THE HOME DEPOT, INC.
To our Stockholders:
On behalf of the Board of Directors, it is our pleasure to invite you to
attend the Annual Meeting of Stockholders of The Home Depot, Inc.
As shown in the formal notice enclosed, the meeting will be held at the
Cobb Galleria Centre, 2 Galleria Parkway, Atlanta, Georgia 30339, on
Wednesday, May 25, 1994, at 10:00 a.m. (Eastern daylight time). At the
meeting, in addition to acting on the matters described in the Proxy
Statement, we will give a current report on the activities of the Company.
Stockholders will have an opportunity at that time to comment on or to inquire
about the affairs of the Company that may be of interest to stockholders
generally. If you will need special assistance at the meeting because of a
disability, please contact Mr. Don Singletary, Vice President-Employee
Relations, Home Depot U.S.A., Inc., 2727 Paces Ferry Road, Atlanta, Georgia
30339. An interpreter for persons who are hearing impaired will be provided.
The subjects proposed for action at the meeting are the election of three
directors, the approval of the Senior Officers' Bonus Pool Plan and the
conducting of such other business as may properly come before the meeting.
It is important that your shares be represented at this meeting in order
that the presence of a quorum may be assured. Whether or not you plan to
attend the meeting, you are urged to date, sign and mail the enclosed proxy
card in the envelope provided.
Thank you for your support.
Sincerely,
Bernard Marcus
Chairman and
Chief Executive Officer
Arthur M. Blank
President and
Chief Operating Officer
THE HOME DEPOT, INC.
2727 Paces Ferry Road
Atlanta, Georgia 30339
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 25, 1994
NOTICE is hereby given that the Annual Meeting of Stockholders of The Home
Depot, Inc., a Delaware Corporation (the "Company" or "The Home Depot"), will
8be held in accordance with its By-Laws at the Cobb Galleria Centre, 2
Galleria Parkway, Atlanta, Georgia 30339, on Wednesday, May 25, 1994, at 10:00
a.m. (Eastern daylight time) for the following purposes:
(1) To elect three (3) directors for terms ending with the 1997 Annual
Meeting of Stockholders and until their successors are elected and qualified;
(2) To approve the Senior Officers' Bonus Pool Plan; and
(3) To conduct such other business as may properly come before the meeting.
The Common Stock of the Company should be represented as fully as possible
at the Annual Meeting. Therefore, it will be appreciated if you will sign and
return the enclosed proxy at your earliest convenience. You may, of course,
change or withdraw your proxy at any time prior to the voting at the meeting.
However, signing and returning the proxy will assure your representation at
the Annual Meeting.
The Board of Directors has fixed the close of business on March 28, 1994,
as the record date for the determination of holders of Common Stock of the
Company entitled to notice of, and to vote at, the Annual Meeting and any
adjournments thereof.
By Order of the Board of Directors
BERNARD MARCUS
Chairman of the Board of Directors,
Chief Executive Officer and
Secretary
Atlanta, Georgia
April 15, 1994
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN,
DATE AND RETURN YOUR PROXY.
THE HOME DEPOT, INC.
2727 Paces Ferry Road
Atlanta, Georgia 30339
(404) 433-8211
PROXY STATEMENT
SOLICITATION OF PROXIES FOR ANNUAL MEETING
INTRODUCTION
The enclosed proxy is being solicited by the Board of Directors of The Home
Depot for use at the 1994 Annual Meeting of Stockholders of the Company to be
held at 10:00 a.m. (Eastern daylight time) on Wednesday, May 25, 1994, at the
Cobb Galleria Centre, 2 Galleria Parkway, Atlanta, Georgia 30339, or at any
adjournments thereof (the "Annual Meeting").
Certain directors, officers and employees of the Company may solicit
proxies by telephone, telegram, mail or personal contact. In addition, the
Company has retained D.F. King & Co., Inc., New York, New York, to assist in
the solicitation of proxies and will pay such firm a fee, estimated not to
exceed $10,000, plus reimbursement of expenses. Arrangements will be made with
brokers, nominees and fiduciaries to send proxies and proxy material at the
Company's expense to their principals. This Proxy Statement is first being
mailed on or about April 15, 1994 to stockholders of record on March 28, 1994.
The shares held by each stockholder who signs and returns the enclosed
proxy will be counted for purposes of determining the presence of a quorum at
the meeting unless such proxy shall be timely revoked. If the enclosed form of
proxy is executed and returned, it may, nevertheless, be revoked at any time
before it is voted by written notice to the Secretary of the Company or by a
stockholder personally attending and voting his or her shares at the meeting.
The total number of shares of stock of the Company outstanding and entitled
to vote at the Annual Meeting is 450,648,080 consisting of Common Stock, par
value $.05 per share. Each share of the Company's Common Stock entitles the
holder to one vote with respect to all matters to come before the meeting, and
all of such shares vote as a single class. Only stockholders of record at the
close of business on March 28, 1994, are entitled to notice of, and to vote
at, the Annual Meeting. A majority of the outstanding shares will constitute a
quorum at the meeting. Abstentions and broker non-votes are counted for
purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions are counted in tabulations, but not as an
affirmative vote, of the votes cast on proposals presented to stockholders,
whereas broker non-votes are not counted for purposes of determining whether a
proposal has been approved. The affirmative vote of the holders of a majority
of all outstanding shares entitled to vote is necessary for the election of
directors and the approval of the Senior Officers' Bonus Pool Plan. Management
knows of no person that owns beneficially more than five percent of the
outstanding shares of Common Stock of the Company.
