SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. __)
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COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-12
Kohl's Corporation
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KOHL'S CORPORATION
N56 W17000 Ridgewood Drive
Menomonee Falls, Wisconsin 53051
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 2002
To Our Shareholders:
The Annual Meeting of Shareholders of Kohl's Corporation, a Wisconsin
corporation (the "Company"), will be held at the Midwest Express Center, 400
West Wisconsin Avenue, Milwaukee, Wisconsin 53203, on Tuesday, May 21, 2002, at
10:30 a.m., for the following purposes:
1. To elect four directors to serve for a three-year term;
2. To ratify the appointment of Ernst & Young LLP as independent auditors;
3. To vote on a shareholder proposal, if presented, concerning monitoring
of vendors' compliance with the Company's Terms of Engagement; and
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 March 26, 2002 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 vote as soon as possible
in one of these three ways, whether or not you plan to attend the meeting:
1. Visit the web site shown on your proxy card to vote through the
internet;
2. Use the toll-free telephone number shown on your proxy card to vote
over the telephone; or
3. Complete, sign, date and return your proxy card in the reply envelope
provided.
If you submit your proxy and then decide to attend the meeting to vote in
person, you may still do so. Your proxy is revocable in accordance with the
procedures set forth in the proxy statement.
By Order of the Board of Directors
Richard D. Schepp
Secretary
Menomonee Falls, Wisconsin
April 12, 2002
KOHL'S CORPORATION
N56 W17000 Ridgewood Drive
Menomonee Falls, Wisconsin 53051
PROXY STATEMENT
-----------------
ANNUAL MEETING OF SHAREHOLDERS
May 21, 2002
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 21,
2002, 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 336,103,418 of Common Stock outstanding at the close
of business on March 26, 2002 will be entitled to notice of and to vote at the
meeting. The presence, in person or by proxy, of the holders of a majority of
the shares of Common Stock outstanding on March 26, 2002 is required for a
quorum with respect to the matters on which action is to be taken at the
meeting. Each such shareholder is entitled to one (1) vote for each share of
Common Stock registered in their name 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 in this proxy statement or the accompanying proxy to a "fiscal
year" are to the calendar year in which the fiscal year begins. For example,
the fiscal year ended February 2, 2002 is referred to as "fiscal 2001".
This proxy statement, the accompanying proxy and the Company's Annual Report
for fiscal 2001 are being furnished to shareholders beginning on or about April
12, 2002.
ITEM ONE
ELECTION OF DIRECTORS
Proxies solicited by the Board of Directors will, unless otherwise directed,
be voted for the election of four nominees to serve as Class I directors for a
three-year term expiring in 2005, and until their successors are elected and
qualified. The four Class I nominees are James D. Ericson, William S. Kellogg,
Arlene Meier and R. Elton White.
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 thirteen members: four of whom are Class I directors
whose terms expire at this Annual Meeting; five of whom are Class II directors
whose terms expire at the 2003 Annual Meeting; and four of whom are Class III
directors whose terms expire at the 2004 Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" THE ELECTION OF THE NOMINEES TO SERVE AS DIRECTORS.
1
Following is information regarding the nominees and continuing 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.
Director
Age Since
--- --------
Nominees for Election of Class I Directors
(Terms to expire in 2005)
James D. Ericson............................................................................... 66 1997
Former Chairman and Chief Executive Officer of The Northwestern Mutual Life Insurance
Company. Mr. Ericson is a Trustee of The Northwestern Mutual Life Insurance Company
and a director of Mason Street Funds, Inc., Green Bay Packaging, a manufacturer of
packaging products, and The Marcus Corporation, a lodging and theater business.
William S. Kellogg............................................................................. 58 1988
Chairman of the Company. Mr. Kellogg retired from the Company at the end of fiscal 2000,
after 34 years of service.
Arlene Meier................................................................................... 50 2000
Chief Operating Officer of the Company since November, 2000. Ms. Meier served as
Executive Vice President--Chief Financial Officer from October 1994 to November 2000.
She joined the Company as Vice President--Controller in 1989.
R. Elton White................................................................................. 59 1994
Formerly President of NCR Corporation, a technology and services provider. Mr. White is
also a director of Keithley Instruments, Inc., a provider of analytical testing equipment.
Class II Directors
(Terms to expire in 2003)
Steven A. Burd................................................................................. 52 2001
Chairman, President and Chief Executive Officer of Safeway, Inc., an operator of grocery
store chains. Mr. Burd has served as Safeway's Chairman of the Board of Directors since
1998, Chief Executive Officer since 1993 and President since 1992.
Jay H. Baker................................................................................... 67 1988
Formerly President of the Company. Mr. Baker retired from the Company effective
February, 2000, after 13 years of service. Mr. Baker is also a director of Briggs & Stratton
Corporation, a manufacturer of engines and power equipment.
Kevin Mansell.................................................................................. 49 1999
President of the Company since February 1999. Mr. Mansell served as Executive Vice
President--General Merchandise Manager from 1987 to 1998. He joined the Company as a
Divisional Merchandise Manager in 1982.
