<PAGE>

                                                                   EXHIBIT 10.14

                             EMPLOYMENT AGREEMENT
                             --------------------


     THIS AGREEMENT made and entered into as of the 15th day of November, 2000,
by and between KOHL'S DEPARTMENT STORES, INC., a Delaware corporation
("Corporation"), and Arlene Meier ("Executive").


                             W I T N E S S E T H:
                             --------------------


     WHEREAS, the Corporation desires to employ the Executive in the capacity
and under the terms set forth herein and the Executive desires to be employed by
the Corporation on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Corporation and the Executive agree as
follows:


                                   ARTICLE I
                                   ---------

     Employment Duties.  During the term of the Executive's employment
     -----------------
hereunder, the Corporation shall employ the Executive and the Executive shall
serve as Chief Operating Officer of the Corporation. Subject to the authority
and direction of the Chairman, the Chief Executive Officer and Board of
Directors of the Corporation, the Executive shall have supervision and control
over, and responsibility for such general management and day-to-day operations
of the Corporation as may be designated by the Chief Executive Officer. The
Executive shall also have such other powers and duties as may from time to time
be prescribed by the Board of Directors of the Corporation; provided, however,
that such duties are reasonably consistent with the duties normally performed by
a Chief Operating Officer. The Executive's principal place of employment shall
be at the Corporation's headquarters in Menomonee Falls, Wisconsin; provided,
however, that the Executive acknowledges and agrees that she may from time to
time be required to travel outside Milwaukee, Wisconsin on behalf of the
Corporation. The Executive shall devote her entire working time and efforts to
the business affairs of the Corporation and its affiliates and shall faithfully
and to the best of her ability perform her duties hereunder, provided that
Executive may take reasonable amounts of time to serve on corporate, civil or
charitable boards or committees if such activities do not interfere with the
performance of Executive's duties hereunder. The Executive hereby agrees to
serve as an officer of the Corporation and of affiliates of the Corporation as
part of her contemplated duties hereunder without additional compensation
therefor.
<PAGE>

                                  ARTICLE II
                                  ----------

     Term. The term of the Executive's employment (the "Employment Term") under
     ----
this Agreement shall commence as of the date first above written (the
"Anniversary Date"), and shall, except as it may otherwise be subject to
termination hereunder, continue thereafter until the third anniversary of such
Anniversary Date; provided, however, that at the end of each day during the
Employment Term the Employment Term shall be automatically extended for one (1)
day unless either party shall give written notice to the other not less than
thirty (30) days prior thereto that the Employment Term shall not be so
extended.


                                  ARTICLE III
                                  -----------


     Compensation.
     ------------

     3.1. Salary.  The Corporation shall pay to the Executive an annual base
     -----------
salary in the amount of Six Hundred Thousand Dollars ($600,000.00) during the
Employment Term ("Annual Base Salary"). The Executive's Annual Base Salary shall
be payable in equal installments not less frequently than monthly. Executive's
Annual Base Salary shall be reviewed by the Board of Directors of the
Corporation at least annually and may be increased by such amount as the Board
of Directors, in its sole discretion, may determine, taking into consideration
the profitability of the Corporation relative to its business plan and such
other factors as the Board of Directors may deem relevant for that purpose.
Annual Base Salary shall not be reduced after any such increase and the term
Annual Base Salary as utilized in this Agreement shall refer to Annual Base
Salary as so increased.

     3.2. Bonuses. The Executive shall participate in bonus plans established
     ------------
for the executive officers of the Corporation on terms no less favorable than
those applicable to other employees of the Corporation of comparable status with
the Executive.


