NORDSTROM INC, DEF 14A, 1998-03-31

NORDSTROM INC
DEF 14A, 1998-03-31
FAMILY CLOTHING STORES

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<PAGE>
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12

NORDSTROM, 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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[NORDSTROM LOGO]

1501 Fifth Avenue, Seattle, WA 98101-1603

March 31, 1998

DEAR SHAREHOLDERS:

On behalf of the Board of Directors and management, I cordially invite you to
attend the Annual Meeting of Shareholders on Tuesday, May 19, 1998, at 11:00
a.m., Pacific Daylight Time, in Salons I and II, The Ritz-Carlton San Francisco,
600 Stockton Street, San Francisco, California.

In addition to the matters described in the Notice of Annual Meeting and Proxy
Statement, there will be a report on the progress of the Company and an
opportunity to ask questions of general interest to you as a Shareholder.

YOUR VOTE IS VERY IMPORTANT. Therefore, whether or not you plan to attend the
meeting in person, please sign and return the enclosed Proxy in the envelope
provided. If you attend the meeting and desire to vote in person, you may do so
even though you have previously sent your Proxy.

I hope you will be able to join us and we look forward to seeing you in San
Francisco.

Sincerely yours,
/s/ John J. Whitacre
John J. Whitacre
Chairman of the Board of Directors
<PAGE>
NORDSTROM, INC.
1501 FIFTH AVENUE
SEATTLE, WA
98101-1603

NOTICE OF ANNUAL
MEETING OF
SHAREHOLDERS
To the Shareholders of
Nordstrom, Inc.:

The Annual Meeting of Shareholders of Nordstrom, Inc. will
be held on Tuesday, May 19, 1998, at 11:00 a.m., Pacific
Daylight Time, in Salons I and II, The Ritz-Carlton San
Francisco, 600 Stockton Street, San Francisco, California
for the following purposes:

1. To elect 11 directors to hold office until the next
Annual Meeting of Shareholders and until their successors
are duly elected and qualified;

2. To consider and vote upon a proposal to amend the
Nordstrom, Inc. 1997 Stock Option Plan;

3. To ratify the appointment of auditors; and

4. To transact such other business as may properly come
before the meeting and any adjournment thereof.

Holders of shares of Common Stock of record at the close
of business on March 20, 1998 are entitled to notice of,
and to vote at, the meeting.

Shareholders are cordially invited to attend the meeting
in person.

By order of the Board of Directors,

/s/ Karen E. Purpur
Karen E. Purpur
Secretary

Seattle, Washington
March 31, 1998

WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING,
YOU ARE URGED TO SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.

1
<PAGE>
PROXY STATEMENT

APPROXIMATE
MAILING DATE:
MARCH 31, 1998
This Proxy Statement is furnished to the Shareholders of
Nordstrom, Inc. (the "Company") in connection with the
solicitation of proxies by the Board of Directors for use
at the Annual Meeting of Shareholders to be held on May
19, 1998 and any adjournment thereof. If the enclosed
Proxy is executed and returned, it will be voted in
accordance with the instructions given, but may be revoked
at any time insofar as it has not been exercised by
notifying the Secretary of the Company in writing (such
notification to be directed to the Company's offices at
1501 Fifth Ave., Seattle, WA 98101-1603). Each Proxy will
be voted for Proposals 1, 2 and 3 and may be voted on such
other matters as may properly come before the meeting if
no contrary instruction is indicated on the Proxy.

There were 74,302,281 shares of Common Stock, the only
security of the Company entitled to vote at the meeting,
outstanding at March 20, 1998, the record date for the
Annual Meeting of Shareholders. Shareholders are entitled
to one vote for each share of Common Stock held of record
at the close of business on March 20, 1998. Under
Washington law and the Company's Articles of
Incorporation, a quorum consisting of a majority of the
shares eligible to vote must be represented in person or
by proxy to elect directors and to transact any other
business that may properly come before the meeting. For
election of directors, the nominees elected will be those
receiving the greatest number of votes cast by the shares
entitled to vote, up to the number of directors to be
elected. Any action other than a vote for a nominee will
have the effect of voting against the nominee. The
amendments to the Nordstrom, Inc. 1997 Stock Option Plan
will be approved and the appointment of auditors will be
ratified if the votes cast in favor of the respective
proposal exceed the votes cast against it. Abstentions and
nonvotes by brokers will have no effect since such actions
do not represent votes cast by Shareholders.

PRINCIPAL
SHAREHOLDERS
Except for D. Wayne Gittinger, Bruce A. Nordstrom and the
Elmer and Katharine Nordstrom Family Interests, L.P.
(whose ownership of the Company's Common Stock is set
forth in the table on page 3), the only one who, to
management's knowledge, is the beneficial owner of more
than five percent of the Company's Common Stock at March
20, 1998 is Dodge and Cox of San Francisco, California,
which owns 5,195,137 shares. The nature of the beneficial
interest consists of the sole power of disposition as to
5,195,137, and the sole voting power as to 4,596,887
shares and the shared voting power as to 70,900 shares.

2
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of March 20, 1998 the
number of shares of Common Stock held by directors and
nominees, the executive officers named in the Summary
Compensation Table on page 8, and all directors and
executive officers of the Company as a group:

* Does not exceed 1% of the Company's outstanding Common Stock.
(a) Does not include 80,000 shares held by a corporation of which the director
or his spouse owns a one-eighth beneficial interest.
(b) Includes 3,470,212 shares held by his wife individually, 309 shares held by
her as a participant in the Company's 401(k) Plan, 388,800 shares held by a
trust of which she is a trustee and beneficiary, and 1,375,380 shares held by a
trust of which she is the beneficiary. Does not include 103,448 shares held by
trusts of which he is a trustee.

3
<PAGE>
(c) Includes 614,488 shares held by his wife individually and 54,000 shares held
by a trust of which his wife is the beneficiary.
(d) Includes 29,194 shares held by his wife individually and 2,117,640 shares
held by trusts of which he is a trustee and beneficiary. Does not include
1,757,482 shares held by trusts of which he is co-trustee.
(e) The general partners of this partnership are Katharine J. Nordstrom, The
Elected Marital Trust under the Will of Elmer J. Nordstrom (John N. Nordstrom,
trustee), the James F. Nordstrom Interests, L.P., and the John N. Nordstrom
Interests, L.P. The general partners of the James F. Nordstrom Interests, L.P.
are Sally A. Nordstrom, the Estate of James F. Nordstrom (Sally A. Nordstrom,
personal representative), J. Daniel Nordstrom and William E. Nordstrom, and the
general partners of the John N. Nordstrom Interests, L.P. are John N. Nordstrom,
Sally B. Nordstrom and James A. Nordstrom. Each of these entities and
individuals are deemed to beneficially own the shares held by the Elmer and
Katharine Nordstrom Family Interests, L.P. Each of the general partners
disclaims beneficial ownership of the shares held by the Elmer and Katharine
Nordstrom Family Interests, L.P. that exceed the greater of their proportionate
interest in their respective profits or capital account in the partnerships.
(f) Includes 80,805 shares held by his wife, 2,006 shares held by trusts of
which he is the trustee and 1,390,000 shares held by the John N. Nordstrom
Interests, L.P. of which he is a general partner. Mr. Nordstrom disclaims
beneficial ownership of the shares held by the John N. Nordstrom Interests, L.P.
that exceed the greater of his proportionate interest in his profits or capital
account in the partnership. Does not include any of the shares held by the Elmer
and Katharine Nordstrom Family Interests, L.P., of which he is deemed a
beneficial owner.
(g) Includes 300 shares held by his wife and 200 shares held by a corporation of
which he is the sole shareholder.
(h) Includes 26,481 shares which may be acquired under the 1987 Stock Option
Plan and 3,255 shares held by him as a participant in the Company's 401(k) Plan.
(i) Represents shares held by a trust of which he and his spouse are trustees
and beneficiaries.
(j) Includes 35,639 shares which may be acquired under the 1987 Stock Option
Plan. On October 3, 1997, Mr. Goesling simultaneously sold 37,500 call options
and purchased 37,500 put options, each entitling the holder to purchase or sell,
as applicable, one share of Nordstrom, Inc. common stock, exercisable on October
3, 2000.
(k) Includes 22,485 shares which may be acquired under the 1987 Stock Option
Plan.
(l) Includes 13,773 shares which may be acquired under the 1987 Stock Option
Plan and 1,719 shares held by him in the Company's 401(k) Plan.
(m) Includes 5,327 shares which may be acquired under the 1987 Stock Option Plan
and 583 shares held by him in the Company's 401(k) Plan. Also includes one share
held by his wife, 3,374 shares which may be acquired by her under the 1987 Stock
Option Plan and 412 shares held by her in the Company's 401(k) Plan.
(n) Includes 14,912 shares which may be acquired under the 1987 Stock Option
Plan and 789 shares held by her in the Company's 401(k) Plan.
(o) Includes the 6,238,276 shares held by the Elmer and Katharine Nordstrom
Family Interests, L.P. Also includes 655,000 shares held by the James F.
Nordstrom Interests, L.P.

