<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth 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.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
DAYTON HUDSON CORPORATION
[LOGO] 777 Nicollet Mall
Minneapolis, Minnesota 55402
612/370-6948
April 14, 1998
Dear Shareholder:
You are 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 20, 1998, beginning at 9:30 a.m. 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]
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 20, 1998
- --------------------------------------------------------------------------------
To Our Shareholders:
The Annual Meeting of Shareholders of Dayton Hudson Corporation will be held
at The Children's Theatre, 2400 Third Avenue South, Minneapolis, Minnesota, on
Wednesday, May 20, 1998, 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 act upon any other business that may properly come before the
meeting.
Holders of record of Common Stock and Series B ESOP Convertible Preferred
Stock at the close of business on March 27, 1998 will be entitled to vote at the
meeting and any adjournment thereof.
YOU ARE INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON
AS POSSIBLE. IF YOU ARE A REGISTERED SHAREHOLDER, YOU MAY VOTE BY TELEPHONE BY
FOLLOWING THE INSTRUCTIONS ON THE REVERSE SIDE OF THE ENCLOSED ADMISSION TICKET.
YOUR COOPERATION IN SIGNING AND RETURNING YOUR PROXY OR VOTING BY TELEPHONE
PROMPTLY WILL HELP AVOID FURTHER SOLICITATION EXPENSE TO YOUR CORPORATION.
[SIGNATURE]
James T. Hale
SECRETARY
Approximate Date of Mailing of Proxy Material:
April 14, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
GENERAL INFORMATION ABOUT THE MEETING, VOTING AND SHARE OWNERSHIP.......................................... 1
What is the purpose of the Annual Meeting?............................................................... 1
How will the Corporation's stock split on April 30, 1998 affect the Annual Meeting?...................... 1
Who may vote?............................................................................................ 1
Who may attend the Annual Meeting?....................................................................... 2
What constitutes a quorum?............................................................................... 2
May I vote by proxy card or telephone?................................................................... 2
May I vote confidentially?............................................................................... 2
May I change my vote?.................................................................................... 2
How does the Board recommend I vote?..................................................................... 3
How many votes are required to approve each item?........................................................ 3
How many shares do the Corporation's directors and officers own?......................................... 4
Who are the largest owners of the Corporation's shares?.................................................. 5
ITEM ONE--ELECTION OF DIRECTORS............................................................................ 6
Director Nominees........................................................................................ 6
General Information About the Board of Directors......................................................... 6
Director Compensation.................................................................................... 10
Board Meetings During Fiscal 1997........................................................................ 10
Board Committees......................................................................................... 10
Executive Compensation................................................................................... 12
Summary Compensation Table............................................................................. 12
Option Grants in Last Fiscal Year...................................................................... 15
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option Values...................... 16
Income Continuance Policy.............................................................................. 16
Amounts Paid Upon Termination.......................................................................... 16
Pension................................................................................................ 17
Report of Compensation Committee on Executive Compensation............................................... 18
Performance Evaluations................................................................................ 18
Base Salary............................................................................................ 19
Short-Term Incentive Compensation...................................................................... 19
Long-Term Incentive Compensation....................................................................... 20
Corporate Governance and Certain Tax Consequences of Plans............................................. 22
Comparison of Five-Year Cumulative Total Shareholder Return.............................................. 23
Certain Transactions..................................................................................... 23
ITEM TWO--APPOINTMENT OF INDEPENDENT AUDITORS.............................................................. 24
ADDITIONAL INFORMATION..................................................................................... 25
Section 16(a) Beneficial Ownership Reporting Compliance.................................................. 25
Commitment to Diversity.................................................................................. 25
General.................................................................................................. 25
Shareholder Proposals.................................................................................... 25
</TABLE>
<PAGE>
DAYTON HUDSON CORPORATION
777 NICOLLET MALL
MINNEAPOLIS, MINNESOTA 55402
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 20, 1998
------------------------
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, 2400 Third Avenue South, Minneapolis, Minnesota, on
Wednesday, May 20, 1998, at 9:30 a.m., Central Daylight Time, and for any
adjournment thereof.
GENERAL INFORMATION ABOUT THE MEETING, VOTING AND SHARE OWNERSHIP
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Corporation's Annual Meeting, shareholders will act upon the matters
described in the accompanying notice of meeting, including the election of four
directors and appointment of the Corporation's independent auditors. In
addition, the Corporation's management will report on the performance of the
Corporation during fiscal 1997 and respond to questions from shareholders.
HOW WILL THE CORPORATION'S STOCK SPLIT ON APRIL 30, 1998 AFFECT THE ANNUAL
MEETING?
All of the references in this Proxy Statement to the Corporation's Common
Stock, including per share data, reflect the two-for-one split of the Common
Stock to be effected April 30, 1998. Pursuant to the stock split, each
shareholder of record on April 10, 1998 will receive an additional share of
Common Stock for each share held on that date. As a result, the stock split has
doubled the numbers of shares and decreased by 50% the per share prices reported
in this Proxy Statement.
This stock split will not change the voting procedures for the Annual
Meeting. Only shareholders of record on March 27, 1998 have a right to vote at
the Annual Meeting. The stock split will occur after that date and, as a result,
has no impact on who may vote or how many shares may be voted at the Annual
Meeting.
WHO MAY VOTE?
The Corporation has two classes of voting stock, Common Stock and Series B
ESOP Convertible Preferred Stock (the "401(k) Preferred Shares"), which is stock
issued by the Corporation to match employee contributions to the Corporation's
401(k) plan (the "DHC 401(k) Plan"). Only shareholders of record of Common Stock
and 401(k) Preferred Shares at the close of business on the record date, March
27, 1998, are entitled to receive notice of the Annual Meeting and to vote the
shares of Common Stock and the 401(k) Preferred Shares that they held on that
date at the meeting, or any postponement or adjournment of the meeting. As of
the record date for the Annual Meeting, each share of Common Stock had one vote
and each 401(k) Preferred Share was convertible into 30 shares of Common Stock
and had 30 votes on each matter to be voted upon. Common Stock and the 401(k)
Preferred Shares vote as a single class, except as required by law.
1
<PAGE>
WHO MAY ATTEND THE ANNUAL MEETING?
All shareholders as of the record date, or their duly appointed proxies, may
attend the meeting. Seating, however, is limited. Admission to the meeting is on
a first-come, first-served basis and seating begins at approximately 9:00 a.m.
The admission ticket attached to the enclosed proxy card is required for
admission to the meeting. Cameras and recording devices are not permitted at the
meeting.
Please note that if you hold shares in "street name" (that is, through a
broker or other nominee), you will need to bring a copy of a brokerage statement
reflecting your stock ownership as of the record date and check in at the
registration desk at the meeting.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of Common Stock and 401(k) Preferred Shares outstanding on the record
date will constitute a quorum, permitting the meeting to conduct its business.
As of the record date, 438,740,638 shares of Common Stock and 357,392 401(k)
Preferred Shares of the Corporation were outstanding. Proxies received but
marked as abstentions and broker non-votes will be included in the calculation
of the number of shares considered to be present at the meeting for purposes of
determining whether there is a quorum.
MAY I VOTE BY PROXY CARD OR TELEPHONE?
You may vote by completing and properly signing the enclosed proxy card and
returning it to the Corporation in the envelope provided. If you attend the
meeting, you may deliver your completed proxy card in person. In addition,
registered shareholders (those whose shares are owned in their name and not in
"street name") may vote by telephone by following the instructions on the
reverse side of the enclosed admission ticket.
MAY I VOTE CONFIDENTIALLY?
