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. __)
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Filed by the Registrant |
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Filed by a Party other than the Registrant |
Check
the appropriate box: |
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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
(Name of Registrant as Specified In Its
Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box): |
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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(1) |
Title of each class of securities to which transaction applies: |
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(2) |
Aggregate number of securities to which transaction applies: |
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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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(4) |
Proposed maximum aggregate value of transaction: |
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(5) |
Total fee paid: |
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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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(1) |
Amount Previously Paid: |
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(2) |
Form, Schedule or Registration Statement No.: |
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(3) |
Filing Party: |
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(4) |
Date Filed: |
PROXY STATEMENT
AND NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS
Wednesday, June
8, 2016 at 9:00 a.m. PDT
Segerstrom Center for the Arts –
Samueli Theater | 615 Town Center Drive | Costa Mesa, California 92626
Dear Fellow Shareholder,
We are providing the enclosed proxy materials in preparation
for our 2016 Annual Meeting of Shareholders. During the past year your Board has continued to make progress in overseeing management’s
efforts to create long-term value and being responsive to shareholder input. In particular:
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Four new independent directors have been added to the Board
since our last Annual Meeting. These individuals, who are described in our proxy statement, bring considerable retail, consumer
goods, and marketing expertise to the Board, and continue the Board’s long-standing commitment to diversity at the Board
level. |
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The Board supported management’s recommendation to exit the direct
operation of pharmacies in Target stores, and instead rely on a partner with a strong pharmacy brand to operate the in-store
pharmacies. This allows management to focus capital and their time on growing sales in other categories, particularly Target’s
Signature Categories: Style, Baby, Kids and Wellness. |
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The role of the Board’s Committees were refined, with two notable
changes: (1) to further coordinate risk oversight activities among all Committees, we changed the composition of the Risk
and Compliance Committee, which has primary risk oversight responsibility, to consist of the Chairs of all other Committees;
and (2) created an Infrastructure and Investment Committee to provide more focused oversight of the company’s investments
to grow long-term shareholder value—both in terms of where and how capital is being deployed. |
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In recognition of an emerging governance trend, the Board proactively amended
the company’s bylaws to adopt a proxy access provision. |
I would also like to take this opportunity to thank the shareholders
with whom we have met over the last two years to discuss our compensation and governance practices. The input we obtained was
invaluable in assisting the Board address a number of matters, including proxy access and the impact that our decision to exit
the Canadian market had on our executive compensation program. Additional information on our Canadian exit decision is described
in the Compensation Discussion & Analysis of this year’s and last year’s proxy statement.
On behalf of the Board of Directors, I invite you to attend Target
Corporation’s 2016 Annual Meeting of Shareholders. The accompanying proxy statement and 2015 Annual Report on Form 10-K
contain information about:
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The date, location, and time of the meeting. |
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Business matters on which you are encouraged to vote. |
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Governance and executive compensation disclosures, including the changes
we made this past year in response to developments in our business and our continuing shareholder outreach efforts. |
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Our 2015 financial results. |
We value your feedback and thank you for your continued support
of Target.
Douglas M. Baker, Jr.
Lead Independent Director
2016 Proxy Statement │ TARGET CORPORATION 3
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2016 Proxy Statement │ TARGET CORPORATION 4
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Notice
of 2016 Annual Meeting of Shareholders |
Wednesday, June 8, 2016
9:00 a.m. Pacific Daylight Time
Segerstrom Center for the Arts – Samueli Theater
located at 615 Town Center Drive, Costa Mesa, California 92626
TO OUR SHAREHOLDERS
You are invited to attend Target Corporation’s 2016 Annual
Meeting of Shareholders to be held at Segerstrom Center for the Arts – Samueli Theater located at 615 Town Center Drive,
Costa Mesa, California 92626 on Wednesday, June 8, 2016 at 9:00 a.m. Pacific Daylight Time.
PURPOSE
Shareholders will vote on the following items of business:
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1. |
Election of all 14 directors named in our proxy statement to
our Board of Directors for the coming year; |
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2. |
Ratification of the appointment of Ernst & Young LLP as our independent
registered public accounting firm; |
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3. |
Approval, on an advisory basis, of our executive compensation; |
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4. |
The shareholder proposal contained in this proxy statement, if properly
presented at the meeting; and |
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Transaction of any other business properly brought before the meeting or
any adjournment. |
You may vote if you were a shareholder
of record at the close of business on April 11, 2016. 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. If you plan to attend the meeting, please follow the instructions
provided in Question 12 “How can I attend the Annual Meeting?” on page 71 of the proxy statement.
Following the formal business of the meeting, our Chairman and
CEO will provide prepared remarks, followed by a question and answer session.
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,
Timothy R. Baer |
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Corporate Secretary |
Approximate Date of Mailing of Proxy Materials or |
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Notice of Internet Availability: |
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April 25, 2016 |
2016 Proxy Statement │ TARGET CORPORATION 5
Table of Contents
2016 Proxy Statement │ TARGET CORPORATION 6
2016 Proxy Statement │ TARGET CORPORATION 7
PROXY
STATEMENT
Annual Meeting of Shareholders June 8, 2016
The Board of Directors of Target Corporation solicits the enclosed
proxy for the 2016 Annual Meeting of Shareholders, and for any adjournment thereof.
PROXY SUMMARY
This summary highlights information described in other parts
of this proxy statement, and does not contain all of the information you should consider in voting. Please read the entire proxy
statement carefully before voting.
TARGET 2016 ANNUAL MEETING OF SHAREHOLDERS
June 8, 2016 |
Segerstrom Center for the Arts – Samueli Theater |
9:00 a.m. Pacific Daylight Time |
615 Town Center Drive |
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Costa Mesa, California 92626 |
ITEMS
OF BUSINESS
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BOARD’S |
ITEM |
RECOMMENDATION |
Election of 14 Directors (page 17) |
FOR each Director Nominee |
Ratification of Independent Registered Public Accounting
Firm (page 63) |
FOR |
Advisory Approval of Executive Compensation (page 65) |
FOR |
Shareholder Proposal, if Properly Presented (pages 66-67) |
AGAINST |
QUESTIONS
AND ANSWERS ABOUT OUR ANNUAL MEETING AND VOTING
We encourage you to review the “Questions and Answers About
Our Annual Meeting and Voting” beginning on page 68 for answers to common questions on the rules and procedures surrounding
the proxy and annual meeting process, as well as the business to be conducted at our Annual Meeting.
ADMISSION
AT THE MEETING
If you plan to attend the Annual Meeting in person, please see
the information in Question 12 “How can I attend the Annual Meeting?” on page 71. We strongly encourage you to pre-register.
If you plan to bring a guest you must pre-register by June 3, 2016. Any person who does not present identification and establish
proof of ownership will not be admitted to the Annual Meeting.
2016 Proxy Statement │ TARGET CORPORATION 8
VOTING
If you held shares of Target common stock as of the record date
(April 11, 2016) you are entitled to vote at the Annual Meeting.
Your vote is important. Thank you for voting.
ADVANCE
VOTING METHODS AND DEADLINES
METHOD |
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INSTRUCTION |
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DEADLINE |
Internet |
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• Go
to website identified on proxy card, voter instruction form or Notice of Internet Availability of Proxy Materials
• Enter Control Number on proxy card, voter instruction form or Notice of Internet Availability of Proxy
Materials
• Follow instructions on the screen
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Internet and telephone voting are available 24 hours
a day, seven days a week up to these deadlines:
• Registered
Shareholders or Beneficial Owners –11:59 p.m. Eastern Daylight Time on June 7, 2016
• Participants
in the Target 401(k) Plan – 6:00 a.m. Eastern Daylight Time on June 6, 2016 |
Telephone |
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• Call the toll-free number identified on the enclosed proxy card or voter instruction form or, after viewing
the proxy materials on the website provided in your Notice of Internet Availability of Proxy Materials, call the toll-free
number for telephone voting identified on the website
• Enter Control Number on the proxy card, voter instruction form or Notice of Internet Availability of Proxy
Materials
• Follow the recorded instructions
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Mail |
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• Mark your selections on the enclosed proxy card or voter instruction form
• Date and sign your name exactly as it appears on the proxy card or voter instruction form
• Promptly mail the proxy card or voter instruction form in the enclosed postage-paid envelope
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Return promptly to ensure proxy card or voter instruction form is received
before the date of the Annual Meeting or, for participants in the Target 401(k) Plan, by 6:00 a.m. Eastern Daylight Time on
June 6, 2016 |
If you received a Notice of Internet Availability of Proxy
Materials and would like to vote by mail, you must follow the instructions on the Notice to request a written copy of the proxy
materials, which will include a proxy card or voter instruction form.
Any proxy may be revoked at any time prior to its exercise
at the Annual Meeting. Please see the information in Question 3 “What is a proxy and what is a proxy statement?” on
page 68.
VOTING
AT THE MEETING
All registered shareholders may vote in person at the Annual
Meeting. Beneficial owners may vote in person at the Annual Meeting if they have a legal proxy. Please see the information in
Question 6 “How do I vote?” on page 68. In either case, shareholders wishing to attend the meeting must follow the
procedures under “Admission at the Meeting.”
NOTICE OF INTERNET AVAILABILITY OF PROXY
MATERIALS
Important Notice Regarding
the Availability of Proxy Materials for the Shareholders Meeting to be held on June 8, 2016.
The proxy statement
and annual report are available at www.proxyvote.com.
2016 Proxy Statement │ TARGET CORPORATION 9
GENERAL INFORMATION ABOUT CORPORATE GOVERNANCE
AND THE BOARD OF DIRECTORS
CORPORATE
GOVERNANCE HIGHLIGHTS
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MORE |
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PRACTICE |
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DESCRIPTION |
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INFORMATION |
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BOARD COMPOSITION AND ACCOUNTABILITY |
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Independence |
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A majority of our directors must be independent. Currently, all of our
directors other than our CEO are independent, and all of our Committees consist exclusively of independent directors. |
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Diversity of Relevant Experiences |
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The composition of our Board represents broad perspectives, experiences
and knowledge relevant to our business while maintaining a balanced approach to gender and ethnic diversity. |
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Lead Independent Director |
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Our Corporate Governance Guidelines require a Lead Independent Director
position with specific responsibilities to ensure independent oversight of management whenever our CEO is also the Chair of
the Board. The Lead Independent Director and the Chair of the Board are elected annually by the independent directors. |
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Annual Management Succession Planning Review |
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Our Board conducts an annual review of management development and succession
planning. |
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Director Tenure Policies |
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Our director tenure policies include mandatory retirement at age 72 and
a maximum term limit of 20 years in order to ensure the Board regularly benefits from a balanced mix of perspectives and experiences.
In addition, a director is required to submit an offer of resignation for consideration by the Board upon any change in the
director’s principal employment. |
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Director Overboarding Policy |
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Any director who is not serving as CEO of a public company is expected
to serve on no more than five public company boards (including our Board), and any director serving as a CEO of a public company
is expected to serve on no more than two outside public company boards (including our Board). |
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Committee Membership and Leadership Rotations |
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The Board appoints members of its Committees on an annual basis, with the
Nominating and Governance Committee reviewing and recommending Committee membership, and assignments rotate periodically.
The guideline for rotating Committee Chair assignments and the Lead Independent Director position is four to six years. |
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Board Evaluations and Board Refreshment |
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To enhance Board functioning and the effectiveness of the Board-management
relationship for the benefit of Target and its shareholders, the Board regularly evaluates its performance through self-evaluations,
corporate governance reviews and periodic Charter reviews. Those evaluations, changes in our business strategy or operating
environment and the future needs of the Board in light of anticipated director retirements are used to identify desired backgrounds
and skill sets for future Board members. |
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Risk Oversight |
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We disclose how risk oversight is exercised at the Board and Committee
levels and how risk oversight responsibilities are allocated among the Committees. |
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SHAREHOLDER
RIGHTS |
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Annual Election of Directors |
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All directors are elected annually, which reinforces our Board’s
accountability to shareholders. |
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Majority Voting Standard for Director Elections |
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Our Articles of Incorporation mandate that directors be elected under a
“majority voting” standard in uncontested elections–each director must receive more votes “For”
his or her election than votes “Against” in order to be elected. |
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Director Resignation Policy |
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An incumbent director who is not re-elected must promptly offer to resign.
The Nominating and Governance Committee will make a recommendation on the offer and the Board must accept or reject the offer
within 90 days and publicly disclose its decision and rationale. |
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Proxy Access |
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We allow each shareholder, or a group of up to 20 shareholders, owning
3% or more of Target common stock continuously for at least three years, to nominate and include in our proxy materials director
nominees constituting up to the greater of 20% of the Board of Directors or at least two directors. |
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Single Voting Class |
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Target common stock is the only class of voting shares outstanding. |
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10% Threshold for Special Meetings |
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Shareholders holding 10% or more of Target’s outstanding stock have
the right to call a special meeting of shareholders. |
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No Poison Pill |
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We do not have a poison pill. |
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COMPENSATION |
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Follow Leading Practices |
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See “Target’s Executive Compensation Practices.” |
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2016 Proxy Statement │ TARGET CORPORATION 10
OUR
DIRECTORS
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OTHER
CURRENT |
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DIRECTOR |
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PUBLIC COMPANY |
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NAME |
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AGE |
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SINCE |
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COMPANY |
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TITLE |
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INDEPENDENT |
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BOARDS |
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Roxanne S. Austin |
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55 |
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2002 |
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Austin Investment Advisors |
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President |
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Yes |
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3 |
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Douglas M. Baker, Jr. |
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57 |
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2013 |
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Ecolab Inc. |
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Chairman & CEO |
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Yes |
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2 |
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Brian C. Cornell |
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57 |
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2014 |
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Target Corporation |
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Chairman & CEO |
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No |
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1 |
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Calvin Darden |
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66 |
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2003 |
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Darden Putnam Energy & Logistics, LLC |
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Chairman |
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Yes |
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2 |
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Henrique De Castro |
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50 |
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2013 |
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Yahoo! Inc. (Until January 2014) |
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Former COO |
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Yes |
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0 |
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Robert L. Edwards |
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60 |
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2015 |
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AB Acquisition LLC (Albertsons/Safeway) (Until April 2015) |
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Former President & CEO |
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Yes |
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1 |
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Melanie L. Healey |
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55 |
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2015 |
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The Procter & Gamble Company (Until December 2014) |
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Former Group President, North America |
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Yes |
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1 |
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Donald R. Knauss |
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65 |
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2015 |
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The Clorox Company (Until June 2015) |
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Former Executive Chairman |
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Yes |
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2 |
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Monica C. Lozano |
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59 |
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2016 |
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U.S. Hispanic Media, Inc. (Until January 2016) |
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Former Chairman |
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Yes |
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1 |
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Mary E. Minnick |
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56 |
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2005 |
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Lion Capital |
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Partner |
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Yes |
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1 |
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Anne M. Mulcahy |
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63 |
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1997 |
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Save The Children Federation, Inc. |
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Chairman of the Board of Trustees |
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Yes |
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3 |
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Derica W. Rice |
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51 |
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2007 |
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Eli Lilly and Company |
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EVP, Global Services and CFO |
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Yes |
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0 |
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Kenneth L. Salazar |
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61 |
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2013 |
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WilmerHale |
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Partner |
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Yes |
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0 |
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John G. Stumpf |
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62 |
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2010 |
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Wells Fargo & Company |
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Chairman & CEO |
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Yes |
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2 |
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BOARD
LEADERSHIP STRUCTURE
We do not have an express policy as to whether the roles of Chair
of the Board and CEO should be combined or separated. Instead, the Board prefers to maintain the flexibility to determine which
leadership structure best serves the interests of Target and our shareholders based on the evolving needs of the company. The
Board regularly reevaluates our Board leadership structure as part of the Board evaluation process described under “Board
Evaluations and Refreshment” on page 18. The Board also considers shareholder feedback on the topic. Following Mr.
Cornell’s appointment to CEO in 2015, shareholders expressed varied views on their preferred leadership structure,
with no prevailing view of a preferred structure for Target Corporation.
We currently have a combined Chair/CEO
leadership structure. As a result of its evaluation, the Board decided to continue having Mr. Cornell serve as both Chairman and
CEO to allow him to coordinate the development, articulation and execution of a unified strategy at the Board and management
levels. Where the Chair/CEO roles are combined as they are currently, our Corporate Governance Guidelines require that we have
a Lead Independent Director position to complement the Chair’s role, and to serve as the principal liaison between
the non-management directors and the Chair. Mr. Baker currently serves as our Lead Independent Director, providing effective,
independent leadership of our Board through his clearly defined and robust set of roles and responsibilities.
Our Corporate Governance Guidelines require that both the Chairman
and Lead Independent Director be elected annually by the independent, non-management directors, which ensures that the leadership
structure is reviewed at least annually. The Board is committed to continuing to seek shareholder feedback on its approach as
part of its ongoing shareholder outreach efforts, and will continue to reassess its Board leadership structure on a regular basis.
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LEAD INDEPENDENT DIRECTOR
– DOUGLAS M. BAKER, JR. |
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Annual Election:
Elected annually by the independent, non-management directors. |
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Regular Duties: |
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Has the authority to convene meetings
of the Board and executive sessions consisting solely of independent directors at every meeting; |
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Presides at all meetings of the Board of Directors at which
the Chair is not present, including executive sessions of independent directors; |
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Conducts the annual performance reviews of the CEO, with input
from the other independent directors, and serves as the primary liaison between the CEO and the independent directors; |
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Provides insights to the Human Resources and Compensation Committee
as it annually reviews the performance of the CEO as it relates to all elements of compensation; |
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Approves meeting schedules, agendas and the information furnished
to the Board to ensure that the Board has adequate time and information for discussion; |
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Is expected to engage in consultation and direct communication
with major shareholders as appropriate; |
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Coordinates with the CEO to establish minimum expectations
for non-management directors to consistently monitor Target’s retail operations and those of our competitors; and |
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Consults with the Nominating and Governance Committee regarding
Board and Committee composition, Committee Chair selection, the annual performance review of the Board and its Committees,
and director succession planning. |
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Service:
As a guideline, the Lead Independent Director should serve in that capacity for no more than four to six years. |
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2016 Proxy Statement │ TARGET CORPORATION 11
MANAGEMENT
EVALUATIONS AND 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 to the annual review, the Human Resources and Compensation
Committee conducts regular reviews of talent development and succession planning activities with a deeper focus than the full
Board review, emphasizing career development of promising management talent.
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 that 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.
Given the evolving environment around risk oversight,
during 2014 we embarked on a comprehensive review of risk oversight at the management, Board and Committee levels, with the
assistance of a third-party strategy, risk management and regulatory compliance consultant. As a result of that comprehensive
review, in January 2015 we clarified and enhanced existing practices to provide more transparency about how risk oversight is
exercised at the Board and Committee levels. In addition, we reallocated and clarified risk oversight responsibilities among
the Committees, most notably by elevating the risk oversight role of the Risk and Compliance Committee.
In the fall of 2015, after having an opportunity to evaluate
the functioning of the Committees, the Board further refined its Committee responsibilities to align with our strategic priorities
and, in part, to further enhance risk oversight coordination among the Committees. As part of the risk oversight enhancements,
the Board also adjusted the membership of the Risk and Compliance Committee so that each Committee Chair is a member of that Committee.
A summary of the allocation of general risk oversight functions among management, the Board and its Committees is as follows:
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RESPONSIBLE
PARTY |
GENERAL
DESCRIPTION OF RISK OVERSIGHT FUNCTION |
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Management |
Identification,
assessment and management of risks |
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Board
of Directors |
Continuous
oversight of overall risks, with emphasis on strategic risks, as well as reputation and corporate social responsibility efforts |
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Audit
and Finance Committee |
Financial
reporting, internal controls and financial risks |
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Human
Resources and Compensation Committee |
Compensation
policies, practices and incentive-related risks, organizational talent and culture, and
management succession risks |
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Nominating
and Governance Committee |
Governance
structuring, Board succession and public policy engagement risks |
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Risk
and Compliance Committee |
Operating,
business, and compliance risks, including information security and incident response |
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Infrastructure
and Investment Committee |
Risks
related to capital expenditures, major expense commitments and infrastructure needs |
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2016 Proxy
Statement │ TARGET
CORPORATION 12
COMMITTEES
The Board has the following Committees and Committee composition
as of the date of this proxy statement. All members of each Committee are independent directors. Each Committee operates under
a written Charter, a current copy of which is available on our company website, as described in Question 14 on page 72.
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RESPONSIBILITIES |
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COMMITTEE
MEMBERS |
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NUMBER OF
MEETINGS DURING
FISCAL 2015 |
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AUDIT AND
FINANCE
COMMITTEE(1) |
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• Assists
the Board in overseeing our financial reporting process, including the integrity of our financial statements and internal controls,
the independent auditor’s qualifications and independence, performance of our internal audit function and approval of transactions
with related persons
• Prepares
the “Report of the Audit and Finance Committee” on page 64 and performs the duties and activities described in that
report
• Discusses
with management our positions with respect to income and other tax obligations
• Reviews
and discusses with management our policies with respect to risk assessment and risk management, including the risk of fraud, commitment
of internal audit resources and policies and procedures to mitigate identified risks
• Considers
our major financial, accounting and compliance risk exposures and, as appropriate, involves our principal risk officer and compliance
officer and our internal audit function. Conducts a joint meeting annually with the Risk and Compliance Committee to review legal
and regulatory risk and compliance matters
• Assists
the Board in overseeing our financial policies, financial condition, including our liquidity position, funding requirements, ability
to access the capital markets, interest rate exposures and policies regarding return of cash to shareholders
• Oversees
financial risks, including liquidity and capital markets risks by discussing with management our financial risk assessment process,
financial risk management activities and strategies and the use of third-party insurance and self-insurance strategies
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Mr. Rice
(Chair)
Mr. Edwards
Ms. Lozano
Ms. Minnick |
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7 |
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HUMAN
RESOURCES
AND
COMPENSATION
COMMITTEE(2) |
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• Determines
the composition and value of non-CEO executive officer compensation and makes recommendations with respect to CEO compensation
to the independent members of the Board, who collectively have final approval authority
• Consults
with the Lead Independent Director as part of the annual review of the performance of the CEO as it relates to the appropriate
level and elements of compensation
• Reviews
our compensation philosophy, selection and relative weightings of different compensation elements to balance risk, reward and retention
objectives and the alignment of incentive compensation performance measures with our strategy
• Prepares
the “Human Resources and Compensation Committee Report” on page 31
• Oversees
risks associated with our compensation policies and practices, and annually reviews with its compensation consultant whether those
policies and practices create material risks to Target
• Oversees
management development, evaluation and succession planning at least annually in consultation with the Lead Independent Director
|
|
Ms. Mulcahy
(Chair)
Mr. Baker
Mr. Darden
Mr. De Castro
Ms. Healey
Mr. Knauss
|
|
5 |
|
|
|
NOMINATING
AND
GOVERNANCE
COMMITTEE |
|
• Oversees
our corporate governance practices
• Identifies
individuals qualified to become Board members
• Makes recommendations,
in consultation with the Lead Independent Director, on overall composition of the Board, its Committees, and the selection of the
Committee Chairs and the Lead Independent Director
• Leads the
annual self-evaluation performance review of the Board and its Committees in consultation with the Lead Independent Director
• With input
from the Lead Independent Director, leads director succession planning, and oversees the risks associated with Board succession
• Oversees
policies and practices regarding public advocacy and political activities
|
|
Mr. Stumpf
(Chair)
Mr. Baker
Mr. Darden
Mr. Knauss
Ms. Lozano
|
|
4 |
|
|
|
|
|
|
|
|
|
|
|
|
2016
Proxy Statement │ TARGET CORPORATION 13
|
|
|
|
|
|
|
|
|
|
|
|
|
RESPONSIBILITIES |
|
COMMITTEE
MEMBERS |
|
NUMBER OF
MEETINGS DURING
FISCAL 2015 |
|
|
|
RISK AND
COMPLIANCE
COMMITTEE |
|
• Assists
the Board in overseeing management’s identification and evaluation of our principal operational, business and compliance
risks, including our risk management framework and the policies, procedures and practices employed to manage risks
• Oversees
and monitors the effectiveness of our business ethics and compliance program
• Supports
the Audit and Finance Committee in oversight of compliance with legal and regulatory requirements
|
|
Mr. Salazar
(Chair)
Ms. Austin
Ms. Mulcahy
Mr. Rice
Mr. Stumpf |
|
4 |
|
|
|
INFRASTRUCTURE
AND
INVESTMENT
COMMITTEE |
|
• Assists
the Board in overseeing our investment activity, including alignment of investments with our strategy and evaluating the effectiveness
of investment decisions
• Oversees
management’s resources allocation plans regarding infrastructure requirements
• Reviews
management’s plans for business development, business acquisitions and other significant business relationships, including
alignment of opportunities with our strategic objectives, expected return on investment and post-acquisition integration and performance
of acquired businesses
|
|
Ms. Austin
(Chair)
Mr. De Castro
Mr. Edwards
Ms. Healey
Ms. Minnick
Mr. Salazar |
|
2 |
|
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|
(1) |
The Board of Directors has determined that all members of the
Audit and Finance Committee satisfy the applicable audit committee independence requirements of the New York Stock Exchange
(NYSE) and the Securities and Exchange Commission (SEC). The Board also determined that all members have acquired the attributes
necessary to qualify them as “audit committee financial experts” as defined by applicable SEC rules. The determination
for each of Mr. Edwards, Ms. Lozano and Mr. Rice was based on past experiences as a principal financial officer, principal
accounting officer, controller, public accountant or auditor, or actively supervising a person holding one of those positions.
For Ms. Minnick, the determination was based on her experience with analyzing the financial statements and financial performance
of portfolio companies of Lion Capital. |
|
|
(2) |
The Board of Directors has determined that all members of the Human Resources
and Compensation Committee satisfy the applicable compensation committee independence requirements of the NYSE and the SEC. |
COMMITTEE
COMPOSITION AND LEADERSHIP
The Board appoints members of its Committees on an annual basis,
with the Nominating and Governance Committee reviewing and recommending Committee membership, and assignments rotate periodically.