The directors and executive officers shown in the table disclaim beneficial
interest in any shares held solely as custodian or trustee, and all shares held
by their spouses and immediate family members.

4
<PAGE>
PROPOSAL 1:
ELECTION OF DIRECTORS
Eleven directors will be elected at the meeting, each to
hold office until the next Annual Meeting of Shareholders
and until a successor has been duly elected and qualified.
Unless otherwise instructed by the Shareholder, the
persons named in the enclosed Proxy intend to vote for the
election of the persons listed in this Proxy Statement.
Except for Mr. Willison, all of the nominees are currently
directors of the Company. If any nominee becomes
unavailable for any reason or should a vacancy occur
before the election (which events are not anticipated),
the Proxy may be voted for a person to be selected by the
Board of Directors of the Company.

NOMINEES

Information related to the director nominees is set forth
below:

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Principal Occupation and Business Director
Name and Age Experience for Past Five Years Since
- -------------------------------------------------------------------------------
<S> <C> <C>
D. WAYNE GITTINGER Partner in the law firm of Lane Powell 1971
Age 65(a)(b) Spears Lubersky LLP
ENRIQUE HERNANDEZ, JR. President and CEO of Inter-Con Security 1997
Age 42(c) Systems, Inc., a California based
worldwide security and facility support
services provider; co-founder and
principal partner, Interspan
Communications, a television
broadcasting company serving Spanish
speaking audiences
ANN D. MCLAUGHLIN Chairman of the Aspen Institute, a 1992
Age 56(d) Colorado based non- profit, non-partisan
organization whose goal is to enhance,
through debate, the effectiveness of the
leaders of the country's democratic
institutions (formerly Vice Chairman of
the Aspen Institute; President of the
Federal City Council; President and CEO
of New American Schools Development
Corporation; Visiting Fellow of the
Urban Institute)
JOHN A. MCMILLAN Retired (formerly Co-Chairman of the Board 1966
Age 66(b)(e) of Directors of the Company)
BRUCE A. NORDSTROM Retired (formerly Co-Chairman of the Board 1966
Age 64(b) of Directors of the Company)
JOHN N. NORDSTROM Retired (formerly Co-Chairman of the Board 1966
Age 60(b) of Directors of the Company)
ALFRED E. OSBORNE, JR. Director of the Harold Price Center for 1987
Age 53(f) Entrepreneurial Studies and Associate
Professor of Business Economics, The
Anderson School at UCLA
WILLIAM D. RUCKELSHAUS A Principal in Madrona Investment Group, 1985
Age 65(g) L.L.C., a Washington based private
investment firm (formerly Chairman and
CEO of Browning-Ferris Industries, Inc.)
ELIZABETH CROWNHART President of Salar Enterprises, Ltd., an 1977
VAUGHAN Oregon based Company engaged in the
Age 69 production of historical materials
</TABLE>

5
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Principal Occupation and Business Director
Name and Age Experience for Past Five Years Since
- -------------------------------------------------------------------------------
<S> <C> <C>
JOHN J. WHITACRE Chairman of the Board of Directors of the 1995
Age 45(h) Company (formerly Co-Chairman of the
Board of Directors of the Company;
Co-President of the Company)
BRUCE G. WILLISON President and Chief Operating Officer of N/A
Age 49(i) H.F. Ahmanson & Company, a California
headquartered thrift holding company and
Home Savings of America, a full-service
consumer bank, also headquartered in
California. H.F. Ahmanson is the parent
company of Home Savings of America
(formerly Vice Chairman of First
Interstate Bancorp; Chairman, President
and CEO of First Interstate Bank of
California)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>

(a) Mr. Gittinger is a partner in the law firm of Lane Powell Spears Lubersky
LLP, which rendered legal services to the Company during the past fiscal year.
(b) Bruce A. Nordstrom is a brother-in-law of D. Wayne Gittinger and a cousin of
John N. Nordstrom. John A. McMillan is a cousin of all three by marriage.
(c) Mr. Hernandez is also a director of California Healthcare Foundation, ICSS
Holding Corp., McDonald's Corporation and Washington Mutual, Inc.
(d) Mrs. McLaughlin, a former U.S. Secretary of Labor, is also a director of AMR
Corporation, Donna Karan International, Fannie Mae, General Motors Corporation,
Harman International Industries, Inc., Host Marriott Corporation, Kellogg
Company, Potomac Electric Power Company, Sedgwick Group plc, Union Camp
Corporation and Vulcan Materials Company.
(e) Mr. McMillan is also a director of the Follett Company.
(f) Dr. Osborne is also a director of Greyhound Lines, Inc., The Times Mirror
Company, Wedbush Morgan Securities, Inc. and United States Filter Corporation,
and is also a trustee of the Sierra Trust Funds, an independent general partner
of Technology Funding Venture Partners.
(g) Mr. Ruckelshaus is also a director of Browning-Ferris Industries, Inc.
(Chairman of the Board), Coinstar, Inc., Cummins Engine Company, Gargoyles,
Inc., Monsanto Company, Solutia Inc. and Weyerhaeuser Company. He was also a
director of the Company from 1978 to 1983.
(h) Mr. Whitacre is also a director of Nordstrom Credit, Inc., the Company's
wholly-owned finance subsidiary.
(i) Mr. Willison is also a director of Enron Corporation, the Los Angeles Urban
League, the United Way of Greater Los Angeles and the Los Angeles Sports
Council.

The Board of Directors recommends a vote for each of the nominees listed in the
table.

6
<PAGE>
BOARD OF DIRECTORS
AND COMMITTEES
The Board of Directors maintains an Audit Committee, a
Compensation and Stock Option Committee and a Corporate
Governance and Nominating Committee. These committees do
not have formal meeting schedules, but are required to
meet at least once each year. During the past year, there
were four meetings of the Board of Directors, four
meetings of the Audit Committee, five meetings of the
Compensation and Stock Option Committee and five meetings
of the Corporate Governance and Nominating Committee.

Current members of the Audit Committee are Alfred E.
Osborne, Jr., Chair, Enrique Hernandez, Jr., Charles A.
Lynch, Ann D. McLaughlin, William D. Ruckelshaus and
Elizabeth Crownhart Vaughan. The Audit Committee is
responsible for recommending the Company's independent
auditors, and reviewing the scope, costs and results of
the audit engagement.

Current members of the Compensation and Stock Option
Committee are William D. Ruckelshaus, Chair, D. Wayne
Gittinger, Ann D. McLaughlin, John A. McMillan, Alfred E.
Osborne, Jr. and Elizabeth Crownhart Vaughan. The
Compensation and Stock Option Committee is responsible for
determining the overall compensation levels of certain of
the Company's executive officers and administering the
Company's stock option plans.

Current members of the Corporate Governance and Nominating
Committee are D. Wayne Gittinger, Chair, Charles A. Lynch,
Ann D. McLaughlin, William D. Ruckelshaus and Elizabeth
Crownhart Vaughan. The Corporate Governance and Nominating
Committee is primarily responsible for recommending
director nominees to the Company's Board of Directors. The
Committee will consider recommendations by Shareholders
for vacancies on the Board. Suggestions may be submitted
to the Company's Secretary.