The Annual Report to Stockholders of the Company for the fiscal year ended
January 30, 1994, including financial statements (the "Annual Report"), is
being mailed concurrently with this Proxy Statement to all stockholders of
record as of March 28, 1994, except for accounts where the stockholder had
filed a written request to eliminate duplicate reports. In addition, the
Company has provided brokers, dealers, banks, voting trustees and their
nominees, at Company expense, with additional copies of the Annual Report so
that such record holders could supply such material to beneficial owners as of
March 28, 1994. ADDITIONAL COPIES OF THE ANNUAL REPORT AND THE ANNUAL REPORT
ON FORM 10-K FOR THE FISCAL YEAR ENDED JANUARY 30, 1994, TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION (the "Form 10-K"), BUT WITHOUT EXHIBITS TO
THE FORM 10-K, ARE OR WILL BE AVAILABLE WITHOUT CHARGE, UPON REQUEST. SEE
"AVAILABILITY OF FORM 10-K AND ANNUAL REPORT TO STOCKHOLDERS."
Each properly executed proxy received in time for the meeting will be voted
as specified therein. If a stockholder does not specify otherwise, the shares
represented by his or her proxy will be voted FOR the election of Frank
Borman, Ronald M. Brill, and Berry R. Cox to the Board of Directors of the
Company and FOR the approval of the Senior Officers' Bonus Pool Plan.
COMMON STOCK OWNERSHIP BY CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table shows information as to "beneficial ownership" of the
Common Stock of the Company, as of January 30, 1994, by each person known by
the Company to be the "beneficial owner" of more than five percent of such
Common Stock, by each present director and nominee of the Company, by certain
executive officers, and by the directors and all executive officers of the
Company as a group (15 persons). The determinations of "beneficial ownership"
of the Company's Common Stock are based upon responses to Company inquiries
which cited Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "1934 Act"). Such Rule provides that shares shall be deemed so owned
where a person has, either solely or in conjunction with others, the power to
vote or to direct the voting of shares and/or the power to dispose, or to
direct the disposition of shares; or where a person has the right to acquire
any such power within 60 days after the date such "beneficial ownership" is
determined. Except as disclosed in the notes to the table, each person has
sole voting and investment powers with respect to the whole number of shares
shown as beneficially owned by him or her.
Name of Beneficial Owner Shares of Common
(and Address if "Beneficial Stock Beneficially Percent
Ownership" Exceeds 5%) Owned (1) of Class (2)
Bernard Marcus (3) 14,819,019 3.30
Arthur M. Blank (4) 8,349,952 1.86
Kenneth G. Langone (5) 4,600,000 1.02
Milledge A. Hart III 1,356,915 *
Berry R. Cox 1,237,500 *
Ronald M. Brill (6) 652,184 *
Frank Borman (7) 233,437 *
Bruce Berg (8) 174,413 *
James W. Inglis (9) 156,200 *
Peter S. Gold (10) 96,613 *
Donald R. Keough (11) 8,332 *
M. Faye Wilson (12) 3,500 *
Directors and Executive Officers
as a group (13) 32,174,410 7.16
* Less than 1%
<FN>
<F1>(1)As indicated in the introduction to the table, the shares shown as
"beneficially owned" are as of January 30, 1994. These shares shown as
"beneficially owned" do not include any shares that might accrue to the
persons indicated pursuant to the Company's Employee Stock Ownership Plan.
<F2>(2)Based on 449,364,459 shares outstanding on January 30, 1994.
<F3>(3)Includes 21,421 shares held by a private foundation of which Mr. Marcus may
be deemed to have shared voting and investment powers. Does not include
191,360 shares held by Mr. Marcus' wife as trustee of a trust for his children
of which Mr. Marcus may be deemed to have shared voting and investment powers;
Mr. Marcus disclaims beneficial ownership of such shares.
<F4>(4)Does not include 290,739 shares which are held by others as co-trustees for
the children of Mr. Blank. Mr. Blank disclaims beneficial ownership of such
shares.
<F5>(5)Does not include 1,009 shares held by Mr. Langone's wife of which Mr.
Langone may be deemed to have shared voting and investment powers. Mr. Langone
disclaims beneficial ownership of such shares.
<F6>(6)Includes 9,600 shares held by a private charitable trust of which Mr. Brill
has shared voting and investment powers. Does not include 85,158 shares which
are held by his wife or by his wife as custodian for their children or held by
Mr. Brill as custodian for his children of which Mr. Brill may be deemed to
have shared voting and investment powers. Includes 39,919 shares under stock
options which are exercisable within 60 days.
<F7>(7)Includes 218,192 shares held by a trust of which Col. Borman and his wife
have shared voting and investment powers. Includes 14,624 shares held by a
private foundation of which Col. Borman has shared voting and investment
powers.
<F8>(8)Includes 39,357 shares under stock options which are exercisable within 60
days.
<F9>(9)Does not include 21,982 shares held by a child of Mr. Inglis and 5,200
shares held by Mr. Inglis's wife of which Mr. Inglis may be deemed to have
shared voting and investment powers. Mr. Inglis disclaims beneficial ownership
of such shares. Includes 16,000 shares held by a private foundation of which
Mr. Inglis has shared voting and investment powers and 39,919 shares under
stock options which are exercisable within 60 days.
<F10>(10)Includes 51,612 shares which may be acquired through conversion to Common
Stock of convertible debt securities.
<F11>(11)Does not include 400 shares held by Mr. Keough's wife of which Mr. Keough
may be deemed to have shared voting and investment powers. Includes 1,666
shares under stock options which are exercisable within 60 days.
<F12>(12)Includes 2,500 shares under stock options which are exercisable within 60
days.
<F13>(13)Includes 304,164 shares under options and convertible debt securities
which are exercisable within 60 days from January 30, 1994, and also includes
certain shares held jointly with their spouses and held by their spouses as
custodian for their children.
ELECTION OF DIRECTORS
AND INFORMATION REGARDING DIRECTORS
The Company's Certificate of Incorporation, as amended, provides that, "The
directors shall be divided into three classes, designated Class I, Class II
and Class III...". The terms of the present Class III directors shall expire
at the Annual Meeting of Stockholders in 1994.
The Board of Directors has nominated two incumbent Class III directors,
Frank Borman and Ronald M. Brill and one incumbent Class II director, Berry R.