Herbert Simon.................................................................................. 67 1988
Co-Chairman of the Board of Directors of Simon Property Group, Inc., and Melvin Simon &
Associates, Inc., both real estate management and development firms.
Peter M. Sommerhauser.......................................................................... 59 1988
Shareholder of the law firm of Godfrey & Kahn, S.C., Milwaukee, Wisconsin.
2
Class III Directors
(Terms to expire in 2004)
Wayne Embry....................................................................................... 65 2000
Consultant to the Cleveland Cavaliers. Served in several executive positions with the Cleveland
Cavaliers over the past 14 years, including over 13 years as General Manager and Team
Division President and Chief Operating Officer. Mr. Embry is also a director of The Ohio
Casualty Corporation and PolyOne Corporation, a polymer services company.
John F. Herma, 54................................................................................. 54 1988
Formerly Chief Operating Officer and Secretary of the Company. Mr. Herma retired from the
Company effective June, 1999, after 21 years of service.
R. Lawrence Montgomery............................................................................ 53 1994
Chief Executive Officer of the Company since February 1999. Mr. Montgomery served as Vice
Chairman from March 1996 to November 2000 and as Executive Vice President of Stores from
February 1993 to February 1996. He joined the Company in 1988 as Senior Vice President--
Director of Stores.
Frank V. Sica..................................................................................... 51 1988
Managing Director of Soros Fund Management LLC and Managing Partner of Soros Private
Equity Partners. Mr Sica is also a director of CSG Systems International, Inc., a computer
software company, Emmis Communications Corporation, a diversified media company, Global
TeleSystems Group, Inc., a telecommunications company, and Outboard Marine Corporation, a
manufacturer of marine engines and boats. He was a Managing Director in the Merchant
Banking Division of Morgan Stanley & Co. Incorporated from 1988 to 1998.
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.
The Company's Board of Directors held four formal meetings during fiscal
2001. During fiscal 2001, each director attended 75 percent or more 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 three standing committees: a
Compensation and Stock Option Committee, a Nominating Committee and an Audit
Committee.
Compensation and Stock Option 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 Chief Executive Officer's, President's and Chief Operating
Officer'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 2001, the Compensation and Stock Option
Committee formally met three times and otherwise accomplished its business
without formal meetings. The members of the Compensation Committee for fiscal
2001 were Messrs. Ericson, Simon and Sica.
3
Nominating Committee
The duties of the Nominating Committee are to identify and present qualified
individuals for election and re-election to the Board and to monitor the
participation of directors. The Committee also makes recommendations to the
Board concerning the structure and membership of the other Board committees.
The Nominating Committee has not established procedures for shareholders to
recommend nominees for directors beyond those contained in the Company's
By-Laws. During fiscal 2001, the Nominating Committee formally met one time and
otherwise accomplished its business without formal meetings. The members of the
Nominating Committee for fiscal year 2001 were Messrs. Embry, Ericson, Kellogg,
Sica and White.
Audit Committee
It is the responsibility of the Audit Committee to oversee the Company's
financial reporting process on behalf of the Board of Directors and report the
results of their activities to the Board. The specific duties of the Audit
Committee are to monitor the integrity of the Company's financial process and
systems of internal controls regarding finance, accounting and legal
compliance; monitor the independence and performance of the Company's
independent auditors and internal auditing functions; and provide an avenue of
communication among the independent auditors, management, the internal auditing
functions and the Board of Directors. The Audit Committee has the authority to
conduct any investigation appropriate to fulfilling its responsibilities, and
it has direct access to the independent auditors as well as anyone in the
Company. The Audit Committee has the ability to retain, at the Company's
expense, special legal, accounting, or other consultants or experts it deems
necessary in the performance of its duties. The Audit Committee met four times
during fiscal 2001 and otherwise accomplished its business without formal
meetings. The members of the Audit Committee for fiscal 2001 were Messrs.
Embry, Sica and White.
Directors are reimbursed for travel and other expenses related to attendance
at Board and committee meetings. Stock options are granted to directors who are
not officers or employees of the Company or any of its subsidiaries from time
to time. Options to purchase 11,000 shares of the Company's common stock were
granted to such directors in fiscal 2001. Directors are not otherwise
compensated for their services.
Compensation Committee Interlocks and Insider Participation
None of the Compensation and Stock Option Committee members is or has been
an officer or employee of the Company.
4
BENEFICIAL OWNERSHIP OF SHARES
The following information is furnished as of March 1, 2002 (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. Indicated
options are all exercisable within 60 days of March 1, 2002.