                                  ARTICLE IV
                                  ----------


     Termination of Employment.
     --------------------------

     4.1. Causes for Termination. Notwithstanding the term set forth in Article
     ---------------------------
II, above, Executive's employment hereunder may be terminated prior to the
expiration of such term upon occurrence of any of the following events:

     4.1.1. Death. The Executive's employment shall terminate upon the
     ------------
Executive's death.

     4.1.2. Disability. The Executive's employment shall terminate in the event
     -----------------
of the Disability of the Executive. For purposes of this Agreement, the term
"Disability" shall be defined as the inability of the Executive to perform her
normal duties as a full-time employee of

                                       2
<PAGE>

the Corporation for a continuous period of two hundred seventy (270) consecutive
days by reason of physical or mental illness or incapacity, or for periods of
physical or mental illness or incapacity aggregating two hundred fifteen (215)
business days in any consecutive twelve (12) month period. If the Corporation
determines in good faith that the Disability of Executive has occurred it may
give the Executive written notice of its intention to terminate the Executive's
employment. In such event, Executive's employment with the Corporation shall
terminate on the thirtieth (30th) day after receipt of such notice by the
Executive unless within such thirty (30) day period Executive shall have
returned to full-time performance of her duties or Executive shall deliver
written notice to the Corporation disagreeing that a Disability has occurred. If
there is any dispute as to whether Executive is disabled, such question shall be
submitted to a licensed physician for the purpose of making such determination.
An examination of the Executive shall be made within thirty (30) days after
written notice by the Corporation to the Executive by a licensed physician
appointed by the Corporation. The Executive shall submit to such examination and
provide such information as such physician may request. If the Executive shall
disagree with the determination of the physician appointed by the Corporation,
she may request an examination to be conducted by a physician of her own
choosing. If the two (2) physicians shall disagree, the two (2) physicians shall
jointly appoint an independent physician, whose determination shall be binding
and conclusive on all parties concerned for purposes of this Agreement. The
termination shall be deemed effective as of the date of the final determination
of Disability.

     4.1.3. Cause. The Corporation may terminate the Executive for "Cause".  A
     ------------
termination for Cause is a termination upon (a) the continued failure by
Executive to substantially perform her duties with the Corporation (other than
any such failure resulting from termination by Executive for Good Reason) after
a written demand for substantial performance is delivered to Executive that
specifically identifies the manner in which the Corporation believes that
Executive has not substantially performed her duties, and Executive has failed
to resume substantial performance of her duties on a continuous basis within
sixty (60) days after receiving such demand; (b) the willful engaging by
Executive in conduct which is demonstrably and materially injurious to the
Corporation, monetarily or otherwise; (c) any dishonest or fraudulent conduct
which results or is intended to result in gain to Executive or Executive's
personal enrichment at the expense of the Corporation; or (d) Executive's
conviction of a felony, misdemeanor or criminal offense (other than traffic
violations and other minor offenses).

     4.1.4. Good Reason. The Executive may terminate her employment for "Good
     ------------------
Reason". "Good Reason" shall mean the occurrence of any of the following: (a) A
change in the Executive's status, title, position or responsibilities (including
reporting responsibilities) which, in the Executive's reasonable judgment, does
not represent a promotion from her status, title, position or responsibilities
as in effect immediately prior thereto; the assignment to the Executive of any
duties or responsibilities which, in the Executive's reasonable judgment, are
inconsistent with her status, title, position or responsibilities in effect
immediately prior to such assignment; or any removal of the Executive from or
failure to reappoint or reelect her to any position, except in connection with
the termination of her employment for Disability, Cause, as a result of her
death or by the Executive other than for Good Reason. (b) The insolvency or the
filing (by any party, including the Corporation) of a petition for bankruptcy of
the Corporation. (c) Any material breach by the Corporation of this Agreement.
(d) Any purported termination of the

                                       3
<PAGE>

Executive's employment for Cause by the Corporation which does not comply with
the terms of this Agreement. (e) The failure of the Corporation to obtain an
agreement, satisfactory to the Executive, from any successor or assign of the
Corporation, to assume and agree to perform this Agreement, as contemplated in
Section 9.4 hereof. Provided, however, that no termination shall be for Good
Reason until the Corporation shall have had at least thirty (30) days to cure
any conduct alleged to have caused Good Reason after a written demand shall have
been delivered to the Corporation specifying the alleged conduct. The
Executive's right to terminate her employment pursuant to this Section 4.1.4
shall not be affected by her incapacity due to physical or mental illness. The
Executive's continued employment or failure to give Notice of Termination shall
not constitute consent to, or a waiver of rights with respect to, any
circumstances constituting Good Reason hereunder. Subject to the thirty (30) day
cure period set forth above, any good faith determination of Good Reason made by
the Executive shall be conclusive.

