<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>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
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:
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(4) Date Filed:
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<PAGE> 2
PROXY STATEMENT
AND NOTICE OF
2000
ANNUAL
STOCKHOLDERS
MEETING
[THE HOME DEPOT (R) LOGO]
<PAGE> 3
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<S> <C>
TIME: 10:00 a.m. on Wednesday, May 31, 2000
PLACE: Cobb Galleria Centre
2 Galleria Parkway
Atlanta, Georgia 30339
ITEMS OF BUSINESS: (1) To elect two directors.
(2) To amend the Certificate of Incorporation to
increase the number of authorized shares of common
stock.
(3) To amend the Certificate of Incorporation to
eliminate the classification of the Board of
Directors effective in 2001.
(4) To transact other business properly coming
before the meeting, including the consideration of
two stockholder proposals.
WHO CAN VOTE: You can vote if you were a stockholder of record on
April 3, 2000.
ANNUAL REPORT: A copy of our 1999 Annual Report is enclosed.
DATE OF MAILING: This notice and the proxy statement are first being
mailed to stockholders on or about April 24, 2000.
</TABLE>
By Order of the Board of Directors
Lawrence A. Smith, Secretary
<PAGE> 4
[HOME DEPOT LOGO]
To our Stockholders:
It is our pleasure to invite you to attend our 2000 Annual Meeting of
Stockholders, which will be held this year on Wednesday, May 31, 2000, at the
Cobb Galleria Centre in Atlanta, Georgia. The meeting will start at 10:00 a.m.
local time.
On the ballot at this year's meeting are company proposals (1) for the election
of two directors, (2) to increase the number of authorized shares of stock
and (3) to eliminate the classification of the Board of Directors effective in
2001. Additionally, you will vote on two stockholder proposals. We also look
forward to answering your questions at the meeting in the manner discussed in
the proxy statement. If you will need special assistance at the meeting because
of a disability, please contact Kevin Herron at 770-384-3226. We will provide
an interpreter for the hearing impaired.
PLEASE NOTE THAT YOU WILL NEED TO SHOW THAT YOU ARE A STOCKHOLDER OF HOME DEPOT
TO ATTEND THE ANNUAL MEETING. If your shares are registered in your name, your
admission card is attached to your proxy card, and you will need to bring this
card with you to the meeting. If your shares are in the name of your broker or
bank or you received your proxy materials electronically, you will need to
bring evidence of your stock ownership, such as your most recent brokerage
statement, and valid picture identification. IF YOU DO NOT HAVE EITHER AN
ADMISSION CARD OR PROOF THAT YOU OWN HOME DEPOT STOCK, YOU MAY NOT BE ADMITTED
INTO THE MEETING.
We are continuing to offer you the option to receive future proxy materials
electronically through the Internet. You can sign up by following the simple
instructions contained in this mailing. Receiving future annual reports and
proxy statements through the Internet will be simpler for you, will save your
company money and is friendlier to the environment. If you have a computer with
Internet access, we hope you will follow the instructions and sign up.
Whether or not you plan to attend, you can be sure your shares are represented
at the meeting by promptly voting and submitting your proxy by phone, by
Internet or by completing, signing and returning the enclosed proxy card.
Thank you for your support.
Sincerely,
/s/ Arthur M. Blank /s/ Bernard Marcus
Arthur M. Blank Bernard Marcus
President and CEO Chairman of the Board of Directors
<PAGE> 5
ABOUT THE MEETING
WHAT AM I VOTING ON?
You will be voting on the following:
- - To elect two directors;
- - To increase the number of shares of authorized common stock;
- - To eliminate the classification of the Board of Directors effective in 2001;
and
- - To consider two stockholder proposals.
WHO IS ENTITLED TO VOTE?
You may vote if you owned stock as of the close of business on April 3, 2000.
Each share of common stock is entitled to one vote. As of April 3, 2000, we had
2,308,809,562 shares of common stock outstanding.
HOW DO I VOTE BEFORE THE MEETING?
You have three voting options:
- - Over the Internet, which we encourage if you have Internet access, at the
address shown on your proxy card;
- - By telephone through the number shown on your proxy card; or
- - By mail by completing, signing and returning the enclosed proxy card.
If you hold your shares in the name of a bank or broker, whether you can vote
by telephone or the Internet depends on their voting processes. Please follow
the directions on your proxy card carefully.
CAN I VOTE AT THE MEETING?
You may vote your shares at the meeting if you attend in person. Even if you
plan to attend the meeting, we encourage you to vote your shares by proxy. You
may vote by proxy through the Internet, by telephone or by mail.
CAN I CHANGE MY MIND AFTER I VOTE?
You may change your vote at any time before the polls close at the meeting. You
may do this by (1) signing another proxy with a later date and returning it to
us prior to the meeting, (2) voting again by telephone or over the Internet
prior to 10:00 a.m. on May 31, 2000 or (3) voting again at the meeting.
WHAT IF I RETURN MY PROXY CARD BUT DO NOT PROVIDE VOTING INSTRUCTIONS?
Proxies that are signed and returned but do not contain instructions will be
voted (1) FOR the election of the nominee directors named on page 3 of this
proxy statement, (2) FOR the increase in the number of authorized shares, (3)
FOR the elimination of the classification of the Board effective in 2001 and
(4) AGAINST each of the two stockholder proposals.
HOW DO I VOTE IF I PARTICIPATE IN THE DIVIDEND REINVESTMENT PLAN?
The proxy card you have received includes your dividend reinvestment plan
shares. You may vote your shares through the Internet, by telephone or by mail,
all as described on the enclosed proxy card.
HOW DO I VOTE IF I PARTICIPATE IN THE FUTUREBUILDER PLAN FOR HOME DEPOT
ASSOCIATES?
Shares credited to your FutureBuilder account are included on your proxy card.
You may vote your shares by Internet, telephone or mail, all as described on
the enclosed proxy card. If you do not vote, the shares credited to 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. If you
also own stock in your own name and not through a broker, your proxy card
includes both your stock holdings and your plan interests.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
It means that you have multiple accounts with brokers and/or our transfer
agent. Please vote all of these shares. We recommend that you contact your
broker and/or our transfer agent to consolidate as many accounts as possible
under the same name and address. Our transfer agent is Fleet National Bank,
which may be reached at 1-800-577-0177.
WILL MY SHARES BE VOTED IF I DO NOT PROVIDE MY PROXY?
Your shares may be voted under certain circumstances if they are held in the
name of a brokerage firm. Brokerage firms have the authority under the New York
Stock Exchange rules to vote customers' unvoted shares, which are referred to
as "broker non-votes," on certain "routine" matters, including the election of
directors. Shares represented by broker non-votes are counted for purposes of
establishing a quorum. At our meeting, shares represented by broker non-votes
will be counted
1
<PAGE> 6
as voted by the brokerage firm in the election of directors, but will not be
counted for all other matters to be voted on because these other matters are
not considered "routine" under the applicable rules. If you hold your shares
directly in your own name, they will not be voted if you do not provide a
proxy.
HOW CAN I ATTEND THE MEETING?
The annual meeting is open to all holders of Home Depot common stock. To attend
the meeting, you will need to bring evidence of your stock ownership. If your
shares are registered in your name, your admission card is attached to your
proxy card, and you will need to bring it with you to the meeting. If your
shares are in the name of your broker or bank or you received your proxy
materials electronically, you will need to bring evidence of your stock
ownership, such as your most recent brokerage statement, and valid picture
identification. For directions to the annual meeting, please call our Investor
Relations department at 770-384-3049. IF YOU DO NOT HAVE EITHER AN ADMISSION
CARD OR PROOF THAT YOU OWN HOME DEPOT STOCK, YOU MAY NOT BE ADMITTED INTO THE
MEETING.
MAY STOCKHOLDERS ASK QUESTIONS AT THE MEETING?
Yes. Representatives of the Company will answer stockholders' questions of
general interest at the end of the meeting. In order to give a greater number
of stockholders an opportunity to ask questions, individuals or groups will be
allowed to ask only one question and no repetitive or follow-up questions will
be permitted.
HOW MANY VOTES MUST BE PRESENT TO HOLD THE MEETING?
Your shares are counted as present at the meeting if you attend the meeting and
vote in person or if you properly return a proxy by Internet, telephone or
mail. In order for us to conduct our meeting, a majority of our outstanding
shares of common stock as of April 3, 2000, must be present in person or by
proxy at the meeting. This is referred to as a quorum.