Name of Beneficial Owner Amount Beneficially Owned Percent of Class
------------------------ ------------------------- ----------------
Jay H. Baker................................................ 7,973,352(1) 2.4%
Steven A. Burd.............................................. 0 *
Wayne Embry................................................. 2,000(2) *
James D. Ericson............................................ 22,000(3) *
John F. Herma............................................... 11,133,746(4) 3.3%
William S. Kellogg.......................................... 20,350,190(5) 6.1%
Frank V. Sica............................................... 32,000(6) *
Herbert Simon............................................... 17,000(7) *
Peter M. Sommerhauser....................................... 36,252,028(8) 10.8%
R. Elton White.............................................. 21,000(9) *
Kevin Mansell............................................... 1,525,595(10) *
Arlene Meier................................................ 1,384,707(11) *
R. Lawrence Montgomery...................................... 2,565,320(12) *
Richard B. Leto............................................. 409,350(13) *
Gary Vasques................................................ 398,025(14) *
All Directors and Executive Officers as a group (22 Persons) 45,333,742(15) 13.3%
AXA Financial, Inc.......................................... 79,548,701(16) 23.3%
1290 Avenue of the Americas
New York, NY 10104
- --------
*Less than 1%.
(1)Includes 1,851,800 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, 102,000 shares held by a charitable foundation for
which Mr. Baker serves as a director and president, 6,018,552 shares held
in trusts for the benefit of Mr. Baker and his spouse for which Mr.
Sommerhauser is sole trustee, and 1,000 shares represented by options.
(2)Includes 2,000 shares represented by stock options.
(3)Includes 16,000 shares represented by stock options.
(4)Includes 9,703,406 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 171,800 shares held by a charitable foundation for which Mr.
Herma serves as a director and president.
(5)Includes 16,784,690 shares held in trust for the benefit of Mr. Kellogg's
family but as to which Mr. Sommerhauser has sole voting and investment
power, 379,520 shares held by a charitable foundation for which Mr. Kellogg
serves as a director and president and 1,851,800 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, but no pecuniary
interest.
(6)Includes 16,000 shares represented by stock options.
(7)Includes 17,000 shares represented by stock options.
(8)Includes 35,651,664 shares held in trust for the benefit of the families of
current and former executive officers of the Company or in charitable
foundations established by executive officers of the Company for which Mr.
Sommerhauser has sole or shared voting and investment power but no
pecuniary interest.
5
Includes 147,084 shares held in trusts for the benefit of Mr.
Sommerhauser's family as to which Mr. Sommerhauser has no voting or
investment power. Includes 11,150 shares held by a charitable foundation
for which Mr. Sommerhauser acts as president and a director, and 17,000
shares represented by stock options.
(9)Includes 16,000 shares represented by stock options.
(10)Includes 276,000 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 968,931 shares represented by stock options.
(11)Includes 1,370,707 shares represented by stock options.
(12)Includes 251,896 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 2,058,306 shares represented by stock options.
(13)Includes 409,350 shares represented by stock options.
(14)Includes 398,025 shares represented by stock options.
(15)Includes 6,041,212 shares represented by stock options.
(16)Based upon information as of December 31, 2001 set forth in Amendment No. 7
to Schedule 13G. According to their joint filing, AXA Financial, Inc., AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, AXA Conseil Vie
Assurance Mutuelle, and AXA Courtage Assurance Mutuelle and their
subsidiaries each has sole voting power with respect to 36,985,432 shares,
shared voting power with respect to 16,989,402 shares, sole dispositive
power with respect to 79,457,234 shares and shared dispositive power with
respect to 91,467 shares.
6
EXECUTIVE COMPENSATION
The table below summarizes information concerning compensation for the last
three fiscal years of those persons who were at February 2, 2002: (i) the chief
executive officer, and (ii) the other four most highly compensated executive
officers of the Company.
Summary Compensation Table
Long Term
Compensation
Annual Compensation Awards(1)
--------------------------------- ------------
Shares
Underlying
Fiscal Other Annual Stock All Other
Name and Principal Position Year Salary Bonus Compensation(2) Options(#) Compensation(3)
- --------------------------- ------ -------- -------- --------------- ------------ ---------------
R. Lawrence Montgomery...... 2001 $919,167 $306,900 $ 9,470 130,000 $8,225
Chief Executive Officer 2000 $845,833 $285,450 $22,380 130,000 $8,050
1999 $750,000 $247,500 $27,507 600,000 $7,658
Kevin Mansell............... 2001 $726,667 $244,200 $ 7,949 97,500 $8,014
President 2000 $643,333 $217,800 $26,128 97,500 $8,189
1999 $560,000 $184,800 $29,731 290,000 $7,430
Arlene Meier................ 2001 $600,000 $198,000 $ 0 97,500 $7,695
Chief Operating Officer 2000 $472,917 $198,000 $ 0 190,000 $7,858
1999 $384,167 $132,000 $ 0 130,000 $7,114
Richard B. Leto............. 2001 $529,167 $176,550 $ 0 55,000 $7,192
Executive Vice President/ 2000 $493,333 $165,000 $ 0 55,000 $7,415
General Merchandise Manager 1999 $460,000 $151,800 $ 0 80,000 $7,430
& Product Development
Gary Vasques................ 2001 $386,667 $128,700 $ 0 39,600 $4,773
Executive Vice President, 2000 $367,167 $122,100 $ 0 38,500 $6,438
Marketing 1999 $350,500 $116,490 $ 0 40,000 $6,644
- --------
(1)None of the named executive officers held restricted stock at the end of
fiscal 2001.