     4.1.5. Voluntary. The Executive's employment shall terminate upon the
     ----------------
Executive's voluntary resignation as an employee of the Corporation.

     4.2. Notice of Termination. Any purported termination by the Corporation or
     --------------------------
by the Executive (other than by death of the Executive) shall be communicated by
Notice of Termination to the other. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated, and (iii) the Termination Date. For purposes of this
Agreement, no such purported termination of employment shall be effective
without such Notice of Termination.

     4.3. Termination Date, etc. "Termination Date" shall mean in the case of
     --------------------------
the Executive's death, her date of death, in the event of Executive's
Disability, the date set forth in Section 4.1.2, or in all other cases, the date
specified in the Notice of Termination subject to the following: (a) If the
Executive's employment is terminated by the Corporation, the date specified in
the Notice of Termination shall be at least thirty (30) days after the date the
Notice of Termination is given to the Executive, Provided, however, that in the
case of Disability, the Executive shall not have returned to the full-time
performance of her duties during such period of at least thirty (30) days. (b)
If the Executive's employment is terminated for Good Reason, the date specified
in the Notice of Termination shall not be less than thirty (30) nor more than
sixty (60) days after the date the Notice of Termination is given to the
Corporation. (c) Except in the case of a termination for Disability subject to
the provisions of Section 4.1.2, in the event that within thirty (30) days
following the date of receipt of the Notice of Termination, one party notifies
the other that a dispute exists concerning the basis for termination, the
Executive's employment hereunder shall not be terminated except after the
dispute is finally resolved and a Termination Date is determined either by a
mutual written agreement of the parties, or by a binding and final judgment
order or decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been perfected).

                                       4
<PAGE>

                                   ARTICLE V
                                   ---------


     Obligations of the Corporation Upon Termination
     -----------------------------------------------

     5.1. Good Reason; Other Than for Cause, Death or Disability. If, during the
     -----------------------------------------------------------
Employment Term, the Corporation shall terminate the Executive's employment
other than for Cause or Disability or the Executive shall terminate employment
for Good Reason:

(a) The Corporation shall pay to the Executive in a lump sum in cash within ten
    (10) days after the Termination Date the aggregate of the following amounts:

     (1) The sum of:
          (i)    The Executive's Annual Base Salary through the Termination Date
                 to the extent not theretofore paid;
          (ii)   The product of (x) the sum of the average bonuses paid or
                 payable, including any amounts that were deferred, and the
                 average value of any stock options and stock appreciation
                 rights awarded (computed solely by reference to the difference
                 between the value of the stock to which it relates and the
                 exercise price or base value thereof) to the Executive in
                 respect of the three (3) fiscal years immediately preceding the
                 fiscal year in which the Effective Date occurs (the "Recent
                 Average Bonus") and (y) a fraction, the numerator of which is
                 the number of days completed in the current fiscal year through
                 the Termination Date, and the denominator of which is 365; and
          (iii)  Except as provided in Section 5.1(b), any compensation
                 previously deferred by the Executive (together with any accrued
                 interest or earnings thereon) and any accrued vacation pay, in
                 each case to the extent not theretofore paid. The sum of the
                 amounts described in clauses (i), (ii) and (iii)shall be
                 hereinafter referred to as the "Accrued Obligations";

     (2)  The amount equal to the product of: (i) the number of days remaining
          in the Employment Term as of the Termination Date had the Executive's
          employment not been terminated (the "Remaining Employment Term")
          divided by 365, and (ii) the sum of (x) the Executive's Annual Base
          Salary (increased for this purpose by any Section 401(k) deferrals,
          cafeteria plan elections, or other deferrals that would have 7
          increased Executive's Annual Base Salary if paid in cash to Executive
          when earned) and (y) the Executive's Recent Average Bonus.

