<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
KOHL'S CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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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Notes:
<PAGE>
LOGO
N56 W17000 RIDGEWOOD DRIVE
MENOMONEE FALLS, WISCONSIN 53051
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 27, 1998
To Our Shareholders:
The Annual Meeting of Shareholders of Kohl's Corporation, a Wisconsin
corporation (the "Company"), will be held at Davians Banquet & Conference
Center, 16300 West Silver Spring Drive, Menomonee Falls, Wisconsin 53051, on
Wednesday, May 27, 1998, at 10:00 a.m., for the following purposes:
1. To elect three directors to serve for a three-year term.
2. To ratify the appointment of Ernst & Young LLP as independent auditors.
3. To consider and act upon a proposal by a shareholder.
4. To act upon any other business that may properly come before the meeting or
any adjournment thereof.
Only shareholders of record at the close of business on April 10, 1998, are
entitled to notice of and to vote at the meeting.
You are cordially invited to attend the meeting. Your vote is important no
matter how large or small your holdings may be. PLEASE COMPLETE, SIGN, DATE
AND RETURN YOUR PROXY IN THE REPLY ENVELOPE PROVIDED AS SOON AS POSSIBLE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. IF YOU ATTEND THE MEETING AND
WISH TO VOTE IN PERSON, YOUR PROXY MAY BE REVOKED.
By Order of the Board of Directors
John F. Herma
Secretary
Menomonee Falls, Wisconsin
April 20, 1998
<PAGE>
LOGO
N56 W17000 RIDGEWOOD DRIVE
MENOMONEE FALLS, WISCONSIN 53051
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 27, 1998
----------------
The Board of Directors of Kohl's Corporation (the "Company") solicits the
enclosed proxy for the Annual Meeting of Shareholders to be held on May 27,
1998, or any adjournment(s) thereof, at the time and place and for the
purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. Only holders of record of the 78,968,401 shares (pre-split) of
Common Stock outstanding at the close of business on April 10, 1998, will be
entitled to notice of and to vote at the meeting. Each such shareholder is
entitled to one (1) vote for each share of Common Stock so held and may vote
such shares either in person or by proxy.
The shares represented by each valid proxy received in time will be voted at
the annual meeting in accordance with the directions and specifications
contained therein. A proxy may be revoked at any time before it is exercised
by filing with the Secretary of the Company a proxy dated at a later time or a
written revocation dated after the date of the proxy. A proxy will be revoked
if the shareholder who executed it is present at the meeting and elects to
vote in person.
References herein to a "fiscal year" are to the calendar year in which the
fiscal year begins. For example, the fiscal year ended January 31, 1998 is
referred to herein as "fiscal 1997."
This proxy statement, the accompanying proxy and the Company's Annual Report
for fiscal 1997 are being furnished to shareholders beginning on or about
April 20, 1998.
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
Proxies solicited by the Board of Directors will, unless otherwise directed,
be voted for the election of three nominees to serve as Class III directors
for a three-year term expiring in 2001, and until their successors are
elected. The three Class III nominees are John F. Herma, R. Lawrence
Montgomery and Frank V. Sica.
The Company's Articles of Incorporation provide that the Company's Board of
Directors shall consist of not less than five nor more than fifteen persons.
Directors are divided into three classes (Class I, Class II and Class III),
and each class is elected for a term of three years. The Board of Directors
currently consists of nine members: three of whom are Class I directors whose
terms expire at the 1999 Annual Meeting; three of whom are Class II directors
whose terms expire at the 2000 Annual Meeting; and three of whom are Class III
directors whose terms expire at this Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE ELECTION OF THE NOMINEES TO SERVE AS DIRECTORS.
1
<PAGE>
Following is information regarding the nominees and directors, as furnished
by them. Unless otherwise indicated, the nominees and directors have had the
indicated principal occupation for at least the past five years.
<TABLE>
<CAPTION>
FIRST
YEAR AS
DIRECTOR
--------
<S> <C>
NOMINEES FOR ELECTION AS CLASS III DIRECTORS
(Terms to expire in 2001)
John F. Herma, 50................................................... 1988
Chief Operating Officer and Secretary of the Company.
R. Lawrence Montgomery, 49.......................................... 1994
Vice Chairman of the Company.
Frank V. Sica, 47(2)................................................ 1988
Mr. Sica is a director of CSG Systems International, Inc. and Sita
Telecommunications Holdings, N.V. Formerly Managing Director in
the Merchant Banking Division of Morgan Stanley & Co. Incorporated
from 1988 to 1998.
CLASS II DIRECTORS
(Terms to expire in 2000)
Jay H. Baker, 63.................................................... 1988
President of the Company.
Herbert Simon, 63................................................... 1988
Co-Chairman of the Board of Directors of Simon DeBartolo Group,
Inc., a publicly held real estate investment trust engaged in the
development and management of shopping centers and Co-Chairman of
Melvin Simon & Associates, Inc., a real estate developer and
manager.
Peter M. Sommerhauser, 55........................................... 1988
Shareholder of the law firm of Godfrey & Kahn, S.C., Milwaukee,
Wisconsin.
CLASS I DIRECTORS
(Terms to expire in 1999)
James D. Ericson, 62(1)............................................. 1997
President and Chief Executive Officer of The Northwestern Mutual
Life Insurance Company. Mr. Ericson is a Trustee of The
Northwestern Mutual Life Insurance Company and ex-officio member
of all standing committees of the Board of Trustees (except Audit
Committee). Mr. Ericson is a director of MGIC Investment
Corporation, Green Bay Packaging and Consolidated Papers, Inc.
William S. Kellogg, 54.............................................. 1988
Chairman and Chief Executive Officer of the Company.
R. Elton White, 55 (1) (2).......................................... 1994
Formerly President (1991-1994) and an Executive Vice President
(1987-1991) of NCR Corporation. Mr. White is a director of
Flowserve Corporation and Keithley Instruments, Inc.
</TABLE>
- --------
(1) Member of the Compensation and Stock Option Committee.
(2) Member of the Audit Committee.
The Board of Directors has no reason to believe that a nominee is not
available or will not serve if elected. If for any reason a nominee becomes
unavailable for election, the Board of Directors may reduce the number of
directors or may designate a substitute nominee, in which event the shares
represented by the proxies returned to the Company will be voted for such
substitute nominee, unless an instruction to the contrary is indicated on the
proxy.