HOW MANY VOTES ARE NEEDED TO ELECT DIRECTORS?
The two nominees receiving the highest number of "Yes" votes will be elected
as directors. This number is called a plurality. Shares not voted, whether by
marking "Abstain" on your proxy card, by broker non-vote (which is described
above), or otherwise, will have no impact on the election of directors. Unless
a properly executed proxy card is marked "Withhold Authority," the proxy given
will be voted "For" the two nominees for director.
HOW MANY VOTES ARE NEEDED TO APPROVE THE INCREASE IN THE NUMBER OF AUTHORIZED
SHARES AND THE ELIMINATION OF THE CLASSIFICATION OF THE BOARD EFFECTIVE IN
2001?
Each of the proposals to amend the Certificate of Incorporation will be
considered separately. Both the amendment of the Certificate of Incorporation
to increase the number of authorized shares and to eliminate the classification
of the Board effective in 2001 must receive the "Yes" vote of a majority of our
outstanding shares of common stock as of April 3, 2000. A properly executed
proxy card marked "Abstain" with respect to these proposals will not be voted.
Accordingly, abstentions will have the effect of a vote "Against" these
proposals.
HOW MANY VOTES ARE NEEDED TO APPROVE THIS YEAR'S STOCKHOLDER PROPOSALS?
Each stockholder proposal will be considered separately. A proposal must
receive the "Yes" vote of a majority of the shares present at the meeting in
order to be approved. A properly executed proxy card marked "Abstain" with
respect to these proposals will not be voted. Accordingly, abstentions will
have the effect of a vote "Against" these proposals.
CAN MY SHARES BE VOTED ON MATTERS OTHER THAN THOSE DESCRIBED IN THIS PROXY
STATEMENT?
Yes. The Company has not received proper notice of, and is not aware of, any
business to be transacted at the meeting other than as indicated in this proxy
statement. If any other item or proposal properly comes before the meeting, the
proxies received will be voted in accordance with the discretion of the proxy
holders.
ARE DISSENTERS' RIGHTS APPLICABLE TO ANY OF THE PROPOSALS?
No, dissenters' rights do not apply to any of the proposals.
2
<PAGE> 7
ELECTION OF DIRECTORS AND DIRECTOR BIOGRAPHIES
WHO ARE THIS YEAR'S NOMINEES?
The directors standing for election this year are:
FRANK BORMAN, 72, Director since 1983
- - Retired U.S. Air Force Colonel
- - Retired as Chairman of the Board and Chief Executive Officer of Eastern Air
Lines, Inc. in 1986
- - President of Borman Motor Company since 1986
- - President and Chief Executive Officer of Patlex Corporation since 1988
- - Chairman of the Board of DBT Online, Inc. since 1996
- - Member of the Board of American Superconductor Corporation
BERRY R. COX, 46, Director since 1978
- - Chairman of Berry R. Cox, Inc., a private investment company with interests
in oil and gas, real estate and both public and private equities worldwide,
for over 20 years
WE RECOMMEND THAT YOU VOTE FOR THE ELECTION OF THESE DIRECTORS
HOW LONG WITH THESE NOMINEES SERVE?
If the proposal to eliminate classification of the Board of
Directors effective in 2001 is approved, each nominee would hold office until
the 2001 annual meeting of stockholders and until his successor is elected. If
that proposal is not approved, each nominee would hold office until the 2003
annual meeting of stockholders and until his successor is elected.
WILL THERE BE A VACANCY IN THIS CLASS OF THE BOARD?
Yes. Ronald M. Brill, Chief Administrative Officer and a director of the
Company, is not standing for reelection and will be retiring from the Board
as of the annual meeting. This will result in our having a vacancy on the
Board. Under the terms of our Certificate of Incorporation, any vacancy on the
Board may be filled by a majority vote of the directors then in office. The
Company has begun a search for another director.
WHO ARE THE DIRECTORS WHO WILL CONTINUE TO SERVE?
The incumbent directors whose current terms will expire in 2001 are:
ARTHUR M. BLANK, 57, Director since 1978
- - Co-founder of The Home Depot and President and Chief Executive Officer
since 1997
- - President and Chief Operating Officer of The Home Depot from inception
through 1997
- - Member of the Board of:
- Carter Center, Inc.
- Cox Enterprises, Inc.
- Post Properties, Inc.
- Emory University
- North Carolina Outward Bound School
- - Trustee of The Arthur M. Blank Charitable Trusts and The Arthur M. Blank
Family Foundation
MILLEDGE A. HART, III, 66, Director since 1978
- - Member of the Board since 1985 and Chairman since 1997 of DocuCorp
International, Inc.
- - Chairman of the Board of:
- Hart Group, Inc., a private management service and investment company,
since 1988
- Rmax, Inc., an insulation manufacturing company, since 1978
- Axon, Inc., a residential/commercial service company from 1982 through
1999
- - Member of the Board of Trustees and Chairman of the Investment Committee of
Southern Methodist University
M. FAYE WILSON, 62, Director since 1992
- - Senior Vice President, Value Initiatives of The Home Depot since 1998
- - Executive Vice President of Bank of America NT&SA from 1992 through 1998
- - Chairman, Security Pacific Financial Services, Inc. from 1992 through 1998
- - Member of the Board of:
- Acsys, Inc.
- Farmers Insurance Group
- Big Brothers Big Sisters
- Duke University Trinity Board
- Neurosciences Research Institute
- San Diego Opera
WILLIAM S. DAVILA, 68, Director since 1999
- - President Emeritus of Vons Companies, Inc. from 1993 through 1999
- - Member of the Board of:
- Hormel Foods Co.
- Pacific Gas & Electric Co.
- Wells Fargo & Company
- - Foundation Director of:
- Santa Maria Hospital, Los Angeles, California
- Methodist Hospital, Arcadia, California
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<PAGE> 8
DIRECTOR BIOGRAPHIES
The following are incumbent directors whose terms are currently scheduled to
expire in 2002. If the proposal to eliminate classification of the Board of
Directors effective in 2001 is approved, these directors have agreed that their
terms will expire in 2001; otherwise, their terms will continue until 2002.
BERNARD MARCUS, 70, Director since 1978
- - Co-founder of The Home Depot and Chairman of the Board since inception
- - Member of the Board of:
- DBT Online, Inc.
- National Service Industries, Inc.
- Westfield America, Inc.
- Kennedy Krieger Institute
- The National Foundation for the Centers for Disease Control and
Prevention
- The Marcus Center, Inc.
- The City of Hope
- - Member of the Advisory Board and the Board of Directors of the Shepherd
Center
BONNIE G. HILL, 58, Director since 1999
- - Vice President of The Times Mirror Company, a newspaper and publishing
company, since 1997
- - President and Chief Executive Officer of The Times Mirror Foundation since
1997
- - Senior Vice President, Communications and Public Affairs of the Los Angeles
Times since 1998
- - Chair, Securities and Exchange Commission's Consumer Affairs Advisory Board
- - Dean of McIntire School of Commerce at the University of Virginia from 1993
through 1996
- - Member of the Board of:
- AK Steel Holding Corp.
- Hershey Foods Corp.
- Niagara-Mohawk Holdings, Inc.
- Hollywood Entertainment Museum
- Pomona College
KENNETH G. LANGONE, 64, Director since 1978
- - Co-founder of The Home Depot
- - Lead Director of The Home Depot since 1998
- - Chairman of the Board, Chief Executive Officer and President of Invemed
Associates, Inc., an investment banking and brokerage firm for more than
five years
- - Member of the Board of:
- DBT Online, Inc.
- General Electric Company
- Tricon Global Restaurants, Inc.
- Unifi, Inc.
- Cancer Research Fund of the Damon
Runyon-Walter Winchell Foundation
- The Children's Oncology Society of New York
- New York Philharmonic
- The New York Stock Exchange, Inc.
- New York University and New York University School of Medicine
- New York University Leonard Stern School of Business
- Robin Hood Foundation
JOHN L. CLENDENIN, 65, Director since 1996
- - Retired as Chairman in 1997 and as President and Chief Executive Officer in
1996 of BellSouth Corporation
- - Member of the Board of:
- Coca-Cola Enterprises Inc.
- Equifax Inc.
- The Kroger Co.
- Nabisco Group Holdings Corp.