Cox, who are described below, for election to the Board of Directors as Class
III directors for terms expiring at the Annual Meeting of Stockholders in
1997. Mr. Cox will stand for election and be reclassified as a Class III
director to comply with the Company's Certificate of Incorporation which
provides that "Each class shall consist as nearly as may be possible, of
one-third the total number of directors...". Mr. Peter S. Gold, a present
Class III director, is retiring from the Board of Directors and will not be
nominated for election at the Annual Meeting. The Board of Directors has fixed
the number of directors at ten (10) upon the election of directors at the
Annual Meeting.
The following information is provided concerning directors of The Home
Depot and nominees for election as directors. Positions held by executive
officers are for the Company and/or its subsidiaries.
FRANK BORMAN, age 66, has been a director of the Company since 1983. Col.
Borman (U.S. Air Force, ret.) retired as the Chairman of the Board and Chief
Executive Officer of Eastern Air Lines, Inc. in 1986. Since 1986, Col. Borman
has served on the Board of Directors of Continental Holdings, Inc., and since
1988, as Chairman of the Board, President and Chief Executive Officer of
Patlex Corporation, and also since 1993, as Chairman of the Board of Directors
of AutoFinance Group, Inc. (parent company of Patlex Corporation). Col. Borman
also serves as a director of Outboard Marine Corporation, Thermo Instrument
Systems, American Superconductor Corporation and is also a member of the Board
of Trustees of the National Geographic Society.
RONALD M. BRILL, age 50, has been Executive Vice President and Chief
Financial Officer ("CFO") of the Company since March, 1993. Mr. Brill joined
The Home Depot as its Controller in 1978, was elected Treasurer in 1980, Vice
President-Finance in 1981, Senior Vice President and CFO in 1984, and elected
as a director in 1987. Mr. Brill serves on the Board of Directors of
AutoFinance Group, Inc.; the Board of Trustees of the Atlanta Jewish
Federation; the Board of Trustees of Woodruff Arts Center; the Board of
Directors of the Atlanta High Museum of Art; the Board of Directors of the
Atlanta Chamber of Commerce; and the Governing Board of Woodward Academy.
BERRY R. COX, age 40, has been a director of the Company since 1978. For
the past sixteen years, Mr. Cox has been a private investor, with interests in
oil and gas, real estate, and equities. Mr. Cox is a member of the Board of
Trustees of the Children's Medical Center of Dallas.
If any nominee becomes unwilling or unable to serve, which is not expected,
the proxies are intended to be voted for a substitute person to be designated
by the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY VOTE "FOR" THE PROPOSAL TO ELECT Frank Borman, Ronald M. Brill and
Berry R. Cox as directors of the Company to hold office until the 1997 Annual
Meeting of Stockholders and until their successors are elected and qualified.
The following Class II directors were elected at the Annual Meeting of
Stockholders in 1992 and their present terms expire with the Annual Meeting of
Stockholders in 1995:
ARTHUR M. BLANK, age 51, has been President, Chief Operating Officer
("COO") and a director of The Home Depot since its inception in 1978; and is,
together with Mr. Bernard Marcus and Mr. Kenneth G. Langone, a co-founder of
the Company. Mr. Blank serves as Chairman of the Board of Trustees of North
Carolina Outward Bound School, a non-profit corporation; serves on the Board
of Trustees of Emory University; serves on the Board of Councilors of the
Carter Center of Emory University; and the Board of Directors of Harry's
Farmers Market, Inc.
MILLEDGE A. HART, III, age 60, has been a director of the Company since
1978. Mr. Hart is Chairman of the Board of Hart Group, Inc., a private
management services company. Mr. Hart is also Chairman of the Board of Rmax,
Inc., an insulation manufacturing company, and Axon, Inc., a
residential/commercial service company.
M. FAYE WILSON, age 55, has been a director of the Company since 1992. Ms.
Wilson was Managing Director of Mergers and Acquisitions for Security Pacific
Hoare Govett in London from 1987 until she returned to California in 1991 as
Executive Vice President for Security Pacific Financial Services Systems, Inc.
Since the merger in 1992 between Bank of America, NT&SA and Security Pacific
Corporation, Ms. Wilson has been Executive Vice President of Bank of America,
NT&SA. Since November 1993, Ms. Wilson has been Chairman of the Board and
President of Security Pacific Financial Services, Inc.
The following Class I directors were elected at the Annual Meeting of
Stockholders in 1993 and their present terms expire with the Annual Meeting of
Stockholders in 1996:
BERNARD MARCUS, age 64, is one of the co-founders of The Home Depot and has
been its Chairman of the Board of Directors and Chief Executive Officer
("CEO") since its inception in 1978. He serves on the Board of Directors of
Wachovia Bank of Georgia, N.A., National Service Industries, Inc. and the New
York Stock Exchange, Inc. Mr. Marcus is a member of the Advisory Board and
Board of Directors of the Shepherd Spinal Center in Atlanta, as well as a Vice
President and member of the Board of The City of Hope, a charitable
organization in Duarte, California. Mr. Marcus is also a member of Emory
University's Board of Visitors.
KENNETH G. LANGONE, age 58, is one of the co-founders of The Home Depot and
has been a director of
the Company since 1978. For at least the past five years, Mr. Langone has been
Chairman of the Board, Chief Executive Officer, President and Managing
Director of Invemed Associates, Inc., a New York Stock Exchange
member firm engaged in investment banking and brokerage. Mr. Langone serves on
the Board of Directors of Unifi, Inc. and AutoFinance Group, Inc. Mr. Langone
also serves on the boards of a number of charitable and educational
organizations.
DONALD R. KEOUGH, age 67, was President, Chief Operating Officer and a
director of The Coca-Cola Company until his retirement in April 1993. Mr.
Keough has been a director of The Home Depot since January 1993. Mr. Keough is
also Chairman of the Board of Allen & Company Incorporated and serves on the
boards of National Service Industries, Inc., H. J. Heinz Company, The
Washington Post Company and McDonald's Corporation.