(b) To the extent not theretofore paid or provided, the Corporation shall timely
    pay or provide to the Executive any other amounts or benefits required to be
    paid or provided or which the Executive is eligible to receive after a
    termination of Employment under any plan, program, Policy or practice or
    contract or agreement of the Corporation (such other amounts and benefits
    shall be hereinafter referred to as the "Other Benefits").

                                       5
<PAGE>

     5.2. Death. If the Executive's employment is terminated by reason of the
     ----------
Executive's death during the Employment Term, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, except that the Corporation shall pay or provide the Accrued
Obligations, six (6) months of Annual Base Salary, and the other Benefits. The
Accrued Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within thirty (30) days of the Termination
Date. The six (6) months of Annual Base Salary shall be paid during the six (6)
month period following the Termination Date on a monthly basis. With respect to
the provision of Other Benefits, the term Other Benefits as utilized in this
section shall include, and the Executive's family shall be entitled to receive,
benefits at least equal to the most favorable benefits provided by the
Corporation to surviving families of peer executives of the Corporation.

     5.3. Disability. If the Executive's employment is terminated by reason of
     ---------------
the Executive's Disability during the Employment Term, this Agreement shall
terminate without further obligations to the Executive, except that the Company
shall pay or provide the Accrued Obligations, six (6) months of Annual Base
Salary (subject to reduction as provided below) and the Other Benefits. The
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
thirty (30) days of the Termination Date. The six (6) months of Annual Base
Salary shall be paid during the six (6) month period following the termination
on a monthly basis. The six (6) months of Annual Base Salary shall be reduced by
any amounts paid to the Executive for such six (6) month period under any
disability insurance or program paid by the Corporation. The provision of Other
Benefits shall include, and the Executive shall be entitled to receive,
disability and other benefits at least equal to the most favorable of those
generally provided by the Corporation to disabled executives and/or their
families to other peer executives and their families.

     5.4. Cause; Other Than for Good Reason. If the Executive's employment shall
     --------------------------------------
be terminated for Cause during the Employment Term, or if the Executive
voluntarily terminates employment during the Employment Term for other than Good
Reason, this Agreement (other than Section 7.3, if applicable, and Article VIII
thereof) shall terminate without further obligations to the Executive other than
the obligation to pay to the Executive Annual Base Salary through the Date of
Termination, any other amounts earned or accrued through the Termination Date,
and the amount of any compensation previously deferred by the Executive, in each
case to the extent theretofore unpaid; provided that if Executive voluntarily
terminates Executive shall receive the benefits normally provided upon normal or
early retirement with respect to other peer Executives and their families to the
extent she qualifies therefor. All salary or compensation hereunder shall be
paid to the Executive in a lump sum in cash within thirty (30) days of the Date
of Termination.

     5.5. Delinquent Payments. If any of the payments referred to in this
     ------------------------
Article V are not paid within the time specified after the Termination Date
(hereinafter a "Delinquent Payment"), in addition to such principal sum, the
Corporation will pay to the Executive interest on all such Delinquent Payments
computed at the prime rate as announced from time to time by Bankers Trust
Company, New York, New York, or its successor, compounded monthly.

                                       6
<PAGE>

     5.6. No Mitigation. In no event shall the Executive be obligated to seek
     ------------------
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced (except to the extent expressly set forth herein)
whether or not the Executive obtains other employment.

