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TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ý | ||
Filed by a Party other than the Registrant o |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12 |
Target Corporation | ||||
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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Amount Previously Paid: |
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(4) | Date Filed: |
1000 Nicollet Mall
Minneapolis, Minnesota 55403
(612) 304-6073
PROXY STATEMENT
Annual Meeting of Shareholders
June 12, 2013
To Our Shareholders:
You are invited to attend Target Corporation's 2013 Annual Meeting of Shareholders. The Annual Meeting will be held at 1:00 p.m. Mountain Daylight Time, on Wednesday, June 12, 2013 at the Target Store located at 7777 East Hampden Avenue, Denver, Colorado 80231-4806. Details regarding admission to the Annual Meeting and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting of Shareholders and proxy statement.
At this year's Annual Meeting, you will be asked to elect all 12 directors to our Board of Directors and to vote on the other items described in this proxy statement.
We hope you will be able to attend the Annual Meeting, but if you cannot do so, it is important that your shares be represented. We urge you to read the proxy statement carefully, and to vote in accordance with the Board of Directors' recommendations by telephone or Internet, or by signing, dating, and returning the enclosed proxy card in the postage-paid envelope provided, whether or not you plan to attend the Annual Meeting.
Thank you for your continued support.
Sincerely,
Gregg
Steinhafel
Chairman of the Board, Chief Executive Officer and President
The accompanying proxy statement describes important issues affecting Target Corporation ("Target"). To vote:
In order to vote by Internet or by telephone, you must follow the relevant instructions above and vote by the following deadlines:
Your vote is important. Thank you for voting.
All shareholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting. You must reserve an admission ticket for you and any guest in order to attend. A maximum of one guest may accompany each ticketed shareholder. If you are a shareholder of record and plan to attend, please contact Target's Investor Relations Department by email at investorrelations@target.com or by telephone at (800) 775-3110 to reserve a ticket for you and up to one guest. Your ticket will be available for pick-up at the meeting. If you hold shares through an intermediary, such as a bank or broker, and you plan to attend, you will need to send a written request for a ticket either by regular mail, fax or email, along with proof of share ownership, such as a bank or brokerage firm account statement or a letter from the broker, trustee, bank or nominee holding your shares, confirming ownership as of the record date to: Investor Relations, Target Corporation, 1000 Nicollet Mall, TPN-1145, Minneapolis, MN 55403 (fax: 612-761-5555 or email: investorrelations@target.com). Requests to reserve admission tickets will be processed in the order in which they are received and must be received no later than June 7, 2013.
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
Important Notice Regarding the Availability of Proxy Materials
for the Shareholders Meeting to be held on June 12, 2013.
The proxy statement and annual report are available at www.proxyvote.com.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TIME | 1:00 p.m. Mountain Daylight Time, on Wednesday, June 12, 2013 | |||
PLACE |
Target Store 7777 East Hampden Avenue Denver, Colorado 80231-4806 |
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This location allows us to showcase our current general merchandise store design in the latter stages of construction prior to opening. This store is scheduled to open in July 2013. The near-completed status of this store also provides sufficient space to accommodate shareholders for our Annual Meeting. |
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MEETING FORMAT |
The meeting will include prepared remarks by our Chairman, President and CEO, followed by a question and answer session. |
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ITEMS OF BUSINESS |
(1) |
To elect 12 directors for a one-year term. |
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(2) |
To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm. |
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To approve, on an advisory basis, our executive compensation ("Say-on-Pay"). |
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To vote on the shareholder proposals contained in this proxy statement, if properly presented at the meeting. |
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To transact any other business properly brought before the meeting or any adjournment thereof. |
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RECORD DATE |
You may vote if you were a shareholder of record at the close of business on April 15, 2013. |
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ANNUAL REPORT |
Our 2012 Annual Report, which is not part of the proxy soliciting material, is available at www.proxyvote.com. |
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PROXY VOTING |
It is important that your shares be represented and voted at the Annual Meeting. Please vote in one of these three ways: |
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VISIT THE WEBSITE shown under "Voting Methods" and have your proxy card or Notice of Internet Availability of Proxy Materials in hand to vote through the Internet, |
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USE THE TOLL-FREE TELEPHONE NUMBER shown under "Voting Methods" and have your proxy card in hand, OR |
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MARK, SIGN, DATE AND PROMPTLY RETURN your proxy card in the postage-paid envelope. |
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If you received a Notice of Internet Availability of Proxy Materials and would like to vote by telephone or mail, you must follow the instructions on the Notice to request a proxy card. |
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Any proxy may be revoked at any time prior to its exercise at the Annual Meeting. |
Timothy R. Baer Corporate Secretary |
Approximate
Date of Mailing of Proxy Materials
Or Notice of Internet Availability:
April 29, 2013
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
June 12, 2013
The Board of Directors of Target Corporation solicits the enclosed proxy for the Annual Meeting of Shareholders to be held at the Target Store, 7777 East Hampden Avenue, Denver, Colorado 80231-4806 on Wednesday, June 12, 2013, at 1:00 p.m. Mountain Daylight Time, and for any adjournment thereof.
GENERAL INFORMATION ABOUT THE MEETING AND VOTING
What is the purpose of the Annual Meeting?
At our Annual Meeting, shareholders will act upon the matters described in the accompanying notice of meeting. In addition, our management will report on Target's performance during fiscal 2012 and respond to questions from shareholders.
Who may vote?
We have one class of voting shares outstanding. Only shareholders of record at the close of business on the record date, April 15, 2013, are entitled to receive notice of the Annual Meeting and to vote. Each share of common stock will have one vote on each matter to be voted on.
Who may attend the Annual Meeting?
All shareholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting. If you plan to attend, please review the admission policy at the beginning of this proxy statement.
What constitutes a quorum?
The presence at the meeting, in person or by proxy, of the holders of a majority of our common stock outstanding on the record date will constitute a quorum, permitting the meeting to conduct its business. As of the record date, 641,534,501 shares of our common stock were outstanding. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting for purposes of determining whether there is a quorum.
How do I vote?
You may vote by completing and properly signing the enclosed proxy card and returning it to us in the envelope provided. If you are a registered shareholder (whose shares are owned in your name and not in "street name") and attend the meeting, you may deliver your completed proxy card in person. In addition, you may vote either by telephone or through the Internet by following the instructions on your proxy card or Notice of Internet Availability of Proxy Materials. "Street name" shareholders should follow the voting instructions on the proxy form received from the broker or other institution that holds their shares.
May I vote confidentially?
Subject to the exceptions described below, our policy is to treat all shareholder meeting proxies, ballots and voting tabulations of a shareholder confidentially, if the shareholder has requested confidentiality on the proxy card.
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If you so request, your proxy will not be available for examination and your vote will not be disclosed prior to the tabulation of the final vote at the Annual Meeting, except (a) to meet applicable legal requirements, (b) to allow the independent election inspectors to count and certify the results of the vote, or (c) if there is a proxy solicitation in opposition to the Board of Directors, based upon an opposition proxy statement filed with the Securities and Exchange Commission (SEC). The independent election inspectors may at any time inform us whether or not a shareholder has voted.
May I change my vote?
Yes. Even after you have submitted your proxy, you may change your vote at any time by mailing a later-dated proxy card or by voting again via telephone or Internet before the applicable deadlinesee the instructions under "Voting Methods." If you are a registered shareholder, you can also change your vote by attending the meeting in person and delivering a proper written notice of revocation of your proxy. Attendance at the meeting will not by itself revoke a previously granted proxy.
How does the Board recommend I vote?
In summary, the Board of Directors recommends a vote:
FOR election of its director nominees (see pages 4-12);
FOR ratification of the appointment of Ernst & Young LLP as Target's independent registered public accounting firm (see page 61);
FOR advisory approval of our on executive compensation ("Say-on-Pay") (see page 63); and
AGAINST the two shareholder proposals (see pages 64-68).
Unless you give instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of the Board of Directors. The Board's full recommendation is set forth in the description of each item in this proxy statement. With respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the Board of Directors or, if no recommendation is given, in their own discretion.
How many votes are required to approve each item?
Election of Directors. The number of votes required for the election of directors is described in the section captioned "Election of Directors."
Say-On-Pay. The Say-on-Pay vote is a non-binding advisory vote. The Board of Directors will consider our executive compensation to have been approved by shareholders if the Say-on-Pay item receives more votes "For" than "Against." The effect of this non-binding advisory vote is discussed on page 64.
Other Items. For all other matters described in this proxy statement and any other items that properly come before the meeting, the affirmative vote of the greater of (a) a majority of the outstanding shares of our common stock present in person or by proxy and entitled to vote on the item at the Annual Meeting and (b) a majority of the minimum number of shares entitled to vote that would constitute a quorum for the transaction of business at the Annual Meeting, will be required for approval.
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Abstentions. A properly executed proxy marked "Abstain" with respect to any matter will be counted for purposes of determining whether there is a quorum and will be considered present in person or by proxy and entitled to vote. Accordingly, for all items other than Items 1 and 3, an abstention will have the effect of a negative vote.
What is a broker non-vote?
If you hold your shares in "street name," such as through a broker or other institution, you generally cannot vote your shares directly and must instead instruct the broker how to vote your shares using the voting instruction form provided by the broker. If you are a "street name" holder and do not provide voting instructions to your broker, your broker may not vote on your behalf for any of the non-discretionary items at the Annual Meeting, which include Items 1, 3, 4 and 5. Your failure to provide voting instructions to your broker for those non-discretionary items results in a "broker non-vote." Shares constituting broker non-votes will be counted as present for the purpose of determining a quorum at the Annual Meeting, but generally are not counted or deemed to be present in person or by proxy for the purpose of voting on any of the non-discretionary items. If quorum for the Annual Meeting cannot be established without including broker non-votes, then those broker non-votes required to establish a minimum quorum will have the same effect as votes "Against" Items 4 and 5.
What if other matters are presented for determination at the Annual Meeting?
As of the date of this proxy statement, we know of no matters that will be presented for determination at the meeting other than those referred to in this proxy statement. If any other matters properly come before the meeting calling for a vote of shareholders, proxies in the enclosed form returned to us or voted by telephone or through the Internet will be voted in accordance with the recommendation of the Board of Directors or, in the absence of such a recommendation, in accordance with the judgment of the proxy holders.
Who pays the expenses incurred in connection with the solicitation of proxies?
Expenses in connection with the solicitation of proxies will be paid by us. Proxies are being solicited principally by mail, by telephone, and through the Internet. In addition to sending you these materials, some of our directors and officers, as well as management employees, may contact you by telephone, mail, email or in person. You may also be solicited by means of news releases issued by Target, postings on our website, www.target.com, and print advertisements. None of our officers or employees will receive any extra compensation for soliciting you. We have retained Georgeson Inc. to act as a proxy solicitor for a fee estimated to be $25,000, plus reimbursement of out-of-pocket expenses.
How will shares in the Target 401(k) Plan be voted?
This proxy statement is being used to solicit voting instructions from participants in the Target 401(k) Plan with respect to shares of our common stock that are held by the trustee of the plan for the benefit of plan participants. If you are a plan participant and also own shares as a record holder, you will separately receive proxy materials to vote the shares you hold as a record holder. If you are a plan participant, you must instruct the plan trustee to vote your shares by utilizing one of the methods described on the voting-instruction form that you receive in connection with your shares held in the plan. If you do not give voting instructions, the trustee generally will vote the shares allocated to your personal account in proportion to the instructions actually received by the trustee from participants who give voting instructions.
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How may I get additional copies of the Annual Report?
Our Annual Report for the fiscal year ended February 2, 2013, including financial statements, is furnished with this proxy statement. The Annual Report is also available online at www.target.com (click on "Investor Relations," then "Investors" and "Annual Reports"). For additional printed copies, please contact our Investor Relations representative by email at investorrelations@target.com, by phone at (800) 775-3110, by mail at the address listed on the cover of this proxy statement, Attention: Investor Relations, or online at www.target.com (click on "Investor Relations," then "Investors," then "Shareholder Services" and "Request Materials").
How may I access or receive materials electronically?
You can access our proxy materials, Annual Report and other periodic reports and information under the "Investors" section of our website, www.target.com (click on "Investor Relations"). You can also register at this same location to receive email alerts, which we send to registered users when new information is posted on our website (click on "Investor Relations" and enter your email address under "Investor Email Alerts"). Shareholders may request electronic delivery of our proxy materials and Annual Report online at www.target.com (click on "Investor Relations," then "Investors," then "Shareholder Services" and "Sign up for E-Delivery"). To receive other shareholder information, contact us via email at investorrelations@target.com.
ITEM ONEELECTION OF DIRECTORS
Election Process
Board Composition
Our Governance Guidelines set forth the Board Membership Criteria that is followed in determining the composition of the Board. Under these criteria, directors are to have broad perspective, experience, knowledge and independence of judgment, and the Board as a whole should consist predominantly of persons with strong business backgrounds.
As part of the Board's annual self-evaluation process, the Board seeks input from each of its members with respect to the current composition of the Board in light of our current and future business strategies as a means to identify any backgrounds or skill sets that may be helpful in maintaining or improving alignment between Board composition and our business. This input is then used by our Nominating & Governance Committee in its director search process.
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The Board does not have a specific policy regarding consideration of gender, ethnic or other diversity criteria in identifying director candidates; however, the Board has had a longstanding commitment to, and practice of, maintaining diverse representation on the Board.
Board Renewal and Nomination Process
The Nominating & Governance Committee is responsible for identifying individuals qualified to become Board members and making recommendations on director nominees to the full Board. The Committee considers the following two factors in its efforts to identify potential director candidates:
The Board maintains a series of tenure policies (contained in our Corporate Governance Guidelines) as a means of ensuring that the Board is regularly renewed with fresh perspectives, and that directors continue to have adequate time to devote to Board service after any change in their careers. Under these policies, non-management directors may not serve on the Board for more than 20 years, or 5 years after they retire from active employment, whichever occurs first. In addition, directors must resign at age 72 and must submit an offer of resignation for consideration by the Nominating & Governance Committee and the full Board upon any substantial change in principal employment. These policies were applied as follows in fiscal 2012:
The Nominating & Governance Committee has retained an independent search firm to assist in identifying director candidates, and will also consider recommendations from shareholders. Any shareholder who wishes the Committee to consider a candidate should submit a written request and related information to our Corporate Secretary no later than December 31 of the calendar year preceding the next Annual Meeting of Shareholders.
In March 2013, upon the recommendation of the Nominating & Governance Committee, the Board elected two new directors: Mr. Douglas M. Baker, Jr. and Mr. Henrique De Castro. Both candidates were identified as a result of the process discussed above. More specifically:
5
2013 Nominees for Director
After considering the recommendations of the Nominating & Governance Committee, the Board has set the number of directors at 12 and nominated the persons described below to stand for election. All nominees are incumbent directors. The Board believes that each of these nominees is qualified to serve as a director of Target and the specific qualifications of each nominee that were considered by the Board are set forth following each nominee's biographical description. Equally as important, the Board believes that the combination of backgrounds, skills and experiences has produced a Board that is well-equipped to exercise oversight responsibilities for Target's shareholders and other stakeholders. Specifically:
We have no reason to believe that any of the nominees will be unable or unwilling for good cause to serve if elected. However, if any nominee should become unable for any reason or unwilling for good cause to serve, proxies may be voted for another person nominated as a substitute by the Board, or the Board may reduce the number of directors.