Mr. Keough is immediate past Chairman of the Board of Trustees of the
University of Notre Dame and is a trustee of
several other educational institutions. Mr. Keough also serves on the boards
of a number of national charitable and civic organizations.
JAMES W. INGLIS, age 50, has been a director of the Company since 1993 and
Executive Vice President-Strategic Development of the Company since April
1994. Mr. Inglis joined the Company in 1983 as a merchandiser, was shortly
thereafter promoted to Senior Merchandiser, and then promoted to Vice
President-Merchandising, West Coast in 1985 and Executive Vice
President-Merchandising in 1988. Mr. Inglis serves as endowment chairman for
the City of Hope's hardware and home improvement industry group and on the
Board of Directors of the National Kitchen and Bath Association.
Each director who is not an employee of the Company is paid for service on
the Board of Directors a retainer at the rate of $30,000 per annum and an
additional $1,000 for each meeting of the Board of Directors attended. The
Home Depot also reimburses each director for reasonable expenses in attending
meetings of the Board of Directors. Directors who are also employees of the
Company are not separately compensated for their services as directors.
The Home Depot's Board of Directors has the following committees:
(a) The Executive Committee is comprised of Messrs. Marcus, Blank, and
Langone. This Committee exercises the authority of the Board of Directors in
accordance with the By-Laws of the Company, between meetings of
the Board.
(b) The Audit Committee is comprised of Messrs. Borman, Cox, Hart, Keough
and Ms. Wilson. This Committee was established to oversee the auditing
procedures of the Company, to receive and accept the reports of the Company's
independent certified public accountants, to oversee the Company's internal
systems of accounting and management controls, and to make recommendations to
the full Board of Directors as to the selection and appointment of auditors
for the Company. The Committee held two meetings during fiscal 1993.
(c) The Stock Option Committee is comprised of Messrs. Marcus, Blank, and
Langone. This Committee considers and makes grants of stock options pursuant
to the Company's 1991 Omnibus Stock Option Plan and Employee Stock Purchase
Plan and administers such plans.
(d) The Compensation Committee is comprised of Messrs. Borman, Hart and
Keough. This Committee reviews and recommends to the Board of Directors the
appropriate compensation of directors and executive officers of the Company.
The Committee held one meeting during fiscal 1993.
(e) The Directors' Nominating Committee is comprised of Messrs. Marcus,
Gold, Hart, and Langone. This Committee is charged with making recommendations
to the full Board for the selection of director nominees. There is no formal
procedure for the submission of stockholder recommendations. The Committee
held one meeting during fiscal 1993.
During fiscal 1993, the Board of Directors of the Company had four
meetings. All directors attended at least 75% of the meetings of the Board and
of the Committees of the Board of which they were members during that period.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
IN COMPENSATION DECISIONS
Messrs. Borman, Hart and Langone served on the Compensation Committee
during the 1993 fiscal year. Kenneth G. Langone, a director of the Company, is
Chairman of the Board and President of Invemed Associates, Inc. ("Invemed"),
which provides investment banking consulting services to the Company under a
written contract which is cancelable by either party upon sixty days written
notice. The contract provides for the Company to pay Invemed an annual
consulting fee of $100,000.
APPROVAL OF SENIOR OFFICERS' BONUS POOL PLAN
The Board of Directors recommends approval by the stockholders of the
performance goals contained in the Senior Officers' Bonus Pool Plan (the
"SOBP") as adopted by the Compensation Committee, a committee of outside
directors. These performance goals will govern the award of annual bonuses to
the CEO and COO, the designated eligible participants. Approval of the
performance goals is being recommended to preserve, for fiscal years 1994 and
beyond, The Home Depot's federal tax deduction for compensation paid to its
senior officers, by complying with new provisions of Section 162(m) of the
Internal Revenue Code ("IRC"), enacted as part of the Omnibus Budget
Reconciliation Act of 1993 ("OBRA"). These provisions and the proposed
regulations issued under IRC Section 162(m) by the U.S. Department of the
Treasury could limit the Company's federal tax deduction for compensation paid
to its senior officers to $1 million each, unless compensation in excess of
this amount is based on the achievement of performance goals and eligibility
requirements that have been approved by a committee of outside directors and
approved by the stockholders. The SOBP is intended to be, and the Committee
believes that the SOBP qualifies as, performance-based compensation and
accordingly that all sums paid thereunder should be deductible by the Company.
In 1993, the SOBP allowed the CEO and the COO collectively to earn a bonus
based on 1.25% of the Company's earnings up to $54 mil-
lion and 2.0% of earnings above $54 million (before being adjusted for the bonus
pool and income taxes) up to a maximum amount of $4 million. In order to comply
with a "safe harbor" under proposed regulations adopted under OBRA, the
Committee has revised the SOBP to allow the CEO and the COO collectively to earn
a bonus equal to 10% of the Company's earnings, subject to an annual maximum
established by the Committee, in excess of a threshold amount as established
by the Committee (the "Earnings Threshold"). The Earnings Threshold for fiscal
1994 is equal to $457,401,000, which is approximately equal to the Company's
net earnings for fiscal 1993. Monies payable from the SOBP are to be shared by
the CEO and COO at the ratio of 54% and 46% respectively, on the first $2
million and 50% each on the balance of the next $2 million. For 1994, the
maximum amount awardable under the SOBP is $4 million. The two participants in
the SOBP, Messrs. Marcus and Blank, have an interest in the proposal. The
actual benefits to be paid under the SOBP are not presently determinable.
Prior to awarding any cash bonuses for the 1994 fiscal year and all
subsequent years covered by the SOBP, the Compensation Committee will evaluate
the performance of the Company to certify that the performance goals have been
met.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THIS
PROPOSAL.