- Nabisco Holdings Corp.
- National Service Industries Inc.
- Powerwave Technologies Inc.
- Springs Industries Inc.
- Wachovia Corporation
- - Past Chairman/President of:
- The Committee for Economic Development
- Junior Achievement
- The Boy Scouts of America
4
<PAGE> 9
BOARD OF DIRECTORS INFORMATION
WHAT IS THE MAKEUP OF THE BOARD OF DIRECTORS?
Our Board of Directors currently has 11 members. Ronald M. Brill, a director of
the Company since 1987, is not standing for reelection and will be retiring
from the Board as of the annual meeting. This will result in our having a
vacancy on the Board. Under the terms of our Certificate of Incorporation, any
vacancy on the Board may be filled by a majority vote of the directors then in
office. The Company has begun a search for another director.
IS THE BOARD CURRENTLY DIVIDED INTO CLASSES?
The directors are currently divided into three classes, with each class serving
for a three-year period. The stockholders elect approximately one-third of the
members of the Board of Directors each year. If the proposal to eliminate the
classification of the Board is approved by the stockholders, each director will
stand for election every year beginning in 2001. Those directors elected to
serve until 2002 or 2003 have agreed that their terms will expire in 2001 if the
classification of directors is eliminated.
WHAT IF A NOMINEE IS UNWILLING OR UNABLE TO SERVE?
That is not expected to occur. If it does, proxies will be voted for a
substitute nominated by the Board of Directors or the Board may reduce the
number of directors.
HOW ARE DIRECTORS COMPENSATED?
Each director who is not an employee of The Home Depot receives $40,000 each
year, $10,000 of which is in the form of restricted shares of our common stock.
Directors may elect to receive all or any portion of their cash compensation in
additional shares of restricted stock. These directors also receive $1,000 for
each meeting they attend other than by telephone and are reimbursed for
reasonable expenses in attending meetings. Directors who are also employees of
The Home Depot are not separately compensated for their services as directors.
WHAT DOES THE LEAD DIRECTOR DO?
The Lead Director helps the Chairman of the Board develop the agenda for Board
meetings and reviews the Board's governance procedures and policies. The Lead
Director is also the Chairman of the Nominating and Corporate Governance
Committee and chairs any meetings of outside directors. The Lead Director is
elected by the Board of Directors for a three-year term. Mr. Langone was
elected as the first Lead Director in 1998.
HOW OFTEN DID THE BOARD MEET IN FISCAL 1999?
The Board of Directors met four times during fiscal 1999. Each director
attended at least 75% of the meetings of the board and of the committees of
which they were members.
5
<PAGE> 10
WHAT ARE THE COMMITTEES OF THE BOARD?
Our Board of Directors has the following committees:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Name of Committee and Members Functions of the Committee Number of
----------------------------- -------------------------- Meetings/Consent
Actions in Fiscal
1999
----
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EXECUTIVE: - Exercises the authority of the full Board
Bernard Marcus, Chair between Board meetings 8
Arthur M. Blank
Kenneth G. Langone
- ---------------------------------------------------------------------------------------------------------------------
AUDIT: - Oversees auditing procedures
Berry R. Cox, Chair - Receives and accepts the report of independent
Frank Borman auditors 4
Milledge A. Hart, III - Oversees internal systems of accounting and
William S. Davila management control
John L. Clendenin - Makes recommendations regarding the
selection of independent auditors
- ---------------------------------------------------------------------------------------------------------------------
STOCK OPTION: - Administers stock incentive plans
Bernard Marcus, Chair - Makes grants of stock awards to associates 6
Arthur M. Blank pursuant to stock incentive plans
Kenneth G. Langone
- ---------------------------------------------------------------------------------------------------------------------
COMPENSATION: - Reviews and recommends compensation of
Frank Borman, Chair directors and executive officers 4
John L. Clendenin - Makes grants of stock awards to officers
Berry R. Cox pursuant to stock incentive plans
William S. Davila
- ---------------------------------------------------------------------------------------------------------------------
NOMINATING AND CORPORATE GOVERNANCE: - Makes recommendations for nominees for
Kenneth G. Langone, Chair director 7
John L. Clendenin - Reviews and monitors activities of Board
Milledge A. Hart, III members
Bonnie G. Hill - Develops, sets and maintains corporate
governance standards
- ---------------------------------------------------------------------------------------------------------------------
HUMAN RESOURCES: - Reviews and recommends policies, practices
M. Faye Wilson, Chair and procedures concerning employment- 4
Bonnie G. Hill related matters
Kenneth A. Langone
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 11
PROPOSED AMENDMENT TO
INCREASE AUTHORIZED SHARES
(Item 2 on the proxy card)
WHAT AM I VOTING ON?
A proposal to amend our Certificate of Incorporation to increase the number of
authorized shares of our common stock from 5,000,000,000 shares to
10,000,000,000 shares.
WHAT IS AUTHORIZED STOCK?
Our Certificate of Incorporation establishes the maximum number of shares of
common stock that we may issue without obtaining additional stockholder
approval. This is called authorized stock.
WHAT IS THE DIFFERENCE BETWEEN AUTHORIZED STOCK AND ISSUED STOCK?
Shares that have already been issued are referred to as "issued" or "issued and
outstanding." The difference between the total number of authorized shares and
the number of issued shares is the number of shares that the Company may issue
in the future without amending the Certificate of Incorporation. Delaware law
and the rules and regulations of the New York Stock Exchange may require
stockholder approval of issuances under certain circumstances.
For example, as of April 3, 2000, we had 5,000,000,000 shares authorized and
2,308,809,562 shares issued. As a result, the Company could have issued an
additional 2,691,190,438 shares. If the amendment to the Certificate of
Incorporation had been adopted prior to that date, the Company could have issued
an additional 5,000,000,000 shares, for a total of 7,691,190,438 shares
available for issuance. In the interest of simplicity, in this example we have
ignored shares reserved for issuance upon exercise of stock options, under our
other employee benefit plans and for other purposes.
WHAT RIGHTS WILL THE NEW AUTHORIZED SHARES HAVE?
If approved, the additional shares of common stock will have the same voting
and other rights as all other shares of our common stock.
COULD THE AUTHORIZATION OF ADDITIONAL SHARES HAVE ANY ADVERSE EFFECT ON THE
COMPANY'S STOCKHOLDERS?
Future issuances of shares of common stock or securities convertible into
common stock would have the effect of diluting the voting rights and could have
the effect of diluting earnings per share and book value per share of existing
stockholders. In addition, the availability of additional shares of common
stock for issuance could discourage or make more difficult efforts to obtain
control of the Company.
WHY DOES THE BOARD WANT TO INCREASE THE AUTHORIZED STOCK?
The larger we become, the greater our need for capitalization. Although we have
no current plans to issue any of the additional shares, increasing the number of
authorized shares will permit us to meet future business and financial needs, as
well as permit stock splits and stock dividends should we determine that they
are advisable in the future.
WHEN WOULD THIS AMENDMENT BECOME EFFECTIVE?
The Board of Directors has unanimously authorized this amendment and voted to
recommend it to the Company's stockholders. If approved by the stockholders, the
amendment will become effective upon filing an appropriate certificate with the
Delaware Secretary of State.
WE RECOMMEND THAT YOU VOTE FOR
THE ADOPTION OF THIS PROPOSAL
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<PAGE> 12
PROPOSED AMENDMENT TO
DECLASSIFY THE BOARD OF DIRECTORS
(Item 3 on the proxy card)
WHAT AM I VOTING ON?
A proposal to amend our Certificate of Incorporation to eliminate the
classification of the Board of Directors effective in 2001.
WHAT DOES IT MEAN FOR OUR BOARD TO BE CLASSIFIED?
Our Board is currently divided into three classes, as nearly equal in size as
possible. Each class serves for a term of three years and only one class stands
for election each year.
WHAT DIFFERENCE WOULD ELIMINATING THE CLASSES OF THE BOARD MAKE?
If the classes of the Board are eliminated, each director would stand for
election every year, rather than once every three years. The Board has
determined that the elimination of classes of the Board should become effective
beginning with the annual meeting of stockholders in 2001. If this proposal is
approved by the stockholders, the terms of all directors, including those who
were elected to serve until 2002 or 2003, will end at the annual meeting of
stockholders in 2001, and all directors elected at each annual meeting will be
elected for one-year terms.