7
<PAGE>
COMPENSATION OF
EXECUTIVE OFFICERS IN
THE YEAR ENDED
JANUARY 31, 1998
SUMMARY COMPENSATION TABLE

The following table summarizes compensation paid or
accrued by the Company for services rendered by the
Chairman of the Board of Directors and five Executive Vice
Presidents for the periods indicated:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------

<CAPTION>
Annual Compensation Long-Term Compensation
- --------------------------------------------------------------------------------------------------
Number
Name and Principal Fiscal Other Annual of Stock All Other
Position Year(a) Salary Bonus Compensation(b) Options Compensation(c)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JOHN J. WHITACRE 1997 $365,000 $245,791 $1,066 4,380 $12,726
CHAIRMAN OF THE BOARD OF 1996 $350,000 $0 $20,769 5,024 $48,093
DIRECTORS 1995 $344,167 $0 $1,648 5,651 $10,998
- --------------------------------------------------------------------------------------------------
JOHN A. GOESLING 1997 $325,000 $162,500 $495 4,066 $13,428
EXECUTIVE VICE PRESIDENT 1996 $325,000 $0 $127 4,665 $11,055
AND TREASURER 1995 $322,083 $0 $20,354 5,264 $50,715
- --------------------------------------------------------------------------------------------------
JACK F. IRVING 1997 $297,000 $265,225 $752 3,716 $8,522
1996 $297,000 $106,122 $600 4,263 $6,837
EXECUTIVE VICE PRESIDENT 1995 $290,000 $44,793 $20,634 4,795 $45,406
- --------------------------------------------------------------------------------------------------
ROBERT J. MIDDLEMAS 1997 $194,750 $268,865 $1,604 2,395 $11,350
1996 $164,000 $16,000 $1,995 2,353 $11,585
EXECUTIVE VICE PRESIDENT 1995 $162,333 $0 $2,811 2,648 $12,368
- --------------------------------------------------------------------------------------------------
JAMES R. O'NEAL 1997 $184,250 $312,276 $20,516 2,189 $59,871
1996 $157,000 $6,500 $0 2,009 $11,505
EXECUTIVE VICE PRESIDENT 1995 $148,750 $14,427 $0 2,392 $12,231
- --------------------------------------------------------------------------------------------------
MARTHA S. WIKSTROM 1997 $249,250 $457,878 $540 3,146 $11,167
1996 $230,000 $6,000 $20,991 3,330 $57,293
EXECUTIVE VICE PRESIDENT 1995 $218,333 $65,285 $1,233 3,551 $12,445
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>

(a) The fiscal year of the Company ends January 31. Fiscal years indicated end
January 31 of the following year.
(b) Other Annual Compensation for fiscal year 1997 includes tax reimbursements.
(c) All Other Compensation for fiscal year 1997 includes the following:

Profit Sharing Plan benefit: Mr. Whitacre: $6,626; Mr. Goesling: $6,622;
Mr. Irving: $6,667; Mr. Middlemas: $6,614; Mr. O'Neal: $6,610; Ms.
Wikstrom: $6,606.

401(k) Plan benefit: Mr. Whitacre: $4,750; Mr. Goesling: $4,750; Mr.
Middlemas: $4,340; Mr. O'Neal: $4,161; Ms. Wikstrom: $4,025.

Premiums on excess life insurance: Mr. Whitacre: $1,350; Mr. Goesling:
$2,056; Mr. Irving: $1,855; Mr. Middlemas: $396; Mr. O'Neal: $267; Ms.
Wikstrom: $536.

Automobile Allowance: Mr. O'Neal: $48,833.

8
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information concerning
option grants during fiscal year 1997 to the named
executive officers:

- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Potential Realizable
Percent Value at Assumed
of Total Annual Rates of Stock
Options Price Appreciation for
Number Granted to Exercise or Option Terms
of Options Employees in Base Price ----------------------
Name Granted(a) Fiscal Year Per Share Expiration Date 5% 10%
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JOHN J. WHITACRE 2,485 0.72% $46.1875 May 20, 2007 $72,182 $182,923
1,895 0.55% $60.5625 Nov 18, 2007 $72,176 $182,907
- ---------------------------------------------------------------------------------------------------------------------------
JOHN A. GOESLING 2,307 0.67% $46.1875 May 20, 2007 $67,012 $169,821
1,759 0.51% $60.5625 Nov 18, 2007 $66,996 $169,780
- ---------------------------------------------------------------------------------------------------------------------------
JACK F. IRVING 2,108 0.61% $46.1875 May 20, 2007 $61,231 $155,172
1,608 0.46% $60.5625 Nov 18, 2007 $61,245 $155,206
- ---------------------------------------------------------------------------------------------------------------------------
ROBERT J. MIDDLEMAS 1,313 0.38% $46.1875 May 20, 2007 $38,139 $96,651
1,082 0.31% $60.5625 Nov 18, 2007 $41,211 $104,436
- ---------------------------------------------------------------------------------------------------------------------------
JAMES R. O'NEAL 1,242 0.36% $46.1875 May 20, 2007 $36,076 $91,425
947 0.27% $60.5625 Nov 18, 2007 $36,069 $91,405
- ---------------------------------------------------------------------------------------------------------------------------
MARTHA S. WIKSTROM 1,739 0.50% $46.1875 May 20, 2007 $50,513 $128,009
1,407 0.41% $60.5625 Nov 18, 2007 $53,589 $135,805
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) Options are granted at the fair market value of the Company's Common Stock
on the date of grant and vest and become exercisable during employment with the
Company ratably each year over a four-year period from the date of grant. To the
extent not already exercisable, options generally become exercisable upon a sale
of the Company or substantially all of its assets. During the last fiscal year,
the Company granted options to officers and other key employees on May 20, 1997
and on November 18, 1997.

9
<PAGE>
OPTION EXERCISES AND YEAR END VALUE TABLE

The following table sets forth information concerning
option exercises and the value of options held during
fiscal year 1997 by the named executive officers:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Dollar Value of
Number of Unexercised Unexercised, in-the-Money
Number of Options Held at Options held at
Shares Dollar January 31, 1998 January 31, 1998(a)
Acquired on Value -------------------------- --------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JOHN J. WHITACRE 0 $0 31,408 12,099 $485,258 $66,574
- ---------------------------------------------------------------------------------------------------------------
JOHN A. GOESLING 3,628 $131,062 38,024 11,296 $644,192 $61,793
- ---------------------------------------------------------------------------------------------------------------
JACK F. IRVING 21,155 $677,208 20,383 10,224 $254,183 $56,282
- ---------------------------------------------------------------------------------------------------------------
ROBERT J. MIDDLEMAS 1,538 $39,119 12,550 6,035 $178,704 $32,005
- ---------------------------------------------------------------------------------------------------------------
JAMES R. O'NEAL 5,391 $74,914 4,254 5,361 $32,632 $28,445
- ---------------------------------------------------------------------------------------------------------------
MARTHA S. WIKSTROM 2,338 $60,204 13,252 8,170 $158,799 $43,589
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

(a) Dollar value is based on the market value of the Company's Common Stock on
the date of exercise or at January 31, 1998, as the case may be, minus the
exercise price.

PENSION PLAN TABLE

The following table sets forth information concerning
estimated annual benefits payable to each of the named
executive officers upon their retirement based upon
indicated years of service (without reduction for any
Profit Sharing Retirement Plan benefits):

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
Years of Service
Average Annual ---------------------------------------------------------------
Compensation(a) 15 20 25 30 35
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$125,000 $ 45,000 $ 60,000 $ 75,000 $ 75,000 $ 75,000
$150,000 $ 54,000 $ 72,000 $ 90,000 $ 90,000 $ 90,000
$175,000 $ 63,000 $ 84,000 $ 105,000 $ 105,000 $ 105,000
$200,000 $ 72,000 $ 96,000 $ 120,000 $ 120,000 $ 120,000
$225,000 $ 81,000 $ 108,000 $ 135,000 $ 135,000 $ 135,000
$250,000 $ 90,000 $ 120,000 $ 150,000 $ 150,000 $ 150,000
$300,000 $ 108,000 $ 144,000 $ 180,000 $ 180,000 $ 180,000
$400,000 $ 144,000 $ 192,000 $ 240,000 $ 240,000 $ 240,000
$450,000 $ 162,000 $ 216,000 $ 270,000 $ 270,000 $ 270,000
$500,000 $ 180,000 $ 240,000 $ 300,000 $ 300,000 $ 300,000
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>

(a) The benefits are payable pursuant to the Nordstrom Supplemental Executive
Retirement Plan, which covers officers of the Company and its subsidiaries,
including the named executive officers. The benefits are unfunded and limited to
a maximum of 60% of the monthly average compensation (based solely on the yearly
amounts set forth in the salary and bonus columns of the Summary Compensation
Table) less any monthly benefits payable under the Nordstrom Profit Sharing
Retirement Plan. The

10
<PAGE>
normal retirement benefit provided by the Nordstrom Supplemental Executive
Retirement Plan is 2.4% of the monthly average compensation for the three
highest paying years of the last five years, multiplied by the number of years
of service with the Company, up to a maximum of twenty-five years.
(b) The credited years of service to the Company for John J. Whitacre, John A.
Goesling, Jack F. Irving, Robert J. Middlemas, James R. O'Neal and Martha S.
Wikstrom are 21, 20, 31, 18, 17 and 16, respectively.