Yes. The Corporation's policy is to treat all shareholder meeting proxies,
ballots and voting tabulations of a shareholder confidentially, if the
shareholder has requested confidentiality on the proxy card or ballot.
If you so request, your proxy will not be available for examination nor will
your vote be disclosed prior to the tabulation of the final vote at the Annual
Meeting except (i) to meet applicable legal requirements, (ii) to allow the
independent election inspectors to count and certify the results of the 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 "SEC"). The independent election inspectors may at
any time inform the Corporation whether or not a shareholder has voted.
MAY I CHANGE MY VOTE?
Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy is exercised by filing with the Secretary of the
Corporation either a notice of revocation or a duly executed proxy bearing a
later date. Alternatively, if you have voted by telephone, you may change your
vote by calling the toll free number again and following the instructions. The
powers of the proxy holders will be suspended if you attend the meeting in
person and so request, although attendance at the meeting will not by itself
revoke a previously granted proxy.
2
<PAGE>
HOW DOES THE BOARD RECOMMEND I VOTE?
Unless you give instructions on your proxy card, the persons named as proxy
holders on the proxy card will vote in accordance with the recommendations of
the Board of Directors. The Board's recommendation is set forth together with
the description of each item in this proxy statement. In summary, the Board of
Directors recommends a vote:
FOR election of the director nominees (see pages 6-22) and
FOR approval of the appointment of Ernst & Young LLP as the Corporation's
independent auditors (see page 24).
With respect to any other matter that properly comes before the meeting, the
proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion.
HOW MANY VOTES ARE REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The affirmative vote of a majority of the
outstanding shares of Common Stock and the 401(k) Preferred Shares of the
Corporation present and entitled to vote on the election of directors is
required for the election to the Board of Directors of each of the four
director nominees. For this purpose, a properly executed proxy marked
"WITHHOLD" with respect to the election of director nominees will be counted
for purposes of determining whether there is a quorum, but will not be
considered present and entitled to vote on the election of directors.
OTHER ITEMS. For appointment of our independent auditors and any other
items that properly come before the meeting, the affirmative vote of a
majority of the outstanding shares of Common Stock and the 401(k) Preferred
Shares of the Corporation present and entitled to vote on the item will be
required for approval. A properly executed proxy marked "ABSTAIN" with
respect to any such matter will be counted for purposes of determining
whether there is a quorum. Accordingly, an abstention will have the effect
of a negative vote.
3
<PAGE>
HOW MANY SHARES DO THE CORPORATION'S DIRECTORS AND OFFICERS OWN?
Set forth below is information regarding equity securities of the
Corporation owned beneficially on April 1, 1998 by all directors and nominees,
each of the executive officers named in the Summary Compensation Table below and
all directors and executive officers of the Corporation as a group. None of the
named individuals nor the group owned one percent or more of the total
outstanding shares.
<TABLE>
<CAPTION>
AGGREGATE NUMBER
NAME OF INDIVIDUAL OF SHARES ACQUIRABLE
OR NUMBER OF TITLE OF BENEFICIALLY WITHIN 60
PERSONS IN GROUP CLASS OWNED(1)(2) DAYS(1)(3)
- ------------------------------------------------------------------ ---------- -------------------- ----------
<S> <C> <C> <C>
Livio D. DeSimone................................................. Common 12,294(4) 12,482
Roger A. Enrico................................................... Common 29,316 12,482
William W. George................................................. Common 11,268 12,482
Michele J. Hooper................................................. Common 7,052 12,482
James A. Johnson.................................................. Common 9,258 8,174
Richard M. Kovacevich............................................. Common 18,830 4,646
Susan A. McLaughlin............................................... Common 1,450 0
Anne M. Mulcahy................................................... Common 1,850 0
Stephen W. Sanger................................................. Common 2,940 8,174
Solomon D. Trujillo............................................... Common 4,044 12,482
Robert J. Ulrich(5)............................................... Common 337,350(7) 582,830
Kenneth B. Woodrow(5)............................................. Common 72,730(6)(7) 208,534
Gregg W. Steinhafel(5)............................................ Common 42,756(6)(7) 197,272
John E. Pellegrene(5)............................................. Common 32,906(6)(7) 76,190
Larry V. Gilpin(5)................................................ Common 41,862(6)(7) 85,658
All directors and executive officers of the Corporation as a group
(24 persons).................................................... Common 811,576(7) 1,948,794
</TABLE>
- ------------------------
(1) Reflects the effect of the two-for-one split of the Corporation's Common
Stock as described on page 1, which will be effected April 30, 1998.
(2) The persons listed have sole voting and investment power with respect to the
shares listed except that Mr. DeSimone, Mr. Johnson and Ms. Mulcahy have (i)
sole voting and sole investment power over 0 shares, 1,194 shares and 1,450
shares, respectively, and (ii) shared voting and investment power over 8,694
shares, 8,064 shares and 400 shares, respectively. Directors are deemed to
have sole voting and investment power as to restricted stock they own.
(3) Includes shares that the named individuals may acquire on or before June 13,
1998 pursuant to options held by them under the Corporation's Long-Term
Incentive Plan of 1981 ("LTIP") or 1995 Director Stock Option Plan.
(4) Includes 3,600 shares of Common Stock owned as of April 1, 1998 by certain
of Mr. DeSimone's family members as to which shares he disclaims beneficial
ownership.
(5) Executive officer.
(6) Includes shares of Common Stock owned by such person in the DHC 401(k) Plan
as of January 31, 1998.
(7) Does not include ownership of 401(k) Preferred Shares. As of January 31,
1998, Messrs. Ulrich, Woodrow, Steinhafel, Pellegrene and Gilpin each owned
71, 72, 71, 78 and 71 401(k) Preferred Shares, respectively, and all
directors and executive officers of the Corporation owned 841 401(k)
Preferred Shares. Each 401(k) Preferred Share will be convertible into 60
shares of the Corporation's Common Stock after the stock split described on
page 1, which will be effected on April 30, 1998.
4
<PAGE>
WHO ARE THE LARGEST OWNERS OF THE CORPORATION'S SHARES?
The table below sets forth certain information, as to each person or entity
known to the Corporation to be the beneficial owner of more than five percent of
any class of the Corporation's voting securities:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS TITLE OF BENEFICIALLY PERCENT
OF BENEFICIAL OWNER CLASS OWNED OF CLASS
- ---------------------------------------------------- ---------- ----------------- ------------
<S> <C> <C> <C>
State Street Bank and Trust Company................. Common 42,648,658(1)(3) 9.30%
225 Franklin Street
Boston, Massachusetts 02110
FMR Corp............................................ Common 31,954,706(2)(3) 7.31%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- ------------------------
(1) State Street Bank and Trust Company ("State Street") reported its beneficial
ownership as of December 31, 1997 on a Schedule 13G filed with the SEC. The
filing indicates that State Street has sole voting power for 7,621,352
shares, shared voting power for 34,463,906 shares, sole dispositive power
for 8,174,072 shares and shared dispositive power for 34,474,586 shares.
These shares include the Common Stock equivalent of the 401(k) Preferred
Shares that has been allocated to employee accounts in the DHC 401(k) Plan
as well as the unallocated shares held in the DHC 401(k) Plan Trust, of
which State Street is trustee.
(2) FMR Corp. ("FMR") reported its beneficial ownership as of December 31, 1997
on a Schedule 13G filed with the SEC. The filing indicates that FMR has sole
voting power for 1,965,826 shares, shared voting power for 0 shares, sole
dispositive power for 31,954,706 shares and shared dispositive power for 0
shares.