WHAT WOULD HAPPEN IF THE PROPOSAL TO AMEND OUR CERTIFICATE OF INCORPORATION IS
NOT APPROVED?
Our Board will remain classified, and the nominees elected at this year's
annual meeting would hold office until the 2003 annual meeting.
WHY DOES THE COMPANY WANT TO ELIMINATE THE CLASSES?
We believe that it is in the best interests of The Home Depot and our
stockholders to eliminate the classified Board so that stockholders elect all
directors annually. The amendment to the Certificate of Incorporation will
allow stockholders to review and express their opinions on the performance of
all directors each year. Because there is no limit to the number of terms an
individual may serve, the continuity and stability of the Board's membership
and our policies and long-term strategic planning should not be affected.
WHAT CHANGES WOULD BE MADE IN OUR CERTIFICATE OF INCORPORATION?
The proposed amendment to the Certificate of Incorporation will result in the
deletion of paragraphs 1, 2, 6, 7 and 8 of ARTICLE SIXTH of the Certificate of
Incorporation regarding classification of the Board and amendment of ARTICLE
SIXTH and the addition of the following paragraphs:
1. The business and affairs of the Company shall be managed by or under the
direction of a Board of Directors consisting of not less than three nor
more than fifteen directors, the exact number of directors to be
determined from time to time by resolution adopted by affirmative vote of
a majority of the entire Board of Directors.
2. The term of each director will expire at the annual meeting of the
stockholders held in 2001. At each annual meeting of the stockholders
beginning with 2001, each director shall be elected for a one-year term.
Each director shall hold office until the next annual meeting and until
his successor shall be elected and shall qualify, subject, however, to
prior death, resignation, retirement, disqualification or removal from
office. Any vacancy on the Board of Directors that results from an
increase in the number of directors may be filled by a majority of the
Board of Directors then in office, and any other vacancy occurring in the
Board of Directors may be filled by a majority of the directors then in
office, although less than a quorum, or by a sole remaining director.
WHEN WOULD THIS AMENDMENT BECOME EFFECTIVE?
The Board of Directors has unanimously authorized this amendment and voted to
recommend it to the Company's stockholders. If approved by the stockholders, the
amendment will become effective upon filing an appropriate certificate with the
Delaware Secretary of State.
WE RECOMMEND THAT YOU VOTE FOR
THE ADOPTION OF THIS PROPOSAL
8
<PAGE> 13
STOCKHOLDER PROPOSAL A
(Item 4 on the proxy card)
We have been notified that this proposal will be presented for consideration at
the meeting:
Equal employment opportunity is a key issue for many shareholders.
The 1995 bipartisan Glass Ceiling Commission Study explains that a
positive diversity record has a positive impact on the bottom line. Yet
while women and minorities comprise 57% of the U.S. workforce, the
Commission found that they represent only 3% of the executive management
positions.
Workplace discrimination has created a significant burden for
shareholders due to the high cost of litigation, potential loss of
government contracts, and the financial consequences of a damaged corporate
image resulting from discrimination allegations. In several instances,
including at Home Depot, the financial impact on shareholders has exceeded
$100 million to settle discrimination lawsuits.
More than 150 major U.S. corporations now provide complete
information on workforce diversity in public reports to their
shareholders. Examples are Disney, Intel, K-Mart, May Department Stores,
Merck, Monsanto, Sears, and Texaco. These companies and others provide
reports describing diversity progress, challenges and detailed statistics.
Often companies include this information in their annual reports.
RESOLVED: Shareholders request that the Board expand Home Depot's
annual Social Responsibility Report, at reasonable cost and omitting
confidential information, to be made available to shareholders and
employees by October 2000, to include:
1. A chart identifying the number and percentage of employees by gender
and race in each of the nine Equal Employment Opportunity Commission
defined job categories for 1999, 1998 and 1997.
2. A summary 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. A report on any material litigation in which Home Depot is involved
concerning race, gender or the physically challenged.
SUPPORTING STATEMENT
Over a dozen concerned institutional investors have filed this
resolution urging Home Depot to be completely and publicly accountable for
its efforts to achieve a discrimination-free workplace. Our investor
coalition represents religious institutions, investment managers, mutual
funds, as well as other organizations.
We congratulate Home Depot for taking an important step toward public
accountability by including selected diversity data in its 1998 Social
Responsibility Report. The information gives a broad picture of Home
Depot's progress in meeting its diversity goals. But just as the Financial
Accounting Standards Board sets the standards on how to report financial
data, there are standards set forth by the Equal Employment Opportunity
Commission (EEOC) on how to report diversity data. The data provided by
Home Depot draw selectively from the job, gender and racial
classifications that the EEOC has established, and in so doing, the report
denies investors an adequate understanding of Home Depot's progress. Since
the company already collects the data in the EEOC format, it would not be
burdensome to include this information in its Social Responsibility
Report.
We believe Home Depot aspires to real leadership on this issue and
that it is making meaningful progress toward that end. Full disclosure is
a powerful incentive for companies to achieve their equal opportunity
objectives. Such accountability symbolizes management's strong dedication
to a diverse workforce.
Promptly upon receipt of an oral or written request, we will provide you with
the name and address of each proponent and the number of shares of stock
held by each proponent.
9
<PAGE> 14
COMPANY RESPONSE TO STOCKHOLDER PROPOSAL A
WHAT IS THE RECOMMENDATION OF THE COMPANY?
THE COMPANY RECOMMENDS THAT YOU VOTE AGAINST THE ADOPTION OF THIS STOCKHOLDER
PROPOSAL.
HAS THIS STOCKHOLDER PROPOSAL BEEN SUBMITTED BEFORE?
Yes. Substantially the same proposal was presented at the last two years' annual
meetings and each time received less than 15% of the votes cast.
WHAT IS THE COMPANY'S POSITION REGARDING EQUAL OPPORTUNITY LAWS?
We are fully committed to complying with all applicable equal employment
opportunity laws. Moreover, behavior of all of our associates is governed by
our Code of Ethics. This Code of Ethics requires that our associates treat
everyone with respect and that our work environment be free from discrimination
and harassment based on race, color, religion, gender, national origin, age or
disability.
DO HOME DEPOT'S POLICIES PROMOTE DIVERSITY AMONG ITS ASSOCIATES?
We are continually developing and implementing programs that promote diversity.
For example, by the end of 2000, over 30,000 of our managers will have attended
a two-day diversity training seminar. Not only is hiring and promoting
associates from a variety of backgrounds essential to ensuring that we have the
strongest workforce possible, but it is also good business to attract and
retain associates who reflect the differences in the communities we serve. We
are proud of our record in recruiting and promoting minorities and women.
WHY DOES THE COMPANY OPPOSE THIS PROPOSAL?
We believe that this resolution is unnecessary. We release three-year employment
data, based on EEO-1 reports and company data, each year in our Social
Responsibility Report. This data includes information about the number of
minorities and women who hold various positions in our company. By providing
historical data for three years, it is easy to track our progress in terms of
hiring, retaining and promoting people of diverse backgrounds. In addition, the
Social Responsibility Report includes an update on specific company programs
promoting diversity.
HOW CAN I RECEIVE INFORMATION ABOUT THE COMPANY'S PROGRAMS PROMOTING DIVERSITY?
You can obtain a copy of our 1999 Social Responsibility Report at the annual
stockholders' meeting, at our Internet site, www.homedepot.com, or by writing:
Community Affairs, The Home Depot, Inc., 2455 Paces Ferry Road, Atlanta, GA
30339.
WE RECOMMEND THAT YOU VOTE AGAINST
THE ADOPTION OF THIS STOCKHOLDER PROPOSAL
10
<PAGE> 15
STOCKHOLDER PROPOSAL B
(Item 5 on the proxy card)
We have been notified that this proposal will be presented for consideration at
the meeting:
RESOLVED: RECOMMEND SIMPLE-MAJORITY VOTE
Recommend reinstate simple majority vote on all issues subject to shareholder
vote. This includes deleting Home Depot (HD) requirements for
greater than a majority shareholder vote. This includes requiring that any
future super-majority proposal be put to shareholder vote -- as a separate
resolution.
SUPPORTING STATEMENT:
WHY ADOPT SIMPLE-MAJORITY VOTE?
- - Simple-majority resolutions won 54% APPROVAL from shareholders in
1999 -- Investor Responsibility Research Center's Corporate Governance
Bulletin, April-June 1999.