COMPENSATION AND
STOCK OPTION
COMMITTEE
REPORT ON FISCAL YEAR
1997 EXECUTIVE
COMPENSATION
The Compensation and Stock Option Committee is comprised
of six directors, and is responsible for setting
compensation levels for the Chairman of the Board of
Directors, the Co-Presidents and the Executive Vice
Presidents of the Company. The Committee also consults
with the Chairman and the Co-Presidents with respect to
the compensation and benefits for other officers and with
respect to the benefits for certain other employees of the
Company.

COMPENSATION PHILOSOPHY

The Company bases different portions of its executive
compensation program on differing measures of Company
performance and Shareholder value. The overall goal of the
Committee is to develop compensation programs and policies
that are consistent with and linked to the Company's
strategic business objectives. The program is designed to:

- Play a critical role in retaining executives whom
the Company deems most able to further its goal of
aligning the Company's interests with creating value
for Shareholders.

- Reward executives for medium and long-term Company
performance and value created for Shareholders as
measured by a mix of factors, including increases in
Company stock price, sales increases, earnings per
share, dividends and other performance related value
drivers which will or should increase Shareholder
return.

In fiscal 1997, the Company's management initiated a
long-term program to assure that the Company increases
value for Shareholders. The Committee considered this
clarification of the Company's management approach and
engaged an outside consultant to provide counsel regarding
the competitiveness and alignment of the Company's
executive compensation structure with its strategic
objectives. The Committee has considered these
recommendations and, as set forth below, has restructured
portions of its fiscal 1998 compensation program as a
result, and will likely make refinements in future years
to further reinforce management's implementation of its
value-based approach to managing the business.

The Company also considers Section 162(m) of the Internal
Revenue Code, which limits to $1 million per year the
compensation expense deduction the Company may take with
respect to the executive officers named in the Summary
Compensation Table. The Company is submitting amendments
to

11
<PAGE>
its 1997 Stock Option Plan for Shareholder approval in
part to comply with regulations promulgated under Section
162(m) to qualify certain long-term incentives granted
pursuant to that plan under the performance-based
compensation exception to the expense deduction limit.

PAY MIX AND MEASUREMENT

The Company's executive compensation program is based on
three components, each of which furthers a differing
objective, but all of which together are intended to serve
the Company's overall compensation philosophy.

BASE SALARY. Base salary increases or decreases are
established on an annual basis and are based on the
Committee's view of how the management team and the
respective individuals contribute to the overall
performance of the Company. Overall performance of the
Company is measured by a number of factors including the
Company's earnings, its performance versus its retail
competitors, its performance versus budget, its
improvement in gross margins and the Committee's
assessment of management skills. None of these factors is
given greater weight than any other factor. The Committee
also reviews the competitive median base salaries for
competitors in the specialty retailing field, including
companies listed in Standard & Poor's Retail Store
Composite referenced in the Performance Graph on page 15.

ANNUAL BONUS INCENTIVES. This incentive is intended to
reflect the Company's belief that management's
contribution to medium and long-term Company performance
comes, in part, from improvement in Company earnings per
share, division sales, inventory turn and gross margins.
Annual bonus incentives for the Chairman, the
Co-Presidents and the Executive Vice President and
Treasurer have been based solely on specified earnings per
share target amounts. Annual bonus incentives for the
other Executive Vice Presidents have been based on various
combinations of earnings per share, division sales,
inventory turn, gross margin and expense control targets.
The amount of the respective bonuses has been based on
these targets which, in turn, relate to pre-established
percentages of the respective base salaries. Under this
plan, executive officers have not received any bonus
incentives until the applicable minimum specified
performance target was achieved. The performance targets
have not been waived for purposes of these bonus
incentives for any year covered by the Summary
Compensation Table.

LONG-TERM INCENTIVES. STOCK OPTIONS. The 1987 Stock
Option Plan expired in August 1997. The 1987 Plan
authorized granting options to key employees or key
managerial personnel of the Company and its subsidiaries.
A number of options granted under this Plan remain
outstanding. The 1997 Stock Option Plan, adopted for a
term of 10 years beginning May 20, 1997, authorized
granting options and shares of restricted stock to
employees of the Company and its subsidiaries. Both the
1987 and 1997 Stock Option

12
<PAGE>
Plans are administered by the Committee. The Committee
proposed to the Board the amendments to the 1997 Stock
Option Plan which are being submitted for approval by the
Shareholders. Among other things, those amendments
authorize granting performance shares in addition to
options and shares of restricted stock.

The option incentive component of the total compensation
package is intended to retain and motivate executives to
increase total return to the Shareholders. Stock options
have been granted at the fair market value of the
Company's Common Stock and only have value if the
Company's stock price increases from the time of the
award. If the Shareholders approve the amendments to the
1997 Stock Option Plan, options must be granted at no less
than fair market value. Vesting of options occurs only
during employment with the Company upon each anniversary
of the award unless vesting of the options is subject to
performance goals established by the Committee.

The number of stock options granted to the executive
officers named in the Summary Compensation Table has been
determined by the Committee pursuant to a formula used for
all plan participants, without reference to the number of
stock options granted previously. Pursuant to the formula,
the number of option shares granted has corresponded to
the number of underlying Company shares that would produce
a value equal to 50% of the participant's yearly salary,
assuming an annual 12% growth rate in the Company's Common
Stock price over a five-year period. Stock options have
been granted semiannually in May and November, with one
half of the formula value of the option award granted each
time. Since the formula is keyed to salary, the
performance factors discussed in the Base Salary paragraph
also would apply to this compensation component. The
Committee reserves the right to change or eliminate the
formula at any time.

Under the 1997 Stock Option Plan, as amended, the
Committee has granted in fiscal 1998, subject to
Shareholder approval of the Plan amendments, a mixture of:

- Stock options granted at fair market value with
vesting over time.

- Stock options granted at fair market value with
vesting based on the achievement of pre-established
performance goals related to increases in the
Company's stock price.

- Performance shares with vesting that entitles the
grantee to receive shares of the Company's Common
Stock (or cash in lieu thereof) upon the achievement
of pre-established performance goals related to
three year total shareholder return in relation to
Standard & Poor's Retail Store Composite (i.e., the
index referenced in the Performance Graph on page
15).

13
<PAGE>
In granting this mixture of benefits, the Committee sought
to further the Company's new management approach by more
closely aligning the Company's compensation program with
increasing value for Shareholders.

RETIREMENT. The Nordstrom Profit Sharing Retirement Plan
covers all regular employees of the Company and its
subsidiaries, including the executive officers named in
the Summary Compensation Table. The Board of Directors
determines annually an amount to be contributed by the
Company to the Retirement Plan. Allocation of the
Company's contribution to each participant's account is
pro rata, based on one unit of credit for each year of
service and one unit of credit for each $100 of
compensation. For purposes of this latter calculation,
compensation is limited to $160,000 for calendar year
1997.

SAVINGS. Pursuant to the Nordstrom Employee Deferral
Retirement Plan, employees may elect to have the Company
pay from 1% to 10% of the employee's compensation, up to a
maximum of $9,500 for calendar year 1997, to the
Retirement Plan instead of paying that amount to the
employee. The Company matches 50% of the employee's
contribution up to 6% of the employee's compensation.
Monies in the account are invested at the direction of the
employee among one or more of six funds, one of which
consists of Common Stock of the Company. Distributions are
made at normal retirement or earlier termination of
employment, and for terminal illness, disability or
hardship.