2
<PAGE>
The Company's Board of Directors held four formal meetings during fiscal
1997. In addition, management confers frequently with its directors on an
informal basis to discuss Company affairs. During fiscal 1997 each director
attended at least 75% of the full board meetings and meetings of committees on
which such director served, except Mr. Simon.
DIRECTOR COMMITTEES AND COMPENSATION
The Company's Board of Directors has two standing committees: a Compensation
and Stock Option Committee and an Audit Committee.
The duties of the Compensation and Stock Option Committee are to provide a
general review of the Company's compensation and benefit plans to ensure that
they meet corporate objectives. The Compensation and Stock Option Committee
has the authority to administer the Company's stock option plans and to grant
options thereunder. In addition, the Compensation and Stock Option Committee
reviews the Chairman's, President's, Chief Operating Officer's and Vice
Chairman's recommendations on (i) compensation of all corporate officers, (ii)
granting of awards under the Company's other compensation and benefit plans
and (iii) adopting and changing major compensation policies and practices, and
reports its recommendations to the whole Board of Directors for approval and
to authorize action. During fiscal 1997, the Compensation and Stock Option
Committee accomplished its business without a formal meeting.
The duties of the Audit Committee are to recommend to the whole Board of
Directors the selection of independent auditors to audit annually the books
and records of the Company, to review the activities and the reports of the
independent auditors and to report the results of such review to the whole
Board of Directors. The Audit Committee met two times during fiscal 1997.
Directors are reimbursed for travel and other expenses related to attendance
at Board and committee meetings. During fiscal 1997, directors who were not
officers or employees of the Company or any of its subsidiaries were each
awarded options to purchase 8,000 shares of Common Stock pursuant to the
Company's 1997 Stock Option Plan for Outside Directors. Directors are not
otherwise compensated for their services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, Messrs. Ericson and White are currently members of the
Compensation and Stock Option Committee of the Board of Directors. During
parts of fiscal 1997, Mr. Sica served on the Committee. Mr. Sica was a
Managing Director in the Merchant Banking Division of Morgan Stanley & Co.
Incorporated ("Morgan Stanley") from 1988 to 1998. Morgan Stanley has
performed investment banking and other services for the Company in the past
and may do so in the future.
3
<PAGE>
BENEFICIAL OWNERSHIP OF SHARES
The following information is furnished as of March 12, 1998 (unless
otherwise noted) to indicate beneficial ownership of shares of the Company's
Common Stock by each director, each executive officer listed in the Summary
Compensation Table, each person who is known to the Company to own
beneficially more than 5% of the Company's Common Stock, and all executive
officers and directors of the Company, as a group. Unless otherwise indicated,
beneficial ownership is direct and the person indicated has sole voting and
investment power. The number of shares indicated are adjusted to reflect the
two-for-one stock split effected in the form of a dividend to be paid on April
27, 1998, to shareholders of record on April 10, 1998 (the "stock split").
Indicated options are all exercisable within 60 days of March 12, 1998.
<TABLE>
<CAPTION>
AMOUNT PERCENT
BENEFICIALLY OF
NAME OF BENEFICIAL OWNER OWNED CLASS
------------------------ ------------ -------
<S> <C> <C>
William S. Kellogg............................... 11,765,746(1) 7.4%
Jay H. Baker..................................... 5,629,196(2) 3.6
John F. Herma.................................... 7,188,862(3) 4.5
R. Lawrence Montgomery........................... 764,860(4) *
Kevin B. Mansell................................. 607,610(5) *
James D. Ericson................................. 2,000 *
Frank V. Sica.................................... 4,000 *
Herbert Simon.................................... -0- --
Peter M. Sommerhauser............................ 398,224(6) *
R. Elton White................................... 10,000 *
All directors and executive officers
as a group (16 persons)......................... 27,497,448(7) 17.1
The Equitable Companies Incorporated............. 14,970,412(8)
787 Seventh Avenue 9.5
New York, New York 10019
Putnam Investments, Inc.......................... 10,120,142(9) 6.4
One Post Office Square
Boston, Massachusetts 10036
Provident Investment Counsel, Inc................ 9,899,370(10) 6.3
300 North Lake Avenue
Pasadena, California 91101
The Prudential Insurance Company of America...... 8,766,252(11) 5.6
Prudential Plaza
Newark, New Jersey 07102
</TABLE>
- --------
* Less than 1%.
(1) Includes 10,034,346 shares held in trust for the benefit of Mr. Kellogg's
family but as to which Mr. Sommerhauser has sole voting and investment
power and 52,860 shares held by a charitable foundation for which Mr.
Kellogg serves as a director and president. Excludes 1,268,892 shares held
in trust for the benefit of Mr. Baker's family and as to which Mr. Kellogg
and Mr. Sommerhauser have shared voting and investment power. Includes
775,000 shares represented by stock options.
(2) Includes 1,268,892 shares held in trust for the benefit of Mr. Baker's
family but as to which Mr. Kellogg and Mr. Sommerhauser have shared voting
and investment power and 134,660 shares held by a charitable foundation
for which Mr. Baker serves as a director and president. Also includes
387,500 shares represented by stock options.
(3) Includes 5,777,642 shares held in trust for the benefit of Mr. Herma's
family but as to which Mr. Sommerhauser has sole voting and investment
power and 23,800 shares held by a charitable foundation for which Mr.
Herma serves as a director and president. Also includes 387,500 shares
represented by stock options.
(4) Includes 125,948 shares held in trust for the benefit of Mr. Montgomery's
family but as to which Mr. Sommerhauser has sole voting and investment
power. Also includes 428,328 shares represented by stock options.
4
<PAGE>
(5) Includes 138,000 shares held in trust for the benefit of Mr. Mansell's
family but as to which Mr. Sommerhauser has sole voting and investment
power. Also includes 265,078 shares represented by stock options.
(6) Excludes 17,400,828 shares held in trust for the benefit of the families
of executive officers, as noted in the footnotes above, or held in trust
for the benefit of the family of a retired executive officer of the
Company, as to which Mr. Sommerhauser has sole or shared voting and
investment power. Includes 81,042 shares held in trusts for the benefit of
Mr. Sommerhauser's family as to which Mr. Sommerhauser has no voting or
investment power. Excludes 211,320 shares held by charitable foundations,
as noted in the footnotes above, for which Mr. Sommerhauser acts as a
director and may be deemed to have shared voting and investment power.