The following considerations provide the framework for determining Committee composition and leadership:
|
• |
The guideline for rotating Committee Chair assignments is four
to six years; |
|
|
|
|
• |
The Board seeks to have directors on two to three Committees; |
|
|
|
|
• |
The Board considers a number of factors in deciding Committee composition,
including individual director experience and qualifications, prior Committee experience and increased time commitments for
directors serving as a Committee Chair or Lead Independent Director; |
|
|
|
|
• |
By virtue of the position, the Lead Independent Director is a member of
the Nominating and Governance Committee; and |
|
|
|
|
• |
To enhance risk oversight coordination, each Committee Chair serves on
the Risk and Compliance Committee. |
In March 2015, the Board of Directors evaluated its Committee
leadership, and made several changes to refresh its leadership:
|
COMMITTEE(1) |
PRIOR
CHAIR |
NEW
CHAIR |
|
|
Audit and Finance |
Roxanne S. Austin |
Derica W. Rice |
|
|
Human
Resources and Compensation |
James A. Johnson |
Anne M. Mulcahy |
|
|
Nominating and Governance |
Anne M. Mulcahy |
John G. Stumpf |
|
|
Infrastructure
and Investment(2) |
Derica W. Rice |
Roxanne S. Austin |
|
|
|
|
|
|
(1) |
Kenneth L. Salazar has been the Chair of the Risk and Compliance
Committee since March 2014. |
|
|
(2) |
The Infrastructure and Investment became a Board Committee in October 2015,
but consists of the membership of the former Finance Committee, which was chaired by Derica W. Rice until March 2015. |
2016 Proxy
Statement │ TARGET
CORPORATION 14
CORPORATE
RESPONSIBILITY AND REPUTATION
Target recognizes that environmental, social and governance issues
are of increasing importance to many investors. We have a longstanding dedication to improving the communities where we operate.
We know that working together with our team members, guests, suppliers and communities creates better outcomes on issues that
matter to us all.
We are especially proud that since 1946, we have given 5 percent
of our profit to communities, which today is more than $4 million a week. Our Board of Directors encourages corporate responsibility
efforts and we publish an annual Corporate Social Responsibility Report, which uses the Global Reporting Initiative framework,
to share our work.
Our most recent report, published in June 2015, covers a variety
of topics, including responsible sourcing practices, diversity and inclusion, responsible products, environmental standards, stakeholder
engagement, corporate philanthropy and volunteerism. Through our Corporate Social Responsibility reports, we set goals in a variety
of areas, including those relating to the environment and sustainability, and report our progress on those goals. A copy of our
most recent Corporate Social Responsibility Report is available on our company website, as described in Question 14 on page 72.
BOARD
AND SHAREHOLDER MEETING ATTENDANCE
The Board of Directors met seven times during fiscal 2015. All
directors attended at least 84% of the aggregate total of meetings of the Board and Board Committees on which the director served
during the last fiscal year.
All of our eleven then-serving directors attended our June 2015
Annual Meeting of Shareholders. The Board has a policy requiring all directors to attend all Annual Meetings of Shareholders,
absent extraordinary circumstances.
DIRECTOR
INDEPENDENCE
The Board of Directors believes that a 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) detail certain relationships that, if present, preclude a finding
of independence.
Given recent investor focus on the impact of director
tenure on independence, the Board also specifically considered each director’s length of service on the Board in making
its annual independence determination. Specifically, the Board determined that Ms. Mulcahy, Ms. Austin and Mr. Darden, each
of whom have served on the Board for more than 12 years, continue to demonstrate the independence of judgment expected of
independent directors.
The Board affirmatively determined that all non-management directors
are independent. Mr. Cornell is the only management director and is not independent. The Board specifically considered the following
transactions and concluded that none of the transactions impaired any director’s independence. In addition, none of the
transactions are related party transactions because none of the directors have a direct or indirect material interest in the listed
transactions.
|
|
|
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|
|
|
|
|
|
DIRECTOR |
|
ENTITY
AND RELATIONSHIP |
|
TRANSACTIONS |
|
%
OF ENTITY’S
ANNUAL REVENUES
IN EACH OF
LAST 3 YEARS |
|
|
Douglas M.
Baker, Jr. |
|
Ecolab Inc. Chairman & CEO |
|
We purchase supplies, servicing, repairs and merchandise
from Ecolab. |
|
Less than 0.01% |
|
|
Mary E. Minnick |
|
Each portfolio company of Lion Capital(1)
Partner in Lion Capital |
|
We purchase merchandise for resale from portfolio companies
of Lion Capital. |
|
Less than 2% of each portfolio company |
|
|
Anne M. Mulcahy |
|
Save the Children Federation Chairman of Board of Trustees |
|
We make charitable contributions to Save the Children. |
|
Less than 2% |
|
|
Kenneth L.
Salazar |
|
WilmerHale Partner |
|
In fiscal 2015, WilmerHale was engaged to provide legal
services.(2) |
|
Less than 1% |
|
|
John G. Stumpf |
|
Wells Fargo & Company Chairman & CEO |
|
Wells Fargo provides commercial banking, brokerage,
trust and equipment financing services, serves as a non-lead participant in Target’s syndicated revolving credit facility
and is Target’s transfer agent.(3) |
|
Less than 0.02% |
|
|
|
|
|
|
|
|
|
|
(1) |
Ms. Minnick’s indirect ownership in each of these portfolio
companies is less than 5%. |
|
|
(2) |
WilmerHale represented to us that: (a) Mr. Salazar’s compensation
was not affected by the amount of legal services performed by WilmerHale for Target, (b) Mr. Salazar did not receive any of
the fees from the Target relationship during each of the last three years and (c) Mr. Salazar will not receive any of the
fees from the Target relationship in the future. Mr. Salazar does not personally provide any of the legal services to Target. |
|
|
(3) |
Target does not use Wells Fargo for any investment banking, consulting
or advisory services. |
2016 Proxy
Statement │ TARGET
CORPORATION 15
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 and Finance 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 Human Resources and 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 ratified two related party transactions in accordance with
this policy during fiscal 2015. Both transactions dealt with compensation of immediate family members of one of our executive
officers, Casey Carl, Executive Vice President and Chief Strategy and Innovation Officer. Mr. Carl’s brother joined Target
in 2005, has been a team member in merchandising since that time and earned compensation of $161,311 in fiscal 2015. Mr. Carl’s
sister-in-law joined Target in 2009, has been a team member in merchandising since that time and earned compensation of $289,807
in fiscal 2015. For each of these immediate family members, the compensation is commensurate with the immediate family member’s
peers.
BUSINESS
ETHICS AND CONDUCT
We are committed to conducting
business lawfully and ethically. All of our directors and named executive officers, like all Target team members, 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 disclose any 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.
COMMUNICATIONS
WITH DIRECTORS AND SHAREHOLDER OUTREACH
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.
We regularly engage in outreach
efforts with our shareholders, both large and small, relating to our business, compensation practices, and environmental,
social and governance issues. We involve one or more independent directors in these conversations as appropriate. Among the
changes we made in the last year that were informed by shareholder outreach and feedback are the desired backgrounds and
relevant skill sets for new additions to the Board, our adoption of a proxy access bylaw, the rotation of leaders of our
Committees, the inclusion of all Committee Chairs as members of our Risk and Compliance Committee, the refinement of our
Committee responsibilities to align with our strategic priorities and enhance risk oversight coordination among the
Committees, and the reasoning behind the Strategic Alignment Awards granted to our executive officers.
While we benefit from an ongoing dialogue with many of our shareholders,
we recognize that we have not communicated directly with all of our shareholders. If you would like to engage with us, please
send correspondence to Target Corporation, Attn: Investor Relations, 1000 Nicollet Mall, Minneapolis, Minnesota 55403 or email
investorrelations@target.com.
2016 Proxy
Statement │ TARGET
CORPORATION 16
ITEM ONE |
ELECTION OF DIRECTORS |
ELECTION
AND NOMINATION PROCESS
Our election process is backed by sound corporate governance
principles:
|
• |
All directors are elected annually; |
|
|
|
|
• |
Directors are elected under a “majority voting” standard –
each director in an uncontested election must receive more votes “For” his or her election than votes “Against”
in order to be elected; and |
|
|
|
|
• |
An incumbent director who is not re-elected must promptly offer to resign.
The Nominating and Governance Committee will make a recommendation on the offer and the Board must accept or reject the offer
within 90 days and publicly disclose its decision and rationale. |
The Nominating and 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 factors in its efforts to identify potential director candidates:
|
• |
Input from the Board’s self-evaluation process to identify
the backgrounds or skill sets that are desired; and |
|
|
|
|
• |
Changes in our business strategy or operating environment and the future
needs of the Board in light of anticipated director retirements under our Board tenure policies. |
The Nominating and Governance Committee has retained a third-party
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. Shareholders may also nominate
director candidates directly if they comply with our bylaws, which are described in more detail in Question 18 “How do I
submit a proposal or nominate a director candidate for the 2017 Annual Meeting of Shareholders?” on page 73 of the proxy
statement.
DETERMINING
BOARD COMPOSITION
The criteria the Board follows
in determining the composition of the Board is simple: directors are to have broad perspective, experience, knowledge and
independence of judgment. The Board as a whole should consist predominantly of persons with strong business backgrounds that
span multiple industries. 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. At least annually the Board seeks input from each of its members with
respect to the current composition of the Board in light of changes in our current and future business strategies, as well as
our operating environment, 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. In addition, we seek feedback from our shareholders regarding
the backgrounds and skill sets that they would like to see represented on our Board. This input is then used by our
Nominating and Governance Committee in its director search process.
2016 Proxy
Statement │ TARGET
CORPORATION 17
BOARD
EVALUATIONS AND REFRESHMENT
The Board regularly evaluates its performance to enhance Board
functioning and the effectiveness of the Board-management relationship.
|
|
|
|
|
EVALUATION
METHOD |
DESCRIPTION |
|
|
Self-Evaluation |
The Nominating and Governance Committee, in consultation with the Lead Independent Director, annually leads the performance review of the Board and its Committees. In 2015, the Board self-evaluation involved a third-party consultant who conducted an online survey completed by each director, followed by individual interviews. Following completion of the interviews, the results were discussed by both the Nominating and Governance Committee and the full Board.
|
|
|
|
The self-evaluation process seeks to obtain each director’s
assessment of the effectiveness of the Board, the Committees and their leadership, and Board/management dynamics in the following
categories: |
|
|
|
• The
Board’s purpose and mandate |
|
|
|
• Business
knowledge and risk management |
|
|
|
• Information
sharing |
|
|
|
• Board
and Committee composition, roles and contribution |
|
|
|
• Meeting
effectiveness |
|
|
Corporate
Governance Review |
Our Nominating and Governance Committee conducts an
annual corporate governance review that compares our core corporate governance practices with prevailing best practices, emerging
practices and evolving topics as indicated by current literature, corporate governance organizations and institutional shareholders. |
|
|
Charter
and Corporate Governance Guidelines Review |
We periodically review our Committee Charters and Corporate
Governance Guidelines. In January 2015, as a result of our comprehensive review of risk oversight at the management, Board
and Committee levels, we clarified and enhanced existing practices through amendments to our Committee Charters and Corporate
Governance Guidelines to provide more transparency on how risk oversight is exercised at the Board and Committee levels, and
reallocated and clarified risk oversight responsibilities among the Committees. In the fall of 2015, after having an opportunity
to evaluate the functioning of the Committees, the Board further refined its Committee responsibilities to align with our
strategic priorities and to enhance coordination among the Committees. Additionally, after engaging shareholders to understand
their perspectives and viewpoints on proxy access, while also giving consideration to the views of industry groups and proxy
advisory firms, as part of our annual corporate governance review we adopted a proxy access bylaw in November 2015. |
|
|
|
|
|
The Board maintains tenure policies (contained in our Corporate
Governance Guidelines) as a means of ensuring that the Board regularly benefits from a balanced mix of perspectives and experiences.
To enhance our ability to recruit the most qualified candidates for our Board, including candidates with robust retail experience,
in 2015 we eliminated our prior tenure policy that prohibited directors from serving on the Board for more than five years after
retiring from active employment. Our current tenure policies are as follows:
|
|
TENURE
POLICIES |
|
|
Term
Limit |
Directors may not serve on the Board for more than
20 years |
|
|
Mandatory
Retirement |
Directors must retire at the end of the term in
which they reach age 72 |
|
|
Change
in Principal Employment |
Directors must offer to resign upon any substantial
change in principal employment |
|
|
|
|
|
No directors departed our Board since our 2015 Annual Meeting,
but we did expand the size of our Board to add four new directors:
|
|
|
BIOGRAPHICAL |
|
|
ADDITIONS |
INFORMATION |
|
|
• |
Robert
L. Edwards – Identified by our CEO; brings substantial food and drug retail expertise to the Board |
|
|
|
• |
Melanie
L. Healey – Identified by independent search firm(1); brings substantial consumer product goods expertise
to the Board |
|
|
|
• |
Donald
R. Knauss – Identified by independent search firm(1); brings substantial consumer product goods manufacturing
and marketing expertise to the Board |
|
|
|
• |
Monica
C. Lozano – Identified by independent search firm(1); brings substantial operations, marketing and strategic
planning expertise to the Board, as well as a deep understanding of issues that are important to Hispanics, a growing U.S.
demographic |
|
|
|
|
|
|
|
(1) | The independent search firm was retained directly by the Nominating and Governance
Committee to assist with identifying, screening and evaluating candidates for the Board. |
2016 Proxy
Statement │ TARGET
CORPORATION 18
Our current Board’s composition represents a balanced approach
to director tenure, allowing the Board to benefit from the experience of longer-serving directors combined with fresh perspectives
from newer directors:
TENURE
ON BOARD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.8
years |
|
|
|
|
Average
Director |
|
|
|
|
Tenure |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 NOMINEES FOR DIRECTOR
After considering the recommendations
of the Nominating and Governance Committee, the Board has set the number of directors at 14 and nominated all of the current
directors to stand for re-election. 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 follow each nominee’s
biographical description. Equally 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.
The following table describes key characteristics of our business
and the skills our Board collectively possesses.
|
|
|
|
|
|
TARGET’S
BUSINESS CHARACTERISTICS |
|
SKILLS
OUR BOARD COLLECTIVELY POSSESSES |
|
|
Target’s
scale and complexity requires aligning many different areas of our operations, including marketing, merchandising, supply
chain, technology, human resources, property development, credit card servicing and our community and charitable activities. |
|
Senior
Leadership. Experience as executive officer level business leader or senior government leader. |
|
|
Our
brand is the cornerstone of our strategy to provide a relevant and affordable differentiated shopping experience for our guests. |
|
Marketing
or Brand Management. Marketing or managing well-known brands or the types of consumer products and services we sell. |
|
|
We
own most of our stores and a network of distribution centers. |
|
Real
Estate. Real estate acquisitions and dispositions or property management experience. |
|
|
We
have a large and global workforce, which represents one of our key resources, as well as one of our largest operating expenses. |
|
Workforce
Management. Managing a large or global workforce. |
|
|
Our
business has become increasingly complex as we have expanded our offerings as well as the channels in which we deliver our
shopping experience. This increased complexity requires an increasingly sophisticated technology infrastructure. |
|
Technology.
Leadership and understanding of technology, digital platforms and new media, data security, and data analytics. |
|
|
Our
business involves sourcing merchandise domestically and internationally from a large number of vendors and distributing it
through our network of distribution centers. |
|
Multi-National
Operations or Supply Chain Logistics. Executive officer roles at multi-national organizations or in global supply chain
operations. |
|
|
We
are a large public company committed to disciplined financial and risk management, legal and regulatory compliance and accurate
disclosure. |
|
Finance
or Risk Management. Public company management, financial stewardship, enterprise risk management or credit card servicing
experience. |
|
|
To
be successful, we must preserve, grow and leverage the value of our reputation with our guests, team members, the communities
in which we operate and our shareholders. |
|
Public
Affairs or Corporate Governance. Public sector experience, community relations or corporate governance expertise. |
|
|
|
|
|
|
2016 Proxy
Statement │ TARGET
CORPORATION 19
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.
|
|
|
|
|
|
|
Roxanne
S. Austin
Age 55
Director
since 2002
Independent
Committees
• Infrastructure
and Investment (Chair)
• Risk
and Compliance
|
|
BACKGROUND
Roxanne
S. Austin is President of Austin Investment Advisors, a private investment and consulting firm, a position
she has held since 2004. Ms. Austin also previously served as President and Chief Executive Officer of
Move Networks, Inc., President and Chief Operating Officer of DIRECTV, Inc., Executive Vice President and
Chief Financial Officer of Hughes Electronics Corporation and as a partner of Deloitte & Touche LLP.
|
|
|
|
|
QUALIFICATIONS
Through
her extensive management and operating roles, including her financial roles, Ms. Austin provides the
Board with financial, operational and risk management expertise, and substantial knowledge of new media
technologies.
|
|
|
|
|
OTHER
PUBLIC COMPANY BOARDS |
|
|
|
|
Current
Abbott Laboratories(1)
AbbVie Inc.(1)
Teledyne Technologies Incorporated
|
Past
5 Years
LM Ericsson Telephone Company
|
|
|
|
|
|
|
|
|
|
(1) |
AbbVie Inc. became a public company in January 2013 following its separation from Abbott Laboratories. Ms. Austin was serving on the Board of Abbott Laboratories at the time of the separation and became a director of AbbVie Inc. in connection with the separation. |
|
|
|
|
|
|
|
Douglas
M. Baker, Jr.
Age 57
Director since 2013
Lead
Independent Director
Committees
• Human Resources and
Compensation
• Nominating
and Governance
|
|
BACKGROUND
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.
|
|
|
|
|
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.
|
|
|
|
|
OTHER
PUBLIC COMPANY BOARDS |
|
|
|
|
Current
Ecolab Inc.
U.S. Bancorp
|
Past
5 Years
None
|
|
|
|
|
|
|
|
|
|
2016 Proxy Statement │ TARGET CORPORATION 20
|
|
|
|
|
|
|
Brian C. Cornell
Age 57
Director since 2014
Committees
• None
|
|
BACKGROUND
Brian
C. Cornell has served as Chairman of the Board and Chief Executive Officer of Target Corporation since August
2014. Mr. Cornell served as Chief Executive Officer of PepsiCo Americas Foods, a division of PepsiCo,
Inc., a multinational food and beverage corporation, from March 2012 to July 2014. From April 2009 to
January 2012, Mr. Cornell served as Chief Executive Officer and President of Sam’s Club, a division of Wal-Mart
Stores, Inc., a discount retailer, and as an Executive Vice President of Wal-Mart Stores, Inc.
|
|
|
|
|
QUALIFICATIONS
Through
his more than 30 years in escalating leadership positions at leading retail and global consumer product
companies, including three CEO roles and more than two decades doing business in North America, Asia,
Europe and Latin America, Mr. Cornell provides meaningful leadership experience and retail knowledge. His
past experience includes time as both a vendor partner and a competitor to Target, and he brings insights from
those roles to the company today.
|
|
|
|
|
OTHER
PUBLIC COMPANY BOARDS |
|
|
|
|
Current
Yum! Brands, Inc.
|
Past 5 Years
Polaris Industries Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calvin Darden
Age 66
Director
since 2003
Independent
Committees
•
Human Resources and
Compensation
•
Nominating and Governance
|
|
BACKGROUND
Calvin
Darden is Chairman of Darden Putnam Energy & Logistics, LLC, a company that sells fuel products, a
position he has held on a full-time basis since February 2015. From November 2009 to February 2015, he was
Chairman of Darden Development Group, LLC, a real estate development company. Mr. Darden had a
33-year career with the United Parcel Service of America, Inc., an express carrier and package delivery company,
and served in a variety of senior management positions, ending as Senior Vice President of U.S. Operations
in February 2005.
|
|
|
|
|
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 career with United Parcel Service of
America, Inc., and more recently has developed expertise in community relations and real estate development.
|
|
|
|
|
OTHER
PUBLIC COMPANY BOARDS |
|
|
|
|
Current
Coca-Cola Enterprises, Inc.
Cardinal Health, Inc.
|
Past 5 Years
None
|
|
|
|
|
|
|
|
|
|
2016 Proxy Statement │ TARGET CORPORATION 21
|
|
|
|
|
|
|
Henrique De Castro
Age 50
Director
since 2013
Independent
Committees
•
Human Resources and
Compensation
•
Infrastructure and Investment
|
|
BACKGROUND
Henrique
De Castro is the former 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 held that position from November 2012 to January 2014. He previously served at Google Inc., a
company that builds technology products and provides services to organize information, as President, Partner
Business Worldwide from March 2012 to November 2012 and as President, Global Media, Mobile & Platforms
from June 2009 to March 2012.
|
|
|
|
|
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.
|
|
|
|
|
OTHER
PUBLIC COMPANY BOARDS |
|
|
|
|
Current
None
|
Past 5 Years
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Edwards
Age 60
Director since 2015
Independent
Committees
• Audit
and Finance
•
Infrastructure and Investment
|
|
BACKGROUND
Robert
L. Edwards is the former President and Chief Executive Officer of AB Acquisition LLC, a North American
food and drug retail company, a position he held from January 2015 to April 2015 due to Albertsons’
acquisition of Safeway Inc. Mr. Edwards previously held several executive level positions with Safeway
Inc., a United States food and drug retail company, including President and Chief Executive Officer from
May 2013 to April 2015, President and Chief Financial Officer from April 2012 to May 2013, and Executive
Vice President and Chief Financial Officer from March 2004 to April 2012.
|
|
|
|
|
QUALIFICATIONS
Mr. Edwards
provides the Board with substantial food and drug retail expertise and perspectives from his time
at Safeway and Albertsons. In addition, his prior experiences as a CEO of a large publicly-held company and
as CFO of multiple public companies provides the Board with extensive public company accounting and financial
reporting expertise and a top-level perspective in organizational management.
|
|
|
|
|
OTHER
PUBLIC COMPANY BOARDS |
|
|
|
|
Current
Blackhawk Network Holdings, Inc.
|
Past 5 Years
Flextronics International Ltd.
KKR Financial Holdings LLC
Safeway Inc.
|
|
|
|
|
|
|
|
|
|
2016 Proxy Statement │ TARGET CORPORATION 22
|
|
|
|
|
|
|
Melanie L. Healey
Age 55
Director
since 2015
Independent
Committees
•
Human Resources and
Compensation
•
Infrastructure and Investment
|
|
BACKGROUND
Melanie
L. Healey is the former Group President, North America, of The Procter & Gamble Company, one of the
world’s leading providers of branded consumer packaged goods, a position she held from January 2009 to
December 2014. Ms. Healey also served as Group President and Advisor to the Chairman and Chief Executive
Officer of The Procter & Gamble Company from January 2015 to July 2015.
|
|
|
|
|
QUALIFICATIONS
Ms. Healey
provides the Board with valuable strategic, branding, distribution and operating experience on
a global scale obtained over her more than 30-year career in the consumer goods industry in three multinational
companies (Procter & Gamble, Johnson & Johnson and S.C. Johnson & Sons). Her deep experience
in marketing, including her 18 years outside the United States, provides the Board with strategic and
operational leadership and critical insights into brand building and consumer marketing trends globally.
|
|
|
|
|
OTHER
PUBLIC COMPANY BOARDS |
|
|
|
|
Current
Verizon Communications Inc.
|
Past 5 Years
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald
R. Knauss
Age 65
Director since 2015
Independent
Committees
• Human Resources and Compensation
• Nominating and Governance
|
|
BACKGROUND
Donald
R. Knauss is the former Executive Chairman of The Clorox Company, a leading multinational
manufacturer and marketer of consumer and professional products, a position he held from
November 2014 to
June 2015. Mr. Knauss previously served as Chairman and Chief Executive Officer of The
Clorox Company from October
2006 until November 2014.
|
|
|
|
|
QUALIFICATIONS
Mr.
Knauss possesses substantial senior management level experience in a variety of areas,
including branded consumer products and consumer dynamics, manufacturing and supply chain,
the retail environment, and sales and distribution that strengthens the Board’s
collective knowledge, capabilities and experience.
|
|
|
|
|
OTHER
PUBLIC COMPANY BOARDS |
|
|
|
|
Current
Kellogg Company
McKesson Corporation
|
Past
5 Years
The Clorox Company
URS Corporation
|
|
|
|
|
|
|
|
|
|
2016 Proxy Statement │ TARGET CORPORATION 23
|
|
|
|
|
|
|
Monica
C. Lozano
Age 59
Director since 2016
Independent
Committees
• Audit
and Finance
•
Nominating and Governance
|
|
BACKGROUND
Monica
C. Lozano is the former Chairman of U.S. Hispanic Media, Inc., a leading Hispanic news and information
company with outlets in Los Angeles, New York, Chicago and other U.S. cities, a position she held
from June 2014 to January 2016. Ms. Lozano previously served ImpreMedia, LLC, a wholly owned subsidiary
of U.S. Hispanic Media, Inc., as Chair from July 2012 to May 2014, and as Chief Executive Officer from
May 2010 to May 2014. Ms. Lozano served as Publisher of La Opinion, a subsidiary of ImpreMedia, LLC,
from 2004 to May 2014 and was Chief Executive Officer from 2004 to July 2012.
|
|
|
|
|
QUALIFICATIONS
Ms. Lozano
possesses substantial senior management experience in areas such as operations, marketing and
strategic planning. She also has a deep understanding of issues that are important to Hispanics, a growing
U.S. demographic. Ms. Lozano has board-level experience overseeing large organizations with diversified
operations on matters such as governance, risk management and financial reporting.
|
|
|
|
|
OTHER
PUBLIC COMPANY BOARDS |
|
|
|
|
Current
Bank of America Corporation
|
Past 5 Years
The Walt Disney Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mary E. Minnick
Age 56
Director
since 2005
Independent
Committees
•
Audit and Finance
•
Infrastructure and Investment
|
|
BACKGROUND
Mary
E. Minnick is a Partner of Lion Capital LLP, a consumer-focused private investment firm, a position she has
held since May 2007. Ms. Minnick had a 23-year career with The Coca Cola Company, a manufacturer, marketer
and distributor of nonalcoholic beverage concentrates and syrups, and served in a variety of senior management
positions, ending as President of Marketing, Strategy and Innovation in February 2007.
|
|
|
|
|
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 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.
|
|
|
|
|
OTHER
PUBLIC COMPANY BOARDS |
|
|
|
|
Current
The
WhiteWave Foods Company
(Term ending in May 2016)
|
Past 5 Years
Heineken NV
|
|
|
|
|
|
|
|
|
|
2016 Proxy Statement │ TARGET CORPORATION 24
|
|
|
|
|
|
|
Anne M. Mulcahy
Age 63
Director since 1997
Independent
Committees
•
Human Resources and
Compensation (Chair)
•
Risk and Compliance
|
|
BACKGROUND
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. Ms. Mulcahy had a 34-year career with Xerox Corp., a document management company,
and served in a variety of senior management positions, ending as Executive Chairman in May 2010.
|
|
|
|
|
QUALIFICATIONS
Ms. Mulcahy
obtained extensive experience in all areas of business management as she led Xerox Corp. 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.
|
|
|
|
|
OTHER
PUBLIC COMPANY BOARDS |
|
|
|
|
Current
Graham Holdings Company
Johnson
& Johnson
LPL Financial Holdings Inc.
|
Past 5 Years
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derica W. Rice
Age 51
Director
since 2007
Independent
Committees
•
Audit and Finance (Chair)
• Risk
and Compliance
|
|
BACKGROUND
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.
|
|
|
|
|
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.
|
|
|
|
|
OTHER
PUBLIC COMPANY BOARDS |
|
|
|
|
Current
None
|
Past 5 Years
None
|
|
|
|
|
|
|
|
|
|
2016 Proxy Statement │ TARGET CORPORATION 25
|
|
|
|
|
|
|
Kenneth L. Salazar
Age 61
Director
since 2013
Independent
Committees
•
Risk and Compliance (Chair)
•
Infrastructure and Investment
|
|
BACKGROUND
Kenneth
L. Salazar is a Partner at WilmerHale, a full service business law firm, a position he has held since June
2013. Previously, Mr. Salazar served as the U.S. Secretary of the Interior from 2009 to 2013, U.S. Senator
from Colorado from 2005 to 2009 and as Attorney General of Colorado from 1999 to 2005.
|
|
|
|
|
QUALIFICATIONS
Mr. Salazar
has substantial public policy experience at both the state and federal levels. Mr. Salazar provides the
Board with additional insights on public policy issues and leadership on matters involving multiple stakeholder
stewardship.
|
|
|
|
|
OTHER
PUBLIC COMPANY BOARDS |
|
|
|
|
Current
None
|
Past 5 Years
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John G. Stumpf
Age 62
Director
since 2010
Independent
Committees
•
Nominating and Governance
(Chair)
•
Risk and Compliance
|
|
BACKGROUND
John
G. Stumpf is Chairman of the Board and Chief Executive Officer of Wells Fargo & Company, a banking and
financial services company. He has been Chief Executive Officer since June 2007 and Chairman since January
2010. He also served as President from August 2005 to November 2015. A 33-year veteran of Wells
Fargo, he has held various operational and managerial positions throughout his career.
|
|
|
|
|
QUALIFICATIONS
Mr.
Stumpf’s current role as Chairman 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, as well as valuable perspectives in
large public company organizational structuring and management.
|
|
|
|
|
OTHER
PUBLIC COMPANY BOARDS |
|
|
|
|
Current
Chevron
Corporation
Wells Fargo & Company
|
Past 5 Years
None
|
|
|
|
|
|
|
|
|
|
2016 Proxy Statement │ TARGET CORPORATION 26
STOCK OWNERSHIP INFORMATION
STOCK
OWNERSHIP GUIDELINES
Stock ownership that must be disclosed
in this proxy statement includes shares directly or indirectly owned, and shares issuable or options exercisable that the
person has the right to acquire within 60 days. Our stock ownership guidelines vary from the required ownership disclosure in
that they do not include any options, but do include share equivalents held under deferred compensation arrangements, as well
as unvested restricted stock units (RSUs) and performance-based RSUs (PBRSUs) at the minimum share payout. We believe our
stock ownership guidelines for our directors and executive officers are aligned with shareholders’ interests because
the guidelines reflect equity that has economic exposure to both upside and downside risk.
|
|
|
|
OWNERSHIP
GUIDELINES BY POSITION |
|
|
DIRECTORS |
CEO |
OTHER NEOS |
|
|
Fixed Value of $270,000 |
7x base salary |
3x base salary |
|
|
|
|
|
|
|
|
|
|
EQUITY
USED TO MEET STOCK OWNERSHIP GUIDELINES |
|
|
YES |
|
NO |
|
|
Outstanding shares that the person beneficially owns or is deemed to beneficially own, directly or indirectly, under the federal securities laws |
|
Options, regardless of when they are exercisable |
|
|
RSUs and PBRSUs (at their minimum share payout, which is 75% of the at-goal payout level), whether vested or unvested |
|
Performance Share Units (PSUs) because their minimum share payout is 0% of the at-goal payout level |
|
|
Deferred compensation amounts that are indexed to Target common stock, but ultimately paid in cash |
|
|
|
|
|
|
|
|
All directors and executive officers are expected to achieve the
required levels of ownership under our stock ownership guidelines within five years of their election or appointment. If a director
or executive officer has not satisfied the ownership guideline amounts within those first five years, 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. In addition, if an executive officer is below the ownership guideline amounts during the first five
years after becoming an executive officer, he or she must retain at least 50% of all shares acquired on the vesting of equity awards
or the exercise of stock options until compliance is achieved.
2016 Proxy Statement │ TARGET CORPORATION 27
The following table shows the holdings of our current directors
and NEOs recognized for purposes of our stock ownership guidelines as of March 30, 2016, and the respective ownership guidelines
calculations.
|
| |
| |
| | |
| |
| |
|
|
|
| |
SHARES | |
| | |
| |
TOTAL STOCK | |
STOCK |
|
|
| |
DIRECTLY OR | |
| | |
| |
OWNERSHIP FOR | |
OWNERSHIP |
|
|
| |
INDIRECTLY | |
RSUs & | |
SHARE | |
GUIDELINES | |
GUIDELINES |
|
|
| |
OWNED | |
PBRSUs | |
EQUIVALENTS | |
(# OF SHARES)(1) | |
CALCULATION |
|
|
DIRECTORS | |
| | |
| | |
| | |
| | |
TOTAL VALUE(2) |
|
|
Roxanne S. Austin | |
| 10,000 | | |
| 22,134 | | |
| 0 | | |
| 32,134 | | |
$ | 2,686,402 | |
|
|
Douglas M. Baker, Jr. | |
| 0 | | |
| 9,682 | | |
| 0 | | |
| 9,682 | | |
$ | 809,415 | |
|
|
Calvin Darden | |
| 0 | | |
| 22,134 | | |
| 775 | | |
| 22,909 | | |
$ | 1,915,224 | |
|
|
Henrique De Castro | |
| 0 | | |
| 12,472 | | |
| 0 | | |
| 12,472 | | |
$ | 1,042,659 | |
|
|
Robert L. Edwards(3) | |
| 10,000 | | |
| 3,951 | | |
| 0 | | |
| 13,951 | | |
$ | 1,166,304 | |
|
|
Melanie L. Healey(3) | |
| 0 | | |
| 3,430 | | |
| 0 | | |
| 3,430 | | |
$ | 286,748 | |
|
|
Donald R. Knauss(3) | |
| 0 | | |
| 3,951 | | |
| 0 | | |
| 3,951 | | |
$ | 330,304 | |
|
|
Monica C. Lozano(3) | |
| 0 | | |
| 2,364 | | |
| 0 | | |
| 2,364 | | |
$ | 197,630 | |
|
|
Mary E. Minnick | |
| 886 | | |
| 56,346 | | |
| 443 | | |
| 57,675 | | |
$ | 4,821,668 | |
|
|
Anne M. Mulcahy | |
| 7,114 | | |
| 29,701 | | |
| 0 | | |
| 36,815 | | |
$ | 3,077,734 | |
|
|
Derica W. Rice | |
| 0 | | |
| 49,397 | | |
| 0 | | |
| 49,397 | | |
$ | 4,129,589 | |
|
|
Kenneth L. Salazar | |
| 0 | | |
| 9,129 | | |
| 0 | | |
| 9,129 | | |
$ | 763,184 | |
|
|
John G. Stumpf | |
| 0 | | |
| 14,011 | | |
| 0 | | |
| 14,011 | | |
$ | 1,171,320 | |
|
|
CURRENT NAMED | |
| | | |
| | | |
| | | |
| | | |
MULTIPLE OF BASE |
|
|
EXECUTIVE OFFICERS | |
| | | |
| | | |
| | | |
| | | |
SALARY(2) |
|
|
Brian C. Cornell | |
| 68,085 | | |
| 132,484 | | |
| 0 | | |
| 200,569 | | |
| 12.9 | |
|
|
Catherine R. Smith(4) | |
| 0 | | |
| 11,868 | | |
| 0 | | |
| 11,868 | | |
| 1.2 | |
|
|
John J. Mulligan | |
| 37,431 | | |
| 34,714 | | |
| 10,779 | | |
| 82,924 | | |
| 6.9 | |
|
|
Michael E. McNamara(4) | |
| 0 | | |
| 13,667 | | |
| 0 | | |
| 13,667 | | |
| 1.6 | |
|
|
Jeffrey J. Jones II | |
| 18,475 | | |
| 16,990 | | |
| 0 | | |
| 35,465 | | |
| 4.1 | |
|
|
Timothy R. Baer | |
| 16,396 | | |
| 17,289 | | |
| 0 | | |
| 33,685 | | |
| 4.2 | |
|
|
| |
| | | |
| | | |
| | | |
| | | |
| | |
|
(1) |
The “Total Stock Ownership” calculation, like the required disclosure of “Total Shares Beneficially Owned”
on page 29, starts with “Shares Directly or Indirectly Owned” but differs by (a) excluding all options, regardless
of whether they can be converted into common stock on or before May 29, 2016, and (b) including (i) share equivalents that are
held under deferred compensation arrangements and (ii) RSUs and PBRSUs (at their minimum share payout, which is 75% of the at-goal
payout level), whether vested or unvested, even if they will be converted into common stock more than 60 days from March 30, 2016. |
(2) |
Based on closing stock price of $83.60 as of March 30, 2016. |
(3) |
Mr. Edwards and Mr. Knauss joined the Board on August 12, 2015. Ms. Healey joined the Board on November 11, 2015. Ms. Lozano joined
the Board on March 9, 2016. They currently comply with our stock ownership guidelines because they have five years from those
respective dates to meet the required $270,000 stock ownership level. |
(4) |
Ms. Smith became Executive Vice President & Chief Financial Officer on September 1, 2015. Mr. McNamara became Executive Vice
President & Chief Information Officer on June 3, 2015. They currently comply with our stock ownership guidelines because they
have five years from those respective dates to meet the required 3x base salary stock ownership level. |
2016 Proxy Statement │ TARGET CORPORATION 28
BENEFICIAL
OWNERSHIP OF DIRECTORS AND OFFICERS
The following table includes information about the shares of Target
common stock (our only outstanding class of equity securities) which are beneficially owned on March 30, 2016 or which the person
has the right to acquire within 60 days of March 30, 2016 for each director, named executive officer in the Summary Compensation
Table on page 47, and all current Target directors and executive officers as a group.
|
| |
| | |
| | |
| | |
| |
|
|
| |
SHARES | |
| | |
| | |
| |
|
|
| |
DIRECTLY OR | |
SHARES | |
STOCK OPTIONS | |
TOTAL SHARES |
|
|
| |
INDIRECTLY | |
ISSUABLE | |
EXERCISABLE | |
BENEFICIALLY |
|
|
| |
OWNED | |
WITHIN 60 DAYS(1) | |
WITHIN 60 DAYS | |
OWNED(2)) |
|
|
DIRECTORS | |
| | |
| | |
| | |
| |
|
|
Roxanne S. Austin | |
| 10,000 | | |
| 20,360 | | |
| 24,349 | | |
| 54,709 | |
|
|
Douglas M. Baker, Jr. | |
| 0 | | |
| 7,908 | | |
| 5,570 | | |
| 13,478 | |
|
|
Calvin Darden | |
| 0 | | |
| 20,360 | | |
| 37,105 | | |
| 57,465 | |
|
|
Henrique De Castro | |
| 0 | | |
| 10,698 | | |
| 5,570 | | |
| 16,268 | |
|
|
Robert L. Edwards(3) | |
| 10,000 | | |
| 2,177 | | |
| 0 | | |
| 12,177 | |
|
|
Melanie L. Healey(3) | |
| 0 | | |
| 1,656 | | |
| 0 | | |
| 1,656 | |
|
|
Donald R. Knauss(3) | |
| 0 | | |
| 2,177 | | |
| 0 | | |
| 2,177 | |
|
|
Monica C. Lozano(3) | |
| 0 | | |
| 592 | | |
| 0 | | |
| 592 | |
|
|
Mary E. Minnick | |
| 886 | | |
| 54,572 | | |
| 0 | | |
| 55,458 | |
|
|
Anne M. Mulcahy | |
| 7,114 | | |
| 27,927 | | |
| 23,325 | | |
| 58,366 | |
|
|
Derica W. Rice | |
| 0 | | |
| 46,371 | | |
| 0 | | |
| 46,371 | |
|
|
Kenneth L. Salazar | |
| 0 | | |
| 7,355 | | |
| 3,601 | | |
| 10,956 | |
|
|
John G. Stumpf | |
| 0 | | |
| 12,237 | | |
| 17,889 | | |
| 30,126 | |
|
|
NAMED EXECUTIVE OFFICERS | |
| | | |
| | | |
| | | |
| | |
|
|
Brian C. Cornell | |
| 68,085 | | |
| 0 | | |
| 0 | | |
| 68,085 | |
|
|
Catherine R. Smith(4) | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | |
|
|
John J. Mulligan(4) | |
| 37,431 | | |
| 6,253 | | |
| 222,636 | | |
| 266,320 | |
|
|
Michael E. McNamara(4) | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | |
|
|
Jeffrey J. Jones II | |
| 18,475 | | |
| 0 | | |
| 152,064 | | |
| 170,539 | |
|
|
Timothy R. Baer | |
| 16,396 | | |
| 2,913 | | |
| 387,665 | | |
| 406,974 | |
|
|
ALL CURRENT DIRECTORS AND EXECUTIVE OFFICERS | |
| | | |
| | | |
| | | |
| | |
|
|
As a group (24 persons) | |
| 191,234 | (5) | |
| 223,556 | | |
| 1,061,800 | | |
| 1,476,590 | |
|
|
| |
| | | |
| | | |
| | | |
| | |
|
(1) |
Includes shares of
common stock that the named individuals may acquire on or before May 29, 2016 pursuant to the conversion of vested RSUs into
common stock. |
|
|
(2) |
All directors and
executive officers as a group own less than 1% of Target’s outstanding common stock. The persons listed have sole voting
and investment power with respect to the shares listed. |
|
|
(3) |
Mr. Edwards and Mr.
Knauss joined the Board on August 12, 2015. Ms. Healey joined the Board on November 11, 2015. Ms. Lozano joined the Board
on March 9, 2016. |
|
|
(4) |
Ms. Smith became Executive
Vice President & Chief Financial Officer on September 1, 2015. Mr. McNamara became Executive Vice President & Chief
Information Officer on June 3, 2015. |
|
|
(5) |
Includes shares of
common stock owned by executive officers in the Target 401(k) Plan as of March 30, 2016. |
2016 Proxy Statement │ TARGET CORPORATION 29
BENEFICIAL
OWNERSHIP OF TARGET’S LARGEST SHAREHOLDERS
The following table includes certain information about each person
or entity known to us to be the beneficial owner of more than five percent of our common stock:
|
|
|
|
|
|
|
|
|
|
|
NUMBER OF |
|
|
|
|
|
|
COMMON SHARES |
|
|
|
|
|
NAME AND ADDRESS |
BENEFICIALLY |
PERCENT OF |
|
|
|
OF
>5% BENEFICIAL OWNER |
OWNED |
CLASS(1) |
|
|
|
State Street Corporation |
|
53,329,159(2) |
|
|
8.9% |
|
|
|
One Lincoln Street |
|
|
|
|
|
|
|
|
Boston, Massachusetts 02111 |
|
|
|
|
|
|
|
|
The Vanguard Group |
|
40,375,582(3) |
|
|
6.8% |
|
|
|
100 Vanguard Boulevard |
|
|
|
|
|
|
|
|
Malvern, Pennsylvania 19355 |
|
|
|
|
|
|
|
|
BlackRock, Inc. |
|
35,549,107(4) |
|
|
6.0% |
|
|
|
55 East 52nd Street |
|
|
|
|
|
|
|
|
New York, New York 10055 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Based on shares outstanding
on March 30, 2016. |
|
|
(2) |
State Street Corporation (State Street)
reported its direct and indirect beneficial ownership in various fiduciary capacities (including as trustee under Target’s
401(k) Plan) on a Schedule 13G filed with the SEC on February 16, 2016. The filing indicates that as of December 31, 2015,
State Street had sole voting power for 0 shares, shared voting power for 53,329,159 shares, sole dispositive power for 0 shares
and shared dispositive power for 53,329,159 shares. |
|
|
(3) |
The Vanguard Group (Vanguard) reported
its direct and indirect beneficial ownership on a Schedule 13G/A filed with the SEC on February 11, 2016. The filing indicates
that as of December 31, 2015, Vanguard had sole voting power for 1,143,469 shares, shared voting power for 60,900 shares,
sole dispositive power for 39,182,855 shares and shared dispositive power for 1,192,727 shares. |
|
|
(4) |
BlackRock, Inc. (BlackRock) reported
its direct and indirect beneficial ownership on a Schedule 13G/A filed with the SEC on February 10, 2016. The filing indicates
that as of December 31, 2015, BlackRock had sole voting power for 29,974,267 shares, shared voting power for 21,834 shares,
sole dispositive power for 35,527,273 shares and shared dispositive power for 21,834 shares. |
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. Based solely on review of reports furnished
to us and written representations that no other reports were required during the fiscal year ended January 30, 2016, all Section
16(a) filing requirements were met.
2016 Proxy Statement │ TARGET CORPORATION 30
HUMAN RESOURCES AND COMPENSATION COMMITTEE REPORT
The Human Resources and Compensation Committee has reviewed and
discussed the following Compensation Discussion and Analysis with management. Based on this review and discussion, the Human Resources
and 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.
HUMAN RESOURCES
AND COMPENSATION COMMITTEE(1)
Anne M. Mulcahy, Chair
Douglas M. Baker, Jr.
Calvin Darden
Henrique De Castro
Donald R. Knauss
(1) |
Ms. Healey joined
the Human Resources and Compensation Committee following the preparation of this report. |
COMPENSATION DISCUSSION AND ANALYSIS
INTRODUCTION
This Compensation Discussion and Analysis (CD&A) focuses on
how our Named Executive Officers (NEOs) were compensated for fiscal 2015 (February 1, 2015 through January 30, 2016) and how their
fiscal 2015 compensation aligns with our pay for performance philosophy.
For fiscal 2015, our NEOs were:
|
|
|
|
|
NAME |
PRINCIPAL POSITION |
|
|
Brian C. Cornell |
Chairman & Chief Executive Officer |
|
|
Catherine R. Smith |
Executive Vice President & Chief Financial Officer |
|
|
John J. Mulligan |
Executive Vice President & Chief Operating Officer |
|
|
Michael E. McNamara |
Executive Vice President & Chief Information Officer |
|
|
Jeffrey J. Jones II |
Executive Vice President & Chief Marketing Officer |
|
|
Timothy R. Baer |
Executive Vice President, Chief Legal Officer & Corporate Secretary |
|
|
|
|
|
On June 3, 2015, Mr. McNamara joined Target as Executive Vice
President and Chief Information Officer. On September 1, 2015, Mr. Mulligan assumed the newly created role of Executive Vice President
and Chief Operating Officer and Ms. Smith replaced Mr. Mulligan as Executive Vice President and Chief Financial Officer.
Our CD&A is divided into the following sections:
|
• |
Executive Summary |
|
|
|
|
• |
Our Performance Framework for Executive
Compensation |
|
|
|
|
• |
Other Benefit Elements |
|
|
|
|
• |
Compensation Governance |
2016 Proxy Statement │ TARGET CORPORATION 31
EXECUTIVE
SUMMARY
Executing on our Strategy
Over the past year, we delivered on the sales and profit goals
we laid out at the beginning of the year. Traffic increased in all four quarters of fiscal 2015 and our signature categories of
Style, Baby, Kids, and Wellness led our growth. Along with sales growth, we delivered year-over-year gross margin and selling,
general, and administrative expense improvement. We delivered $4.69 of adjusted EPS this year, more than 11% higher than 2014,
which is on track to deliver longer term financial goals. Excluding the gain on the sale of our pharmacy business, we generated
a very healthy after-tax ROIC of 13.9% for the year, up well over a percentage point from 2014.
This year’s results demonstrate that we are focused on the
right strategic priorities on behalf of our guests. We have created a stronger foundation and have a talented and agile team aligned
around a focused set of key enterprise priorities. Throughout the CD&A we provide examples of how our executive compensation
programs align with our overall performance and strategic priorities. Our incentives, which comprise the majority of our NEOs’
compensation packages, are comprised of a well-balanced portfolio of distinct performance metrics. These metrics are centered on
profitable growth in both the short-term and long-term incentive plans to encourage focus on sustained and holistic overall company
performance.
Shareholder Support for our 2015 Advisory Vote on Executive
Compensation
At our June 2015 annual meeting of shareholders, shareholders
approved our Say on Pay proposal in support of our executive compensation program by 96.6%, a significant improvement over the
prior year. We believe open dialogue with our shareholders and reflecting their feedback in our compensation decisions has been
instrumental in obtaining shareholder support.
Shareholder Outreach
As discussed on page 16, we regularly engage in outreach efforts
with our shareholders, both large and small, and involve one or more independent directors in these conversations as appropriate.
Prior to the June 2015 Say on Pay vote, these engagements focused on key strategic initiatives announced by our CEO, as well as
our decision to exit the Canadian market and the impact that the associated write-offs would have on our executive officers’
compensation. Shareholder feedback gained from these discussions informed key compensation decisions made during the March 2015
Human Resources and Compensation Committee meeting, resulting in a special one-time grant of Strategic Alignment Awards to executive
officers. The rationale for these grants was explained in our prior year’s CD&A. Due to the March 2015 grant date of
these awards (which falls in our fiscal 2015), the value of these awards is reported in the Summary Compensation Table in this
year’s proxy statement.
Since the 2015 Say on Pay vote in which 96.6% of shareholder votes
cast were in support, our outreach efforts included a business and governance update on the addition of new directors, our
refresh of leadership roles to execute strategy, how our reshaped strategy has led to improving performance, and a discussion of
our continued commitment to sound governance and compensation practices. In the course of these engagements we have received positive
feedback on the current design of our executive compensation program. Accordingly, there have been no significant changes in the
program design in 2015. We value the feedback provided by our shareholders and look forward to continued, open dialogue on compensation
matters and other issues relevant to our business.
The Board’s overarching goal is to deliver on our pay for
performance philosophy by offering compensation programs that support our strategy, incent strong results, attract and retain a
premier management team, and are supported by shareholders.
2016 Proxy Statement │ TARGET CORPORATION 32
Summary of Key Compensation Decisions Made in Fiscal 2015
|
|
|
|
|
|
|
TOPIC |
DESCRIPTION |
|
MORE
INFORMATION |
|
|
Forfeited Incentives |
As described in the CD&A for last year’s Annual
Meeting of Shareholders, the Board’s decision to discontinue Canadian operations resulted in a write-off in 2014
that, due to not meeting the minimum performance threshold in fiscal 2014 required to provide tax deductibility, caused
the forfeiture of a substantial portion of outstanding incentives, including:
•
Three years of PSU awards, the January 2014 PBRSU award and the 2014 short-term incentive plan (STIP) for executive
officers
• $4.7
million of Mr. Cornell’s 2014 at-goal pro-rata incentives
|
|
|
|
|
Strategic Alignment Awards |
As described in last year’s CD&A, Strategic Alignment Awards
were granted in March 2015 to connect the management team’s pay with performance in achieving goals designed to reposition
Target and drive long-term growth consistent with our key priorities. The awards were granted off-cycle to consider this
matter in the context of Target’s full year financial performance (including the impact of our Canadian exit), as well
as to gain input from shareholders in advance of making the awards. These shareholder conversations, which represented over
40% of shares voted, informed our decision to grant these awards. |
|
|
|
|
Fiscal 2015 STIP Payouts |
For fiscal 2015, the financial metrics within our short-term incentive
plan delivered at-goal performance, resulting in 100% payout for the financial component. |
|
|
|
|
Fiscal 2016 STIP Change |
Beginning in fiscal 2016, we replaced the personal performance component
of the non-CEO NEOs’ STIP with a team scorecard to encourage alignment around strategy, collective goals and greater
objectivity in this portion of the annual incentive program. Along with this change, we increased the weight of the financial
component from 67% at-goal to 80% at-goal. |
|
|
|
|
NEO New Hire Compensation |
As part of the offers given to Mr. McNamara and Ms. Smith to join Target,
the Human Resources and Compensation Committee approved sign-on bonuses and pro-rata equity grants consisting of PSUs and
PBRSUs on terms consistent with the awards granted to Target’s other executive officers in January 2015, as well as
Strategic Alignment Awards consistent with those granted to Target’s other executive officers in March 2015. |
|
|
|
|
Perquisite Changes |
As part of the Human Resources and Compensation Committee’s annual
assessment of perquisites, automobile and automobile allowances were eliminated from executive officer perquisites starting
in fiscal 2016. |
|
|
|
|
|
|
|
|
|
Pay for Performance
We provide our NEOs a mix of base salary, short-term and long-term
incentives with compensation opportunities measured by a variety of time horizons to balance our near-term and long-term strategic
goals.
Our incentive award payouts align with our financial performance.
|
• |
For fiscal 2015, the financial metrics within our short-term
incentive plan delivered at-goal performance, resulting in 100% payout for the financial component. This was the first payout
under the financial component of our short-term incentive plan since fiscal 2012. |
|
|
|
|
• |
100% of our annual long-term incentive (LTI) program features performance-based
metrics and is tied to relative performance versus our retail peers. |
|
|
|
|
• |
Our PSU awards for the 2012-2014, 2013-2015 and 2014-2016 performance periods
were forfeited entirely, as described under “Long-Term Incentives” beginning on page 40. |
The charts below illustrate actual payouts, as a percentage of
goal, over the last five years for our STIP and PSU plans. PSU awards and the financial component of STIP made up more than 67%
of at-goal annual total direct compensation (TDC) for our NEOs in fiscal 2015.
|
STIP Financial Component Performance |
|
PSU Awards Payouts |
|
|
|
|
|
|
|
|
2016 Proxy
Statement │ TARGET
CORPORATION 33
Target’s Executive Compensation Practices
The following practices and policies ensure alignment of interests
between shareholders and executives, and effective ongoing compensation governance.
|
|
|
|
|
|
|
|
COMPENSATION
PRACTICE |
TARGET POLICY |
|
MORE
INFORMATION |
|
|
Pay
for Performance |
YES | |
A significant percentage of the total direct compensation
package features performance-based metrics, including 100% of our annual LTI. |
|
|
|
|
Robust
Stock Ownership Guidelines |
YES | |
We
have stock ownership guidelines for executive officers of 7x base salary for CEO, 3x base salary for non-CEO executive
officers and $270,000 for directors. |
|
|
|
|
Annual
Shareholder “Say on Pay” |
YES | |
We
value our shareholders’ input on our executive compensation programs. Our Board of Directors seeks an annual
non-binding advisory vote from shareholders to approve the executive compensation
disclosed in our CD&A, tabular disclosures and related narrative of this proxy statement. |
|
|
|
|
Double
Trigger Change-in-Control |
YES | |
We grant equity awards that require both a change-in-control
and an involuntary termination or voluntary termination with good reason before vesting. |
|
|
|
|
Annual
Compensation Risk Assessment |
YES | |
A risk assessment of our compensation programs
is performed on an annual basis. |
|
|
|
|
Clawback
Policy |
YES | |
Our policy allows recovery of incentive cash and
equity compensation if it is earned based on inaccurate financial statements. |
|
|
|
|
Independent
Compensation Consultant |
YES | |
The Human Resources and Compensation Committee
retains an independent compensation consultant to advise on the executive compensation program and practices. |
|
|
|
|
Hedging
of Company Stock |
NO | |
Executive officers and members of the Board of
Directors may not directly or indirectly engage in transactions intended to hedge or offset the market value of Target common
stock owned by them. |
|
|
|
|
Pledging
of Company Stock |
NO | |
Executive
officers and members of the Board of Directors may not directly or indirectly pledge Target common stock as collateral for any obligation. |
|
|
|
|
Tax
Gross-Ups |
NO | |
We do not provide tax gross-ups to our executive
officers. |
|
|
|
|
Dividends on Unearned Performance Awards |
NO | |
We do not pay dividends on unearned performance
awards. |
|
|
|
|
Repricing or Exchange of Underwater Stock Options |
NO | |
Our
equity incentive plan does not permit repricing or exchange of underwater stock options without shareholder approval. |
|
|
|
|
Employment
Contracts |
NO | |
None of our current Named Executive Officers has
an employment contract. |
|
|
|
|
|
|
|
|
|
|
2016
Proxy Statement │ TARGET CORPORATION 34
Performance Highlights
The following highlights show our historical performance on key
metrics over each of the last five years and provide a back-drop for both our compensation outcomes and decisions. Variations
of each respective metric are present in our executive compensation elements. Our precise metrics and results are described in
more detail in the narratives for each compensation element.
Total Adjusted
Sales(2)
(in millions) |
|
Digital Channel
Sales Growth |
|
|
|
|
|
|
|
|
|
Adjusted Earnings Per Share
(EPS)
from Continuing Operations(3) |
|
After-Tax Return on Invested
Capital (ROIC)
from Continuing Operations(4) |
|
|
|
|
|
|
Total Shareholder Return (TSR)
(1) |
2012 reflects a 53-week accounting year. |
(2) |
Total Adjusted Sales excludes pharmacy sales for comparison purposes, due
to the sale of the pharmacy business to CVS at the end of fiscal 2015. A reconciliation of Total Adjusted Sales to GAAP consolidated
sales is provided in Appendix A. |
(3) |
A reconciliation of Adjusted EPS from Continuing Operations to GAAP EPS
from Continuing Operations is provided in Appendix A. |
(4) |
After-Tax ROIC from Continuing Operations is a ratio based on GAAP information,
with the exception of adjustments made to capitalize operating leases. A reconciliation of After-Tax ROIC from Continuing
Operations is provided in Appendix A. For 2015, the After-Tax ROIC from Continuing Operations for the trailing twelve months
ended January 30, 2016 was 16.0%, but was 13.9% excluding the net gain on the sale of our pharmacy and clinic businesses. |
The Board and management team have demonstrated a strong commitment
to returning capital to shareholders over the past five fiscal years.
2016
Proxy Statement │ TARGET CORPORATION 35
OUR
PERFORMANCE FRAMEWORK FOR EXECUTIVE COMPENSATION
Our compensation programs are structured to align the interests
of our executive officers with the interests of our shareholders and support our strategy. 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.
CEO PAY MIX(1) |
OTHER NEOs PAY MIX(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance-Based |
90% |
|
|
|
Performance-Based |
84% |
|
|
|
|
|
|
|
|
|
|
(1) |
Represents annual at-goal TDC, which includes: (a) base salary
levels approved for that year, (b) STIP opportunity at-goal for performance for that year, and (c) annual LTI awards representing
the aggregate grant date fair value of awards granted in January 2016. For this purpose, TDC excludes items shown under “Change
in Pension Value and Nonqualified Deferred Compensation Earnings”, “All Other Compensation”, and the one-time
Strategic Alignment Awards included in “Stock Awards” in the Summary Compensation Table. |
|
|
|
|
How Annual CEO Pay is Tied to Performance |
|
|
|
|
The following pay elements are performance-based and represent
a significant percentage of the total direct compensation package. |
|
|
|
|
• |
STIP
– Payouts range from 50% to 200% of goal when performance levels are at or between 5% below and 5% above goal, respectively. |
|
|
|
|
• |
PSUs –
Payouts range from 0% to 175% of goal depending on our performance relative to our retail peer group. |
|
|
|
|
• |
PBRSUs –
Payouts range from 75% to 125% of goal depending on TSR performance relative to our retail peer group. |
2016
Proxy Statement │ TARGET CORPORATION 36
Elements of Fiscal 2015 Executive Total Direct Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ELEMENT |
|
KEY
CHARACTERISTICS |
|
LINK TO
SHAREHOLDER
VALUE |
|
HOW WE DETERMINE
AMOUNT |
|
KEY
DECISIONS |
|
|
FIXED |
|
Base Salary |
|
Fixed compensation component payable
in cash, representing less than 20% of TDC for our NEOs. Reviewed annually and adjusted when appropriate. |
|
A means to attract and retain talented
executives capable of driving superior performance. |
|
Scope and complexity of each executive
officer’s roles, individual skills, contributions, market data and prior experience. |
|
Approved starting salaries of new CFO
and CIO in fiscal 2015. See page 42. |
|
|
PERFORMANCE-
BASED |
|
Short-Term Incentives |
|
Variable compensation component payable
in cash based on performance against annually established financial goals and assessment of individual performance
(excluding CEO). |
|
Incentive
targets are tied to achievement of key annual financial measures.
NEOs other than the
CEO are also evaluated on subjective criteria intended to foster achievement of strategic goals.
Our CEO’s STIP is exclusively tied to financial
measures.
|
|
Financial
component of award based on:
-
Earnings Before Interest and Taxes (Incentive EBIT)
- Sales
Personal scores are based on critical factors upon
which we believe leadership and performance should be assessed, but which are not quantifiable. We do not use a personal
score in our CEO’s STIP.
|
|
To
reinforce the importance of profitable growth, for fiscal 2015, we added sales as a metric.
For fiscal 2015, the financial component of our STIP achieved
at-goal performance, resulting in 100% payout.
Beginning in fiscal 2016, we will replace the personal
performance component of NEO STIP (excluding CEO) with a team scorecard. See page 39. |
|
|
|
Performance Share Unit Awards (75%
of annual LTI grants) |
|
PSUs cliff vest three years from the
date of grant and payouts are based on relative three-year performance versus our retail peer group. |
|
PSUs
recognize our executive officers for achieving superior long-term relative performance in:
-
Market share
change
-
EPS growth
- After-tax ROIC
|
|
Grant
award levels based on individual performance, potential future contributions, historical
grant amounts, retention considerations and market data.
Actual award payout based on change in market share, EPS
compound annual growth, and ROIC performance versus retail peer group over the three-year performance period. |
|
As discussed on page 41, we did not
meet the 162(m) threshold for fiscal 2014, effectively cancelling the fiscal 2012-2014, 2013-2015, and 2014-2016 PSU awards. |
|
|
|
Performance-Based Restricted Stock
Unit Awards (25% of annual LTI grants) |
|
PBRSUs cliff vest three years from the
date of grant with the number of shares based on relative three-year TSR performance versus our retail peer group. |
|
Fosters a culture of ownership, aligns
the long-term interests of Target’s executive officers with our shareholders and rewards or penalizes based on relative
TSR performance. |
|
Grant awards based on individual performance,
historical grant amounts, retention considerations and market data. |
|
As discussed on page 41, we did not
meet the 162(m) threshold for fiscal 2014, effectively cancelling the fiscal 2014-2016 PBRSU award. |
|
|
|
Strategic Alignment Awards (one-time
grant) |
|
Grants are one-time in nature and are
based on performance against four strategic metrics identified as vital to Target’s short- and long-term success by
senior management and the Board. These grants have a two-year performance period, are settled in stock and are included in
this year’s Summary Compensation Table. |
|
Designed to connect pay with performance
in achieving goals designed to re-position Target and drive long-term growth. |
|
Payout
of these awards is based on the following metrics:
- Total Sales
Growth
- Digital Channel
Sales Growth
- EBIT Growth
- ROIC Modifier
|
|
As disclosed in last year’s CD&A,
these one-time awards were made during fiscal 2015. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 Proxy Statement │ TARGET CORPORATION 37
Base Salary
We provide base salary as a means to provide a stable amount of
cash compensation to our executive officers. In alignment with our pay for performance philosophy, it represents the smallest portion
of TDC. The Human Resources and Compensation Committee approved starting salaries for Mr. McNamara and Ms. Smith in fiscal 2015
in connection with them joining Target as Executive Vice President and Chief Information Officer and Executive Vice President and
Chief Financial Officer, respectively.
In January 2015, the Human Resources and Compensation Committee
approved a fiscal 2015 base salary increase of $25,000 for Mr. Jones for his leadership in advancing our brand.
Short-Term Incentives
All NEOs are eligible to earn cash awards under our STIP program,
which is designed to motivate and reward executives for performance on key annual measures. For fiscal 2015, STIP metrics included
Incentive EBIT and Sales.
Fiscal 2015 Performance Metrics
Our STIP program for fiscal 2015 was based on two financial metrics
to align our annual incentives with our strategy of driving growth, with an emphasis on profitability:
• |
Incentive EBIT.
Incentive EBIT represented 75% of the financial component of the STIP payout, an increase from 50% in fiscal 2014. |
|
|
• |
Sales. Beginning
in fiscal 2015, sales was introduced to complement Incentive EBIT with a weighting of 25% at-goal of the financial component
of the STIP payout to align with our strategy of driving growth. Prior to fiscal 2015, we used Economic Value Added as the
second financial metric under the STIP. |
In addition, fiscal 2015 is the last year we utilized the personal
component under our STIP. For all NEOs other than the CEO, personal performance payments correspond to a predetermined percentage
of base salary tied to a payout matrix for each personal performance review score. The maximum personal performance payout is equal
to 46.7% of base salary. Review scores are a subjective element within our mix of variable compensation elements to recognize the
critical factors upon which we believe leadership and performance should be assessed, but which are not quantifiable, including:
enterprise leadership, the development of a high performing and diverse team, a strong commitment to high ethical standards, and
the achievement of strategic goals and objectives for the year.
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
salary. The tables are not substitutes for the information disclosed in the Grants of Plan-Based Awards in Fiscal 2015 table located
on page 50.
|
|
|
|
|
|
|
|
|
Illustrative Payouts for our CEO (as a % of base salary) |
|
|
|
|
|
|
|
|
PERFORMANCE LEVEL |
|
|
|
|
5%
BELOW GOAL |
GOAL |
5%
ABOVE GOAL |
|
|
|
Financial Component
(75% Incentive EBIT, 25% Sales) |
|
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
(75% Incentive EBIT, 25% Sales) |
|
20% |
53% |
120% |
|
|
|
Personal Performance Component |
|
20% |
27% |
40% |
|
|
|
Total |
|
40% |
80% |
160% |
|
|
|
|
|
|
|
|
|
|
(1) |
Reflects financial performance at 5% below goal and “effective” personal performance. |
(2) |
Reflects financial performance at-goal and “excellent” personal performance. |
(3) |
Reflects financial performance at 5% above goal and “outstanding” personal performance. |
2016 Proxy Statement │ TARGET CORPORATION 38
Fiscal 2015 Performance Goals and How We
Performed in Comparison to These Goals
The fiscal STIP goals were reviewed, discussed and approved by
the Board at the beginning of the year. When approving these goals, the Board takes into account our business strategies, the economic
environment and how the annual goal aligns with our long-range plan.
Historically, our STIP goals have proven challenging, with 0%
payouts for the Financial Component of STIP for both fiscal 2013 and fiscal 2014.
With respect to fiscal 2015, Incentive EBIT and Sales goals represented
a year-over-year increase in Incentive EBIT of 8.5% and Sales growth of 2.4%, respectively. For context, an 8.5% increase needed
for an at-goal payout for Incentive EBIT is higher than any actual year-over-year increase since 2010. Similarly, the 2.4% sales
increase needed for an at-goal payout for Sales is higher than any actual year-over-year increase since 2012.
|
| |
| |
| |
| |
| |
|
|
|
METRIC | |
GOAL(1) | |
ACTUAL(1) | |
PERFORMANCE
RESULT(2) | |
WEIGHT | |
TOTAL
PAYOUT(2) |
|
|
Incentive
EBIT | |
$ | 5,352 | | |
$ | 5,353 | | |
| 100 | % | |
| 75 | % | |
| 100 | % |
|
|
STIP
Sales | |
$ | 74,359 | | |
$ | 74,339 | | |
| 99.9 | % | |
| 25 | % | |
|
|
|
| |
| | | |
| | | |
| | | |
| | | |
| | |
|
(1) |
In millions. |
(2) |
Expressed as a percentage of goal. |
Incentive EBIT is EBIT for our single business segment, as determined
under GAAP, but it excludes incentive expense. In other words, it represents EBIT on a pre-incentive compensation expense basis.
Effective December 16, 2015, CVS Pharmacy, Inc. (CVS) acquired
Target’s pharmacy and clinic businesses. Because the original goal level of sales assumed that we would have a full year
of pharmacy and clinic sales, for purposes of the STIP, the actual sales results were adjusted to include the sales lost to CVS
from the effective date of the transaction through the end of the fiscal year to ensure consistent comparison with the sales goal
set. Incentive EBIT results were unaffected by the transaction.
Fiscal 2016 STIP Design
Beginning in fiscal 2016, we replaced the personal performance
component of the other NEOs’ STIP with a team scorecard. In tandem, we increased the weight of the financial component
from 67% at-goal to 80% at-goal. Our CEO’s STIP remains exclusively tied to Financial Performance.
|
|
|
|
|
|
2015 |
|
2016 |
|
|
Financial Performance
67% at-goal
•
Incentive EBIT (75% weight)
•
Sales (25% weight)
|
|
Financial Performance
80% at-goal
•
Incentive EBIT (75% weight)
•
Sales (25% weight)
|
|
|
Personal Performance
33% at-goal
|
|
Team Scorecard
20% at-goal
|
|
|
|
|
|
|
|
|
|
|
|
2016 Proxy Statement │ TARGET CORPORATION 39
In order to align our executive officers with our announced strategy
and initiatives, team scorecard performance will be based on progress made toward strategic priorities. The Human Resources and
Compensation Committee approved this change to address shareholder and proxy advisor feedback to enhance transparency of the plan,
to focus the management team around common results, and to increase the overall financial orientation of the program.
Additional detail regarding this new component will be described
in relation to fiscal 2016 STIP payouts in next year’s proxy statement.
Long-Term Incentives
To align our executive officers’ pay outcomes with long-term
performance, 100% of our annual LTI grant features performance-based metrics and comprises the majority of each NEO’s total
compensation.
Value of LTI Awarded at Grant
In determining the amount of individual LTI awards, the Human
Resources and Compensation Committee considered each NEO’s performance during the fiscal year, potential future contributions,
historical annual grant amounts and retention considerations, as well as market data for comparable executives from our retail
and general industry peer groups. The annual LTI grants are made in January of each year (the last month of our fiscal year) to
allow the Committee to include an assessment of our financial performance in determining grant levels.
The Human Resources and Compensation Committee made two changes
to the NEOs’ annual LTI grants versus the prior year. Mr. Cornell’s LTI grant date present value was increased by $500,000.
The grant date present value of this award was used to position Mr. Cornell’s at-goal TDC at roughly the median of our combined
retail and general industry peer groups. In addition, Mr. Mulligan’s LTI grant date present value was increased by $1.5 million
for assuming additional responsibilities in connection with his new role as Chief Operating Officer.
Mix of LTI
Once the total annual grant date present value for a NEO is determined,
the Human Resources and Compensation Committee grants 75% of this value in PSUs and 25% in PBRSUs. Under this approach, strong
long-term performance relative to peers on critical metrics becomes the key driver of compensation realized by executive officers.
PSUs
Our PSUs have a three-year performance period and are settled
in stock. The plan payout is intended to reflect the same key metrics we use to manage our business and drive shareholder returns
over time. Each metric is compared relative to our retail peer group. The three relative metrics used in our PSU plan are:
• |
Change in Market Share.
A company’s change in market share is calculated by determining the difference between (b) and (a) and dividing that
difference by (a). The “market” is the sum of domestic net sales for us and our retail peer group. |
|
|
|
(a) |
The company’s domestic net sales in the baseline year is divided by the market’s domestic net sales for the baseline year. |
|
|
|
|
(b) |
The company’s domestic net sales in the final year of the performance period is divided by the market’s domestic net sales for the final year. |
|
|
|
• |
EPS Growth. The compound
annual growth rate of our EPS from continuing operations versus the reported EPS from continuing operations of our retail
peer group. |
|
|
• |
After-Tax ROIC. Three-year
average net operating profit after-tax (NOPAT) divided by average invested capital for both our results and our retail peer
group, excluding discontinued operations. |
With these three independent metrics, our PSU program supports
the critical drivers of our success: to grow top-line relative to the retail sector, to grow it profitably, and to ensure prudent
deployment of capital to drive the business.
As described on page 39, we sold our pharmacy and clinic businesses
to CVS in December of 2015. The Change in Market Share and EPS Growth metrics described above will use fiscal 2015 as the baseline
year from which we will compare our performance with our retail peer group over the next three years. To normalize our results
for the absence of the pharmacy and clinic businesses over the three-year performance period, our baseline fiscal 2015 results
will exclude both the pharmacy and clinic sales for all of fiscal 2015, as well as the one-time gain that was recognized on the
sale of this business to CVS.
2016 Proxy Statement │ TARGET CORPORATION 40
The following example illustrates PSU payouts at various levels
of performance:
For more information about our peer groups, see pages 44-45.
2013-2015 PSU Payout
We did not achieve our 162(m) threshold for fiscal 2014 required
to earn the 2013-2015 PSU payout. In addition, the 2012-2014 and 2014-2016 PSU award cycles were also forfeited.
PBRSUs
In January 2016, the Human Resources and Compensation Committee
granted PBRSU awards in connection with fiscal 2015 performance. The PBRSU amount will be adjusted up or down by 25 percentage
points if Target’s TSR is in the top one-third or bottom one-third for the retail peer group, respectively, over the three-year
vesting period. These stock-settled awards cliff vest three years from the date of grant.
|
|
|
|
PBRSU
Payout Schedule |
|
|
TSR
PERFORMANCE RANKING(1) |
PERCENT
OF GOAL |
|
|
1-6 |
125% |
|
|
7-12 |
100% |
|
|
13-18 |
75% |
|
|
|
|
|
(1) |
The retail peers for PBRSUs exclude Publix. The value of Publix’s
stock price is established on an annual basis, making them an inappropriate comparator for the purpose of assessing our relative
TSR performance. |
We did not achieve our 162(m) threshold for fiscal 2014 required
to earn a payout for the 2014-2016 PBRSU performance period, so the PBRSUs for that performance period were forfeited.
2016 Proxy Statement │ TARGET CORPORATION 41
Strategic Alignment Awards
Strategic Alignment Awards were granted in March 2015, recognizing
a change in leadership and a refocused strategy following the exit from Canada. Payout of these awards is based on important absolute
metrics, each selected to drive focused outcomes that complement the relative performance metrics in our annual LTI awards. The
payouts up to 150% of goal will be assessed based on three core metrics, as outlined below, with an additional ability to earn
up to 200% of goal payout with an after-tax ROIC modifier.
|
|
|
|
|
|
|
|
METRIC |
|
IMPORTANCE |
|
PERFORMANCE
GOALS |
|
|
Total Sales Growth |
|
Drive sales through a focus on signature categories,
increased personalization, and localization |
|
Goal: 3% Compound Annual Growth Rate (CAGR)
Maximum: 4.5% CAGR No payout for 0% CAGR |
|
|
Digital Channel Sales Growth |
|
Continued focus on omnichannel strategy that enables
our guests to engage with Target anywhere, anytime |
|
Goal: 30% CAGR
Maximum: 45% CAGR
No payout for 0%
CAGR |
|
|
Earnings Before Interest and Taxes (EBIT) Growth |
|
Ensure that we are growing sales profitably, and optimizing expenses to
fuel this profitable growth |
|
Goal: increase Segment EBIT by $500 million (2016
v. 2014), surpassing all time high EBIT performance
Maximum: $750 million increase
No payout for $0 increase |
|
|
Return on Invested Capital Modifier |
|
Invest smartly in our business, effectively allocating capital to drive
profit |
|
To earn additional upside, requires at least 13.75%
for fiscal 2016, representing the highest in recent history at the time they were granted |
|
|
|
|
|
|
|
|
In March 2015, the Human Resources and Compensation Committee
and the independent members of the Board approved Strategic Alignment Awards for our active executive officers at that time. As
described in last year’s CD&A, Strategic Alignment Awards were granted in March 2015 to connect the management team’s
pay with its performance in achieving goals designed to re-position Target and drive long-term growth consistent with our key
priorities. The awards were in addition to annual LTI grants, and were granted off-cycle to allow the Human Resources and Compensation
Committee and full Board to carefully consider this matter in the context of Target’s full year financial performance, as
well as to gain input from shareholders in advance of making the awards. In addition to aligning pay with performance, the Human
Resources and Compensation Committee considered the overall retentive value of the awards in a key time of transition.
Based on our extensive dialogue with shareholders on this matter,
we proactively disclosed detailed information about these awards throughout last year’s CD&A; however, the grant date
fair values appear in the compensation tables of this proxy statement since they were granted in fiscal 2015. Accordingly, the
Stock Awards column of the Summary Compensation Table on page 47 includes the grant date fair values for the Strategic Alignment
Awards and annual LTI grants made in January 2016.
Specifically, in March 2015, our
active NEOs received these performance-based awards with grant date present values as follows: Mr. Cornell – $3.75
million, Mr. Mulligan – $3 million, Mr. Jones – $2.85 million, and Mr. Baer – $2.5 million. Strategic
Alignment Awards were also granted as sign-on compensation to Mr. McNamara – $2.5 million in June 2015, and Ms. Smith
– $1 million in September 2015, to align the management team around these common goals.
The grants are based on performance, have a two-year performance
period and are settled in stock. The two-year performance period and performance metrics are explicitly designed to align with
timing and metrics that drive the transformational plan set by our CEO and Board that was announced in March 2015. A two-year
performance period bolsters the performance-based nature of our executive pay program as all other outstanding LTI with active
performance metrics at the time of grant did not vest until 2018.
The Strategic Alignment Awards are forfeited if termination occurs
prior to the conclusion of the performance period, except in the event of death and disability.
Competitive Sign-On Compensation Related to New Hires
On June 3, 2015, Mr. McNamara joined Target as Executive Vice
President and Chief Information Officer. To attract Mr. McNamara to Target, he received a sign-on bonus of $750,000, pro-rata
equity grants consisting of PSUs and PBRSUs valued at $2.2 million and a Strategic Alignment Award valued at $2.5 million.
On September 1, 2015, Ms. Smith joined Target as Executive Vice
President and Chief Financial Officer. To attract Ms. Smith to Target, she received a sign-on bonus of $500,000, pro-rata
equity grants consisting of PSUs and PBRSUs valued at $1.4 million and a Strategic Alignment Award valued at $1 million.
Sign-on compensation for Mr. McNamara and Ms. Smith is reflective
of their respective significant retail experiences and was designed to orient a meaningful portion of their compensation to common
goals shared by the other NEOs on terms consistent with the awards granted to Target’s other executive officers in January
2015 and the Strategic Alignment Awards granted in March 2015. Mr. McNamara and Ms. Smith also received relocation benefits.
2016 Proxy Statement │ TARGET CORPORATION 42
OTHER
BENEFIT ELEMENTS
We offer other benefit components designed to encourage retention
of key talent including:
• |
Pension plan. No pension plan is available to any employee
hired after January 2009. We maintain a pension plan for team members hired prior to January 2009 who meet certain eligibility
criteria. We also maintain supplemental pension plans for those team members who are subject to IRS limits on the basic pension
plan or whose pensions are adversely impacted by participating in our deferred compensation plan. Our pension formula under
these plans is the same for all participants—there are no enhanced benefits provided to executive officers beyond extending
the pension formula to earnings above the qualified plan limits. |
|
|
• |
401(k) plan. Available to all team members who work more than 1,000
hours for the company. There is no enhanced benefit for executives. |
|
|
• |
Deferred compensation plan. For a broad management group (approximately
3,500 eligible team members), we offer a non-qualified, unfunded, individual account deferred compensation plan. The plan
has investment options that mirror our 401(k) plan. |
|
|
• |
Perquisites. We provide certain perquisites to
our executive officers, principally to allow them to devote more time to our business and to promote their health and
safety. The Human Resources and Compensation Committee reviews these perquisites annually to ensure they are consistent
with our philosophy and appropriate in magnitude. Mr. Cornell is only eligible for perquisites that support his safety,
health and well-being — home security, parking, executive physical, exercise room access and personal use of
company-owned aircraft for security reasons. Mr. Cornell is required to reimburse Target for the incremental costs of
using company-owned aircraft for personal purposes if his personal use exceeds $175,000 per year. Mr. Cornell did not
exceed that amount in fiscal 2015. |
Greater detail on these components is provided in the tables
that follow the Summary Compensation Table on page 47.
Income Continuance
None of our NEOs has an employment contract, enhanced change-of-control
benefits or rights to tax gross-ups. We provide an Income Continuance Policy (ICP) to executive officers who are involuntarily
terminated without cause 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. In addition, any NEO who receives severance payments under our ICP also receives a $30,000
allowance for outplacement services.
COMPENSATION
GOVERNANCE
Process for Determining Executive Compensation (Including
NEOs)
Human Resources and Compensation
Committee
The Human Resources and 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 Human Resources and Compensation Committee receives assistance from two sources: (a) an independent
compensation consulting firm, Semler Brossy Consulting Group (SBCG); and (b) our internal executive compensation staff,
led by our Executive Vice President & Chief Human Resources Officer. All decisions regarding executive compensation and
final recommendations to the independent members of the full Board are made solely by the Human Resources and Compensation
Committee. The Human Resources and 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.
Human Resources and Compensation
Committee’s Independent Consultant
SBCG has been retained by and reports directly to the Human Resources
and Compensation Committee and does not have any other consulting engagements with management or Target. The Committee assessed
SBCG’s independence in light of the SEC and NYSE listing standards and determined that no conflict of interest or independence
concerns exist.
With respect to CEO compensation, SBCG provides an independent
recommendation to the Human Resources and Compensation Committee, in the form of a range of possible outcomes, for the Human Resources
and Compensation Committee’s consideration. In developing its recommendation, SBCG relies 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 CEO compensation. SBCG also provides an independent assessment of the CEO’s recommendations on NEO compensation to the
Human Resources and Compensation Committee.
2016 Proxy Statement │ TARGET CORPORATION 43
Compensation of Other Executive Officers
and Role of Management
In developing compensation
recommendations for other executive officers, the Executive Vice President and Chief Human Resources Officer provides our CEO
with market data on pay levels and compensation design practices provided by management’s external compensation
consultants, Willis Towers Watson and Hay Group, covering our retail and general industry peer group companies.
Management’s outside consultants do not have any interaction with either the Human Resources and Compensation Committee
or our CEO, but do interact with the Executive Vice President and Chief Human Resources Officer and her staff. In addition to
providing market data, management’s external compensation consultants perform other services for Target unrelated to
the determination of executive compensation.
Our Executive Vice President and Chief Human Resources Officer
and the CEO work together to develop our CEO’s compensation recommendations to the Human Resources and Compensation Committee
for other executive officers. The CEO alone is responsible for providing final compensation recommendations for the other executive
officers to the Human Resources and Compensation Committee.
Benchmarking Using Compensation Peer
Groups
Peer group market positioning is another important factor considered
in determining each executive officer’s TDC.
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 SBCG and
proprietary survey data assembled by Willis Towers Watson and Hay Group.
Due to a range of factors, including the scope of NEO positions,
tenure in role and company-specific concerns, there is an imperfect comparability of NEO positions between companies. As such,
market position served as a reference point in the TDC determination process rather than a formula-driven outcome.
100% of our annual LTI program features performance-based metrics
and is tied to relative performance versus the retail peer group. The retail peer group was formulated based on an initial screen
of companies in the Global Industry Classification Standard (GICS) retailing index with revenue from core retail operations greater
than $15 billion. The retail peer group is also used within our LTI plans. Target’s relative performance compared to this
peer group on key metrics determines overall payout for our PSU and PBRSU awards.
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. The companies included in the 2015 market comparisons are listed below.
|
|
|
|
|
|
|
|
|
2015 Peer Groups |
|
|
|
|
|
|
|
|
RETAIL |
|
GENERAL
INDUSTRY |
|
|
Amazon.com, Inc. |
|
Lowe’s Companies, Inc. |
|
3M Company |
|
Johnson Controls, Inc. |
|
|
Best Buy Co., Inc. |
|
Macy’s, Inc. |
|
Abbott Laboratories |
|
McDonald’s Corporation |
|
|
Costco Wholesale Corporation |
|
Publix Super Markets, Inc. |
|
Anthem, Inc. |
|
MetLife, Inc. |
|
|
CVS Health Corporation |
|
Rite Aid Corporation |
|
Archer-Daniels-Midland Company |
|
Mondelez International, Inc. |
|
|
Dollar General Corporation |
|
Sears Holdings Corporation |
|
The Coca-Cola Company |
|
PepsiCo, Inc. |
|
|
The Gap, Inc. |
|
Staples, Inc. |
|
Deere & Company |
|
Pfizer Inc. |
|
|
The Home Depot, Inc. |
|
The TJX Companies, Inc. |
|
The Dow Chemical Company |
|
The Procter & Gamble Company |
|
|
Kohl’s Corporation |
|
Walgreens Boots Alliance, Inc. |
|
Express Scripts Holding Company |
|
Time Warner Inc. |
|
|
The Kroger Co. |
|
Wal-Mart Stores, Inc. |
|
FedEx Corporation |
|
United Parcel Services, Inc. |
|
|
|
|
|
|
General Mills, Inc. |
|
UnitedHealth Group Incorporated |
|
|
|
|
|
|
Johnson & Johnson |
|
United Technologies Corporation |
|
|
|
|
|
|
|
|
|
|
|
2016 Proxy Statement │ TARGET CORPORATION 44
The following table summarizes our scale relative to our retail
and general industry peer groups. The financial information reflects fiscal year end data available as of January 30, 2016:
|
|
|
|
|
|
2015 Peer Group Comparison(1)(2) |
|
|
|
RETAIL |
GENERAL INDUSTRY |
|
|
|
REVENUES |
MARKET CAP |
EMPLOYEES |
REVENUES |
MARKET CAP |
EMPLOYEES |
|
|
25th Percentile |
$ |
27,316 |
$ |
8,562 |
121,000 |
$ |
32,427 |
$ |
35,384 |
54,212 |
|
|
Median |
|
36,330 |
|
20,002 |
154,100 |
|
53,886 |
|
57,044 |
96,900 |
|
|
75th Percentile |
|
96,216 |
|
72,986 |
197,000 |
|
73,735 |
|
106,680 |
162,250 |
|
|
Target Corporation |
$ |
73,785 |
$ |
41,922 |
341,000 |
$ |
73,785 |
$ |
41,922 |
341,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
All amounts in millions, except employees. |
(2) |
Data Source:
Equilar |
Shareholder Outreach
As discussed on page 16, we regularly engage in outreach efforts
with our shareholders, both large and small, relating to a variety of topics and involve one or more independent directors in
these conversations as appropriate. Compensation-related topics covered as part of these outreach efforts commonly include the
results of our most recent Say on Pay vote, the impact of our business strategies on compensation decisions, our overall compensation
framework, developments in the competitive compensation environment including third party policies on compensation practices,
and contemplated changes to our compensation practices. We use the information gathered through these outreach efforts to help
inform our compensation decisions. For example, shareholder feedback gained in 2015 informed key compensation decisions made during
the March 2015 Human Resources and Compensation Committee meeting, resulting in a special one-time grant of Strategic Alignment
Awards to executive officers. In the course of our discussions with shareholders since the 2015 Say on Pay vote, in which 96.6%
of shareholder votes were cast in support, we have received positive feedback on the current design of our compensation program.
We value the feedback provided by our shareholders and look forward to continued, open dialogue on compensation matters and other
issues relevant to our business.
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 for our employees create material risks to the company.
The results of this analysis, which concluded that our policies and practices do not create risks that are reasonably likely to
have a material adverse effect on the company, were reviewed by the Human Resources and Compensation Committee’s independent
consultant and discussed with the Human Resources and Compensation Committee. More specifically, this conclusion was based on
the following considerations:
|
|
|
|
|
COMPENSATION
RISK CONSIDERATIONS |
|
|
Pay Mix |
Compensation mix of base salary and short-term and long-term incentives
provides compensation opportunities measured by a variety of time horizons to balance our near-term and long-term strategic
goals. |
|
|
Performance Metrics |
A variety of distinct performance metrics are used in both the short-term
and long-term incentive plans. This “portfolio” approach to performance metrics encourages focus on sustained
and holistic overall company performance. |
|
|
Performance Goals |
Goals are approved by our independent directors and take into account our
historical performance, current strategic initiatives and the expected macroeconomic environment. In addition, short-term
and long-term incentive compensation programs are designed with payout curves and leverage that support our pay for performance
philosophy. |
|
|
Equity Incentives |
Equity incentive programs and stock ownership guidelines are designed to
align management and shareholder interests by providing vehicles for executive officers to accumulate and maintain an ownership
position in the company. |
|
|
Risk Mitigation Policies |
We incorporate several risk mitigation policies into our officer compensation
program, including: |
|
|
|
• The Human Resources and Compensation Committee’s ability to use “negative discretion” to determine
appropriate payouts under formula-based plans; |
|
|
|
• A clawback policy to recover incentive compensation that was based on inaccurate financial statements; |
|
|
|
• Stock ownership guidelines for executive officers and directors; and |
|
|
|
• Anti-hedging and anti-pledging policies. |
|
|
|
|
|
2016 Proxy Statement │ TARGET CORPORATION 45
Clawback Policy
Our clawback policy, which covers all officers, allows for recovery
of the following compensation elements:
|
• |
All amounts paid under the Short-Term Incentive Plan (including
any discretionary payments) that were paid with respect to any fiscal year that is restated; and |
|
|
|
|
• |
All awards under the Long-Term Incentive Plan whether exercised, vested,
unvested, or deferred. |
All demands for repayment are subject to Human Resources and
Compensation Committees 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 our consolidated financial statements.
Anti-Hedging and Anti-Pledging 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, nor may they pledge Target common stock owned by them as collateral for any loan. In compliance with this policy,
none of our executive officers or members of the Board of Directors have any hedges or pledges of Target common stock.
Grant Timing Practices
We have the following practices regarding the timing of equity
compensation grants. These practices have not been formalized in a written policy, but they are strictly observed.
|
• |
Our annual LTI grant is made on the date of our regularly scheduled
January Board of Directors meeting. These meetings are scheduled more than one year in advance. |
|
|
|
|
• |
We have no practice or policy of coordinating or timing the release of
company information around our grant dates. |
|
|
|
|
• |
On occasion we grant equity compensation outside of our annual LTI grant
cycle for new hires, promotions, recognition, retention or other purposes. If the grant date is after the approval date, it
must be on a date specified at the time of approval. |
Compensation Tax Policy
Our short-term and long-term compensation programs, including
the compensation paid in fiscal 2015, are intended to qualify as deductible performance-based compensation under Section 162(m)
of the Internal Revenue Code (IRC). These compensation programs are generally structured such that executive officers are entitled
to receive a maximum payout amount upon achievement of a minimum performance condition determined by the Human Resources and Compensation
Committee. The Human Resources and Compensation Committee then uses its negative discretion to determine the actual payout amount.
The performance objectives that are communicated to our executive officers, which are described in detail above, guide the Human
Resources and Compensation Committee’s exercise of its negative discretion to determine the actual payouts. We may provide
non-deductible compensation in situations the Human Resources and Compensation Committee or our Board of Directors believes appropriate.
2016 Proxy Statement │ TARGET CORPORATION 46
COMPENSATION TABLES
SUMMARY COMPENSATION TABLE
The following Summary Compensation table
contains values calculated and disclosed according to SEC reporting requirements. Salary, Bonus, and Non-Equity Incentive Plan
compensation amounts reflect the compensation earned during each fiscal year. Stock Awards reflect awards with a grant date during
each fiscal year.
It is important to note that the “Stock
Awards” column, which is computed using grant date fair value:
|
| • | Includes Strategic Alignment Awards for 2015 in addition to the regular 2015 annual grant amount,
as described in Note 1. Strategic Alignment Awards were one-time in nature and made off-cycle, and have the effect of causing the
amounts for 2015 to be higher. |
|
| • | Does not account for awards that were forfeited after grant. For example, the amounts for 2013
include PSUs and PBRSUs that were forfeited due to our financial performance not meeting the 162(m) threshold for fiscal 2014. |
|
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|
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|
|
NAME
AND
PRINCIPAL POSITION |
|
FISCAL YEAR |
|
SALARY |
|
BONUS(2) |
|
STOCK
AWARDS(1)(4)(5) |
|
OPTION
AWARDS(4) |
|
NON-EQUITY
INCENTIVE PLAN
COMPENSATION(6) |
|
CHANGE IN
PENSION
VALUE AND
NONQUALIFIED
DEFERRED
COMPENSATION
EARNINGS(7) |
|
ALL OTHER
COMPENSATION(8) |
|
TOTAL |
|
|
Brian C.
Cornell
Chairman &
Chief Executive
Officer |
|
2015 |
|
$ |
1,300,000 |
|
$ |
0 |
|
$ |
13,422,958 |
|
$ |
0 |
|
$ |
1,950,000 |
|
$ |
0 |
|
$ |
273,379 |
|
$ |
16,946,337 |
|
|
|
2014 |
|
$ |
595,000 |
|
$ |
48,390 |
|
$ |
27,354,887 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
165,747 |
|
$ |
28,164,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catherine R. Smith
Executive Vice
President &
Chief Financial
Officer(3) |
|
2015 |
|
$ |
290,000 |
|
$ |
608,750 |
|
$ |
5,683,978 |
|
$ |
0 |
|
$ |
161,313 |
|
$ |
0 |
|
$ |
788,775 |
|
$ |
7,532,815 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John J. Mulligan
Executive Vice
President &
Chief Operating
Officer(3) |
|
2015 |
|
$ |
1,000,000 |
|
$ |
387,000 |
|
$ |
8,091,035 |
|
$ |
0 |
|
$ |
534,000 |
|
$ |
4,063 |
|
$ |
377,385 |
|
$ |
10,393,482 |
|
|
|
2014 |
|
$ |
919,231 |
|
$ |
400,000 |
|
$ |
4,555,603 |
|
$ |
0 |
|
$ |
0 |
|
$ |
89,446 |
|
$ |
328,348 |
|
$ |
6,292,627 |
|
|
|
2013 |
|
$ |
700,000 |
|
$ |
150,000 |
|
$ |
3,505,105 |
|
$ |
0 |
|
$ |
0 |
|
$ |
5,465 |
|
$ |
273,286 |
|
$ |
4,633,856 |
|
|
Michael E. McNamara
Executive Vice
President & Chief
Information Officer |
|
2015 |
|
$ |
468,462 |
|
$ |
924,000 |
|
$ |
8,015,929 |
|
$ |
0 |
|
$ |
258,100 |
|
$ |
0 |
|
$ |
293,636 |
|
$ |
9,960,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey J. Jones II
Executive Vice
President &
Chief Marketing
Officer |
|
2015 |
|
$ |
725,000 |
|
$ |
280,575 |
|
$ |
6,159,313 |
|
$ |
0 |
|
$ |
387,150 |
|
$ |
0 |
|
$ |
121,123 |
|
$ |
7,673,161 |
|
|
|
2014 |
|
$ |
700,000 |
|
$ |
290,000 |
|
$ |
3,301,716 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
67,343 |
|
$ |
4,359,059 |
|
|
|
2013 |
|
$ |
700,000 |
|
$ |
0 |
|
$ |
3,505,105 |
|
$ |
0 |
|
$ |
0 |
|
$ |
0 |
|
$ |
87,169 |
|
$ |
4,292,275 |
|
|
Timothy R. Baer
Executive Vice
President, Chief
Legal Officer &
Corporate Secretary |
|
2015 |
|
$ |
675,000 |
|
$ |
261,225 |
|
$ |
5,300,173 |
|
$ |
0 |
|
$ |
360,450 |
|
$ |
104,308 |
|
$ |
737,675 |
|
$ |
7,438,832 |
|
|
|
|
|
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|
2016 Proxy Statement │ TARGET CORPORATION 47
| (1) | The amounts in the “Stock Awards” column shows the aggregate grant date fair value of awards made in each fiscal
year, and does not take into account a number of unusual events that have affected the awards in each of the three years provided.
The following table shows the components of the “Stock Awards” amount reported for 2015 in order to isolate the amounts
that are attributable to the 2015 annual grant from the amounts that are one-time or new hire compensation. |
|
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|
COMPONENTS
OF AMOUNT REPORTED
IN 2015 STOCK AWARDS COLUMN |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMOUNT REPORTED |
|
ONE-TIME
STRATEGIC |
|
|
|
|
|
|
|
|
IN 2015
STOCK |
|
ALIGNMENT
AWARD |
|
NEW HIRE
PRO-RATED |
|
2015 ANNUAL
GRANT |
|
|
NAME |
|
AWARDS
COLUMN |
|
AMOUNT |
|
GRANT AMOUNT |
|
AMOUNT |
|
|
Mr. Cornell |
|
$ |
13,422,958 |
|
|
$ |
3,750,014 |
|
|
|
N/A |
|
|
$ |
9,672,944 |
|
|
|
Ms. Smith |
|
$ |
5,683,978 |
|
|
$ |
1,000,046 |
|
|
$ |
1,374,691 |
|
|
$ |
3,309,240 |
|
|
|
Mr. Mulligan |
|
$ |
8,091,035 |
|
|
$ |
3,000,011 |
|
|
|
N/A |
|
|
$ |
5,091,024 |
|
|
|
Mr. McNamara |
|
$ |
8,015,929 |
|
|
$ |
2,500,026 |
|
|
$ |
2,206,663 |
|
|
$ |
3,309,240 |
|
|
|
Mr. Jones |
|
$ |
6,159,313 |
|
|
$ |
2,850,073 |
|
|
|
N/A |
|
|
$ |
3,309,240 |
|
|
|
Mr. Baer |
|
$ |
5,300,173 |
|
|
$ |
2,500,035 |
|
|
|
N/A |
|
|
$ |
2,800,137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | The “Stock Awards” amount for Mr. Cornell for 2014 is larger than a typical year because
it includes both his hiring compensation (a portion of which was forfeited due to our financial performance not meeting the 162(m)
threshold in 2014) and the annual PSU and PBRSU grants granted in January 2015. The amounts for 2013 include the PSUs and PBRSUs
granted in January 2014 and the PSUs granted in March 2013 relating to the 2012 annual grant, even though both sets of grants were
forfeited due to our financial performance not meeting the 162(m) threshold in 2014. |
| (2) | For NEOs other than our CEO, the “Bonus” amount shows actual payouts earned under the
personal component of our Short-Term Incentive Plan. The CEO has no personal component to his Short-Term Incentive Plan payout.
Fiscal 2015 is the only year of the last three years in which our NEOs earned a payout under the personal component of our Short-Term
Incentive Plan. For Ms. Smith and Mr. McNamara, the “Bonus” amount for 2015 also includes $500,000 and $750,000, respectively,
for sign-on bonuses included in their hiring compensation. |
| (3) | On September 1, 2015, Ms. Smith became Executive Vice President & Chief Financial Officer.
Mr. Mulligan is a named executive officer because he was our Executive Vice President & Chief Financial Officer until August
31, 2015, although he would also have been a NEO due to his compensation had he not served as Executive Vice President &
Chief Financial Officer for part of fiscal 2015. |
| (4) | Amounts represent the aggregate grant date fair value of awards made each fiscal year, as computed
in accordance with FASB ASC Topic 718. See Note 26, Share Based Compensation, to our consolidated financial statements for
fiscal 2015 and Note 24, Share Based Compensation, to our consolidated financial statements for fiscal 2014 for a description of
our accounting and the assumptions used. |
| (5) | Represents the aggregate grant date fair value of Strategic Alignment Awards, PSUs and PBRSUs that
were computed based on the probable outcome of the performance conditions as of the grant date. Actual payments will be based on
degree of attainment of the performance conditions and our stock price on the settlement date. The Strategic Alignment Awards,
which were an off-cycle grant, causes the amounts for 2015 to be higher. Additionally, the amounts for 2013 include the PSUs and
PBRSUs granted in January 2014, even though they were forfeited due to our not meeting the 162(m) threshold for fiscal 2014. |
2016 Proxy Statement │ TARGET CORPORATION 48
The range of payments for the Strategic Alignment Awards and PSUs
granted in fiscal 2015 is as follows:
|
|
| |
| |
| |
|
|
|
|
| |
MINIMUM | |
AMOUNT | |
MAXIMUM |
|
|
NAME |
|
AMOUNT | |
REPORTED | |
AMOUNT |
|
|
Mr. Cornell | |
| | | |
| | | |
| | |
|
|
• |
Strategic Alignment Award Granted 3/11/15 | |
$ | 0 | | |
$ | 3,750,014 | | |
$ | 7,500,028 | |
|
|
• |
PSU Granted 1/13/16 | |
$ | 0 | | |
$ | 7,125,015 | | |
$ | 12,468,776 | |
|
|
Ms. Smith | |
| | | |
| | | |
| | |
|
|
• |
Strategic Alignment Award Granted 9/1/15 | |
$ | 0 | | |
$ | 1,000,046 | | |
$ | 2,000,092 | |
|
|
• |
PSU Granted 9/1/15 | |
$ | 0 | | |
$ | 1,012,558 | | |
$ | 1,771,976 | |
|
|
• |
PSU Granted 1/13/16 | |
$ | 0 | | |
$ | 2,437,541 | | |
$ | 4,265,697 | |
|
|
Mr. Mulligan | |
| | | |
| | | |
| | |
|
|
• |
Strategic Alignment Award Granted 3/11/15 | |
$ | 0 | | |
$ | 3,000,011 | | |
$ | 6,000,022 | |
|
|
• |
PSU Granted 1/13/16 | |
$ | 0 | | |
$ | 3,750,008 | | |
$ | 6,562,514 | |
|
|
Mr. McNamara | |
| | | |
| | | |
| | |
|
|
• |
Strategic Alignment Award Granted 6/4/15 | |
$ | 0 | | |
$ | 2,500,026 | | |
$ | 5,000,051 | |
|
|
• |
PSU Granted 6/4/15 | |
$ | 0 | | |
$ | 1,625,261 | | |
$ | 2,844,207 | |
|
|
• |
PSU Granted 1/13/16 | |
$ | 0 | | |
$ | 2,437,541 | | |
$ | 4,265,697 | |
|
|
Mr. Jones | |
| | | |
| | | |
| | |
|
|
• |
Strategic Alignment Award Granted 3/11/15 | |
$ | 0 | | |
$ | 2,850,073 | | |
$ | 5,700,146 | |
|
|
• |
PSU Granted 1/13/16 | |
$ | 0 | | |
$ | 2,437,541 | | |
$ | 4,265,697 | |
|
|
Mr. Baer | |
| | | |
| | | |
| | |
|
|
• |
Strategic Alignment Award Granted 3/11/15 | |
$ | 0 | | |
$ | 2,500,035 | | |
$ | 5,000,071 | |
|
|
• |
PSU Granted 1/13/16 | |
$ | 0 | | |
$ | 2,062,540 | | |
$ | 3,609,446 | |
|
|
|
| |
| | | |
| | | |
| | |
|
(6) | The “Non-Equity Incentive Plan Compensation” amount shows actual payouts earned under
the financial component of our Short-Term Incentive Plan. Fiscal 2015 is the only year of the last three years in which our NEOs
earned a payout under the financial component our Short-Term Incentive Plan. |
(7) | For fiscal 2015, the following amounts are related to the change in the qualified pension plan
value: |
|
| CHANGE
IN PENSION |
| |
|
NAME | VALUE |
| |
|
Mr. Mulligan | |
$ | 4,063 |
| |
|
Mr. Baer | |
$ | 104,308 |
| |
|
| |
| |
| |
Mr. Cornell, Ms. Smith, Mr. McNamara and
Mr. Jones are not eligible for the Target Corporation Pension Plan or any supplemental pension plans because they were hired after
January 2009. Consistent with applicable law, the accrued benefits under the pension plan cannot be reduced; however, the present
value of the benefit is dependent on the discount rate used. The discount rates used in fiscal 2015, 2014 and 2013 were 4.71%,
3.87% and 4.77%, respectively. The Change in Pension Value column reflects the additional pension benefits attributable to additional
service, increases in eligible earnings and changes in the discount rate.
(8) | The amounts reported for fiscal 2015 include matching credits of up to a maximum of 5% of cash
compensation allocated between the Target 401(k) Plan and our current executive deferred compensation plan (EDCP), the dollar value
of life insurance premiums paid by Target, credits to the EDCP representing annual changes in supplemental pension plan values,
relocation benefits and perquisites. |
|
| |
| | |
| | |
| | |
| | |
| | |
| | |
|
|
NAME | |
MATCH CREDITS | |
LIFE INSURANCE | |
SPP CREDITS | |
RELOCATION | |
PERQUISITES | |
| TOTAL | |
|
|
Mr. Cornell | |
$ | 66,770 | |
$ | 22,624 | |
$ | 0 | |
$ | 0 | |
$ | 183,985 | |
$ | 273,379 | |
|
|
Ms. Smith | |
$ | 0 | |
$ | 2,540 | |
$ | 0 | |
$ | 784,675 | |
$ | 1,561 | |
$ | 788,775 | |
|
|
Mr. Mulligan | |
$ | 70,096 | |
$ | 35,275 | |
$ | 228,157 | |
$ | 0 | |
$ | 43,857 | |
$ | 377,385 | |
|
|
Mr. McNamara | |
$ | 0 | |
$ | 3,925 | |
$ | 0 | |
$ | 271,229 | |
$ | 18,482 | |
$ | 293,636 | |
|
|
Mr. Jones | |
$ | 50,733 | |
$ | 17,114 | |
$ | 0 | |
$ | 0 | |
$ | 53,276 | |
$ | 121,123 | |
|
|
Mr. Baer | |
$ | 47,120 | |
$ | 64,653 | |
$ | 578,785 | |
$ | 0 | |
$ | 47,117 | |
$ | 737,675 | |
|
|
| |
| | |
| | |
| | |
| | |
| | |
| | |
|
Supplemental Pension Plans.
The SPP Credits for our NEOs represent additional accruals of supplemental pension plan benefits under the Target Corporation Supplemental
Pension Plan I (SPP I) and the Target Corporation Supplemental Pension Plan II (SPP II) 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, service, age and changes
in interest rates. See the narrative following the Pension Benefits for Fiscal 2015 table for more information about our pension
plans.
2016 Proxy Statement │ TARGET CORPORATION 49
Relocation. In connection
with the hiring and appointment of Ms. Smith as our Chief Financial Officer and Mr. McNamara as our Chief Information Officer,
we paid direct expenses of $252,382 and $121,229, respectively, related to their relocations to facilitate moves to our corporate
office in Minnesota, including commuting costs. In addition, we provided relocation support to Ms. Smith of $532,292 and a lump
sum relocation allowance of $150,000 to Mr. McNamara. The entire relocation benefit is subject to repayment if the recipient voluntarily
leaves Target at any time during the recipient’s first 36 months with the company. No tax gross-up is provided for these
relocation benefits.
Perquisites. The perquisites
for our NEOs other than Mr. Cornell consist of a company-provided car or car allowance, reimbursement of financial management expenses,
reimbursement of home security expenses, on-site parking, on-site exercise room, spousal travel on business trips, limited personal
use of company-owned aircraft and executive physicals. Mr. Cornell is only eligible for perquisites that support his safety, health
and well-being—reimbursement of home security expenses, on-site parking, executive physical, on-site exercise room, and personal
use of company-owned aircraft for security reasons. Mr. Cornell is required to reimburse Target for the incremental costs
of using company-owned aircraft for personal purposes if his personal use exceeds $175,000 per year. As part of the Human Resources
and Compensation Committee’s annual assessment of perquisites, automobile and automobile allowances will be eliminated from
executive officer perquisites starting in fiscal 2016. The only individual perquisite that exceeded $25,000 was Mr. Cornell’s
personal use of company-owned aircraft for security reasons, which amounted to $161,873. No tax gross-up is provided on this perquisite.
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. In addition to the perquisites included
in the table in this footnote, the NEOs occasionally use support staff time for personal matters, principally to allow them to
devote more time to our business, and receive personal use of empty seats on business flights of company-owned aircraft and personal
use of event tickets when such tickets are not being used for business purposes, each of which are benefits for which we have no
incremental cost.
GRANTS OF PLAN-BASED AWARDS IN FISCAL 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GRANT DATE |
|
|
|
|
|
|
|
ESTIMATED POSSIBLE PAYOUTS |
|
ESTIMATED FUTURE PAYOUTS |
|
FAIR VALUE |
|
|
|
|
GRANT |
|
UNDER NON-EQUITY INCENTIVE |
|
UNDER EQUITY INCENTIVE |
|
OF STOCK |
|
|
NAME |
|
DATE |
|
PLAN AWARDS(1) |
|
PLAN AWARDS(2) |
|
AWARDS(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
THRESHOLD |
|
TARGET |
|
MAXIMUM |
|
|
|
|
|
|
|
|
|
|
THRESHOLD |
|
TARGET |
|
MAXIMUM |
|
(#) |
|
(#) |
|
(#) |
|
|
|
|
|
Brian C. Cornell |
|
3/11/15 |
|
|
$ |
975,000 |
|
$ |
1,950,000 |
|
$ |
5,200,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/11/15 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
48,145 |
|
96,290 |
|
$ |
3,750,014 |
|
|
|
|
1/13/16 |
|
|
|
|
|
|
|
|
|
|
|
|
24,610 |
|
|
32,813 |
|
41,017 |
|
$ |
2,547,929 |
|
|
|
|
1/13/16 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
98,439 |
|
172,269 |
|
$ |
7,125,015 |
|
|
Catherine R. Smith |
|
9/1/15 |
(4) |
|
$ |
60,417 |
|
$ |
161,313 |
|
$ |
1,127,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/1/15 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
3,339 |
|
|
4,451 |
|
5,564 |
|
$ |
362,133 |
|
|
|
|
9/1/15 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
13,353 |
|
23,368 |
|
$ |
1,012,558 |
|
|
|
|
9/1/15 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
13,188 |
|
26,376 |
|
$ |
1,000,046 |
|
|
|
|
1/13/16 |
|
|
|
|
|
|
|
|
|
|
|
|
8,420 |
|
|
11,226 |
|
14,033 |
|
$ |
871,699 |
|
|
|
|
1/13/16 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
33,677 |
|
58,935 |
|
$ |
2,437,541 |
|
|
John J. Mulligan |
|
3/11/15 |
|
|
$ |
200,000 |
|
$ |
534,000 |
|
$ |
3,733,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/11/15 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
38,516 |
|
77,032 |
|
$ |
3,000,011 |
|
|
|
|
1/13/16 |
|
|
|
|
|
|
|
|
|
|
|
|
12,953 |
|
|
17,270 |
|
21,588 |
|
$ |
1,341,016 |
|
|
|
|
1/13/16 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
51,810 |
|
90,668 |
|
$ |
3,750,008 |
|
|
Michael E. McNamara |
|
6/4/15 |
(4) |
|
$ |
96,667 |
|
$ |
258,100 |
|
$ |
1,804,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/4/15 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
5,075 |
|
|
6,766 |
|
8,458 |
|
$ |
581,402 |
|
|
|
|
6/4/15 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
20,298 |
|
35,522 |
|
$ |
1,625,261 |
|
|
|
|
6/4/15 |
(4) |
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
31,223 |
|
62,446 |
|
$ |
2,500,026 |
|
|
|
|
1/13/16 |
|
|
|
|
|
|
|
|
|
|
|
|
8,420 |
|
|
11,226 |
|
14,033 |
|
$ |
871,699 |
|
|
|
|
1/13/16 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
33,677 |
|
58,935 |
|
$ |
2,437,541 |
|
|
Jeffrey J. Jones II |
|
3/11/15 |
|
|
$ |
145,000 |
|
$ |
387,150 |
|
$ |
2,706,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/11/15 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
36,591 |
|
73,182 |
|
$ |
2,850,073 |
|
|
|
|
1/13/16 |
|
|
|
|
|
|
|
|
|
|
|
|
8,420 |
|
|
11,226 |
|
14,033 |
|
$ |
871,699 |
|
|
|
|
1/13/16 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
33,677 |
|
58,935 |
|
$ |
2,437,541 |
|
|
Timothy R. Baer |
|
3/11/15 |
|
|
$ |
135,000 |
|
$ |
360,450 |
|
$ |
2,519,775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/11/15 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
32,097 |
|
64,194 |
|
$ |
2,500,035 |
|
|
|
|
1/13/16 |
|
|
|
|
|
|
|
|
|
|
|
|
7,125 |
|
|
9,499 |
|
11,874 |
|
$ |
737,597 |
|
|
|
|
1/13/16 |
|
|
|
|
|
|
|
|
|
|
|
|
0 |
|
|
28,496 |
|
49,868 |
|
$ |
2,062,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) | Awards represent potential payments under the current Target Corporation Officer Short-Term Incentive
Plan (STIP). Payments are based on specified target levels of Incentive EBIT and Sales, as described in the Compensation Discussion
and Analysis. Executive officers must be employed on the date the payments are made (typically in March of each year with respect
to the preceding fiscal year) to be eligible for a payment, except in the event of death, disability or retirement eligibility
(termination other than for cause after age 55 with at least five years of service). The maximum payment is the annual plan maximum,
which is generally four times salary less, for executive officers other than our CEO, the minimum personal performance bonus payable
as a condition to receiving a financial performance payout under the STIP. |
2016 Proxy Statement │ TARGET CORPORATION 50
(2) |
Awards represent potential payments under Strategic Alignment Awards, PSUs and PBRSUs granted under our Amended and Restated 2011 Long-Term Incentive Plan in fiscal 2015. See the Compensation Discussion and Analysis for a more detailed description of the performance measures for those awards. The other terms of the Strategic Alignment Awards, PSUs and PBRSUs are described in Note 3 to the Outstanding Equity Awards at 2015 Fiscal Year-End table. |
|
|
(3) |
Grant date fair value for Strategic Alignments Awards, PSUs and PBRSUs was determined pursuant to FASB ASC Topic 718. |
|
|
(4) |
Awards represent the potential payments under the equity grants made to Ms. Smith and Mr. McNamara in connection with their hire dates of September 1, 2015 and June 3, 2015, respectively. Each received a pro-rata equity grant consisting of PSUs and PBRSUs on terms consistent with the awards granted to Target’s other executive officers in January 2015, as well as Strategic Alignments Awards consistent with those granted to Target’s other executive officers in March 2015. |
OUTSTANDING
EQUITY AWARDS AT 2015 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) | |
|
Brian C. | |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| 521,545 | | |
$ | 37,770,289 | |
|
Cornell | |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| | | |
| | |
|
Catherine R. | |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| 89,426 | | |
$ | 6,476,231 | |
|
Smith | |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| | | |
| | |
|
John J. | |
| 10,228 | | |
| 0 | | |
| $48.89 | | |
01/09/2018 | |
| 12,420 | | |
$ | 899,456 | | |
| 196,317 | | |
$ | 14,217,277 | |
|
Mulligan | |
| 3,645 | | |
| 0 | | |
| $54.87 | | |
09/02/2018 | |
| | | |
| | | |
| | | |
| | |
|
| |
| 1,784 | | |
| 0 | | |
| $42.05 | | |
08/10/2019 | |
| | | |
| | | |
| | | |
| | |
|
| |
| 10,406 | | |
| 0 | | |
| $49.41 | | |
01/13/2020 | |
| | | |
| | | |
| | | |
| | |
|
| |
| 9,466 | | |
| 0 | | |
| $53.36 | | |
08/09/2020 | |
| | | |
| | | |
| | | |
| | |
|
| |
| 11,557 | | |
| 0 | | |
| $55.46 | | |
01/12/2021 | |
| | | |
| | | |
| | | |
| | |
|
| |
| 29,833 | | |
| 0 | | |
| $48.88 | | |
01/11/2022 | |
| | | |
| | | |
| | | |
| | |
|
| |
| 76,983 | | |
| 0 | | |
| $50.51 | | |
01/24/2022 | |
| | | |
| | | |
| | | |
| | |
|
| |
| 104,263 | | |
| 34,755 | | |
| $60.48 | | |
01/09/2023 | |
| | | |
| | | |
| | | |
| | |
|
Michael E. | |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| 135,762 | | |
$ | 9,831,884 | |
|
McNamara | |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| | | |
| | |
|
Jeffrey J. | |
| 31,100 | | |
| 16,701 | | |
| $58.21 | | |
04/02/2022 | |
| | | |
| | | |
| 164,742 | | |
$ | 11,930,616 | |
|
Jones II | |
| 104,263 | | |
| 34,755 | | |
| $60.48 | | |
01/09/2023 | |
| | | |
| | | |
| | | |
| | |
|
Timothy R. | |
| 63,408 | | |
| 0 | | |
| $48.89 | | |
01/09/2018 | |
| | | |
| | | |
| 141,717 | | |
$ | 10,263,145 | |
|
Baer | |
| 23,782 | | |
| 0 | | |
| $42.05 | | |
08/10/2019 | |
| | | |
| | | |
| | | |
| | |
|
| |
| 65,037 | | |
| 0 | | |
| $49.41 | | |
01/13/2020 | |
| | | |
| | | |
| | | |
| | |
|
| |
| 64,202 | | |
| 0 | | |
| $55.46 | | |
01/12/2021 | |
| | | |
| | | |
| | | |
| | |
|
| |
| 99,444 | | |
| 0 | | |
| $48.88 | | |
01/11/2022 | |
| | | |
| | | |
| | | |
| | |
|
| |
| 95,574 | | |
| 31,859 | | |
| $60.48 | | |
01/09/2023 | |
| | | |
| | | |
| | | |
| | |
|
| |
| | | |
| | | |
| | | |
| |
| | | |
| | | |
| | | |
| | |
(1) |
Stock options have a ten-year term and generally vest and become exercisable in 25% increments on each anniversary of the grant date. In general, recipients of stock options must be continuously employed from the grant date to the applicable vesting date to become vested. If an executive officer’s employment is terminated other than for cause, unvested stock options are forfeited and the executive officer will have 210 days to exercise any vested stock options. An extension of the vesting and post-termination exercise periods may be provided (but not in excess of the original ten-year term of the option) if the executive officer satisfies certain age and years of service conditions as of the date of termination, as follows: |
2016 Proxy Statement │ TARGET CORPORATION 51
|
| |
OPTIONS
GRANTED BEFORE | |
OPTIONS GRANTED ON OR AFTER |
|
|
| SEPTEMBER 14, 2011 | |
SEPTEMBER
14, 2011 |
|
|
| |
|
|
| |
VESTING AND | |
| |
VESTING AND |
|
|
| |
|
|
| |
EXERCISE | |
| |
EXERCISE |
|
|
| |
MINIMUM YEARS | |
EXTENSION | |
MINIMUM YEARS | |
EXTENSION |
|
|
AGE | |
OF SERVICE | |
PERIOD | |
OF SERVICE | |
PERIOD |
|
|
65+ | |
|
5 |
| |
5 Years | |
10 | |
|
10 Years |
|
|
|
60-64 | |
|
15 |
| |
5 Years | |
10 | |
|
10 Years |
|
|
|
55-59 | |
|
15 |
| |
5 Years | |
15 | |
|
5 Years |
|
|
|
52-54 | |
|
15 |
| |
4 Years | |
15 | |
|
4 Years |
|
|
|
48-51 | |
|
15 |
| |
3 Years | |
15 | |
|
3 Years |
|
|
|
45-47 | |
|
15 |
| |
2 Years | |
15 | |
|
2 Years |
|
|
|
| |
|
|
| |
| |
| |
|
|
|
|
|
To receive these extension provisions, the executive officer must sign an agreement that includes a non-solicitation clause and a release of claims, and provides that the award will be terminated if the executive officer becomes employed by specified competitors. If the termination is voluntary, the executive officer must also have commenced discussions with the company regarding the executive officer’s consideration of termination at least six months prior to termination. These vesting-extension provisions are not available if an executive officer’s employment is terminated for cause. If an executive officer’s employment is terminated for cause, both the vested and unvested stock options are forfeited. |
|
|
|
A five-year exercise period will apply in the event of the executive officer’s termination due to death or a disability, except that the exercise period will be ten years if the executive officer meets the described age and years of service requirements. The exercise period is not to exceed the original ten-year term of the option, except to the extent necessary to provide at least one year to exercise after the executive officer’s death during employment. Vesting is accelerated upon death and continues during the post-termination exercise period in the event of disability. Stock options are transferable during the life of the executive officer to certain family members and family-controlled entities. |
|
|
(2) |
Includes RSUs granted to Mr. Mulligan on May 22, 2014, which will vest in one-third increments on each anniversary of the grant date. After vesting, the RSUs will be converted into shares of our common stock on a 1:1 basis. Dividend equivalents are accrued (in the form of additional units) on RSUs during the vesting period and converted to shares if and after the underlying RSUs vest. Mr. Mulligan must generally be continuously employed for three years from the date of grant in order to receive the shares, except that the award will vest in full in the event that Mr. Mulligan’s employment is involuntarily terminated without cause and Mr. Mulligan signs an agreement that includes a non-solicitation clause and a release of claims, and provides that the award will be terminated if Mr. Mulligan becomes employed by specified competitors. Vesting is also accelerated in the event of death or disability. |
|
|
(3) |
The shares reported in this column represent potentially issuable shares under outstanding Strategic Alignment, PSU and PBRSU awards. Strategic Alignment Awards, PSUs and PBRSUs represent the right to receive a variable number of shares based on actual performance over the performance period. The number of shares reported is based on our actual performance results through the end of fiscal 2015 under the applicable performance measures and assuming that the payout will occur at the next highest level (threshold, target or maximum). The performance levels required for payouts on outstanding awards are described in the Compensation Discussion and Analysis. |
|
|
|
Dividend equivalents are accrued (in the form of additional units) on Strategic Alignment Awards, PSUs and PBRSUs, respectively, during the vesting period and are subject to the same performance and other conditions as the underlying Strategic Alignment Awards, PSUs and PBRSUs. The dividend equivalents are converted to shares if and after the underlying Strategic Alignment Awards, PSUs and PBRSUs vest. |
|
|
|
The payment date of the awards, to the extent they are earned, will be within a certain time after the date the Human Resources and Compensation Committee certifies the financial results following completion of the performance period (60 days for Strategic Alignment Awards and PSUs, and 90 days for PBRSUs). Recipients must be continuously employed during the performance period to become vested, except that vesting will also occur, and any shares earned upon certification of the financial results following completion of the performance period will be paid, if a termination occurs under the following circumstances prior to the end of the performance period (referred to as “vesting-extension provisions”): |
|
• |
Death or disability; |
|
|
|
|
• |
For PSUs and PBRSUs only, executive officer is: |
|
|
|
|
|
– |
For awards granted on or after January
13, 2016 – Age 55 or greater and has at least 5 years of service; or |
|
|
|
|
|
|
– |
For awards granted before January
13, 2016 – Age 60 or greater and has at least 10 years of service or age 55-59 and has at least 15 years of service; |
|
|
|
|
|
• |
For PSUs only, the executive officer is age 45-54, has at least 15 years of service and has worked for a specified minimum amount of the performance period (1-2 years, depending on age); or |
|
|
|
|
• |
For PBRSUs only, 50% of the shares subject to an award will vest if the recipient is involuntarily terminated without cause prior to the scheduled vesting date and the executive officer signs an agreement that includes a non-solicitation clause and a release of claims, and provides that the award will be terminated if the executive officer becomes employed by specified competitors. |
|
To receive these vesting-extension provisions, the executive officer must comply with the same conditions that are applicable to the vesting and post-termination extension of stock options that are described in Note 1 to this table. These vesting-extension provisions are not available if an executive officer’s employment is terminated for cause. If an executive officer’s employment is terminated for cause, then all Strategic Alignment Awards, PSUs and PBRSUs are forfeited. |
|
|
|
The shares reported in this column also include Make-Whole PBRSUs granted to Mr. Cornell on August 21, 2014 to compensate him for incentive awards from his former employer he forfeited to join Target. Those Make-Whole PBRSUs have the same general terms as the other PBRSUs described in this Note, except that one third vested in March 2016 and the remaining Make-Whole PBRSUs vest in one third increments in March 2017 and 2018, respectively, subject to Mr. Cornell’s continued employment through the applicable vesting dates. If Mr. Cornell’s employment is involuntarily terminated without cause before an applicable vesting date, Mr. Cornell will receive 50% of the at-goal payout of any outstanding unvested Make-Whole PBRSUs. |
2016 Proxy Statement │ TARGET CORPORATION 52
OPTION EXERCISES AND STOCK
VESTED IN FISCAL 2015
|
| |
OPTION
AWARDS | |
STOCK
AWARDS |
|
|
NAME | |
NUMBER
OF SHARES ACQUIRED
ON EXERCISE
(#) | |
VALUE
REALIZED ON EXERCISE(1) | |
NUMBER
OF SHARES ACQUIRED
ON VESTING
(#) | |
VALUE
REALIZED ON VESTING(2) |
|
|
Brian C. Cornell | |
| 0 | | |
$ | 0 | | |
| 70,104 | | |
|
$ | 5,456,895 | |
|
|
Catherine R. Smith | |
| 0 | | |
$ | 0 | | |
| 0 | | |
|
$ | 0 | |
|
|
John J. Mulligan | |
| 21,573 | | |
$ | 764,814 | | |
| 19,547 | | |
|
$ | 1,446,542 | |
|
|
Michael E. McNamara | |
| 0 | | |
$ | 0 | | |
| 0 | | |
|
$ | 0 | |
|
|
Jeffrey J. Jones II | |
| 19,000 | | |
$ | 445,254 | | |
| 54,800 | | |
|
$ | 4,341,950 | |
|
|
Timothy R. Baer | |
| 148,055 | | |
$ | 5,062,540 | | |
| 12,347 | | |
|
$ | 884,416 | |
|
|
| |
| | | |
| | | |
| | | |
|
| | |
|
(1) |
Value Realized on Exercise is calculated as the difference between the market value of Target common stock on the respective exercise date(s) and the exercise price of the option(s). |
|
|
(2) |
Value Realized on Vesting is calculated by multiplying the number of shares acquired on vesting by the market value of Target common stock on the respective vesting date(s). |
PENSION BENEFITS FOR FISCAL
2015
|
NAME(1) | |
PLAN
NAME | |
AGE
AT FYE | | |
NUMBER
OF YEARS CREDITED
SERVICE(#) | |
PRESENT
VALUE OF ACCUMULATED
BENEFIT |
|
|
John
J. Mulligan | |
Target
Corporation Pension Plan | |
| 50 | | |
| 19 | | |
$ | 301,597 | |
|
|
Timothy R. Baer | |
Target Corporation
Pension Plan | |
| 55 | | |
| 22 | | |
$ | 542,362 | |
|
|
| |
| |
| | | |
| | | |
| | |
|
(1) |
Mr. Cornell, Ms. Smith, Mr. McNamara and Mr. Jones are not eligible for the Target Corporation Pension Plan or any supplemental pension plans because they were hired after January 2009. |
Pension Plan
The Pension Benefits for Fiscal 2015 table 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 benefit for Mr. Mulligan and Mr. Baer is based on their final average
pay.
The final average pay benefit, 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 among annuity forms that have an actuarially equivalent value.
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).
Supplemental Pension Plans
We also provide benefits under supplemental pension
plans 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 annual compensation limits imposed by the IRC for qualified
retirement plans, and is based on the same benefit formula used for determining benefits under
2016 Proxy Statement │ TARGET CORPORATION 53
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 or SPP I.
Each year, the annual change in
the actuarial lump-sum amount of a participant vested benefits under SPP I and II 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 annual change in actuarial equivalent lump-sum amount, the current actuarial
equivalent lump sum value of the SPP benefits is reduced by the amount of the prior transfers 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. Because of the
feature that annually transfers amounts to a participant’s EDCP account, the benefits accrued under SPP I and II are
reflected as EDCP deferrals in the Nonqualified Deferred Compensation table. If the current actuarial equivalent lump sum
value of the SPP benefit is less than the prior transfers to EDCP, adjusted for assumed annual earnings, there will be a
negative adjustment (forfeiture) reflected in the participant’s EDCP account equal to such difference.
NONQUALIFIED
DEFERRED COMPENSATION FOR FISCAL 2015
The amounts in the following table represent
deferrals under the EDCP, which includes the supplemental pension benefits discussed in the preceding section, and deferrals of
RSUs that are held as stock units.
|
NAME | |
EXECUTIVE
CONTRIBUTIONS IN LAST FY(1) | |
REGISTRANT
CONTRIBUTIONS IN LAST FY(2) | |
AGGREGATE
EARNINGS IN LAST FY(3) | |
AGGREGATE WITHDRAWALS/ DISTRIBUTIONS IN LAST FY | |
AGGREGATE
BALANCE AT LAST FYE(4) |
|
|
Brian C. Cornell | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
EDCP | |
$ | 73,000 | | |
$ | 49,170 | | |
$ | (6,622 | ) | |
$ | 0 | | |
$ | 123,032 | |
|
|
Catherine R. Smith | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
EDCP | |
$ | 5,577 | | |
$ | 0 | | |
$ | 79 | | |
$ | 0 | | |
$ | 5,656 | |
|
|
John J. Mulligan | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
EDCP | |
$ | 96,050 | | |
$ | 286,830 | | |
$ | (57,755 | ) | |
$ | 0 | | |
$ | 1,863,220 | |
|
|
Michael E. McNamara | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
EDCP | |
$ | 2,788 | | |
$ | 0 | | |
$ | 37 | | |
$ | 0 | | |
$ | 2,825 | |
|
|
Jeffrey J. Jones II | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
EDCP | |
$ | 70,728 | | |
$ | 38,726 | | |
$ | (15,163 | ) | |
$ | 0 | | |
$ | 249,418 | |
|
|
Timothy R. Baer | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
EDCP | |
$ | 134,860 | | |
$ | 614,083 | | |
$ | (231,331 | ) | |
$ | 0 | | |
$ | 7,648,827 | |
|
|
Stock Units | |
| | | |
$ | 6,279 | | |
$ | (3,686 | ) | |
| | | |
$ | 209,511 | |
|
|
| |
| | | |
| | | |
| | | |
| | | |
| | |
|
(1) |
All amounts of Executive Contributions in the table have been reported in the current year Summary Compensation Table. |
|
|
(2) |
All of the Registrant Contributions from the table have been reported in the current year Summary Compensation Table. Registrant Contributions include transfers of supplemental pension benefits, net of any negative credits, and restored matching contributions on executive deferrals into the EDCP (i.e., matching contributions not able to be made into the Target 401(k) Plan because of IRC limits). |
|
|
(3) |
No amounts from Aggregate Earnings in the table have been reported in the current year Summary Compensation Table. |
|
|
(4) |
The following amounts of the Aggregate Balance from the table were reported in the Summary Compensation Tables covering fiscal years 2006-2014. |
|
| |
REPORTED IN PRIOR |
|
|
| |
YEARS’ SUMMARY |
|
|
| |
COMPENSATION TABLES |
|
|
Mr. Cornell | |
$ | 7,500 | |
|
|
Ms. Smith | |
$ | 0 | |
|
|
Mr. Mulligan | |
$ | 886,309 | |
|
|
Mr. McNamara | |
$ | 0 | |
|
|
Mr. Jones | |
$ | 144,865 | |
|
|
Mr. Baer | |
$ | 299,439 | |
|
|
| |
| | |
|
2016 Proxy Statement │ TARGET CORPORATION 54
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 2015 consolidated financial statements for additional
information.
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, or installment
payments over five or 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.
The EDCP is 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 is
an unfunded plan and represents a general unsecured obligation 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.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
This section explains the payments and benefits
to which our currently employed NEOs are entitled in various termination of employment and change-in-control scenarios. The potential
payments to the currently employed NEOs are hypothetical situations only, and assume that termination of employment and/or change-in-control
occurred on January 30, 2016, the last day of our 2015 fiscal year, and that any change-in-control was at our fiscal year-end closing
stock price of $72.42 per share. Beginning in January 2015, a double-trigger applies to RSUs, PBRSUs or PSU awards, meaning that
no outstanding awards of those types granted on or after January 14, 2015 will accelerate upon a change-in-control unless an involuntary
termination of employment without cause or a voluntary termination of employment for good reason occurs.
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 described situations. 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, under
all employment termination scenarios. In addition, unless the termination is for cause (generally defined as deliberate and
serious disloyal or dishonest conduct), 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 and PSUs are not
forfeited, and vesting will continue according to the original schedule for defined periods. A description of these age and
years of service requirements is provided in the notes under the Outstanding Equity Awards at 2015 Fiscal Year-End table.
Only Mr. Mulligan and Mr. Baer have met the minimum age and years of service requirements.
The following table shows the payments and benefits
for which the amount, vesting or time of payment is altered by each situation (referred to as Post-Termination Benefits). The paragraphs
following the table explain the general provisions applicable to each termination situation.
2016 Proxy Statement │ TARGET CORPORATION 55
TABLE OF POTENTIAL PAYMENTS UPON TERMINATION
OR CHANGE-IN-CONTROL
|
| |
| |
| |
| |
| |
| |
|
|
|
| |
| |
| |
| |
| |
CHANGE-IN-CONTROL |
|
|
| |
| |
| |
| |
| |
| |
INVOLUNTARY |
|
|
| |
| |
| |
| |
| |
| |
OR VOLUNTARY |
|
|
NAME / | |
VOLUNTARY | |
INVOLUNTARY | |
| |
| |
| |
GOOD REASON |
|
|
PAYMENT TYPE | |
TERMINATION | |
TERMINATION | |
DEATH | |
DISABILITY | |
NO TERMINATION | |
TERMINATION(6) |
|
|
Brian C. Cornell | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
ICP Payments (Severance) | |
$ | 0 | | |
$ | 2,630,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 2,630,000 | |
|
|
PBRSU Vesting(1)(2) | |
$ | 0 | | |
$ | 2,317,838 | | |
$ | 3,476,757 | | |
$ | 3,476,757 | | |
$ | 0 | | |
$ | 2,317,838 | |
|
|
Make-Whole PBRSU
Vesting(1)(3) | |
$ | 0 | | |
$ | 6,051,596 | | |
$ | 12,103,193 | | |
$ | 12,103,193 | | |
$ | 7,417,114 | | |
$ | 7,417,114 | |
|
|
PSU Vesting(1) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 4,278,300 | |
|
|
Life Insurance Proceeds | |
$ | 0 | | |
$ | 0 | | |
$ | 3,000,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
|
|
Excess Long-Term Disability Plan (Annual Payments) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 441,000 | | |
$ | 0 | | |
$ | 0 | |
|
|
Total | |
$ | 0 | | |
$ | 10,999,435 | | |
$ | 18,579,950 | | |
$ | 16,020,950 | | |
$ | 7,417,114 | | |
$ | 16,643,253 | |
|
|
Catherine R. Smith | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
ICP Payments (Severance) | |
$ | 0 | | |
$ | 1,480,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 1,480,000 | |
|
|
PBRSU Vesting(1)(2) | |
$ | 0 | | |
$ | 568,932 | | |
$ | 853,397 | | |
$ | 853,397 | | |
$ | 0 | | |
$ | 568,932 | |
|
|
PSU Vesting(1) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 630,863 | |
|
|
Life Insurance Proceeds | |
$ | 0 | | |
$ | 0 | | |
$ | 2,175,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
|
|
Excess Long-Term Disability Plan (Annual Payments) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 276,000 | | |
$ | 0 | | |
$ | 0 | |
|
|
Total | |
$ | 0 | | |
$ | 2,048,932 | | |
$ | 3,028,397 | | |
$ | 1,129,397 | | |
$ | 0 | | |
$ | 2,679,794 | |
|
|
John J. Mulligan | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
ICP Payments (Severance) | |
$ | 0 | | |
$ | 2,721,445 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 2,721,445 | |
|
|
Accelerated Vesting of Stock
Options(4) | |
$ | 0 | | |
$ | 0 | | |
$ | 414,975 | | |
$ | 0 | | |
$ | 0 | | |
$ | 414,975 | |
|
|
RSU Vesting(1)(5) | |
$ | 0 | | |
$ | 899,456 | | |
$ | 899,456 | | |
$ | 899,456 | | |
$ | 0 | | |
$ | 304,003 | |
|
|
PBRSU Vesting(1)(2) | |
$ | 0 | | |
$ | 1,064,683 | | |
$ | 1,597,024 | | |
$ | 1,597,024 | | |
$ | 0 | | |
$ | 1,064,683 | |
|
|
PSU Vesting(1) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 3,668,542 | |
|
|
Life Insurance Proceeds | |
$ | 0 | | |
$ | 0 | | |
$ | 3,000,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
|
|
Excess Long-Term Disability Plan
(Annual Payments) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 441,000 | | |
$ | 0 | | |
$ | 0 | |
|
|
Total | |
$ | 0 | | |
$ | 4,685,584 | | |
$ | 5,911,455 | | |
$ | 2,937,480 | | |
$ | 0 | | |
$ | 8,173,647 | |
|
|
Michael E. McNamara | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
ICP Payments (Severance) | |
$ | 0 | | |
$ | 1,480,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 1,480,000 | |
|
|
PBRSU Vesting(1)(2) | |
$ | 0 | | |
$ | 655,220 | | |
$ | 982,830 | | |
$ | 982,830 | | |
$ | 0 | | |
$ | 655,220 | |
|
|
PSU Vesting(1) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 1,929,472 | |
|
|
Life Insurance Proceeds | |
$ | 0 | | |
$ | 0 | | |
$ | 2,175,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
|
|
Excess Long-Term Disability Plan (Annual Payments) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 276,000 | | |
$ | 0 | | |
$ | 0 | |
|
|
Total | |
$ | 0 | | |
$ | 2,135,220 | | |
$ | 3,157,830 | | |
$ | 1,258,830 | | |
$ | 0 | | |
$ | 4,064,692 | |
|
|
Jeffrey J. Jones II | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
ICP Payments (Severance) | |
$ | 0 | | |
$ | 2,068,028 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 2,068,028 | |
|
|
Accelerated Vesting of Stock
Options(4) | |
$ | 0 | | |
$ | 0 | | |
$ | 652,296 | | |
$ | 0 | | |
$ | 0 | | |
$ | 652,296 | |
|
|
PBRSU Vesting(1)(2) | |
$ | 0 | | |
$ | 814,544 | | |
$ | 1,221,816 | | |
$ | 1,221,816 | | |
$ | 0 | | |
$ | 814,544 | |
|
|
PSU Vesting(1) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 3,433,491 | |
|
|
Life Insurance Proceeds | |
$ | 0 | | |
$ | 0 | | |
$ | 2,465,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
|
|
Excess Long-Term Disability Plan (Annual Payments) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 441,000 | | |
$ | 0 | | |
$ | 0 | |
|
|
Total | |
$ | 0 | | |
$ | 2,882,572 | | |
$ | 4,339,112 | | |
$ | 1,662,816 | | |
$ | 0 | | |
$ | 6,968,358 | |
|
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
2016 Proxy Statement │ TARGET CORPORATION 56
|
| |
| |
| |
| |
| |
|
|
|
| |
| |
| |
| |
| |
CHANGE-IN-CONTROL |
|
|
| |
| |
| |
| |
| |
| |
INVOLUNTARY |
|
|
| |
| |
| |
| |
| |
| |
OR VOLUNTARY |
|
|
NAME / | |
VOLUNTARY | |
INVOLUNTARY | |
| |
| |
| |
GOOD REASON |
|
|
PAYMENT TYPE | |
TERMINATION | |
TERMINATION | |
DEATH | |
DISABILITY | |
NO TERMINATION | |
TERMINATION(6) |
|
|
Timothy R. Baer | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
ICP Payments (Severance) | |
$ | 0 | | |
$ | 2,033,633 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 2,033,633 | |
|
|
Accelerated Vesting
of Stock Options(4) | |
$ | 0 | | |
$ | 0 | | |
$ | 380,396 | | |
$ | 0 | | |
$ | 0 | | |
$ | 380,396 | |
|
|
PBRSU Vesting(1)(2) | |
$ | 0 | | |
$ | 1,378,370 | | |
$ | 1,033,777 | | |
$ | 1,033,777 | | |
$ | 0 | | |
$ | 1,378,370 | |
|
|
PSU Vesting(1) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 8,884,775 | |
|
|
Life Insurance Proceeds | |
$ | 0 | | |
$ | 0 | | |
$ | 2,295,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
|
|
Excess Long-Term Disability Plan
(Annual Payments) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 441,000 | | |
$ | 0 | | |
$ | 0 | |
|
|
Total | |
$ | 0 | | |
$ | 3,412,003 | | |
$ | 3,709,174 | | |
$ | 1,474,777 | | |
$ | 0 | | |
$ | 12,677,175 | |
|
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
(1) |
Amounts are determined by multiplying the number of shares for which vesting is accelerated by our closing stock price on January 29, 2016 ($72.42 per share). Any remaining unvested RSUs, PBRSUs and PSUs are forfeited. |
(2) |
For purposes of calculating the number of PBRSU shares vesting upon death and disability, the table uses the minimum payout, though the actual number of shares will be based on the actual performance at the end of the performance period. |
(3) |
For the Make-Whole PBRSUs granted to Mr. Cornell on August 21, 2014, the number of PBRSU shares vesting upon death and disability is equal to the at-goal payout, and the number of shares vesting upon involuntary termination without cause is equal to 50% of the at-goal payout of the outstanding unvested Make-Whole PBRSUs. In addition, in both change-in-control scenarios the Make-Whole PBRSUs would pay out a pro-rata portion of the at-goal payout within ten days following the change-in-control based on percentage of the performance period that had elapsed as of the date of the change-in-control. |
(4) |
Amounts are determined by multiplying the number of option shares for which vesting is accelerated by our closing stock price on January 29, 2016 ($72.42 per share) and subtracting the exercise price of such option shares. Mr. Cornell, Ms. Smith and Mr. McNamara do not have options outstanding because we ceased granting options to NEOs in January 2014. |
(5) |
The RSUs granted to Mr. Mulligan on May 22, 2014 vest in one-third increments on each anniversary of the grant date. However, the award will vest in full in the event of Mr. Mulligan’s death or disability. It will also vest in full in the event that Mr. Mulligan’s employment is involuntarily terminated without cause and Mr. Mulligan signs an agreement that includes a non-solicitation clause and a release of claims, and provides that the award will be terminated if Mr. Mulligan becomes employed by specified competitors. In addition, in both change-in-control scenarios Mr. Mulligan’s RSUs would pay out a pro-rata portion of the total shares subject to the award within ten days following the change-in-control. |
(6) |
With the exception of Mr. Cornell’s Make-Whole PBRSUs, the PSU and PBRSU awards are subject to a double-trigger, meaning that no vesting will accelerate upon a change-in-control unless an involuntary termination of employment without cause or a voluntary termination of employment for good reason occurs. The amount accelerated is equal to the greater of: (a) the amount the recipient would have been entitled to had the termination occurred without a change-in-control (which ranges from 50% to 100% depending on the award type and the participant’s age and years of service), or (b) a pro-rata portion of the at-goal payout based on the percentage of the performance period that has elapsed as of the date of the termination following the change-in-control. The balance of those awards is forfeited. |
Voluntary Termination
None of our currently employed NEOs are entitled to payments and
benefits for which the amount, vesting or time of payment is altered by their voluntary termination.
Involuntary Termination
If a NEO was involuntarily terminated for cause, he or she would
not be eligible for any of the Post-Termination Benefits described in this section. If a NEO is involuntarily terminated without
cause, the potential Post-Termination Benefits generally consist of:
|
• |
Severance payments under our Income Continuance Policy (ICP); and |
|
|
|
|
• |
Accelerated vesting of 50% of the at-goal payout of PBRSU awards, and forfeiture of the remaining 50%. |
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. In addition, a NEO who receives severance
payments under our ICP also receives a $30,000 allowance for outplacement services.
The accelerated vesting provisions of PBRSU awards are described
in the notes under the Outstanding Equity Awards at 2015 Fiscal Year-End table.
2016 Proxy Statement │ TARGET CORPORATION 57
Death
If a NEO dies while employed, the Post-Termination Benefits generally
consist of:
|
• |
Accelerated vesting of stock options; |
|
|
|
|
• |
Vesting of PBRSUs, with payout occurring after the end of the performance period based on the actual performance at the end of that period; and |
|
|
|
|
• |
Life insurance proceeds equal to three times the sum of the prior year’s annual base salary, plus the most recent Bonus and Non- Equity Incentive Plan payments, up to a maximum of $3 million. |
In addition, the NEO’s beneficiary will have the right to
receive a payout, if any, under PSUs after the end of the performance period based on the actual performance at the end of that
period.
Disability
If a NEO becomes totally and permanently disabled while employed,
the Post-Termination Benefits generally consist of:
|
• |
Vesting of PBRSUs, with payout occurring after the end of the performance period based on the actual performance at the end of that period; and |
|
|
|
|
• |
Monthly payments under the Excess Long-Term Disability Plan if he or she also participated in the widely available qualified long-term disability plan. |
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 $265,000) 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. In addition, the NEO will have the right to receive a payout, if any,
under PSUs after the end of the performance period based on the actual performance at the end of that period.
Change-in-Control
The following discussion describes the payments and
benefits that are triggered by: (a) the occurrence of a change-in-control; and (b) the occurrence of a change-in-control that
is followed by the NEO’s employment terminating involuntarily without cause or voluntarily with good reason (a material
reduction in compensation or responsibilities or a required relocation 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:
|
• |
50% or more of our Board of Directors consists of persons who were not initially nominated or appointed by incumbent directors, for which purpose any director who assumes office as a result of an actual or threatened contested election will not be considered as having been nominated or appointed by incumbent directors; |
|
|
|
|
• |
Any person or group acquires 30% or more of our common stock; |
|
|
|
|
• |
We merge with or into another company and our shareholders own less than 60% of the combined company; or |
|
|
|
|
• |
Our shareholders approve an agreement or plan to liquidate or dissolve our company. |
Our plans do not provide for any gross-ups for taxes due on any
payments described in this section.
Without Termination of Employment
The consequence of a change-in-control to the NEOs without termination
of employment is generally as follows:
|
• |
The deferred compensation balance in the EDCP will be paid in a lump sum as soon as allowed under IRC Section 409A, unless the Board of Directors determines not to accelerate payment of these amounts; and |
|
|
|
|
• |
A double-trigger applies to PBRSUs or PSU awards, meaning that no vesting will accelerate upon a change-in-control unless an involuntary termination of employment without cause or a voluntary termination of employment for good reason occurs. |
With Involuntary or Good Reason Termination
of Employment
In addition to the payments upon a change-in-control explained
under “Without Termination of Employment,” if a NEO’s employment terminates involuntarily without cause or voluntarily
with good reason (a material reduction in compensation or responsibilities or a required relocation following a change-in-control)
following a change-in-control, the double-trigger requirement will be met and the Post-Termination Benefits that may be received
generally consist of:
|
• |
Severance payments under our ICP; |
|
|
|
|
• |
Accelerated vesting of outstanding stock options; and |
|
|
|
|
• |
For outstanding PBRSUs and PSUs, the greater of: (a) the amount the recipient would have been entitled to had the termination occurred without a change-in-control (which ranges from 50% to 100% depending on the award type and the participant’s age and years of service), or (b) a pro-rata portion of the at-goal payout based on the percentage of the three-year vesting or performance period that has elapsed as of the date of the termination following the change-in-control. The balance of the awards is forfeited. |
We use the “greater of” calculation for PBRSUs and
PSUs to prevent a NEO from receiving less due to a change-in-control than they would have received as a result of a similar termination
absent a change-in-control. In addition, we use the at-goal payout for calculating the pro-rata portion rather than actual performance
to eliminate arbitrary results that could occur with a shortened performance period and in case calculation of actual or comparable
performance metrics would be unfeasible following the change-in-control.
2016 Proxy Statement │ TARGET CORPORATION 58
DIRECTOR COMPENSATION
General Description of Director Compensation
Our non-employee director compensation program allows directors
to choose one of two forms of annual compensation:
|
• |
a combination of cash and RSUs; or |
|
|
|
|
• |
RSUs only. |
Each form under the compensation program is intended to provide
$260,000 in value to non-employee directors as follows:
|
| |
| |
|
|
|
| |
CASH | |
RSUs |
|
|
Combination (Cash and RSUs) | |
$ | 90,000 | | |
$ | 170,000 | |
|
|
RSUs Only | |
$ | 0 | | |
$ | 260,000 | |
|
|
| |
| | | |
| | |
|
The forms of annual compensation have the following terms:
|
• |
The cash retainer is paid pro-rata in quarterly installments. Directors may defer receipt of all or a portion of any cash retainer into the Director Deferred Compensation Plan. Deferrals earn market returns based on the investment alternatives chosen by them from the funds offered by Target’s 401(k) Plan, including the Target Corporation Common Stock Fund. |
|
|
|
|
• |
RSUs are settled in shares of Target common stock immediately following a director’s departure from the Board. Dividend equivalents are paid on RSUs in the form of additional RSUs. RSUs are granted in January each year and vest quarterly over a one-year period. |
The Lead Independent Director and Committee Chairs receive additional
compensation for those roles, which is paid (a) in cash if the director elects a combination of cash and RSUs, or (b) in RSUs if
the director elects all RSUs. Compensation for Lead Independent Director and Committee Chairs is as follows:
|
| |
|
|
|
ROLE | |
AMOUNT |
|
|
Lead Independent Director | |
$ | 30,000 | |
|
|
Audit and Finance Committee Chair | |
$ | 30,000 | |
|
|
Human Resources and Compensation Committee Chair | |
$ | 20,000 | |
|
|
Nominating and Governance Committee Chair | |
$ | 15,000 | |
|
|
Risk and Compliance Committee Chair | |
$ | 15,000 | |
|
|
Infrastructure and Investment Committee Chair | |
$ | 15,000 | |
|
|
| |
| | |
|
New directors also receive a one-time grant of RSUs with a $50,000
grant date fair value upon joining the Board, as well as a pro-rated portion of the annual compensation based on the date they
joined the Board using the combination of cash and RSUs.
2016 Proxy Statement │ TARGET CORPORATION 59
Director Compensation Table(1)
|
| |
| |
| |
| |
| |
|
|
|
| |
| |
| |
| |
CHANGE IN | |
|
|
|
| |
| |
| |
| |
PENSION VALUE | |
|
|
|
| |
| |
| |
| |
AND NONQUALIFIED | |
|
|
|
| |
| |
| |
| |
DEFERRED | |
|
|
|
| |
FEES EARNED OR | |
STOCK | |
OPTION | |
COMPENSATION | |
|
|
|
NAME | |
PAID IN CASH | |
AWARDS(2)(3) | |
AWARDS(2)(3) | |
EARNINGS(4)(5) | |
TOTAL(6) |
|
|
Roxanne S. Austin(7) | |
$ | 110,000 | | |
$ | 170,021 | | |
$ | 0 | | |
$ | 0 | | |
$ | 280,021 | |
|
|
Douglas M. Baker, Jr.(7) | |
$ | 110,833 | | |
$ | 170,021 | | |
$ | 0 | | |
$ | 0 | | |
$ | 280,854 | |
|
|
Calvin Darden | |
$ | 90,000 | | |
$ | 170,021 | | |
$ | 0 | | |
$ | 0 | | |
$ | 260,021 | |
|
|
Henrique De Castro | |
$ | 0 | | |
$ | 170,021 | | |
$ | 0 | | |
$ | 0 | | |
$ | 170,021 | |
|
|
Robert L. Edwards | |
$ | 37,500 | | |
$ | 290,935 | | |
$ | 0 | | |
$ | 0 | | |
$ | 328,435 | |
|
|
Melanie L. Healey | |
$ | 15,000 | | |
$ | 248,420 | | |
$ | 0 | | |
$ | 0 | | |
$ | 263,420 | |
|
|
Donald R. Knauss | |
$ | 37,500 | | |
$ | 290,935 | | |
$ | 0 | | |
$ | 0 | | |
$ | 328,435 | |
|
|
James A. Johnson(7)(8) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 20,056 | | |
$ | 20,056 | |
|
|
Mary E. Minnick | |
$ | 0 | | |
$ | 170,021 | | |
$ | 0 | | |
$ | 0 | | |
$ | 170,021 | |
|
|
Anne M. Mulcahy(7) | |
$ | 110,417 | | |
$ | 170,021 | | |
$ | 0 | | |
$ | 0 | | |
$ | 280,437 | |
|
|
Derica W. Rice(7) | |
$ | 13,750 | | |
$ | 290,027 | | |
$ | 0 | | |
$ | 0 | | |
$ | 303,777 | |
|
|
Kenneth L. Salazar(7) | |
$ | 105,000 | | |
$ | 170,021 | | |
$ | 0 | | |
$ | 0 | | |
$ | 275,021 | |
|
|
John G. Stumpf(7) | |
$ | 102,500 | | |
$ | 170,021 | | |
$ | 0 | | |
$ | 0 | | |
$ | 272,521 | |
|
|
| |
| | | |
| | | |
| | | |
| | | |
| | |
|
(1) |
Ms. Lozano is not reflected in the Director Compensation Table because she became a director after the end of fiscal 2015. |
(2) |
Amounts represent the aggregate grant date fair value of RSUs and stock options that were granted in fiscal 2015, as computed in accordance with FASB ASC Topic 718, Stock Compensation. See Note 26, Share-Based Compensation, to our consolidated financial statements for fiscal 2015 for a description of our accounting and the assumptions used. Details on the stock awards granted during fiscal 2015 are as follows: |
|
| |
|
|
|
| |
STOCK AWARDS (RSUs) |
|
|
| |
| |
GRANT DATE |
|
|
NAME | |
# OF UNITS | |
FAIR VALUE |
|
|
Ms. Austin | |
| 2,349 | | |
$ | 170,021 | |
|
|
Mr. Baker | |
| 2,349 | | |
$ | 170,021 | |
|
|
Mr. Darden | |
| 2,349 | | |
$ | 170,021 | |
|
|
Mr. De Castro | |
| 2,349 | | |
$ | 170,021 | |
|
|
Mr. Edwards | |
| 3,897 | | |
$ | 290,935 | |
|
|
Ms. Healey | |
| 3,396 | | |
$ | 248,420 | |
|
|
Mr. Knauss | |
| 3,897 | | |
$ | 290,935 | |
|
|
Mr. Johnson | |
| 0 | | |
$ | 0 | |
|
|
Ms. Minnick | |
| 2,349 | | |
$ | 170,021 | |
|
|
Ms. Mulcahy | |
| 2,349 | | |
$ | 170,021 | |
|
|
Mr. Rice | |
| 4,007 | | |
$ | 290,027 | |
|
|
Mr. Salazar | |
| 2,349 | | |
$ | 170,021 | |
|
|
Mr. Stumpf | |
| 2,349 | | |
$ | 170,021 | |
|
|
| |
| | | |
| | |
|
2016 Proxy Statement │ TARGET CORPORATION 60
(3) |
The aggregate number of unexercised stock options (which were granted in years prior to fiscal 2013) and unvested RSUs outstanding at fiscal year-end held by directors was as follows: |
|
|
|
|
|
|
|
|
NAME |
|
STOCK
OPTIONS |
|
RESTRICTED
STOCK UNITS |
|
|
Ms. Austin |
|
|
24,349 |
|
|
2,349 |
|
|
Mr. Baker |
|
|
5,570 |
|
|
2,349 |
|
|
Mr. Darden |
|
|
37,105 |
|
|
2,349 |
|
|
Mr. De Castro |
|
|
5,570 |
|
|
2,349 |
|
|
Mr. Edwards |
|
|
0 |
|
|
2,349 |
|
|
Ms. Healey |
|
|
0 |
|
|
2,349 |
|
|
Mr. Knauss |
|
|
0 |
|
|
2,349 |
|
|
Mr. Johnson |
|
|
0 |
|
|
0 |
|
|
Ms. Minnick |
|
|
0 |
|
|
2,349 |
|
|
Ms. Mulcahy |
|
|
23,325 |
|
|
2,349 |
|
|
Mr. Rice |
|
|
0 |
|
|
4,007 |
|
|
Mr. Salazar |
|
|
3,601 |
|
|
2,349 |
|
|
Mr. Stumpf |
|
|
17,889 |
|
|
2,349 |
|
|
|
|
|
|
|
|
|
|
(4) |
Amount reported represents above-market earnings on nonqualified deferred compensation, consisting of an additional 7.74% annual return on a frozen deferred compensation plan. Prior to December 31, 1996, deferrals were allowed under our Deferred Compensation Plan Directors (DCP-Director). No new deferrals or participants were allowed after that year. Participants’ DCP-Director accounts are credited each month 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%. |
(5) |
In addition to amounts reported, non-employee directors who were elected prior to 1997 are eligible to receive a lump-sum payment in the February following the date they leave their directorship. The payment is equal to the present value of an annual payment stream of $25,000 (i.e., the director’s fee in effect as of December 31, 1996) for a period equal to the number of years of service of the individual as a director before December 31, 1996.The present value is based on a discount rate of 3.80% based on the Moody’s Bond Indices Corporate AA rate on December 31, 2015. During fiscal 2015, Mr. Johnson was the only director eligible to receive a benefit under this program and his retirement benefit was $18,938. |
(6) |
In addition to the amounts reported, all directors also receive a 10% discount on merchandise purchased at Target stores and Target.com, both during active service and following retirement. Non-employee directors are also provided with $100,000 of accidental death life insurance. |
(7) |
The following directors received additional compensation in fiscal 2015 for their roles as Committee Chairs and, in the case of Mr. Baker and Mr. Johnson, as Lead Independent Director. The additional compensation is reflected in “Fees Earned or Paid in Cash” and/or “Stock Awards” based on the form of annual compensation selected by the director as described under the heading “General Description of Director Compensation.” Amounts paid as Stock Awards were granted in January of fiscal 2014. |
|
|
|
|
|
NAME |
ROLE(S) DURING FISCAL
2015 |
|
|
Ms. Austin |
Audit Chair (until March 2015)
Infrastructure and Investment Chair (since March 2015) |
|
|
Mr. Baker |
Lead Independent Director (since March 2015) |
|
|
Mr. Johnson |
Lead Independent Director (until March 2015)
Compensation Chair (until March 2015) |
|
|
Ms. Mulcahy |
Nominating and Governance Chair (until March 2015)
Human Resources and Compensation Chair (since March 2015) |
|
|
Mr. Rice |
Finance Chair (until March 2015)
Audit and Finance Chair (since March 2015) |
|
|
Mr. Salazar |
Risk and Compliance Chair |
|
|
Mr. Stumpf |
Nominating and Governance Chair (since March 2015) |
|
|
|
|
|
(8) |
Mr. Johnson retired from the Board on June 10, 2015 in connection with our mandatory retirement policy. Mr. Johnson served as an independent director until his retirement. |
2016 Proxy Statement │ TARGET CORPORATION 61
EQUITY COMPENSATION PLAN INFORMATION
|
| |
| |
| |
| |
|
PLAN
CATEGORY | |
NUMBER
OF SECURITIES TO BE ISSUED UPON
EXERCISE OF OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS
AS OF JANUARY 30, 2016 | |
WEIGHTED-AVERAGE
EXERCISE PRICE OF
OUTSTANDING OPTIONS, WARRANTS AND RIGHTS
AS OF JANUARY 30, 2016 | |
NUMBER
OF SECURITIES REMAINING AVAILABLE
FOR FUTURE ISSUANCE UNDER EQUITY
COMPENSATION PLANS
AS OF JANUARY 30, 2016 (EXCLUDING
SECURITIES REFLECTED IN
COLUMN (A)) | |
|
| |
(a) | |
(b) | |
(c) | |
|
Equity compensation plans approved by security holders | |
18,749,638(1) | |
$ 53.47 | |
31,509,596 | |
|
Equity compensation plans not approved by security holders | |
0 | |
| |
0 | |
|
TOTAL | |
18,749,638 | |
$
53.47 | |
31,509,596 | |
|
| |
| |
| |
| |
(1) |
This amount includes 8,249,325 Strategic Alignment Award, PSU, RSU and PBRSU shares potentially issuable upon settlement of Strategic Alignment Awards, PSUs, RSUs and PBRSUs issued under our Long-Term Incentive Plan and Amended and Restated 2011 Long-Term Incentive Plan. The actual number of Strategic Alignment Award and PSU shares to be issued depends on our financial performance over a period of time and the actual number of PBRSU shares to be issued depends on our total shareholder return over a period of time. Strategic Alignment Awards, PSUs, RSUs and PBRSUs do not have an exercise price and thus they have been excluded from the weighted average exercise price calculation in column (b). |
ADVANCES OF DEFENSE COSTS FOR CERTAIN LITIGATION
MATTERS
Certain members of our current Board and current executive officers,
and certain former Board members and former executive officers have been named as defendants in lawsuits alleging breaches of fiduciary
duties to Target in connection with the data breach that occurred in the fourth quarter of fiscal 2013. The current and former
directors and officers who have been named as defendants in this action have a legal right under the Minnesota Business Corporation
Act and our Amended and Restated Articles of Incorporation to advancement of their costs of defense. Accordingly, in fiscal 2015,
we advanced defense costs on behalf of the current and former directors and officers amounting to approximately $2,008,715.
2016 Proxy Statement │ TARGET CORPORATION 62
ITEM TWO |
RATIFICATION OF APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
The Audit and Finance Committee is directly responsible for the appointment,
compensation, retention and oversight of the independent registered public accounting firm retained to audit our financial statements.