SUPER-MAJORITY REQUIREMENTS ARE WIDELY OPPOSED:
- - The bi-partisan National Conference of State Legislatures urged States
to ban super-majority rules.
- - Major professionally-managed funds, including those holding
substantial HD stock, declare that super-majority rules are not in the
best interest of shareholders.
- - Simple-majority vote proponents said that super-majority vote
requirements may devaluate the stock.
WHAT INCENTIVE IS THERE FOR GOOD CORPORATE GOVERNANCE -- HIGHLIGHTED BY
SIMPLE-MAJORITY VOTE?
50 institutional investors, managing $840-million, told McKinsey & Co.
they would pay an 11%-average stock premium for companies with good governance
practices.
Why the big jump? Some investors said that good governance will boost
long-term performance. Others said good governance decreases the risk of bad
news -- and when trouble occurs, good-governance companies rebound faster.
(Business Week, Sept. 15, 1997)
Home Depot needs to adopt simple-majority vote as a step toward
competitive corporate governance. SIMPLE-MAJORITY VOTE CAN BE A KEY STEP IN
MAINTAINING HOME DEPOT'S EXTRAORDINARY HIGH STOCK PRICE -- COMPARED TO MANY
STOCK-PRICE RATIOS. HD stock nearly quadrupled in 3 years. So it's worth
wondering if HD stock is getting ahead of itself, said Online Investor, Oct. 6,
1999.
Competitive corporate governance at HD is particularly important due
to the extent of HD governance practices that are opposed by institutional
shareholders and independent proxy advisory services. The following Home Depot
practices are not in the best interest of shareholders according to many
institutional shareholders. Institutions own 63% of Home Depot stock.
- No annual election of all directors.
A resolution to remedy this received 43% shareholder approval in 1999.
- 70% of HD directors are not independent. Source: Investor
Responsibility Research Center, May 1999.
A resolution to remedy this received 32% shareholder approval in 1999.
Arguably these resolutions would have received significantly higher
approval if the proponents had an equal opportunity to communicate with
shareholders as management does.
- With 70% of HD directors not independent:
40% of HD directors are management - yet directors must monitor management.
30% of remaining HD directors have additional financial links to the company.
The final 30% of HD directors have major flaws in proponent's opinion:
1) Mr. Cox has been a director for 22 years, nearly 1/2 his life.
The only businesses qualification listed is chairman of a private company.
The CalPERS $150-billion fund argued that directors who stay for a decade
should not be considered independent.
2) Ms. Hill owns no stock.
With zero stock ownership - directors do not think like stockholders.
3) Mr. Clendenin is over-extended with 8 outside boards seats
and...
Further over-extended with seats on all 3 key HD board committees in
proponent's opinion.
Additional questionable corporate practices include:
- Directors with divided loyalty sit on key committees.
All members of a board's audit, nominating and compensation committees should
be independent. Source: The Council of Institutional Investors Shareholder Bill
of Rights (http://www.cii.org).
- No cumulative voting.
- No confidential voting.
- Management can personally telephone shareholders and ask them
to change their vote.
A respected proxy advisory service said the super-majority votes serve
to lock in provisions that are harmful to shareholders. Super-majority may
entrench management by preventing action that may benefit shareholders.
To maintaining Home Depot's extraordinary high stock price:
ADOPT SIMPLE-MAJORITY VOTE
YES ON 5
Promptly upon receipt of an oral or written request, we will provide you with
the name and address of each proponent and the number of shares of stock held
by each proponent.
11
<PAGE> 16
COMPANY RESPONSE TO STOCKHOLDER PROPOSAL B
WHAT IS THE RECOMMENDATION OF THE COMPANY?
THE COMPANY RECOMMENDS THAT YOU VOTE AGAINST THE ADOPTION OF THIS STOCKHOLDER
PROPOSAL.
WHAT DOES IT MEAN TO REQUIRE A SIMPLE-MAJORITY OR SUPER-MAJORITY VOTE?
Most proposals submitted to a vote of our stockholders, whether submitted by
management or a stockholder, currently require a vote of a majority of the
shares present at the meeting, whether in person or by proxy. This is referred
to as a simple-majority vote. Our Certificate of Incorporation contains
provisions requiring that 80% of our outstanding shares, whether present at a
meeting or not, must approve a limited number of significant changes involving
the Company, such as a merger or dissolution, or changes to stockholders'
voting rights. This is called a super-majority vote.
WHY IS SUPER-MAJORITY VOTING SOMETIMES PREFERABLE TO SIMPLE-MAJORITY VOTING?
Super-majority voting makes it more difficult for a small number of
self-interested stockholders to take actions that benefit them, but that may
not treat other stockholders fairly or equally. These provisions are intended
to encourage people who support a transaction or significant amendment to the
Certificate of Incorporation to negotiate with the Board to reach terms that
are fair and in the best interest of all stockholders. Similar provisions are
included in the governing documents of many public companies.
DOES OUR BOARD FOLLOW BEST PRACTICES FOR CORPORATE GOVERNANCE?
Our Board is committed to implementing the absolute best practices in the area
of corporate governance. These practices include:
- requiring a majority of the Board to be independent;
- encouraging probing, open discussions about the important issues facing the
Company; and
- having only independent directors on the Audit and Compensation Committees
of our Board.
HAS THE COMPANY BEEN RECOGNIZED FOR ITS CORPORATE GOVERNANCE PRACTICES?
Yes. Our Board was named one of the top ten boards in Business Week's report on
corporate governance published on January 24, 2000, based on accountability to
stockholders, quality of directors, independence and corporate performance.
IS A MAJORITY OF THE BOARD OF DIRECTORS INDEPENDENT?
Yes. Our By-laws require that a majority of our Board be composed of directors
who are not employees and who do not have other significant relationships with
the Company.
WOULD APPROVAL OF THIS PROPOSAL AUTOMATICALLY ELIMINATE SUPER-MAJORITY VOTING
REQUIREMENTS?
This proposal is a suggestion that, if approved, would recommend that the Board
take action. To make the proposed changes, both the Board and the stockholders
would have to act. Delaware law requires that a board recommend that the
stockholders approve changes to a company's certificate of incorporation before
the stockholders vote on the proposed changes. While the Board would consider
the proposed amendments, its fiduciary duties require that the Board could only
approve and recommend the amendments required by this proposal if it believes
they are in the best interest of the Company and its stockholders. If the Board
were to approve the amendments, stockholders owning 80% of the Company's
outstanding shares would generally have to vote to approve them.
WE RECOMMEND THAT YOU VOTE AGAINST
THE ADOPTION OF THIS STOCKHOLDER PROPOSAL
12
<PAGE> 17
EXECUTIVE COMPENSATION
The following tables discuss the compensation earned by our Chief
Executive Officer and the four other most highly compensated executive officers
in fiscal years 1999, 1998 and 1997:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
------------------- Awards
----------
Securities All Other
Other Annual Underlying Compensation(2)
Fiscal Salary Bonus Compensation Options(1) ($)
Name and Principal Position Year ($) ($) ($) (#) ---
- --------------------------- ---- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
Bernard Marcus 1999 900,000 2,000,000 60,652(3) -- 171,558
Chairman of the Board 1998 900,000 2,000,000 4,263 -- 163,517
1997 799,615 2,000,000 3,788 -- 145,698
Arthur M. Blank 1999 980,769 3,000,000 104,984(3) -- 212,063
President and Chief Executive 1998 900,000 2,000,000 5,972 -- 210,462
Officer 1997 799,615 2,000,000 6,550 -- 24,025
Ronald M. Brill 1999 500,000 364,800 7,464 40,137 33,242
Executive Vice President 1998 500,000 364,800 3,340 34,695 31,644
and Chief Administrative Officer 1997 500,000 348,000 5,839 38,160 15,504
Dennis J. Carey 1999 495,192 364,800 215 70,137 5,750
Executive Vice President and 1998 328,846 346,560 -- 422,475 3,576
Chief Financial Officer 1997 -- -- -- -- --
David Suliteanu 1999 513,115 359,316 -- 20,637 8,740
Group President -- 1998 403,846 368,200 -- 154,410 2,314
Diversified Businesses 1997 -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Share amounts have been adjusted for a three-for-two stock split effected
in the form of a stock dividend on July 3, 1997, a two-for-one stock split
effected in the form of a stock dividend on July 2, 1998, and a
three-for-two stock split effected in the form of a stock dividend on
December 30, 1999. Neither Mr. Marcus nor Mr. Blank participates in any of
the Company's stock option plans.