(3) Reflects the effect of the two-for-one split of the Corporation's Common
Stock as described on page 1, which will be effected April 30, 1998.
5
<PAGE>
ITEM ONE--ELECTION OF DIRECTORS
DIRECTOR NOMINEES
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 2001 and until their successors are elected. The
four nominees are Michele J. Hooper, Susan A. McLaughlin, Anne M. Mulcahy and
Stephen W. Sanger. All of the nominees are currently 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 proxies returned
to the Corporation will be voted for such substitute nominees, unless an
instruction to the contrary is indicated on the proxy.
GENERAL INFORMATION ABOUT THE BOARD OF DIRECTORS
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 21 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 11 members, four of whom are Class I directors whose terms
expire at this Annual Meeting, four of whom are Class II directors whose terms
expire at the 1999 Annual Meeting and three of whom are Class III directors
whose terms expire at the 2000 Annual Meeting.
Following is information regarding the nominees and directors, including
information furnished by them as to their principal occupations. All of the
present directors were elected to the Board of Directors by the shareholders,
except for Mr. Sanger, Ms. Mulcahy and Ms. McLaughlin, who were elected by the
Board of Directors. See page 4 for a table showing the number of shares of
Common Stock of the Corporation beneficially owned by each director as of April
1, 1998.
<TABLE>
<CAPTION>
DIRECTOR
DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION AGE SINCE
- ---------------------- ---------------------------------------------------------------------- --- --------
<S> <C> <C> <C>
Livio D. DeSimone is Chairman of the Board and Chief Executive Officer 61 1987
[PHOTO] of 3M, a diversified manufacturer. Mr. DeSimone joined 3M in 1957 and
held various international and domestic positions. He was elected Area
LIVIO D. DESIMONE Vice President, Latin America in 1975, Vice President in 1979 and
Class II Executive Vice President in 1981. He was elected Chairman and
Term expires in 1999 Chief Executive Officer in 1991. Mr. DeSimone is a director of
Cargill, Incorporated, General Mills, Inc., 3M and Vulcan
Materials Company. He is also Vice Chairman of the
Executive Committee of the Board of Directors of the Corporation.
(1)(2)(5)(6)
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION AGE SINCE
- ---------------------- ---------------------------------------------------------------------- --- --------
<S> <C> <C> <C>
Roger A. Enrico is Chairman of the Board and Chief Executive Officer 53 1990
[PHOTO] of PepsiCo, Inc., a domestic and international beverage and food
business. He joined PepsiCo in 1971. He was President and Chief
ROGER A. ENRICO Executive Officer of Pepsi-Cola USA from 1983 to 1986 when he became
Class II President and Chief Executive Officer of PepsiCo Worldwide Beverages.
Term expires in 1999 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, Inc. and in 1994, Chairman and Chief Executive Officer of
PepsiCo Worldwide Restaurants. In 1996, he was elected Chairman of the
Board and Chief Executive Officer of PepsiCo, Inc. He is a director of
A.H. Belo Corp., PepsiCo, Inc. and The Prudential Insurance Company of
America. (1)(3)(5)
William W. George is Chairman of the Board and Chief Executive Officer 55 1993
[PHOTO] of Medtronic, Inc., a therapeutic medical device company. He served in
the United States Department of Defense from 1966 to 1968 and worked
WILLIAM W. GEORGE in the United States Department of the Navy from 1968 to 1969. From
Class II 1969 to 1978, he worked for Litton Industries, Inc., serving as
Term expires in 1999 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 in 1989, President and Chief
Executive Officer in 1991 and was elected Chairman of the Board and
Chief Executive Officer in 1996. He is a director of Imation Corp. and
Medtronic, Inc. (1)(2)(4)
Michele J. Hooper is Corporate Vice President and President, 46 1990
[PHOTO] International Businesses, Caremark International, Inc., a health care
company. She joined Baxter Healthcare Corporation in 1976 and served
MICHELE J. HOOPER in various management positions before being named Vice President,
Class I Corporate Planning for Baxter International in 1984. In 1988, she was
Nominee for term elected President of Baxter Healthcare Corporation, Canada. From 1991
expiring in 2001 to 1992 she was President, Alternate Site International, a unit of
Baxter Corporation. In 1992, she became President, International
Business Group, Caremark International, Inc. and in 1993, she became
Corporate Vice President, International Businesses, Caremark
International, Inc. She is a director of PPG Industries, Inc. and the
Seagrams Company Ltd. (1)(2)(5)(6)
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION AGE SINCE
- ---------------------- ---------------------------------------------------------------------- --- --------
<S> <C> <C> <C>
James A. Johnson is Chairman of the Board and Chief Executive Officer 54 1996
[PHOTO] of Fannie Mae, a Congressionally chartered financial services company.
From 1977 to 1981 he was Executive Assistant to Vice President Walter
JAMES A. JOHNSON F. Mondale. From 1981 to 1985 he was President of Public Strategies, a
Class II strategic consulting firm and from 1985 to 1989 he was a managing
Term expires in 1999 director of Lehman Bros. In 1990, he was elected Vice Chairman of
Fannie Mae. In 1991, he was elected Chairman and Chief Executive
Officer of Fannie Mae. He is a director of Fannie Mae, Kaufman & Broad
Home Corporation and United HealthCare Corporation. (1)(4)(5)
Richard M. Kovacevich is Chairman of the Board and Chief Executive 54 1996
[PHOTO] Officer of Norwest Corporation, a banking and financial services
company. He was elected President and Chief Operating Officer in 1989,
RICHARD M. KOVACEVICH President and Chief Executive Officer in 1993 and was elected to his
Class III current positions at Norwest Corporation in 1995. He is a director of
Term expires in 2000 Northern States Power Company, Norwest Corporation, PETsMART, Inc. and
ReliaStar Financial Corp. (1)(2)(6)
Susan A. McLaughlin is President of Consumer Services, BellSouth 45 1997
[PHOTO] Telecommunications, Inc., a communications services company. From 1996
to February 1998, she was Vice President and Chief Operating Officer,
SUSAN A. MCLAUGHLIN Kodak Professional Division, Eastman Kodak Company, an imaging
Class I company. She joined Eastman Kodak in 1987 and held several other
Nominee for term management positions across the company's divisions including General
expiring in 2001 Manager, U.S., Operations and Vice President Imaging and President and
General Manager, Kodak Imaging Services, Inc. (1)(4)
Anne M. Mulcahy is Vice President and Chief Staff Officer of Xerox 45 1997
[PHOTO] Corporation, a document management company. She joined Xerox in 1976
and held several sales and management positions in marketing until
ANNE M. MULCAHY 1991, when she was named Vice President, Worldwide Marketing
Class I Operations Planning and Director, Corporate Human Services. From 1992
Nominee for term until 1995, she served as Vice President for Human Resources. Prior to
expiring in 2001 being elected to her current positions in March 1997, she was Staff
Officer for Customer Operations. She serves on the Board of Trustees
of Marymount College. (1)(5)
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION AGE SINCE
- ---------------------- ---------------------------------------------------------------------- --- --------
<S> <C> <C> <C>
Stephen W. Sanger is Chairman of the Board and Chief Executive Officer 51 1996
[PHOTO] of General Mills, Inc., a consumer food products company. He joined
General Mills in 1974 and held a series of positions in marketing and
STEPHEN W. SANGER management across the company's consumer food businesses. He served as
Class I President of the Big G Division, President of Yoplait USA and General
Nominee for term Manager of the New Business Development Division. In 1991, he was
expiring in 2001 elected Executive Vice President. In 1992, he was elected Vice
Chairman. In 1993, he was elected President. In 1995, he was elected
Chairman of the Board and Chief Executive Officer. He is a director of
Donaldson Company, Inc. and General Mills, Inc. (1)(3)(5)(6)
Solomon D. Trujillo is President and Chief Executive Officer of U S 46 1994
[PHOTO] WEST Communications Group, Inc., a business of U S WEST that provides
telecommunication services to customers in 14 Western and Midwestern
SOLOMON D. TRUJILLO states. He joined Mountain Bell in 1974 and held various management
Class III positions before being named Vice President and Chief Executive
Term Expires in 2000 Officer of Mountain Bell New Mexico in 1984. He served as Vice
President and General Manager of the Small Business Services Market
Unit of U S WEST from 1987 until he was elected President and Chief
Executive Officer of U S WEST Marketing Resources Group in 1992. He
was elected President and Chief Executive Officer of U S WEST
Communications in 1995. He is a director of Bank of America. (1)(3)(4)
Robert J. Ulrich is Chairman of the Board, Chief Executive Officer and 54 1993
[PHOTO] Chairman of the Executive Committee of the Corporation and Chairman
and Chief Executive Officer of Target, a division of the Corporation.
