<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
THE HOME DEPOT, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
<PAGE> 2
(LOGO)
THE HOME DEPOT, INC.
To our Stockholders:
On behalf of the Board of Directors, it is our pleasure to invite you to
attend the Annual Meeting of Stockholders of The Home Depot, Inc.
As shown in the formal notice enclosed, the meeting will be held at the
Cobb Galleria Centre, 2 Galleria Parkway, Atlanta, Georgia 30339, on Wednesday,
May 27, 1998, at 10:00 a.m. local time. At the meeting, in addition to acting on
the matters described in the Proxy Statement, we will give a current report on
the activities of the Company. Stockholders will have an opportunity at that
time to comment on or to inquire about the affairs of the Company that may be of
interest to stockholders generally. If you will need special assistance at the
meeting because of a disability, please contact Mr. Kevin Herron, The Home
Depot, 2455 Paces Ferry Road, Atlanta, Georgia 30339-4024 (770-433-8211, ext.
16226). An interpreter for persons who are hearing impaired will be provided.
The subjects proposed for action at the meeting are the election of four
directors, the approval of two officer bonus plans, the amendment of the
Company's Certificate of Incorporation to increase the number of authorized
shares and the conduct of such other business, including consideration of two
stockholder proposals, as may properly come before the meeting.
It is important that your shares be represented at this meeting in order
that the presence of a quorum may be assured. Whether or not you plan to attend
the meeting, you are urged to vote your shares via (1) a toll-free telephone
call; (2) the Internet or (3) by dating, signing and mailing the enclosed proxy
card in the envelope provided. If you are interested in voting via telephone or
the Internet, specific instructions are set forth on the enclosed proxy card to
assist you.
Thank you for your support.
Sincerely,
/s/ BERNARD MARCUS
Bernard Marcus
Chairman of the Board of Directors
/s/ ARTHUR M. BLANK
Arthur M. Blank
President and CEO
<PAGE> 3
THE HOME DEPOT, INC.
2455 PACES FERRY ROAD
ATLANTA, GEORGIA 30339-4024
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 27, 1998
NOTICE is hereby given that the Annual Meeting of Stockholders of The Home
Depot, Inc., a Delaware corporation (the "Company" or "Home Depot"), will be
held in accordance with its By-laws at the Cobb Galleria Centre, 2 Galleria
Parkway, Atlanta, Georgia 30339, Wednesday, May 27, 1998, at 10:00 a.m. for the
following purposes:
(1) To elect four (4) directors for terms ending with the 2001 Annual
Meeting of Stockholders and until their successors are elected and
qualified;
(2) To approve an amendment to the Company's Senior Officers' Bonus
Pool Plan;
(3) To approve an Executive Officers' Bonus Plan;
(4) To consider and act upon a proposal to amend the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 1,000,000,000 to 2,500,000,000; and
(5) To conduct such other business, including consideration of two
stockholder proposals, as may properly come before the meeting and any
adjournments or postponements of the meeting.
The Common Stock of the Company should be represented as fully as possible
at the Annual Meeting. Therefore, it will be appreciated if you will date, sign
and return the enclosed proxy at your earliest convenience or vote your shares
electronically via the telephone or the Internet. You may, of course, change or
withdraw your proxy at any time prior to the voting at the meeting. However,
returning the proxy in a timely manner will assure your representation at the
Annual Meeting.
The Board of Directors has fixed the close of business on March 30, 1998,
as the record date for the determination of holders of Common Stock of the
Company entitled to notice of, and to vote at, the Annual Meeting and any
adjournments thereof. A list of stockholders entitled to vote at the meeting
will be available for inspection by any stockholder for any purpose germane to
the meeting during ordinary business hours from May 18 through May 27, 1998, at
the corporate offices of the Company and during the meeting.
By Order of the Board of Directors
/s/ Lawrence A. Smith
Lawrence A. Smith
Secretary
Atlanta, Georgia
April 17, 1998
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR PROXY.
<PAGE> 4
THE HOME DEPOT, INC.
2455 PACES FERRY ROAD
ATLANTA, GEORGIA 30339-4024
(770) 433-8211
PROXY STATEMENT
SOLICITATION OF PROXIES FOR ANNUAL MEETING
INTRODUCTION
The enclosed proxy is being solicited by the Board of Directors of Home
Depot for use at the 1998 Annual Meeting of Stockholders of the Company to be
held at 10:00 a.m. on Wednesday, May 27, 1998, at the Cobb Galleria Centre, 2
Galleria Parkway, Atlanta, Georgia 30339, or at any adjournments or
postponements thereof (the "Annual Meeting").
Certain directors, officers and associates of the Company may solicit
proxies by telephone, e-mail, fax, mail or personal contact. In addition, the
Company has retained D. F. King & Co., Inc., New York, New York, to assist in
the solicitation of proxies and will pay such firm a fee, estimated not to
exceed $10,000, plus reimbursement of expenses. Arrangements will be made with
brokers, nominees and fiduciaries to send proxies and proxy material at the
Company's expense to their principals. This Proxy Statement is first being
mailed on or about April 17, 1998, to stockholders of record on March 30, 1998.
This year, stockholders of record can simplify their voting and reduce
Company costs by voting their shares via telephone or the Internet. The
telephone and Internet voting procedures are designed to authenticate
stockholders' identities, allow stockholders to vote their shares and to confirm
that their instructions have been properly recorded. If your shares are held in
the name of a bank or broker, the availability of telephone and Internet voting
will depend on their voting processes; therefore, it is recommended that you
follow the voting instructions on the form you receive. If you do not choose to
vote by telephone or the Internet, please date, sign and return the enclosed
proxy card. The Company has been advised by counsel that the procedures which
have been put in place are consistent with the requirements of applicable law.
The shares held by each stockholder who executes and returns the proxy will
be counted for purposes of determining the presence of a quorum at the Annual
Meeting unless such proxy is timely revoked. If the proxy is executed and
returned, it may, nevertheless, be revoked at any time before it is voted by
written notice to the Secretary of the Company, by executing and returning a
subsequent proxy or by a stockholder personally attending and voting his or her
shares at the Annual Meeting.
The total number of shares of stock of the Company outstanding and entitled
to vote at the Annual Meeting is 733,452,399 consisting of Common Stock, par
value $.05 per share (the "Common Stock"). Each share of Common Stock entitles
the holder to one vote with respect to all matters to come before the meeting,
and all such shares vote as a single class. Only stockholders of record at the
close of business on March 30, 1998, are entitled to notice of, and to vote at,
the Annual Meeting. A majority of the outstanding shares will constitute a
quorum at the meeting. Abstentions and broker non-votes are counted for purposes
of determining the presence or absence of a quorum for the transaction of
business. A plurality of the votes cast at the Annual Meeting is necessary for
the election of directors. Accordingly, abstentions and broker non-votes will
not affect the outcome of the election. The affirmative vote of a majority of
the outstanding shares is required to amend the Certificate of Incorporation to
increase the number of authorized shares, and the affirmative vote of the
holders of a majority of the votes cast at the Annual Meeting is necessary for
approval of each of the two officer bonus plans and for approval of two
stockholder proposals. Thus, with respect to the proposed amendment to the
Certificate of Incorporation, abstentions and broker non-votes will have the
same effect as negative votes but, with respect to the officer bonus plans and
stockholder proposals, abstentions and broker non-votes will not be included in
vote totals and will have no effect on the outcome of the vote.
The Annual Report to Stockholders of the Company for the fiscal year ended
February 1, 1998 (sometimes referred to herein as "fiscal 1997"), including
financial statements (the "Annual Report"), is being mailed concurrently with
this Proxy Statement to all stockholders of record as of March 30, 1998, except
for accounts
<PAGE> 5
where the stockholder had filed a written request to eliminate duplicate
reports. In addition, the Company has provided brokers, dealers, banks, voting
trustees and their nominees, at Company expense, with additional copies of the
Annual Report so that such record holders could supply such material to
beneficial owners as of March 30, 1998. ADDITIONAL COPIES OF THE ANNUAL REPORT
AND THE ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED FEBRUARY 1, 1998,
TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "FORM 10-K"), BUT
WITHOUT EXHIBITS TO THE FORM 10-K, ARE OR WILL BE AVAILABLE WITHOUT CHARGE, UPON
REQUEST. SEE "AVAILABILITY OF FORM 10-K AND ANNUAL REPORT TO STOCKHOLDERS."
Each properly executed proxy received in time for the Annual Meeting will
be voted as specified therein. If a stockholder does not specify otherwise, the
shares represented by his or her proxy will be voted in accordance with the
recommendations by the Board of Directors as follows: FOR the election of Arthur
M. Blank, Johnnetta B. Cole, Milledge A. Hart, III and M. Faye Wilson to the
Board of Directors of the Company; FOR the amendment of the Company's Senior
Officers' Bonus Pool Plan; FOR the approval of an Executive Officers' Bonus
Plan; FOR the amendment of the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 1,000,000,000 to
2,500,000,000; AGAINST Stockholder Proposal No. 1 and AGAINST Stockholder
Proposal No. 2.
If you participate in the Company's FutureBuilder Plan (a combined 401(k)
and ESOP plan referred to as the "FutureBuilder Plan"), you may vote shares of
Common Stock of the Company equivalent to the value of the interest credited to
your account by instructing Wachovia Bank, N.A., Trustee of the FutureBuilder
Plan, pursuant to the proxy card being mailed with this proxy statement to plan
participants. Plan participants who are also stockholders of record will receive
a combined proxy card for voting both their stock holdings and plan interests.
The Trustee will vote your shares in accordance with your duly executed
instructions. If you do not send instructions, the shares in your account will
be voted by the Trustee in the same proportion that it votes shares in other
accounts for which it did receive timely instructions.