Includes 6,000 shares held by a charitable foundation for which Mr.
Sommerhauser acts as president and a director.
(7) Includes 3,211,360 shares represented by stock options.
(8) Based upon information as of December 31, 1997 set forth an Amendment No.
1 to Schedule 13G. According to their joint filing, The Equitable
Companies Incorporated; four French mutual insurance companies, AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, Alpha
Assurances Vie Mutuelle, and AXA Courtage Assurance Mutuelle (collectively
the "Mutuelles AXA" as a group); AXA-UAP and their subsidiaries each has
sole voting power with respect to 9,265,006 shares, shared voting power
with respect to 1,264,800 shares, sole dispositive power with respect to
14,970,412 shares and shared dispositive power with respect to no shares.
(9) Based on information as of December 31, 1997 as set forth in Schedule 13G.
According to its filing, Putnam Investments, Inc. ("Putnam") has shared
voting power with respect to 339,106 shares, shared dispositive power with
respect to 10,120,142 shares and sole voting or dispositive power with
respect to no shares. Putnam is a wholly-owned subsidiary of Marsh &
McLennan Companies, Inc., 1166 Avenue of the Americas, New York, New York
10036.
(10) Based on information as of December 31, 1997 as set forth in Amendment
No. 1 to Schedule 13G. According to its filing, Provident Investment
Counsel, Inc. has sole voting power with respect to 8,216,620 shares,
shared voting power with respect to no shares, sole dispositive power
with respect to 9,899,370 shares and shared dispositive power with
respect to no shares.
(11) Based upon information as of December 31, 1997 set forth in Amendment No.
5 to Schedule 13G. According to its filing, The Prudential Insurance
Company of America ("Prudential") has sole voting and dispositive power
with respect to 720,800 shares, shared voting power with respect to
7,332,052 shares and shared dispositive power with respect to 8,045,452
shares. Jennison Associates Capital Corp., 466 Lexington Avenue, New
York, New York, 10017, a subsidiary of Prudential, has filed its own
Schedule 13G indicating beneficial ownership of 8,580,400 shares.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon its review of Form 3, 4 and 5 and amendments thereto
furnished to the Company pursuant to Section 16 of the Securities Exchange Act
of 1934, as amended, except as noted below, all of such forms were filed on a
timely basis by reporting persons. Messrs. Sica and Simon filed one late Form
4 with respect to one stock option grant in fiscal 1997. Mr. Baker filed two
late Form 4s, the first with respect to a gift of Common Stock and the second
with respect to a sale of shares of Common Stock in fiscal 1997.
5
<PAGE>
EXECUTIVE COMPENSATION
The table below summarizes information concerning compensation for the last
three fiscal years of those persons who were at January 31, 1998 (i) the chief
executive officer and (ii) the other four most highly compensated executive
officers of the Company. The number of shares underlying stock options
indicated in this table and those that follow are adjusted to reflect the
stock split.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS(1)
----------------------------------- ------------
SHARES
UNDERLYING
NAME AND PRINCIPAL FISCAL OTHER ANNUAL STOCK ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(2) OPTIONS(#) COMPENSATION(3)
- ------------------ ------ ---------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
William S. Kellogg...... 1997 $1,024,831 $353,468 $ 0 100,000 $7,824
Chairman of the Board
and 1996 948,916 327,284 0 200,000 6,245
Chief Executive Officer 1995 861,622 91,830 0 200,000 5,604
Jay H. Baker............ 1997 873,050 301,118 0 50,000 7,808
President 1996 808,380 278,813 0 100,000 6,155
1995 734,014 78,230 0 100,000 5,595
John F. Herma........... 1997 539,034 185,915 0 50,000 7,771
Chief Operating Officer 1996 499,106 172,143 0 100,000 5,855
1995 453,192 48,300 0 100,000 5,226
R. Lawrence Montgomery.. 1997 460,024 151,808 48,293 120,000 7,528
Vice Chairman 1996 422,049 132,008 50,383 370,000 5,046
1995 341,250 35,000 36,294 80,000 4,440
Kevin B. Mansell........ 1997 335,000 115,500 48,597 70,000 6,578
Executive Vice
President 1996 272,500 92,400 50,316 130,000 3,244
General Merchandise 1995 230,833 23,500 36,245 48,000 1,865
Manager
</TABLE>
- --------
(1) None of the named executive officers held restricted stock at the end of
fiscal 1997.
(2) Fiscal 1997 amounts consist of interest expense and related tax
reimbursement payments for Mr. Montgomery and Mr. Mansell made under a
certain agreement described below. See "Executive Compensation--Other
Agreements," below. Perquisites and other personal benefits (valued on the
basis of incremental cost to the Company) did not exceed the lesser of
$50,000 or 10% of the annual salary and bonus for any of the named
executive officers.
(3) Includes matching contributions by the Company for fiscal 1997 under the
Company's savings plan in the following amounts: Mr. Kellogg ($3,274), Mr.
Baker ($3,258), Mr. Herma ($3,221), Mr. Montgomery ($3,247) and Mr.
Mansell ($3,261). Also includes a contribution of $2,080 by the Company
for fiscal 1997 to the Kohl's retirement plan account under the Company's
savings plan for each executive listed. Also includes the following
amounts paid by the Company during fiscal 1997 for term life, long term
disability and accidental death and dismemberment insurance under the
Company's life insurance plan: Mr. Kellogg ($2,470), Mr. Baker ($2,470),
Mr. Herma ($2,470), Mr. Montgomery ($2,201) and Mr. Mansell ($1,237).
OPTION GRANTS IN LAST FISCAL YEAR
The Company has adopted a 1992 Long-Term Compensation Plan (the "1992
Plan"), a 1994 Long-Term Compensation Plan (the "1994 Plan") and a 1997 Stock
Option Plan for Outside Directors (the "1997 Plan"). The 1992 Plan authorizes
awards through May 14, 2002 for up to 11,400,000 shares of Common Stock, after
6
<PAGE>
adjustment to reflect the stock split, of which 235,548 shares were available
for grant as of the end of fiscal 1997. The 1994 Plan authorizes awards
through May 24, 2004 for up to 12,000,000 shares of Common Stock, after
adjustment for the stock split, 9,089,050 shares of which were available for
grant as of the end of fiscal 1997. The 1997 Plan authorizes awards for up to
200,000 shares of Common Stock, after adjustment to reflect the stock split,
of which 160,000 shares were available for grant as of the end of fiscal 1997.