ROBERT J. ULRICH Mr. Ulrich began his retailing career as a merchandising trainee at
Class III Dayton's in 1967 and advanced through various management positions. In
Term Expires in 2000 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 of Target. He became Chairman and
Chief Executive Officer of Target in 1987. He was elected Chairman and
Chief Executive Officer of the Corporation in 1994. He is a director
of Tricon Global Restaurants, Inc. (1)
</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.
9
<PAGE>
DIRECTOR COMPENSATION
Directors who are not employees of the Corporation are paid an annual fee of
$25,000, plus $1,000 for each directors' or committee meeting they attend.
Directors may defer receipt of their fees. If they do, their fees are credited
at rates based upon the return earned by various investment alternatives chosen
by the director. 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 $15,000 of restricted stock of the
Corporation per year. Those shares are restricted until the director leaves the
Board. The Vice Chairman of the Executive Committee receives an additional
$10,000 of restricted stock of the Corporation each year. Non-employee directors
receive options to purchase $100,000 of the Corporation's Common Stock on a set
date in April at the market value of the Common Stock on that day. Non-employee
directors also receive merchandise discounts of varying amounts at the stores of
each of the Corporation's operating companies. Those discounts are the same as
the discounts employees receive. Employee directors are not compensated
separately for services as a director or committee member but receive their
regular compensation as employees.
BOARD MEETINGS DURING FISCAL 1997
The Board of Directors met six times during fiscal 1997. The Securities and
Exchange Commission ("SEC") rules require disclosure of those directors who
attended fewer than 75% of the aggregate total of meetings of the Board and
Board Committees on which the director served during the last fiscal year. No
director attended fewer than 75% of the aggregate total of such meetings.
BOARD COMMITTEES
EXECUTIVE COMMITTEE
The Executive Committee of the Board of Directors consists of the Chairman
of the Board of the Corporation and all the independent directors. The members
of the Executive Committee are identified above. During the last fiscal year,
the Executive Committee held three 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
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 Secretary of the Corporation on behalf of
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.
10
<PAGE>
COMPENSATION COMMITTEE
The Board of Directors has a Compensation Committee, consisting of the
independent directors identified above. The Compensation Committee held three
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 three 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 met
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, performance objectives and financing
requirements of the Corporation.
CORPORATE RESPONSIBILITY COMMITTEE
The Board of Directors has a Corporate Responsibility Committee, consisting
of the independent directors identified above. The Corporate Responsibility
Committee held two meetings during the last fiscal year. The duties of the
Corporate Responsibility Committee include review and evaluation of the public
affairs and community development programs of the Corporation. The Corporate
Responsibility Committee also reviews and evaluates the community giving
programs of the Corporation and the Dayton Hudson Foundation and annually
recommends the charitable gift of the Corporation to the Foundation.
11
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION --------------------------------- --------
------------------------- 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)(7)
- ------------------------------ ----- ------------- ---------- ------------ ------------------ -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert J. Ulrich.............. 1997 1,027,874 3,257,150 0 1,000,000(8) 1,503,635 440,697(9)
Chairman and Chief 1996 1,027,874 3,169,685 0 321,072 453,234 355,023
Executive Officer; Chairman 1995 1,009,125 423,365 251,918 990,396 0 199,278
and Chief Executive Officer
of Target
Kenneth B. Woodrow............ 1997 613,983 942,117 0 101,176 375,909 220,839(10)
President of Target 1996 579,600 1,723,072 0 287,126 113,369 155,459
1995 568,929 137,284 124,838 43,014 0 91,069
Gregg W. Steinhafel........... 1997 594,073 825,168 0 101,176 244,398 180,814(11)
Executive Vice 1996 528,712 1,431,026 0 287,126 90,688 120,766
President, Merchandising of 1995 476,426 92,793 93,464 32,262 0 62,999
Target
John E. Pellegrene............ 1997 495,893 599,008 0 57,814 225,647 131,668(12)
Executive Vice 1996 474,141 1,086,012 0 166,928 90,688 81,298
President, Marketing of 1995 433,070 100,354 121,983 42,024 0 52,230
Target
Larry V. Gilpin............... 1997 487,240 580,983 0 57,814 225,647 146,835(13)
Executive Vice 1996 465,400 1,075,457 0 166,928 90,688 176,288
President, Team, Guest and 1995 424,370 140,000 121,983 42,024 0 56,836
Community Relations of
Target
</TABLE>
- ------------------------
(1) Significant amounts of salary and bonus for the five named executive
officers were not actually received. Receipt of such amounts was deferred
through December 31, 1996 in the Corporation's Deferred Compensation Plan
("Old Plan"). Under the Old Plan, participants elected to defer a minimum
per year of $5,000 of their compensation and a maximum per year of 25% of
base salary and 100% of incentive bonuses up to an aggregate total of
$250,000, plus the amount of any previous deferral automatically paid out
in the eighth year following its deferral. Payout from the Old Plan cannot
be made until retirement, death or termination, except that each deferral
is automatically paid out in the eighth year following its deferral.
Amounts deferred are subject to the same bankruptcy rules as are the
Corporation's general debt obligations. Deferred amounts earn a return, a
portion of which is categorized as reportable by the SEC proxy rules.
Effective December 31, 1996, deferrals under the Old Plan were terminated
except for deferrals in an amount equal to amounts automatically paid out
eight years after their deferral. As of January 1, 1997, compensation may
be deferred through the Dayton Hudson Corporation SMG Executive Deferred
Compensation Plan ("New Plan"). Under the New Plan, participants may elect
to defer up to 80% of annual base salary and bonus. There is no automatic
eighth year payout of deferred amounts and the crediting rate alternatives
mirror the investment accounts available under the DHC 401(k) Plan. The New
Plan is otherwise substantially similar to the Old Plan. Further
information regarding reportable earnings under both plans is provided in
the footnotes below.
12
<PAGE>
(2) The Corporation's executive officers and certain other members of
management of the Corporation and its operating companies are eligible for
incentive bonuses under the Corporation's Personal Score Plan and the PTOC
and EVA components of its Executive Incentive Plan ("EIP"). The Corporation
did not achieve the minimum performance criteria for fiscal 1995 and no
bonuses were paid under the PTOC or EVA components of the EIP for that
year. Information regarding the bonus plans is found in the Report of the
Compensation Committee on Executive Compensation.