2
<PAGE> 6
COMMON STOCK OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows information as to "beneficial ownership" of the
Common Stock of the Company, as of February 1, 1998, by each person known by the
Company to be the "beneficial owner" of more than five percent of such Common
Stock, by each present director and nominee of the Company, by certain executive
officers and by directors and all executive officers of the Company as a group
(22 persons). The determinations of "beneficial ownership" of the Company's
Common Stock are based upon responses to Company inquiries which cited Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "1934 Act").
Such Rule provides that shares shall be deemed to be beneficially owned where a
person has, either solely or in conjunction with others, the power to vote or to
direct the voting of shares and/or the power to dispose or to direct the
disposition of shares; or where a person has the right to acquire any such power
within 60 days after the date such "beneficial ownership" is determined. Except
as disclosed in the notes to the table, each person has sole voting and
investment powers with respect to the entire number of shares shown as
beneficially owned by him or her.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OF
(AND ADDRESS IF "BENEFICIAL OWNERSHIP" EXCEEDS 5%) OWNED CLASS(1)
- -------------------------------------------------- ------------ --------
<S> <C> <C>
Bernard Marcus(2)........................................... 21,842,890 2.98
Arthur M. Blank(3).......................................... 12,182,614 1.66
Kenneth G. Langone(4)....................................... 6,850,243 *
Milledge A. Hart, III(5).................................... 1,733,185 *
Berry R. Cox................................................ 1,650,243 *
Ronald M. Brill(6).......................................... 872,392 *
Larry M. Mercer (7)......................................... 330,451 *
Frank Borman(8)............................................. 265,782 *
W. Andrew McKenna(9)........................................ 161,639 *
Donald R. Keough(10)........................................ 20,304 *
M. Faye Wilson(11).......................................... 16,743 *
Johnnetta B. Cole(12)....................................... 4,803 *
John L. Clendenin(13)....................................... 5,477 *
Directors and Executive Officers as a group(14)............. 46,993,323 6.41
FMR Corp.(15)............................................... 55,991,937 7.65
</TABLE>
- ---------------
* Less than one percent.
(1) Based on 732,107,612 shares outstanding on February 1, 1998.
(2) Includes 12,164 shares credited to Mr. Marcus' account under the Company's
FutureBuilder Plan. Mr. Marcus may be deemed to have shared voting and
investment powers over the following shares not included in the table:
229,324 shares held by Mr. Marcus' spouse as trustee of a trust for his
children and 20,177 shares held by charitable organizations of which Mr.
Marcus serves as a director. Mr. Marcus disclaims beneficial ownership of
such shares.
(3) Includes 11,257 shares credited to Mr. Blank's account under the Company's
FutureBuilder Plan. Includes 950,000 shares held by two private charitable
trusts of which Mr. Blank has sole voting and investment powers. Does not
include 15,764 shares held by Mr. Blank's spouse, 447,024 shares which are
held by others as co-trustees for the children of Mr. Blank and 135,500
shares held by a private foundation of which Mr. Blank is the Trustee. Mr.
Blank disclaims beneficial ownership of such shares.
(4) Does not include 2,477 shares held by Mr. Langone's wife of which Mr.
Langone may be deemed to have shared voting and investment powers and
23,109 shares held by Invemed Associates, Inc., an investment banking firm
of which Mr. Langone is President and Chairman. Mr. Langone disclaims
beneficial ownership of such shares.
(5) Includes 150,776 shares held by a limited partnership whose general partner
is a corporation of which Mr. Hart and his spouse are the sole
stockholders.
3
<PAGE> 7
(6) Includes 10,776 shares credited to Mr. Brill's account under the Company's
FutureBuilder Plan. Includes 24,749 shares held by a private charitable
trust of which Mr. Brill has shared voting and investment powers. Does not
include 70,661 shares which are held by Mr. Brill and his spouse as
custodians for their children and 6,073 shares held by Mr. Brill's spouse,
as to which shares Mr. Brill may be deemed to have shared voting and
investment powers. Mr. Brill disclaims beneficial ownership of such shares.
Includes 217,646 shares under stock options which are exercisable within 60
days from February 1, 1998.
(7) Includes 9,771 shares credited to Mr. Mercer's account under the Company's
FutureBuilder Plan. Includes 188,396 shares under stock options which are
exercisable within 60 days from February 1, 1998.
(8) Includes 186,942 shares held by a trust of which Colonel Borman and his
spouse have shared voting and investment powers, 21,036 shares held by a
private foundation of which Colonel Borman has sole voting and investment
powers and 54,630 shares held by a charitable trust of which Colonel Borman
has shared voting and investment powers.
(9) Includes 4,754 shares credited to Mr. McKenna's account under the Company's
FutureBuilder Plan. Includes 79,646 shares under stock options which are
exercisable within 60 days from February 1, 1998.
(10) Does not include 600 shares held by Mr. Keough's spouse of which Mr. Keough
may be deemed to have shared voting and investment powers. Mr. Keough
disclaims beneficial ownership of such shares. Includes 10,000 shares under
stock options which are exercisable within 60 days from February 1, 1998.
(11) Includes 15,000 shares under stock options which are exercisable within 60
days from February 1, 1998.
(12) Includes 3,750 shares under stock options which are exercisable within 60
days from February 1, 1998.
(13) Includes 1,875 shares under stock options which are exercisable within 60
days from February 1, 1998.
(14) Includes 105,995 shares credited to accounts under the Company's
FutureBuilder Plan. Includes 1,160,665 shares under stock options which are
exercisable within 60 days from February 1, 1998, and does not include
certain shares held by their spouses individually, held by their spouses as
custodian for their children or otherwise described above.
(15) A Schedule 13G has been filed on behalf of FMR Corp ("FMR"), 82 Devonshire
Street, Boston, Massachusetts 02109, to report beneficial ownership as of
December 31, 1997, through Fidelity Management & Research Company, of
51,939,179 shares, through Fidelity Management Trust Company, of 3,704,816
shares, through Edward C. Johnson, III, of 20,362 shares and through
Fidelity International Limited, of 327,580 shares. Of the 55,991,937 shares
beneficially owned, FMR reports sole voting power over 2,824,411 shares,
shared voting power over 1,500 shares, sole investment power over
55,990,325 shares and shared investment power over 1,500 shares.
I. ELECTION OF DIRECTORS
AND INFORMATION REGARDING DIRECTORS
The Company's Certificate of Incorporation, as amended, provides that, "The
directors shall be divided into three classes, designated Class I, Class II and
Class III..." The terms of the present Class II directors shall expire at the
Annual Meeting of Stockholders in 1998.
The Board of Directors has nominated four incumbent Class II directors,
Arthur M. Blank, Johnnetta B. Cole, Milledge A. Hart, III and M. Faye Wilson for
terms expiring at the Annual Meeting of Stockholders in 2001 and until their
successors are elected and qualified.
The following information is provided concerning the nominees for election
as directors.
ARTHUR M. BLANK, age 55, has been the President, Chief Operating Officer
("COO") and a director of Home Depot since its inception in 1978 and was named
Chief Executive Officer ("CEO") in 1997. He is, together with Mr. Bernard Marcus
and Mr. Kenneth G. Langone, a co-founder of the Company. Mr. Blank is a member
of the Board of Trustees of North Carolina Outward Bound School, a non-profit
corporation, the Board of Trustees of Emory University, the Board of Trustees of
the Carter Center, Inc., the Board of Councilors of the
4
<PAGE> 8
Carter Center of Emory University and serves as a member of the Board of
Directors of Cox Enterprises, Inc. and Post Properties, Inc.
JOHNNETTA B. COLE, age 61, has been a director of the Company since 1995.
Dr. Cole served as President of Spelman College in Atlanta, Georgia, from 1987
until July 1997. Dr. Cole serves as a member of the Board of Directors of
Coca-Cola Enterprises, Inc. and Merck & Co., Inc. and also serves on the boards
of a number of charitable, civic and educational organizations. Dr. Cole is also
Trustee of the Rockefeller Foundation.
MILLEDGE A. HART, III, age 64, has been a director of the Company since
1978. Mr. Hart is Chairman of the Board of Hart Group, Inc., a private
management services company. Mr. Hart is also Chairman of the Board of Rmax,
Inc., an insulation manufacturing company, and Axon, Inc., a
residential/commercial service company.
M. FAYE WILSON, age 60, has been a director of the Company since 1992. Ms.
Wilson was Managing Director of Mergers and Acquisitions for Security Pacific
Hoare Govett in London from 1987 until she returned to California in 1991 as
Executive Vice President for Security Pacific Financial Services Systems, Inc.
Since the merger in 1992 between BankAmerica Corporation and Security Pacific
Corporation, Ms. Wilson has been Executive Vice President of Bank of America
NT&SA. Ms. Wilson also served as Chairman of the Board and President of Security
Pacific Financial Services, Inc. from November 1993 to October 1997.
If any nominee becomes unwilling or unable to serve, which is not expected,
the proxies are intended to be voted for a substitute person to be designated by
the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY VOTE "FOR" THE PROPOSAL TO ELECT ARTHUR M. BLANK, JOHNNETTA B. COLE,
MILLEDGE A. HART, III AND M. FAYE WILSON AS CLASS II DIRECTORS OF THE COMPANY TO
HOLD OFFICE UNTIL THE 2001 ANNUAL MEETING OF STOCKHOLDERS AND UNTIL THEIR
SUCCESSORS ARE ELECTED AND QUALIFIED.
The following Class I directors were elected at the Annual Meeting of
Stockholders in 1996 and their present terms expire with the Annual Meeting of
Stockholders in 1999:
BERNARD MARCUS, age 68, is a co-founder of Home Depot and serves as
Chairman of the Board. From inception of the Company in 1978 until 1997, he
served as Chairman of the Board and CEO, at which time the title of CEO was
passed on to Mr. Arthur M. Blank. Mr. Marcus serves as a director on the Boards
of National Service Industries, Inc., the New York Stock Exchange, Inc.,
Westfield Corporation, Inc. and DBT Online, Inc. He also serves on the boards of
the National Foundation for the Centers for Disease Control and Prevention and
The Marcus Center, Inc., which provides support services for persons with
developmental disabilities and their families. In addition, he is a member of
the Advisory Board and the Board of Directors of the Shepherd Center in Atlanta,
Georgia and is a Vice President and member of the Board of The City of Hope, in
Duarte, California.