     5.7. Excise Tax Payments.
     ------------------------

     (a)  Notwithstanding anything contained in this Agreement to the contrary,
          in the event that any payment or distribution to or for the benefit of
          the Executive, whether paid or payable or distributed or distributable
          pursuant to the terms of this Agreement or otherwise in connection
          with, or arising out of, her employment with the Corporation (a
          "Payment" or "Payments"), 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 are incurred by the Executive
          with respect to such excise tax (such excise tax, together with any
          interest and penalties, are collectively referred to as the "Excise
          Tax"), then the Executive shall be entitled to receive an additional
          payment (a "Gross-Up Payment") in an amount such that after payment by
          the Executive of all taxes (including any interest or penalties
          imposed with respect to such taxes), including any Excise Tax, imposed
          upon the Gross-Up Payment, the Executive retains an amount of the
          Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

     (b)  A determination shall be made as to whether and when Gross-Up Payment
          is required pursuant to this Section 5.7 and the amount of such Gross-
          Up Payment, such determination to be made within fifteen (15) business
          days of the Termination Date, or such other time as requested by the
          Corporation or by the Executive (provided the Executive reasonably
          believes that any of the Payments may be subject to the Excise Tax).
          Such determination shall be made by a national independent accounting
          firm selected by the Executive (the "Accounting Firm"). All fees,
          costs and expenses (including, but not limited to, the cost of
          retaining experts) of the Accounting Firm shall be borne by the
          Corporation and the Corporation shall pay such fees, costs and
          expenses as they become due. The Accounting Firm shall provide
          detailed supporting calculations, acceptable to the Executive, both to
          the Company and the Executive. The Gross-Up Payment, if any, as
          determined pursuant to this Section 5.7(b) shall be paid by the
          Corporation to the Executive within five (5) business days of the
          receipt of the Accounting Firm's determination. If the Accounting Firm
          determines that no Excise Tax is payable by the Executive with respect
          to a Payment or Payments, it shall furnish the Executive with an
          unqualified opinion that no Excise Tax will be imposed with respect to
          any such Payment or Payments. Any such initial determination by the
          Accounting Firm of the Gross-Up Payment shall be binding upon the
          Corporation and the Executive subject to the application of Section
          5.7 (c).

     (c)  As a result of the uncertainty in the application of Sections 4999 and
          280G of the Code, it is possible that a Gross-Up Payment (or a portion
          thereof) will be paid which should not have been paid (an
          "Overpayment") or a Gross-Up Payment (or a portion

                                       7
<PAGE>

          thereof) which should have been paid will not have been paid (an
          "Underpayment"). An Underpayment shall be deemed to have occurred upon
          notice (formal or informal) to the Executive from any governmental
          taxing authority that the tax liability of the Executive (whether in
          respect of the then current taxable year of the Executive or in
          respect of any prior taxable year of the Executive) may be increased
          by reason of the imposition of the Excise Tax on a Payment or Payments
          with respect to which the Company has failed to make a sufficient
          Gross-Up Payment. An Overpayment shall be deemed to have occurred upon
          a "Final Determination" (as hereinafter defined) that the Excise Tax
          shall not be imposed upon a Payment or Payments with respect to which
          the Executive had previously received a Gross-Up Payment. A Final
          Determination shall be deemed to have occurred when the Executive has
          received from the applicable governmental taxing authority a refund of
          taxes or other reduction in her tax liability by reason of the
          Overpayment and upon either (i) the date a determination is made by,
          or an agreement is entered into with, the applicable governmental
          taxing authority which finally and conclusively binds the Executive
          and such taxing authority, or in the event that a claim is brought
          before a court of competent jurisdiction, the date upon which a final
          determination has been made by such court and either all appeals have
          been taken and finally resolved or the time for all appeals has
          expired or (ii) the expiration of the statute of limitations with
          respect to the Executive's applicable tax return. If an Underpayment
          occurs, the Executive shall promptly notify the Corporation and the
          Corporation shall pay to the Executive at least five (5) business days
          prior to the date on which the applicable governmental taxing
          authority has requested payment, an additional Gross-Up Payment equal
          to the amount of the Underpayment plus any interest and penalties
          imposed on the Underpayment. If an Overpayment occurs, the amount of
          the Overpayment shall be treated as a loan by the Corporation to the
          Executive and the Executive shall, within ten (10) business days of
          the occurrence of such Overpayment, pay to the Corporation the 11
          amount of the Overpayment plus interest at an annual rate equal to the
          rate provided for in Section 1274 (b)(2)(B) of the Code from the date
          the Gross- Up Payment (to which the Overpayment relates) was paid to
          the Executive.