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Director
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Principal Occupation, other Directorships and Qualifications | Age | Director Since |
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Roxanne S. Austin |
Roxanne S. Austin is President of Austin Investment Advisors, a private investment and consulting firm, a position she has held since January 2004. From June 2009 until July 2010, she also served as
President, Chief Executive Officer and a director of Move Networks, Inc., an Internet television services provider. Other Current Public Company Directorships: Abbott Laboratories, AbbVie Inc., Teledyne Technologies Incorporated, and LM Ericsson Telephone Company. Other Public Company Directorships within Past 5 Years: None. Qualifications: Ms. Austin provides the Board with financial, operational and risk management expertise, and substantial knowledge of new media technologies, which were developed during Ms. Austin's previous service as President and COO of DirecTV, Executive Vice President and CFO of Hughes Electronics Corporation and Partner of Deloitte & Touche. Committees: Audit (Chair), Finance. |
52 | 2002 | |||
Douglas M. Baker, Jr. |
Douglas M. Baker, Jr., is Chairman and Chief Executive Officer of Ecolab Inc., a provider of water and hygiene services and technologies for the food, hospitality, industrial and energy markets. He has
served as Chairman of the Board of Ecolab since May 2006 and Chief Executive Officer since July 2004, and served as President from 2002 to 2011. Other Current Public Company Directorships: U.S. Bancorp. Other Public Company Directorships within Past 5 Years: None. Qualifications: Mr. Baker provides the Board with valuable global marketing, sales and general management experience, as well as operational and governance perspectives. His current role as CEO of a large publicly-held company provides the Board with additional top-level perspective in organizational management. Committees: Audit, Nominating & Governance. |
53 | 2013 | |||
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Director
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Principal Occupation, other Directorships and Qualifications | Age | Director Since |
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Henrique De Castro |
Henrique De Castro is Chief Operating Officer of Yahoo! Inc., a digital media company that delivers personalized digital content and experiences worldwide by offering online properties and services to users. He
has held that position since November 2012. He previously served Google Inc. as President, Partner Business Worldwide from March 2012 to November 2012, President, Global Media, Mobile & Platforms from June 2009 to
March 2012, and as Managing Director, European Sales from July 2006 to May 2009. Other Current Public Company Directorships: None. Other Public Company Directorships within Past 5 Years: None. Qualifications: Mr. De Castro provides the Board with valuable insight into media, mobile and technology platforms. His experiences at Yahoo! and Google, as well as his prior experience at Dell Inc. provides him with global perspectives on leading operations, strategy, partner management and revenue generation in the technology and media industries. Committees: Corporate Responsibility, Nominating & Governance. |
47 | 2013 | |||
Calvin Darden |
Calvin Darden is Chairman of Darden Development Group, LLC, a real estate development company, a position he has held on a full-time basis since November 2009. From February 2006 to November 2009, he
was Chairman of The Atlanta Beltline, Inc., an urban revitalization project for the City of Atlanta. Other Current Public Company Directorships: Coca-Cola Enterprises, Inc. and Cardinal Health, Inc. Other Public Company Directorships within Past 5 Years: None. Qualifications: Mr. Darden provides the Board with significant experience in supply chain networks, logistics, customer service and management of a large-scale workforce obtained over his 33-year career with United Parcel Service of America, Inc., and more recently has developed expertise in community relations and real estate development. Committees: Compensation, Nominating & Governance. |
63 | 2003 | |||
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Director
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Principal Occupation, other Directorships and Qualifications | Age | Director Since |
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Mary N. Dillon |
Mary N. Dillon is President, Chief Executive Officer and a director of United States Cellular Corporation, a provider of wireless telecommunication services, positions she has held since June 2010. Previously,
Ms. Dillon was Executive Vice President and Global Chief Marketing Officer of McDonald's Corporation, a global restaurant company, from October 2005 to June 2010. Other Current Public Company Directorships: None. Other Public Company Directorships within Past 5 Years: None. Qualifications: Ms. Dillon provides the Board with substantial expertise in marketing, brand management, and consumer sales obtained from her roles with McDonald's and prior experience with the Quaker Foods division of PepsiCo. Her current role as CEO of a large publicly-held company provides the Board with additional top-level perspective in organizational management. Committees: Compensation, Corporate Responsibility. |
51 | 2007 | |||
James A. Johnson |
James A. Johnson founded Johnson Capital Partners, a private consulting company, in January 2000 and he continues to be actively engaged with that firm. Mr. Johnson was Vice Chairman of Perseus, LLC, a merchant
banking private equity firm, from April 2001 to June 2012. Other Current Public Company Directorships: The Goldman Sachs Group, Inc. and Forestar Group Inc. Other Public Company Directorships within Past 5 Years: UnitedHealth Group Incorporated and KB Home. Qualifications: Mr. Johnson has more than 40 years of experience in the business and public sectors. Mr. Johnson provides the Board with strong leadership and consensus-building capabilities as well as a solid understanding of public policy dynamics, corporate governance and reputation management issues. Committees: Compensation (Chair), Corporate Responsibility. |
69 | 1996 | |||
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Director
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Principal Occupation, other Directorships and Qualifications | Age | Director Since |
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Mary E. Minnick |
Mary E. Minnick is a Partner of Lion Capital, a consumer-focused private investment firm, a position she has held since May 2007. Other Current Public Company Directorships: The WhiteWave Foods Company, Heineken NV. Other Public Company Directorships within Past 5 Years: None. Qualifications: Ms. Minnick provides the Board with substantial expertise in building brand awareness, general management, product development, marketing, distribution and sales on a global scale obtained over her 23-year career with The Coca-Cola Company. Her current position with Lion Capital provides the Board with additional insights into the retail business and consumer marketing trends outside the United States. Committees: Audit, Corporate Responsibility. |
53 | 2005 | |||
Anne M. Mulcahy |
Anne M. Mulcahy is Chairman of the Board of Trustees of Save The Children Federation, Inc., a non-profit organization dedicated to creating lasting change in the lives of children throughout the world, a
position she has held since March 2010. She previously served as Chairman of the Board of Xerox Corp., a document management company, from January 2002 to May 2010, and Chief Executive Officer of Xerox from August 2001 to
July 2009. Other Current Public Company Directorships: The Washington Post Company and Johnson & Johnson. Other Public Company Directorships within Past 5 Years: Citigroup Inc. Qualifications: Ms. Mulcahy obtained extensive experience in all areas of business management as she led Xerox through a transformational turnaround. This experience, combined with her leadership roles in business trade associations and public policy activities, provides the Board with additional expertise in the areas of organizational effectiveness, financial management and corporate governance. Committees: Nominating & Governance (Chair), Finance. |
60 | 1997 | |||
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Director
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Principal Occupation, other Directorships and Qualifications | Age | Director Since |
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Derica W. Rice |
Derica W. Rice is Executive Vice President, Global Services and Chief Financial Officer of Eli Lilly and Company, a pharmaceutical company, positions he has held since January 2010 and May 2006, respectively.
From May 2006 to December 2009, he served as Eli Lilly's Senior Vice President and Chief Financial Officer. Other Current Public Company Directorships: None. Other Public Company Directorships within Past 5 Years: None. Qualifications: Mr. Rice's career with Eli Lilly has provided him with substantial experience in managing worldwide financial operations. His expertise gives the Board additional skills in the areas of financial oversight, risk management and the alignment of financial and strategic initiatives. Committees: Finance (Chair), Audit. |
48 | 2007 | |||
Gregg W. Steinhafel |
Gregg W. Steinhafel is Chairman of the Board, Chief Executive Officer and President of Target. He began his career at Target as a merchandise trainee in 1979 and subsequently advanced through a variety of
merchandising and operational management positions. Mr. Steinhafel became President of Target in August 1999, Chief Executive Officer in May 2008 and Chairman in February 2009. Other Current Public Company Directorships: The Toro Company. Other Public Company Directorships within Past 5 Years: None. Qualifications: In his more than 30 years at Target, Mr. Steinhafel has gained meaningful leadership experience and retail knowledge. As Chief Executive Officer, he is responsible for determining Target's strategy and clearly articulating priorities, as well as aligning and motivating the organization to execute effectively and ensure continued success. These capabilities, combined with Mr. Steinhafel's intimate understanding of Target's guests and unwavering commitment to Target's brand, make him uniquely qualified to serve on the Board. Committees: None. |
58 | 2007 | |||
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Director
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Principal Occupation, other Directorships and Qualifications | Age | Director Since |
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John G. Stumpf |
John G. Stumpf is Chairman of the Board, President and Chief Executive Officer of Wells Fargo & Company, a banking and financial services company. He has been President since August 2005, Chief
Executive Officer since June 2007, and Chairman since January 2010. A 30-year veteran of Wells Fargo, he has held various operational and managerial positions throughout his career. Other Current Public Company Directorships: Chevron Corporation. Other Public Company Directorships within Past 5 Years: None. Qualifications: Mr. Stumpf's current role as Chairman, President and Chief Executive Officer of Wells Fargo, and long career in banking, provides the Board with expertise in brand management, financial oversight and stewardship of capital. Committees: Compensation, Finance. |
59 | 2010 | |||
Solomon D. Trujillo |
Solomon D. Trujillo served as Chief Executive Officer and a director of Telstra Corporation Limited, Australia's leading telecommunications company, from July 2005 to May 2009. Other Current Public Company Directorships: The Western Union Company and WPP plc. Other Public Company Directorships within Past 5 Years: None. Qualifications: Mr. Trujillo is an international business executive with three decades experience as CEO of large market cap global companies in the telecommunications, media and cable industries headquartered in the United States, the European Union and the Asia-Pacific region. He has global operations experience and provides the Board with substantial international experience and expertise in the retail, technology, media and communications industries. Committees: Corporate Responsibility (Chair), Nominating & Governance. |
61 | 1994 |
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GENERAL INFORMATION ABOUT THE BOARD OF DIRECTORS
AND CORPORATE GOVERNANCE
Director Independence
The Board of Directors believes that a substantial majority of its members should be independent directors. The Board annually reviews all relationships that directors have with Target to affirmatively determine whether the directors are independent. If a director has a material relationship with Target, that director is not independent. The listing standards of the New York Stock Exchange (NYSE) set forth certain relationships that, if present, preclude a finding of independence.
The Board affirmatively determined that all non-management directors are independent. Mr. Steinhafel is the only management director and is not independent. In making this determination, the Board specifically considered the following transactions, all of which were entered into in the ordinary course of business:
Mr. Sanger served as an independent director until his retirement in March 2013.
Corporate Governance Documents Available on Our Website
Copies of our key corporate governance documents are available on our website, www.target.com (click on "Investor Relations," then "Investors" and "Corporate Governance"). These documents include our Articles of Incorporation, Bylaws, Corporate Governance Guidelines, Position Descriptions (charters) for each of the Board's committees, our Business Conduct Guide and our Corporate Responsibility Report.
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Board Meetings; Attendance at Annual Shareholders Meeting
The Board of Directors met six times during fiscal 2012. All directors attended at least 75% of the aggregate total of meetings of the Board and Board Committees on which the director served during the last fiscal year.
Ten of our directors attended our June 2012 Annual Meeting of Shareholders. The Board has a policy requiring all directors to attend all Annual Meetings of Shareholders, absent extraordinary circumstances.
Board Leadership Structure
The Board is led by Mr. Steinhafel in his role as Chairman. Mr. Steinhafel is also the Chief Executive Officer. The Board has designated a lead independent director position to complement the Chairman's role, and to serve as the principal liaison between the non-management directors and the Chairman.
The Board continues to believe that its current structure is appropriate for Target at this time. Specifically, the Board believes that in light of Target's clear strategy and the strength of its overall governance practices, a combined Chairman/CEO role will more effectively unify the Board and management around the specific initiatives to support Target's strategy. The Board continues to separately evaluate Mr. Steinhafel annually in each of his roles, and it has retained the discretion to separate the Chairman/CEO roles at any time if the Board believes it would better serve the interests of Target. The Board also concluded that its lead independent director position effectively balances any risk of concentration of authority that may exist with a combined Chairman/CEO position.
Mr. Johnson is our lead independent director. As lead director, Mr. Johnson:
Management Succession Planning
One of the primary responsibilities of the Board is to ensure that Target has a high-performing management team in place. On an annual basis, the Board conducts a detailed review of management development and succession planning activities to maximize the pool of internal candidates who can assume top management positions without undue interruption. In addition, the Board has adopted a CEO emergency succession policy to govern unforeseen succession needs.
14
Risk Oversight
The primary responsibility for the identification, assessment and management of the various risks that we face belongs with management. The Board's oversight of these risks occurs as an integral and continuous part of the Board's oversight of our business. For example, our principal strategic risks are reviewed as part of the Board's regular discussion and consideration of our strategy, and the alignment of specific initiatives with this strategy. Similarly, at every meeting the Board reviews the principal factors influencing our operating results, including the competitive environment, and discusses with our senior executive officers the major events, activities and challenges affecting their respective functional areas. The Board's ongoing oversight of risk also occurs at the Board Committee level on a more focused basis, as described in the description of each Committee's responsibilities, as applicable.
Committees
The Board has the following committees and committee composition (all of whom are independent directors) as of the date of this proxy statement:
Nominating & Governance |
Compensation | Audit | Finance | Corporate Responsibility |
||||
---|---|---|---|---|---|---|---|---|
Ms. Mulcahy, Chair | Mr. Johnson, Chair | Ms. Austin, Chair | Mr. Rice, Chair | Mr. Trujillo, Chair | ||||
Mr. Baker | Mr. Darden | Mr. Baker | Ms. Austin | Mr. De Castro | ||||
Mr. De Castro | Ms. Dillon | Ms. Minnick | Ms. Mulcahy | Ms. Dillon | ||||
Mr. Darden | Mr. Stumpf | Mr. Rice | Mr. Stumpf | Mr. Johnson | ||||
Mr. Trujillo | Ms. Minnick |
A description of each Committee's function and number of meetings during fiscal 2012 follows.
Nominating & Governance Committee
The Nominating & Governance Committee oversees our corporate governance practices and identifies individuals qualified to become Board members. After identifying qualified Board candidates, the Nominating & Governance Committee will make a recommendation to the full Board with respect to candidates to stand for election or otherwise be added to the Board. The Nominating & Governance Committee held three meetings during the last fiscal year.
Compensation Committee
The Compensation Committee has responsibility for determining the composition and value of non-CEO executive officer compensation and making recommendations with respect to CEO compensation to the independent members of the Board, who collectively have final approval authority. The Compensation Committee's responsibilities include reviewing our compensation philosophy, selection and relative weightings of different compensation elements to balance risk, reward and retention objectives, the alignment of incentive compensation performance measures with our strategy, and specific compensation levels for each executive officer. The Compensation Committee also reviews the compensation provided to non-management directors and makes recommendations to the independent members of the Board. The Compensation Committee also discusses with its compensation consultant the results of the regular review of whether our compensation policies and practices create material risks to Target. Please see pages 39-40 of the Compensation Discussion and Analysis for more details about our most recent compensation policies risk assessment.
15
The Compensation Committee may not delegate its primary responsibility of overseeing executive officer compensation, but it may delegate to management the administrative aspects of our compensation plans that do not involve the setting of compensation levels for executive officers. Additional information on the processes and procedures for executive compensation determinations, including the role of management and compensation consultants, is contained in the Compensation Discussion and Analysis beginning on page 24. The Compensation Committee held four meetings during the last fiscal year.
Audit Committee
The Audit Committee assists the Board with the oversight of our financial reporting process and our compliance programs. The Audit Committee's financial reporting process oversight responsibilities include the integrity of our financial statements and internal controls, the independent auditor's qualifications and independence and performance of our internal audit function. The Audit Committee's compliance program oversight responsibilities include compliance with legal and regulatory requirements, our business ethics program and review and approval of transactions with related persons. The Audit Committee supplements the Board's ongoing oversight of risk, through periodic review of our risk assessment process, which facilitates identification and consideration of our risk exposures in the context of our overall strategic objectives.
The Board of Directors has determined that all members of the Committee satisfy the independence requirements of the NYSE and SEC, and all members have acquired the attributes necessary to qualify them as "audit committee financial experts" as defined by applicable SEC rules.
The duties and activities of the Audit Committee are further described in the Report of the Audit Committee on page 62. The Audit Committee held six meetings during the last fiscal year.
Finance Committee
The Finance Committee reviews our primary financial policies and strategies, including our liquidity position, funding requirements, ability to access the capital markets, interest rate exposures and policies regarding return of cash to shareholders. The Finance Committee held two meetings during the last fiscal year.
Corporate Responsibility Committee
The Corporate Responsibility Committee reviews and evaluates our public affairs, community relations, corporate social responsibility and reputation management programs. The Corporate Responsibility Committee is primarily responsible for assessing and managing reputational risk. The Corporate Responsibility Committee held two meetings during the last fiscal year.
Communications with Directors
Shareholders and other interested parties seeking to communicate with any individual director or group of directors may send correspondence to Target Board of Directors, c/o Corporate Secretary, 1000 Nicollet Mall, TPS-2670, Minneapolis, Minnesota 55403 or may send an email to BoardOfDirectors@target.com, which is managed by the Corporate Secretary. The Corporate Secretary, in turn, has been instructed by the Board to forward all communications, except those that are clearly unrelated to Board or shareholder matters, to the relevant Board members.
16
Director Compensation
General Description of Director Compensation
Our non-employee director compensation program allows directors to choose one of three forms of annual compensation(a) a combination of cash, stock options, and restricted stock units (RSUs), (b) all stock options (if the director already meets our stock ownership guidelines, described below under "Economic Ownership; Stock Ownership Guidelines"), or (c) all RSUs. Each form under the compensation program is intended to provide approximately the same level of compensation to non-employee directors as follows:
|
Combination | All Stock Options |
All RSUs | |||
---|---|---|---|---|---|---|
Cash |
$90,000 | $0 | $0 | |||
Stock Options |
$80,000 | $260,000 | $0 | |||
RSUs |
$90,000 | $0 | $260,000 | |||
Total Compensation |
$260,000 | $260,000 | $260,000 |
The three forms of annual compensation have the following terms:
The Lead Director and Committee Chairpersons receive additional compensation for those roles, which are paid (a) in cash if the director elects a combination of cash, stock options and RSUs, (b) in stock options if the director elects all stock options, or (c) in RSUs if the director elects all RSUs. New directors also receive a one-time grant of RSUs with a $50,000 grant date fair value upon joining the Board.