(2) "All other compensation" consists of:
- Matching contributions under the 401(k) component of our FutureBuilder
plan;
- Allocations of common stock under the ESOP component of our
FutureBuilder plan;
- Allocations of "stock units" under 401(k) and ESOP restoration plan
valued based on the market value of our common stock on the day such
amounts were credited to the participants' accounts; and
- Payment of annual life insurance premiums.
The following table shows the amount of each category of "all other
compensation" received by each of the named individuals:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
ALLOCATION
401(K) UNDER
MATCHING ESOP RESTORATION INSURANCE
NAME CONTRIBUTION ALLOCATION PLAN PREMIUMS
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bernard Marcus $5,600 $1,232 $28,896 $135,830
--------------------------------------------------------------------------------------------
Arthur M. Blank $5,600 $1,232 $28,896 $176,335
--------------------------------------------------------------------------------------------
Ronald M. Brill $5,600 $1,232 $23,595 $ 2,815
--------------------------------------------------------------------------------------------
Dennis J. Carey -- -- -- $ 5,750
--------------------------------------------------------------------------------------------
David Suliteanu $5,600 -- -- $ 3,140
--------------------------------------------------------------------------------------------
</TABLE>
(3) "Other annual compensation" includes the benefit for personal use of
airplanes owned by the Company in the amount of $31,021 for Mr. Marcus and
$72,081 for Mr. Blank.
13
<PAGE> 18
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
Potential
Realizable Value
at Assumed Annual
Number of % of Total Rate of Stock
Securities Options Price Appreciation
Underlying Granted to for Option Term
Options Employees in Exercise or (10)Years*
Granted Fiscal Base Price Expiration -----------
Name (#) Year (%) ($/Sh) Date 5%($) 10%($)
---- --------- -------- ------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Bernard Marcus -- -- -- -- -- --
Arthur M. Blank -- -- -- -- -- --
Ronald M. Brill* 25,137 .17 37.9167 2/11/09 599,407 1,519,015
15,000 .10 37.2917 8/08/09 351,788 891,500
Dennis J. Carey* 70,137 .50 37.9167 2/11/09 1,672,459 4,238,341
David Suliteanu* 20,637 .14 37.9167 2/11/09 492,102 1,247,083
- -----------------------------------------------------------------------------------------------------------------------
* These amounts represent assumed rates of appreciation only. Actual gains, if
any, on stock option exercises are dependent on future performance of our
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.
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
at Fiscal Year-End (#) at Fiscal Year-End ($)
---------------------- ----------------------
Shares Value
Acquired on Realized
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bernard Marcus -- -- -- -- -- --
Arthur M. Blank -- -- -- -- -- --
Ronald M. Brill 52,500 2,016,141 741,967 258,407 35,419,279 10,297,966
Dennis J. Carey -- -- 1,068 491,544 34,443 14,832,382
David Suliteanu -- -- 1,102 173,945 36,366 5,424,610
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 19
COMPENSATION COMMITTEE REPORT
Filings made by companies with the Securities and Exchange Commission
sometimes "incorporate information by reference." This means the Company is
referring you to information that has been previously filed with the SEC and
that this information should be considered as part of the filing you are
reading. The Compensation Committee Report and Stock Performance Graph in this
proxy statement are not incorporated by reference into any other filings with
the SEC.
The Compensation and Stock Option Committees of the Board of Directors
have furnished the following report on executive compensation:
WHAT ARE THE COMPONENTS OF EXECUTIVE COMPENSATION?
Our compensation program for executives consists of three key elements:
- - Annual base salary
- - Performance based annual bonus
- - Long-term stock incentive compensation
WHAT IS THE PHILOSOPHY OF EXECUTIVE COMPENSATION?
We have a "pay for performance" philosophy, which rewards executives for
long-term strategic management and enhancement of stockholder value. This
philosophy is implemented by setting base salaries near retail industry
averages. Annual performance-based bonuses and long-term stock incentive awards
make it possible for total executive compensation packages to exceed retail
industry averages.
We believe it is important for our executives to have ownership incentives in
our company and to operate in an environment that measures rewards against
personal and Home Depot goals. We believe this philosophy attracts, retains and
motivates key executives critical to the long-term success of our company.
HOW ARE THE CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER COMPENSATED?
Mr. Marcus received a base salary of $900,000 in fiscal 1999, and Mr. Blank
received a base salary of $980,769 in fiscal 1999. These annual base salaries
were approximately 31% and 25% of the total cash compensation paid to Mr.
Marcus and Mr. Blank, respectively, in fiscal 1999. The base salaries paid to
Mr. Marcus and Mr. Blank were determined in 1998 primarily based on the
performance of the Company.
The Compensation Committee increased Mr. Blank's base salary to $1,000,000
effective in April 1999, in recognition of his contributions and his assumption
of additional responsibilities since becoming Chief Executive Officer of the
Company in May 1997. Under Mr. Blank's leadership, the Company continues to set
the industry's standards in satisfying customers, in penetrating new markets
(both in geography and business segments) and in cultivating those who will
carry on his visions. Mr. Blank's leadership has driven the Company to superior
performance (sales increased 27% and net earnings increased 44% in fiscal 1999
compared to fiscal 1998). In determining Mr. Blank's salary, the Compensation
Committee also considered the salaries paid to chief executive officers of
comparable companies.
Mr. Marcus received a $2,000,000 cash bonus for fiscal 1999 and Mr. Blank
received a $3,000,000 cash bonus for fiscal 1999 under the Senior Officers'
Bonus Pool Plan. This plan pays total bonuses equal to 10% of the Company's
earnings in excess of a threshold amount. The maximum amount payable to a
participant under the plan for any one fiscal year is $4,000,000. For fiscal
1999, the threshold amount was $1.614 billion, which is approximately equal to
Home Depot's net earnings for fiscal 1998. In fiscal 1999, Home Depot's
earnings exceeded the threshold amount and, accordingly, bonuses were paid.
Messrs. Marcus and Blank do not receive annual stock option grants under any
Home Depot plan. As founders of Home Depot, both Mr. Marcus and Mr. Blank have
substantial holdings of Home Depot common stock. The Compensation Committee
believes that these existing stock holdings provide them with the ownership
incentives that are incorporated into the Company's compensation philosophy.
HOW ARE OTHER EXECUTIVE OFFICERS COMPENSATED?
In setting all other executive officer annual salaries, the Compensation
Committee reviews an annual salary plan recommended by the Chairman and CEO.
The annual salary plan is based on numerous subjective factors which include
performance, merit increases and responsibility levels.
All executive officers (other than the Chairman and CEO) participate in the
officers' bonus plans. Under these plans, officers 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
15
<PAGE> 20
responsibilities. 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 fiscal 1999, based upon these
objective performance assessments, the named 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
these plans 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.
Disclosure could potentially expose the Company to claims by third parties
based on the projections, especially because these projections are not intended
as a predictor of future performance.
A large portion of the executive officers' total compensation is tied to stock
performance, more closely aligning their interests with the long-term interests
of stockholders. This is accomplished through our Omnibus Stock Incentive Plan.
Stock options are granted to all executive officers, excluding both the
Chairman and CEO, to purchase stock at the then current market price. The stock
option grant size is determined by the Compensation Committee and the Stock
Option Committee and is based on the individual's position within the Company,
job performance, future potential, awards made to executives at comparable
companies and other factors.
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 options are
typically exercisable at a rate of 25% per year commencing on the first or
second year after the date of grant depending on the type of stock option
granted. Stock options are typically exercisable for ten years after the date
of grant.
DOES THE COMPENSATION COMMITTEE COMPARE COMPANY SALARIES TO OTHER COMPANIES?
Salaries are based on the Compensation Committee's assessment of each officer's
past performance and the expectation for future contributions in leading the
Company. In addition, the Compensation Committee reviews compensation data for
the retail industry and other companies similar in size. This review is not
done scientifically. The Compensation Committee uses other company compensation
data for informational purposes only, but also considers subjective factors
relating to the differences between companies.
HOW ARE LIMITATIONS ON THE DEDUCTIBILITY OF COMPENSATION HANDLED?