The Nordstrom Supplemental Executive Retirement Plan
provides retirement benefits to certain executives of the
Company. This Plan is described in the note to the Pension
Plan Table on page 10.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

The base salary for the chief executive officer is
determined by the Committee and is based on overall
Company performance. That performance is measured by a
number of factors including the Company's earnings, real
or perceived retail environment and competitive
conditions, performance versus budget, growth in sales,
improvement in gross margins and the Committee's
assessment of management skills. None of these factors is
given greater weight than any other factor. The base
salary of the Chairman was increased from $350,000 in 1996
to $365,000 in 1997, reflecting an improvement in a number
of important areas of the Company's financial performance
over the previous year. The annual bonus incentive for the
Chairman was based solely on earnings per share targets as
previously described. Those earnings per share targets
were met and the Chairman received a bonus of $245,791 for

14
<PAGE>
fiscal year 1997. The Chairman received stock options
during fiscal year 1997 pursuant to the formula used for
all Stock Option Plan participants as previously
described.

February 16, 1998 COMPENSATION AND STOCK OPTION
COMMITTEE

William D. Ruckelshaus, Chair
D. Wayne Gittinger
Ann D. McLaughlin
John A. McMillan
Alfred E. Osborne, Jr.
Elizabeth Crownhart Vaughan

STOCK PRICE
PERFORMANCE
PERFORMANCE GRAPH

The following graph compares for each of the last five
fiscal years ending January 31 the cumulative total return
of Company Common Stock, Standard & Poor's 500 Index and
Standard & Poor's Retail Store Composite. The cumulative
total return of Company Common Stock assumes $100 invested
on January 31, 1993 in Nordstrom, Inc. Common Stock and
assumes reinvestment of dividends.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
STANDARD & POOR'S 500 INDEX S&P RETAIL STORES COMPOSITE NORDSTROM, INC. COMMON STOCK
<S> <C> <C> <C>
1993 $100 $100 $100
1994 113 96 90
1995 113 89 105
1996 157 96 103
1997 199 115 99
1998 252 170 137
</TABLE>

15
<PAGE>

16
<PAGE>
COMPENSATION OF
DIRECTORS
Employee directors of the Company are not paid any fees
for serving as members of the Board or any Board
committee. Non-employee directors are paid a yearly
retainer of $15,000 and a fee of $1,000 for each Board
meeting and $1,000 for each committee meeting attended,
together with reasonable traveling expenses. Pursuant to
the 1993 Non-Employee Director Stock Incentive Plan,
immediately following each Annual Meeting of Shareholders
non-employee directors also receive that number of shares
of Company Common Stock having a fair market value of
$10,000, plus a $4,000 cash award to offset tax
obligations attributable to the stock award.

COMPENSATION
COMMITTEE INTERLOCKS
AND INSIDER
PARTICIPATION
None of the members of the Compensation and Stock Option
Committee is or has been an officer or employee of the
Company or any of its subsidiaries except John A.
McMillan, who was a Co-Chairman of the Board of Directors
of the Company before his retirement in January 1996. D.
Wayne Gittinger, a director of the Company and a member of
the Compensation and Stock Option Committee, is a partner
in the law firm of Lane Powell Spears Lubersky LLP, which
rendered legal services to the Company during the past
fiscal year.

CERTAIN RELATIONSHIPS
AND RELATED
TRANSACTIONS
The Company is managed by six Co-Presidents, who are
responsible for specific areas of the Company's business,
and the Chairman, who oversees the overall operations of
the Company. Each of the Co-Presidents received a salary
and bonus for fiscal 1997 of $303,500. Compensation for
the Chairman is set forth in the executive compensation
section on page 8. The Co-Presidents are Blake W.
Nordstrom, Peter E. Nordstrom and Erik B. Nordstrom, who
are sons of Bruce A. Nordstrom; J. Daniel Nordstrom and
William E. Nordstrom, who are sons of James F. Nordstrom
(deceased), a former Co-Chairman and director of the
Company; and James A. Nordstrom, who is the son of John N.
Nordstrom. James R. O'Neal's wife was employed by the
Company at a salary and bonus of $175,599. D. Wayne
Gittinger's stepson was employed by the Company at a
salary and bonus of $71,625.

During the year ended January 31, 1998, the Company leased
an airplane from JBW Aircraft Leasing Company, Inc.
("JBW"), of which John N. Nordstrom, Bruce A. Nordstrom
and D. Wayne Gittinger are the sole shareholders. During
the period, the Company made lease payments to JBW of
$27,000. Also during the period, JBW made payments to the
Company of $58,200 for services rendered. In addition, the
Company chartered an airplane from JFN, Inc., the
shareholders of which are Sally A. Nordstrom and the
Estate of James F. Nordstrom (Sally A. Nordstrom, personal
representative). During the period, the net amount of
payments made by the Company to JFN, Inc. was $60,200. The
Company believes the lease and charter rates and the terms
of these arrangements are more favorable than those
generally available to the Company from other commercial
charters.

PROPOSAL 2:
APPROVAL OF AMENDMENT
TO THE 1997
STOCK OPTION PLAN

16
<PAGE>
INTRODUCTION

The Board of Directors, subject to approval of the
Shareholders, has adopted amendments to the Company's 1997
Stock Option Plan (the "Plan"). The Plan was originally
approved by the Shareholders in 1997. The purposes of the
Plan are to attract and retain the best available
personnel for positions of substantial responsibility with
the Company; to provide additional incentive in the form
of options to purchase the Company's Common Stock, shares
of restricted Common Stock or performance shares based on
the value of Common Stock to employees of the Company or
subsidiary of the Company; and to promote the success of
the business. The Plan will continue to be administered by
the Compensation and Stock Option Committee. Although all
of the Company's employees are eligible to receive awards
under the Plan, as of March 20, 1998, approximately 289
current employees had been granted awards under the Plan.

The proposed Plan amendments were prepared primarily to
authorize granting Performance Shares (defined below)
under the Plan and to qualify those awards as
performance-based compensation under Section 162(m) of the
Internal Revenue Code. Section 162(m) provides that
compensation in excess of $1 million paid in any year to
the chief executive officer and the four other highest
paid executive officers will not be deductible by the
Company for federal income tax purposes unless certain
conditions are met. One condition is that the compensation
qualify as "performance-based compensation." In addition
to other requirements for qualification as
performance-based compensation, Shareholders must be
advised of and approve the material terms of the
performance goals under which such compensation is to be
paid.

Since the determination was made to amend the Plan as set
forth above, the Company also decided to amend the Plan to
address certain other Shareholder concerns. Namely, the
Plan amendments prohibit the repricing of any options
granted under the Plan and mandate that the exercise price
of any option granted under the Plan may not be less than
the fair market value of the Company's Common Stock on the
date of grant. Finally, the Plan amendments also increase
the number of shares of Common Stock that may be granted
to any participant in any year pursuant to each of stock
options, restricted stock or Performance Shares from
50,000 to 200,000.

Set forth below is a summary of the Plan amendments, which
is qualified in its entirety by reference to the full text
of the Plan, as amended, a copy of which may be obtained
upon written request to the Company's Secretary.

PERFORMANCE SHARES

The Plan currently provides the Compensation and Stock
Option Committee with discretion to grant options to
purchase Common Stock and shares of restricted Common
Stock. The Plan amendments also authorize granting

17
<PAGE>
performance share units which entitle the participant to
shares of Common Stock or cash in lieu thereof (the
"Performance Shares") upon the achievement of such
performance goals as may be established by the Committee
at the time of grant. Those performance goals may be based
on any one or combination of the following performance
criteria: (a) achievement of a specified percentage
increase or quantitative level in the Company's
Shareholder return as compared to the Standard & Poor's
Retail Store Composite or other comparator group, (b)
achievement of a specified percentage increase or
quantitative level in the trading price of the Company's
Common Stock, (c) achievement of a specified percentage
increase or quantitative level in the results of
operations, such as sales, earnings, cash flow, economic
profit or return on investment (including return on
equity, return on capital employed or return on assets) of
the Company or of a subsidiary or division or other
segment of the Company for which the participant has
responsibilities, (d) achievement of a specified
percentage increase or quantitative level in other
financial results, such as profit margins, expense
reduction or asset management goals of the Company or of a
subsidiary or division or other segment of the Company for
which the participant has responsibilities, or (e)
achievement of a specified percentage increase or
quantitative level in the internal or external market
share of a product or line of products. Only after the
performance goals have been attained may the Committee
authorize the payment of cash in lieu of Performance
Shares or the issuance of Performance Shares registered in
the name of the participant, or both.