EXECUTIVE OFFICERS AND THEIR COMPENSATION
The following table sets forth all cash compensation paid by the Company and
its subsidiaries (for the purposes of this section collectively referred to as
the "Company") to the Chief Executive Officer ("CEO") and the four most highly
compensated executive officers for services rendered in all capacities during
the Company's last three fiscal years:
Long Term
Compensation
Annual Compensation Awards
Other All
Annual Securities Other
Compen- Underlying Compen-
Name and Fiscal Salary Bonus sation Options(1) sation(2)
Principal Position Year ($) ($) ($) (#) ($)
Bernard Marcus 1993 600,000 2,080,000 2,216 - 161,918
Chairman of the 1992 584,783 2,080,000 2,216 - 165,096
Board, CEO and 1991 501,092 1,080,000 966 - 160,726
Secretary
Arthur M. Blank 1993 550,000 1,920,000 4,500 - 24,914
Chief Operating 1992 534,783 1,920,000 4,500 - 28,092
Officer and 1991 451,092 920,000 3,151 - 33,722
President
Ronald M. Brill 1993 404,615 161,212 3,080 2,133 18,907
Executive Vice 1992 369,615 156,000 3,080 103,200 22,085
President, CFO 1991 333,846 135,000 3,900 6,450 27,715
and Treasurer
James W. Inglis 1993 425,384 107,500 1,174 2,133 19,047
Executive Vice 1992 392,307 134,400 1,174 103,200 22,225
President 1991 343,846 100,000 883 6,450 27,855
Bruce W. Berg 1993 325,384 82,500 2,934 2,133 19,387
President - 1992 296,154 144,600 2,934 103,200 22,565
Southern Division 1991 272,692 75,000 1,763 6,450 28,195
<FN>
<F1>(1) Messrs. Marcus and Blank do not participate in the stock option plans.
<F2>(2) The Company has had in effect various plans and arrangements which may
not be available generally to all its salaried employees and which provide for
cash or non-cash compensation for one or more of its executive officers.
Certain plans and arrangements are described in the remainder of this section.
The Company's Employee Stock Ownership Plan and Trust (the "ESOP''),
adopted during fiscal 1988, is a defined contribution and employee stock
ownership plan qualified under the Internal Revenue Code and is available to
all employees pursuant to the ESOP's Eligibility to Participate provisions.
The ESOP is funded solely by contributions from the Company and generally
invests only in Common Stock of the Company. Contributions are allocated to
each participant's account on the basis of his or her individual compensation
as defined in the ESOP. Participants' accounts are fully vested once seven
years of service (as defined in the ESOP) are completed or employment is
terminated by reason of death, disability or retirement.
The Company's contribution to the ESOP for the year ended January 30, 1994
was $6,000,000. Allocations of the Company's Common Stock for the last fiscal
year were valued at $16,089 for each of Messrs. Marcus, Blank, Brill, Inglis
and Berg. All of the executive officers named above are fully vested pursuant
to the terms of the ESOP.
The Company, in fiscal 1993, enabled Messrs. Marcus, Blank, Brill, Inglis
and Berg to obtain life insurance in the amounts of $8,000,000, $800,000,
$250,000, $250,000, and $250,000, respectively, pursuant to a "split dollar"
plan under which the Company pays the gross annual premium of $145,829,
$8,825, $2,818, $2,958, and $3,298, respectively.
Stock Options
At the Annual Meeting of Stockholders in 1991, the stockholders approved
the 1991 Omnibus Stock Option Plan (the "1991 Plan") providing for stock
options to key employees and newly elected non-employee directors. The 1991
Plan became effective June 1, 1991 and continues for a ten year term, except
that any options granted under the 1991 Plan will continue to be effective
pursuant to the terms of each grant beyond the expiration of the 1991 Plan.
All of the Company's stock option plans are administered by the Stock
Option Committee of the Board of Directors. The Stock Option Committee
determines the number of shares granted and the option exercise price, but
such price may not be less than 100% of the fair market value of Common Stock
on the grant date.
The following tables reflect certain information with respect to options
granted under the Company's stock option plans to and those exercised by
certain executive officers (excluding Messrs. Marcus [CEO] and Blank [COO] who
do not participate in the stock option plans) for the last fiscal year:
OPTION GRANTS IN THE LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term
Number % of Total
of Securities Options
Underlying Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration
Name (#)* Year(%) ($/Sh) Date 5%($) 10%($)
Ronald M. Brill 2,133 0.12 44.625 02/22/03 59,861 151,701
James W. Inglis 2,133 0.12 44.625 02/22/03 59,861 151,701
Bruce Berg 2,133 0.12 44.625 02/22/03 59,861 151,701
<FN>
*Shares become exercisable at an annual rate of 25% commencing on the first
anniversary of the grant date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION VALUES
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options Options at
Shares Value at FY-End(#) FY-End($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise(#) ($) Unexercisable Unexercisable
Ronald M. Brill -0- -0- 8,880/110,853 256,520/1,010,550
James W. Inglis -0- -0- 8,880/110,853 256,520/1,010,550
Bruce W. Berg -0- -0- 8,599/110,572 247,794/1,001,823
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committees of the Board of Directors have
furnished the following report on executive compensation:
Under the supervision of the Compensation and Stock Option Committees of
the Board of Directors, the Company has developed and implemented compensation
policies, plans and programs ("Compensation Policies") which seek to structure
executive compensation consistent with the Company's overall business
strategy, philosophy and objectives. The Compensation Policies are intended to
embody a "pay-for-performance" philosophy which rewards executives for
long-term strategic management and enhancement of stockholder value by
providing ownership incentives in the Company and a performance-oriented
environment that measures rewards against personal and Company goals. The
Company believes this philosophy attracts, retains and motivates key
executives critical to the long-term success of the Company.
This compensation philosophy is implemented through compensation packages
which include various cash components and non-cash components. Although no
formal analysis of compensation was conducted by the Compensation Committee,
base salaries are generally set somewhat below competitive levels so that the
Company relies to a large degree on annual and longer term "incentive"
compensation.