17
Director Compensation Table(1)
Name
|
Fees Earned or Paid in Cash |
Stock Awards (2)(3) |
Option Awards (2)(3) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings (4)(5) |
Total (6) |
|||||
---|---|---|---|---|---|---|---|---|---|---|
Roxanne S. Austin(7) |
$120,000 | $90,055 | $71,477 | $0 | $281,532 | |||||
Calvin Darden |
$90,000 | $90,055 | $71,477 | $0 | $251,532 | |||||
Mary N. Dillon |
$0 | $260,004 | $0 | $0 | $260,004 | |||||
James A. Johnson(7) |
$135,000 | $90,055 | $71,477 | $13,174 | $309,706 | |||||
Mary E. Minnick |
$0 | $260,004 | $0 | $0 | $260,004 | |||||
Anne M. Mulcahy(7) |
$0 | $275,003 | $0 | $0 | $275,003 | |||||
Derica W. Rice |
$0 | $260,004 | $0 | $0 | $260,004 | |||||
Stephen W. Sanger(7)(8) |
$0 | $0 | $245,682 | $8,527 | $254,209 | |||||
John G. Stumpf |
$90,000 | $90,055 | $71,477 | $0 | $251,532 | |||||
Solomon D. Trujillo(7) |
$105,000 | $90,055 | $71,477 | $32,165 | $298,697 |
|
Stock Awards (RSUs) | Option Awards | ||||||
---|---|---|---|---|---|---|---|---|
Name
|
# of Units | Grant Date Fair Value |
# of Shares | Grant Date Fair Value |
||||
Ms. Austin |
1,489 | $90,055 | 7,415 | $71,477 | ||||
Mr. Darden |
1,489 | $90,055 | 7,415 | $71,477 | ||||
Ms. Dillon |
4,299 | $260,004 | 0 | $0 | ||||
Mr. Johnson |
1,489 | $90,055 | 7,415 | $71,477 | ||||
Ms. Minnick |
4,299 | $260,004 | 0 | $0 | ||||
Ms. Mulcahy |
4,547 | $275,003 | 0 | $0 | ||||
Mr. Rice |
4,299 | $260,004 | 0 | $0 | ||||
Mr. Sanger |
0 | $0 | 25,487 | $245,682 | ||||
Mr. Stumpf |
1,489 | $90,055 | 7,415 | $71,477 | ||||
Mr. Trujillo |
1,489 | $90,055 | 7,415 | $71,477 |
18
Name
|
Stock Options |
Restricted Stock Units |
||
---|---|---|---|---|
Ms. Austin |
42,513 | 1,489 | ||
Mr. Darden |
59,362 | 1,489 | ||
Ms. Dillon |
0 | 4,299 | ||
Mr. Johnson |
96,680 | 1,489 | ||
Ms. Minnick |
0 | 4,299 | ||
Ms. Mulcahy |
35,124 | 4,547 | ||
Mr. Rice |
0 | 4,299 | ||
Mr. Sanger |
122,943 | 4,618 | ||
Mr. Stumpf |
17,889 | 1,489 | ||
Mr. Trujillo |
76,147 | 1,489 |
Name
|
Retirement Benefit |
|
---|---|---|
Mr. Johnson |
$18,947 | |
Mr. Sanger |
$17,181 | |
Mr. Trujillo |
$53,884 |
19
Name
|
Role(s) | Amount(s) | ||
---|---|---|---|---|
Ms. Austin |
Audit Chairperson | $30,000 | ||
Mr. Johnson |
Lead Director | $25,000 | ||
|
Compensation Chairperson | $20,000 | ||
Ms. Mulcahy |
Finance Chairperson | $15,000 | ||
Mr. Sanger |
Nominating & Governance Chairperson | $15,000 | ||
Mr. Trujillo |
Corporate Responsibility Chairperson | $15,000 |
Policy on Transactions with Related Persons
The Board of Directors has adopted a written policy requiring that any transaction: (a) involving Target; (b) in which one of our directors, nominees for director, executive officers, or greater than five percent shareholders, or their immediate family members, have a direct or indirect material interest; and (c) where the amount involved exceeds $120,000 in any fiscal year, be approved or ratified by a majority of independent directors of the full Board or by a designated committee of the Board. The Board has designated the Audit Committee as having responsibility for reviewing and approving all such transactions except those dealing with compensation of executive officers and directors, or their immediate family members, in which case it will be reviewed and approved by the Compensation Committee.
In determining whether to approve or ratify any such transaction, the independent directors or relevant committee must consider, in addition to other factors deemed appropriate, whether the transaction is on terms no less favorable to Target than those involving unrelated parties. No director may participate in any review, approval or ratification of any transaction if he or she, or his or her immediate family member, has a direct or indirect material interest in the transaction.
We did not have any transactions requiring review and approval in accordance with this policy during fiscal 2012 and through the date of this proxy statement.
20
BENEFICIAL OWNERSHIP OF CERTAIN SHAREHOLDERS
Share Ownership of Directors and Officers
Set forth below is information regarding the shares of Target common stock (our only outstanding class of equity securities) which are owned on March 15, 2013 or which the person has the right to acquire within 60 days of March 15, 2013 for each director, executive officer named in the Summary Compensation Table on page 42, and all Target directors and executive officers as a group.
Name of Individual or Number of Persons in Group |
Shares Directly or Indirectly Owned |
Shares Issuable within 60 Days(1) |
Stock Options Exercisable within 60 Days |
Total Shares Beneficially Owned(2) |
||||
---|---|---|---|---|---|---|---|---|
Roxanne S. Austin |
0 | 12,157 | 35,098 | 47,255 | ||||
Douglas M. Baker, Jr.(3) |
0 | 467 | 0 | 467 | ||||
Henrique De Castro(3) |
0 | 467 | 0 | 467 | ||||
Calvin Darden |
0 | 12,157 | 51,947 | 64,104 | ||||
Mary N. Dillon |
0 | 30,589 | 0 | 30,589 | ||||
James A. Johnson |
0 | 12,344 | 89,265 | 101,609 | ||||
Mary E. Minnick |
886 | 38,926 | 0 | 39,812 | ||||
Anne M. Mulcahy |
7,114 | 16,814 | 35,124 | 59,052 | ||||
Derica W. Rice |
0 | 30,589 | 0 | 30,589 | ||||
John G. Stumpf |
0 | 4,709 | 10,474 | 15,183 | ||||
Solomon D. Trujillo |
55,100 | 9,254 | 68,732 | 133,086 | ||||
Gregg W. Steinhafel |
529,764(4) | 0 | 1,310,313 | 1,840,077 | ||||
John J. Mulligan |
9,583(4) | 0 | 98,449 | 108,032 | ||||
Kathryn A. Tesija |
143,469(4) | 0 | 386,709 | 530,178 | ||||
Jeffrey J. Jones II |
282(4) | 0 | 0 | 282 | ||||
Tina M. Schiel |
11,339(4) | 164 | 114,271 | 125,774 | ||||
Douglas A. Scovanner |
26,119 | 0 | 550,061 | 576,180 | ||||
All directors and executive officers as a group (24 persons) |
888,237(4) | 171,312 | 4,452,885 | 5,512,434 |
21
Economic Ownership; Stock Ownership Guidelines
Because the table above is limited to shares that are owned or which the person has the right to acquire within 60 days, it does not present a complete view of the economic exposure our directors and executive officers have to Target common stock. Excluded from the table above are RSUs which will be converted into common stock more than 60 days from March 15, 2013, and deferred compensation amounts that are indexed to Target common stock, but ultimately paid in cash.
We have stock ownership guidelines for our directors and executive officers that are based on economic ownership. These guidelines recognize the following forms of economic ownership:
Our ownership guideline amount for non-employee directors is a fixed value of $270,000, and directors are expected to achieve this level of ownership within five years of their appointment. All directors currently comply with these stock ownership guidelines. The following table shows the economic ownership position of each director as of March 15, 2013:
Name
|
Shares Directly or Indirectly Owned |
RSUs | Share Equivalents |
Total Economic Ownership (# of Shares) |
Value at March 15, 2013(1) |
|||||
---|---|---|---|---|---|---|---|---|---|---|
Roxanne S. Austin |
0 | 13,280 | 0 | 13,280 | $887,104 | |||||
Douglas M. Baker, Jr.(2) |
0 | 1,863 | 0 | 1,863 | $124,448 | |||||
Henrique De Castro(2) |
0 | 1,863 | 0 | 1,863 | $124,448 | |||||
Calvin Darden |
0 | 13,280 | 718 | 13,998 | $935,096 | |||||
Mary N. Dillon |
0 | 33,832 | 0 | 33,832 | $2,259,978 | |||||
James A. Johnson |
0 | 13,467 | 884 | 14,351 | $958,678 | |||||
Mary E. Minnick |
886 | 42,169 | 411 | 43,466 | $2,903,522 | |||||
Anne M. Mulcahy |
7,114 | 20,243 | 0 | 27,357 | $1,827,448 | |||||
Derica W. Rice |
0 | 33,832 | 0 | 33,832 | $2,259,978 | |||||
John G. Stumpf |
0 | 5,832 | 0 | 5,832 | $389,578 | |||||
Solomon D. Trujillo |
55,100 | 10,377 | 0 | 65,477 | $4,373,864 |
22
Our ownership guideline amount for executive officers is based on a multiple of base salary as follows:
Executive officers are expected to achieve this level of ownership within five years of their appointment. All of our named executive officers (NEOs) who are currently employed with us comply with our guidelines. The following table shows the economic ownership position of each NEO as of March 15, 2013:
Name
|
Shares Directly or Indirectly Owned |
RSUs | Share Equivalents |
Total Economic Ownership (# of Shares) |
Multiple of Base Salary Held at March 15, 2013(1) |
|||||
---|---|---|---|---|---|---|---|---|---|---|
Gregg W. Steinhafel |
529,764 | 148,716 | 376,686 | 1,055,166 | 47.0 | |||||
John J. Mulligan |
9,583 | 34,518 | 9,987 | 54,088 | 5.2 | |||||
Kathryn A. Tesija |
143,469 | 63,529 | 8,953 | 215,951 | 15.2 | |||||
Jeffrey J. Jones II |
282 | 51,517 | 0 | 51,799 | 4.9 | |||||
Tina M. Schiel |
11,339 | 38,908 | 11,138 | 61,385 | 5.7 |
If a director or executive officer has not satisfied the ownership guideline amounts by the compliance deadline, he or she must retain all shares acquired on the vesting of equity awards or the exercise of stock options (in all cases net of exercise costs and taxes) until compliance is achieved.
Largest Owners of Target's Shares
The table below sets forth certain information as to each person or entity known to us to be the beneficial owner of more than five percent of any class of our voting securities (percent of class based on shares outstanding on March 15, 2013):
Name and Address of Beneficial Owner |
Number of Common Shares Beneficially Owned |
Percent of Class |
||
---|---|---|---|---|
State Street Corporation One Lincoln Street Boston, Massachusetts 02111 |
60,783,464(1) | 9.5% | ||
The Vanguard Group 100 Vanguard Boulevard Malvern, Pennsylvania 19355 |
33,233,402(2) | 5.2% |
23
Compensation Committee Report
The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our annual report on Form 10-K and this proxy statement.
James A.
Johnson, Chair
Calvin Darden
Mary N. Dillon
Stephen W. Sanger**
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
Our compensation programs are structured to align the interests of our executive officers with the interests of our shareholders. They are designed to attract, retain, and motivate a premier management team to sustain our distinctive brand and its competitive advantage in the marketplace, and to provide a framework that encourages outstanding financial results and shareholder returns over the long term. We pursue this alignment with shareholders through a pay-for-performance philosophy in which a mix of variable equity and cash compensation represents a majority of an executive officer's total potential compensation. Our cash and equity incentive programs use a balance of short and long-term performance metrics that support our business strategies and are reinforced by sound compensation governance to mitigate enterprise risk.
Our NEOs for fiscal 2012 are:
Name
|
Principal Position
|
|
---|---|---|
Gregg W. Steinhafel | Chairman, President & Chief Executive Officer | |
John J. Mulligan | Executive Vice President & Chief Financial Officer | |
Kathryn A. Tesija | Executive Vice President, Merchandising & Supply Chain | |
Jeffrey J. Jones II | Executive Vice President & Chief Marketing Officer | |
Tina M. Schiel | Executive Vice President, Stores | |
Douglas A. Scovanner | Retired Executive Vice President & Chief Financial Officer |
24
Performance Over Time
Target's Retail Sales and Adjusted Earnings Per Share (EPS) have experienced significant growth over the past five years:
In addition, we performed above median in terms of market share and earnings per share growth relative to our retail peer group over a three-year performance period (as detailed on pages 34-35) as measured by our results under our relative performance share unit (PSU) plan.
Our performance in terms of stock price appreciation and dividends paid has resulted in returns to Target shareholders that outpaced the median of our retail peer group (as defined on page 36) over the one and ten year time horizons:
Data Source: Bloomberg
25
2012 Performance Highlights
Our fiscal 2012 results indicate strong performance during the year and continued execution of our strategy:
All references to segments in this Compensation Discussion and Analysis are to those segments reported in our annual report on Form 10-K for fiscal 2012.
2012 Compensation Decisions
Key compensation decisions for our NEOs in fiscal 2012 are as follows:
26
Compensation Governance
In addition, we continued our sound corporate governance of pay practices, including:
The following sections discuss our compensation program and each element of compensation in more detail.
Our Performance Framework for Executive Compensation
Pay-for-Performance Philosophy
In broad terms, our compensation programs for executive officers focus on clear and consistent pay-for-performance criteria and reflect the competitive environment in which we operate. More specifically, we:
27
Pay Mix Allocation
Our compensation programs embrace a strong pay-for-performance approach, in which variable compensation, also referred to as pay-at-risk, represents a majority of potential total compensation in order to motivate and reward sustained outstanding performance that is aligned with shareholder interests.
Total direct compensation (TDC) for our executive officers is comprised of three compensation elements: base salary, short-term incentive compensation, and long-term incentive compensation. We provide long-term incentive compensation to our executive officers in the form of stock options, PSUs and RSUs. TDC is allocated among the components in consideration of our strong pay-for-performance culture and in view of external practices and trends. Our competitive market assessment includes a comparison of the amount of each element provided to our executive officers to the compensation provided to their external counterparts among our retail and general industry peer groups. We also examine the portion provided in each element as a percentage of TDC. These reference points provide perspective on the external competitiveness of our programs to ensure we maintain our desired relative emphasis on variable compensation as a percentage of TDC.
As illustrated below, fiscal 2012 pay mix provided to our NEOs is heavily concentrated in variable compensation elements:
28
Pay Mix Components
Our compensation programs use a combination of performance measures with short (annual) and long-term time horizons to provide a balanced assessment of performance and risk over time and to support our financial and strategic objectives.
Element |
Measure/Metric |
Objective |
||
---|---|---|---|---|
Base Salary | Scope of Role, Experience | Reflects the scope and complexity of each executive officer's roles, individual skills, contributions, and prior experience. | ||
Short-Term Incentive | Earnings Before Interest and Taxes (Incentive EBIT) | Reinforces our focus on profitability. | ||
Economic Value Added (Incentive EVA) |
Evaluates the degree to which capital is efficiently invested through balancing profitability with capital investments. |
|||
Personal Performance (excluding CEO) |
Recognizes additional critical factors based on subjective management criteria, including the ability to develop a high performing team, ability to lead strategic initiatives and demonstration of a strong commitment to high ethical standards. |
|||
Long-Term Incentive: PSUs | Change in Market Share | Incents continued domestic net sales growth captured relative to our retail peer group over a three-year period. | ||
EPS Compound Annual Growth Rate |
Focuses on achieving sufficiently high growth in EPS relative to our retail peer group over a three-year period. |
|||
Long-Term Incentives: RSUs, Stock Options and PSUs | Stock Price | Ties executive compensation with our shareholders' value assessment. We believe that consistent execution of our strategy over multi-year periods will lead to an increase in stock price. | ||
29
Pay-for-Performance Link
By our program design, the actual TDC earned by our executive officers will vary significantly depending on the company's financial performance and, for executives below the CEO, individual performance that contributes to the company's results.
The following chart highlights the variability concept of our compensation program. It shows our CEO's fiscal 2012 TDC at-goal and the value of the TDC package one year later under two performance scenarios: above-goal performance reflecting EBIT and EVA results at 10% above goal with 10% stock price appreciation for the year; and below-goal performance reflecting EBIT and EVA results at 10% below goal with 10% stock price depreciation:
Our other NEOs' TDC packages exhibit a similar level of variability. With this backdrop, the remainder of this section discusses in greater detail our CEO and other NEO compensation, and each component of TDC.