Section 162(m) of the Internal Revenue Code limits the deductibility of
executive compensation paid by publicly held corporations to $1 million per
employee. The $1 million limitation generally does not apply to compensation
based on performance goals if certain requirements are met. The Company
believes its Senior Officers' Bonus Pool Plan and Executive Officers' Bonus
Plan each satisfy Section 162(m). As a result, the Company believes that the
compensation paid under these plans is not subject to limits on deductibility.
However, there can be no assurance that the Internal Revenue Service would
reach the same conclusion.
WHO PREPARED THIS REPORT?
This report has been furnished by the members of the following committees:
Compensation Committee:
- Frank Borman, Chair
- John L. Clendenin
- Berry R. Cox
- William S. Davila
Stock Option Committee:
- Bernard Marcus, Chair
- Arthur M. Blank
- Kenneth G. Langone
16
<PAGE> 21
STOCK PERFORMANCE GRAPH
This graph compares our total stockholder returns (assuming reinvestment of
dividends), the Standard & Poor's 500 Composite Stock Index, and our industry
peer group as compiled by the S&P Retail Composite. The graph assumes $100
invested at the per share closing price of the common stock of The Home Depot
and of each of the other indices on the New York Stock Exchange on January 29,
1995.
[GRAPH]
<TABLE>
<CAPTION>
01/29/1995 01/28/1996 02/02/1997 02/01/1998 01/31/1999 01/30/2000
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
HD $100.00 $ 94.50 $103.66 $190.05 $380.10 $524.21
S&P 500 $100.00 $132.15 $167.13 $208.40 $272.04 $289.16
S&P Retail Composite $100.00 $103.00 $124.55 $182.74 $297.45 $293.38
</TABLE>
17
<PAGE> 22
STOCK OWNERSHIP
This table shows how much of our common stock is owned by directors,
executive officers and owners of more than 5% of our outstanding common stock
as of April 3, 2000.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
NAME OF BENEFICIAL OWNER SHARES RIGHT TO PERCENT OF
(AND ADDRESS IF BENEFICIAL OWNERSHIP EXCEEDS 5%) OWNED(1) ACQUIRE(2) CLASS
------------------------------------------------ ---------- ----------- ---------
<S> <C> <C> <C>
Bernard Marcus(3) 61,166,102 0 2.6
Arthur M. Blank(4) 34,796,756 0 1.5
Kenneth G. Langone(5) 18,001,393 0 *
Milledge A. Hart, III(6) 4,393,379 0 *
Berry R. Cox 3,692,018 0 *
Ronald M. Brill(7) 1,532,181 829,218 *
Frank Borman(8) 699,678 0 *
William S. Davila 12,010 0 *
M. Faye Wilson 1,122 69,261 *
Bonnie G. Hill 510 0 *
John L. Clendenin 9,986 22,500 *
Dennis J. Carey 56 107,346 *
David Suliteanu 969 40,364 *
Directors and executive officers as a group 125,436,460 3,450,286 5.6
(24 people)(9)
FMR Corp.(10) 141,957,404 0 6.1
---------------------------------------------------------------------------------------------------------------
</TABLE>
*Less than one percent.
(1) These amounts include shares for which the named person has sole voting
and investment power or shares such powers with his or her spouse. They
also include shares credited to the named person's account under our
FutureBuilder plan, in the following amounts:
- Mr. Marcus - 36,530 shares
- Mr. Blank - 34,610 shares
- Mr. Brill - 32,916 shares
- Dennis J. Carey - 56 shares
- David Suliteanu - 369 shares
- All directors and executive officers as a group (24 people) -
230,967 shares
(2) These amounts reflect shares that could be purchased by exercise of stock
options as of April 3, 2000, or by June 2, 2000, under the Company's stock
incentive plans.
(3) These amounts include the following shares for which Mr. Marcus may be
deemed to have shared voting and investment power, but disclaims
beneficial ownership:
- 592,002 shares held by Mr. Marcus' wife as trustee of a trust
for his children
- 724,357 shares held by charitable organizations of which Mr.
Marcus serves as a director.
(4) These amounts include 2,051,500 shares held by two private charitable
trusts for which Mr. Blank may be deemed to have shared voting and
investment power. These amounts also include 136,000 shares held by a
private foundation for which Mr. Blank has sole voting and investment
power, but disclaims beneficial ownership. These amounts do not include
the following shares for which Mr. Blank may be deemed to have shared
voting and investment power, but disclaims beneficial ownership:
- 47,295 shares held by Mr. Blank's wife
- 1,314,072 shares that are held by others as co-trustees for Mr.
Blank's children
(5) These amounts do not include 4,120 shares held by Mr. Langone's wife for
which Mr. Langone may be deemed to have shared voting and investment
power, but disclaims beneficial ownership.
(6) These amounts include 454,918 shares held by a limited partnership whose
general partner is a corporation owned by Mr. Hart and his wife.
18
<PAGE> 23
(7) These amounts include 72,661 shares held by a private charitable trust for
which Mr. Brill may be deemed to have shared voting and investment power.
They also include 41,850 shares held by a limited partnership whose
general partner is controlled by Mr. Brill for which Mr. Brill may be
deemed to have shared voting and investment power. These amounts also
include 34,200 shares for which Mr. Brill may be deemed to have shared
voting and investment power, but disclaims beneficial ownership. They do
not include the following shares for which Mr. Brill may be deemed to have
shared voting and investment power, but disclaims beneficial ownership:
- 18,093 shares held by Mr. Brill's wife
- 196,983 shares that are held by Mr. Brill and his wife as
custodians for their children
(8) These amounts include the following shares for which Colonel Borman may be
deemed to have shared voting and investment power:
- 528,958 shares held by a trust
- 135,900 shares held by a charitable trust
These amounts also include 24,633 shares held by a private foundation for
which Colonel Borman may be deemed to have sole voting and investment
power.
(9) These amounts do not include shares that are not included in the amounts
set forth for the named individuals, as described in footnotes 1 through
8.
(10) The Schedule 13G/A, filed with the SEC on February 11, 2000 by FMR Corp.,
82 Devonshire Street, Boston, Massachusetts 02109, reports beneficial
ownership of the following shares as of December 31, 1999:
- Fidelity Management & Research Company: 131,278,760 shares
- Fidelity Management Trust Company: 9,264,311 shares
- Edward C. Johnson, III: 98,661 shares
- Fidelity International Limited: 1,315,672 shares
FMR reports voting power over the following shares:
- Sole voting power: 8,711,867 shares
- Shared voting power: 0 shares
- Sole investment power: 141,957,404 shares
- Shared investment power: 0 shares
19
<PAGE> 24
GENERAL
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
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.
Bernard Marcus, who is Chairman of the Board of the Company, is a member of the
Compensation Committee of the Board of Directors of DBT Online, Inc. Frank
Borman, who is Chairman of the Board of DBT Online, Inc., serves on the
Company's Compensation Committee.
INSIDER TRANSACTIONS
Kenneth G. Langone, one of our directors, is Chairman of the Board and
President of Invemed Associates, Inc. Invemed has provided investment banking
consulting services to the Company under a written contract, which provided for
the Company to pay Invemed an annual consulting fee of $100,000. Invemed and
the Company mutually agreed to cancel the contract effective December 31, 1999.
In connection with the Company's offering of $500,000,000 6 1/2% Senior Notes
in September 1999, Invemed performed certain investment banking services to the
Company for which Invemed received fees of approximately $1,500,000. Mr.
Langone is also Chairman and a stockholder of Salem Leasing Corporation. During
fiscal 1999, we leased trucks from Salem Leasing, and Salem Leasing received
payments of approximately $437,000.
Milledge A. Hart, III, one of our directors, was until 1999 Chairman of the
Board and a substantial stockholder of Axon, Inc., a company which provides
installed sales services, and is Chairman of Rmax, Inc., a company which sells
isocyanurate foam insulation. Axon and Rmax were vendors to the Company in
fiscal 1999 for which Axon, Inc. received approximately $489,600 and Rmax, Inc.
received approximately $2,295,000. We expect to make purchases from Rmax, Inc.
in fiscal 2000.
The Marcus Foundation, of which Bernard Marcus is Chairman, leases office space
from the Company. During fiscal 1999, The Marcus Foundation paid the Company
$87,259 in rent.