DONALD R. KEOUGH, age 71, was President, Chief Operating Officer and a
director of The Coca-Cola Company until his retirement in 1993. Mr. Keough has
been a director of Home Depot since 1993. Mr. Keough is also Chairman of the
Board of Allen & Company Incorporated and Excalibur Technologies Corporation,
Advisor to the Board of Directors of The Coca-Cola Company and serves on the
boards of H. J. Heinz Company, The Washington Post Company and McDonald's
Corporation. Mr. Keough is a past Chairman of the Board of Trustees of the
University of Notre Dame and is a trustee of several other educational
institutions. Mr. Keough also serves on the boards of a number of national
charitable and civic organizations.
KENNETH G. LANGONE, age 62, is one of the co-founders of Home Depot and has
been a director of the Company since 1978. Mr. Langone is Chairman of the Board,
Chief Executive Officer, President and Managing Director of Invemed Associates,
Inc., a New York Stock Exchange member firm engaged in investment banking and
brokerage. Mr. Langone serves on the Board of Directors of Unifi, Inc., DBT
Online, Inc. and Tricon Global Restaurants, Inc. and is a nominee for election
to the Board of Directors of the New York Stock Exchange, Inc. Mr. Langone also
serves on the boards of a number of charitable and educational organizations,
including the Cancer Research Fund of the Damon Runyon-Walter Winchell
Foundation, the Board of Trustees of New York University, Ronald McDonald House,
the Robin Hood Foundation and the Palm Beach Pops.
5
<PAGE> 9
JOHN L. CLENDENIN, age 63, was Chairman, President and Chief Executive
Officer of BellSouth Corporation for at least five years until his retirement in
1996 and remained its Chairman of the Board until 1997. Mr. Clendenin has been a
director of Home Depot since 1996. Mr. Clendenin serves on the Board of
Directors of Coca-Cola Enterprises, Inc., Equifax, Inc., Springs Industries,
Inc., The Kroger Company, RJR Nabisco Holdings Corp., Wachovia Corporation and
National Service Industries, Inc. Mr. Clendenin is past Chairman of the
Committee for Economic Development, past National Chairman of Junior Achievement
and past National President of The Boy Scouts of America. He is currently a
member of the Board of Governors of the American Red Cross.
The following Class III directors were elected at the Annual Meeting of
Stockholders in 1997 and their present terms expire with the Annual Meeting of
Stockholders in 2000:
FRANK BORMAN, age 70, has been a director of the Company since 1983.
Colonel Borman (U.S. Air Force, ret.) retired as the Chairman of the Board and
Chief Executive Officer of Eastern Air Lines, Inc. in 1986. Since 1986, Colonel
Borman has served on the Board of Directors of Continental Holdings, Inc., and
since 1988, as Chairman of the Board, President and Chief Executive Officer of
Patlex Corporation. Since the merger in 1996 between Patlex Corporation and DBT
Online, Inc., Colonel Borman has been President and Chief Executive Officer of
Patlex Corporation and Chairman of the Board of DBT Online, Inc. Colonel Borman
also serves as a director of Thermo Instrument Systems and American
Superconductor Corporation and is also a member of the Board of Trustees of the
National Geographic Society.
RONALD M. BRILL, age 54, has been Executive Vice President and Chief
Administrative Officer ("CAO") of the Company since 1995. Mr. Brill joined Home
Depot as its Controller in 1978, was elected Treasurer in 1980, Vice
President -- Finance in 1981, Senior Vice President and Chief Financial Officer
("CFO") in 1984, Executive Vice President and CFO in 1993 and elected as a
director in 1987. Mr. Brill serves on the Board of Trustees of the Atlanta
Jewish Community Center and Woodruff Arts Center, the Board of Directors of the
Atlanta High Museum of Art and Pilchuck Glass School and the Governing Board of
Woodward Academy.
BERRY R. COX, age 44, has been a director of the Company since 1978. For
the past 20 years, Mr. Cox has been a private investor. Mr. Cox is chairman of
the Board of Berry R. Cox, Inc., a private investment management company which
oversees interests in oil and gas, real estate and both public and private
equities worldwide.
Each director who is not an employee of the Company is paid for service on
the Board of Directors a retainer at the rate of $40,000 per annum, of which
$10,000 is in the form of restricted shares of Common Stock, and an additional
$1,000 for each meeting of the Board of Directors attended other than telephonic
meetings. Home Depot also reimburses each director for reasonable expenses in
attending meetings of the Board of Directors. Directors who are also employees
of the Company are not separately compensated for their services as directors.
Home Depot's Board of Directors has the following committees:
(a) The Executive Committee is comprised of Messrs. Marcus, Blank and
Langone. This Committee exercises the authority of the Board of Directors
in accordance with the By-laws of the Company between meetings of the
Board. The Executive Committee held meetings frequently during fiscal 1997.
(b) The Audit Committee is comprised of Messrs. Borman, Cox, Hart and
Keough and Ms. Wilson. This Committee was established to oversee the
auditing procedures of the Company, to receive and accept the reports of
the Company's independent certified public accountants, to oversee the
Company's internal systems of accounting and management controls and to
make recommendations to the full Board of Directors as to the selection and
appointment of auditors for the Company. The Audit Committee held four
meetings during fiscal 1997.
(c) The Stock Option Committee is comprised of Messrs. Marcus, Blank
and Langone. This Committee considers and makes grants of stock options
pursuant to the Company's 1997 Omnibus Stock Incentive Plan and Employee
Stock Purchase Plan and administers such plans. The Stock Option Committee
held four meetings during fiscal 1997.
6
<PAGE> 10
(d) The Compensation Committee is comprised of Messrs. Borman,
Clendenin, Cox and Keough. This Committee reviews and recommends to the
Board of Directors the appropriate compensation of directors and executive
officers of the Company. The Compensation Committee held four meetings
during fiscal 1997.
(e) The Directors' Nominating Committee is comprised of Messrs.
Marcus, Hart and Langone and Dr. Cole. This Committee is charged with
making recommendations to the full Board for the selection of director
nominees. There is no formal procedure for the submission of stockholder
recommendations. The Directors' Nominating Committee held one meeting
during fiscal 1997.
(f) The Human Resources Committee is comprised of Dr. Cole, Mr.
Langone and Ms. Wilson. This Committee reviews and recommends policies,
practices and procedures for the Company concerning any and all employment
related matters.
The Board of Directors of the Company held seven meetings during fiscal
1997. All incumbent directors attended at least seventy-five percent of the
meetings of the Board and of the Committees of the Board of which they were
members during fiscal 1997.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS
The following persons served as members of the Compensation Committee of
the Board of Directors during the fiscal year ended February 1, 1998: Frank
Borman, John L. Clendenin, Berry R. Cox, Donald R. Keough and Ronald A.
Matricaria. None of the members of the Compensation Committee were officers or
employees of the Company or had any relationship with the Company requiring
disclosure under Securities and Exchange Commission regulations.
INSIDER TRANSACTIONS
Mr. Kenneth G. Langone, a director of the Company, is Chairman of the Board
and President of Invemed Associates, Inc. ("Invemed"), which provides investment
banking consulting services to the Company under a written contract which is
cancelable by either party upon 60 days written notice. The contract provides
for the Company to pay Invemed an annual consulting fee of $100,000. The Company
contemplates utilizing the services of and paying a similar amount to Invemed in
fiscal 1998.
Ms. M. Faye Wilson, a director of the Company, is an executive officer of
Bank of America NT&SA ("Bank of America"). Bank of America provides a variety of
banking services to the Company, including deposit and cash management services,
letters of credit and capital market products.
Mr. Milledge A. Hart, III, a director of the Company, is Chairman of the
Board and a substantial stockholder of Axon, Inc., a company which provides
installed sales services, and Rmax, Inc., a company which sells isocyanurate
foam insulation. Axon, Inc. and Rmax, Inc. were vendors to the Company in fiscal
1997 for which Axon, Inc. and Rmax, Inc. received payments in the amount of
$823,420 and $1,113,803, respectively. The Company contemplates making purchases
from Axon, Inc. and Rmax, Inc. in fiscal 1998.
In the opinion of management, all monies paid to Invemed, Bank of America,
Axon, Inc. and Rmax, Inc. are fair and reasonable and as favorable to the
Company as those which could have been obtained from unrelated third parties.
In connection with the Company's acquisition of Load N Go, Inc., in
December 1997, the stepson of Bernard Marcus received $180,000 for his minority
ownership interest in Load N Go, Inc., and an investment banking firm in which
he has a substantial ownership interest received advisory fees and other
payments of $200,000.
During fiscal 1996, the Company provided an interest free bridge loan in
the amount of $200,000 to Mr. Lynn Martineau, President -- Western Division, to
facilitate his relocation. The loan is to be repaid on or before July 14, 1998.
7
<PAGE> 11
II. AMENDMENT TO THE SENIOR OFFICERS'
BONUS POOL PLAN
The Board of Directors first adopted The Home Depot, Inc. Senior Officers'
Bonus Pool Plan (the "SOBP Plan") in 1994. The SOBP Plan was last amended on
February 26, 1998, subject to approval by the Company's stockholders. The SOBP
Plan is designed to provide a total cash compensation package for the Chairman
of the Board ("Chairman") and Chief Executive Officer ("CEO") of the Company
that is consistent with the Company's philosophy of "pay for performance." The
Company's stockholders are being asked to approve the SOBP Plan solely for the
purpose of ensuring that bonuses paid to eligible officers are fully tax
deductible by the Company without regard to the limitations of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code").