(2)Fiscal 2001 amounts consist of interest expense and related tax
reimbursement payments for Mr. Montgomery and Mr. Mansell made under an
agreement. See "Executive Compensation--Other Agreements". 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 2001 under the
Company's savings plan in the following amounts: Mr. Montgomery ($3,576),
Mr. Mansell ($3,611), Ms. Meier ($3,458), Mr. Leto ($3,549), and Mr. Vasques
($1,444). Also includes a contribution of $2,080 by the Company for fiscal
2001 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 2001 for term life, long term disability and
accidental death and dismemberment insurance under the Company's life
insurance plan: Mr. Montgomery ($2,569), Mr. Mansell ($2,323), Ms. Meier
($2,157), Mr. Leto ($1,563), and Mr. Vasques ($1,248).
Option Grants In Last Fiscal Year
The Company adopted a 1992 Long-Term Compensation Plan (the "1992 Plan"), a
1994 Long-Term Compensation Plan (the "1994 Plan") and a 1997 Stock Option Plan
for Outside Directors (the "1997 Plan"). Awards under the 1992 Plan and the
1994 Plan may be in the form of stock options; stock appreciation rights;
Common Stock, including restricted stock; Common Stock units; performance
units; and performance shares.
7
Awards under the 1997 Plan may be in the form of stock options only. During
fiscal 2001, no awards were granted under the 1992 Plan, and only stock options
were granted under the 1994 Plan. All awards to outside directors during fiscal
2001 were granted under the 1997 Plan.
The table below provides information regarding option grants during fiscal
2001 to the persons named in the Summary Compensation Table.
% of Total Potential Realizable Value at
Number of Options Assumed Annual Rate of
Shares Granted to Stock Price Appreciation for
Underlying Employees Exercise Option Term(s)/(3)/
Options in Fiscal Price Expiration -----------------------------
Name Granted /(1), (2)/ Year ($/Share) Date 5% 10%
---- ----------------- ---------- --------- ---------- ---------- -----------
R. Lawrence Montgomery 130,000 4.5% $66.30 1/30/17 $9,299,282 $27,384,702
Kevin Mansell......... 97,500 3.4% $66.30 1/30/17 $6,974,461 $20,538,526
Arlene Meier.......... 97,500 3.4% $66.30 1/30/17 $6,974,461 $20,538,526
Richard B. Leto....... 55,000 1.9% $66.30 1/30/17 $3,934,312 $11,585,835
Gary Vasques.......... 39,600 1.4% $66.30 1/30/17 $2,832,704 $ 8,341,802
- --------
(1)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.
(2)Represents options granted in the fiscal year awarded with an exercise price
equal to the fair market value of the Common Stock on the date of grant and
exercisable in four equal annual installments commencing one year from date
of grant, with full vesting on the fourth anniversary of the date of grant.
(3)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 2001 and the value of stock options held at February 2, 2002 by
the persons named in the Summary Compensation Table.
Number of Shares Value of Unexercised In-the-
Shares Underlying Unexercised Money Options at Fiscal
Acquired Options at Fiscal Year End Year End
on Value -------------------------- ----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- ---------- ----------- ------------- ----------- -------------
R. Lawrence Montgomery 156,200 $9,155,369 1,938,306 1,125,900 $99,831,945 $42,929,142
Kevin Mansell......... 103,200 6,135,959 968,931 365,625 $47,797,399 $ 6,318,906
Arlene Meier.......... 82,100 4,554,771 1,363,207 423,393 $74,318,609 $ 8,938,238
Richard B. Leto....... 60,700 3,243,568 409,350 658,750 $18,974,756 $30,768,750
Gary Vasques.......... 67,100 3,675,719 398,025 518,475 $20,538,866 $25,690,604
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file reports with the Securities and
Exchange Commission disclosing their ownership, and changes in their ownership,
of the Company's stock. Copies of these reports must also be furnished to the
Company. Based solely upon its review of these copies, the Company believes
that during fiscal 2001, all of such forms were filed
8
on a timely basis by reporting persons, with the exception of filings for
Messrs. Kellogg, Baker and Herma, with respect to the acquisition of 500, 200,
and 100 shares, respectively, of the Company's Common Stock. These forms were
filed late.
Employment Agreements
The Company has Employment Agreements with Mr. Montgomery, Mr. Mansell and
Ms. Meier. As of the end of fiscal 2001, Mr. Montgomery's Employment Agreement
provided for an annual base salary of $930,000, Mr. Mansell's Employment
Agreement provided for an annual base salary of $740,000, and Ms. Meier's
Employment Agreement provided for an annual base salary of $600,000, in each
case subject to increase by the Company's Board of Directors. Mr. Montgomery,
Mr. Mansell and Ms. Meier are 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, the
executive's 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 the executive's
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 the Company), or by the executive upon
voluntary termination of employment. If the employment of any of the executives
is terminated upon the executive's 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 or her 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 Internal Revenue Code of 1986, as amended (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 the executive's employment.