Awards under the 1992 Plan and the 1994 Plan may be in the form of stock
options; stock appreciation rights; Common Stock, including restricted stock;
Common Stock units; performance units; and performance shares. Awards under
the 1997 Plan may be in the form of stock options only. During fiscal 1997,
only stock options were granted under the 1992 Plan, 1994 Plan and 1997 Plan.
The table below provides information regarding option grants during fiscal
1997 adjusted to reflect the stock split to the persons named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF ANNUAL RATE OF STOCK
SHARES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM(S)(4)
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED(1)(2) FISCAL YEAR ($/SHARE)(3) DATE 5% 10%
- ---- ------------- --------------- ------------ ---------- -- -----------
<S> <C> <C> <C> <C> <C> <C>
William S. Kellogg...... 100,000 4.5% $34.000 01/13/13 $3,668,356 $10,802,644
Jay H. Baker............ 50,000 2.2 34.000 01/13/13 1,834,178 5,401,322
John F. Herma........... 50,000 2.2 34.000 01/13/13 1,834,178 5,401,322
R. Lawrence Montgomery.. 120,000 5.4 34.000 01/13/13 4,402,027 12,963,173
Kevin B. Mansell........ 70,000 3.1 34.000 01/13/13 2,567,849 7,561,851
</TABLE>
- --------
(1) All options granted in the fiscal year were awarded with an exercise price
equal to the fair market value of the Common Stock on the date of grant
and are exercisable in four equal annual installments commencing one year
from date of grant, with full vesting occurring on the fourth anniversary
of the date of grant. Options were granted January 13, 1998.
(2) The Compensation and Stock Option Committee retains discretion to, among
other things, accelerate the exercise of an option, modify the terms of
outstanding options (including decreasing the exercise price), and permit
the exercise price and tax withholding obligations related to exercise to
be paid by delivery of already owned shares or by offset of the underlying
shares.
(3) The Exercise Price is adjusted to reflect the stock split.
(4) These amounts do not represent the present value of the options. Amounts
shown represent what would be received upon exercise (fifteen years after
the date of grant) assuming certain rates of stock price appreciation
during the entire period. Actual gains, if any, on stock option exercises
are dependent on future performance of the Common Stock and overall stock
conditions. In addition, actual gains are dependent upon whether, and the
extent to which, the options actually vest.
AGGREGATE OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
The table below provides information regarding exercises of stock options
during fiscal 1997 (adjusted for the stock split) and the value of stock
options held at January 31, 1998 by the persons named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS AT
ACQUIRED END FISCAL YEAR END
ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William S. Kellogg...... 0 0 750,000 350,000 $18,786,713 $5,122,638
Jay H. Baker............ 0 0 375,000 175,000 9,393,356 2,561,319
John F. Herma........... 0 0 375,000 175,000 9,393,356 2,561,319
R. Lawrence Montgomery.. 35,072 $679,467 353,328 772,500 9,067,525 15,004,779
Kevin B. Mansell........ 29,322 568,307 238,078 191,500 6,157,438 2,370,489
</TABLE>
7
<PAGE>
EMPLOYMENT AGREEMENTS
The Company has Employment Agreements with Messrs. Kellogg, Baker, Herma and
Montgomery. As of the end of fiscal 1997, Mr. Kellogg's Employment Agreement
provided for an annual base salary of $1,071,114, Mr. Baker's Employment
Agreement provided for an annual base salary of $912,479, Mr. Herma's
Employment Agreement provided for an annual base salary of $563,378, and Mr.
Montgomery's Employment Agreement provided for an annual base salary of
$460,024, in each case subject to increase by the Company's Board of
Directors. Each of Messrs. Kellogg, Baker, Herma and Montgomery is also
entitled to participate in such bonus plans as the Company may establish from
time to time. Each of the Employment Agreements has a three-year term, and the
term is extended on a daily basis until either party to such contract gives
notice that the term shall no longer be so extended. Under the Employment
Agreements, each executive, his spouse and dependents are entitled to post-
retirement health insurance benefits and a supplemental executive medical plan
with coverage similar to that received by the executive at the time of his
retirement. Under each of the Employment Agreements, the employment of the
executive in question may be terminated upon death, as a result of disability,
by the Company for "Cause" (as defined in the Employment Agreements), by the
executive for "Good Reason" (as defined in the Employment Agreements but which
does not include a change-of-control of Kohl's), or by the executive upon
voluntary termination of employment. If the employment of any of the
executives is terminated upon his death, such executive's estate will receive
the executive's then annual base salary for a period of six months. If the
employment of any of the executives is terminated as a result of disability,
such executive will continue to receive his then base salary (less benefits
paid under such disability insurance as the Company may provide from time to
time) for a period of six months. Except for the health insurance benefits
noted above, the Employment Agreements do not provide for any post-termination
payment other than amounts earned through the date of termination if an
executive's employment is terminated by the Company for Cause or as a result
of the voluntary resignation of the executive. If the employment of an
executive is terminated by the executive for Good Reason or by the Company in
violation of the Employment Agreement, the executive will be entitled to a
lump-sum payment within ten days of the date of termination or resignation
equal generally to the sum of the following: (i) all accrued or deferred
amounts not previously paid to the executive; (ii) a pro rata portion of the
anticipated bonus and option awards for the current year (determined on the
basis of awards made over the prior three years) and (iii) the salary, bonus
and incentive compensation payable to the executive for the then remaining
term of the Employment Agreement (determined on the basis of the executive's
then current salary and average bonus and option awards for the prior three
years). If any amount payable under the Employment Agreements upon the
termination of an executive's employment would be subject to the excise tax
imposed by Section 4999 of the Code, or any interest or penalties would be
incurred by the executive with respect to such excise tax, then such executive
would be entitled to receive an additional amount so that after payment by the
executive of all such excise taxes, interest and penalties, such executive
would retain an amount equal to such excise taxes, interest and penalties.