Beginning in 1994, the Omnibus Budget Reconciliation Act of 1993 ("OBRA")
limits the deductibility of executive compensation paid by publicly held
corporations to $1 million per employee subject to various exceptions,
including compensation based on performance goals.
The deductibility limitation does not apply to compensation based on
performance goals where (1) the performance goals are established by a
compensation committee which is comprised solely of two or more outside
directors; (2) the material terms are disclosed to shareholders and approved
by majority vote of the stockholders eligible to vote thereon before the
compensation is paid; and (3) before the compensation is paid, the
compensation committee certifies that the performance goals and other material
terms have been satisfied. Pursuant to OBRA and Internal Revenue Service
("IRS") regulations adopted thereunder, a director will not be an outside
director if such person, among other things, receives compensation for
personal services in any capacity other than as a director. To satisfy the IRS
outside director requirement, the composition of the Compensation Committee
has been altered by the Board to the membership identified below. The Company
has chosen to not immediately seek stockholder approval and related amendments
for potential compensation in excess of $1 million relating to its stock
option plan. The Company has until 1997 to accomplish this pursuant to IRS
proposed regulations.
The Compensation Committee of the Board of Directors of the Company has
established a Senior Officers' Bonus Pool ("SOBP") for its Chief Executive
Officer ("CEO") and President ("COO"). The SOBP is intended to be, and the
Committee believes that the SOBP qualifies as, performance-based compensation
and accordingly that all sums paid thereunder should be deductible by the
Company. In 1993, the SOBP allowed the CEO and the COO collectively to earn a
bonus based on 1.25% of the Company's earnings up to $54 million and 2.0% of
earnings above $54 million (before being adjusted for the bonus pool and
income taxes) up to a maximum amount of $4 million. In order to comply with a
"safe harbor" under proposed regulations adopted under OBRA the Committee has
revised the SOBP to allow the CEO and the COO collectively to earn a bonus
equal to 10% of the Company's earnings, subject to an annual maximum
established by the Committee, in excess of a threshold amount as established
by the Committee (the "Earnings Threshold"). The Earnings Threshold for fiscal
1994 is equal to $457,401,000, which is approximately equal to the Company's
net earnings for fiscal 1993. Monies payable from the SOBP are to be shared by
the CEO and COO at the ratio of 54% and 46% respectively, on the first $2
million and 50% each on the balance of the next $2 million. For 1994, the
maximum amount awardable under the SOBP is $4 million.
The Committee bases its belief that the SOBP is performance-based on, among
other things, the fact that the amount of the Company's earnings in any year
are not capable of being ascertained with certainty at the start of such year,
statements in the published IRS regulations that performance goals need not be
based upon an increase or positive result under a company's business criterion
and may include maintaining the status quo or limiting economic losses and the
Committee's belief that achievement of an earnings threshold which is at least
equal to the level of the prior year's earnings is subject to substantial
uncertainty, even in light of the Company's historical earnings growth.
Nevertheless, neither the Company nor the Committee can give any assurance
that the IRS will agree that the SOBP is performance-based. In the event that
the SOBP was deemed by the IRS not to be performance-based, the Company would
have the option to contest such determination, forego the deduction for sums
in excess of the deductible limit, modify the SOBP for future years or any
combination of the foregoing.
Payments under the SOBP to the CEO and COO comprise approximately 78% of
each of their total cash compensation in fiscal 1993. From fiscal 1988 until
fiscal 1992, the CEO and COO declined to accept recommendations from the
Compensation Committee for increases to the maximum amount in the SOBP. In the
1992 fiscal year, the Compensation Committee increased the maximum amount in
the SOBP for the CEO and COO from $2 million to $4 million. The increase in
the maximum amount awardable under the SOBP from prior years was based upon
the Committee's assessment of the CEO's and COO's contributions to the Company
as reflected in the multiple measures of the Company's financial performance
since the last increase in the maximum compensation awardable under the SOBP
including, without limitation, increases in net earnings, net sales, net
earnings per share, total assets and stockholder's equity. The Committee also
considered the Company's market share, geographic expansion and market
penetration and marketing innovation. The Committee did not assign formal
weights to particular measures and the relative
weighing of the importance of such measures was based on the
subjective perception of the individual members of the Committee.
In increasing the maximum potential incentive earnings under
the SOBP last year, the Committee was also cognizant of the total compensation
levels of certain other executives of similar position in the specialty retail
industry and other companies similar in size.
In setting annual salaries, the Compensation Committee reviews with the CEO
an annual salary plan recommended by the CEO and COO for the Company's
executive officers. The annual salary plan is based on numerous subjective
factors which include inflation, performance merit increases and
responsibility levels. The annual salary plans for both the CEO and COO are
established by the Compensation Committee based on available compensation
data, including compensation data for the specialty retail industry and other
companies similar in size, the Committee's assessment of such officers' past
performance and the Committee's expectation of their future contributions in
leading the Company. The Committee does not purport to scientifically or
statistically sample compensation data for other companies. Accordingly,
compensation data for other companies may, but need not, include companies in
the specialty retail group or the S & P 500, usually is historical in nature,
and may be limited to that available from public sources. To the extent that
comparative data is utilized, the Committee believes a subjective comparison
is required to account for the numerous variables between The Home Depot and
other companies and notes that compensation levels and operating performance
of other companies can be influenced by a variety of factors both within and
without the control of such other companies. Similarly, differences in size,
performance and type of business advise, in the Committee's view, against a
mechanistic compensation approach, purportedly based on objective criteria.
While type of business and broad market indexes may be appropriate measures of
historical company performance, the Committee currently believes neither
grouping should be accorded any special ranking in its compensation
deliberations. In setting overall compensation, the Committee was cognizant
that certain independent third party performance evaluations reported in the
financial press, and purportedly based on objective criteria, deemed the CEO
undercompensated (only CEOs were studied in the surveys) and depending on the
survey would have awarded the CEO compensation of $5.8 million to $17.2
million last year. The Committee believes similar compensation levels would
have been recommended by such studies with respect to the COO, had such
position been studied. Despite the Committee's assessment that a substantial
increase in compensation could be justified, the Committee has honored the
request of the CEO and COO that their maximum compensation under the SOBP not
be increased and that the majority of their cash compensation continue to be
awarded pursuant to the SOBP.