Other Agreements
During fiscal 1992, Messrs. Montgomery and Mansell, as well as several
former executives, 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
9
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. The largest amount of indebtedness
outstanding during fiscal 2001 under the agreements with Messrs. Montgomery and
Mansell were $263,638 and $314,129, respectively. These amounts were repaid in
full by Messrs. Montgomery and Mansell during fiscal 2001, pursuant to their
respective agreements.
Other Transactions
The Company occupies 11 stores that it leases from entities owned or managed
by Mr. Simon, his brother and their affiliates. During fiscal 2001, the Company
incurred rent expense of $4,407,000 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.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. The Board of Directors has adopted a written charter under
which the Audit Committee operates (a copy of which was included in the
Company's proxy materials relating to the Company's May 31, 2001 annual meeting
of shareholders) and has determined that all of the Audit Committee members are
"independent" under the currently applicable rules of the New York Stock
Exchange.
In fulfilling its oversight responsibilities, the Audit Committee reviewed
the audited financial statements in the Annual Report with management including
a discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing standards, including
Statement on Auditing Standards No. 90. In addition, the Audit Committee
obtained from Ernst & Young LLP a formal written statement required by
Independence Standard No. 1, "Independence Discussions with Audit Committees,"
as amended, by the Independence Standards Board and discussed with the auditors
any relationships that may impact their objectivity and independence. The Audit
Committee has also considered whether the provision of nonaudit services by
Ernst & Young is compatible with maintaining Ernst & Young's independence, and
has satisfied itself with respect to the auditors' independence.
The Audit Committee discussed with the Company's internal and independent
auditors the overall scope and plans for their respective audits. The Audit
Committee meets with the internal and independent auditors, with and without
management present, to discuss the results of their examinations, their
evaluations of the Company's internal controls, and the overall quality of the
Company's financial reporting. The Audit Committee met four times during fiscal
year 2001.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual
10
Report on Form 10-K for the year ended February 2, 2002 for filing with the
Securities and Exchange Commission. The Audit Committee and the Board have
recommended, subject to shareholder approval, the selection of the Company's
independent auditors.
R. Elton White, fiscal 2001 Audit Committee Chair
Wayne Embry, fiscal 2001 Audit Committee Member
Frank Sica, fiscal 2001 Audit Committee Member
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board of Directors of
Kohl's Corporation (the "Compensation Committee") is pleased to present its
report on executive compensation. This report documents the components of the
Company's executive officer compensation programs and describes the basis on
which compensation determinations for fiscal 2001 were made by the Compensation
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 Compensation 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.
Every Company executive is expected to uphold and comply with the social and
ethical responsibilities set forth in the Company's written code of ethical
standards. This code describes every executive's responsibilities to the
Company's associates, customers, investors, business partners and the
communities in which the Company does business. Upholding these ethical
standards contributes to the success of the individual executive, and to the
Company as a whole. An executive's performance in meeting these standards is
taken into account for purposes of determining the executive's compensation
level and stock option awards.
Compensation Program Components
The particular elements of the Company's compensation program for executive
officers are explained below.
Base Salary. The Compensation Committee establishes, in its discretion,
increases in salaries for the Chief Executive Officer, President and Chief
Operating Officer. The Chief Executive Officer, President and Chief Operating
Officer generally determine, in their discretion, based primarily on individual
performance evaluations, increases in salaries for the other executive
officers, but the Compensation Committee reviews their decisions. Salary
increases for executive officers generally range from 3% to 8.5%, but in some
cases may increase more than 8.5% 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 Compensation Committee, Messrs.
11
Montgomery and Mansell and Ms. Meier 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 2001, Mr. Montgomery's base salary increased 7.5% from
$865,000 to $930,000; Mr. Mansell's salary increased from $660,000 to $740,000.
Ms. Meier's salary remained at $600,000, due to the fact that her salary had
been adjusted in November 2000 in connection with her promotion to the position
of Chief Operating Officer. The fiscal 2001 increases for Messrs. Montgomery
and Mansell were based on the Compensation Committee's assessment of overall
corporate performance and were not based on specific criteria. Under the terms
of the employment agreements for Ms. Meier and Messrs. Montgomery and Mansell,
their base salaries cannot be reduced without their consent. Base salary merit
increases granted to all executive officers during fiscal 2001 averaged 6.4%.
Base salaries of the other executive officers of the Company are based on a
review of salaries paid to executives of a representative group of domestic
retailers and general industry, adjusted for the size of the companies,
corporate growth rates, and the scope of the executives' responsibilities.
Increases in base salary result from promotions, job scope expansion, increased
responsibilities, company growth and from merit increases determined by the
executive's personal performance and the executive's position in the salary
range. Merit increase guidelines are established each year based on current
economic and market conditions.
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 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 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
914 associates participated in the plan. For fiscal 2001, Messrs. Montgomery
and Mansell and Ms. Meier 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 earnings in excess of the
highest performance goal set by the Compensation Committee.
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 2001.
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.
Stock options granted for performance vest over a period of four years. Stock
options granted to executive officers and senior vice presidents to recognize
increased responsibilities vest over a period of seven years. Stock options
granted for recruitment of executive officers and senior vice presidents vest
over a period of seven years. Participants must be employed by the Company at
the time of vesting in order to exercise the options except that participants
are required to exercise vested stock options within a specified time period in
the event of termination of employment, disability or death.