Under the Employment Agreements, each executive agrees not to compete with the
Company for a period of two years following the termination of his employment.
OTHER AGREEMENTS
During fiscal 1992, certain of the Company's executive officers entered into
agreements with the Company pursuant to which the Company agreed (in
consideration for each executive's agreement not to make a certain election
under Section 83(b) of the Code) to lend the executive sufficient funds to
enable the executive to pay tax on income recognized by the executive
attributable to the lapse or termination of transfer restrictions on shares of
Common Stock owned by the executive, plus an amount equal to 62% of the
proceeds received by the executive from the sale of Common Stock in the
Company's initial public offering. Each executive also agreed to apply all
proceeds received from the sale of Common Stock in the Company's initial
public offering toward payment of the executive's income tax obligations. The
restrictions lapsed on the date of consummation of the initial public
offering. Because each such executive did not make an election under Section
83(b) of the Code at the time of the acquisition of his shares, the Company
received a federal and state income tax deduction in an amount equal to the
difference between the fair market value of the executive's Common Stock on
the date of the initial public offering and the original purchase price.
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<PAGE>
The executive officers who entered into these agreements, and the largest
amount of indebtedness outstanding during fiscal 1997 in accordance with each,
were: Caryn Blanc ($223,867), Kevin Mansell ($476,887), and R. Lawrence
Montgomery ($477,525). As of April 1, 1998, their respective loan balances
were: Ms. Blanc ($182,948), Mr. Mansell ($399,369), and Mr. Montgomery
($380,628).
The loans which bear interest at 5.65% per annum are payable on December 9,
1998; provided, however, that (1) if the executive's employment terminates for
any reason other than retirement, disability or death, the loans are
immediately payable, (2) if the executive's employment terminates for
retirement, disability or death, the loans are payable the earlier of one year
after such termination of employment or December 9, 1998, and (3) in the event
the executive or trusts established for the executive's family sells any
Common Stock, an agreed upon principal amount of the loan is payable for each
share of Common Stock so sold. The Company will pay each such executive
additional compensation equal to any interest payment on his loan, grossed-up
for any tax payable by the executive by reason of such additional compensation
(but taking into account the tax benefit for interest on the loan which is
deductible by the executive). Each loan is secured by a pledge of Common Stock
owned by the executive having a fair market value of 125% of the unpaid
principal amount of the loan, calculated as of the end of the preceding
calendar quarter.
OTHER TRANSACTIONS
Messrs. Sica, Simon and Sommerhauser are directors of the Company and have
certain relationships with the Company. See "Compensation Committee Interlocks
and Insider Participation" for a discussion of Mr. Sica's relationship.
The Company occupies 13 stores that it leases from entities owned or managed
by Mr. Simon, his brother and their immediate families. During fiscal 1997,
the Company incurred rent expense of $3.8 million in connection with such
leases. The Company believes that the terms and conditions of such leases are
at least as favorable to the Company as could be obtained from unaffiliated
parties.
Mr. Sommerhauser is a shareholder of the law firm of Godfrey & Kahn, S.C.,
which performs legal services for the Company. Mr. Sommerhauser beneficially
owns 398,224 shares of Common Stock, excluding 17,612,148 additional shares as
to which Mr. Sommerhauser has sole or shared voting and investment power. See
"Beneficial Ownership of Shares".
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<PAGE>
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board of Directors of
Kohl's Corporation (the "Committee") is pleased to present its report on
executive compensation. This Committee report documents the components of the
Company's executive officer compensation programs and describes the basis on
which compensation determinations for fiscal 1997 were made by the Committee
with respect to the executive officers of the Company.
COMPENSATION PHILOSOPHY
It is the philosophy of the Company that executive compensation be directly
linked to corporate performance and increases in shareholder value. The
following objectives have been adopted by the Committee as guidelines for
compensation decisions:
. Provide a competitive total compensation package that enables the Company
to attract and retain key personnel.
. Provide variable compensation opportunities, primarily on an annual
basis, that are directly linked to corporate performance goals.
. Provide long-term compensation opportunities, primarily through stock
options, that align executive compensation with value received by
shareholders.
COMPENSATION PROGRAM COMPONENTS
The particular elements of the Company's compensation program for executive
officers are explained below.
Base Salary. The Committee establishes, in its discretion, increases in
salaries for the Chairman, President, Chief Operating Officer and Vice
Chairman. The Chairman, President, Chief Operating Officer and Vice Chairman
generally determine, in their discretion, based primarily on individual
performance evaluations, increases in salaries for the other executive
officers, but the Committee reviews their decisions. Salary increases
generally range from 0-9%, but in some cases may increase more than 9% to
reflect increased responsibilities or to raise an executive officer's salary
to a level commensurate with the person's position within the Company. The
Committee and Messrs. Kellogg, Baker, Herma and Montgomery rely on certain
information described below under "Summary" and on the judgment of the
Company's Human Resources Department that salary levels of executive officers
are generally competitive.
During fiscal 1997, Mr. Kellogg's base salary increased 8% from $991,772 to
$1,071,114 effective September 1, 1997. Mr. Baker's and Mr. Herma's salaries
also increased 8% to $912,479 and $563,378, respectively. The percentage
increase was the same as in the previous year, and is consistent with the
Committee's current intention generally to award 8% annual increases to
Messrs. Kellogg, Baker and Herma assuming acceptable corporate performance as
determined in the sole discretion of the Committee, without limitation as to
the criteria that the Committee could consider. Mr. Montgomery's salary
increased to $460,024, effective February 1, 1997, in recognition of his
increased responsibilities. The fiscal 1997 increases for Messrs. Kellogg,
Baker, Herma and Montgomery were based on the Committee's assessment of
overall corporate performance and were not based on specific criteria. Under
the terms of the employment agreements for Messrs. Kellogg, Baker, Herma and
Montgomery, their base salaries cannot be reduced without their consent.
During fiscal 1997, salaries for executive officers (other than those named in
the Summary Compensation Table) increased 7.9% on average.
Annual Incentive Compensation. The Company maintains an executive bonus plan
for the benefit of its Management Board members, buyers, store managers and
other key executives such as sales support managers and merchandise planners.