     (d)  Notwithstanding anything contained in this Agreement to the contrary,
          in the event it is determined that an Excise Tax will be imposed on
          any Payment or Payments, the Corporation shall pay to the applicable
          governmental taxing authorities as Excise Tax withholding, the amount
          of the Excise Tax that the Corporation has actually withheld from the
          Payment or Payments.


                                  ARTICLE VI
                                  ----------


     Expenses. During the term of the Executive's employment hereunder, the
     --------
     Corporation shall promptly pay or reimburse the Executive for all
     reasonable and necessary business expenses incurred by the Executive in the
     interest of the Corporation. The Executive shall be required to submit an
     itemized account of such expenditures and such proof as may be reasonably
     necessary to establish to the satisfaction of the Corporation that the
     expenses

                                       8
<PAGE>

     incurred by the Executive were ordinary and necessary business expenses
     incurred on behalf of the Corporation.


                                  ARTICLE VII
                                  -----------


     Fringe Benefits.
     ---------------

     7.1. Benefits. During the term of the Executive's employment hereunder, the
     -------------
     Executive shall be entitled to participate in any benefit plans and
     programs which the Corporation may from time to time make available to its
     executive employees, including, without limitation (i) health and dental
     insurance (family plan); (ii) supplemental executive medical plan (without
     maximum limit); (iii) long term disability insurance; (iv) annual physical;
     (v) business travel accident insurance; and (vi) financial consulting (up
     to Three Thousand Five Hundred Dollars ($3,500.00) per year). The Executive
     acknowledges that she shall have no vested rights in any such programs
     except as expressly provided under the terms thereof and that such programs
     may be terminated, modified, altered or reduced as well as supplemented.

     7.2. Life Insurance. During the term of the Executive's employment
     -------------------
     hereunder, the Corporation shall provide the Executive with term life
     insurance equal to not less than three (3) times the annual salary of the
     Executive; provided, however, that the Executive shall have the option to
     purchase, at her own expense, additional insurance equal to her annual
     salary under such term life insurance policy.

     7.3. Health Insurance. Notwithstanding anything contained herein to the
     ---------------------
     contrary, in the event the Executive's employment with the Corporation is
     terminated (i) at the expiration of the Employment Term, or (ii) prior to
     such date for any reason other than (A) a termination for Cause, or (B) a
     voluntary termination by the Executive for any reason other than "Good
     Reason" or other than approved by the Board of Directors of the
     Corporation, the Corporation shall continue, until the Executive's death,
     to provide the Executive and her spouse and dependents with health
     insurance and a supplemental executive medical plan (with coverage similar
     to that received by the Executive at the time of such termination and
     covering the Executive, her spouse and her dependents (as defined in such
     insurance and medical plan), provided such insurance is reasonably
     available to the Corporation with respect to the Executive.

     7.4. Automobile. The Executive shall be provided with an automobile of a
     ---------------
     quality and value comparable to the automobile provided to Executive as of
     the date of this Agreement for the Executive's use during the term of this
     Agreement. Every two(2) years during the term of this Agreement, the
     Executive shall be entitled to exchange the automobile then in her
     possession for a new automobile of a quality and value comparable to the
     vehicle being replaced. The Corporation shall provide or reimburse the
     Executive for all reasonable insurance and maintenance for such automobile,
     including repairs, gas and oil.