The SOBP Plan is administered by the Compensation Committee of the Board of
Directors (the "Compensation Committee"). The Compensation Committee has full
discretionary authority in all matters relating to the discharge of its
responsibilities and the exercise of its authority under the SOBP Plan. All
decisions of the Compensation Committee and its actions with respect to the SOBP
Plan are final, binding and conclusive.
The SOBP Plan is designed exclusively for the Chairman and CEO. The SOBP
Plan allows the Chairman and CEO collectively to earn a bonus equal to ten
percent (10%) of the Company's net earnings in excess of a threshold amount,
which is automatically established each fiscal year at the prior year's fiscal
net earnings (the "Earnings Threshold"). Bonuses payable under the SOBP Plan are
divided equally between the participants in the SOBP Plan for the fiscal year.
The maximum amount payable under the SOBP Plan to a participant for any one
fiscal year is $2,000,000. The Compensation Committee has the right, in its sole
discretion, to reduce the bonus payable to any participant based on individual
or Company performance factors that the Compensation Committee deems relevant.
The Compensation Committee may, at its option, establish procedures pursuant to
which the participants are permitted to defer the receipt of bonuses payable
under the SOBP Plan.
The Board of Directors has approved the SOBP Plan and has recommended that
it be submitted to the stockholders at the Annual Meeting for their approval.
The Board of Directors may discontinue the SOBP Plan at any time and may, from
time to time, amend or revise the terms of the SOBP Plan as permitted by
applicable statutes; provided, however, that no such discontinuance, amendment
or revision may materially adversely affect any right or obligation with respect
to any award previously made. The Board of Directors believes that the approval
of the SOBP Plan is in the Company's and stockholders' best interests. The full
text of the Plan is set forth as Appendix A to this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE PROPOSAL
TO AMEND THE SENIOR OFFICERS' BONUS POOL PLAN. PROXIES RECEIVED BY THE BOARD OF
DIRECTORS WILL BE VOTED FOR THE PROPOSAL UNLESS STOCKHOLDERS SPECIFY A CONTRARY
CHOICE IN THEIR PROXY.
III. APPROVAL OF THE EXECUTIVE OFFICERS' BONUS PLAN
On February 26, 1998, the Board of Directors adopted, subject to
stockholders' approval, the Executive Officers' Bonus Plan (the "EOBP"). The
EOBP is designed to provide a total cash compensation package for certain
officers of the Company that is consistent with the Company's philosophy of "pay
for performance." The Company's stockholders are being asked to approve the EOBP
solely for the purpose of ensuring that bonuses paid to eligible executive
officers are fully deductible for tax purposes by the Company without regard to
the limitations of Section 162(m) of the Code.
The Plan shall be administered by the Compensation Committee of the Board
of Directors (the "Compensation Committee") which shall have full discretionary
authority in all matters relating to the discharge of its responsibilities and
the exercise of its authority under the EOBP. All decisions of the Compensation
Committee and its actions with respect to the EOBP are final, binding and
conclusive.
The Compensation Committee will determine, within 90 days of the beginning
of each fiscal year of the Company, which of the Company's officers will
participate in the EOBP for the fiscal year. Participation in the
8
<PAGE> 12
EOBP is limited to those executive officers of the Company who, as determined by
the Compensation Committee, in its sole discretion, could receive compensation
from the Company that would be nondeductible under Section 162(m) of the Code.
The Compensation Committee will identify each participant in writing within the
first 90 days of the fiscal year. No officer who is eligible to participate in
the Company's SOBP Plan for a fiscal year will be eligible to participate in the
EOBP. No executive officer has been designated as a participant as of the date
of this Proxy Statement.
The Compensation Committee will establish and approve a schedule under
which potential bonuses payable under the EOBP are tied to attainment of
performance objectives. Potential bonuses may be stated as a percentage of each
participant's salary or as a dollar amount. Performance objectives will be based
on specified levels or increases in the Company's or a subsidiary's or
division's return on equity, earnings per share, total earnings, earnings
growth, return on capital, return on assets, economic value added, earnings
before interest and taxes, sales growth, gross margin return on investment or
increase in the fair market value of the Company's Common Stock. The maximum
potential bonus payable to any participant for a fiscal year is $1,500,000.
The Compensation Committee will determine the extent to which the
performance objectives for the fiscal year have been attained and determine the
actual bonus amount payable to each participant in accordance with the bonus
schedule established for the fiscal year. The Compensation Committee has the
right, in its sole discretion, to reduce the bonus payable to any participant
based on individual or Company performance factors that the Compensation
Committee deems relevant. The Compensation Committee may not increase the amount
of a participant's bonus for any reason. The Compensation Committee may, in its
discretion, establish procedures pursuant to which participants are permitted to
defer the receipt of bonuses payable under the EOBP.
The Board of Directors has approved the EOBP, and has recommended that it
be submitted to the stockholders at the Annual Meeting for their approval. The
Board of Directors may discontinue the EOBP at any time and may, from time to
time, amend or revise the terms of the EOBP as permitted by applicable statutes;
provided, however, that no such discontinuance, amendment or revision shall
materially adversely affect any right or obligation with respect to any award
theretofore made. The Board of Directors believes that the approval of the EOBP
is in the Company's and stockholders' best interests. The full text of the EOBP
is set forth as Appendix B to this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE PROPOSAL
TO APPROVE THE EXECUTIVE OFFICERS' BONUS PLAN. PROXIES RECEIVED BY THE BOARD OF
DIRECTORS WILL BE VOTED FOR THE PROPOSAL UNLESS STOCKHOLDERS SPECIFY A CONTRARY
CHOICE IN THEIR PROXY.
IV. PROPOSED AMENDMENT TO
THE ARTICLES OF INCORPORATION OF THE HOME DEPOT, INC.
On February 26, 1998, the Board of Directors adopted a resolution, subject
to stockholder approval, authorizing an amendment to the Company's Certificate
of Incorporation to increase the number of authorized shares of $.05 par value
Common Stock from 1,000,000,000 to 2,500,000,000. The resolution, in its
entirety, states:
"RESOLVED, that, subject to stockholder approval, the Board of
Directors hereby approves the amendment to the Certificate of Incorporation
of the Company by deleting in its entirety the existing Fourth Article of
that Certificate of Incorporation and substituting the following:
'The total number of shares of stock which the corporation will have
authority to issue is 2,500,000,000, all of which shall be shares of Common
Stock of the par value of $.05 each.'"
At the end of fiscal 1997, there were issued and outstanding 732,107,612
shares of the Company's $.05 par value Common Stock. If the increase in
authorized shares is approved, there will be approximately 1,693,168,775
authorized but unissued (and unreserved) shares available for future
utilization. Although the Company has no specific present plan for the issuance
of any of the additional authorized shares, the Board of Directors believes that
the recommended increase in the number of authorized shares will give it the
flexibility to timely meet the
9
<PAGE> 13
equity capital requirements of the Company's business in the future. If the
Certificate of Incorporation is amended, the additional shares would be
available for issuance to finance the Company's continuing growth and for the
declaration of stock splits, stock dividends and any other proper corporate
purpose. Once authorized in the Certificate of Incorporation, shares of Common
Stock may be issued by the Board of Directors without further authorization from
the stockholders.
The newly authorized shares of Common Stock will have voting and other
rights identical to those of the currently authorized shares of Common Stock.
Holders of the Company's Common Stock have no preemptive rights with respect to
the issuance of additional shares of Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE PROPOSED
AMENDMENT TO THE CERTIFICATE OF INCORPORATION. PROXIES RECEIVED BY THE BOARD OF
DIRECTORS WILL BE VOTED FOR THE PROPOSAL UNLESS STOCKHOLDERS SPECIFY A CONTRARY
CHOICE IN THEIR PROXY.
V. STOCKHOLDER PROPOSALS
STOCKHOLDER PROPOSAL NO. 1
The International Brotherhood of Electrical Workers' Pension Benefit Fund,
owner of 21,650 shares of Common Stock, has given notice that it intends to
present for action at the Annual Meeting the following resolution:
"BE IT RESOLVED: That the shareholders of Home Depot, Inc. ("Company")
hereby request that the Company's Board of Directors take the steps
necessary to amend the Company's bylaws, effective after the 1998 Annual
Meeting, to provide that the Board of Directors shall consist of a majority
of independent directors. For these purposes, the definition of independent
director shall mean a director who:
- has not been employed by the Company or an affiliate in an executive
capacity within the last five years;
- was not, and is not a member of a corporation or firm that is one of the
Company's paid advisers or consultants;
- is not employed by a significant customer, supplier or provider of
professional services;
- has no personal services contract with the Company;
- is not employed by a foundation or university that receives significant
grants or endowments from the Company;
- is not a relative of the management of the Company;
- is not a shareholder who has signed shareholder agreements legally
binding him to vote with management; and
- is not the chairman of a company on which Home Depot's Chairman or Chief
Executive Officer is also a board member."
The following statement was submitted in support of such resolution:
"The purpose of this proposal is to incorporate within the Board of
Directors a basic standard of independence that we believe will permit
clear and objective decision-making in the best long-term interests of
shareholders. A Board of Directors must formulate corporate policies and
monitor the activities of management in implementing those policies. Given
those functions, we believe that it is in the best interest of all
Stockholders if at least a majority of our representatives be independent.
The benefits of such independence we think, are well accepted. The New
York Stock Exchange, for instance, requires each of its listed companies to
have at least two members of the Board of Directors and all members of the
audit committee who meet New York Stock Exchange standards of independence.
We also note studies which reflect that a majority of directors of
publicly-held companies are not employees of the companies on whose boards
they serve. This trend is supported by The Business Roundtable in its
10
<PAGE> 14
publication Corporate Governance and American Competitiveness, prepared by
a committee of the Roundtable, which states, in part, that:
Board of Directors of large publicly-held public corporations
should be composed predominately of independent directors who do not
hold management responsibilities within the corporation ... In order to
underscore their independence, non-management directors should not be
dependent financially on whose boards they serve.