The Management Board is comprised of the Company's executive officers, senior
vice presidents, vice presidents, directors, district managers and divisional
merchandise managers. Under the plan, the Company's Board of Directors fixes
income (before extraordinary items and non-recurring charges) goals for the
Company for each fiscal year. Participants receive a cash bonus equal to a
predetermined percentage of their base pay depending upon the income level
achieved (up to 22.5% of base pay (28% in the case of the Company's
10
<PAGE>
Senior Vice Presidents and 33% in the case of the Company's executive
officers)). The income levels are set sufficiently high in order to link
corporate performance with bonus levels, and the plan is intended to tie
compensation levels to increases in shareholder value which should occur if
the income levels are achieved. At the end of the last fiscal year,
approximately 363 associates participated in the plan.
For fiscal 1997, Messrs. Kellogg, Baker, Herma and Montgomery each received
bonuses under the plan aggregating approximately 33% of annual salary at year-
end, the same percentage received by all other executive officers
participating in the plan. The maximum bonus under the plan was earned because
the Company achieved income before extraordinary items and non-recurring
charges in excess of the highest performance goal ($133.0 million) set by the
Board.
Long-Term Compensation. The Company's 1992 and 1994 Long-Term Compensation
Plans are intended to motivate key associates to put forth maximum efforts
toward the continued growth, profitability and success of the Company by
providing incentives through the ownership and performance of the Company's
Common Stock. The plans are designed to provide benefits to key associates
only to the extent that shareholders enjoy increases in value. The Company
views stock options as an effective way to motivate key associates and align
their interests with those of shareholders. While the plans permit the grant
of, among other things, stock options, stock appreciation rights and
restricted stock, only stock options were granted during fiscal 1997.
Stock options are granted under the plan at the prevailing market price and
will only have value if the Company's stock price increases after the grant.
Generally, option grants vest in four equal annual increments, and (except for
certain circumstances) participants must be employed by the Company at the
time of vesting in order to exercise the options.
The Committee determines, in its discretion, the number of options to be
granted to executive officers based on individual performance contributions,
the dilutive effect on the Company's other shareholders and potential
realizable value for the participants. Outstanding historical performance and
anticipated future contributions by an individual are recognized in part
through larger option grants. The Committee regularly requests and receives
recommendations from the Chairman, President, Chief Operating Officer and Vice
Chairman regarding option grants for the other executive officers.
In fiscal 1997, after adjustment to reflect the stock split, options for
678,000 shares of Common Stock were granted by the Committee to the Company's
executive officers, including grants of 100,000, 50,000, and 50,000 shares to
Messrs. Kellogg, Baker and Herma, respectively. Mr. Montgomery was granted
120,000 shares in recognition of his increased responsibilities. The grants to
Messrs. Kellogg, Baker and Herma were for the same number of shares as in the
previous year granted on January 7, 1997 to be contemporaneous with options
granted to all other key associates and are consistent with the Committee's
current intention generally to continue historical compensation practices for
them. On January 7, 1997, Mr. Montgomery was granted 90,000 shares.
TAX LAW LIMITATION ON DEDUCTIBILITY OF COMPENSATION
The Committee is aware of the limitations imposed by Section 162(m) of the
Internal Revenue Code of 1986, as amended, on the deductibility of non-
performance based compensation paid to certain executive officers of the
Company to the extent it exceeds $1 million per executive. The Committee
currently intends to recommend compensation amounts and plans which meet the
requirements for deductibility, and the Committee expects that Section 162(m)
will not limit the deductibility of any compensation expense in fiscal 1997.
Messrs. Kellogg and Baker have deferred a portion of their compensation.
SUMMARY
The Committee has the responsibility for ensuring that the Company's
compensation program continues to be in the best interest of its shareholders.
The Committee regularly reviews the Company's compensation programs to
determine that pay levels and incentive opportunities for executive officers
reflect the performance of the Company and of the individual.
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<PAGE>
In order to ascertain that compensation levels of executive officers are
generally reasonable and competitive, the Committee reviews compensation
surveys and certain publicly available compensation information disclosed by
other retailers. The base salary and bonus of the chief executive officers of
retail companies participating in an annual compensation study of the retail
industry by Hay Group, Inc. ranged from a low of $780,000 to a high of
$3,250,000 in 1997. The base salary and bonus of the chief executive officers
of retailers that constitute the Standard & Poor's Retail (Department Stores)
Index (the "peer group index" used in the Company's stock price performance
graph) ranged from a low of $350,000 to a high of $2,800,000 in 1996 as
indicated in the retailers' respective proxy statements. The mean salary and
bonus of the companies in the peer group was $1,584,869 and the median was
$1,595,000. Mr. Kellogg's fiscal 1997 salary and bonus were below these 1996
averages. The fiscal 1997 mean salary and bonus of the other named executive
officers of the Company was also below the 1996 mean salary and bonus of the
other named executive officers of the retailers in the Company's peer group
index. Finally, the Company's compensation programs providing stock based
compensation to executive officers are periodically submitted to shareholders
for review and approval.
After a review of all existing programs, the Committee believes that the
total compensation program for executive officers is consistent with the
Committee's compensation philosophy. Base salaries are set at levels that the
Committee considers to be reasonable. The executive bonus plan provides
variable compensation opportunities to key associates that are directly linked
to annual operating results of the Company. The 1992 and 1994 Long-Term
Compensation Plans provide opportunities to participants that are consistent
with increases in value realized by shareholders. The Committee considers the
overall executive compensation package an important reason for the Company's
success to date.
COMPENSATION AND
STOCK OPTION COMMITTEE
James D. Ericson
R. Elton White
Frank V. Sica
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STOCK PRICE PERFORMANCE GRAPH
The following graph shows changes since January 29, 1993 and January 31, 1998
(the last day in fiscal 1997) in the value of $100 invested in (1) the Company,
(2) the Standard & Poor's 500 Index and (3) the Retail (Department Stores)-500
Index, as calculated by Standard & Poor's Compustat Services, Inc. The values
of each investment are based on share price appreciation plus, in the case of
the indices, dividends paid in cash, with the dividends reinvested. The
calculations exclude trading commissions and taxes.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Kohl's Corporation Retail (Dept. Stores) S&P 500 Index
------------------ --------------------- -------------
<S> <C> <C> <C>
1993 100.00 100.00 100.00
1994 136.70 110.26 110.55
1995 126.26 101.84 113.42
1996 165.11 119.84 157.24
1997 223.73 130.03 198.26
1998 399.27 170.14 251.14
</TABLE>
13
<PAGE>
PROPOSAL NUMBER TWO
RATIFICATION OF AUDITORS
Proxies solicited by the Board of Directors will unless otherwise directed,
be voted to ratify the appointment by the Board of Directors of Ernst & Young
LLP as independent auditors of the Company and its subsidiaries for fiscal
1998. Ernst & Young LLP has been the Company's independent auditors since the
Company's incorporation in 1988. The Company has been advised by Ernst & Young
LLP that they are independent auditors with respect to the Company within the
meaning of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated under such act.