(3) The Restricted Stock Awards column reflects rights to receive restricted
stock of the Corporation under the LTIP. The restricted shares are not
issued unless the executive remains employed by the Corporation for four
years from the date of award and provides at least one year's notice prior
to retiring from the Corporation. Upon expiration of the four-year period,
the shares are issued and put into escrow and 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 on Executive Compensation. The number and value of
restricted stock rights holdings at the end of the 1997 fiscal year (based
on the closing price of $35.969 per share at the end of the fiscal year, as
adjusted to reflect the stock split described on page 1, which will be
effected April 30, 1998) are as follows:
<TABLE>
<CAPTION>
NUMBER VALUE
------------ ------------
<S> <C> <C>
Robert J. Ulrich.......................................... 61,674 $ 2,218,352
Kenneth B. Woodrow........................................ 19,044 684,993
Gregg W. Steinhafel....................................... 13,680 492,055
John E. Pellegrene........................................ 15,384 553,347
Larry V. Gilpin........................................... 15,384 553,347
</TABLE>
(4) These options to purchase shares of the Corporation's Common Stock were
awarded under the LTIP and have been adjusted to reflect the stock split
described on page 1, which will be effected April 30, 1998. The Report of
the Compensation Committee on Executive Compensation includes further
information regarding stock options.
(5) Amounts reflect earnouts of performance shares under the LTIP. Based on
Target's competitive performance over the last four years, 82% of the
performance shares granted to the named executives in 1993 and to be paid
in 1997 were earned. Each of the named executives was a Target employee on
the date the award was made. The Report of the Compensation Committee on
Executive Compensation includes further information regarding performance
shares.
(6) The Corporation has an Excess Long-Term Disability Program for certain key
executives, including those executive officers listed above. The program is
integrated with the employee-paid broad-based group disability plan
(non-taxable benefit of $82,000 maximum per individual per year). Taxable
excess disability benefits are paid according to a schedule based on
compensation with the objective of replacing 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 broad-based group disability plan. In the event of a qualifying
disability, the actual cost to the Corporation would be the after-tax cost
of the 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.
13
<PAGE>
(7) The amounts reported include the following:
- Matching contributions to the DHC 401(k) Plan, which all
participating employees receive.
- Amounts credited to the Old Plan and the New Plan for matching
contributions that could not be made to the DHC 401(k) Plan because of
limitations imposed by the Internal Revenue Code.
- Amounts categorized by the SEC as reportable earnings on compensation
deferred in current and previous years.
(8) This award was made shortly after the end of the Corporation's 1997 fiscal
year. The Report of the Compensation Committee contains further information
regarding this award.
(9) Includes
<TABLE>
<C> <S>
$ 5,250 DHC 401(k) Plan matching contribution
$ 195,522 deferred compensation credit for matching contributions which could not
be made to the DHC 401(k) Plan
$ 239,925 reportable earnings on deferred compensation
</TABLE>
(10) Includes
<TABLE>
<C> <S>
$ 6,118 DHC 401(k) Plan matching contribution
$ 104,558 deferred compensation credit for matching contributions which could not
be made to the DHC 401(k) Plan
$ 110,163 reportable earnings on deferred compensation
</TABLE>
(11) Includes
<TABLE>
<C> <S>
$ 6,468 DHC 401(k) Plan matching contribution
$ 90,919 deferred compensation credit for matching contributions which could not
be made to the DHC 401(k) Plan
$ 83,427 reportable earnings on deferred compensation
</TABLE>
(12) Includes
<TABLE>
<C> <S>
$ 6,351 DHC 401(k) Plan matching contribution
$ 70,900 deferred compensation credit for matching contributions which could not
be made to the DHC 401(k) Plan
$ 54,417 reportable earnings on deferred compensation
</TABLE>
(13) Includes
<TABLE>
<C> <S>
$ 6,385 DHC 401(k) Plan matching contribution
$ 72,830 deferred compensation credit for matching contributions which could not
be made to the DHC 401(k) Plan
$ 67,620 reportable earnings on deferred compensation
</TABLE>
14
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------------------------------------ AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM(5)
OPTIONS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION --------------------------------------
NAME (#)(1)(2) FISCAL YEAR ($/SH)(2) DATE 5%($) 10%($)
- ------------------------- --------------- ------------- ------------ ------------ ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Ulrich......... 1,000,000(3) 27.8% 39.8750 3/6/08 25,077,173 63,550,481
Kenneth B. Woodrow....... 101,176(4) 2.8% 34.5938 1/14/08 2,201,167 5,578,189
Gregg W. Steinhafel...... 101,176(4) 2.8% 34.5938 1/14/08 2,201,167 5,578,189
John E. Pellegrene....... 57,814(4) 1.6% 34.5938 1/14/08 1,257,791 3,187,489
Larry V. Gilpin.......... 57,814(4) 1.6% 34.5938 1/14/08 1,257,791 3,187,489
All Shareholders......... 9.5 billion(6) 24.1 billion(6)
</TABLE>
- ------------------------
(1) Under the LTIP each option was granted at the market value of the
underlying Common Stock on the date of grant and has a ten-year term. The
options are exercisable 25% on the first anniversary of the date of grant,
with an additional 25% becoming exercisable on each of the next three
anniversaries of the date of grant; except for Mr. Ulrich's option which may
not be exercised until the fourth anniversary of the grant date when 100% of
his option will become exercisable. The Report of the Compensation Committee
on Executive Compensation includes additional information regarding the
LTIP.
(2) Reflects the effect of the two-for-one split of the Corporation's Common
Stock as described on page 1, which will be effected April 30, 1998.
(3) Granted March 6, 1998. This award is further described in the Report of the
Compensation Committee on Executive Compensation.
(4) Granted January 14, 1998.
(5) 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.
(6) Increase in value of shares held by all shareholders based upon 437,658,092
shares outstanding on January 14, 1998, at a price of $34.5937 per share, as
adjusted to give effect to the two-for-one stock split of the Corporation's
Common Stock as described on page 1.
15
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END
ACQUIRED ON VALUE (#)(1) ($)
EXERCISE REALIZED -------------------------- ---------------------------
NAME (#)(1) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- ---------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Ulrich.............. 0 0 540,396 1,364,520 12,663,424 31,238,940
Kenneth B. Woodrow............ 58,920 1,615,312 169,348 403,244 3,794,089 6,423,323
Gregg W. Steinhafel........... 0 0 161,768 366,004 3,617,495 5,551,913
John E. Pellegrene............ 0 0 114,096 206,010 2,587,519 3,110,911
Larry V. Gilpin............... 11,544 175,685 63,318 206,010 1,339,292 3,110,911
</TABLE>
- ------------------------
(1) Reflects the effect of the two-for-one split of the Corporation's Common
Stock as described on page 1, which will be effected April 30, 1998.
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, together with others, are participants in the Income Continuance
Policy. In 1988, the Income Continuance Policy was amended to exclude additional
participants. Messrs. Woodrow, Steinhafel, Pellegrene and Gilpin were not
participants under the Policy at the time it was amended. In the event a
participant's employment is terminated by the Corporation, 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 three years, the continuation is for 18 months; over
eight years, the continuation is for 24 months; and between three and eight
years, an amount determined by a schedule (more than 18 months but less than 24
months).
Participants under the SMG Income Continuance Policy are members of the
Corporation's Senior Management Group who are not participants under the Income
Continuance Policy. The policy is similar to the Income Continuance Policy,
except its time parameters are based on the participant's salary grade.