All executive officers (other than the CEO and COO) participate in the
Company's Corporate Management Bonus Plan ("CMBP") under which they are
eligible to earn a bonus up to 50% of their annual base salary depending on
personal performance and the Company's performance relative to criteria such
as gross margin return on investment, return on assets and sales target
levels. Fifty percent (50%) of such bonus may be awarded based solely on
subjective evaluations and the remaining fifty percent (50%) is based on
performance with respect to the objective criteria enumerated below. During
the 1993 fiscal year, based upon these objective and subjective performance
assessments all of the executive officers other than the CEO and COO were
awarded bonuses as reflected in the Summary Compensation Table contained
elsewhere in the proxy statement.
The exact objective criteria employed depend on the officer's
responsibilities and such performance criteria may be computed by various
methods depending on the Committee's assessment of the best match between job
duties and performance criteria. Gross Margin Return On Investment ("GMROI")
is calculated by dividing gross margin by net sales and multiplying the
resulting number by net sales divided by average inventory at cost. Return On
Assets is calculated in the same manner as GMROI except net income before
taxes and interest replaces gross margin and total assets, which is composed
of average retail inventory and fixed assets, replaces inventory. In
calculating Return On Assets, for officers with non-merchandising positions,
total assets are defined as average total assets based on the Company's
balance sheet. Minimum bonuses are payable if 100% of planned results are
achieved and maximum bonuses are paid upon the achievement of 115% of planned
results. Bonus payments, as a percentage of salary, increase on a straight
line for the achievement of results between 100% and 115% of planned results
although the slope of line (i.e. relative percentage) varies depending on the
nature of the officer's duties. Minimum bonuses based on the application of
the foregoing formulas generally are payable in an amount equal to but not
less than 6% of salary assuming 100% of planned results are achieved.
The Committee believes that disclosure of actual targets under the CMBP
could adversely affect the Company since, among other things, such projections
are not publicly disclosed and could place the Company at a competitive
disadvantage with respect to hiring and retaining key employees and could
potentially expose the Company to claims by third parties based on such
projections, especially since such projections are not intended as a predictor
of future
performance on which the public should rely. The CMBP Plan is
subject to adjustment based on, among other things, adjustments to scheduled
store opening dates and other non-anticipated events, and the Company may
adjust the CMBP Plan, including targets and utilized criteria, at such time or
times as the Company, in its sole discretion, determines that the original
projections or the bases therefor were materially incorrect.
A large portion of the executive officers' total compensation is tied to
stock performance, thus more closely aligning their interests with the
long-term interests of stockholders. This is accomplished through several
stock plans. The Company's 1991 Omnibus Stock Option Plan and its Employee
Stock Purchase Plan are administered by the Stock Option Committee of the
Board of Directors which coordinates its activities with those of the
Compensation Committee. Annually, at the discretion of the Stock Option
Committee, stock options are granted to all executive officers and key
employees, excluding both the CEO and COO, to purchase stock at the then
current market price. The stock option grant size is determined by the Stock
Option Committee and based on the individual's position within the Company and
job performance rating. Individual job performance ratings are based on
performance reviews compiled by one or more of the officers to whom an officer
reports and such officer's perceived relative performance and abilities when
compared with other employees of the Company. Stock option grants made since
fiscal 1991 are exercisable at a rate of 25% per year commencing on the first
or second year after the date of grant (depending on the type of stock option
granted) with a total stock option term of ten years. The Company's stock
options historically have been financially rewarding as the Company's stock
price has shown dramatic increases. To the extent that the public market does
not, in the Committee's view, fairly value the Company, the Committee may
consider decreasing the portion of compensation tied to stock performance. The
executive officers, excluding the CEO and COO, may also purchase stock at a
discount through the Employee Stock Purchase Plan. The Company's CEO and COO
have chosen not to participate in the Company's 1991 Omnibus Stock Option and
Employee Stock Purchase Plans due to their already large stock ownership as
shown elsewhere in the proxy statement. Of course, they have benefited along
with other stockholders in the historical increases in the market value of the
Company's common stock. All executive officers including the CEO and COO
participate in the Company's Employee Stock Ownership Plan whereby their
vested interests increase in value, without any outlay of funds by the
employees, through seniority, increases in the market value of the Company's
common stock and discretionary annual contributions to the Plan by the
Company. Such discretionary contributions to the Plan are determined by the
Company's Board of Directors based on the Company's performance and are
typically distributed to the Plan participants, including participating
executive officers, based on a percentage of the participants' base salary.
The tables included in the proxy statement and accompanying narrative and
footnotes, reflect the decisions covered by the above discussion. The
foregoing report has been furnished by the members of the following
committees:
Compensation Committee: Stock Option Committee:
Frank Borman Bernard Marcus
Milledge A. Hart III Arthur M. Blank
Donald R. Keough Kenneth G. Langone
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN ON $100 INVESTMENT
AMONG THE HOME DEPOT, S & P 500 AND S & P SPECIALTY RETAIL GROUP
ASSUMING REINVESTMENT OF DIVIDENDS
[DESCRIPTION]
GRAPHIC #1: Line Graph Chart for Five-Year Comparison Among The Home Depot,
S & P 500 and S & P Specialty Retail Group as shown below.
01/28/89 01/27/90 02/02/91 02/01/92 01/31/93 01/30/94
The Home Depot $100.00 $180.81 $318.60 $688.45 $1,093.78 $884.00
S&P Specialty
Retail Group $100.00 $121.18 $137.51 $185.59 $ 244.00 $234.67
S&P 500 Index $100.00 $114.67 $125.19 $153.94 $ 170.20 $190.85
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
KPMG Peat Marwick were the auditors of the Company during the fiscal year
ended January 30, 1994. Although the Board of Directors has not yet selected
auditors for the present fiscal year, it is expected that KPMG Peat Marwick
will be chosen. A representative of that firm will be present at the Annual
Meeting with an opportunity to make a statement and will be available to
respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholders who desire to submit to the Company proposals for inclusion in
the Company's proxy materials for the 1995 Annual Meeting of Stockholders of
The Home Depot, Inc. must submit such proposals to the Secretary of the
Company by December 11, 1994.