A representative from Ernst & Young LLP is expected to be at the annual
meeting and will have the opportunity to make a statement if such
representative so desires and will be available to respond to appropriate
questions during the meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT
AUDITORS.
PROPOSAL NUMBER THREE
SHAREHOLDER PROPOSAL
Mr. Aaron M. Epstein of North Hollywood, California, owner of 200 shares of
Common Stock, has indicated that he intends to submit the following proposal
at the meeting:
"RESOLVED:
The shareholders of Kohl's, Inc. request the Board of Directors to prepare
a report at a reasonable expense describing the Company's actions to ensure
that it does not and will not do business with foreign suppliers who
manufacture items for sale in the United States using forced labor, convict
labor, or illegal child labor, or who fail to satisfy all applicable laws
and standards protecting their employees' wages, benefits, working
conditions, freedom of association, and other rights.
The report should include:
1. Summary of current monitoring practices enforcing the Company's policies
for its manufacturers and suppliers.
2. Establishment of independent monitoring programs in conjunction with
local respected religious and human rights groups.
3. Establishment of incentives to encourage suppliers to raise standards
rather than terminate contracts.
4. Public disclosure of contract supplier reviews on a regular basis."
The following was submitted in support of such resolution:
"As U.S. companies import more goods, concern is growing about working
conditions in many nations that fall far below basic standards of fair and
humane treatment. Several years ago, a controversy arose after reports that
goods made by convicts in Chinese prisons were being imported into the
United States for sale to consumers. The Tariff Act of 1930 makes it
illegal to import any goods made by forced labor, including convict labor.
China's use of prison labor and its record on human rights generally are
issues in the debate about whether China should enjoy "most favored nation"
trading status with the United States.
Public concern has also been voiced in the wake of reports that retail
items were manufactured using illegal child labor, unsafe or unhealthy
working conditions, and similar conditions. In April 1997 the White House
Apparel Industry Partnership, which was appointed by President Clinton to
make recommendations in this area, presented a report to the President
setting out a Workplace Code of Conduct and Principles of
14
<PAGE>
Monitoring for the apparel and footwear industry. The standards in that
report, if implemented comprehensively and diligently, are intended to
eliminate poor working conditions for workers in the U.S. and abroad.
I am submitting this proposal because Kohl's imports many goods into the
United States, and thus we as shareholders have a strong interest in
learning what steps Kohl's is taking to monitor and control the conditions
under which the goods it sells are produced. Reports that overseas
suppliers are exploiting workers may damage a company's reputation and
generate a consumer backlash.
In our view too, it makes good business sense to enforce strict sourcing
standards. For example, there are subterfuges that suppliers can use to
import goods made by forced labor into the United States. Also, when the
federal government enforces applicable laws, it may hold companies liable
for actions of their suppliers.
Strict standards and an active enforcement policy are thus vital for a
company such as Kohl's. I therefore ask the Board to prepare a report
giving investors data about Kohl's efforts to assure that it is not doing
business with overseas suppliers that exploit workers.
I URGE YOU TO VOTE FOR THIS RESOLUTION
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
The Company recognizes the importance, as both an ethical and a business
responsibility, of obtaining assurances that the merchandise it sells is
manufactured in accordance with all applicable laws and that the rights and
welfare of workers around the world are respected.
The Company has always been committed to the highest ethical conduct and
strict compliance with all applicable laws relating to its business dealings,
with its vendors and suppliers ("Vendor Partners"), subcontractors and buying
agents. The Company is deeply concerned about the issues raised in the
Proposal and believes it has adequately addressed such issues by previous
implementation of the policies and procedures described below.
Products sold at the Company's stores are supplied by Vendor Partners who
also supply other retail stores and chains. To a much lesser degree, the
Company is also supplied by overseas Vendor Partners with whom the Company
contracts through the Company's buying agent. Substantially all merchandise
that the Company imports is purchased through the Company's buying agent. The
Company does not engage directly in manufacturing.
The Company has previously addressed the concerns raised in the Proposal by
implementation of the following policies and procedures:
. The Company adopted a formal business policy in October, 1996 entitled
"Terms of Engagement for Kohl's Business Partners" (the "Policy") which
emphasizes and restates the Company's longstanding philosophy that no
merchandise purchased by the Company will be manufactured with the use of
illegal labor conditions. The Policy focuses on the workplace conditions
of, and legal compliance by all Vendor Partners, including, but not
limited to, foreign vendors and suppliers.
. The Policy is included in the Company's Vendor Partner's Guide mailed to
all existing Vendor Partners in March of each year. New Vendor Partners
receive a copy prior to the purchase of merchandise by the Company. The
Company has also distributed its Policy to its buying agent and all
Vendor Partners from whom the Company is considering the procurement of
overseas merchandise directly or through its buying agent.
. The Company requires each of its Vendor Partners to agree, in writing, to
comply with the Policy as a precondition to the Company's approval of a
prospective Vendor Partner and prior to the Company entering into
purchase orders with such Vendor Partner. The Company also requires its
buying agent to
15
<PAGE>
comply with the Policy and use its best efforts to ensure full compliance
with the Policy by Vendor Partners. The Company's buying agent must also
establish and follow policies and procedures to ensure compliance by
Vendor Partners with the Policy and the Company's Purchase Order.
. The Company's philosophy also appears in the Company's Purchase Order
Terms and Conditions which is applicable to all transactions between the
Company and each of its Vendor Partners. The Company's Purchase Order
expressly requires all Vendor Partners to comply with all wage and hour
and other labor laws and to warrant that neither Vendor Partners, nor any
of their subcontractors shall use convict, slave, forced labor, child (14
years of age or younger) or indentured labor to process, manufacturer,
label or ship merchandise. The Company's purchase order further provides
that the Company may terminate any purchase order and withhold payment in
the event of Vendor Partner non-compliance. The Company's Terms and
Conditions are disseminated to its Vendor Partners at least once annually
or are included on the Purchase Order itself.