If the participant's employment with the Company or any
subsidiary is terminated' before the end of the period of
time over which Performance Shares may be earned (a
"Performance Cycle") for any reason other than retirement,
disability, or death, the participant shall forfeit all
rights with respect to any Performance Shares that were
being earned during the Performance Cycle. The Committee
may establish guidelines providing that if a participant's
employment is terminated before the end of a Performance
Cycle by reason of disability, or death, the participant
shall be entitled to a prorated payment with respect to
any Performance Shares that were being earned during the
Performance Cycle. If the participant's employment is
terminated before the end of a Performance Cycle by reason
of retirement, the participant's rights with respect to
any Performance Shares being earned during the Performance
Cycle shall continue as if the participant's employment
had continued through the end of the Performance Cycle.

OPTION REPRICING PROHIBITION

The Plan is currently silent as to whether options may be
repriced by the Committee. The Plan amendments add a
prohibition against repricing options granted under the
Plan. In other words, if the Plan amendments are approved
by the Shareholders, the exercise price of outstanding
options granted under the Plan may not be changed by the
Committee.

18
<PAGE>
FAIR MARKET VALUE REQUIREMENT

The Plan currently allows the Committee to establish the
exercise price of any option granted under the Plan. If
the Plan amendments are approved by the Shareholders, the
exercise price of any option granted under the Plan must
be no less than the fair market value of the Common Stock
on the date of grant.

SHARE LIMIT

The Plan currently provides that no participant shall be
granted options in any year to purchase more than 50,000
shares of the Company's Common Stock and that no
participant shall be granted more than 50,000 shares of
restricted stock of the Company in any year. If the
Shareholders approve the Plan amendments, those numbers
would be increased to 200,000. The Plan amendments also
provide that no participant shall be granted Performance
Shares for more than 200,000 shares of Common Stock in any
year.

FEDERAL INCOME TAX CONSEQUENCES

The material federal income tax consequences to the
Company and employees of the grant and vesting of
Performance Shares under existing and applicable
provisions of the Code and regulations will generally be
as follows. When a participant receives payment with
respect to Performance Shares, the amount of cash and the
fair market value of the Common Stock received will be
ordinary income to the participant and will be allowed as
a deduction for federal income tax purposes to the
Company, assuming that the deduction is not disallowed by
Section 162(m) of the Code or otherwise limited under the
Code.

NEW PLAN BENEFITS

The Compensation Committee has full discretion to
determine the number and amount of options, shares of
restricted stock or Performance Shares to be granted to
employees under the Plan, subject to annual limitations on
the total number of shares of Common Stock that may by
granted to any employee. Therefore, the benefits and
amounts that will be received by each of the named
executive officers, the executive officers as a group and
all other employees under the Plan are not presently
determinable. Details on stock options granted during the
last three years to certain executive officers are
presented in the Summary Compensation Table.

The Board of Directors recommends a vote for approval of
the Plan amendments.

PROPOSAL 3:
RATIFICATION OF
APPOINTMENT OF
AUDITORS
The Board of Directors, acting upon the recommendation of
the Audit Committee, has appointed the independent public
accounting firm of Deloitte & Touche LLP to be the
Company's auditors for fiscal year 1998. As in the past,

19
<PAGE>
the Board has determined that it would be desirable to
request ratification of its appointment by the
Shareholders of the Company. If the Shareholders do not
ratify the appointment of Deloitte & Touche LLP, the
appointment of independent public accountants will be
reconsidered by the Board. A representative of Deloitte &
Touche LLP will be present at the Annual Meeting, will
have the opportunity to make a statement if he or she so
desires and will be available to respond to appropriate
questions.

The Board of Directors recommends ratification of Deloitte
& Touche LLP as auditors for the Company.

SOLICITATION OF
PROXIES
Solicitation of proxies will be made primarily by mail,
but proxies may also be solicited personally, by telephone
and by telegraph and by regular officers and employees of
the Company who will receive no additional compensation
for their services. Brokers or other persons holding
shares in their names or in the names of nominees will be
reimbursed their reasonable expenses for sending proxy
material to principals and obtaining their proxies. All
expenses of proxy solicitation will be paid by the
Company.

COMPLIANCE WITH
SECTION 16(a) OF
THE EXCHANGE ACT
OF 1934
Based solely on its review of copies of reports made
pursuant to Section 16(a) of the Securities Exchange Act
of 1934 and the related regulations, the Company believes
that during fiscal year 1997 all filing requirements
applicable to its directors, executive officers and 10
percent shareholders were satisfied except that one
report, covering one transaction, was filed late by
Charles A. Lynch, a current director of the Company, and
that one report for each of Gail A. Cottle, John A.
Goesling, Blake W. Nordstrom, Erik B. Nordstrom, J. Daniel
Nordstrom, James A. Nordstrom, Peter E. Nordstrom, William
E. Nordstrom and John J. Whitacre was filed late to report
special recognition awards to each of those individuals of
one share of the Company's Common Stock.

OTHER MATTERS
The Board of Directors of the Company knows of no other
matters that may come before the meeting. However, if any
other matters should properly come before the meeting or
any adjournment thereof, it is the intention of the
persons named in the Proxy to vote the Proxy in accordance
with their best judgment.

SHAREHOLDER
PROPOSALS FOR 1999
ANNUAL MEETING
Proposals for Shareholder action which eligible
Shareholders wish to have included in the Company's Proxy
Statement mailed to Shareholders in connection with the
Company's 1999 Annual Meeting must be received by the
Company at its principal executive offices on or before
December 1, 1998.

By Order of the Board of Directors,

20
<PAGE>
/s/ Karen E. Purpur
Karen E. Purpur
Secretary

Seattle, Washington
March 31, 1998

21
<PAGE>
[LOGO]

[RECYCLED LOGO]
Printed on Recycled Paper
<PAGE>

APPENDIX A

NORDSTROM, INC.
1997 STOCK OPTION PLAN
(As amended on February 17, 1998)

1. Purposes of the Plan. The purposes of this 1997 Nordstrom Stock
Option Plan (the "Plan") are to attract and retain the best available
personnel for positions of substantial responsibility with Nordstrom, Inc.
(the "Company"), to provide additional incentive in the form of options to
purchase the Company's shares of common stock, no par value per share (the
"Common Stock"), shares of restricted Common Stock or performance shares
based on the value of Common Stock (the "Benefits") to employees of the
Company or any parent or subsidiary of the Company which now exists or
hereafter is organized or acquired by or acquires the Company, and to promote
the success of the business.

2. Eligibility. Any employee of the Company or any parent or
subsidiary of the Company may receive Benefits under the Plan.

3. Administration. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company, or a subcommittee thereof
(the "Committee"). The Committee shall either (i) consist solely of two or
more directors of the Company who are "non-employee directors" as defined
under Section 16 under the Securities Exchange Act of 1934, as amended and
"outside directors" as defined under Section 162(m) of the Internal Revenue
Code of 1986, as amended, or (ii) cause any director who is not a
non-employee or outside director to abstain from any action by the Committee
related to granting Benefits to executive officers of the Company. The Board
of Directors may also appoint one or more separate committees of the Board of
Directors who may administer the Plan with respect to employees who are not
executive officers of the Company.

4. Effective Date and Termination of Plan. Subject to shareholder
approval, the effective date of the Plan is May 20, 1997. The Plan shall
terminate when all shares of stock subject to Benefits granted under the Plan
shall have been acquired or on May 19, 2007, whichever is earlier, or at such
earlier time as the Board of Directors may determine. Termination of the
Plan will not affect the rights and obligations arising under Benefits
granted under the Plan and then in effect.

5. Shares Subject to the Plan. The Common Stock subject to Benefits
authorized to be granted under the Plan shall consist of 5,000,000 shares of
Common Stock, no par value, or the number and kind of shares of Common Stock
or other securities which shall be substituted or adjusted for such shares as
provided in Section 8. All or any shares of Common Stock subject to Benefits
which for any reason terminate may again be made subject to Benefits under
the Plan.