WE URGE YOU TO VOTE FOR THIS PROPOSAL"
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
It is the Company's view that, since its inception, Home Depot's Board of
Directors has functioned extraordinarily well. Company policy has been served
well in the past and continues to be served by combining the talents and diverse
backgrounds of outside directors with that of our most senior officers serving
on the Board.
No longer in its infancy, Home Depot has achieved prominent recognition in
North America. For example, for the last five years the Company was named by
Fortune Magazine as America's most admired retailer. The Company would not have
achieved this recognition without the combination of talent, knowledge and
perspective held by the persons serving on the Board of Directors.
It is without question that the senior officers serving on the Board bring
direct knowledge of Company culture, operations and strategies in the very
competitive home improvement industry. Without the presence of senior officers
serving on the Board, the directors would be without direct access to
on-the-spot information about the Company's operations and strategies.
Certain outside directors have business relationships with the Company
which are disclosed by the Company. These relationships may enhance the
directors' knowledge about the Company and enhance their abilities to execute
their duties. None of the outside directors are financially dependent on their
membership on the Board or on transactions between their affiliates and the
Company.
The Company's disagreement with the proposed resolution also arises out of
the proponent's definition of "independent," which the Company believes is
excessively restrictive. In addition, the Company believes the Board's ability
to fulfill its fiduciary obligations to represent and safeguard the best
interests of the stockholders as a whole would be impaired if the composition of
the Board consisted primarily of "independent directors" as defined by this
Proposal.
The current Board is comprised of eleven members, six of whom may not meet
the proponent's definition of independent director. The Company cannot determine
how these relationships would be defined under the proponent's criteria. The
Board, therefore, might not currently meet the burden of this rule. The Company
should have flexibility in the composition of its Board and not be mandated by a
rigid arbitrary rule that has no bearing to the qualifications of the individual
member.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE ADOPTION OF THE
STOCKHOLDER PROPOSAL. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE VOTED
AGAINST THE PROPOSAL UNLESS STOCKHOLDERS SPECIFY A CONTRARY CHOICE IN THEIR
PROXY.
STOCKHOLDER PROPOSAL NO. 2
Calvert Asset Management Company, Inc., Franklin Research & Development
Corporation and United States Trust Company of Boston, owners of 228,190; 50 and
24,000 shares of Common Stock, respectively, have given notice that they intend
to present for action at the Annual Meeting the following resolution:
Whereas, Home Depot in September 1997 incurred a cost of $104 million
to settle several serious charges of gender discrimination in its hiring,
promotion and compensation practices: a large class action suit involving
up to 17,000 current and former employees in well over 100 Home Depot
stores in 10 western
11
<PAGE> 15
states; a Louisiana-based case seeking class action certification on behalf
of up to 22,000 women in over 300 The Home Depot stores east of the
Mississippi River; as well as similar challenges in Florida and New Jersey.
Whereas, in addition to The Home Depot's $104 million settlement (a
settlement estimated to consume 20 percent of per share earnings for the
quarter), other high profile lawsuits are increasingly proving that
companies involved in discrimination litigation bear significant financial
risk.
Whereas, negative publicity against Home Depot could alienate a
significant proportion of its customer base, particularly women who
comprise about half of the shoppers at our company's stores.
Whereas, shareholders are entitled to access information necessary to
assess the financial risks they incur.
Whereas, Home Depot's management has consistently stated that they are
very proud of their record of hiring and promoting women to every level in
the company.
Whereas, Home Depot continues to refuse to disclose EEO data detailing
the composition of its workforce by gender and race. Wherein, this data is
routinely provided to the Equal Employment Opportunity Commission (EEOC).
Whereas, more than 100 major U.S. corporations disclose their EEO data
in annual reports or other public documents. Many of Home Depot's directors
are also directors or officers at companies that disclose EEO information
either in public reports or directly to shareholders when asked, including
BankAmerica, Heinz, Merck, Wachovia and Washington Post.
Therefore be it resolved: The shareholders request that the Board expand
Home Depot's annual Social Responsibility Report, available by October 1998, to
include:
1. A chart identifying the percentage of employees by gender and race
in each of the nine major EEOC defined job categories for the previous five
years (1993-1997).
2. A summary description of policies and initiatives to advance equal
opportunity for women and minorities into sales, managerial positions and
other job classifications where they are found to be underutilized.
3. Disclosure of any pending lawsuits (omitting confidential
information) alleging discrimination on the basis of gender, race or
disability that: (a) have been granted class-action status; (b) have been
joined by state or federal regulatory agencies; or (c) represent a material
financial risk to shareholders, where material is defined as the lesser of
one percent of corporate assets or three percent of annual earnings.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
Following its review of Stockholder Proposal No. 2, the Securities and
Exchange Commission issued a No-Action letter allowing the Company to omit the
proponents' proposal from this Proxy Statement. The Board, however, has
voluntarily decided to give stockholders the opportunity to respond to this
proposal.
The Company is committed to complying with all applicable equal employment
opportunity laws and provides equal employment opportunity to all associates
without regard to race, color, religion, sex, national origin, age or
disability.
Prior to the settlement cited by the proponents, the Company had already
taken steps to improve its hiring and advancement procedures to ensure that all
of its associates were afforded equal opportunities for advancement. The Company
currently submits federally mandated statistical reports regarding employment
practices; however, it is done at significant time and expense to the Company.
The dissemination of additional reports, as requested by the proponent,
would not assist the Company in its continuing efforts to ensure that each
individual is evaluated based on his or her efforts and abilities. The Company
believes that the information the proponent seeks is susceptible to
misinterpretation by persons who
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<PAGE> 16
may, for whatever reason, be interested in initiating legal action. The
requested reports, for example, could provide certain groups with the false
impression of statistical underutilization and encourage them to initiate
baseless legal actions, which could prove costly to the Company and distracting
to management, thereby affecting the Company's business performance and placing
the Company at a competitive disadvantage.
In conclusion, given that the Company already submits statistical
information to federal, state and local governments, the Board believes that
this proposal is unnecessary. Although the Company shares the proponent's
ultimate objective of equal employment opportunity and discusses this in its
Social Responsibility Report, the Board of Directors does not believe that
expending significant resources, both human and financial, to produce and
distribute additional reports of questionable utility would advance the
Company's business performance, its commitment to equal employment opportunity
or be in the stockholders' best interests.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE ADOPTION OF THE
STOCKHOLDER PROPOSAL. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE VOTED
AGAINST THE PROPOSAL UNLESS STOCKHOLDERS SPECIFY A CONTRARY CHOICE IN THEIR
PROXY.
EXECUTIVE OFFICERS AND THEIR COMPENSATION
The following table sets forth all cash compensation earned by the CEO and
the four most highly compensated executive officers for services rendered to the
Company and its subsidiaries (for the purposes of this section collectively
referred to as the "Company") during the Company's last three fiscal years:
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
FISCAL SALARY BONUS COMPENSATION OPTIONS(1) COMPENSATION(2)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
- --------------------------- ------ ------- --------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Bernard Marcus.................. 1997 799,615 2,000,000 2,863 -- 145,698
Chairman of the Board 1996 600,000 2,000,000 2,864 -- 169,580
1995 600,000 2,000,000 1,597 -- 165,829
Arthur M. Blank................. 1997 799,615 2,000,000 5,625 -- 24,025
President and CEO 1996 600,000 2,000,000 2,656 -- 42,576
1995 600,000 2,000,000 1,539 -- 38,825
Ronald M. Brill................. 1997 500,000 348,000 5,268 25,440 15,504
Executive Vice President and
CAO 1996 494,807 232,150 5,625 78,450 26,865
1995 457,885 153,200 5,631 22,875 28,191
W. Andrew McKenna............... 1997 436,154 295,449 2,790 20,940 14,980
Senior Vice
President-Strategic 1996 414,808 189,798 2,580 18,450 22,604
Business Development 1995 383,654 84,300 1,814 18,375 24,519
Larry M. Mercer................. 1997 410,384 292,320 665 25,440 13,816
Executive Vice President and 1996 361,346 171,791 2,028 78,450 21,050
Group President 1995 313,564 100,000 1,286 18,375 22,001
</TABLE>
- ---------------
(1) Messrs. Marcus and Blank do not participate in any of the Company's stock
option plans. Share amounts have been adjusted for a three-for-two stock
split effected in the form of a stock dividend on July 3, 1997.
(2) The Company has had in effect various plans and arrangements which may not
be available generally to all its salaried employees and which provide for
cash or non-cash compensation for one or more of its executive officers.
Plans and arrangements under which such compensation was provided during
fiscal 1997 are described in the remainder of this section.
The Company's Employee Stock Ownership Plan and Trust (the "ESOP"), adopted
during fiscal 1988, is a defined contribution and employee stock ownership plan
qualified under the Code, and is available to all
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<PAGE> 17
employees pursuant to the ESOP's Eligibility to Participate provisions. The ESOP
is funded solely by contributions from the Company and generally invests only in
Common Stock of the Company. Contributions are allocated to each participant's
account on the basis of his or her individual compensation as defined in the
ESOP. Participants' accounts are fully vested once seven years of service (as
defined in the ESOP) are completed or employment is terminated by reason of
death, disability or retirement.
In fiscal 1996, the ESOP was amended to allow eligible participants to make
Code Section 401(k) contributions to The Home Depot FutureBuilder, a combined
401(k) and Employee Stock Ownership Plan ("FutureBuilder"). FutureBuilder is a
defined contribution plan subject to the applicable provisions of the Code and
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Through FutureBuilder, eligible participants (as defined in FutureBuilder) may
make before-tax contributions in increments from one percent to 15 percent of
their total compensation (subject to lower contribution limits imposed by the
Code for certain participants). When before-tax contributions are made, the
Company matches 50 percent ($.50 for each $1.00) of the first five percent of
the participant's compensation contributed to FutureBuilder (the "Matching
Contribution"). In addition to the Matching Contributions, the Company will
continue to make ESOP contributions to participants' accounts.