Compensation may extend from 12 months to 24 months, based on a schedule which
provides longer income continuation to those participants with higher grade
levels. Messrs. Woodrow, Steinhafel, Pellegrene and Gilpin 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 may
include non-disparagement and non-competition requirements. Both policies
provide that the policies cannot be terminated or amended to reduce future
benefits unless two years prior notice is given to the participants in the
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 LTIP) will be paid the present value of payments owing under the policies
immediately after termination.
AMOUNTS PAID UPON TERMINATION
When an executive's employment with the Corporation terminates, the
executive receives payments under the deferred compensation plan(s), the DHC
401(k) Plan and pension plans. The executive may also be entitled to exercise
previously granted but still outstanding stock options and, in certain
circumstances, receive previously granted but still outstanding performance
shares and restricted stock under the LTIP. Further information regarding stock
options, performance shares and restricted stock is provided in the Report of
the Compensation Committee on Executive Compensation.
16
<PAGE>
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 under the Corporation's pension plans
at age 65, on a life only basis, given the years of service and compensation
levels 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>
$ 100,000 $ 16,050 $ 21,400 $ 26,750 $ 28,000 $ 29,250
200,000 35,550 47,400 59,250 61,750 64,250
300,000 55,050 73,400 91,750 95,500 99,250
400,000 74,550 99,400 124,250 129,250 134,250
500,000 94,050 125,400 156,750 163,000 169,250
1,000,000 191,550 255,400 319,250 331,750 344,250
2,000,000 386,550 515,400 644,250 669,250 694,250
3,000,000 581,550 775,400 969,250 1,006,750 1,044,250
4,000,000 776,550 1,035,400 1,294,250 1,344,250 1,394,250
5,000,000 971,550 1,295,400 1,619,250 1,681,750 1,744,250
</TABLE>
Currently under the Employee Retirement Income Security Act, as amended
("ERISA"), the maximum annual amount that can be paid under the Qualified
Pension Plans to any individual is $130,000, 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: Messrs. Ulrich, 30 years;
Woodrow, 28 years; Steinhafel, 18 years; Pellegrene, 28 years; and Gilpin, 20
years. Average Compensation is the average cash remuneration, including deferred
compensation, for the highest five calendar years of credited service in the
last ten years. The compensation reflected in the "Salary" and "Bonus" columns
of 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 actual amounts payable from the qualified pension trust are not
subject to any deductions for Social Security benefits or other offset amounts.
All executive officers who are members of the Senior Management Group
participate in a program whereby such person's surviving spouse 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's spouse 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 five 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.
17
<PAGE>
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 and the
opportunity for an annual incentive bonus, long-term incentive compensation and
benefits.
The Compensation Committee is responsible for developing and administering
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 senior management. Individual
written performance appraisals are given annually to each executive officer,
including the Chief Executive Officer ("CEO").
Pursuant to the Corporation's pay-for-performance philosophy, the
compensation policies established by the Compensation Committee provide that a
significant portion of the annual compensation of each executive officer is
contingent upon the financial performance of the Corporation or relevant
operating company (Target, Mervyn's or the Department Store Division), as well
as the individual performance of the executive officer.
Performance Evaluations
Mr. Ulrich is separately evaluated in his roles as Chairman of the Board and
as Chief Executive Officer. The Compensation Committee, together with all other
independent directors, established the performance criteria used to evaluate Mr.
Ulrich's fiscal 1997 performance as Chairman and as CEO. The factors used to
evaluate Mr. Ulrich's performance as CEO included operating company performance,
control of the business, management succession planning, strategic planning,
business development, organizational development and formulation and delivery of
major corporate policies. In his role as Chairman of the Board, Mr. Ulrich was
evaluated on his ability to chair effective meetings of the Board of Directors
and the Executive Committee, keep the Board fully informed of the condition of
the Corporation, develop sound corporate governance policies and work with the
directors to effectively use their talents to the best strategic advantage of
the Corporation.
The Compensation Committee prepares an annual written evaluation of Mr.
Ulrich's performance and determines his performance score. The written
evaluation was reviewed with Mr. Ulrich and constituted 33 1/3% of the weighting
for his fiscal 1997 incentive bonus compensation. The remaining 66 2/3% of Mr.
Ulrich's incentive bonus compensation was based on the Corporation's financial
performance as further described under Short-Term Incentive Compensation. In
addition, Mr. Ulrich's performance was discussed with him in a meeting with all
of the independent directors.
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 1997 Personal Scores and Personal Score Plan bonuses of the executive
officers were approved by the Compensation Committee.
As part of the performance evaluation process, each executive is assigned a
Personal Score which is applied to the Corporation's Personal Score Plan for
purposes of determining a bonus amount. For purposes of the Personal Score Plan,
the Compensation Committee 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
multiplying the participant's bonus percentage from the Bonus Matrix by the
midpoint of the salary range of the participant's job grade level (except for
Mr. Ulrich, whose base salary is used), and then multiplying that result by the
participant's percentage of participation in the Personal Score Plan.
18
<PAGE>
Base Salary
The Compensation Committee approved Mr. Ulrich's current base salary in
April 1994. 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 Peer
Group Index in the stock performance graph are included in the Competitive
Surveys. The Compensation Committee has since received regularly updated
information on CEO base salaries and other compensation from third-party
compensation studies. The Compensation Committee has maintained Mr. Ulrich's
base salary rate at the April 1994 level (with minor adjustments) and put
greater emphasis on performance based pay in the form of short-term and
long-term incentive plans.
Base salaries of the other executive officers of the Corporation are based
on competitive practices, and are at approximately the 60th percentile of base
salary 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 median 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 Personal Score,
the executive's position in the salary range and the Corporation's performance.
Merit increase guidelines are established each year based on the performance of
the relevant operating company or the Corporation and current economic and
market 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
In addition to the Personal Score Plan, for fiscal 1997 the Corporation had
a financial performance based short-term incentive plan (referred to generally
as "EIP" or "Executive Incentive Plan") that consisted of two parts: PTOC
(pre-tax operating contribution) and EVA (economic value added). Under the EIP,
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 1997.
PTOC. PTOC measures an operating company's or the Corporation's performance
against annually pre-determined PTOC goals to determine bonus amounts. The
outside directors set PTOC goals when establishing other financial performance
goals for the operating companies and the Corporation. The Compensation
Committee then uses the PTOC goals to establish the PTOC bonus range for use
with the PTOC part of EIP and determines what level of bonuses will be paid if
PTOC performance falls within the PTOC bonus range.
PTOC is the same as pre-tax segment profit which is first-in-first-out
earnings from operations before the impact of securitizing accounts receivable,
interest, corporate and other expenses and unusual items.
The PTOC Score for the fiscal year is determined from a schedule, approved
by the Compensation Committee, that designates a score for each varying level of
PTOC performance achieved by an operating company 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.
The bonus amount for each participant is calculated by multiplying the
participant's bonus percentage from the Bonus Matrix by the midpoint of the
salary range of the participant's job grade level (except for Mr. Ulrich whose
base salary is used), and then multiplying that result by the participant's
percentage of participation in the PTOC part of EIP. In order to receive a bonus
under the PTOC part of EIP, a participant's score under the Personal Score Plan
must equal or exceed a minimum score set by the Compensation Committee.
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<PAGE>
EVA. The EVA part of EIP measures an operating company's or the
Corporation's performance against annually pre-determined EVA goals to determine
bonus amounts. The outside directors set EVA goals in conjunction with
establishing other financial performance goals for the operating companies and
the Corporation. The Compensation Committee then uses the EVA goals to establish
the EVA bonus range for use in conjunction with the EVA part of the EIP and
determines what level of bonuses will be paid if EVA performance falls within
the EVA bonus range.