                                       9
<PAGE>

     7.5. Vacation. The Executive shall be entitled to such vacation time as the
     -------------
     Corporation may from time to time make available to its executive
     employees.


                                 ARTICLE VIII
                                 ------------


     Non-Competition and Confidential Information
     --------------------------------------------

     8.1. Non-Competition. The Executive agrees that she shall not at any time
     --------------------
     while she is employed hereunder or at any time during the Restricted Period
     (as hereinafter defined), for any reason, either directly or indirectly,
     whether as agent, stockholder (except as the holder of not more than five
     percent (5%) of the stock of a publicly held company, provided the
     Executive does not participate in the business of such company or render
     advice or assistance to it), employee, officer, director, trustee, partner,
     consultant, proprietor or otherwise:
     (i)   Engage in, render advice or assistance to, or in any way be connected
           with any Competitive Entity (as hereinafter defined) located in the
           Restricted Area (as hereinafter defined).
     (ii)  Except on behalf of the Corporation, entice or attempt to entice any
           of the suppliers or customers of the Corporation, so as to cause, or
           attempt to cause, any of said suppliers or customers not to do
           business with the Corporation or to reduce or adversely change the
           nature of the business done with the Corporation.
     (iii) For purposes of this Section 8, the following definitions shall
           apply:
           (A)  A "Competitive Entity" shall be defined as any business, person,
                firm, association, partnership, corporation or other entity
                which (x) is engaged directly or indirectly in the retail
                department store business or (y) which competes with the
                business of the Corporation as such business is conducted from
                time to time during the course of the Executive's employment
                hereunder.
           (B)  The term "Restricted Area" shall be defined during the
                Executive's employment as fifty (50) miles from any store
                operated by the Corporation from time to time during the course
                of the Executive's employment, and after the termination of the
                Executive's employment it shall be defined as fifty (50) miles
                from any store operated by the Corporation during the one (1)
                year period prior to the termination of the Executive's
                employment or during the Restricted Period.
           (C)  The term Restricted Period" shall be defined as two (2) years
                from the date of termination of the Executive's employment
                hereunder; provided, hereunder, that the Restricted Period shall
                be extended for the period during which it is determined that
                the Executive is in violation of the provisions of this Sections
                8.1 or 8.2.

     8.2. Confidential Information. The Executive agrees that she shall not, at
          ------------------------
     any time while she is employed hereunder and during the Restricted Period,
     disclose to any person who

                                      10
<PAGE>

     is not at the time of such disclosure, a person to whom such disclosure has
     been authorized by the Board or Chief Executive officer any confidential
     information regarding the Corporation or its business obtained by the
     Executive while in the employ of the Corporation, including without
     limitation, financial information, marketing information and pricing
     information (the "Confidential Information"). The Executive acknowledges
     that she also understands and agrees that the foregoing shall not
     constitute a waiver by the Corporation of any right to protect its trade
     secrets, including rights under Section 134.90 of the Wisconsin Statutes
     and any successor provision thereto.

     8.3. Return of Material. The Executive agrees upon termination of her
     -----------------------
     employment with the Corporation immediately to surrender to the Corporation
     all correspondence, letters, contracts, manuals, mailing lists, marketing
     data, ledgers, supplies, and all other materials or records of any kind
     relating to the Corporation or its business then in her possession or under
     her control, as well as all copies of any of the foregoing.

     8.4. Specific Performance. The Executive recognizes that irrevocable injury
     -------------------------
     may result to the Corporation and its business and properties, in the event
     of a breach by her of the restrictions imposed by this Article VIII and
     that the Executive's acceptance of such restrictions was a material factor
     in the Corporation's decision to enter into this Agreement. The Executive
     agrees that if she shall engage in any acts in violation of this Article
     VIII, the Corporation shall be entitled, in addition to such other remedies
     and damages as may be available to it, to an injunction prohibiting
     Executive from engaging in any such acts.