6. Grant, Terms and Conditions of Options. The Committee may grant
incentive stock options as defined in Section 422 of the Internal Revenue
Code of 1986, as amended and non-qualified stock options at any time and from
time to time prior to the termination of the Plan to those employees of the
Company or any parent or subsidiary of the Company who, in the Committee's
judgment, are largely responsible through their judgment, interest, ability
and special efforts for the successful conduct

<PAGE>

of the Company's operations. However, no participant shall be granted
options in any year to purchase more than 200,000 shares of Common Stock as
adjusted as provided in Section 9.

No participant shall have any rights as a shareholder of the Company
with respect to any Common Stock underlying any option granted hereunder
until those shares have been issued. Each option shall be evidenced by a
written stock option agreement which will expressly identify the option as an
incentive stock option or as a non-qualified stock option. Furthermore, the
grant of an incentive option pursuant to the Plan shall in no way be
construed as an alternative to the right of an optionee to purchase stock
pursuant to any present or future grant of a non-qualified option under any
of the Company's current or future stock option plans. Options granted
pursuant to the Plan need not be identical but each option is subject to the
terms of the Plan and is subject to the following terms and conditions:

6.1 Price. The exercise price of each option granted under the Plan
shall be at least equal to the fair market value of the Common Stock on
the date of grant, as determined by the Committee. The exercise price may
be paid as determined by the Committee.

6.2 Duration and Exercise or Termination of Option. Each option
granted under the Plan shall be exercisable in such manner and at such
times as the Committee shall determine. Each option granted must expire
within a period of ten (10) years from the grant date.

6.3 Transferability of Options. Each option shall be transferable
only by will or the laws of descent and distribution except and unless the
option provides for additional rights to transfer.

6.4 Other Terms and Conditions. Options may also contain such other
provisions, which shall not be inconsistent with any of the foregoing
terms, as the Committee shall deem appropriate. No option, however, shall
be repriced, and nothing contained in the Plan shall confer upon any
participant any right to continue in the Company's employ or service nor
limit in any way the Company's right to terminate his or her employment or
service at any time.

7. Grant, Terms and Conditions of Restricted Common Stock. The
Committee may grant shares of Common Stock with such restrictions, terms and
conditions as may be determined in the sole discretion of the Committee;
provided, however, that if the only restriction attached to the grant is
vesting based on the lapse of time, the minimum period for full vesting of
the grant shall be three years. Grants of shares of restricted Common Stock
shall be made at such cost as the Committee shall determine and may be issued
for no monetary consideration, subject to applicable state law. Shares of
restricted Common Stock shall be issued and delivered at the time of the
grant or as otherwise determined by the Committee, but may be subject to
forfeiture until provided otherwise in the applicable restricted stock
agreement. Each certificate representing shares of restricted Common Stock
shall bear a legend referring to the risk of forfeiture of the shares and
stating that such shares are nontransferable until all restrictions have been
satisfied and the legend has been removed. At the discretion of the
Committee, the grantee may or may not be entitled to full voting and dividend
rights with respect to all shares of restricted stock from the date of grant.
No participant shall be granted

<PAGE>

more than 200,000 shares of restricted Common Stock in any year, as adjusted as
provided in Section 9.

8. Grant, Terms and Conditions of Performance Share Units. The
Committee may grant performance share units which shall entitle the
participant to shares of Common Stock or cash in lieu thereof (the
"Performance Shares") upon the achievement of such performance goals as may
be established by the Committee at the time of grant based on any one or
combination of the following performance criteria: (a) achievement of a
specified percentage increase or quantitative level in the Company's
shareholder return as compared to the S&P Retail Store Composite or other
comparator group, (b) achievement of a specified percentage increase or
quantitative level in the trading price of the Company's Common Stock, (c)
achievement of a specified percentage increase or quantitative level in the
results of operations, such as sales, earnings, cash flow, economic profit or
return on investment (including return on equity, return on capital employed
or return on assets) of the Company or of a subsidiary or division or other
segment of the Company for which the participant has responsibilities, (d)
achievement of a specified percentage increase or quantitative level in the
other financial results, such as profit margins, expense reduction or asset
management goals of the Company or of a subsidiary or division or other
segment of the Company for which the participant has responsibilities, or (e)
achievement of a specified percentage increase or quantitative level in the
internal or external market share of a product or line of products. At such
time as it is certified by the Committee that the performance goals
established by the Committee have been attained or otherwise satisfied, the
Committee shall authorize the payment of cash in lieu of Performance Shares
or the issuance of Performance Shares registered in the name of the
participant, or both.

If the participant's employment with the Company or any parent or
subsidiary of the Company, as the case may be, is terminated before the end
of the period of time, designated by the Committee, over which Performance
Shares may be earned (a "Performance Cycle") for any reason other than
retirement, disability, or death, the participant shall forfeit all rights
with respect to any Performance Shares that were being earned during the
Performance Cycle. The Committee, in its sole discretion, may establish
guidelines providing that if a participant's employment is terminated before
the end of a Performance Cycle by reason of disability, or death, the
participant shall be entitled to a prorated payment with respect to any
Performance Shares that were being earned during the Performance Cycle. If
the participant's employment is terminated before the end of a Performance
Cycle by reason of retirement, the participant's rights with respect to any
Performance Shares being earned during the Performance Cycle shall continue
as if the participant's employment had continued through the end of the
Performance Cycle. No participant shall be granted Performance Shares for
more than 200,000 shares of Common Stock in any year, as adjusted as provided
in Section 9.

9. Adjustment Upon Changes in Capitalization/Change in Control. The
number and kind of shares of Common Stock subject to Benefits under the Plan
shall be appropriately adjusted along with a corresponding adjustment in the
option exercise price, if applicable, to reflect any stock dividend, stock
split, split-up or any combination or exchange of shares, however
accomplished. An appropriate adjustment shall also be made with respect to
the aggregate number and kind of shares available for grant under the Plan.
If the Company or the shareholders of the Company enter into an agreement to
dispose of all or substantially all of the assets or shares by means of a
sale, a reorganization, a

<PAGE>

liquidation, or otherwise, all options shall become immediately exercisable
with respect to the full number of shares subject to those options, all
restrictions on any shares of restricted stock granted under the Plan shall
be immediately removed and all Performance Shares shall be earned as if the
applicable performance goals had been attained or otherwise satisfied.

10. Withholding. To the extent required by applicable federal, state,
local or foreign law, a participant shall make arrangements satisfactory to
the Company for the satisfaction of any withholding tax obligations that
arise pursuant to Benefits granted under the Plan. The Company shall not be
required to issue shares until such obligations are satisfied. The Committee
may (but shall not be required to) permit these obligations to be satisfied
by having the Company withhold a portion of the shares of stock that
otherwise would be issued to the participant or by delivering shares
previously owned by the participant.

11. Amendment and Termination. The Board of Directors may amend or
terminate the Plan as desired, without further action by the Company's
shareholders, except to the extent required by applicable law.

4
<PAGE>

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

NORDSTROM, INC.
1501 Fifth Avenue, Seattle, WA 98101-1603

By signing this Proxy, the Shareholder appoints D. Wayne Gittinger and
Karen E. Purpur, or either of them, with full power of substitution, proxies
to vote all shares of stock of the undersigned entitled to vote at the Annual
Meeting of Shareholders of Nordstrom, Inc. to be held May 19, 1998 in San
Francisco, California, at 11:00 a.m., Pacific Daylight Time, and any
adjournment thereof, with all power the Shareholder would possess if
personally present.

This Proxy will be voted in accordance with the instructions given.
Unless revoked or otherwise instructed, the shares represented by this Proxy
will be voted for proposals 1, 2 and 3 and will be voted in accordance with
the discretion of the proxies upon all other matters which may come before
the meeting or any adjournment thereof.

Please Mark, Date, Sign and Return this proxy card promptly using the enclosed
postage-paid envelope.

FOLD AND DETACH HERE

Direct Deposit of Dividend

Nordstrom is pleased to offer its shareholders of record the ability to have
quarterly dividends electronically deposited. This service is provided at no
cost to you and enables you to have your dividends deposited
on the payable date in an account at the financial institution of your choice.