OTHER MATTERS
Management does not intend to present to the Annual Meeting any business
other than the items stated in the "Notice of Annual Meeting of Stockholders''
and knows of no other business to be presented for action at the meeting. If,
however, any other business should properly come before the meeting or any
adjournments thereof, it is intended that all management proxies will be voted
with respect thereto in accordance with the best judgment of the persons named
in the proxies.
AVAILABILITY OF FORM 10-K
AND ANNUAL REPORT TO STOCKHOLDERS
Copies of The Home Depot's Annual Report to Stockholders for the fiscal
year ended January 30, 1994, which includes certain financial information
about the Company, are currently being mailed together with this Proxy
Statement to stockholders. Additional copies of such Annual Report along with
copies of The Home Depot's Annual Report on Form 10-K for the fiscal year
ended January 30, 1994, as filed with the Securities and Exchange Commission
(exclusive of documents incorporated by reference), are available without
charge to stockholders upon written request to Mr. Ronald M. Brill, Executive
Vice President and Chief Financial Officer, The Home Depot, Inc., 2727 Paces
Ferry Rd., Atlanta, Georgia 30339.
[DESCRIPTION]Senior Officers' Bonus Pool Plan, filed pursuant to
Instruction #3, Item #10 to Schedule 14A.
Not being distrubuted to the stockholders.
SENIOR OFFICERS' BONUS POOL PLAN
The performance goals contained in the Senior Officers' Bonus Pool Plan (the
"SOBP") as adopted by the Compensation Committee of the Board of Directors of
The Home Depot, Inc. (the "Company"), a committee of outside directors (the
"Committee") will govern the award of annual bonuses to Mr. Bernard Marcus,
Chief Executive Officer of the Company (the "CEO") and Mr. Arthur M. Blank,
Chief Operating Officer of the Company (the "COO"), who are the designated
eligible participants.
Moreover, pursuant to the applicable provisions of the Omnibus Budget
Reconciliation Act of 1993 ("OBRA"), the U.S. Department of the Treasury could
limit the Company's federal tax deduction for compensation paid to its senior
officers to $1 million each, unless compensation in excess of this amount is
based on the achievement of performance goals and eligibility requirements.
The SOBP qualifies as performance-based compensation and all sums paid
thereunder should be deductible by the Company. In 1993, the SOBP allowed the
CEO and the COO collectively to earn a bonus based on 1.25% of the Company's
earnings up to $54 million and 2.0% of earnings above $54 million (before
being adjusted for the bonus pool and income taxes) up to a maximum amount of
$4 million. In order to comply with a "safe harbor" under proposed
regulations adopted under OBRA, the Committee has revised the SOBP to allow
the CEO and the COO collectively to earn a bonus equal to 10% of the Company's
earnings in excess of a threshold amount as established by the Committee (the
"Earnings Threshold"), subject to an annual maximum established by the
Committee. The Earnings Threshold for fiscal 1994 is equal to $457,401,000,
which is approximately equal to the Company's net earnings for fiscal 1993.
Monies payable from the SOBP are to be shared by the CEO and COO at the ratio
of 54% and 46% respectively, on the first $2 million and 50% each on the
balance of the next $2 million. For 1994, the maximum amount awardable under
the SOBP is $4 million; however, the actual benefits to be paid under the SOBP
are not presently determinable.
Prior to awarding any cash bonuses for the 1994 fiscal year and all subsequent
years covered by the SOBP, the Committee will evaluate the performance of the
Company to certify that the performance goals have been met.
[DESCRIPTION]FORM OF PROXY
PROXY THE HOME DEPOT, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON MAY 25, 1994.
The undersigned stockholder hereby appoints BERNARD MARCUS, ARTHUR M. BLANK
and RONALD M. BRILL, and each of them, attorneys and proxies for the
undersigned with full power of substitution, to act and vote, with the powers
the undersigned would possess if personally present, at the Annual Meeting of
Stockholders of The Home Depot, Inc. to be held at the Cobb Galleria Centre,
Atlanta, Georgia, on Wednesday, May 25, 1994, at 10:00 a.m., and any
adjournments thereof, as directed below with respect to the matters set forth
below and with discretionary authority on all other matters that come before
the meeting, all as more fully described in the Proxy Statement received by
the undersigned stockholder. If no direction is made, the proxy will be voted
"FOR" the election of FRANK BORMAN, RONALD M. BRILL and BERRY R. COX, "FOR"
the approval of item number 2 and in accordance with the recommendations of
the Board of Directors.
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.
SEE REVERSE SIDE
X Please mark
votes as in
this example.
1.Election of Directors THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR THE APPROVAL OF SUCH PLAN.
FOR AGAINST ABSTAIN
Nominees: Frank Borman, Ronald M. Brill 2. Approval
and Berry R. Cox Company's establishment
of a performance-based
Senior Officers'
Bonus Pool Plan
FOR WITHHELD
MARK HERE
FOR ADDRESS CHANGE
AND NOTE AT LEFT
PLEASE MARK, SIGN AND DATE HEREON AND
For all nominees RETURN PROXY CARD PROMPTLY IN THE
except as noted above ENCLOSED ENVELOPE.
Please sign exactly as name appears at left.
When shares are held by joint tenants, both
should sign.
When signing as attorney, executor,
administrator, trustee or guardian, please
given full title as such. If a corporation,
please sign in full corporate name by
President or other authorized officer.
If a partnership, please sign in
partnership name by authorized person.
Signature: Date:
Signature: Date: