each Stock Option granted to the Participant pursuant to
this Plan or indicating the aggregate of such grant, which Stock Option
shall be in conformity with the provisions of Article IV hereof.
ARTICLE IV
STOCK OPTIONS
4.1 Stock Option. The Stock Option shall be evidenced by Stock Option
agreements in such form and not inconsistent with the Plan as the Plan
Committee shall in its sole discretion approve from time to time, which
agreements shall specify the number of shares to which they pertain and the
purchase price of such shares and shall, but without limitation, contain in
substance the following terms and conditions:
(a) Option Period. Each Stock Option granted shall expire and all
rights to purchase shares thereunder shall cease ten years and one
day after the Date of Grant of the Stock Option or on such date
prior thereto as may be fixed by the Plan Committee, or on such date
prior thereto as is provided by this Plan in the event of
reorganization pursuant to Section 7.6(b) hereof. No Stock Option
shall permit the purchase of any shares thereunder during the first
year after the Date of Grant of such Stock Option, except as
provided in Section 4.2 hereof.
(b) Transferability and Termination of Options. During the lifetime of
an individual to whom a Stock Option is granted, the Stock Option
may be exercised only by such individual and shall terminate at the
earlier of i) five years after the date the Participant ceased to be
a director of Company or, ii) ten years and one day after the Date
of Grant of the Stock Option. Rights of a Participant may, upon the
death of a Participant, be exercised or perfected by his/her duly
designated beneficiary or otherwise by his/her applicable legal
representatives, heirs or legatees to the extent vested in and
unexercised or perfected by the Participant at the date of his/her
death. Provided however, that if a Participant dies, the Stock
Option must be exercised within five years after the date of death
or the life of the Stock Option, whichever is less, but in no event
less than one year after the date of death.
No Stock Option shall be assignable or transferable by the
individual to whom it is granted, except that it may be transferable
by will or the laws of descent and distribution in accordance with
the provisions of the Plan. A Stock Option, if so transferable, may
be exercised after the death of the individual to whom it is granted
only by such individual's beneficiary designated to exercise the
Stock Option or otherwise by his/her applicable legal
representatives, heirs or legatees, and only within the specific
time period set forth above.
In no event whether by the Participant directly or by his/her
beneficiary or other representative shall any Stock Option be
exercisable at any time after its expiration date as stated in the
Stock Option agreement. When a Stock Option is no longer exercisable
it shall be deemed for all purposes and without further act to have
lapsed and terminated.
(c) Exercise of Options. An individual entitled to exercise a Stock
Option may, subject to its terms and conditions and the terms and
conditions of the Plan, exercise it in whole at any time, or in part
from time to time, by delivery to the Company at its principal
office of written notice of exercise, specifying the number of whole
shares with respect to which the Stock Option is being exercised.
Before shares may be issued payment must be made in full, in legal
United States tender, in the amount of the purchase price of the
shares to be purchased at the time and any amounts for withholding,
if any, as provided in Section 7.7 hereof; provided, however, in
lieu of
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<PAGE>
paying for the exercise price in cash as described above, the
individual may pay all or part of such exercise price by delivering
owned and unencumbered shares of the Company common stock having a
Fair Market Value on the date of exercise of the Stock Option equal
to or less than the exercise price of the Stock Options exercised,
with cash, as set forth above, for the remainder, if any, of the
purchase price.
4.2 Change in Control. In the event of a Change in Control, all outstanding
Stock Options granted under the Plan shall accelerate and will be
exercisable in full for a period of two hundred ten (210) days after the
Change in Control; provided that no Stock Option shall be exercisable by a
Participant after the termination date of the Stock Option.
ARTICLE V
SHARES OF STOCK SUBJECT TO THE PLAN
5.1 The total number of shares that may be available for issuance under all
Stock Options granted pursuant to the Plan shall not exceed in the aggregate
100,000 shares of the Company's $1.00 par value common stock. Stock Options
which are forfeited for any reason or are not distributed or are covered by
Stock Options that lapse or are canceled before exercise, shall (unless the
Plan shall have been terminated) again be available in the same relative
amounts for other Stock Option grants under the Plan.
ARTICLE VI
ADMINISTRATION OF THE PLAN
6.1 The Plan will be administered by a committee of two or more members of
the Board appointed from time to time by the Board. Each member of the
committee shall be a "disinterested person" as that term is defined under
Rule 16b-3, promulgated under the Securities Exchange Act of 1934, as
amended, or any successor statute or regulation comprehending the same
subject matter.