EVA is PTOC after taxes less a Capital Charge. The "Capital Charge" is the
cost of capital invested in the business operation, adjusted for the maturity of
the assets employed by that business operation.
The EVA Score for the fiscal year is determined from a schedule, approved by
the Compensation Committee, that designates a score for each varying level of
EVA performance achieved by an operating company or the Corporation. The
Compensation Committee also adopts a "Bonus Matrix" which assigns varying bonus
percentages based on the participant's job grade and EVA Score.
The bonus amount for each participant is calculated by multiplying the
participant's bonus percentage from the Bonus Matrix by the midpoint of the
salary range of a participant's job grade level (except for Mr. Ulrich whose
base salary is used), and then multiplying that result by the participant's
percentage of participation in the EVA part of EIP. In order to receive a bonus
under the EVA part of EIP 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 to an officer covered by the limitations set forth
in Section 162(m) of the Internal Revenue Code under the EIP (PTOC and EVA
combined) together with the Personal Score Plan is 400% of that person's salary
set forth in the Proxy Statement for the year during which the bonus was earned.
If the covered 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
400% of the highest salary reported in such year. However, for purposes of
calculating the maximum bonus payable to any covered officer, the salary of the
participant may not exceed 200% of the fiscal 1996 salary of the CEO as reported
in the Summary Compensation Table in the Corporation's Proxy Statement dated
April 14, 1997. The aggregate of all bonuses payable to any other executive
under any combination of the EIP and the Personal Score Plan may not exceed 400%
of his or her base salary.
Mr. Ulrich's bonus for fiscal 1997 was based on 33 1/3% Personal Score Plan,
33 1/3% EIP-PTOC (Corporation) and 33 1/3% EIP-EVA (Corporation). Mr. Woodrow's,
Mr. Pellegrene's and Mr. Gilpin's bonuses were based on 33 1/3% Personal Score
Plan, 33 1/3% EIP-PTOC (Corporation and Target) and 33 1/3% EIP-EVA (Corporation
and Target). Mr. Steinhafel's bonus was based on 33 1/3% Personal Score Plan,
33 1/3% EIP-PTOC (Target) and 33 1/3% EIP-EVA (Target). For fiscal 1997,
financial performance thresholds were exceeded at Target, Mervyn's, the
Department Store Division and the Corporation and bonuses were paid to employees
of those units based on Personal Score, EIP-PTOC and EIP-EVA.
Long-Term Incentive Compensation
The Compensation Committee determines the amount of options, performance
shares and restricted stock awarded annually under the Long-Term Incentive Plan
of 1981. The Compensation Committee reviews data from third-party compensation
studies and sets the grants at approximately the median of competitive companies
of similar size. The Compensation Committee, using judgment and data from the
third party compensation studies, determines the grant size for the CEO and
other executive officers. The Compensation Committee then approves separate
long-term incentive pools for each operating company and corporate staff. The
size of the pool varies with the Corporation's or relevant operating company's
performance. However, the precise size of each pool is based on the subjective
judgment of the Compensation Committee. The Compensation Committee has also
authorized the CEO to grant stock options from a defined pool to employees who
are not subject to the short-swing trading rules under Section 16(b) of the
Securities Exchange Act of 1934. The Compensation Committee determined in 1997
20
<PAGE>
that all pools would consist entirely of non-qualified stock options. Individual
awards from the pool are based on the individual's responsibilities,
performance, future potential and previous grants. Awards in any year to any
person covered by the limitations in Section 162(m) of the Internal Revenue Code
may not include more than 2,000,000 shares in the aggregate, subject to certain
anti-dilution adjustments.
PERFORMANCE SHARES
The performance shares provide for the potential of earning awards of
Corporation Common Stock during a cycle of four fiscal years based upon the
Corporation's or relevant operating company's performance, measured by defined
criteria. For the presently outstanding grants, the criteria used were the same
as those used for the short-term incentive plan in the years that the grants
were made. 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. Target's financial performance during the performance
cycle of four fiscal years beginning in 1993 surpassed the performance share
threshold for its 1993 grant and a payout was made in 1997. All 1993 performance
share grants made to Mervyn's, Department Store Division and Corporation
executives were forfeited because those operating companies failed to achieve
their performance share goals.
As performance share grants are earned, the Common Stock to be issued is put
into escrow and restricted until retirement. Any participant who terminates
employment prior to early retirement (age 55 and five 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 Board committee administering
the LTIP 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. The Corporation did not make any
performance share grants in fiscal 1997.
RESTRICTED STOCK
The terms of the restricted stock require the executive to remain an
employee of the Corporation for four years from the date of grant. Upon
expiration of the four-year period, the shares are then issued, put into escrow
and restricted until retirement. The escrow release events are the same 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. The
Corporation did not make any restricted stock grants in fiscal 1997.
STOCK OPTIONS
During 1997, the Compensation Committee made stock option grants to the
executive officers of the Corporation. These grants were 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 ten-year term. The options are exercisable
25% after the first year, with an additional 25% after each of the next three
years. In March 1998, the Compensation Committee granted a stock option to Mr.
Ulrich as further described below.
21
<PAGE>
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 COC Officers, including the CEO, that it
believes are critical to the overall performance of the Corporation. Those
measures of performance, which include key employee retention, succession
planning and strategic planning, are vital to the long-term performance of the
Corporation.
This Proxy Statement reflects a stock option awarded to Mr. Ulrich on March
6, 1998 that is intended to address important corporate governance objectives.
The award is consistent with the Compensation Committee's commitment to reward
Mr. Ulrich for superior performance, to retain his services for the long-term
benefit of the Corporation and its shareholders, and to create incentive for
continuing excellent results. The award provides Mr. Ulrich a level of
performance-based compensation that is competitive with the level provided to
executives in similar roles who have achieved similar levels of corporate
performance, including CEOs of certain companies included in the Peer Group
Index in the shareholder return information on page 23. Mr. Ulrich's stock
option is not exercisable until March 6, 2002, when it becomes exercisable in
full. The Compensation Committee made this award with the current expectation
that it covers all option shares to be granted to Mr. Ulrich over a three-year
period.
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 the CEO and the other officers named in the Summary
Compensation Table relating to the period during which the compensation is
earned (the "Covered Officers"), unless the payment of such compensation is
based on pre-established, objective performance goals approved by the
shareholders (the "Section 162(m) Cap"). A significant part of the Corporation's
executive compensation, including Mr. Ulrich's option award, will meet the Code
requirements for deductibility under the Section 162(m) rules. 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 the benefit of their ability to evaluate the performance of COC
Officers, including the CEO, on vital subjective performance measures outweighs
the cost of 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
Roger A. Enrico, Chairman
Stephen W. Sanger
Solomon D. Trujillo
22
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS
DAYTON HUDSON CORPORATION S&P 500 INDEX PEER GROUP INDEX
<S> <C> <C> <C>
1993 $100.00 $100.00 $100.00
1994 86.47 112.88 96.90
1995 92.19 113.48 83.28
1996 102.18 157.35 93.72
1997 158.31 198.80 111.84
1998 306.53 252.3 168.80
</TABLE>
FISCAL YEARS ENDING JANUARY 31
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Dayton Hudson Corporation 100 86.47 92.19 102.18 158.31 306.53
S&P 500 Index 100 112.88 113.48 157.35 198.80 252.30
Peer Group Index 100 96.90 83.28 93.72 111.84 168.80
</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 an index composed of the Corporation's
peer group companies (the "Peer Group Index") over the same period. The Peer
Group Index consists of the following companies: the Corporation, Dillard
Department Stores, Federated Department Stores, Gap Inc., Kmart Corp., Kohl's
Corp., Limited Inc., May Department Stores Co., Nordstrom Inc., J.C. Penney Co.,
Sears Roebuck & Co., TJX Companies Inc. and Wal-Mart Stores. The graph assumes
the investment of $100 in the Corporation's Common Stock, the S&P 500 Index and
the Peer Group Index on January 31, 1993, and reinvestment of all dividends.