12
The Compensation 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 Compensation Committee
regularly requests and receives recommendations from the Chief Executive
Officer, President and Chief Operating Officer regarding option grants for the
other executive officers.
In fiscal 2001, options for 880,720 shares of Common Stock were granted by
the Compensation Committee to the Company's executive officers, including
grants of 130,000 shares to Mr. Montgomery and 97,500 shares each to Mr.
Mansell and Ms. Meier.
Tax Law Limitation on Deductibility of Compensation
The Compensation 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 Compensation
Committee currently intends to recommend compensation amounts and plans which
meet the requirements for deductibility, and the Compensation Committee expects
that Section 162(m) will not limit the deductibility of any compensation
expense in fiscal 2001. Messrs. Montgomery and Mansell deferred a portion of
their compensation in fiscal 2001.
Summary
The Compensation Committee has the responsibility for ensuring that the
Company's compensation program continues to be in the best interest of its
shareholders. The Compensation 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.
In order to ascertain that compensation levels of executive officers are
generally reasonable and competitive, the Compensation Committee reviews
compensation surveys and certain publicly available compensation information
disclosed by comparable companies and other retailers in their proxy
statements. The fiscal 2001 salary and bonus of the named executive officers of
the Company were comparable or below the 2000 mean salary and bonus of their
comparable position in the retail compensation surveys reviewed by the
Compensation Committee, when adjusted for company performance, size and growth
rates, and the individuals' respective scope of responsibilities. 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 Compensation Committee believes
that the total compensation program for executive officers is consistent with
the Compensation Committee's compensation philosophy. Base salaries are set at
levels that the Compensation 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 Compensation Committee considers the overall executive
compensation package an important reason for the Company's success to date.
James D. Ericson, fiscal 2001 Compensation Committee Member
Frank V. Sica, fiscal 2001 Compensation Committee Member
Herbert Simon, fiscal 2001 Compensation Committee Member
13
STOCK PRICE PERFORMANCE GRAPH
The following graph shows changes from February 1, 1997 through February 2,
2002 (the last day in fiscal 2001) in the value of $100 invested in (1) the
Company, (2) the Standard & Poor's 500 Index and (3) the S&P-500 Department
Stores 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.
[CHART]
Kohl's S&P 500 Retail-500
Corporation Index
2/1/1997 $100.00 $100.00 $100.00
1/31/1998 $178.46 $126.67 $131.21
1/30/1999 $348.56 $167.56 $129.74
1/29/2000 $354.03 $181.74 $102.61
2/3/2001 $704.73 $181.41 $133.89
2/2/2002 $673.97 $152.91 $147.36
14
ITEM TWO
RATIFICATION OF AUDITORS
Upon the recommendation and approval of the Audit Committee, the Board of
Directors has approved the selection of Ernst & Young LLP as independent
auditors of the Company and its subsidiaries for fiscal 2002. This selection is
being presented to the shareholders for their ratification. 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 2002. 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.
Audit Fees
Fees paid to Ernst & Young LLP for the last annual audit were $283,000.
Financial Information Systems Design and Implementation Fees
The Company did not pay any fees to Ernst & Young LLP during the last fiscal
year for financial information system design and implementation.
All Other Fees
All other fees paid to Ernst & Young LLP were $368,000, including fees for
audit-related services of $93,000 and nonaudit services of $275,000, of which
$160,000 was for tax consulting. Audit-related services generally include
benefit plan audits, quarterly and other accounting consultations, offering
memoranda and SEC registration statements.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
ITEM THREE
SHAREHOLDER PROPOSAL
The following shareholder proposal was submitted by the Sisters of St.
Francis of Assisi (the "Lead Proponent") and from certain other co-proponents.
The Lead Proponent claims to beneficially own 100 shares of the Company's
stock. A list of the names, addresses and number of the Company's shares held
by each co-proponent will be promptly provided upon oral or written request. If
a representative of the co-proponents who is qualified under state law is
present and submits the proposal for a vote at the Annual Meeting, then the
proposal will be voted upon. In accordance with federal securities regulations,
we have included the proposal exactly as submitted by the co-proponents. To
ensure that readers can easily distinguish between material provided by the
co-proponents and material provided by the Company, we have put a box around
material provided by the co-proponents.
15
Whereas: Consumers and shareholders continue to be seriously concerned about
whether abusive working conditions and absence of a sustainable living wage
exist in facilities that produce or assemble the products they buy.
Three-quarters of the US consumers surveyed would avoid shopping at a
retailer that they knew sold garments made in sweatshops. An overwhelming 86%
of those surveyed would pay a 5% mark-up to ensure decent working conditions.
("The Consumer and Sweatshops," Marymount University Survey, November 1999).
To improve the quality of life of workers who make its products, our company
should adopt a policy to periodically review the working conditions and wage
levels of workers to make sure they can meet their basic needs.
We commend the company for strengthening its Terms of Engagement by adding
new language, including human rights criteria for selecting where to do
business and protections for workers who report alleged violations. In
addition, we commend the company for adopting a compensation policy for top
executives that ties compensation to social performance.