The Company's contribution to FutureBuilder, including reallocated
forfeitures, for the fiscal year ended February 1, 1998, was $39,071,562.
Allocations of Common Stock under the ESOP for the last fiscal year were valued
at $1,792 for each of Messrs. Marcus, Blank, Brill, McKenna and Mercer. The
Matching Contributions under the 401(k) portion of FutureBuilder for the last
fiscal year were valued at $4,000 for each of Messrs. Marcus and Blank, $4,480
for Mr. Brill, $4,423 for Mr. McKenna and $4,403 for Mr. Mercer.
The Company adopted an ESOP Restoration Plan ("Restoration Plan") in fiscal
1994. The primary purpose of the Restoration Plan is to provide certain
employees deferred compensation that they would have received under the ESOP if
not for the maximum compensation limits under the Code. The Restoration Plan is
a funded arrangement under which separate bookkeeping accounts are maintained
for each participant. Participants' accounts are credited with "stock units"
which have a value equal to the market value of the Company's Common Stock as of
the date of such crediting. All material terms of the Restoration Plan including
vesting and distribution are the same as the ESOP. Allocations for the last
fiscal year were $9,408 for each of Messrs. Marcus and Blank, $6,414 for Mr.
Brill, $5,197 for Mr. McKenna and $4,667 for Mr. Mercer.
The Company, in fiscal 1997, enabled Messrs. Marcus, Blank, Brill, McKenna
and Mercer to obtain life insurance in the amounts of $8,000,000; $800,000;
$250,000; $250,000 and $256,900, respectively, pursuant to a "split dollar" plan
under which the Company pays the gross annual premium of $130,498; $8,825;
$2,818; $3,568 and $2,954, respectively.
STOCK OPTIONS
At the Annual Meeting of Stockholders in 1997, the stockholders approved
the 1997 Omnibus Stock Incentive Plan (the "1997 Plan"). The 1997 Plan allows
the Company to attract and retain employees and directors of the Company and its
subsidiaries and to provide such persons with incentives and awards for superior
performance. The 1997 Plan is administered by the Stock Option Committee, which
has broad flexibility in designing stock-based incentives and may select from
among six categories of incentive awards: stock options, stock appreciation
rights, restricted shares, deferred shares, performance shares and performance
units.
All of the Company's stock option plans are administered by the Stock
Option Committee. The Stock Option Committee determines the number of shares
granted and the option exercise price, but such price may not be less than one
hundred percent of the fair market value of Common Stock on the grant date.
The following tables reflect certain information, as adjusted to reflect
the three-for-two stock split effected in the form of a stock dividend on July
3, 1997, with respect to stock options granted under the Company's stock option
plans to and those exercised by certain executive officers (excluding Messrs.
Marcus and Blank who do not participate in the stock option plans) during fiscal
1997.
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<PAGE> 18
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES OR BASE (10 YEARS)*
GRANTED IN FISCAL PRICE EXPIRATION ---------------------
NAME (#) YEAR(%) ($/SH) DATE 5%($) 10%($)
- ---- ---------- ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Ronald M. Brill...................... 25,440 0.29 34.00 02/20/07 543,969 1,378,523
W. Andrew McKenna.................... 20,940 0.24 34.00 02/20/07 447,748 1,134,681
Larry M. Mercer...................... 25,440 0.29 34.00 02/20/07 543,969 1,378,523
</TABLE>
- ---------------
* These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent on future performance
of the Common Stock. There can be no assurance that the amounts reflected in
these columns will be achieved or if achieved, will exist at the time of any
option exercise.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND
FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END($)
SHARES VALUE --------------- -------------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- -------- --------------- -------------------
<S> <C> <C> <C> <C>
Ronald M. Brill........................ 0 0 186,985/139,029 7,290,785/4,396,261
W. Andrew McKenna...................... 0 0 69,610/74,904 2,561,008/2,361,415
Larry M. Mercer........................ 0 0 167,110/116,904 6,603,503/3,628,167
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committees of the Board of Directors have
furnished the following report on executive compensation:
Under the supervision of the Compensation and Stock Option Committees of
the Board of Directors, the Company has developed and implemented compensation
policies, plans and programs ("Compensation Policies") which seek to structure
executive compensation consistent with the Company's overall business strategy,
philosophy and objectives. The Compensation Policies are intended to embody a
"pay for performance" philosophy which rewards executives for long-term
strategic management and enhancement of stockholder value by providing ownership
incentives in the Company and a performance-oriented environment that measures
rewards against personal and Company goals. The Company believes this philosophy
attracts, retains and motivates key executives critical to the long-term success
of the Company.
This compensation philosophy is implemented through compensation packages
which include various cash components and non-cash components. Base salaries are
generally set near retail industry averages so that the Company relies to a
large degree on annual and longer term "incentive" compensation to provide
significant upside potential such that high performance could bring total
compensation above the retail industry averages.
The Omnibus Budget Reconciliation Act of 1993 ("OBRA") limits the
deductibility of executive compensation paid by publicly held corporations to $1
million per employee subject to various exceptions, including compensation based
on performance goals.
The deductibility limitation generally does not apply to compensation based
on performance goals where (1) the performance goals are established by a
compensation committee which is comprised solely of two or more outside
directors; (2) the material terms are disclosed to stockholders and approved by
majority vote of the
15
<PAGE> 19
stockholders eligible to vote thereon before the compensation is paid and (3)
before the compensation is paid, the compensation committee certifies that the
performance goals and other material terms have been satisfied. Pursuant to OBRA
and Internal Revenue Service ("IRS") regulations adopted thereunder, a director
will not be an outside director if such person, among other things, receives
compensation for personal services in any capacity other than as a director. The
Company is seeking stockholder approval for amendments to its Senior Officers'
Bonus Pool Plan ("SOBP Plan") and adoption of its Executive Officers' Bonus Plan
("EOBP") for potential compensation in excess of $1 million to satisfy Code
Section 162(m).
The Compensation Committee has established the SOBP Plan for its Chairman
of the Board of Directors, Bernard Marcus, and CEO, Arthur M. Blank. The SOBP
Plan is intended to be, and the Compensation Committee believes that the SOBP
Plan qualifies as, performance-based compensation and, accordingly, that all
sums paid thereunder should be deductible for tax purposes by the Company. The
SOBP Plan allows the Chairman and the CEO collectively to earn a bonus equal to
ten percent of the Company's earnings in excess of the threshold amount (the
"Earnings Threshold"). The Earnings Threshold for fiscal 1998 is equal to $1.224
billion, which is approximately equal to the Company's net earnings for fiscal
1997, excluding a non-recurring charge. Monies payable from the SOBP Plan are to
be shared equally by the Chairman and CEO. The maximum amount payable to either
the Chairman or CEO in any fiscal year is $2 million. Accordingly, under the
terms and conditions of the SOBP Plan, the performance goals for fiscal 1997
were met and certified by the Compensation Committee, and the Chairman and CEO
each received their respective bonus.
The Compensation Committee bases its belief that the SOBP Plan is
performance-based on, among other things, the fact that the amount of the
Company's earnings in any year are not capable of being ascertained with
certainty at the start of such year, statements in the IRS regulations that
performance goals need not be based upon an increase or positive result under a
company's business criterion and may include maintaining the status quo or
limiting economic losses and the Compensation Committee's belief that
achievement of an earnings threshold which is at least equal to the level of the
prior year's earnings is subject to substantial uncertainty, even in light of
the Company's historical earnings growth. Nevertheless, neither the Company nor
the Compensation Committee can give any assurance that the IRS will agree that
the SOBP Plan is performance-based. In the event that the SOBP Plan is deemed by
the IRS not to be performance-based, the Company would have the option to
contest such determination, forego the deduction for sums in excess of the
deductible limit, modify the SOBP Plan for future years or any combination of
the foregoing.
Payments under the SOBP Plan to the Chairman and CEO comprise approximately
72 percent of each of their total cash compensation in fiscal 1997. From fiscal
1988 until fiscal 1992, the Chairman and CEO declined to accept recommendations
from the Compensation Committee for increases to the maximum amount in the SOBP
Plan. In the 1992 fiscal year, the Compensation Committee increased the maximum
amount in the SOBP Plan for the Chairman and CEO from $2 million to $4 million.
The increase in the maximum amount awardable under the SOBP Plan from prior
years was based upon the Compensation Committee's assessment of the Chairman's
and CEO's contributions to the Company as reflected in the multiple measures of
the Company's financial performance since the last increase in the maximum
compensation awardable under the SOBP Plan including, without limitation,
increases in net earnings, net sales, net earnings per share, total assets and
stockholders' equity. The Compensation Committee also considered the Company's
market share, geographic expansion and market penetration and marketing
innovations. The Compensation Committee did not assign formal weights to
particular measures and the relative weighing of the importance of such measures
was based on the subjective perception of the individual members of the
Compensation Committee. The Compensation Committee was also cognizant of the
total compensation levels of certain other executives of similar position in the
retail industry and other companies similar in size.
In setting annual salaries, the Compensation Committee reviews with the
Chairman an annual salary plan recommended by the Chairman and CEO for the
Company's executive officers. The annual salary plan is based on numerous
subjective factors which include performance merit increases and responsibility
levels. The annual salary plans for both the Chairman and CEO are established by
the Compensation Committee based on available compensation data, including
compensation data for the retail industry and other companies similar in size,
the Compensation Committee's assessment of such officers' past performance and
the Compensation Committee's expectation of their future contributions in
leading the Company. The Compensation Committee does not purport
16
<PAGE> 20
to scientifically or statistically sample compensation data for other companies.
Accordingly, compensation data for other companies may, but need not, include
companies in the retail industry or the S&P 500, usually is historical in nature
and may be limited to that available from public sources. To the extent that
comparative data is utilized, the Compensation Committee believes a subjective
comparison is required to account for the numerous variables between Home Depot
and other companies and notes that compensation levels and operating performance
of other companies can be influenced by a variety of factors both within and
outside the control of such other companies. While type of business and broad
market indexes may be appropriate measures of historical company performance,
the Compensation Committee currently believes neither grouping should be
accorded any special ranking in its compensation deliberations.
All executive officers (other than the Chairman and CEO) participate in the
Company's Officers' Bonus Plans ("OBP"), under which they are eligible to earn a
bonus up to an established percent of their annual base salary depending on the
Company's performance relative to criteria such as gross margin, return on
investment, return on assets and sales target levels. The exact objective
criteria employed depend on the officer's responsibilities and such performance
criteria may be computed by various methods depending on the Compensation
Committee's assessment of the best match between job duties and performance
criteria. During the 1997 fiscal year, based upon these objective performance
assessments, all of the executive officers other than the Chairman and CEO were
awarded bonuses as reflected in the Summary Compensation Table contained
elsewhere in this Proxy Statement.
The Compensation Committee believes that disclosure of actual targets under
the OBP could adversely affect the Company since, among other things, such
projections are not publicly disclosed and could place the Company at a
competitive disadvantage with respect to hiring and retaining key employees and
could potentially expose the Company to claims by third parties based on such
projections, especially since such projections are not intended as a predictor
of future performance on which the public should rely.
A large portion of the executive officers' total compensation is tied to
stock performance, thus more closely aligning their interests with the long-term
interests of stockholders. This is accomplished through several stock plans. The
Company's 1997 Omnibus Stock Incentive Plan and its Employee Stock Purchase Plan
are administered by the Stock Option Committee of the Board of Directors which
coordinates its activities with those of the Compensation Committee. Annually,
at the discretion of the Stock Option Committee, stock options are granted to
all executive officers and designated employees, excluding both the Chairman and
CEO, to purchase stock at the then current market price. The stock option grant
size is determined by the Stock Option Committee and based on the individual's
position within the Company, job performance, future potential and cultural fit.
Job performance is based on reviews compiled by one or more of the officers to
whom an officer reports and such officer's perceived relative performance and
abilities when compared with other associates of the Company. Stock option
grants made since fiscal 1991 are exercisable at a rate of 25 percent per year
commencing on the first or second year after the date of grant (depending on the
type of stock option granted) with a total stock option term of ten years. The
Company's stock options historically have been financially rewarding when the
Company's stock price has shown dramatic increases. To the extent that the
public market does not, in the Compensation Committee's view, fairly value the
Company, the Compensation Committee may consider decreasing the portion of
compensation tied to stock performance. The executive officers, excluding the
Chairman and CEO, may also purchase stock at a discount through the Employee
Stock Purchase Plan. The Company's Chairman and CEO have chosen not to
participate in the Company's 1997 Omnibus Stock Incentive Plan and Employee
Stock Purchase Plan due to their already large stock ownership as shown
elsewhere in this Proxy Statement. Of course, they have benefited along with
other stockholders in the historical increases in the market value of the
Company's Common Stock. All executive officers including the Chairman and CEO
participate in the ESOP portion of the Company's FutureBuilder Plan and the ESOP
Restoration Plan (the "ESOP Plans") whereby their vested interests increase in
value, without any outlay of funds by the associates, through increases in the
market value of the Company's Common Stock and discretionary annual
contributions to the ESOP Plans by the Company. Such discretionary contributions
to the ESOP Plans are determined by the Board of Directors based on the
Company's performance and are typically distributed to the ESOP Plans'
participants, including participating executive officers, based on a percentage
of the participants' base salary.
17
<PAGE> 21
The tables included in this Proxy Statement and accompanying narrative
footnotes, reflect the decisions covered by the above discussion. The foregoing
report has been furnished by the members of the following committees:
<TABLE>
<S> <C>
Compensation Committee: Stock Option Committee:
Frank Borman Bernard Marcus
John L. Clendenin Arthur M. Blank
Berry R. Cox Kenneth G. Langone
Donald R. Keough
</TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN ON $100 INVESTMENT
AMONG HOME DEPOT, S&P RETAIL COMPOSITE GROUP AND S&P 500 INDEX
ASSUMING REINVESTMENT OF DIVIDENDS
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P RETAIL
(FISCAL YEAR COVERED) HD COMPOSITE S&P 500
<S> <C> <C> <C>
1/31/93 100 100 100
1/30/94 80.84 96.91 112.19
1/29/95 98.37 90.14 113.43
1/28/96 93.38 94.30 153.75
2/2/97 102.88 115.45 198.84
2/1/98 189.37 171.20 252.35
</TABLE>
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP were the auditors of the Company during fiscal 1997.
Although the Board of Directors has not yet selected auditors for the present
fiscal year, it is expected that KPMG Peat Marwick LLP will be chosen. A
representative of that firm will be present at the Annual Meeting with an
opportunity to make a statement and will be available to respond to appropriate
questions.
STOCKHOLDER PROPOSALS
Stockholders who desire to submit to the Company proposals for inclusion in
the Company's proxy materials for the 1999 Annual Meeting of Stockholders of The
Home Depot, Inc. must submit such proposals to the Secretary of the Company by
December 18, 1998.
18
<PAGE> 22
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission and the New York Stock Exchange reports of ownership and
changes in ownership of Common Stock and other equity securities of the Company.
Directors, executive officers and greater than ten percent stockholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that during fiscal 1997, all filing requirements applicable to
its directors, executive officers and greater than ten percent beneficial owners
were complied with except that John L. Clendenin, Director; Johnnetta B. Cole,
Director; and Bryant W. Scott, President of EXPO Design Centers Division each
failed to timely file a Form 4 Report on a single transaction.
OTHER MATTERS
Management does not intend to present to the Annual Meeting any business
other than the items stated in the "Notice of Annual Meeting of Stockholders"
and knows of no other business to be presented for action at the meeting. If,
however, any other business should properly come before the meeting or any
adjournments or postponements thereof, it is intended that all management
proxies will be voted with respect thereto in accordance with the best judgment
of the persons named in the proxies.
AVAILABILITY OF FORM 10-K
AND ANNUAL REPORT TO STOCKHOLDERS
Copies of Home Depot's Annual Report to Stockholders for the fiscal year
ended February 1, 1998, which includes certain financial information about the
Company, are included with this Proxy Statement to stockholders. Additional
copies of the Annual Report, along with copies of Home Depot's Annual Report on
Form 10-K for the fiscal year ended February 1, 1998, as filed with the
Securities and Exchange Commission (exclusive of documents incorporated by
reference), are available without charge to stockholders upon written request to
Investor Relations, The Home Depot, Inc., 2455 Paces Ferry Rd., Atlanta, Georgia
30339-4024 or via the Internet at www.homedepot.com.
19
<PAGE> 23
DIRECTIONS TO MEETING
For those who plan on attending the meeting, directions are as follows:
If Traveling Northbound on I-75:
Take Exit 109B (Atlanta Bypass 285 Westbound);
Continue West on I-285 to Exit 14, stay in exit lane and follow the road
signs for Cobb Parkway (also known as U.S. Highway 41). At the end of the
exit ramp, make a left turn at the traffic light, southbound on Cobb
Parkway. Continue under the overpass and make a left turn at the second
traffic light onto Galleria Drive. The first entrance on the right is Cobb
Galleria Centre's main (rotunda) entrance and drop off area. Additional
parking may be found at the second and third rights and in the 100 Building
parking deck.
If Traveling Southbound on I-75:
Take Exit 109 (Atlanta Bypass 285 Westbound);
Continue West on I-285 to Exit 14 and follow the road signs for Cobb
Parkway (also know as U.S. Highway 41). At the end of the exit ramp make a
left turn at the traffic light, southbound on Cobb Parkway. Continue under
the overpass and make a left turn at the second traffic light onto Galleria
Drive. The first entrance on the right is Cobb Galleria Centre's main
(rotunda) entrance and drop off area. Additional parking may be found at
the second and third rights and in the 100 Building parking deck.
If Traveling Eastbound or Northbound on I-285:
Take Exit 13 (Dobbins Air Force Base and Cobb Parkway or U.S. Highway 41
Exit);
At the end of the exit ramp turn right at the traffic light, heading south
on Cobb Parkway. At the next immediate traffic light make a left turn on
Galleria Drive. The first entrance on the right is Cobb Galleria Centre's
main (rotunda) entrance and drop off area. Additional parking may be found
at the second and third rights and in the 100 Building parking deck.
If Traveling Westbound or Southbound on I-285:
Take Exit 14 (Dobbins Air Force Base and Cobb Parkway or U.S. Highway 41
Exit);
Continue exiting in the lane marked "Cobb Parkway." At the end of the exit
ramp turn left at the traffic light, heading south on Cobb Parkway.
Continue under the overpass and make a left turn at the second traffic
light onto Galleria Drive. The first entrance on the right is Cobb Galleria
Centre's main (rotunda) entrance and drop off area. Additional parking may
be found at the second and third rights and in the 100 Building parking
deck.
20
<PAGE> 24
APPENDIX A
THE HOME DEPOT, INC.
SENIOR OFFICERS' BONUS POOL PLAN
I. PURPOSE
The Home Depot, Inc. Senior Officers' Bonus Pool Plan (the "Plan"), as
amended, is effective as of February 2, 1998, subject to approval by the
Company's stockholders. The Plan is designed to provide a total cash
compensation package for the Chairman (the "Chairman") and Chief Executive
Officer ("CEO") of The Home Depot, Inc. (the "Company"), that is consistent with
the Company's philosophy of "pay for performance." Payments pursuant to this
Plan are intended to qualify as "performance-based compensation" under Section
162(m)(4)(c) of the Internal Revenue Code of 1986, as amended.