. The Company undertakes an inspection of prospective Vendor Partner's
facilities and periodic random inspections before, during and at the
completion of the merchandise production process of those Vendor
Partner's facilities from whom the Company procures merchandise through
its buying agent to ensure, to the extent reasonably practicable, that
such Vendor Partners are in compliance with the Policy and the Company's
Purchase Order Terms and Conditions. Inspections are documented by the
Company's buying agent and if a violation is discovered the Company is
notified and will take firm action that may include the cancellation of
purchase orders, termination of a future business relationship with the
Vendor Partner or notification of responsible authorities. Company
employees also personally inspect selected facilities to verify
compliance with the Policy and the Company's Purchase Order Terms and
Conditions.
. As a precondition to the Company's payment of Vendor Partners for
merchandise procured through the Company's buying agent, Vendor Partners
must submit a certification of compliance with the Policy.
. The Company periodically reviews the Policy to determine whether in light
of new developments, Policy modifications would be appropriate. The
Company's Board of Directors is kept appraised of any new developments.
. As with other matters of importance to shareholders, the Company is
always ready and willing to discuss its Policy and the Company's
compliance mechanisms with all interested shareholders.
The Company believes that it has already addressed the concerns raised in
the shareholder's proposal without further expenditure of valuable time and
funds. As the foregoing describes, the Company is committed to assuring that
its Vendor Partners treat their employees properly and in strict compliance
with all applicable laws.
FOR THE ABOVE REASONS, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE AGAINST THE ADOPTION OF THIS PROPOSAL. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY A DIFFERENT CHOICE.
OTHER MATTERS
COST OF SOLICITATION
The entire cost of preparing, assembling, printing and mailing the proxy
material, and the cost of soliciting proxies relating to the meeting, will be
borne by the Company. In addition to use of the mail, proxies may be solicited
by officers, directors, and other regular employees of the Company by
telephone, facsimile or personal solicitation, and no additional compensation
will be paid to such individuals. The Company will, if requested, reimburse
banks, brokerage houses, and other custodians, nominees and certain
fiduciaries for their reasonable expenses incurred in mailing proxy material
to their principals.
16
<PAGE>
SHAREHOLDER PROPOSALS
Proposals that shareholders intend to present at the 1999 Annual Meeting of
Shareholders must be received at the Company's executive offices in Menomonee
Falls, Wisconsin no later than February 27, 1999, in order to be presented at
the meeting (and must otherwise be in accordance with the requirements of the
Bylaws of the Company), and must be received by December 21, 1998 for
consideration for inclusion in the proxy material for that meeting.
OTHER PROPOSED ACTION
If any other matters properly come before the meeting, including any
adjournment or adjournments thereof, proxies received in response to this
solicitation will be voted upon such matters in the discretion of the person
or persons named in the accompanying proxy.
VOTING PROCEDURES
The votes of shareholders present in person or represented by proxy at the
meeting will be tabulated by an inspector of elections appointed by the
Company. The nominees for directors of the Company who receive the greatest
number of votes cast by shareholders present in person or represented by proxy
at the meeting and entitled to vote thereon will be elected directors of the
Company. The other proposals will be approved if the affirmative votes exceed
the votes cast against. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered present with respect to that
matter. These so-called "broker non-votes" will have no effect on the outcome
of the voting. Abstentions will also have no effect on the outcome of the
voting.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL 1997 AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ARE AVAILABLE TO SHAREHOLDERS
WITHOUT CHARGE UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY AT N56
W17000 RIDGEWOOD DRIVE, MENOMONEE FALLS, WISCONSIN 53051. EXHIBITS TO THE FORM
10-K WILL BE FURNISHED UPON PAYMENT OF THE REASONABLE EXPENSES OF FURNISHING
THEM.
By Order of the Board of Directors
John F. Herma,
Secretary
Menomonee Falls, Wisconsin
April 20, 1998
17
<PAGE>
KOHL'S CORPORATION
P R O X Y
Annual Meeting of Shareholders May 27, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints WILLIAM S. KELLOGG, JAY H. BAKER, JOHN F.
HERMA and R. LAWRENCE MONTGOMERY, and each or any of them, as Proxies of the
undersigned, with full power of substitution, and hereby authorizes them to
represent and to vote, as designated on the reverse side, all of the shares of
Common Stock of KOHL'S CORPORATION, held of record by the undersigned on April
10, 1998, at the Annual Meeting of Shareholders of Kohl's Corporation to be held
May 27, 1998, or at any adjournment thereof.
The Board of Directors recommends a vote FOR Proposal Nos. 1 and 2 and
AGAINST Proposal No. 3. This Proxy, when properly executed, will be voted as
specified on the reverse side. THIS PROXY WILL BE VOTED FOR PROPOSAL NOS. 1 AND
2 AND AGAINST PROPOSAL NO. 3 IF NO SPECIFICATION IS MADE.
(Continued, and to be dated and signed on the reverse side.)
KOHL'S CORPORATION
P.O. BOX 11011
NEW YORK, N.Y. 10203-0011
<PAGE>
1. Election of directors of the Company for a term of office expiring in 2001.
FOR all nominees listed below [_]
WITHHOLD AUTHORITY to vote for all nominees listed below [_]
*EXCEPTIONS [_]
Nominees: John F. Herma, R. Lawrence Montgomery and Frank V. Sica
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided
below.)
*Exceptions _________________________________________________________________
2. Ratify appointment of Ernst & Young LLP as independent auditors.
FOR [_] AGAINST [_] ABSTAIN [_]
3. Shareholder proposal concerning foreign suppliers. (Management of the Company
opposes this proposal.)
FOR [_] AGAINST [_] ABSTAIN [_]
4. In their discretion on such other business as may properly come before the
meeting.
Change of Address and or Comments Mark Here [_]
Please sign your name exactly as it appears hereon. 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 name by authorized person.
Dated ___________________________________, 1998
_______________________________________________
(Signature of Stockholder)
_______________________________________________
(Signature of Additional Stockholder)
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
Votes must be indicated (x) in Black or Blue ink. X