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.
23
<PAGE>
ITEM TWO--APPOINTMENT OF INDEPENDENT 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 Corporation and its subsidiaries for the
fiscal year ending January 30, 1999. Ernst & Young LLP has been employed in this
capacity by the Corporation since 1931.
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.
24
<PAGE>
ADDITIONAL INFORMATION
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The SEC rules require disclosure of those directors, officers and beneficial
owners of more than 10% of the Corporation's Common Stock who fail to file on a
timely basis reports required by Section 16(a) of the Securities Exchange Act of
1934, as amended, during the most recent fiscal year. Based solely on review of
reports furnished to the Corporation and written representations that no other
reports were required during the fiscal year ended January 31, 1998, all Section
16(a) filing requirements were met except as follows: retired officer Edwin
Wingate filed one late Form 4 showing a sale of shares and Anne Mulcahy filed an
amended Form 3 to correctly reflect her ownership of the Corporation's Common
Stock.
COMMITMENT TO DIVERSITY
The Corporation believes that attracting and retaining an employee
population reflecting the diversity of the customers and communities it serves
is an important goal and will provide a competitive advantage. The Corporation
is an equal opportunity employer and communicates to its employees information
regarding equal employment opportunities. The Corporation also encourages the
use of minority and women-owned contractors and service providers and it
supports the efforts of its employees, suppliers and vendors to adhere to these
principles of corporate responsibility.
The Corporation provides detailed statistical information on equal
employment opportunity to the federal government as required by law. Information
regarding the Corporation's diversity programs and its diverse employee
population are available upon request from the Corporation's Secretary.
For the benefit of hearing impaired persons, a sign language interpreter
will be present at the Corporation's 1998 Annual Meeting.
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, proxies in the enclosed form returned to the Corporation will
be voted in accordance with the recommendation of the Board of Directors, or, in
the absence of such a recommendation, in accordance with the judgment of the
proxy holders.
Expenses in connection with the solicitation of proxies will be paid by the
Corporation. Proxies are being solicited principally by mail and by telephone.
Georgeson & Company, Inc. has been retained by the Corporation to act as a proxy
solicitor for a fee estimated not to exceed $20,000, plus reimbursement of
out-of-pocket expenses. In addition, directors, officers and regular employees
of the Corporation may solicit proxies personally, by telephone, by fax or by
special letter. The Corporation may reimburse brokerage firms and others for
their expenses in forwarding proxy materials to the beneficial owners of shares
of the Corporation.
The Annual Report of the Corporation for the fiscal year ended January 31,
1998, including financial statements, is enclosed.
SHAREHOLDER PROPOSALS
Shareholder proposals for consideration at the Corporation's 1999 Annual
Meeting must follow the procedures set forth in Rule 14a-8 under the Securities
Exchange Act of 1934 and the Corporation's By-laws. To be timely under Rule
14a-8, they must be received by the Secretary of the Corporation by December 14,
1998 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
25
<PAGE>
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 14, 1998
26
<PAGE>
DAYTON HUDSON CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS MAY 20, 1998
P
Robert J. Ulrich, Douglas A. Scovanner and James T. Hale, and each
of them, are hereby appointed proxies, with power of substitution to
R each, to represent and to vote as designated below and on the reverse
side hereof, all shares of capital stock of Dayton Hudson Corporation, a
Minnesota corporation, held by the undersigned at the Annual Meeting of
O Shareholders to be held on May 20, 1998, and at any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTION IS GIVEN IT
WILL BE VOTED FOR PROPOSALS SET FORTH IN ITEMS 1 AND 2. THE PROXIES
X CANNOT VOTE YOUR SHARES UNLESS YOU SIGN THIS CARD ON THE REVERSE SIDE
AND RETURN THIS CARD.
Y For participants in the DHC 401(k) Plan, this proxy card will
constitute voting instructions to the Trustee under this Plan. As a
participant in this Plan, the undersigned understands that, in
accordance with the terms of the Plan, these instructions shall be held
in the strictest confidence by the Trustee and shall not be divulged or
released to any person, including officers or employees of the Company.
THESE INSTRUCTIONS WILL BE FOLLOWED AS DIRECTED, BUT IF NO DIRECTION IS
GIVEN, THE TRUSTEE IS INSTRUCTED TO VOTE FOR PROPOSALS SET FORTH IN
ITEMS 1 AND 2. SHARES HELD IN THE PLAN FOR WHICH NO VOTING INSTRUCTIONS
ARE RECEIVED BY THE TRUSTEE, AS WELL AS SHARES NOT ALLOCATED TO ANY
PARTICIPANTS, WILL BE VOTED IN THE SAME PROPORTION AS VOTES ACTUALLY
CAST BY PLAN PARTICIPANTS. INSTRUCTION CARDS RECEIVED BY THE TRUSTEE
AFTER MAY 6, 1998, WILL NOT BE COUNTED.
(INSTRUCTION: To withhold authority to vote for any named nominee or a
substitute nominee designated by the Board of Directors, write that
nominee's name or the words "substitute nominee" on the space provided
on the reverse side.)
/SEE REVERSE SIDE/
- --------------------------------------------------------------------------------
TRIANGLE FOLD AND DETACH HERE TRIANGLE
ANNUAL MEETING
OF
DAYTON HUDSON CORPORATION SHAREHOLDERS
WEDNESDAY, MAY 20, 1998
9:30 A.M. CDT
THE CHILDREN'S THEATRE
2400 THIRD AVENUE SOUTH
MINNEAPOLIS, MINNESOTA
Please present this ADMISSION TICKET at the Annual
Shareholders' Meeting as verification of your
Dayton Hudson share ownership.
<PAGE>
/X/ Please mark your votes as in this example. 0361
As an alternative to completing this form, you may vote over the
telephone by following the instructions below.
The Board of Directors recommends a vote FOR proposals 1 and 2.
1. Election of Directors
Election of Directors, Nominees:
1. Michele J. Hooper
2. Susan A. McLaughlin
3. Anne M. Mulcahy
4. Stephen W. Sanger
FOR WITHHELD
/ / / /
For, except withheld from the following nominee(s):
- --------------------------------------------------------
2. Appointment of Ernst & Young as Independent Auditors
FOR AGAINST ABSTAIN
/ / / / / /
The proxies are authorized to vote upon such other business as may properly
come before the meeting in accordance with the recommendation of the Board of
Directors, or, in the absence of such a recommendation, in the proxies'
discretion.
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 1998 Proxy Statement. / /
Signature(s) Date
----------------------------------- --------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
- --------------------------------------------------------------------------------
TRIANGLE FOLD AND DETACH HERE TRIANGLE
[LOGO] DAYTON HUDSON CORPORATION
TELEPHONE VOTING INSTRUCTIONS
Dear Shareholder:
Dayton Hudson Corporation encourages you to take advantage of a new and
convenient way to vote your shares. You may now vote your shares by
telephone. This eliminates the need to return the proxy card.
To vote by telephone:
- On a touch-tone telephone call 1-800-OK2-VOTE (1-800-652-8683) 24 hours a
day, 7 days a week.
- The series of numbers that appear in the box above, just below the
perforation, must be used to access the system.
Your telephone vote authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card.
If you choose to vote your shares by telephone, there is no need for you to
mail back your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