II. ADMINISTRATION
The Plan shall be administered by the Compensation Committee of the Board
of Directors (the "Committee"). The Committee shall be comprised of not less
than two Outside Directors (as defined under Section 162(m)), each of whom shall
be appointed by and serve at the pleasure of the Board of Directors.
The Committee shall have full discretionary authority in all matters
relating to the discharge of its responsibilities and the exercise of its
authority under the Plan. All decisions of the Committee and its action with
respect to the Plan shall be final, binding and conclusive.
III. ELIGIBILITY
The Plan is designed exclusively for the Chairman and CEO. No other members
of the Company's senior management are eligible to participate in the Plan. No
officer who is eligible to participate in the Company's Executive Officers'
Bonus Plan for a fiscal year will be eligible to participate in the Plan.
IV. FUNDING AND ALLOCATION OF BONUS
The Plan allows the Chairman and CEO collectively to earn a bonus equal to
ten percent (10%) of the Company's net earnings in excess of a threshold amount,
which threshold amount will be automatically established each year at the prior
year's net earnings (the "Earnings Threshold"). Bonuses payable under the Plan
are to be divided equally between the participants in the Plan for the fiscal
year. The maximum amount payable under the Plan to a participant for any one
fiscal year is two million dollars ($2,000,000). The Committee shall have the
right, in its sole discretion, to reduce the bonus payable to any participant
based on individual or Company performance factors that the Committee deems
relevant.
V. DEFERRAL ELECTIONS
The Committee may, at its option, establish procedures pursuant to which
the participants are permitted to defer the receipt of bonuses payable
hereunder.
VI. PLAN AMENDMENT OR TERMINATION
The Board of Directors may discontinue the Plan at any time and may, from
time to time, amend or revise the terms of the Plan as permitted by applicable
statutes; provided, however, that no such discontinuance, amendment or revision
shall materially adversely affect any right or obligation with respect to any
award theretofore made.
VII. GOVERNING LAW
The Plan shall be governed by and construed under the laws of the State of
Georgia.
A-1
<PAGE> 25
APPENDIX B
THE HOME DEPOT, INC.
EXECUTIVE OFFICERS' BONUS PLAN
I. PURPOSE
The Home Depot, Inc. Executive Officers' Bonus Plan (the "Plan") is
effective as of February 2, 1998, subject to approval by the Company's
stockholders. The Plan is designed to provide a total cash compensation package
for certain officers of The Home Depot, Inc. (the "Company") that is consistent
with the Company's philosophy of "pay for performance."
II. ADMINISTRATION
The Plan shall be administered by the Compensation Committee of the Board
of Directors (the "Committee"). The Committee shall be comprised of not less
than two Outside Directors (as defined under Section 162(m) of the Internal
Revenue Code), each of whom shall be appointed by and serve at the pleasure of
the Board of Directors.
The Committee shall have full discretionary authority in all matters
relating to the discharge of its responsibilities and the exercise of its
authority under the Plan. All decisions of the Committee and its action with
respect to the Plan shall be final, binding and conclusive.
III. ELIGIBILITY
The Committee shall determine, within 90 days of the beginning of each
fiscal year of the Company, which of the Company's officers will participate in
the Plan for the fiscal year. Participants in the Plan shall be limited to those
executive officers of the Company who, as determined by the Committee in its
sole discretion, could, as a result of the bonus payment for the fiscal year,
together with other relevant compensation, receive compensation that would be
nondeductible under Section 162(m) of the Internal Revenue Code. The Committee
shall identify each participant in writing within the first 90 days of the
fiscal year. No officer who is eligible to participate in the Company's Senior
Officers' Bonus Pool Plan for a fiscal year will be eligible to participate in
the Plan.
IV. ESTABLISHMENT OF TARGET BONUSES
The Committee shall, within the first 90 days of each fiscal year,
establish and approve a schedule under which potential bonuses payable under the
Plan are tied to attainment of performance objectives. Potential bonuses may be
stated as a percentage of each participant's salary or as a dollar amount.
Performance objectives shall be based on specified levels or increases in the
Company's or a subsidiary's or division's return on equity, earnings per share,
total earnings, earnings growth, return on capital, return on assets, economic
value added, earnings before interest and taxes, sales growth, gross margin
return on investment or increase in the fair market value of the Company's
common stock. The maximum potential bonus payable to any participant for a
fiscal year shall be $1,500,000.
V. BONUS PAYMENTS
Within 90 days of the end of each fiscal year, the Committee shall
determine the extent to which the performance objectives for the fiscal year
have been attained and determine the actual bonus amount payable to each
participant in accordance with the bonus schedule established for the fiscal
year. The Committee shall have the right, in its sole discretion, to reduce the
bonus payable to any participant based on individual or Company performance
factors that the Committee deems relevant. The Committee may not increase the
amount of a participant's bonus for any reason. Bonuses will be paid to
participants within 90 days of the end of each fiscal year.
B-1
<PAGE> 26
VI. DEFERRAL ELECTIONS
The Committee may, in its discretion, establish procedures pursuant to
which the participants are permitted to defer the receipt of bonuses payable
hereunder.
VII. PLAN AMENDMENT OR TERMINATION
The Board of Directors may discontinue the Plan at any time and may, from
time to time, amend or revise the terms of the Plan as permitted by applicable
statutes; provided, however, that no such discontinuance, amendment or revision
shall materially adversely affect any right or obligation with respect to any
award theretofore made. The Committee may condition the effectiveness of any
amendment upon stockholder approval if it deems such approval to be required or
advisable.
VIII. GOVERNING LAW
The Plan shall be governed by and construed under the laws of the State of
Georgia.
B-2
<PAGE> 27
2700-PS-98
<PAGE> 28
APPENDIX
PROXY
THE HOME DEPOT, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS ON MAY 27, 1998.
The undersigned stockholder hereby appoints BERNARD MARCUS, ARTHUR M.
BLANK and RONALD M. BRILL, and each of them, attorneys and proxies for the
undersigned with full power of substitution, to act and vote, with the powers
the undersigned would possess if personally present, at the Annual Meeting of
Stockholders of The Home Depot, Inc. to be held at the Cobb Galleria Centre,
Atlanta, Georgia, on Wednesday, May 27, 1998, at 10:00 a.m., and any
adjournments thereof, as directed on the reverse side with respect to the
matters set forth on the reverse side and with discretionary authority on all
other matters that come before the meeting, all as more fully described in the
Proxy Statement received by the undersigned stockholder. If no direction is
made, the proxy will be voted "FOR" the approval of item number 1, the election
of ARTHUR M. BLANK, JOHNNETTA B. COLE, MILLEDGE A. HART, III and M. FAYE WILSON,
"FOR" the approval of item number 2, "FOR" the approval of item number 3, "FOR"
the approval of item number 4, "AGAINST" the approval of item number 5, and
"AGAINST" the approval of item number 6, and in accordance with the
recommendations of the Board of Directors.
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.
SEE REVERSE SIDE
<PAGE> 29
THE HOME DEPOT, INC.
2455 PACES FERRY ROAD
ATLANTA, GEORGIA 30339-4024
VOTE BY TELEPHONE OR INTERNET
QUICK * EASY * IMMEDIATE
The Home Depot, Inc. encourages you to take advantage of two new cost-effective
and convenient ways to vote your shares. You may now vote your proxy 24 hours a
day, 7 days a week, using either a touch-tone telephone or through the Internet.
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed, and returned your proxy card.
TO VOTE BY PHONE: CALL TOLL-FREE ON A TOUCH-TONE TELEPHONE
1-888-807-7699
You will be asked to enter the 13-digit Control
Number located above your name and address in the
lower left corner of this form. Then simply follow
the instructions
OR
TO VOTE BY INTERNET: POINT YOUR BROWSER TO THE WEB ADDRESS:
www.equiserve.com/proxy/
You will be asked to enter the 13-digit Control
Number located above your name and address in the
lower left of this form. Then simply follow the
instructions. You may also indicate if you would be
interested in receiving future proxy materials via
the Internet.
OR
TO VOTE BY MAIL: Simply mark, sign and date your proxy card and
return it in the enclosed postage-paid envelope. If
you are voting by telephone or the Internet, please
do not mail your proxy card.
DETACH HERE
<PAGE> 30
X Please mark
- ----- votes as in
this example.
UNLESS YOU ARE VOTING ELECTRONICALLY, PLEASE MARK, SIGN AND DATE HEREON AND
RETURN PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2, 3 AND 4.
1. Election of Directors. NOMINEES: Arthur M. Blank, Johnnetta B. Cole,
Milledge A. Hart, III and M. Faye Wilson
FOR WITHHELD
---- ----
--------------------------
For all nominees except as noted above
2. Approval of an amendment to the Company's Senior Officers' Bonus Pool
Plan.
FOR AGAINST ABSTAIN
---- ---- ----
3. Approval of The Home Depot, Inc. Executive Officers' Bonus Plan.
FOR AGAINST ABSTAIN
---- ---- ----
4. Approval of an amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares.
FOR AGAINST ABSTAIN
---- ---- ----
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 5 AND 6.
5. Approval of Stockholder Proposal to amend Bylaws to require a majority
of independent directors.
FOR AGAINST ABSTAIN
---- ---- ----
6. Approval of Stockholder Proposal relating to a report on certain
employment matters.
FOR AGAINST ABSTAIN
---- ---- ----
DISCONTINUE
<PAGE> 31
DUPLICATE
ANNUAL
REPORT
---------
MARK HERE
FOR ADDRESS
CHANGE AND
NOTE BELOW
---------
Please sign exactly as name appears at left. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Signature: _________________________ Date: ___________________________
Signature: _________________________ Date: ___________________________