We recommend that the company make direct reference in its standards to the
International Labor Organization conventions that make up the internationally
recognized core labor standards. These include:
1 . All workers have the right to form and join trade unions and to
bargain collectively. (ILO Conventions 87 and 98).
2. Worker representatives shall not be the subject of discrimination and
shall have access to all workplaces necessary to enable them to carry out
their representation functions. (ILO Convention 135).
3. There shall be no discrimination or intimidation in employment.
Equality of opportunity and treatment shall be provided regardless of race,
color, sex, religion, political opinion, age, nationality, social origin or
other distinguishing characteristics. (ILO Conventions 100 and 111).
4. Employment shall be freely chosen. There shall be no use of force,
including bonded or prison labor. (ILO Conventions 29 and 105).
5. There shall be no use of child labor. (ILO Convention 138).
Our company needs to demonstrate that its Terms of Engagement are being
implemented by developing an outside, independent monitoring program,
especially utilizing the skills of local, respected religious, labor and human
rights groups. Credible independent monitoring can ensure compliance with our
company's standards and assure shareholders and consumers that products are not
made under sweatshop conditions.
According to Business Week, "Employers in several developing countries are
even asking for independent monitoring of their factories to attract or retain
orders from Western companies." (Business Week, "Do-It-Yourself Labor
Standards," November 19, 2001).
Reports that suppliers are exploiting workers may damage our company's
reputation and generate a consumer backlash. It makes good business sense to
detect violations and make the necessary changes before conditions get worse
and negative publicity is generated.
Resolved, the shareholders request that Kohl's commit to a program of
outside, independent monitoring of compliance with its Terms of Engagement for
its vendors and suppliers, and report annually, the first such report, omitting
confidential information and prepared at reasonable cost, to be completed by
January 2003.
16
STATEMENT OF THE BOARD OF DIRECTORS AND MANAGEMENT IN OPPOSITION TO SHAREHOLDER
PROPOSAL
The Company believes that it has established an effective program of
monitoring compliance with its Terms of Engagement for its vendors and
suppliers. As a result, adoption of this proposal is unnecessary.
The Company recognizes its ethical and business responsibility to assure
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.
For this reason, the Company has developed and distributed "Terms of
Engagement" to all of its vendors and suppliers ("Vendor Partners"). The Terms
of Engagement, which were first developed in 1996, describe Kohl's expectations
and provide specific compliance requirements on a range of issues, including
wages and benefits, working hours, child labor, prison and forced labor,
discrimination, freedom of association, health and safety and women's rights.
As a condition to doing business with the Company, Vendor Partners must agree
in writing to ensure compliance with the Terms of Engagement at all
manufacturing facilities producing merchandise for the Company.
The Terms of Engagement are posted in each manufacturing facility that
produces merchandise for the Company in the language of the workers and
facility management. The Terms of Engagement have been translated into 37
languages. Through its principal buying agent, the Company provides training to
its direct import Vendor Partners and manufacturing facility managers on the
Terms of Engagement to provide clear guidelines and the Company's expectation
of compliance. These training sessions involve participation of representatives
from government, the Company's third-party monitoring firms and the Company's
principal buying agent.
Compliance with the Terms of Engagement within individual manufacturing
facilities is monitored pursuant to a very thorough and structured third-party
monitoring program, which emphasizes remediation to correct any deficiencies
discovered. Kohl's currently has retained two (2) such monitoring firms that
each have professionals located in the territories in which manufacturing
facilities are located and that each have extensive experience with monitoring
for compliance for social responsibility on behalf of numerous companies.
A typical monitoring visit begins with an opening meeting with facility
management, during which the monitor reviews the Terms of Engagement with
management and the monitoring procedures are described in the language
understood by the manufacturing facility management. The monitors then perform
a facilities walk through where manufacturing facility conditions are observed,
detailed examination of facility personnel and payroll records are conducted
and other business records are reviewed. A manufacturing facility floor plan is
also reviewed to ensure the entire facility is inspected. Workers are selected
at random to be interviewed concerning working conditions and employment
practices and all interviews are conducted in private and in the local language
of the workers. The content of these worker interviews is kept confidential
from the facility's management.
Upon completion of each monitoring visit, the monitor summarizes and
discusses each detected violation with the facility's management team. The
management team is asked to remedy all identified violations or deficiencies. A
written monitoring report is promptly delivered to the Company. The Company's
staff reviews the monitor's report and sends a letter summarizing the
monitoring results in detail to the manufacturing facility and the Vendor
Partner notifying each of them in writing of any Terms of Engagement violations
and deficiencies that have been identified. In such communication, the Company
provides recommendations of corrective action needed to bring the manufacturing
facility into compliance. The Company's response to any discovery of
noncompliance is dependent on the severity of the noncompliance. Severe
violations may require an immediate termination of the business relationship or
notification of responsible authorities. In situations involving less severe
violations, the Vendor Partner is encouraged to adopt a corrective action plan,
and follow-up evaluations are conducted to verify subsequent compliance with
the Terms of Engagement.