Executive Officer Compensation Determinations
When determining executive officer's TDC assuming at-goal payout levels (commonly referred to as "target" levels of performance), we consider a multitude of factors to ensure that the packages are in line with our pay-for-performance philosophy while remaining competitive in the market for talent. We consider individual factors such as performance, experience and internal comparisons. Peer group market positioning is another important factor considered in determining each executive officer's TDC (as discussed on pages 35-36). Due to imperfect comparability of executive officer positions between companies, peer group market position serves as a reference point in the TDC determination process rather than a formula-driven outcome. The following considerations are also utilized when determining at-goal TDC for our executive officers:
30
Base Salary
We provide base salary as a means to provide a fixed amount of cash compensation to our executive officers. In alignment with our pay-for-performance philosophy, it represents the smallest portion of TDC. With respect to our NEOs disclosed in last year's proxy, our CEO's base salary again remained flat and Ms. Tesija received a fiscal 2012 base salary increase to reflect her performance in the prior year and her expanded responsibilities related to our multichannel initiatives.
Short-Term Incentives
Incentive opportunity under our short-term incentive compensation program is based on a percentage of an executive officer's base salary, objective financial performance measures of profitability (Incentive EBIT) and investment discipline (Incentive EVA), and for executive officers other than our CEO, personal performance level:
31
All personal performance payments for executive officers are reported in the "Bonus" column of the Summary Compensation Table, and any payments based on financial performance measures in our short-term incentive program are reported in the "Non-Equity Incentive Plan Compensation" column.
The following tables summarize the total short-term incentive opportunity for financial performance measures at 5% below goal, goal, and 5% above goal, and a representative incentive opportunity for the personal performance aspect of the short-term incentive program under various performance levels as a percentage of base pay:
Illustrative Payouts for CEO
(as a % of base salary)
|
Performance Level | |||||
---|---|---|---|---|---|---|
|
5% Below Goal |
Goal | 5% Above Goal |
|||
Financial Component (50% EBIT, 50% EVA) |
75% | 150% | 300% |
Illustrative Payouts for Other NEOs
(as a % of base salary)
|
Performance Level | |||||
---|---|---|---|---|---|---|
|
Below Goal(1) |
Goal(2) | Above Goal(3) |
|||
Financial Component (50% EBIT, 50% EVA) |
20% | 53% | 120% | |||
Personal Performance Component |
20% | 27% | 40% | |||
Total |
40% | 80% | 160% |
32
Short-term incentive payouts have varied significantly based on our financial performance over the last five years. The following chart illustrates short-term incentive payouts in relation to goal payouts from fiscal 2008 to fiscal 2012 for our CEO:
2012 Financial Results for Short-Term Incentive Program. In fiscal 2012, we achieved Incentive EBIT and Incentive EVA performance of 1.2% and 11.7% above goal, respectively. The goal levels for fiscal 2012 Incentive EBIT and Incentive EVA were established at the beginning of the year, and for the first time included the impact of the costs related to our Canadian market entry. In prior years the costs related to Canada were excluded from our short-term incentive program. Because Canada was still in the start-up phase in fiscal 2012, with start-up costs and no sales, including Canada reduced our overall expected Incentive EBIT and Incentive EVA. In addition, goal and actual results exclude the gain on our credit card receivables held for sale.
To illustrate how our fiscal 2012 financial goals compare to historic actual performance, the following charts compare the fiscal 2012 goal and actual performance with the three prior years on the same basis to allow for consistent comparisons between periods. In addition, to demonstrate the impact our Canadian investment had on our goals, the 2011 and 2012 charts separately show what the goal and actual level of performance would have been without the Canadian investment.
33
Long-Term Incentives
We believe consistent execution of our strategy over multi-year periods will lead to an increase in our stock price. Stock options, PSUs and RSUs are the variable equity instruments we use to incent our executive officers to maintain focus and to reward their efforts, if successful, over the long-term. In addition to the considerations listed under "Executive Officer Determinations" on pages 30-31, each year we evaluate LTI mix and amounts in the market to establish annual LTI grants for executive officers. To align with shareholder interests, the use of multiple equity-based LTI award vehicles supports our pay-for-performance philosophy:
PSU payouts are based on our relative performance compared to our retail peer group for two performance metrics:
The following table summarizes the performance requirements that will determine PSU payouts using the relative measures for the 2010, 2011 and 2012 PSU grants:
|
Rankings Required for Payout At | |||||
---|---|---|---|---|---|---|
Performance Measure | Threshold | Goal | Maximum | |||
Compound EPS Growth Rate Ranking |
12th | 6th | 3rd | |||
Market Share Growth of Domestic Net Sales Ranking |
12th | 6th | 3rd | |||
Payout Levels (number of units/shares) |
0% for 13th | 100% | 150% |
PSU payouts at goal (100% payout) require performance above the median of our retail peer group (a rank of 6th among the 15 companies in the group including Target). Maximum payout at 150% of goal is attained if we rank 3rd or better in both measures at the end of the performance period. A rank of 13-15 results in a 0% payout. Payouts will be interpolated based on the degree of differential between rankings 3 and 6 (for a ranking of 4 or 5), and 6 and 13 (for rankings of 7-12). The following table summarizes the
34
rankings and payout results for awards granted in fiscal 2010 with a base year of fiscal 2009 and a final performance year of fiscal 2012:
|
Period Covered
|
Payout Information
|
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Grant Date |
Baseline Year |
Final Year |
Payout Date |
Metric
|
Ranking
|
Payout
|
Total Payout |
|||||||||||
March 2010 |
2009 | 2012 | March 2013 |
Market Share | 4th | 107% | 107.5% | |||||||||||
EPS CAGR | 5th | 108% |
Based on the results shown above, the Compensation Committee certified (and the Board certified for Mr. Steinhafel) payouts of 107.5% of original shares granted in March 2010. These results exclude the impact of our Canadian Segment and one-time gains from the sale of our credit card receivables.
In fiscal 2012, the Compensation Committee took the following notable actions related to LTI grants for our NEOs disclosed in last year's proxy:
Compensation Peer Groups
The TDC levels and elements described in the preceding pages are evaluated annually for each executive officer relative to our retail and general industry peer group companies. The market comparisons are determined by use of compensation data obtained from publicly available proxy statements analyzed by Semler Brossy Consulting Group (SBCG) and proprietary survey data assembled by Towers Watson and Hay Group. The selected retail peer group provides a cross section of general merchandise, department store, food and specialty retailers and includes companies that are large (generally exceeding $15 billion in revenues) and meaningful competitors. General industry companies are also included as a peer group because they represent companies with whom we compete for talent. Like the selected retailers, the general industry companies are large and among the leaders in their industries. The composition of the peer groups is reviewed annually to ensure it is appropriate in terms of company size and business focus, and any changes made are reviewed with SBCG and approved by the Compensation Committee. For fiscal 2012, Amazon.com was added to the retail peer group in light of its impact to the U.S. Retail Segment and our business. Amazon.com has been included as a performance peer for PSUs granted in March 2013. While Supervalu was removed from our retail peer group for the next PSU performance cycle, the company was included in the peer
35
group at the time our 2012 competitive market assessment was performed. The companies included in the 2012 market comparisons are listed below.
Retail Peer Group |
General Industry Peer Group |
|||||
---|---|---|---|---|---|---|
Amazon.com | Lowe's | 3M | McDonald's | |||
Best Buy | Macy's | Abbott Labs | MetLife | |||
Costco | Safeway | Archer Daniels Midland | Microsoft | |||
CVS Caremark | Sears | Coca-Cola | PepsiCo | |||
Home Depot | Supervalu | Deere | Pfizer | |||
J.C. Penney | Walgreens | Dell | Procter & Gamble | |||
Kohl's | Walmart | Dow Chemical | Time Warner | |||
Kroger | FedEx | UPS | ||||
General Mills | UnitedHealth Group | |||||
Johnson & Johnson | United Technologies | |||||
Johnson Controls | Walt Disney | |||||
Kraft Foods | Wells Fargo |
The following table summarizes our rankings in our retail and general industry peer groups. The financial information reflects fiscal year-end data available as of September 2012, when the Compensation Committee approved the peer groups for the purpose of compensation comparisons:
|
|
Retail Peer Group
|
General Industry Peer Group
|
|
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
Revenues ($MMs) |
Market Cap ($MMs) |
Total Assets ($MMs) |
Employees
|
Revenues ($MMs) |
Market Cap ($MMs) |
Total Assets ($MMs) |
Employees
|
|
||||||||||
25th Percentile | $38,834 | $8,761 | $15,539 | 144,500 | $40,338 | $32,464 | $40,320 | 79,899 | ||||||||||||
Median | 50,208 | 14,035 | 23,476 | 171,000 | 53,735 | 61,413 | 67,845 | 112,300 | ||||||||||||
75th Percentile | 80,550 | 43,574 | 30,506 | 247,500 | 66,734 | 114,492 | 98,789 | 171,475 | ||||||||||||
Target Corporation |
69,865 | 33,966 | 46,630 | 365,000 | 69,865 | 33,966 | 46,630 | 365,000 |
Data Source: Equilar
Additional Benefit Elements
We offer additional benefit components designed to encourage retention of key talent including:
36
account deferred compensation plan. The plan has investment options that mirror our 401(k) plan.
Greater detail on these components is provided in the tables that follow the Summary Compensation Table on page 42.
CEO's All Other Compensation
As reported in the Summary Compensation Table on page 42, the "All Other Compensation" for Mr. Steinhafel is $5,068,118. The largest component of this other compensation relates to supplemental pension credits. Given the magnitude of these credits, a further explanation is provided below.
Depending on compensation changes and interest rate movements, the value of his supplemental pension and the transfers to or from his deferred compensation account, can vary significantly. For
37
illustrative purposes, the following chart shows Mr. Steinhafel's current and projected SPP transfer amounts through age 65:
Fiscal Year |
Age
|
SPP Credit Transfer Component of All Other Compensation ($000)(1) |
||
---|---|---|---|---|
2010 | 56 | $5,042 | ||
2011 | 57 | $5,059 | ||
2012 | 58 | $4,621 | ||
2013 | 59 | $2,186 | ||
2014 | 60 | $2,237 | ||
2015 | 61 | ($1,173) | ||
2016 | 62 | ($1,174) | ||
2017 | 63 | ($1,174) | ||
2018 | 64 | ($1,170) | ||
2019 | 65 | ($1,172) |
Employment Contracts
None of our executive officers, including our CEO, has an employment contract.
Income Continuance
We provide an Income Continuance Policy (ICP) to executive officers who are involuntarily terminated without cause to provide continued income to assist in their occupational transitions. The maximum payment under this policy (paid during regular pay cycles over two years) is two times the sum of base salary and the average of the last three years of short-term incentive and personal performance payments.
Compensation Governance
Roles of Compensation Committee, Management and Consultants
The Compensation Committee is responsible for determining the composition and value of our non-CEO executive officer pay packages and for developing a recommendation for our CEO's pay package that is reviewed and approved by the independent directors of the full Board. The Compensation Committee receives assistance from two sources: (1) an independent compensation consulting firm, SBCG; and (2) our internal executive compensation staff, led by our Executive Vice President of Human Resources. SBCG has been retained by and reports directly to the Compensation Committee and does not have any other consulting engagements with management or Target. The Committee assessed SBCG's independence in light of the U.S. Securities and Exchange Commission and NYSE listing standards and determined that the consultant's work did not raise any conflict of interest or independence concerns.
Compensation recommendations for executive officers are made to the Compensation Committee in two separate ways:
38
on its understanding of Target's business and compensation programs and SBCG's independent research and analysis. SBCG does not meet with our CEO with respect to his compensation.
All decisions regarding executive compensation and final recommendations to the independent members of the full Board are made solely by the Compensation Committee.
Say-on-Pay
At the annual meeting of shareholders held in June 2012, our executive compensation was approved by shareholders holding a majority (84%) of the shares voted on our annual "say-on-pay" proposal. Although we are pleased that our shareholders approved our say-on-pay proposal by a substantial majority, we continue to engage in conversations with a number of our largest institutional shareholders to better understand their "say-on-pay" priorities and perspectives. As mentioned before, the Board eliminated the CEO's discretionary cash bonus and replaced it with long-term incentive compensation to deliver more of our CEO's total compensation as at-risk pay. The Board will continue to carefully consider the outcome of the advisory vote on executive compensation and shareholder opinions offered during other communications throughout the year when making future compensation decisions.
Compensation Policies and Risk
As part of our regular review of our compensation practices, we conducted an analysis of whether our compensation policies and practices create material risks to the company. The results of this analysis were reviewed by the Compensation Committee's independent consultant and discussed with the Compensation Committee, which agreed with management's conclusion that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on the company. More specifically, this conclusion was based on the following considerations:
39
Recoupment Policy
Our recoupment (or "clawback") policy, which covers all officers, allows for recovery of the following compensation elements:
All demands for repayment are subject to Compensation Committee discretion. For an officer to be subject to recovery or cancellation under this policy, he or she must have engaged in intentional misconduct that contributed to the need for a restatement of the Corporation's consolidated financial statements.
Anti-Hedging Policy
Executive officers and members of the Board of Directors may not directly or indirectly engage in capital transactions intended to hedge or offset the market value of Target common stock owned by them.
Policies on Equity Compensation
General
Our use of equity compensation is intended to enhance the alignment of executive officer and shareholder interests, and also to provide a means for our executive officers and directors to accumulate an ownership stake in Target. Our executive officer and director stock ownership guidelines, and their current ownership positions, are discussed on pages 22-23 of this proxy statement.
40
Our Compensation Committee recognizes that the use of equity as a form of compensation can result in potential shareholder dilution. Our equity compensation awards have been granted under a shareholder approved plan (2011 Long-Term Incentive Plan). On an annual basis, the Compensation Committee reviews and approves an aggregate pool of shares that are available for grant, and in doing so, reviews metrics relating to both the annual burn rate and the cumulative dilutive impact of outstanding awards. The 2011 Long-Term Incentive Plan expressly prohibits the repricing of any outstanding stock option without shareholder approval. Individual grants to executive officers must be approved by the Compensation Committee. The Compensation Committee has delegated authority to make grants to team members below the executive officer level to our CEO and Executive Vice President of Human Resources.
Grant Timing
We have the following practices regarding the timing of equity compensation grants which includes stock option exercise price determinations. These practices have not been formalized in a written policy, but they are strictly observed.
Tax ConsiderationsCode Section 162(m)
Our short-term and long-term compensation programs, including the compensation paid in fiscal 2012, are intended to qualify as deductible performance based compensation under Section 162(m) of the Internal Revenue Code (IRC). We may provide non-deductible compensation in situations the Compensation Committee or our Board of Directors believes appropriate.
41
Summary Compensation Table
The Summary Compensation Table below contains values calculated and disclosed according to SEC reporting requirements. Salary, Bonus, and Non-Equity Incentive Plan compensation amounts are reflective of the compensation earned during the fiscal year. The stock awards and option awards reflect awards with a grant date during the fiscal year.
Name and Principal Position |
Year | Salary | Bonus | Stock Awards(3)(4) |
Option Awards(3) |
Non-Equity Incentive Plan Compensation |
Change in Pension Value and Nonqualified Deferred Compensation Earnings(5) |
All Other Compensation(6) |
Total | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Gregg W. Steinhafel |
2012 | $1,500,000 | $0 | $5,285,245 | $5,248,573 | $2,880,000 | $665,528 | $5,068,118 | $20,647,464 | |||||||||
Chairman, President & |
2011 | $1,500,000 | $1,250,000 | $4,857,502 | $3,696,982 | $2,205,000 | $673,635 | $5,523,988 | $19,707,107 | |||||||||
Chief Executive Officer |
2010 | $1,500,000 | $1,200,000 | $8,017,549 | $3,189,299 | $4,101,000 | $480,689 | $5,501,346 | $23,989,883 | |||||||||
John J. Mulligan* |
2012 | $602,404 | $371,917(1) | $1,395,687 | $1,340,064 | $415,250 | $35,381 | $313,505 | $4,474,207 | |||||||||
Executive Vice President & |
||||||||||||||||||
Chief Financial Officer |
||||||||||||||||||
Kathryn A. Tesija |
2012 | $900,000 | $371,700 | $2,306,493 | $2,233,443 | $648,000 | $54,159 | $653,424 | $7,167,219 | |||||||||
Executive Vice President, |
2011 | $850,000 | $351,050 | $2,068,055 | $1,663,643 | $442,000 | $81,178 | $578,492 | $6,034,418 | |||||||||
Merchandising & Supply Chain |
2010 | $750,000 | $309,750 | $1,950,056 | $1,275,727 | $798,150 | $40,350 | $379,779 | $5,503,812 | |||||||||
Jeffrey J. Jones II* |
2012 | $537,500 | $202,042 | $3,000,088(2) | $2,072,624(2) | $390,000 | $0 | $597,017 | $6,799,271 | |||||||||
Executive Vice President & |
||||||||||||||||||
Chief Marketing Officer |
||||||||||||||||||
Tina M. Schiel |
2012 | $700,000 | $270,900 | $1,516,896 | $1,451,738 | $504,000 | $30,031 | $166,606 | $4,640,170 | |||||||||
Executive Vice President, |
||||||||||||||||||
Stores |
||||||||||||||||||
Douglas A. Scovanner* |
2012 | $508,173 | $267,983 | $939,092 | $0 | $222,167 | $301,030 | $778,558 | $3,017,003 | |||||||||
Retired Executive Vice |
2011 | $1,025,000 | $423,325 | $1,414,501 | $739,400 | $533,000 | $321,556 | $1,002,001 | $5,458,782 | |||||||||
President & Chief Financial Officer |
2010 | $995,000 | $410,935 | $2,875,040 | $1,913,585 | $1,058,879 | $245,024 | $1,097,011 | $8,595,474 |
42
Name
|
Minimum Amount | Amount Reported | Maximum Amount | |||
---|---|---|---|---|---|---|
Mr. Steinhafel |
$0 | $2,347,731 | $3,521,597 | |||
Mr. Mulligan |
$0 | $645,674 | $968,511 | |||
Ms. Tesija |
$0 | $1,056,493 | $1,584,740 | |||
Mr. Jones |
$0 | $0 | $0 | |||
Ms. Schiel |
$0 | $704,347 | $1,056,521 | |||
Mr. Scovanner |
$0 | $939,092 | $1,408,639 |
Name
|
Change in Pension Value | Nonqualified Deferred Compensation Earnings |
||
---|---|---|---|---|
Mr. Steinhafel |
$109,111 | $556,417 | ||
Mr. Mulligan |
$35,381 | $0 | ||
Ms. Tesija |
$54,159 | $0 | ||
Mr. Jones |
$0 | $0 | ||
Ms. Schiel |
$30,031 | $0 | ||
Mr. Scovanner |
$85,327 | $215,703 |
43
Name
|
Match Credits |
Life Insurance |
SPP Credits | Relocation | Perquisites | Total | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Mr. Steinhafel |
$250,058 | $15,480 | $4,620,515 | $0 | $182,065 | $5,068,118 | ||||||
Mr. Mulligan |
$42,806 | $4,458 | $218,516 | $0 | $47,725 | $313,505 | ||||||
Ms. Tesija |
$86,322 | $5,621 | $529,329 | $0 | $32,152 | $653,424 | ||||||
Mr. Jones |
$11,063 | $2,835 | $0 | $552,734 | $30,385 | $597,017 | ||||||
Ms. Schiel |
$48,446 | $5,400 | $69,458 | $0 | $43,302 | $166,606 | ||||||
Mr. Scovanner |
$81,135 | $11,908 | $658,439 | $0 | $27,076 | $778,558 |
Supplemental Pension Plan. The SPP Credits for our NEOs represent supplemental pension plan benefits that are credited to their deferred compensation accounts. These benefits are based on our normal pension formula, so they are affected by final average pay, age (and for Mr. Steinhafel, an age acceleration feature) and changes in interest rates. See the narrative following the Pension Benefits for Fiscal 2012 table for more information about our pension plans. In particular, Mr. Steinhafel's supplemental pension plan benefits in fiscal 2012 were most affected by his higher average cash compensation due to more years in his role as CEO, increasing age and years of service, the age acceleration feature and low interest rates. See the discussion beginning on page 37 under "Additional Benefit ElementsCEO's All Other Compensation" in our Compensation Discussion and Analysis for a detailed explanation regarding the supplemental pension plan's impact on Mr. Steinhafel's "All Other Compensation" amount.
Relocation. In connection with the hiring and appointment of Mr. Jones as our Chief Marketing Officer, we provided Mr. Jones a lump-sum relocation allowance of $350,000 and paid direct expenses of $202,734 related to his relocation to facilitate his move to our corporate office in Minnesota. The entire relocation benefit is subject to repayment by Mr. Jones if he voluntarily leaves Target at any time during his first 36 months with the company.
Perquisites. The perquisites consist of a company-provided car or car allowance, personal use of company-owned aircraft, reimbursement of financial management expenses, reimbursement of home security expenses, on-site parking, on-site exercise room, spousal travel on business trips, gifts and executive physicals. The only individual perquisite which exceeded $25,000 was Mr. Steinhafel's personal use of company-owned aircraft for security reasons, which amounted to $125,473. No tax gross-ups are provided on these perquisites.
The dollar amount of perquisites represents the incremental cost of providing the perquisite. We generally measure incremental cost by the additional variable costs attributable to personal use, and we disregard fixed costs that do not change based on usage. Incremental cost for personal use of company-owned aircraft was determined by including fuel cost, landing fees, on-board catering and variable maintenance costs attributable to personal flights and related unoccupied positioning, or "deadhead," flights.
44
In addition to the perquisites included in the table above, the NEOs receive certain other personal benefits for which we have no incremental cost, as follows:
Grants of Plan-Based Awards in Fiscal 2012
Name | Grant Date |
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) |
Estimated Future Payouts Under Equity Incentive Plan Awards(2) |
All Other Stock Awards: Number of Shares of Stock or Units (#)(3) |
All Other Option Awards: Number of Securities Underlying Options (#)(4) |
Per Share Exercise or Base Price of Option Awards(5) |
Per Share Closing Price on Grant Date |
Grant Date Fair Value of Stock and Option Awards(6) |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
Threshold | Target | Maximum | Threshold (#) | Target (#) | Maximum (#) | |
|
|
|
|
||||||||||||
Gregg W. Steinhafel |
3/14/12 | $562,500 | $2,250,000 | $6,000,000 | ||||||||||||||||||||
|
3/14/12 | 0 | 42,655 | 63,983 | $2,347,731 | |||||||||||||||||||
|
1/09/13 | 544,486 | $60.48 | $60.18 | $5,248,573 | |||||||||||||||||||
|
1/09/13 | 48,570 | $2,937,514 | |||||||||||||||||||||
John J. Mulligan |
3/14/12 | $56,917 | $298,625 | $2,359,750 | ||||||||||||||||||||
|
3/14/12 | 0 | 11,731 | 17,597 | $645,674 | |||||||||||||||||||
|
1/09/13 | 139,018 | $60.48 | $60.18 | $1,340,064 | |||||||||||||||||||
|
1/09/13 | 12,401 | $750,012 | |||||||||||||||||||||
Kathryn A. Tesija |
3/14/12 | $90,000 | $480,600 | $3,510,000 | ||||||||||||||||||||
|
3/14/12 | 0 | 19,195 | 28,793 | $1,056,493 | |||||||||||||||||||
|
1/09/13 | 231,697 | $60.48 | $60.18 | $2,233,443 | |||||||||||||||||||
|
1/09/13 | 20,668 | $1,250,001 | |||||||||||||||||||||
Jeffrey J. Jones II |
4/02/12 | $54,167 | $289,250 | $2,112,500 | ||||||||||||||||||||
|
4/02/12 | 66,801 | $58.21 | $58.29 | $732,560 | |||||||||||||||||||
|
4/02/12 | 34,359 | $2,000,037 | |||||||||||||||||||||
|
9/12/12 | 3,885 | $250,039 | |||||||||||||||||||||
|
1/09/13 | 139,018 | $60.48 | $60.18 | $1,340,064 | |||||||||||||||||||
|
1/09/13 | 12,401 | $750,012 | |||||||||||||||||||||
Tina M. Schiel |
3/14/12 | $70,000 | $373,800 | $2,730,000 | ||||||||||||||||||||
|
3/14/12 | 0 | 12,797 | 19,196 | $704,347 | |||||||||||||||||||
|
1/09/13 | 150,603 | $60.48 | $60.18 | $1,451,738 | |||||||||||||||||||
|
1/09/13 | 13,435 | $812,549 | |||||||||||||||||||||
Douglas A. Scovanner |
3/14/12 | $28,817 | $131,225 | $1,721,183 | ||||||||||||||||||||
|
3/14/12 | 0 | 17,062 | 25,593 | $939,092 |
45
46
Outstanding Equity Awards at 2012 Fiscal Year-End
|
Option Awards | Stock Awards | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name
|
Number of Securities Underlying Unexercised Options(#) Exercisable(1) |
Number of Securities Underlying Unexercised Options(#) Unexercisable(1) |
Option Exercise Price |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested(#)(2) |
Market Value of Shares or Units of Stock That Have Not Vested |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(#)(3) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(3) |
||||||||
Gregg W. Steinhafel |
101,154 | 0 | $49.43 | 1/12/2015 | 207,636 | $12,696,941 | 136,700 | $8,359,205 | ||||||||
|
122,268 | 0 | $53.98 | 1/11/2016 | ||||||||||||
|
159,884 | 0 | $48.16 | 6/14/2016 | ||||||||||||
|
131,946 | 0 | $58.13 | 1/10/2017 | ||||||||||||
|
255,677 | 0 | $48.89 | 1/9/2018 | ||||||||||||
|
126,184 | 0 | $33.80 | 1/14/2019 | ||||||||||||
|
185,354 | 61,785 | $49.41 | 1/13/2020 | ||||||||||||
|
128,403 | 128,403 | $55.46 | 1/12/2021 | ||||||||||||
|
99,443 | 298,330 | $48.88 | 1/11/2022 | ||||||||||||
|
0 | 544,486 | $60.48 | 1/9/2023 | ||||||||||||
John J. Mulligan |
4,552 | 0 | $49.43 | 1/12/2015 | 34,329 | $2,099,218 | 20,870 | $1,276,201 | ||||||||
|
1,881 | 0 | $53.17 | 9/1/2015 | ||||||||||||
|
4,632 | 0 | $53.98 | 1/11/2016 | ||||||||||||
|
2,044 | 0 | $48.94 | 9/1/2016 | ||||||||||||
|
6,021 | 0 | $58.13 | 1/10/2017 | ||||||||||||
|
10,228 | 0 | $48.89 | 1/9/2018 | ||||||||||||
|
3,645 | 0 | $54.87 | 9/2/2018 | ||||||||||||
|
17,752 | 0 | $33.80 | 1/14/2019 | ||||||||||||
|
2,676 | 892 | $42.05 | 8/10/2019 | ||||||||||||
|
7,804 | 2,602 | $49.41 | 1/13/2020 | ||||||||||||
|
4,733 | 4,733 | $53.36 | 8/9/2020 | ||||||||||||
|
5,778 | 5,779 | $55.46 | 1/12/2021 | ||||||||||||
|
7,458 | 22,375 | $48.88 | 1/11/2022 | ||||||||||||
|
19,245 | 57,738 | $50.51 | 1/24/2022 | ||||||||||||
|
0 | 139,018 | $60.48 | 1/9/2023 | ||||||||||||
Kathryn A. Tesija |
7,587 | 0 | $49.43 | 1/12/2015 | 63,023 | $3,853,856 | 57,881 | $3,539,423 | ||||||||
|
14,821 | 0 | $53.98 | 1/11/2016 | ||||||||||||
|
17,203 | 0 | $58.13 | 1/10/2017 | ||||||||||||
|
30,682 | 0 | $48.89 | 1/9/2018 | ||||||||||||
|
57,406 | 0 | $52.26 | 4/11/2018 | ||||||||||||
|
88,758 | 0 | $33.80 | 1/14/2019 | ||||||||||||
|
74,142 | 24,714 | $49.41 | 1/13/2020 | ||||||||||||
|
51,361 | 51,362 | $55.46 | 1/12/2021 | ||||||||||||
|
44,749 | 134,249 | $48.88 | 1/11/2022 | ||||||||||||
|
0 | 231,697 | $60.48 | 1/9/2023 | ||||||||||||
Jeffrey J. Jones II |
0 | 66,801 | $58.21 | 4/2/2022 | 51,238 | $3,133,204 | 0 | $0 | ||||||||
|
0 | 139,018 | $60.48 | 1/9/2023 | ||||||||||||
Tina M. Schiel |
3,922 | 0 | $38.25 | 1/14/2014 | 38,535 | $2,356,415 | 33,740 | $2,063,201 | ||||||||
|
15,173 | 0 | $49.43 | 1/12/2015 | ||||||||||||
|
2,822 | 0 | $53.17 | 9/1/2015 | ||||||||||||
|
14,821 | 0 | $53.98 | 1/11/2016 | ||||||||||||
|
5,109 | 0 | $48.94 | 9/1/2016 | ||||||||||||
|
15,483 | 0 | $58.13 | 1/10/2017 | ||||||||||||
|
5,416 | 0 | $64.63 | 9/4/2017 | ||||||||||||
|
6,379 | 0 | $54.87 | 9/2/2018 | ||||||||||||
|
9,246 | 0 | $33.80 | 1/14/2019 | ||||||||||||
|
11,706 | 3,903 | $49.41 | 1/13/2020 | ||||||||||||
|
2,130 | 2,130 | $53.36 | 8/9/2020 | ||||||||||||
|
25,681 | 25,681 | $55.46 | 1/12/2021 | ||||||||||||
|
29,833 | 89,499 | $48.88 | 1/11/2022 | ||||||||||||
|
0 | 150,603 | $60.48 | 1/9/2023 | ||||||||||||
Douglas A. Scovanner |
80,923 | 0 | $49.43 | 1/12/2015 | 0 | $0 | 69,224 | $4,233,048 | ||||||||
|
101,890 | 0 | $53.98 | 1/11/2016 | ||||||||||||
|
94,616 | 0 | $58.13 | 1/10/2017 | ||||||||||||
|
149,315 | 0 | $48.89 | 11/2/2017 | ||||||||||||
|
53,995 | 0 | $33.80 | 11/2/2017 | ||||||||||||
|
107,310 | 35,771 | $49.41 | 11/2/2017 | ||||||||||||
|
77,042 | 77,042 | $55.46 | 11/2/2017 | ||||||||||||
|
19,888 | 59,667 | $48.88 | 1/11/2022 |
47
Age
|
Minimum Years of Service |
Vesting and Exercise Extension Period |
||
---|---|---|---|---|
60+ |
10 | 10 Years | ||
55-59 |
15 |
5 Years |
||
52-54 |
15 |
4 Years |
||
48-51 |
15 |
3 Years |
||
45-47 |
15 |
2 Years |
Age
|
Minimum Years of Service |
Vesting and Exercise Extension Period |
||
---|---|---|---|---|
65+ |
5 | 5 Years | ||
55-64 |
15 |
5 Years |
||
52-54 |
15 |
4 Years |
||
48-51 |
15 |
3 Years |
||
45-47 |
15 |
2 Years |
Age
|
Minimum Years of Service |
Exercise Extension Period |
||
---|---|---|---|---|
55+ |
5 | 5 Years | ||
45-54 |
15 | 2 Years |
48
Age
|
Minimum Years of Service |
|
---|---|---|
60+ |
10 | |
55-59 |
15 |
Age
|
Minimum Years of Service |
|
---|---|---|
65+ |
5 | |
55-64 |
15 |
49
50
Option Exercises and Stock Vested in Fiscal 2012
|
Option Awards | Stock Awards | ||||||
---|---|---|---|---|---|---|---|---|
Name
|
Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise(1) |
Number of Shares Acquired on Vesting (#)(2) |
Value Realized on Vesting(3) |
||||
Gregg W. Steinhafel |
275,817 | $7,706,708 | 99,501 | $6,317,256 | ||||
John J. Mulligan |
2,238 | $43,216 | 4,087 | $273,992 | ||||
Kathryn A. Tesija |
0 | $0 | 39,805 | $2,527,183 | ||||
Jeffrey J. Jones II |
0 | $0 | 0 | $0 | ||||
Tina M. Schiel |
38,947 | $870,229 | 6,130 | $410,955 | ||||
Douglas A. Scovanner |
229,956 | $5,855,220 | 85,860 | $5,459,122 |
Pension Benefits for Fiscal 2012
Name(1)
|
Plan Name | Age at FYE |
Number of Years Credited Service (#) |
Present Value of Accumulated Benefit |
||||
---|---|---|---|---|---|---|---|---|
Gregg W. Steinhafel |
Target Corporation Pension Plan | 58 | 33 | $1,217,542 | ||||
John J. Mulligan |
Target Corporation Pension Plan | 47 | 16 | $202,623 | ||||
Kathryn A. Tesija |
Target Corporation Pension Plan | 49 | 27 | $335,652 | ||||
Tina M. Schiel |
Target Corporation Pension Plan | 47 | 26 | $241,464 | ||||
Douglas A. Scovanner |
Target Corporation Pension Plan | 57 | 19 | $734,972 |
51
The table above reports benefits under our principal pension plan, the Target Corporation Pension Plan (Pension Plan), which is a tax qualified retirement plan that provides retirement benefits to our employees who are at least 21 years of age, have completed at least three years of service and were hired prior to January 2009. The Pension Plan is comprised of two different benefit formulas, and the formula used is based on the date the team member became a Pension Plan participant. Team members who were active participants in the Pension Plan prior to 2003 had the choice to have benefits for their service after December 31, 2002 be calculated using either the final average pay benefit formula, or the personal pension account benefit formula. Participants prior to 2003 who elected to have benefits for their service after their December 31, 2002 calculated under the personal pension account formula have benefits under both benefit formulas. The Pension Plan benefits for Messrs. Steinhafel, Mulligan, and Scovanner and Ms. Tesija are determined exclusively using the final average pay formula. The Pension Plan benefit for Ms. Schiel for service (a) prior to 2003 is determined by using the final average pay formula frozen based on her final average monthly pay and years of service determined as of December 31, 2002, and (b) after December 31, 2002 is based on the personal pension account benefit formula.
Final Average Pay Benefit
The final average pay retirement benefit under the Pension Plan, expressed as a monthly, single life annuity commencing at age 65, is equal to the sum of: (a) 0.8% of the participant's final average monthly pay multiplied by the years of service (not to exceed 25 years of service), plus (b) 0.25% of the participant's final average monthly pay multiplied by the years of service in excess of 25 years of service, plus (c) 0.5% of the participant's final average monthly pay in excess of 12.5% of the average of the Social Security Taxable Wage Base for the 35-year period ending when the participant terminates employment multiplied by the years of service (not to exceed 25 years of service). Final average monthly pay is equal to one twelfth of the highest average annual salary, Bonus and Non Equity Incentive Plan compensation earned during any five years of the last ten year period the participant earned service in the Pension Plan, subject to IRC limits. The present value of the accumulated benefit is based on the same assumptions and valuation dates used for the valuation of pension plan liabilities in our financial statements. Participants can elect other annuity forms that have an actuarially equivalent value. We do not grant extra years of service to supplement retirement benefits.
Early retirement payments may commence at age 55. A participant who terminates employment before age 55 has his or her vested benefit calculated based on the final average monthly pay as of their termination date, but service is projected to age 65. The vested benefit is then multiplied by the ratio of the participant's actual completed service to their projected service through age 65. The result will always be equal to or less than the vested benefit as of the termination date. Benefits are also reduced for early commencement by 6.67% per year between age 65 and age 60 and 3.33% per year between age 60 and age 55 (based upon the participant's age when benefits commence).
Personal Pension Account Benefit
A participant's personal pension account benefit is determined by the value of the participant's personal pension account balance, which is credited each calendar quarter with both pay credits and interest credits. Pay credits to a participant's personal pension account are based on a fixed percentage of the participant's eligible pay for the quarter, ranging from 1.5% to 6.5%, depending upon the participant's combined age and service. Eligible pay includes the participant's base salary, Bonus, and Non-Equity Incentive Plan compensation received during the calendar quarter, subject to the annual IRC limit. Interest credits to a participant's personal pension account are generally made on the last day of the quarter based on the value of the account at the beginning of the quarter and an interest rate equal to the greater of (i) the average 10-year Treasury note rate for the month that is the 2nd month prior to the beginning of the quarter, or (ii) 4.64%.
52
A participant's personal pension account balance is payable to the participant at any time after termination of employment in a lump sum or an actuarially equivalent monthly annuity as provided under the Pension Plan and elected by the participant. The beneficiary of a personal pension account participant who dies before commencing benefits will receive a death benefit equal to the participant's account balance, payable either in a lump sum or an actuarially equivalent monthly annuity.
Supplemental Pension Plan
We also provide benefits under supplemental pension plans, as described below, because of limits imposed on tax qualified plans by the IRC. Benefits under those plans are reflected in the Nonqualified Deferred Compensation table. The Target Corporation Supplemental Pension Plan I (SPP I) restores the lost qualified Pension Plan benefit due to an officer's eligible pay being greater than the compensation limits imposed by the IRC for qualified retirement plans, and is based on the same benefit formula used for determining benefits under the Pension Plan. The Target Corporation Supplemental Pension Plan II (SPP II) restores the lost qualified Pension Plan benefit due to amounts being deferred under the EDCP (our current deferred compensation plan) and therefore not considered for benefit purposes under the Pension Plan. The Target Corporation Supplemental Pension Plan III (SPP III) provides for a subsidized early retirement benefit once a participant attains age 55 by increasing the participant's age by 5 years, but not greater than age 65, for purposes of determining the reduction factors for early commencement of their pension benefits from the Pension Plan, SPP I and SPP II. As a result, the benefit under SPP III increases when the participant is 55 through 60 years old and decreases in value after age 60, until at age 65 the benefit under SPP III is $0. No new participants have been allowed in SPP III since 1989, and Mr. Steinhafel is the only NEO who participates in SPP III.
In 2002, the vested benefits accrued under SPP I, II and III were converted into an actuarial equivalent lump sum value that was transferred to the EDCP. This was done to allow participants more control over the investment of their supplemental pension benefits. Each year, the annual change in the actuarial lump-sum amount is calculated and added to, or deducted from, the participant's EDCP account. This same calculation and an EDCP account adjustment also occurs upon termination of employment. To determine the amount of the change in actuarial equivalent lump-sum amount, the prior transfers are adjusted by an assumed annual earnings rate based on a conservative investment of the prior transfers. For the final average pay benefit, actuarial equivalents are determined using the discount methodology we use in calculating lump-sum payments under the Pension Plan. Currently, we use the applicable interest rate and mortality factors under IRC Section 417(e) published in the month of transfer for active officers, and in the month prior to the month of termination for terminated officers. For the personal pension account benefit, the actuarial lump-sum amount is the balance of the non-qualified personal pension account maintained under SPP I and SPP II. Because of this transfer feature, the benefits accrued under SPP I, II and III are reflected as EDCP deferrals in the Nonqualified Deferred Compensation table.
53
Nonqualified Deferred Compensation for Fiscal 2012
The amounts in the table below represent deferrals under the EDCP (which includes the supplemental pension benefits discussed in the preceding section), deferrals under the ODCP, and deferrals of PSUs that are held as stock units. The ODCP was frozen to new deferrals in 1996.
Name
|
Executive Contributions in Last FY(2) |
Registrant Contributions in Last FY(3) |
Aggregate Earnings in Last FY(4) |
Aggregate Withdrawals/ Distributions in Last FY |
Aggregate Balance At Last FYE(5) |
|||||
---|---|---|---|---|---|---|---|---|---|---|
Gregg W. Steinhafel |
||||||||||
EDCP |
$311,538 | $4,855,765 | $4,818,633 | $0 | $34,008,382 | |||||
ODCP(1) |
$0 | $0 | $943,555 | $0 | $8,806,515 | |||||
John J. Mulligan |
||||||||||
EDCP |
$62,704 | $246,629 | $101,077 | $0 | $953,613 | |||||
Kathryn A. Tesija |
||||||||||
EDCP |
$120,576 | $601,193 | $155,982 | $0 | $2,335,736 | |||||
Stock Units |
$233 | $1,777 | $9,967 | |||||||
Jeffrey J. Jones II |
||||||||||
EDCP |
$3,750 | $0 | $46 | $0 | $3,796 | |||||
Tina M. Schiel |
||||||||||
EDCP |
$38,577 | $103,881 | $143,443 | $0 | $953,758 | |||||
Stock Units |
$233 | $1,777 | $9,967 | |||||||
Douglas A. Scovanner |
||||||||||
EDCP |
$51,887 | $730,819 | $760,073 | $0 | $5,562,509 | |||||
ODCP(1) |
$0 | $0 | $365,782 | $0 | $3,413,969 |
Mr. Steinhafel |
$311,538 | |
Mr. Mulligan |
$62,704 | |
Ms. Tesija |
$120,576 | |
Mr. Jones |
$3,750 | |
Ms. Schiel |
$38,577 | |
Mr. Scovanner |
$51,887 |
Mr. Steinhafel |
$556,417 | |
Mr. Mulligan |
$0 | |
Ms. Tesija |
$0 | |
Mr. Jones |
$0 | |
Ms. Schiel |
$0 | |
Mr. Scovanner |
$215,703 |
54
|
Reported in Prior Years' Summary Compensation Tables |
|
---|---|---|
Mr. Steinhafel |
$16,477,052 | |
Mr. Mulligan |
$0 | |
Ms. Tesija |
$958,652 | |
Mr. Jones |
$0 | |
Ms. Schiel |
$0 | |
Mr. Scovanner |
$5,250,647 |
Participants in the EDCP may generally elect to defer up to 80% of their salary, Bonus and Non-Equity Incentive Plan payments; however, certain executive officers may defer up to 100% of their compensation if IRC Section 162(m) could limit our deductibility of such compensation. At any time, EDCP participants are permitted to choose to have their account balance indexed to crediting rate alternatives that mirror the investment choices and actual rates of return available under the Target 401(k) Plan, including a Target common stock fund. Target invests general corporate assets through various investment vehicles to offset a substantial portion of the economic exposure to the investment returns earned under EDCP. See Note 27, Defined Contribution Plans, to our fiscal 2012 consolidated financial statements for additional information.
No additional deferrals have been made to the ODCP after 1996. Participants' ODCP accounts are credited with earnings based on the average Moody's Bond Indices Corporate AA rate for June of the preceding calendar year, plus an additional annual return of 6%. The minimum crediting rate is 12% and the maximum is 20%. The average Moody's Bond Indices Corporate AA rate was 3.78% as of June 2012, when the rate for calendar 2013 was set. This additional return is included in the above-market earnings on deferred compensation in the Summary Compensation Table.
At the time of deferral, participants can elect to receive a distribution of their EDCP account at a fixed date or upon termination of employment. EDCP payouts at a fixed date will be made as lump-sum payments. EDCP payouts made on termination of employment can be made as a lump-sum payment, installment payments over five years, or installment payments over ten years commencing immediately or one-year after termination of employment. EDCP payouts are also made in the case of the termination of EDCP, a qualifying change in control, or unforeseeable financial emergency of the participant creating severe financial hardship.
Payouts from the ODCP cannot be made until termination of employment, death, termination of the ODCP, a qualifying change in control, or unforeseeable financial emergency of the participant creating severe financial hardship. Participants can elect distributions as a lump-sum payment or lifetime periodic payments with guaranteed payments for 15 years. The payments can commence immediately or up to ten years after termination of employment; however, payments must commence when a participant has terminated employment and reached age 65.
Both the EDCP and ODCP are intended to comply with IRC Section 409A. As a result, payments to executive officers based on a termination of employment will be delayed six months.
The EDCP and the ODCP are unfunded plans and represent general unsecured obligations of Target. Participants' account balances will be paid only if Target has the ability to pay. Accordingly, account balances may be lost in the event of Target's bankruptcy or insolvency.
55
Potential Payments Upon Termination or Change-in-Control
This section explains the payments and benefits to which the NEOs are entitled in various termination of employment scenarios. Except with respect to Mr. Scovanner, these are hypothetical situations only as all of our other NEOs are currently employed by us. For purposes of this explanation, we have assumed that termination of employment occurred on February 2, 2013, the last day of our 2012 fiscal year, and for the change-in-control analysis, that we incurred a change-in-control at our fiscal year-end closing stock price of $61.15 per share. For Mr. Scovanner, the only scenario provided is Voluntary Termination, which he experienced on November 3, 2012 when he retired from Target.
The intent of this section is to isolate those payments and benefits for which the amount, vesting or time of payment is altered by the termination of employment in the described circumstances. This section does not cover all amounts the NEOs will receive following termination. Specifically, the NEOs are entitled to receive their vested balances under our pension and deferred compensation plans, as disclosed in the preceding tables, and payment of accrued vacation balances under all employment termination scenarios. In addition, unless the termination is for cause, they retain their vested stock option awards, and if they meet specified minimum age and years of service requirements at the time of termination, the unvested portion of stock options, PSUs, restricted stock and RSUs are not forfeited, and vesting will continue according to the original schedule for defined periods. Cause is generally defined as deliberate and serious disloyal or dishonest conduct. A description of these age and years of service requirements, applicable to all executive officers who receive equity awards, is set forth in the notes under the Outstanding Equity Awards at 2012 Fiscal Year-End table.
The paragraphs below explain the payments and benefits for which the amount, vesting or time of payment is altered by each employment termination situation (referred to as Post-Termination Benefits). The age and years of service for each executive officer is located in the Pension Benefits for Fiscal 2012 table. All references to RSUs below include the fiscal 2010 restricted stock award to Mr. Steinhafel, as the terms of that award are, for purposes of this section, identical to RSUs.
Voluntary Termination
If a NEO voluntarily terminates employment, the potential Post-Termination Benefits consist of the potential right to continue to receive above-market interest in our former deferred compensation plan, the ODCP, or receive his account balance as a lump-sum payment. Under the ODCP, the participant will continue to receive interest at the plan's crediting rate (as described in the narrative under the Nonqualified Deferred Compensation for Fiscal 2012 table) over the joint life of the participant and his beneficiary in accordance with the participant's distribution election.
|
Mr. Steinhafel | Mr. Mulligan | Ms. Tesija | Mr. Jones | Ms. Schiel | Mr. Scovanner | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
ODCP: Present Value of Above Market Interest(1) |
$9,262,907 | N/A | N/A | N/A | N/A | $8,243,721 |
56
Involuntary Termination
If the NEO was involuntarily terminated for cause, he or she would not be eligible for any of the Post-Termination Benefits described in this section, however, the NEO would receive the ODCP benefit described in the Voluntary Termination section above.
If a NEO is involuntarily terminated for reasons other than for cause, the potential Post-Termination Benefits consist of:
Our ICP provides for continuation of annual cash compensation (salary and average of three most recent Bonuses and Non-Equity Incentive Plan payments) over a period ranging from 12 to 24 months, paid in equal monthly installments. Each of the NEOs is eligible for 24 months of income continuation under the ICP. Payments under the ICP are conditioned on the executive officer releasing any claims against us, a non-solicitation covenant and are subject to reduction if the executive officer becomes employed by specified competitors.
The right to continued above-market interest under the ODCP is the same as for a voluntary termination.
The accelerated vesting provisions of RSU awards, restricted stock awards and stock options are set forth in the notes under the Outstanding Equity Awards at 2012 Fiscal Year-End table.
|
Mr. Steinhafel | Mr. Mulligan | Ms. Tesija | Mr. Jones | Ms. Schiel | |||||
---|---|---|---|---|---|---|---|---|---|---|
ICP Payments (Severance) |
$11,004,000 | $1,883,680 | $4,074,020 | $1,300,000 | $2,469,272 | |||||
ODCP: Present Value of Above Market Interest(1) |
$9,262,907 | N/A | N/A | N/A | N/A | |||||
RSU Vesting(2) |
$6,348,471 | $1,049,609 | $1,926,928 | $1,566,602 | $1,178,208 |
Death
If a NEO dies while employed, the Post-Termination Benefits consist of:
57
Under the ODCP, the participant's beneficiary will generally receive payments for his or her life equal to the payments the participant would have received if the participant retired the day before death and elected to commence distributions immediately.
|
Mr. Steinhafel | Mr. Mulligan | Ms. Tesija | Mr. Jones | Ms. Schiel | |||||
---|---|---|---|---|---|---|---|---|---|---|
ODCP: Present Value of Above-Market Interest(1) |
$7,837,688 | N/A | N/A | N/A | N/A | |||||
RSU Vesting(2) |
$12,696,941 | $2,099,218 | $3,853,856 | $3,133,204 | $2,356,415 | |||||
Accelerated Vesting of Stock Options(3) |
$5,481,284 | $1,099,353 | $2,384,864 | $289,537 | $1,407,596 | |||||
Life Insurance Proceeds |
$3,000,000 | $3,000,000 | $3,000,000 | $3,000,000 | $3,000,000 |
Disability
If a NEO becomes totally and permanently disabled while employed, the Post-Termination Benefits consist of:
Our Excess Long-Term Disability Plan, a self-insured unfunded plan, provides monthly disability income payments with respect to the portion of annualized salary and three-year average Bonus and Non-Equity Incentive Plan compensation above the annual compensation limit (currently set at $245,000) but not exceeding $1 million. The plan replaces 60% of a participant's eligible compensation. A participant who becomes disabled before age 65 is eligible to receive payments under the plan while he or she is totally and permanently disabled through age 65 (with a minimum of three years of disability payments) or death, if sooner.
|
Mr. Steinhafel | Mr. Mulligan | Ms. Tesija | Mr. Jones | Ms. Schiel | |||||
---|---|---|---|---|---|---|---|---|---|---|
Excess Long-Term Disability Plan (Annual Payments) |
$453,000 | $418,104 | $453,000 | $243,000 | $453,000 | |||||
ODCP: Present Value of Above-Market Interest(1) |
$9,262,907 | N/A | N/A | N/A | N/A | |||||
RSU Vesting(2) |
$12,696,941 | $2,099,218 | $3,853,856 | $3,133,204 | $2,356,415 |
58
Change-in-Control
The following discussion describes the payments and benefits that: (1) are triggered by the occurrence of a change-in-control; and (2) are triggered only by a qualifying termination of employment following a change-in-control. In general terms, we will experience a change-in-control, as defined in our compensation plans, whenever any of the following events occur:
Importantly, our plans do not provide for any gross-ups for taxes due on any payments described in this section.
The consequence of a change-in-control to the NEOs, without termination of employment, is as follows:
59
If a change-in-control occurred on February 2, 2013, the NEOs would have received the following:
|
Mr. Steinhafel | Mr. Mulligan | Ms. Tesija | Mr. Jones | Ms. Schiel | |||||
---|---|---|---|---|---|---|---|---|---|---|
ODCP: Present Value of Above Market Interest(1) |
$10,620,819 | N/A | N/A | N/A | N/A | |||||
PSU Payouts(2) |
$2,690,938 | $304,437 | $1,116,261 | N/A | $617,912 | |||||
RSU Vesting(2) |
$11,715,822 | $577,918 | $1,354,308 | $647,563 | $769,068 |
If a NEO's employment terminates involuntarily or voluntarily with good reason (a material reduction in compensation or responsibilities or a required relocation following a change-in-control), the Post-Termination Benefits that may be received consist of severance under the ICP and accelerated vesting of outstanding stock options. The estimated amount of additional Post-Termination Benefits in excess of the benefits triggered by the change-in-control transaction are as follows:
|
Mr. Steinhafel | Mr. Mulligan | Ms. Tesija | Mr. Jones | Ms. Schiel | |||||
---|---|---|---|---|---|---|---|---|---|---|
ICP Payments (Severance) |
$11,004,000 | $1,883,680 | $4,074,020 | $1,300,000 | $2,469,272 | |||||
Accelerated Vesting of Stock Options |
$5,481,284 | $1,099,353 | $2,384,864 | $289,537 | $1,407,596 |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
SEC rules require disclosure of those directors, officers and beneficial owners of more than 10% of our common stock who fail to timely file reports required by Section 16(a) of the Securities Exchange Act of 1934 during the most recent fiscal year. As a result of the failure by a third-party broker to timely notify both Target and Mary Minnick, a director of Target, of the purchase of an aggregate of 50 shares of Target common stock in four separate transactions for the account of Ms. Minnick, the Form 4 that reported these purchases was filed late. Other than this one matter, and based solely on review of reports furnished to us and written representations that no other reports were required during the fiscal year ended February 2, 2013, all Section 16(a) filing requirements were met.
60
ITEM TWORATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Proxies solicited by the Board of Directors will, unless otherwise directed, be voted to ratify the appointment by the Audit Committee of Ernst & Young LLP as the independent registered public accounting firm for Target and its subsidiaries for the fiscal year ending February 1, 2014.
A representative from Ernst & Young LLP will 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 questions during the meeting.
Audit and Non-Audit Fees
The following table presents fees for professional services performed by Ernst & Young LLP for the annual audit of our consolidated financial statements for fiscal 2012 and 2011, the review of our interim consolidated financial statements for each quarter in fiscal 2012 and 2011, and for audit-related, tax and all other services performed in fiscal 2012 and 2011:
|
Fiscal Year End | |||
---|---|---|---|---|
|
February 2, 2013 |
January 28, 2012 |
||
Audit Fees(1) |
$3,666,000 | $4,565,000 | ||
Audit-Related Fees(2) |
181,000 | 212,000 | ||
Tax Fees: |
||||
Compliance(3) |
2,625,000 | 559,000 | ||
Planning & Advice(4) |
894,000 | 269,000 | ||
All Other Fees(5) |
- | 323,000 | ||
Total |
$7,366,000 | $5,928,000 | ||
The Audit Committee's current practice requires pre-approval of all audit services and permissible non-audit services to be provided by the independent registered public accounting firm. The Audit Committee reviews each non-audit service to be provided and assesses the impact of the service on the firm's independence. In addition, the Audit Committee has delegated authority to grant certain pre-approvals to the Audit Committee Chair. Pre-approvals granted by the Audit Committee Chair are reported to the full Audit Committee at its next regularly scheduled meeting.
THE AUDIT COMMITTEE RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
61
Report of the Audit Committee
The role of the Audit Committee is to assist the Board of Directors in fulfilling its responsibility to oversee Target's financial reporting process. Management has primary responsibility for our consolidated financial statements and reporting process, including our systems of internal controls. Target's independent registered public accounting firm is responsible for expressing an opinion on the conformity of our consolidated financial statements with accounting principles generally accepted in the United States. In addition, the independent registered public accounting firm will express its opinion on the effectiveness of our internal control over financial reporting.
A copy of the Audit Committee Position Description, which has been adopted by our Board of Directors and further describes the role of the Audit Committee in overseeing our financial reporting process, is available online at www.target.com (click on "Investor Relations," then "Investors," then "Corporate Governance," then "More About Board Committees" and "Audit Committee Position Description").
In performing its functions, the Audit Committee:
Based on the review and discussions described in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee Position Description, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended February 2, 2013, for filing with the SEC.
AUDIT COMMITTEE*
Roxanne S. Austin, Chair
Mary E. Minnick
Derica W. Rice
John G. Stumpf**
62
EQUITY COMPENSATION PLAN INFORMATION
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights as of February 2, 2013 |
Weighted-average exercise price of outstanding options, warrants and rights as of February 2, 2013 |
Number of securities remaining available for future issuance under equity compensation plans as of February 2, 2013 (excluding securities reflected in column (a)) |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
|
(a) |
(b) |
(c) |
|||||||
Equity compensation plans approved by security holders |
38,608,759(1) | $ | 50.60 | 24,929,774 | ||||||
Equity compensation plans not approved by security holders |
0 | 0 | ||||||||
|
||||||||||
Total |
38,608,759 | $ | 50.60 | 24,929,774 | ||||||
ITEM THREEADVISORY APPROVAL OF EXECUTIVE COMPENSATION
Consistent with the views expressed by shareholders at our 2011 Annual Meeting, the Board of Directors has determined to seek an annual non-binding advisory vote from shareholders to approve the executive compensation as disclosed in the Compensation Discussion & Analysis ("CD&A"), tabular disclosures and related narrative of this proxy statement.
Target's executive compensation programs are structured to align the interests of our executive officers with the interests of our shareholders. They are designed to attract, retain, and motivate a premier management team to sustain our distinctive brand and its competitive advantage in the marketplace, and to provide a framework that encourages outstanding financial results and shareholder returns over the long term. Our executive compensation programs reflect the competitive environment in which we operate, and incorporate performance based criteria. More specifically, we:
Shareholders are urged to read the CD&A, which discusses in-depth how our executive compensation programs are aligned with our performance and the creation of shareholder value. The Compensation Committee and the Board of Directors believe that the policies and practices described in the CD&A effectively implement our pay-for-performance compensation philosophy.
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THE BOARD OF DIRECTORS, UPON RECOMMENDATION OF THE COMPENSATION COMMITTEE, RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF THE FOLLOWING NON-BINDING RESOLUTION:
"RESOLVED, that the shareholders approve the compensation awarded to the named executive officers, as described in the CD&A, tabular disclosures, and other narrative executive compensation disclosures in this proxy statement."
Effect of Item
The Say-on-Pay resolution is non-binding. The approval or disapproval of this item by shareholders will not require the Board or the Compensation Committee to take any action regarding Target's executive compensation practices. The final decision on the compensation and benefits of our executive officers and on whether, and if so, how, to address shareholder disapproval remains with the Board and the Compensation Committee.
The Board believes that the Compensation Committee is in the best position to consider the extensive information and factors necessary to make independent, objective, and competitive compensation recommendations and decisions that are in the best interests of Target and its shareholders.
The Board values the opinions of Target's shareholders as expressed through their votes and other communications. Although the resolution is non-binding, the Board will carefully consider the outcome of the advisory vote on executive compensation and shareholder opinions received from other communications when making future compensation decisions.
ITEM FOURSHAREHOLDER PROPOSAL TO ADOPT A POLICY FOR AN INDEPENDENT CHAIRMAN
The American Federation of State, County and Municipal Employees, AFL-CIO (AFSCME), 1625 L Street, NW, Washington, DC 20036-5687, which held more than $2,000 of shares of common stock on December 14, 2012, intends to submit the following resolution to shareholders for approval at the 2013 annual meeting:
Resolution
RESOLVED: The shareholders of Target Corporation ("Target") request the Board of Directors to adopt a policy, and amend the bylaws as necessary to reflect that policy, to require the Chair of the Board of Directors to be an independent member of the Board. This independence requirement shall apply prospectively so as not to violate any contractual obligation at the time this resolution is adopted. Compliance with this policy is waived if no independent director is available and willing to serve as Chair.
Shareholder's Supporting Statement
CEO Gregg Steinhafel also serves as Chair of Target's Board of Directors. We believe the combination of these two roles in a single person weakens a corporation's governance structure, which can harm shareholder value. As Intel former Chair Andrew Grove stated, "The separation of the two jobs goes to the heart of the conception of a corporation. Is a company a sandbox for the CEO, or is the CEO an employee? If he's an employee, he needs a boss, and that boss is the board. The chairman runs the board. How can the CEO be his own boss?"
In our view, shareholder value is enhanced by an independent Board Chair who can provide a balance of power between the CEO and the Board and can support strong Board leadership. The primary duty of a Board of Directors is to oversee the management of a company on behalf of its shareholders. We believe
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that having a CEO serve as Chair creates a conflict of interest that can result in excessive management influence on the Board and weaken the Board's oversight of management.
An independent Board Chair has been found in studies to improve the financial performance of public companies. A 2007 Booz & Co. study found that, in 2006, all of the underperforming North American companies with long-tenured CEOs lacked an independent Board Chair (The Era of the Inclusive Leader, Booz Allen Hamilton, Summer 2007). A more recent study found that, worldwide, companies are now routinely separating the jobs of Chair and CEO: in 2009 less than 12 percent of incoming CEOs were also made Chair, compared with 48 percent in 2002 (CEO Succession 2000-2009: A Decade of Convergence and Compression, Booz & Co., Summer 2010).
We believe that independent Board leadership would be particularly constructive at Target, where, in 2011 Gregg Steinhafel's "all other compensation" of more than $5.5 million "topped the charts for overall perks last year" among Fortune 100 CEOs ("10 Outrageously Lavish CEO Perks," MSN Money, December 10, 2012), and Steinhafel received more than three times the average compensation of the next highest paid named executive officer at the company. Studies show large executive pay inequity is associated with lower firm value, greater CEO entrenchment and a higher cost of capital (Lucian Bebchuk, "Pay Distribution in the Top Executive Team," February 2007; Zhihong Chen, "Executive Pay Disparity and the Cost of Equity Capital," May 2011).
We urge shareholders to vote for this proposal.
Position of the Board of Directors
The Board of Directors has considered this proposal and believes that its adoption at this time is not in the best interests of Target or our shareholders. The Board believes that any decision to maintain a combined Chairman/CEO role or to separate these roles should be based on the specific circumstances of a corporation, the independence and capabilities of its directors, and the leadership provided by its CEO. The Board does not believe that separating the roles of Chairman and CEO should be mandated or that such a separation would, by itself, deliver additional benefit for shareholders.
The Board believes that its current leadership structure and governance practices allow it to provide effective, independent oversight of our company. Specifically:
Our Board believes that Mr. Steinhafel's knowledge of the day-to-day operations of Target, perspective on the competitive environment, understanding of shareholder interests, and relationships with our guests, business partners, team members and the communities in which we do business allow him to
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provide effective leadership in his role as Chairman and CEO. Furthermore, our clearly defined lead independent director role and independent key committee chairpersons provide a framework for effective direction and oversight by the Board.
Our Board believes that its current governance structure provides clear accountability, allows Target to present its strategy with a unified voice, and serves the best interests of shareholders at this time.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST" THE SHAREHOLDER PROPOSAL TO ADOPT A POLICY FOR AN INDEPENDENT CHAIRMAN.
ITEM FIVESHAREHOLDER PROPOSAL ON ELECTRONICS RECYCLING
As You Sow, 1611 Telegraph Ave., Suite 1450, Oakland, CA 94612, on behalf of shareholder Wallace Global Fund, which held more than $2,000 of shares of common stock on December 21, 2012, intends to submit the following resolution to shareholders for approval at the 2013 annual meeting:
Resolution
RESOLVED that Target Corp.'s board of directors prepare a report, at reasonable cost and excluding confidential information, on policy options, above and beyond legal compliance, to minimize the environmental impacts of its electronics recycling activities by providing mechanisms for take back of all electronics sold, promoting reuse of working equipment and preventing export to non-OECD countries of hazardous e-waste and untested or non-working equipment or components.
Shareholder's Supporting Statement
WHEREAS Target Corp. is the fourth largest U.S. retailer of consumer electronics, and such devices contain toxic materials such as lead, mercury, cadmium, brominated flame retardants, polyvinyl chloride, and are difficult to recycle.
Less than 20% of discarded electronics are collected for recycling, according to the U.S. Environmental Protection Agency. E-waste is the fastest growing and most hazardous component of the municipal waste stream, comprising more than 5%. The estimated collection rate for e-waste lags the U.S. recovery rate for municipal waste of 34%.
Improper disposal of electronics can result in serious public health and environmental impacts. Analog TV sets and monitors with cathode ray tubes contain large amounts of lead, flat screen monitors contain mercury switches, and computer batteries contain cadmium, which can be harmful to human health if released to the environment.
Electronic goods collected for recycling in the U.S. are often shipped by recyclers to developing countries where they endanger health and the environment. Reports by Basel Action Network have revealed appalling conditions in China and parts of Africa where workers break apart and process old electronic equipment under primitive conditions. Workers openly burn toxic plastics and wires, and melt soldered circuit boards to extract gold, silver and copper. These activities threaten worker health and pollute land and water.
Target's 2009 Corporate Responsibility report states "being a responsible steward of the environment is one of the most important issues that defines Target's corporate reputation," yet the company does not offer take back for the full range of electronics it sells and its vendors lack adequate certification policies to ensure safe disposal of materials collected. The company takes back small devices such as music players and mobile phones but does not disclose substantive information about the disposition of
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electronics it collects, or information about whether waste vendors are complying with the standards it has set. Recent instances of fraudulent recycling demonstrate the need for stronger evidence the company is monitoring how collected goods are processed.
Proponents believe our company should develop a nationwide return program for all electronic devices it sells using stores or nearby locations convenient for customers. All electronics collected should be recycled or refurbished by responsible electronics recyclers who are independently verified to meet a superior standard such as the e-Stewards standard. Best Buy takes back a wide range of electronics for free and bars downstream service providers from exporting non-working equipment or components to developing countries, and requires third party provider audits. Staples and Office Depot also offer take back for large electronics.
Position of the Board of Directors
The Board of Directors has considered this proposal and believes, as it did with respect to a similar proposal last year, that its adoption at this time is not in the best interests of Target or our shareholders. We address in detail our responsible recycling standards for e-waste, our in-store recycling program, where our recycling products go and other efforts to divert waste from landfills in our 2011 Corporate Responsibility Report, available at https://corporate.target.com/corporate-responsibility/. Our responsible recycling standards for e-waste, which we contractually obligate our vendor partners to follow, address several of the concerns mentioned by the proponent. Those standards include:
Our program includes consideration of whether vendors have met various certification standards (such as the e-Stewards standard mentioned in the proposal and the Responsible Recycling (R2) standard), the vendors' internal processes and reputation, and periodic process reviews and inspections by appropriate Target team members or third-party inspectors. The vendor responsible for the majority of Target's e-waste processing is independently certified to meet the R2 standard.
The proposal received this year is nearly identical to last year's proposal, and asks us to consider expanding the scope of our guest-facing recycling program to include "all electronics sold." Our guest-facing recycling program already allows guests to easily recycle small electronics, such as MP3 players, ink cartridges and cell phones, as well as cans, glass and plastic bottles and plastic bags in their local Target store. In the fall of 2013, we expect to expand the guest-facing recycling program to pilot additional portable electronic items, including items such as e-readers, cameras, portable DVD players and CD players. This pilot would not include larger electronics such as televisions or appliances. We continue to believe that recycling these types of items through our stores would be disruptive to our store operations and less efficient relative to other alternatives available to guests for disposal of such items, including the availability of local government-run recycling facilities.
Target is committed to ensuring we continue to offer recycling solutions to our guests where it makes sense for our business. To continue to drive recycling efforts across the country, Target is now included on Earth 911's website as a searchable destination for the recyclables mentioned above. Target is also working with third party vendors to include a vendor search function on Target.com that will provide destinations for guests to recycle materials that are not currently in the scope of our recycling program, such as large televisions. We expect to select the vendor by the end of the third quarter of fiscal 2013, and the vendor search functionality to be available on Target.com in early 2014.
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We do not believe a separate report is needed because we already actively monitor our recycling and disposal practices for e-waste above and beyond legal compliance, and our existing recycling program, including our electronics take back, is consistent with, if not ahead of, practices among general merchandise retailers. Based on the above, the Board believes that our current approach to e-waste is appropriate and is in the best interests of Target and our shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST" THE SHAREHOLDER PROPOSAL ON ELECTRONICS RECYCLING.
Business Ethics and Conduct
We are committed to conducting business lawfully and ethically. All of our directors and employees, including our Chief Executive Officer and senior financial officers, are required to act at all times with honesty and integrity. Our Business Conduct Guide covers areas of professional conduct, including conflicts of interest, the protection of corporate opportunities and assets, employment policies, confidentiality, vendor standards and intellectual property, and requires strict adherence to all laws and regulations applicable to our business. Our Business Conduct Guide also describes the means by which any employee can provide an anonymous report of an actual or apparent violation of our Business Conduct Guide.
We intend to disclose any future amendments to, or waivers from, any provision of our Business Conduct Guide involving our directors, our principal executive officer, principal financial officer, principal accounting officer, controller or other persons performing similar functions on our website within four business days following the date of any such amendment or waiver. No waivers were sought or granted in fiscal 2012.
Vendor Standards and Compliance
To ensure that the products we carry in our stores are made legally and ethically, we require our vendors to abide by certain standards. Copies of those standards and related materials are included at https://corporate.target.com/corporate-responsibility/responsible-sourcing.
Commitment to Diversity
At the heart of our company are the diverse backgrounds and perspectives of our more than 361,000 Target team members. The diversity of our team fosters a unique, inclusive culture that is collaborative, dynamic and guided by our shared commitment to delivering outstanding results. The market insight, community-building and commitment of our African American, Asian American, Hispanic, LGBTA, Women's and Military Business Councils help make Target a great place to work and inform business decisions that create a competitive advantage. Our Vice President of Diversity & Inclusion leads a team that works to integrate the Business Councils with our companywide diversity strategy.
We also believe it's important that our stores and merchandise reflect the communities in which we operate. As a result, we actively recruit and engage diverse suppliers and business partners through meaningful participation in national and local organizations focused on diverse business development. In addition, we extend this commitment to our involvement in many innovative programs, partnerships and sponsorships that share our objective of fostering an inclusive culture. We care about the needs of the communities we serve, and embrace their diversity through our support. Information regarding our diversity programs is located at www.target.com/diversity.
For the benefit of hearing impaired persons, a sign language interpreter will be present at our 2013 Annual Meeting.
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Strengthening Communities
Since 1946, Target has donated 5 percent of its income to improve the health and safety of the communities in which we operate. Today, that commitment extends to more than 1,700 neighborhoods throughout the U.S. and Canada and nearly 30 countries around the world. Each week, we give on average more than $4 million and numerous volunteer hours to make a positive impact in the lives of our guests and team members.
Target's longstanding dedication to improving the communities where we operate is punctuated by several core commitments, including paving a path to graduation by supporting K-12 education; reducing our environmental impact; inspiring our guests, team members and their families as they strive to achieve their well-being goals; and operating safe stores that help our communities thrive.
Our legacy of community givingboth in terms of financial support and team member volunteer hoursis a hallmark of our brand and a differentiating factor in Target's ability to attract and retain top talent. To learn more about Target's commitment to strengthening communities as a responsible corporate citizen, visit https://corporate.target.com/corporate-responsibility.
Shareholder Proposals
Proposals by shareholders (other than director nominations) that are submitted for inclusion in our proxy statement for our 2014 Annual Meeting must follow the procedures set forth in Rule 14a-8 under the Securities Exchange Act of 1934 and our bylaws. To be timely under Rule 14a-8, they must be received by our Corporate Secretary at Target Corporation, 1000 Nicollet Mall, Mail Stop TPS-2670, Minneapolis, Minnesota 55403 by December 30, 2013.
If a shareholder does not submit a proposal for inclusion in our proxy statement but does wish to propose an item of business to be considered at an annual meeting of shareholders (other than director nominations), that shareholder must give advance written notice of such proposal to our Corporate Secretary, which notice must be received at least 90 days prior to the anniversary of the most recent annual meeting. For our 2014 Annual Meeting, notice must be received by March 14, 2014, and must comply with all applicable statutes and regulations, as well as certain other provisions contained in our bylaws, which generally require the shareholder to provide a brief description of the proposed business, reasons for proposing the business and certain information about the shareholder and the Target securities held by the shareholder.
Under our bylaws, if a shareholder plans to nominate a person as a director at an annual meeting, the shareholder is required to place the proposed director's name in nomination by written request received by our Corporate Secretary at least 90 days prior to the anniversary of the most recent annual meeting. Shareholder-proposed nominations for our 2014 Annual Meeting must be received by March 14, 2014, and must comply with all applicable statutes and regulations, as well as certain other provisions contained in our bylaws, which generally require the shareholder to provide certain information about the proposed director, the shareholder and the Target securities held by the shareholder.
Householding Information
We have adopted a procedure approved by the SEC called "householding." Under this procedure, certain shareholders of record who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of our annual report and proxy statement, unless one or more of these shareholders notifies us that they would like to continue to
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receive individual copies. This will reduce our printing costs and postage fees. Shareholders who participate in householding will continue to receive separate proxy cards. Also, householding will not in any way affect dividend check mailings.
If you and other shareholders of record with whom you share an address currently receive multiple copies of our annual report and/or proxy statement, or if you hold stock in more than one account, and in either case, you would like to receive only a single copy of the annual report or proxy statement for your household, please contact our Investor Relations representative by email at investorrelations@target.com, by mail to the address listed on the cover of this proxy statement, Attention: Investor Relations, or by telephone at (612) 761-6736.
If you participate in householding and would like to receive a separate copy of our 2012 annual report or this proxy statement, please contact us in the manner described in the immediately preceding paragraph. We will deliver the requested documents to you promptly upon receipt of your request.
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Reconciliation of Incentive EBIT to Consolidated GAAP EBIT
(millions) |
2009 Actual |
2010 Actual |
2011 Actual |
2012 Goal |
2012 Actual |
|||||
---|---|---|---|---|---|---|---|---|---|---|
Consolidated GAAP EBIT |
$4,673 | $5,252 | $5,322 | $5,163 | $5,371 | |||||
Remove GAAP Credit Card Segment EBIT(a) |
(298) | (624) | (678) | (444) | (570) | |||||
Include Credit Card Spread to LIBOR(a) |
270 | 604 | 663 | 430 | 555 | |||||
Fixed Interest Rate Adjustment(b) |
(8) | (4) | (7) | | (4) | |||||
Receivables Held for Sale(c) |
| | | | (152) | |||||
Incentive Compensation Expense(d) |
328 | 270 | 214 | 231 | 241 | |||||
Canadian Translation(e) |
| | | | 1 | |||||
Incentive EBIT |
$4,966 | $5,498 | $5,513 | $5,380 | $5,444 | |||||
Remove Canadian EBIT |
| | 121 | 384 | 369 | |||||
Remove Canadian Incentive Compensation Expense |
| | (6) | (9) | (12) | |||||
Remove Canadian Translation |
| | | | (1) | |||||
Incentive EBIT Without Canada(f) |
$4,966 | $5,498 | $5,629 | $5,755 | $5,800 |
Note: The sum of the adjustments may not equal the total adjustment amounts due to rounding.
www.target.com
*** Exercise Your Right to Vote *** Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on June 12, 2013. Meeting Information TARGET CORPORATION Meeting Type: Annual Meeting For holders as of: April 15, 2013 Date: June 12, 2013 Time: 1:00 PM MDT Location: Target Store 7777 East Hampden Avenue Denver, Colorado 80231-4806 You are receiving this communication because you hold shares in the company named above. This is not a ballot. You cannot use this notice to vote these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online at www.proxyvote.com or easily request a paper copy (see reverse side). We encourage you to access and review all of the important information contained in the proxy materials before voting. 1000 NICOLLET MALL MINNEAPOLIS, MINNESOTA 55403-2542 M59595-Z59404-Z59403-P32608 See the reverse side of this notice to obtain proxy materials and voting instructions. |
Before You Vote How to Access the Proxy Materials Proxy Materials Available to VIEW or RECEIVE: Proxy Materials Available to VIEW or RECEIVE: NOTICE AND PROXY STATEMENT ANNUAL REPORT How to View Online: Have the information that is printed in the box marked by the arrow (located on the following page) and visit: www.proxyvote.com. How to Request and Receive a PAPER or E-MAIL Copy: If you want to receive a paper or e-mail copy of these documents, you must request one. There is NO charge for requesting a copy. Please choose one of the following methods to make your request: 1) BY INTERNET: www.proxyvote.com 2) BY TELEPHONE: 1-800-579-1639 3) BY E-MAIL*: sendmaterial@proxyvote.com * If requesting materials by e-mail, please send a blank e-mail with the information that is printed in the box marked by the arrow (located on the following page) in the subject line.XXXX XXXX XXXXXXXX XXXX XXXX Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before May 29, 2013 to facilitate timely delivery. M59596-Z59404-Z59403-P32608 How To Vote Please Choose One of the Following Voting Methods Vote By Internet: To vote now by Internet, go to www.proxyvote.com. Have the information that is printed in the box marked by the arrow (located on the following page) available and follow the instructions. Vote By Mail: You can vote by mail by requesting a paper copy of the materials, which will include a proxy card. Vote By Telephone: You can vote by telephone by requesting a paper copy of the materials, which will include a proxy card with a toll-free number for voting. Vote In Person: Only registered holders and those beneficial holders that have obtained a legal proxy from the record holder of their shares may vote in person at the meeting. In order to attend the annual meeting you must have an admission ticket. Please review the Admission Policy in the proxy materials for instructions on how to obtain a ticket.XXXX XXXX XXXX |
Voting Items The Board of Directors Recommends you vote "FOR" the listed nominees in Item 1 and "FOR" Items 2 and 3. 1. Election of Directors 2. Company proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm. Nominees: 3. Company proposal to approve, on an advisory basis, our executive compensation ("Say-on-Pay"). 1a. Roxanne S. Austin 1b. Douglas M. Baker, Jr. The Board recommends you vote "AGAINST" Items 4 and 5. 4. Shareholder proposal to adopt a policy for an independent chairman. 1c. Henrique De Castro 5. Shareholder proposal on electronics recycling. 1d. Calvin Darden NOTE: At their discretion, the proxies are authorized to vote on any other business properly brought before the meeting or any adjournment thereof. 1e. Mary N. Dillon 1f. James A. Johnson 1g. Mary E. Minnick 1h. Anne M. Mulcahy M59597-Z59404-Z59403-P32608 1i. Derica W. Rice 1j. Gregg W. Steinhafel 1k. John G. Stumpf 1l. Solomon D. Trujillo |
M59598-Z59404-Z59403-P32608 |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. Signature [PLEASE SIGN WITHIN BOX] Date Signature [PLEASE SIGN WITHIN BOX] Date VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Target Corporation, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. If you vote your proxy through the Internet or by telephone, you do NOT need to mail back your card. ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS If you would like to reduce the costs incurred by Target Corporation in mailing proxy materials, you can consent to receive all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years. 1000 NICOLLET MALL MINNEAPOLIS, MINNESOTA 55403-2542 M59589-Z59404-Z59403-P32608 TARGET CORPORATION The Board of Directors Recommends you vote "FOR" the listed nominees in Item 1 and "FOR" Items 2 and 3. For Against Abstain 1. Election of Directors Nominees: ! ! ! 1a. Roxanne S. Austin ! ! ! 1b. Douglas M. Baker, Jr. ! ! ! 1c. Henrique De Castro ! ! ! For Against Abstain 1d. Calvin Darden ! ! ! ! ! ! 1e. Mary N. Dillon 2. Company proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm. ! ! ! ! ! ! 3. Company proposal to approve, on an advisory basis, our executive compensation ("Say-on-Pay"). 1f. James A. Johnson ! ! ! 1g. Mary E. Minnick Abstain Against For The Board recommends you vote "AGAINST" Items 4 and 5. ! ! ! ! ! ! 4. Shareholder proposal to adopt a policy for an independent chairman. 1h. Anne M. Mulcahy ! ! ! ! ! ! 5. Shareholder proposal on electronics recycling. 1i. Derica W. Rice ! ! ! NOTE: At their discretion, the proxies are authorized to vote on any other business properly brought before the meeting or any adjournment thereof. 1j. Gregg W. Steinhafel ! ! ! 1k. John G. Stumpf ! ! ! 1l. Solomon D. Trujillo ! If you are a registered or beneficial shareholder, consenting to receive all future annual meeting materials electronically is simple and fast! Enroll today at www.icsdelivery.com/target for secure online access to your proxy materials. For comments, please check this box and write them on the back where indicated. ! ! Mark here if you would like your voting instructions to be confidential pursuant to the Target Corporation policy on confidential voting described in the 2013 Proxy Statement. Yes No NOTE: Please sign exactly as your name appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such, and, if signing for a corporation, please give your full title. Joint owners should each sign personally. Please sign, date and return the proxy card promptly using the enclosed envelope. |
IF YOU PLAN ON ATTENDING THE ANNUAL MEETING, YOU MUST REQUEST AN ADMISSION TICKET ON OR BEFORE JUNE 7, 2013. PLEASE SEE THE PROXY STATEMENT FOR INSTRUCTIONS ON REQUESTING A TICKET. As a Registered Shareholder you can access this Target Corporation account online via: www.computershare.com/investor Computershare, Target Corporation's Transfer Agent, now makes it easy and convenient to get current information on this shareholder account. View account status View certificate history View book-entry information View payment history for dividends Make address changes Obtain a duplicate 1099 tax form Establish/change your PIN For Technical Information Call 1-800-794-9871 Monday - Friday between 9 a.m. - 7 p.m. Eastern Daylight Time Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on June 12, 2013: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. M59590-Z59404-Z59403-P32608 Proxy Solicited on Behalf of the Board of Directors for the June 12, 2013 Annual Meeting of Shareholders Vote by Internet or Telephone or Mail 24 Hours a Day, 7 Days a Week Internet voting and telephone voting deadlines are 11:59 p.m. Eastern Daylight Time on June 11, 2013 for all shareholders except participants in the Target Corporation 401(k) Plan; and 6:00 a.m. Eastern Daylight Time on June 10, 2013 for participants in the Target Corporation 401(k) Plan. Your telephone or Internet vote authorizes the named proxies to vote these shares in the same manner as if you marked, signed and returned your proxy card. Gregg W. Steinhafel, John J. Mulligan and Timothy R. Baer, and each of them, are hereby appointed proxies, with power of substitution to each, to represent and to vote as designated on the reverse side hereof, all shares of capital stock of Target Corporation, a Minnesota corporation, held by the undersigned on April 15, 2013, the record date for the Annual Meeting of Shareholders to be held on June 12, 2013, and at any adjournment thereof. This Proxy will be voted as directed, but if no direction is given it will be voted FOR the nominees and proposals set forth in Items 1, 2 and 3, and AGAINST the proposals set forth in Items 4 and 5. The proxies cannot vote these shares unless you vote by telephone or the Internet or unless you sign this card on the reverse side and return it. The following information applies only to participants in the Target Corporation 401(k) Plan: This proxy card will constitute voting instructions to the Trustee of this Plan. In accordance with the terms of the Plan, you are instructing the Trustee to vote as a named fiduciary under the Employee Retirement Income Security Act of 1974. These instructions will be held in the strictest confidence by the Trustee and will not be divulged or released to any person, including officers or employees of the Corporation. If you return your voting instruction form but do not indicate your vote on a proposal, the Trustee is instructed to vote with the Board's recommendation, which is FOR the nominees and proposals set forth in Items 1, 2 and 3, and AGAINST the proposals set forth in Items 4 and 5. Your voting instructions will be applied based on the proportionate interest in shares held by the Target Common Stock Fund under the Plan. If you do not return a signed voting instruction form or respond by telephone or internet as described above, the Trustee will vote the proportionate interest in the shares held by the Target Common Stock Fund in the same proportion as instructions actually received by the Trustee from Plan participants who gave voting instructions. Instruction forms received by the Trustee after 6:00 a.m. Eastern Daylight Time on June 10, 2013, will not be counted. Comments: (If you noted any Comments above, please mark corresponding box on the reverse side.) |