The advantages of having your dividend payment electronically deposited
include: the availability of funds on payment date, the elimination of a trip
to the bank, and no possibility of a stolen or lost check.

Should you wish to take advantage of this service, please contact ChaseMellon
Shareholder Services at 1-800-522-6645 or Nordstrom Investor Relations at
1-206-233-6301.

NORDSTROM

<PAGE>

Please mark /X/
your votes as
indicated in
this example

<TABLE>

PROPOSAL 1--ELECTION OF DIRECTORS FOR all nominees WITHHOLD
(except as indicated to AUTHORITY to vote
the contrary below) for all nominees

D. W. Gittinger, E. Hernandez, Jr., A. D. McLaughlin, / / / /
J. A. McMillan, B. A. Nordstrom, J. N. Nordstrom,
A. E. Osborne, Jr., W. D. Ruckelshaus, E. C. Vaughan,
J. J. Whitacre, B. G. Willison

To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.

</TABLE>

<TABLE>

FOR AGAINST ABSTAIN

PROPOSAL 2--APPROVAL OF AMENDMENTS / / / / / /
TO THE 1997 NORDSTROM STOCK
OPTION PLAN

FOR AGAINST ABSTAIN

PROPOSAL 3--RATIFICATION OF / / / / / /
APPOINTMENT OF AUDITORS

IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED
TO VOTE UPON SUCH OTHER MATTERS AS MAY
_________________________________ PROPERLY COME BEFORE THE MEETING. The Board of
Directors at present knows of no other matters to be brought before
the meeting.

Signature(s)____________________________________________________________ Dated_____________________, 1998
PLEASE SIGN AS NAME APPEARS ON THIS PROXY. Joint signers should each sign.
Trustees, Guardians, Personal and other Representatives, please indicate full
title.

</TABLE>

FOLD AND DETACH HERE

BE ON THE LOOKOUT FOR A NEW NORDSTROM NEAR YOU

Opening Spring of 1998
Atlanta, Georgia
Perimeter Mall

Overland Park, Kansas
Oak Park Mall

Hillsboro, Oregon
Tanasbourne Towne Center (Rack)

Bloomington, Minnesota
Mall of America (Rack)

Opening Fall of 1998
San Jose, California
Westgate Mall (Rack)

Seattle, Washington
Downtown Seattle
(replacement of existing store)

San Diego, California
Fashion Valley (expansion)

Scottsdale, Arizona
Scottsdale Fashion Square

Littleton, Colorado
Park Meadows (Rack)

Opening Spring of 1999*
Norfolk, Virginia
MacArthur Center

Opening Fall of 1999*
Providence, Rhode Island
Providence Place

Spokane, Washington
River Park Square
(replacement of existing store)

Mission Viejo, California
Mission Viejo Mall

Los Angeles, California
Howard Hughes Entertainment Center (Rack)

Columbia, Maryland
Columbia Mall

Opening Spring of 2000*
Atlanta, Georgia
Mall of Georgia

Broomfield, Colorado
FlatIron Crossing

Boca Raton, Florida
Town Center at Boca Raton

Opening Fall of 2000*
Hurst, Texas
North East Mall

Chicago, Illinois
North Michigan Avenue

San Jose, California
Valley Fair Shopping Center
(replacement of existing store)

Opening 2001*
Denver, Colorado
Cherry Creek

Coral Gables, Florida
Village at Merrick Park

St. Louis, Missouri
West County Center

Dallas, Texas
North Park Center

Tampa, Florida
International Plaza
Shopping Center

* tentative

<PAGE>

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

NORDSTROM, INC.
1501 Fifth Avenue, Seattle, WA 98101-1603

By signing this Proxy, the Shareholder appoints D. Wayne Gittinger and Karen E.
Purpur, or either of them, with full power of substitution, proxies to vote all
shares of stock of the undersigned entitled to vote at the Annual Meeting of
Shareholders of Nordstrom, Inc. to be held May 19, 1998 in San Francisco,
California, at 11:00 a.m., Pacific Daylight Time, and any adjournment thereof,
with all power the Shareholder would possess if personally present.

This Proxy will be voted in accordance with the instructions given. Unless
revoked or otherwise instructed, the shares represented by this Proxy will be
voted for proposals 1, 2 and 3 and will be voted in accordance with the
discretion of the proxies upon all other matters which may come before the
meeting or any adjournment thereof.

- -------------------------------------------------------------------------------
Please Mark, Date, Sign and Return this proxy card promptly using the enclosed
postage-paid envelope.
- -------------------------------------------------------------------------------

TRIANGLE FOLD AND DETACH HERE TRIANGLE

Dear Plan Participant:

Since you have a portion of your Nordstrom 401(k) account in the Nordstrom
Stock Fund, you have the right to vote the shares of Nordstrom stock held for
your account. This same proxy and voting information is furnished to all
Nordstrom shareholders.

The Trustee of the Nordstrom Stock Fund (Wells Fargo Bank) will receive your
signed proxy and instructions, as well as those made by other participants,
and cast the resulting vote on behalf of the Fund. Your vote will be kept in
strict confidence by the Trustee.

YOUR VOTE IS VERY IMPORTANT. Please return only this proxy card in the
enclosed envelope. Do not combine it with any other proxy cards you may
receive as they may be tabulated by a different system. You must execute and
return this proxy card if you wish to vote these shares.

<PAGE>

Please mark
your votes as /X/
indicated in
this example

FOR all nominees
PROPOSAL 1 (except as indicated to WITHHOLD AUTHORITY
ELECTION OF DIRECTORS the contrary below) to vote for all nominees

D. W. Gittinger, / / / /
E. Hernandez, Jr.,
A. D. McLaughlin, J. A. McMillan,
B. A. Nordstrom, J. N. Nordstrom,
A. E. Osborne, Jr., W. D. Ruckelshaus,
E. C. Vaughan, J. J. Whitacre,
B. G. Willison

To withhold authority to vote for any individual nominee, write that nominees
name on the space provided below.

FOR AGAINST ABSTAIN
PROPOSAL 2--APPROVAL OF / / / / / /
AMENDMENTS TO
THE 1997 NORDSTROM
STOCK OPTION PLAN

FOR AGAINST ABSTAIN
PROPOSAL 3--ratification of / / / / / /
appointment of auditors

IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING. The Board of Directors at present knows
of no other matters to be brought before the meeting.

Signature(s) ______________________________________________ Dated _______, 1998

Please sign as name appears on this proxy. Joint signers should each sign.
Trustees, Guardians, Personal and other Representatives, please indicate full
title.

TRIANGLE FOLD AND DETACH HERE TRIANGLE

BE ON THE LOOKOUT FOR A NEW NORDSTROM NEAR YOU

OPENING SPRING OF 1998
Atlanta, Georgia
Perimeter Mall

Overland Park, Kansas
Oak Park Mall

Hillsboro, Oregon
Tanasbourne Towne Center (Rack)

Bloomington, Minnesota
Mall of America (Rack)

OPENING FALL OF 1998
San Jose, California
Westgate Mall (Rack)

Seattle, Washington
Downtown Seattle
(replacement of existing store)

San Diego, California
Fashion Valley (expansion)

Scottsdale, Arizona
Scottsdale Fashion Square

Littleton, Colorado
Park Meadows (Rack)

OPENING SPRING OF 1999*
Norfolk, Virginia
MacArthur Center

OPENING FALL OF 1999*
Providence, Rhode Island
Providence Place

Spokane, Washington
River Park Square
(replacement of existing store)

Mission Viejo, California
Mission Viejo Mall

Los Angeles, California
Howard Hughes Entertainment Center
(Rack)

Columbia, Maryland
Columbia Mall

OPENING SPRING OF 2000*
Atlanta, Georgia
Mall of Georgia

Broomfield, Colorado
FlatIron Crossing

Boca Raton, Florida
Town Center at Boca Raton

OPENING FALL OF 2000*
Hurst, Texas
North East Mall

Chicago, Illinois
North Michigan Avenue

San Jose, California
Valley Fair Shopping Center
(replacement of existing store)

OPENING 2001*
Denver, Colorado
Cherry Creek

Coral Gables, Florida
Village at Merrick Park

St. Louis, Missouri
West County Center

Dallas, Texas
North Park Center

Tampa, Florida
International Plaza
Shopping Center

* tentative