17
To further ensure that manufacturing facilities are compliant, the Company
requires its principal buying agent, who is trained to recognize violations of
the Terms of Engagement, to notify the Company of such matters when they are
observed. Such personnel visit manufacturing facilities at the inception of the
relationship with the Company and several times during the manufacturing
process. For certain high-volume merchandise purchased by the Company, the
buying agent is onsite at the manufacturing facility each day during the
manufacturing process. The buying agent also confirms that corrective action of
previously observed Terms of Engagement violations have been undertaken, as
required. The Company's internal sourcing staff also raises issues of
noncompliance which are observed during manufacturing facility visits.
A copy of the Company's Terms of Engagement and a detailed description of
the Company's inspection process is posted on the Company's website at
www.kohlspartners.com. Specific information with respect to the results of each
factory inspection, however, is kept confidential. The Company believes that
the public release of such results would be harmful to the Company, its Vendor
Partners and the workers in overseas factories where the Company's products are
manufactured. This harm greatly outweighs any benefit that shareholders may
obtain from receiving the additional information.
The Company believes that it has already addressed the concerns raised in
the shareholders' 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.
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.
Shareholder Proposals
Proposals and director nominations that shareholders intend to present at
the 2003 Annual Meeting of Shareholders must be received at the Company's
executive offices in Menomonee Falls, Wisconsin no later than January 21, 2003
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 10, 2002 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
Unless otherwise directed, all proxies will be voted FOR the election of
each of the individuals nominated to serve as a Class I director, FOR the
ratification of the appointment of Ernst & Young LLP as independent
18
auditors and AGAINST the adoption of the shareholder proposal. 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. Abstentions and broker non-votes (i.e., proxies from brokers or
nominees indicating that such persons do not have discretionary authority as to
certain shares to vote on a particular matter) will be treated as present for
purposes of determining a quorum. Any shares not voted, whether by withheld
authority, broker non-vote or otherwise, will have no effect on the outcome of
the voting.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR FISCAL 2001 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
Richard D. Schepp,
Secretary
Menomonee Falls, Wisconsin
April 12, 2002
19
[Logo of Kohl's Corporation]
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OR
INTERNET
-------------------
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. Go to the website address listed above.
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OR
MAIL
-------------------
. Mark, sign and date your Proxy Card.
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. Return the card in the postage-paid envelope provided.
Your telephone or internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned the proxy card. If you
have submitted your proxy by telephone or the internet there is no need for you
to mail back your proxy card.
----------------------------
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----------------------------
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- --------------------------------------------------------------------------------
[_] Mark, Sign, Date and Return
the Proxy Card Promptly
Using the Enclosed Envelope.
[X]
Votes must be indicated
(x) in Black or Blue ink.
1. Election of directors of the Company for a term of office expiring in 2005.
FOR WITHHOLD
ALL [_] FOR ALL [_] EXCEPTIONS [_]
Nominees: James D. Ericson, William S. Kellogg, Arlene Meier and R. Elton White
(Instructions: To withhold authority to vote for any individual nominee, mark
the "Exceptions*" box and write that nominee's name on the following blank
line.)
Exceptions*_______________________________________
2. Ratify appointment of Ernst & Young LLP as independent auditors.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Shareholder proposal concerning monitoring of vendors' compliance with the
Company's Terms of Engagement. The Board of Directors opposes this
proposal.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before the meeting.
I agree to access future proxy statements and annual reports over the internet.
[_]
To include any comments please mark this box.
[_]
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Date Share Owner sign here Co-Owner sign here
- ---- -------------------------------- ----------------------------------
- ---- -------------------------------- ----------------------------------
ANNUAL MEETING OF SHAREHOLDERS
OF
KOHL'S CORPORATION
Tuesday, May 21, 2002
10:30 a.m.
Midwest Express Center
400 West Wisconsin Avenue
Milwaukee, Wisconsin 53203
AGENDA
------
1. To elect four directors to serve for a three-year term;
2. To ratify the appointment of Ernst & Young LLP as independent
auditors;
3. To vote on a shareholder proposal, if presented, concerning monitoring
of vendors' compliance with the Company's Terms of Engagement; and
4. To act upon any other business that may properly come before the
meeting or any adjournment thereof.
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YOUR VOTE IS IMPORTANT!
Whether or not you plan to attend the Annual Meeting, please promptly
vote by telephone, through the internet or by completing and
returning the attached proxy card.
Voting early will not prevent you from voting in
person at the Annual Meeting if you wish to
do so. Your proxy is revocable in
accordance with the procedures set forth in
the proxy statement.
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KOHL'S CORPORATION
P R O X Y
Annual Meeting of Shareholders May 21, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Richard D. Schepp and Arlene Meier and each
or either 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, and in their discretion on all other matters as may
properly come before the meeting, any or all of the shares of Common Stock of
KOHL'S CORPORATION, held of record by the undersigned on March 26, 2002, at the
Annual Meeting of Shareholders of Kohl's Corporation to be held May 21, 2002, 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
To change your address, please mark this box. [_]