6.2 The Plan Committee shall have and exercise all of the powers and
responsibilities granted expressly or by implication to it by the provisions
of the Plan. Subject to and as limited by such provisions, the Plan
Committee may from time to time enact, amend and rescind such rules,
regulations and procedures with respect to the administration of the Plan as
it deems appropriate or convenient. Notwithstanding any contrary provisions
of this Plan, the Plan Committee shall have no discretion with respect to
the granting of Stock Options to any Participant or to alter or amend any
terms, conditions and eligibility requirements of a Stock Option granted or
to be granted to any Participant under this Plan, it being understood that
the granting and terms, conditions and eligibility requirements of such
Stock Options are governed solely by the provisions set forth in this Plan
pertaining thereto.
6.3 All questions arising under the Plan or any Stock Option agreement, or
any rule, regulation or procedure adopted by the Plan Committee shall be
determined by the Plan Committee, and its determination thereof shall be
conclusive and binding upon all parties.
6.4 Any action required or permitted to be taken by the Plan Committee under
the Plan shall require the affirmative vote of a majority of a quorum of the
members of the Plan Committee. A majority of all members of the Plan
Committee shall constitute a "quorum" for Plan Committee business. The Plan
Committee may act by written determination instead of by affirmative vote at
a meeting, provided that any written determination shall be signed by all
members of the Plan Committee, and any such written determination shall be
as fully effective as a majority vote of a quorum at a meeting.
B-4
<PAGE>
ARTICLE VII
GENERAL PROVISIONS
7.1 Amendment or Termination. The Board may at any time amend, suspend,
discontinue or terminate the Plan; provided, however, that no amendment by
the Board shall, without further approval of the shareholders of the
Company:
(a) except as provided at Section 2.10 hereof increase the total number
of shares of Company common stock which may be made subject to the
Plan; or
(b) except as provided at Section 2.10 hereof change the purchase price
of Company common stock under the Plan; or
(c) change the Date of Grant; or
(d) change the calculation used to determine the number of Stock
Options granted on the Date of Grant.
No action taken pursuant to this Section 7.1 of the Plan shall, without the
consent of a Participant, alter or impair any Stock Options which have been
previously granted to a Participant. Provisions relating to Stock Options
may not be amended more often than once every six months other than to
comport with changes in the Code or the Employee Retirement Income Security
Act of 1974, as amended, or the rules thereunder.
7.2 Non-Alienation of Rights and Benefits. Except as expressly provided
herein, no right or benefit under the Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance or charge and any attempt
to anticipate, alienate, sell, assign, pledge, encumber or charge the same
shall be void. No right or benefit hereunder shall in any manner be liable
for or subject to the debts, contracts, liabilities or torts of the person
entitled to such right or benefit. If any Participant or beneficiary
hereunder should become bankrupt or attempt to anticipate, alienate, sell,
assign, pledge, encumber or charge any right or benefit hereunder, then such
right or benefit shall, in the sole discretion of the Plan Committee, cease
and in such event the Company may hold or apply the same or any or no part
thereof for the benefit of the Participant or beneficiary, his/her spouse,
children or other dependents or any of them in any such manner and in such
proportion as the Plan Committee in its sole discretion may deem proper.
7.3 No Rights as Shareholder. The granting of Stock Option(s) under the Plan
shall not entitle a Participant or any other person succeeding to his/her
rights, to any dividend, voting or other right as a shareholder of the
Company unless and until the issuance of a stock certificate to the
Participant or such other person pursuant to the provisions of the Plan and
then only subsequent to the date of issuance thereof.
7.4 Government Regulations. Notwithstanding any other provisions of the Plan
seemingly to the contrary, the obligation of the Company with respect to
Stock Options granted under the Plan shall at all times be subject to any
and all applicable laws, rules, and regulations and such approvals by any
government agencies as may be required or deemed by the Board or Plan
Committee as reasonably necessary or appropriate for the protection of the
Company.
In connection with any sale, issuance or transfer hereunder, the Participant
acquiring the shares shall, if requested by the Company give assurances
satisfactory to counsel of the Company that the shares are being acquired
for investment and not with a view to resale or distribution thereof and
assurances in respect of such other matters as the Company may deem
desirable to assure compliance with all applicable legal requirements.
7.5 Effective Date. Subject to the approval of this Plan by the holders of a
majority of the voting power of the shares present and entitled to vote at
the Company's Annual Meeting of Shareholders to be held May 24, 1995 and any
necessary approval being obtained from any
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<PAGE>
department, board or agency of the United States or states having
jurisdiction, the Plan shall be effective as of May 24, 1995.
7.6 Reorganization. In case the Company is merged or consolidated with
another corporation, or in case the property or stock of the Company is
acquired by another corporation, or in case of a separation, reorganization
or liquidation of the Company, the Plan Committee or a comparable committee
of any corporation assuming the obligations of the Company hereunder, shall
either:
(a) make appropriate provision for the protection of any outstanding
Stock Options granted thereunder by the substitution on an equitable
basis of appropriate stock of the Company, or of the merged,
consolidated or otherwise reorganized corporation which will be
issuable in respect to the shares of the Company's $1.00 par value
common stock.
(b) upon written notice to the Participant, provide that all
outstanding Stock Options shall accelerate and become exercisable in
full but that all outstanding Stock Options, whether or not
exercisable prior to such acceleration, must be exercised within not
less than sixty days of the date of such notice or they will be
terminated. In any such case the Plan Committee may, in its
discretion, extend the sixty day- exercise period.
7.7 Withholding Taxes, etc. All distributions under the Plan shall be
subject to any required withholding taxes and other withholdings and, in
case of distributions in Company common stock, the Participant or other
recipient may, as a condition precedent to the delivery of the common
stock, be required to pay to the Company the excess, if any, of the amount
of required withholding over the withholdings, if any, from any
distributions in cash under the Plan. No distribution under the Plan shall
be made in fractional shares of the Company's common stock, but the
proportional market value thereof shall be paid in cash.
7.8 General Restriction. Each Stock Option shall be subject to the
requirement that, if at any time the Board shall determine, in its
discretion, that the listing, registration or qualification of the shares
subject to such Stock Option upon any securities exchange or under any
state or Federal Law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or in
connection with the granting of such Stock Option or the issue or purchase
of shares thereunder, such Stock Option may not be exercised in whole or in
part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable
to the Board.
7.9 Use of Proceeds. The proceeds derived from the sale of the stock pursuant
to Stock Options granted under the Plan shall constitute general funds of
the Company.
7.10 Headings. The headings of the Articles and their subparts in this Plan
are for convenience of reading only and are not meant to be of substantive
significance and shall not add to or detract from the meaning of such
Article or subpart to which it refers.
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<PAGE>
DAYTON HUDSON CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
P ANNUAL MEETING OF SHAREHOLDERS MAY 24, 1995
R Robert J. Ulrich, Stephen E. Watson and James T. Hale, and each of them, are
hereby appointed proxies, with power of substitution to each, to represent
O 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
X by the undersigned at the Annual Meeting of Shareholders to be held on May
24, 1995, and at any adjournment thereof.
Y
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
PROPOSAL SET FORTH IN ITEM 5 HEREOF. THIS PROXY MUST BE SIGNED AND RETURNED
FOR YOUR SHARES TO BE VOTED.
1. Election of Directors, Nominees:
Rand V. Araskog, Roger L. Hale, Michele J. Hooper and John R. Walter.
(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 SEE REVERSE
ON THE REVERSE SIDE AND RETURN THIS CARD. SIDE
-------------
. FOLD AND DETACH HERE .
ANNUAL MEETING
OF
DAYTON HUDSON CORPORATION SHAREHOLDERS
WEDNESDAY, MAY 24, 1995
9:30 A.M. CDT
THE CHILDREN'S THEATRE
2400 THIRD AVENUE SOUTH
MINNEAPOLIS, MINNESOTA
<PAGE>
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. 0361
- --------------------------------------------------------------------------------
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):
- --------------------------------------------------------------------------------
2. Ratification of Ernst & Young LLP as Independent Auditors
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Approval of the Executive Incentive Plan
[_] [_] [_]
4. Approval of the Director Option Plan
FOR AGAINST ABSTAIN
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE SHAREHOLDER PROPOSAL
REGARDING:
5. Equal Employment & Affirmative Action Report
FOR AGAINST ABSTAIN
[_] [_] [_]
6. 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
1995 Proxy Statement.
[_]
Signatures: _____________________________________________ 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.
. FOLD AND DETACH HERE .
- --------------------------------------------------------------------------------