Home Depot has purchase, finance and other transactions and relationships in
the normal course of business with companies with which Home Depot directors
are associated, but which are not sufficiently significant to be reportable. We
believe that all of these transactions and relationships during fiscal 1999
were on terms that were reasonable and competitive. Additional transactions and
relationships of this nature may be expected to take place in the ordinary
course of business in the future.
COMPLIANCE WITH SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 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 SEC and
the New York Stock Exchange reports of ownership and changes in ownership of
the Company's common stock. 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 a review of
the copies of these reports furnished to the Company or written representations
that no other reports were required, with the exception of Patrick Farrah who
filed a Form 3 on a delayed basis, we believe that during fiscal year 1999, all
our directors, executive officers and greater than ten percent beneficial
owners complied with these requirements.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
KPMG LLP was our auditor during fiscal 1999. Although the Board of Directors
has not yet selected auditors for the present fiscal year, it is expected that
KPMG LLP will be chosen. A representative of that firm will be present at the
annual meeting, will be given an opportunity to make a statement and will be
available to respond to appropriate questions.
AVAILABILITY OF FORM 10-K AND ANNUAL REPORT TO STOCKHOLDERS
SEC rules require us to provide an Annual Report to stockholders who receive
this Proxy Statement. We will also provide copies of the Annual Report to
brokers, dealers, banks, voting trustees and their nominees for the benefit of
their beneficial owners of record. Additional copies of the Annual Report,
along with copies of our Annual Report on Form 10-K for the fiscal year ended
January 30, 2000 (not including 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,
by calling (770) 384-4388 or via the Internet at www.homedepot.com.
STOCKHOLDER PROPOSALS
To be considered for inclusion in next year's proxy statement, stockholder
proposals must be submitted in writing by December 21, 2000. Any stockholder
proposal, including nomination of a director, to be considered at next year's
meeting, but not included in the
20
<PAGE> 25
proxy statement, must be submitted in writing by March 2, 2001, or the persons
appointed as proxies may exercise their discretionary voting authority with
respect to the proposal. All written proposals should be submitted to Lawrence
A. Smith, Corporate Secretary, The Home Depot, Inc., 2455 Paces Ferry Road,
Atlanta, Georgia 30339. Our by-laws, which are publicly available through our
SEC reports or may be obtained upon request from our Corporate Secretary, state
the specific requirements that may be included in any notice of any business to
be brought before the meeting.
SOLICITATION BY BOARD; EXPENSES OF SOLICITATION
Our Board of Directors has sent you this Proxy Statement. Our directors,
officers and associates may solicit proxies. In addition, we have hired D.F.
King & Co., Inc. to assist us in soliciting proxies. We anticipate paying D.F.
King a fee of $15,000, plus expenses. We will also reimburse brokers, nominees
and fiduciaries to send proxies and proxy materials to our stockholders so they
can vote their shares.
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<PAGE> 26
THE HOME DEPOT, INC.
2000 ANNUAL STOCKHOLDERS' MEETING
May 31, 2000
Cobb Galleria Centre
Atlanta, Georgia
10:00 a.m.
- --------------------------------------------------------------------------------
CONSENT TO OBTAIN FUTURE STOCKHOLDER-RELATED MATERIALS
ELECTRONICALLY INSTEAD OF BY MAIL
Home Depot stockholders may elect to receive future materials through the
Internet instead of receiving copies through the mail. The Home Depot is
offering this service to provide added convenience to its stockholders, to
reduce printing and mailing costs and to help preserve our environment.
To take advantage of this option, stockholders must subscribe to an Internet
service provider that offers access to the world wide web. Costs normally
associated with electronic access, such as usage and telephone charges, will be
the responsibility of the stockholder.
TO ELECT THIS OPTION, GO TO THE WEBSITE HTTP://WWW.ECONSENT.COM/HD/. You will
be asked to enter your account number, found on your DepotDirect statement or
on a dividend check. Stockholders who elect this option will be notified each
year by e-mail how to access the proxy materials and how to vote their shares
on the Internet.
If you consent to receive the Company's future stockholder-related materials
electronically, your consent will remain in effect unless it is withdrawn by
calling, writing or e-mailing our Transfer Agent, c/o EquiServe, at
1-800-577-0177; P.O. Box 8038, Boston, MA 02266-8038; www.equiserve.com. Also,
if while this consent is in effect you decide you would like to receive a hard
copy of the proxy materials, you may call, write or e-mail our Transfer Agent.
You may access The Home Depot annual report and proxy statement at:
WWW.HOMEDEPOT.COM/PROXY
If you vote by telephone or Internet, please do not mail back your proxy card.
--- Detach here if mailing ---
- --------------------------------------------------------------------------------
PROXY/VOTING INSTRUCTIONS
THE HOME DEPOT, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON MAY 31, 2000.
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 31, 2000, at 10:00 a.m. and any adjournments
or postponements 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 Frank Borman and Berry R. Cox, "FOR" the approval of item number 2, "FOR" the
approval of item number 3, "AGAINST" the approval of item number 4 and "AGAINST"
the approval of item number 5 and in accordance with the recommendations of the
Board of Directors.
Participants in the Company's 401(k) plan, FutureBuilder, may vote their
proportionate share of The Home Depot, Inc. common stock held in the plan, by
signing and returning this card. By doing so, you are instructing the trustee to
vote all of your shares at the meeting and at any adjournment, as you have
indicated on the reverse side of this card with respect to Proposals 1-6. If
this card is signed and returned without voting instructions, the shares
represented by this proxy will be voted by the plan trustee as indicated in the
preceding paragraph. If this card is not returned or is returned unsigned,
shares will be voted by the plan trustee in the same proportion as the shares
for which voting instructions are received from other participants in the plan.
SEE REVERSE UNLESS VOTING ELECTRONICALLY OR BY PHONE, SEE REVERSE
SIDE PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE SIDE
<PAGE> 27
[THE HOME DEPOT LOGO]
THE HOME DEPOT, INC. ADMISSION CARD
2455 PACES FERRY ROAD
ATLANTA, GEORGIA 30339-4024
THE HOME DEPOT, INC.
2000 ANNUAL STOCKHOLDERS' MEETING
(Please detach card at perforation)
- --------------------------------------------------------------------------------
VOTE BY TELEPHONE OR INTERNET
QUICK * EASY * IMMEDIATE * AVAILABLE 24 HOURS A DAY *
7 DAYS/WEEK UNTIL 10:00 A.M., E.T., MAY 31, 2000
The Home Depot, Inc. encourages you to take advantage of two 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 you to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
TO VOTE BY TELEPHONE: CALL TOLL-FREE ON A TOUCH-TONE TELEPHONE 1-877-PRX-VOTE
(1-877-779-8683) ANYTIME (THERE IS NO CHARGE TO YOU FOR
THIS CALL) OR CALL COLLECT ON A TOUCH-TONE TELEPHONE
1-201-536-8073. You will be asked to enter the 14-digit
voter 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:
HTTP://WWW.EPROXYVOTE.COM/HD
You will be asked to enter the 14-digit voter control
number located above your name and address in the lower
left corner 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.
Our annual report is mailed to every account of record. If you would like to
receive future stockholder materials electronically, please read the information
on the reverse side.
-- DETACH PROXY CARD HERE --
- --------------------------------------------------------------------------------
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
UNLESS VOTING ELECTRONICALLY OR BY PHONE, PLEASE MARK, SIGN AND DATE THIS PROXY
CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3 AND AGAINST ITEMS
4 AND 5.
DISCONTINUE DUPLICATE ANNUAL REPORT [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [ ]
1. Election of Directors:
Nominees: (01) Frank Borman, (02) Berry R. Cox
FOR WITHHELD
[ ] [ ]
For all nominees except as noted below
[ ]___________________________________
FOR AGAINST ABSTAIN
2. Approval of an amendment to the [ ] [ ] [ ]
Company's Certificate of Incorporation
to increase the number of authorized
shares.
3. Approval of an amendment to the Company's
Certificate of Incorporation to declassify [ ] [ ] [ ]
the Board of Directors.
4. Approval of Stockholder Proposal [ ] [ ] [ ]
relating to a report on certain
employment matters.
5. Approval of Stockholder Proposal [ ] [ ] [ ]
relating to simple-majority voting.
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(s)_________________________________________ Date ____________________
Signature(s)_________________________________________ Date ____________________
PLEASE SIGN THIS PROXY AS NAME(S) APPEAR(S) ABOVE.