                                  ARTICLE IX
                                  ----------


     Miscellaneous.
     --------------

     9.1. Insurance. The Executive agrees to perform all acts and execute all
     instruments necessary in connection with the obtaining by the Corporation
     of life insurance or disability insurance on the Executive.

     9.2. Waiver of Breach. No waiver by either party hereto of any breach of
     ---------------------
     any provision of this Agreement shall be deemed a waiver by such party of
     any subsequent breach.

     9.3. Notice. Any notice required or permitted to be given hereunder shall
     -----------
     be in writing and shall be deemed to be sufficiently given and received in
     all respects when personally delivered or when deposited in the United
     States mail, certified or registered mail, postage prepaid, return receipt
     requested, addressed as follows:

     IF TO THE CORPORATION:
     Kohl's Department Stores, Inc.
     N56 W17000 Ridgewood Drive
     Menomonee Falls, WI 53051

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<PAGE>

     Attention: Chief Executive Officer
     Copy To: General Counsel

     IF TO THE EXECUTIVE:
     c/o Kohl's Department Stores, Inc.
     N56 W17000 Ridgewood Drive
     Menomonee Falls, WI 53051

     9.4. Assignment. This Agreement shall not be assignable by the Corporation
     ---------------
     without the written consent of the Executive, except that if the
     Corporation shall merge or consolidate with or into or transfer all or
     substantially all of its assets, including goodwill, to another corporation
     or other form of business organization, the Corporation shall require any
     successor corporation in such merger, consolidation or transfer to assume
     and perform this Agreement. The Executive may not assign, pledge or
     encumber any interest in this Agreement or any part thereof without the
     written consent of the Corporation.

     9.5. Complete Agreement; Amendment. Once the term of this Agreement
     ----------------------------------
     commences, her Agreement shall contain the full and complete understanding
     and agreement of the parties and supersede all prior agreements and
     understandings between the parties with respect to the subject matter
     hereof. This Agreement may not be modified, amended, terminated or
     discharged orally.

9.6. Fees and Expenses. The Corporation shall pay all legal fees and related
----------------------
expenses (including the costs of experts, evidence and counsel) reasonably
incurred by the Executive as they become due as a result of a position taken in
good faith by the Executive with respect to (i) the Executive's termination of
employment (including all such fees and expenses, if any, incurred in contesting
or disputing any such termination of employment), (ii) the Executive's hearing
before the Board as contemplated in Section 4.13 of this Agreement, (iii) the
Executive's seeking to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the Corporation
under which the Executive is or may be entitled to receive benefits or (iv) a
dispute between the Executive and the Internal Revenue Service (or any other
taxing authority) with regard to an "Underpayment" (as defined in Section 5.7 of
this Agreement).

     9.7. Severability. The provisions of this Agreement shall be deemed
     -----------------
     severable and the invalidity or unenforceability of any provision shall not
     affect the validity or enforceability of the other provisions hereof.

     9.8. Withholding Taxes. The Corporation shall deduct from all payments to
     ----------------------
     the Executive hereunder any federal, state or local withholding or other
     taxes or charges which the Corporation is from time to time required to
     deduct under applicable law, and all amounts payable to the Executive
     hereunder are stated herein before any such deduction. The Corporation
     shall have the right to rely upon written opinion of legal counsel, which
     may be independent legal counsel or legal counsel regularly employed by the
     Corporation, if any questions should arise as to any such deductions.

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<PAGE>

     9.9. Governing Law. This Agreement and all questions or its interpretation,
     ------------------
     performance, enforceability and the rights and remedies of the parties
     hereto shall be governed by and determined in accordance with the laws of
     the State of Wisconsin.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
     the day, month and year first above written.

                                              KOHL'S DEPARTMENT STORES, INC.

                                              By: /s/  R. Lawrence Montgomery
                                                 ----------------------------
                                                   Chief Executive Officer

                                              EXECUTIVE:

                                                  /s/ Arlene Meier
                                                  ---------------------------
                                                  Arlene Meier

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