The Audit and Finance Committee appointed Ernst & Young LLP as the independent registered public accounting firm for Target
and its subsidiaries for the fiscal year ending January 28, 2017. Ernst & Young LLP has been retained in that capacity since
1931. The Audit and Finance Committee is aware that a long-tenured auditor may be believed by some to pose an independence risk.
To address these concerns, our Audit and Finance Committee:
|
• |
Reviews all non-audit services and engagements provided by Ernst & Young LLP, specifically with regard to the impact on the firm’s independence; |
|
|
|
|
• |
Conducts an annual assessment of Ernst & Young LLP’s service quality, and its working relationship with our management; |
|
|
|
|
• |
Conducts regular private meetings separately with each of Ernst & Young LLP and our management; |
|
|
|
|
• |
Interviews and approves the selection of Ernst & Young LLP’s new lead engagement partner with each rotation; and |
|
|
|
|
• |
At least annually obtains and reviews a report from Ernst & Young LLP describing all relationships between the independent auditor and Target. |
The members of the Audit and Finance Committee believe that the continued
retention of Ernst & Young LLP to serve as our independent registered public accounting firm is in the best interests of our
company and its shareholders.
As a good corporate governance practice, the Board of Directors is
seeking shareholder ratification of the appointment even though ratification is not legally required. Proxies solicited by the
Board of Directors will, unless otherwise directed, be voted to ratify the appointment by the Audit and Finance Committee of Ernst
& Young LLP as the independent registered public accounting firm for Target and its subsidiaries for the fiscal year ending
January 28, 2017.
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 2015 and 2014, the review of
our interim consolidated financial statements for each quarter in fiscal 2015 and 2014, and for audit-related, tax and all other
services performed in 2015 and 2014:
|
| |
| | | |
| | |
|
| |
FISCAL
YEAR END | |
|
| |
JANUARY
30, 2016 | | |
JANUARY
31, 2015 | |
|
Audit Fees(1) | |
$ | 5,124,000 | | |
$ | 5,911,000 | |
|
Audit-Related Fees(2) | |
| 678,000 | | |
| 870,000 | |
|
Tax Fees: | |
| | | |
| | |
|
Compliance(3) | |
| 1,104,000 | | |
| 1,653,000 | |
|
Planning & Advice(4) | |
| 314,000 | | |
| 133,000 | |
|
Total | |
$ | 7,220,000 | | |
$ | 8,567,000 | |
|
| |
| | | |
| | |
(1) |
Includes annual integrated audit, statutory audits of certain foreign subsidiaries, consents for securities offerings and registration statements, accounting consultations, and other agreed-upon procedures. |
(2) |
Includes benefit plan audits, accounting consultations, and other attestation services. |
(3) |
Includes tax return preparation and other tax compliance services, including tax methods analysis and support. |
(4) |
Includes tax-planning advice and assistance with tax audits and appeals, including fees related to our exit from Canada. |
2016 Proxy Statement │ TARGET CORPORATION 63
The Audit and Finance 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 and Finance 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 and Finance Committee has delegated authority to grant certain pre-approvals
to the Audit and Finance Committee Chair. Pre-approvals granted by the Audit and Finance Committee Chair are reported to the full
Audit and Finance Committee at its next regularly scheduled meeting.
THE AUDIT AND FINANCE COMMITTEE RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
REPORT
OF THE AUDIT AND FINANCE COMMITTEE
The role of the Audit and Finance 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 and Finance Committee
Charter, which has been adopted by our Board of Directors and further describes the role of the Audit and Finance Committee in
overseeing our financial reporting process, is available online at www.target.com/investors (click on “Board of
Directors,” then “Board Committees”).
In performing its functions, the Audit and Finance Committee:
|
• |
Met with our internal auditors and independent registered public accounting firm, with and without management present, to discuss the overall scope and plans for their respective audits, the results of their examinations and their evaluations of Target’s internal controls; |
|
|
|
|
• |
Reviewed and discussed with management the audited financial statements included in our Annual Report; |
|
|
|
|
• |
Discussed with our independent registered public accounting firm the matters required to be discussed by the applicable Public Company Oversight Board standards; and |
|
|
|
|
• |
Received the written disclosures and the letter from our independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered accountant’s communication with the Audit and Finance Committee concerning independence, and discussed with them matters relating to their independence. |
Based on the review and discussions described in this report, and
subject to the limitations on the role and responsibilities of the Audit and Finance Committee referred to above and in the Audit
and Finance Committee Charter, the Audit and Finance 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 January 30, 2016, for filing with the SEC.
AUDIT AND FINANCE COMMITTEE(1)
Derica W. Rice, Chair
Roxanne S. Austin(2)
Robert L. Edwards
Mary E. Minnick
John G. Stumpf(2)
|
(1) |
Ms. Lozano joined the Audit and Finance Committee following the preparation of this report. |
|
(2) |
Ms. Austin and Mr. Stumpf rotated off of the Audit and Finance Committee following the preparation of this report. |
2016 Proxy Statement │ TARGET CORPORATION 64
ITEM THREE |
ADVISORY APPROVAL OF EXECUTIVE COMPENSATION (SAY ON PAY) |
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 CD&A, tabular disclosures and related narrative of this proxy statement.
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. 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.
At our June 2015 annual meeting of shareholders, 96.6% of shareholder
votes were cast in support of our executive compensation program for our Say on Pay proposal, a significant improvement over the
prior two years.
Since the 2015 Say on Pay vote, our outreach efforts included
a business and governance update on the addition of new directors, our refresh of leadership roles to execute strategy, how our
reshaped strategy has led to improving performance, and a discussion of our continued commitment to sound governance and compensation
practices.
In the course of these engagements we have received positive
feedback on the current design of our executive compensation program. Accordingly, there have been no significant changes in the
program design in 2015. We value the feedback provided by our shareholders and look forward to continued, open dialogue on compensation
matters and other issues relevant to our business.
THE BOARD OF DIRECTORS, UPON RECOMMENDATION
OF THE HUMAN RESOURCES AND 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 Human Resources and 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 Human Resources and Compensation
Committee.
The Board believes that the Human
Resources and 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, as evidenced by our outreach
and response to the 2013 and 2014 Say on Pay votes, 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.
2016 Proxy Statement │ TARGET CORPORATION 65
ITEM FOUR |
SHAREHOLDER PROPOSAL TO REPORT ON CRITERIA FOR SELECTING
COUNTRIES FOR OPERATIONS |
The National Center for Public Policy
Research, 20 F Street, NW, Suite 700, Washington, DC 20001, who held more than $2,000 of shares of common stock on December
28, 2015, intends to submit the following resolution to shareholders for approval at the 2016 Annual Meeting of Shareholders
(the language below in the “Resolution” and “Shareholder’s Supporting Statement” is reproduced
without alteration):
RESOLUTION
Human Rights Review – High-Risk Regions
Whereas, the Securities and Exchange Commission has consistently
recognized that human rights constitute a significant policy issue.
Company operations in high-risk regions with poor human rights
records risk damage to Target’s reputation and shareholder value.
Through its registered owned brand
factories, Target has a presence in areas such as Pakistan, Egypt and Bangladesh – all nations that have
questionable human rights records as it relates to suffrage, women’s rights and gay rights. Target also maintains
a major presence in India, which has a questionable human rights record as it relates to homosexual rights.
Resolved: The proponent requests
the Board review the Company’s guidelines for selecting countries/regions for its operations and issue a report, at reasonable
expense excluding any proprietary information, to shareholders by December 2016. The report should identify Target’s criteria
for investing in, operating in and withdrawing from high-risk regions.
SHAREHOLDER’S SUPPORTING STATEMENT
If the Company chooses, the review may consider developing guidelines
on investing or withdrawing from areas where the government has engaged in systematic human rights violations.
In its review and report, the Company might also consider a
congruency analysis between its stated corporate values and Company operations in certain regions, which raises an issue of misalignment
with those corporate values, and stating the justification for such exceptions.
For example, the Company recently
joined with other corporations in bashing American states that support traditional marriage. In a U.S. Supreme Court filing,
the Company joined a brief that suggested states with traditional view on marriage “hamper employer efforts to recruit
and retain the most talented workforce possible in those states.” However, Target has operations in regions such as
India and Pakistan where homosexual acts are criminalized. These company operations are inconsistent with Target’s
claimed values.
Additionally, Target supports sustainability and works to reduce
its CO2 (GHG) emissions. However, Target has operations in China – the world’s largest emitter of CO2 with a questionable
record on human rights and religious freedom. Again, operations in this region appear to conflict with Target’s stated values
and policies.
The proponent believes that Target’s record to date demonstrates
a gap between its lofty rhetoric/aspirations and its performance. The requested report would play a role in illuminating and addressing
the factors accounting for this gap.
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.
Our selection of the countries in
which we operate is based on a wide range of proprietary factors relating to our business strategy, including social- and
environmental-related risks. We apply our values and standards of conduct everywhere we do business. In evaluating our supply
chain, we aspire to the highest ethical and legal standards, and we only work with vendors and suppliers who share our
commitment. To advance those standards, we work with manufacturers, industry organizations, and other retailers around the
world to continually raise the bar for our industry as a whole.
2016 Proxy Statement │ TARGET CORPORATION 66
Respect for human rights is a fundamental
principle throughout our business practices and standards. We require all vendors, including manufacturers, contractors, subcontractors
and suppliers to meet our Standards of Vendor Engagement, which address eleven business principles focused on ethical sourcing
(see https://corporate.target.com/corporate-responsibility/responsible-sourcing for additional detail). Our standards often
exceed requirements set by local law. To drive accountability throughout our supply chain for these standards, we consistently
monitor our vendors to confirm that our standards are being met. In 2015, we conducted over 1,500 supply chain audits on human
rights, labor, health, and safety in 21 different countries (more information about our audit program is available at https://corporate.target.com/corporate-responsibility).
In addition, we believe that implementing this proposal would
not be a productive use of company resources, and that doing so would not provide meaningful information to shareholders. If the
requested report were undertaken, it would omit proprietary information and not materially enhance Target’s existing publicly-available
information relating to our commitment to human rights. For these reasons, we do not believe that this proposal is in the best
interests of Target or our shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “AGAINST”
THE SHAREHOLDER PROPOSAL TO REPORT ON CRITERIA FOR SELECTING COUNTRIES FOR OPERATIONS.
2016 Proxy Statement │ TARGET CORPORATION 67
QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING AND VOTING
1. |
WHAT
IS THE PURPOSE OF OUR ANNUAL MEETING? |
Our Annual Meeting provides shareholders with the opportunity
to act upon the items of business described in the accompanying Notice of 2016 Annual Meeting of Shareholders. In addition, the
Annual Meeting serves as a forum where our management reports on Target’s performance and governance during fiscal 2015
and responds to questions from shareholders.
2. |
WHAT
IS INCLUDED IN THE PROXY MATERIALS? |
The proxy materials for our 2016 Annual Meeting of Shareholders
include the accompanying Notice of 2016 Annual Meeting of Shareholders, this proxy statement and our Annual Report on Form 10-K
for the year ended January 30, 2016 (Annual Report). If you received a paper copy of these materials, the proxy materials also
include a proxy card or voting instruction form.
3. |
WHAT
IS A PROXY AND WHAT IS A PROXY STATEMENT? |
A proxy is your legal designation of another person to vote
the shares you own. The person you designate is called a proxy or proxy holder. If you designate someone as your proxy in a written
document, that document also is called a proxy or a proxy card. Any proxy may be revoked at any time prior to completion of voting
at the Annual Meeting by delivering either a proper written notice of revocation of your proxy or a later-dated proxy to our Corporate
Secretary, 1000 Nicollet Mall, TPS-2670, Minneapolis, Minnesota 55403. We have designated three of our officers as proxies for
the 2016 Annual Meeting of Shareowners—Brian C. Cornell, Catherine R. Smith and Timothy R. Baer. A proxy statement is the
document that contains the information the SEC rules require us to provide when we ask you to sign a proxy designating individuals
to vote on your behalf.
4. |
WHAT
IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A REGISTERED SHAREHOLDER AND AS A BENEFICIAL OWNER? |
If your shares are registered directly in your name with Target’s
transfer agent, Wells Fargo Shareowner Services, you are considered a registered shareholder with respect to those shares. If
your shares are held through a broker, trustee, bank or other nominee, you are considered the “beneficial owner” of
those shares.
5. |
WHO
MAY VOTE AND WHAT CONSTITUTES A QUORUM FOR THE ANNUAL MEETING? |
Only registered shareholders or beneficial owners holding our
outstanding shares at the close of business on the record date, April 11, 2016, are entitled to receive notice of the Annual Meeting
and to vote. Target common stock is the only class of voting shares we have outstanding. Each share of common stock will have
one vote for each director nominee and one vote on each item of business to be voted on. As of the record date, 595,968,818 shares
of our common stock were outstanding.
We need a quorum to be able to hold the Annual Meeting. 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. 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.
Depending on how you hold your shares, you have up to three
options for voting in advance:
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Internet. If you are a registered shareholder
or a beneficial owner holding shares through the Target 401(k) Plan you may vote through the Internet by going to the website
identified on your proxy card or Notice of Internet Availability of Proxy Materials (Notice) entering the Control Number found
on your proxy card or Notice and following the instructions on the website. If you are a beneficial owner holding shares outside
of Target’s 401(k) Plan you may vote through the Internet if your broker, trustee, bank or nominee makes that method
available by going to the website identified on your voter instruction form or Notice, entering the Control number found on
the voter instruction form or Notice and following the instructions on that website. Internet voting is available 24 hours
a day, seven days a week up to the deadline. The Internet voting deadline for shares held by a beneficial owner through the
Target 401(k) Plan is 6:00 a.m. Eastern Daylight Time on June 6, 2016. For all registered shareholders or other beneficial
owners, the deadline is 11:59 p.m. Eastern Daylight Time on June 7, 2016. |
2016 Proxy Statement │ TARGET CORPORATION 68
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Telephone. If you are a registered shareholder or a
beneficial owner holding shares through the Target 401(k) Plan you may vote by touch-tone telephone by either calling the
toll-free number identified on your proxy card or, after viewing the proxy materials on the website provided in your Notice,
calling the toll-free number for telephone voting identified on the website, and following the recorded instructions during
the call. If you are a beneficial owner holding shares outside of the Target 401(k) Plan you may vote by touch-tone telephone
if your broker, trustee, bank or nominee makes that method available by either calling the toll-free number identified on
your voter instruction form or, after viewing the proxy materials on the website provided in your Notice, calling the toll-free
number for telephone voting identified on that website, and following the recorded instructions during the call. Telephone
voting is available 24 hours a day, seven days a week up to the deadline. The telephone voting deadline for shares held by
a beneficial owner through the Target 401(k) Plan is 6:00 a.m. Eastern Daylight Time on June 6, 2016. For all registered shareholders
or other beneficial owners, the deadline is 11:59 p.m. Eastern Daylight Time on June 7, 2016. |
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Mail. If you are a registered shareholder or
a beneficial owner holding shares through the Target 401(k) Plan you may vote by completing, properly signing and mailing
a written proxy card. If you are a beneficial owner holding shares outside of the Target 401(k) Plan you may vote by completing,
properly signing and mailing a written voter instruction form. If you did not receive a proxy card or voter instruction form
by mail, you must request a written copy of the proxy materials, which will include a proxy card or voter instruction form,
by visiting www.proxyvote.com, dialing 1-800-579-1639 or emailing sendmaterial@proxyvote.com. If requesting a written
copy of the proxy materials, please be prepared to provide your control number, which can be found in your Notice. Those shareholders
voting by mail should return their proxy card or voter instruction form promptly to ensure it is received before the date
of the Annual Meeting or, for participants in the Target 401(k) Plan, by 6:00 a.m. Eastern Daylight Time on June 6, 2016. |
In addition, you may vote in person at the Annual Meeting if
you follow these procedures:
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In Person. If you are a registered shareholder
you may vote in person at the Annual Meeting, unless you have legally appointed another proxy to vote on your behalf and not
revoked that appointed proxy. If you are a beneficial owner you may vote in person at the Annual Meeting if you have obtained
a legal proxy from your broker, trustee, bank or nominee. Please note that if you are a beneficial owner and request a legal
proxy, any previously executed proxy will be revoked, and your vote will not be counted unless you appear at the meeting and
vote in person or legally appoint another proxy to vote on your behalf. Registered shareholders and beneficial owners planning
to attend the meeting and vote in person must follow the instructions provided in Question 12 “How can I attend the
Annual Meeting?” on page 71. |
7. | WHAT
HAPPENS IF I DO NOT PROVIDE INSTRUCTIONS ON HOW TO VOTE OR IF OTHER MATTERS ARE PRESENTED
FOR DETERMINATION AT THE ANNUAL MEETING? |
If you are a registered shareholder and return your proxy card
without instructions, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of
the Board of Directors.
If you are a beneficial owner, you generally cannot vote your
shares directly and must instead instruct your broker, trustee, bank or nominee how to vote your shares using the voting instruction
form provided by that intermediary. If you do not provide voting instructions, whether your shares can be voted by your broker,
bank or nominee depends on the type of item being considered.
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Non-Discretionary Items. If you do not provide voting
instructions for any of the non-discretionary items at the Annual Meeting, your broker, bank or nominee cannot vote your shares,
resulting in a “broker non-vote.” All items of business other than Item 2 (Ratification of Appointment of
Ernst & Young LLP as Independent Registered Public Accounting Firm) are non-discretionary items. 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. |
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Discretionary Items. Even if you do not provide voting instructions,
your broker, bank or nominee may vote in its discretion on Item 2 (Ratification of Appointment of Ernst & Young LLP as
Independent Registered Public Accounting Firm) because it is a discretionary item. |
If you hold shares through a trust, whether your trustee can
vote your shares if you do not provide voting instructions depends on the agreement governing the trust holding your shares. Voting
for shares held in the Target 401(k) Plan is detailed in the following Question 8 “How will shares in the Target 401(k)
Plan be voted?”.
As of the date of this proxy statement, we know of no matters
that will be presented for determination at the Annual 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, proxy holders will vote as recommended by the Board
of Directors or, if no recommendation is given, in their own discretion.
2016 Proxy Statement │ TARGET CORPORATION 69
8. |
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 other shares as a registered shareholder or beneficial
owner, you will separately receive proxy materials to vote those other shares you hold outside of the Target 401(k) Plan. 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.
9. |
WHAT
ITEMS ARE BEING VOTED UPON, HOW DOES THE BOARD RECOMMEND THAT I VOTE, AND WHAT ARE THE STANDARDS FOR DETERMINING WHETHER ANY
ITEM HAS BEEN APPROVED? |
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EFFECT
OF |
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BOARD |
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VOTING
APPROVAL |
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EFFECT
OF |
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BROKER |
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ITEM
OF BUSINESS |
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RECOMMENDATION |
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STANDARD |
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ABSTENTION |
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NON-VOTE |
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Item
1: Election of 14 Directors |
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FOR each Director Nominee |
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More votes “FOR” than “AGAINST” |
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No effect |
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No effect |
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Item
2: Ratification of Appointment of Ernst & Young LLP as Independent Registered Public Accounting Firm |
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FOR |
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Majority of shares present and entitled to vote(1) |
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Vote Against |
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Not applicable |
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Item
3: Advisory Approval of Executive Compensation |
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FOR |
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More votes “FOR” than “AGAINST” |
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No effect |
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No effect |
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Item
4: Shareholder Proposal to Report Criteria for Selecting Countries for Operations |
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AGAINST |
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Majority of shares present and entitled to vote(1)(2) |
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Vote Against(2) |
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No effect(3) |
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(1) |
This amount must be at least a majority of the minimum number of shares entitled
to vote that would constitute a quorum. “Shares present” includes shares represented in person or by proxy at
the Annual Meeting. |
(2) |
For purposes of determining the level of support needed for a shareholder to be eligible to resubmit
a shareholder proposal in a following year using Rule 14a-8 under the Securities Exchange Act of 1934, the SEC uses a simple
majority standard that compares the votes cast “FOR” to votes cast “AGAINST” an item (which gives
abstentions “No Effect”). Proxy advisory firms, such as Institutional Shareholder Services and Glass Lewis, also
use a simple majority standard in determining the level of support for shareholder proposals. |
(3) |
If quorum 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.” |
An item of business will not be considered to be approved unless
it meets the applicable Voting Approval Standard listed above. However, we believe in being responsive to shareholder input, and
will consider whether there is majority opposition to management proposals or majority support for shareholder proposals (whether
binding or non-binding) using a simple majority of more votes “FOR” than “AGAINST” in determining the
level of support for purposes of the Board’s response.
As a result of discussions with shareholders represented by
Newground Social Investment, we agreed to disclose, in our proxy statements and our SEC filings reporting the results of voting
items, both our applicable Voting Approval Standards for shareholder proposals and the simple majority standard used by the SEC
and proxy advisory firms to determine the level of support for shareholder proposals.
10. |
MAY
I VOTE CONFIDENTIALLY? |
Subject to the described exceptions, where the shareholder has
requested confidentiality on the proxy card, our policy is to treat all proxies, ballots and voting tabulations of a shareholder
confidentially.
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 SEC.
The independent election inspectors may at any time inform us whether or not a shareholder has voted.
2016 Proxy Statement │ TARGET CORPORATION 70
11. |
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 deadline—see
the instructions under Question 6 “How do I vote?” on page 68. 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.
12. |
HOW
CAN I ATTEND THE ANNUAL MEETING? |
Only registered shareholders or
beneficial owners of common stock holding shares at the close of business on the record date (April 11, 2016), or their
duly appointed proxies, may attend the Annual Meeting. If you plan to attend the meeting, you must:
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such as a driver’s license, state-issued ID card, or passport, and |
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ATTENDEE |
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PERMITTED PROOF OF OWNERSHIP |
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Registered |
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Any one of the following: |
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Shareholder |
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Registered Shareholder List. Your name will be verified against our list of registered shareholders as of the record date; |
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Proxy Card. The proxy card that you received in the mail or, if you have already voted and returned your proxy card, the top part of the proxy card marked “Keep this Portion for Your Records”; |
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Notice of Internet Availability of Proxy Materials. The Notice of Internet Availability of Proxy Materials that you received in the mail containing a valid control number; or |
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Email with Voting Instructions. A copy of the email you received with instructions containing a link to the website where our proxy materials are available, a link to the proxy voting website and a valid control number. |
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Beneficial Owner |
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Any one of the following: |
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through the Target |
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Account Statement. Your account statement showing your share ownership as of the record date; |
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401(k) Plan |
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Proxy Card. The proxy card that you received in the mail or, if you have already voted and returned your proxy card, the top part of the proxy card marked “Keep this Portion for Your Records”; |
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Notice of Internet Availability of Proxy Materials. The Notice of Internet Availability of Proxy Materials that you received in the mail containing a valid control number; |
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Email with Voting Instructions. A copy of the email you received with instructions containing a link to the website where our proxy materials are available, a link to the proxy voting website and a valid control number; |
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Legal Proxy. A valid legal proxy containing a valid control number or a letter from a registered shareholder naming you as proxy; or |
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Letter from Intermediary. A letter from a broker, trustee, bank or nominee holding your shares confirming your ownership as of the record date. |
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Other Beneficial |
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Any one of the following: |
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Owner |
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Account Statement. Your account statement showing your share ownership as of the record date; |
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Voting Instruction Form. The voting instruction form you received in the mail from your broker, trustee, bank or nominee holding your shares containing a valid control number; |
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Notice of Internet Availability of Proxy Materials. The Notice of Internet Availability of Proxy Materials that you received in the mail containing a valid control number; |
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Email with Voting Instructions. A copy of the email you received with instructions containing a link to the website where our proxy materials are available, a link to the proxy voting website and a valid control number; |
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Legal Proxy. A valid legal proxy containing a valid control number or a letter from a registered shareholder naming you as proxy; or |
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Letter from Intermediary. A letter from a broker, trustee, bank or nominee holding your shares confirming your ownership as of the record date. |
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Guest |
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You must be accompanied by a shareholder who pre-registered no later than June 3, 2016 by submitting a request to Target’s Investor Relations Department, providing proof of ownership and submitting your name as the shareholder’s guest. Only one guest is permitted per shareholder. |
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Any person who does not have identification and establish
proof of ownership will not be admitted to the Annual Meeting.
We will decide in our sole discretion whether the documentation
you present for admission to the meeting meets the admission requirements. If you hold your shares in a joint account, both owners
can be admitted to the meeting if proof of joint ownership is provided and you both provide identification.
To expedite the admission process we strongly encourage all
shareholders wishing to attend the Annual Meeting to pre-register by submitting their attendance request and proof of ownership
to Target’s Investor Relations Department by email at investorrelations@target.com or by telephone at (800) 775-3110. Pre-registration
requests will be processed in the order in which they are received and must be received no later than June 3, 2016. Shareholders
who wish to bring a guest must complete the pre-registration process and submit the guest’s name to Target’s Investor
Relations Department by that deadline. Only one guest is permitted per shareholder.
2016 Proxy Statement │ TARGET CORPORATION 71
13. |
HOW
WILL THE ANNUAL MEETING BE CONDUCTED? |
Same-day registration and admittance will begin at 8:00 a.m.
Pacific Daylight Time. We will have two separate lines, one for pre-registered attendees and one for same-day registering attendees.
If you do not pre-register for the meeting, you should allow ample time for the same-day registration, as no attendees will be
admitted after 9:10 a.m. Pacific Daylight Time. Both pre-registered attendees and same-day registering attendees must present
their identification to be admitted to the Annual Meeting.
An Annual Meeting program containing rules of conduct for the
Annual Meeting will be provided to meeting attendees. The use of cameras, video and audio recording devices and other electronic
devices at the Annual Meeting is prohibited, and such devices will not be allowed in the Annual Meeting or any other related areas,
except by credentialed media. We realize that many cellular phones have built-in digital cameras, and while you may bring these
phones into the venue, you may not use the camera function at any time.
14. |
HOW
MAY I ACCESS OR RECEIVE THE PROXY MATERIALS, OTHER PERIODIC FILINGS, KEY CORPORATE GOVERNANCE DOCUMENTS AND OTHER INFORMATION? |
You can access our proxy statement and Annual Report, SEC filings,
key corporate governance documents and other information in a number of different ways, free of charge:
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METHODS
OF ACCESS |
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WEBSITE |
ELECTRONIC
DELIVERY |
HARD
COPY |
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Proxy Materials
Proxy Statement
Annual Report |
www.target.com/investors Register to receive email alerts by entering your email address under “Investor Email Alerts.” |
Sign up at www.target.com/investors (hover over “company,” then click on “shareholder services” in the “investors” column and click on “Sign up for E-Delivery”) |
Contact Investor Relations: Email investorrelations@target.com Phone (800) 775-3110 Mail Target Corporation Attn: Investor Relations 1000 Nicollet Mall Minneapolis, Minnesota 55403 Online www.target.com/investors (hover over “company” then click on “shareholder services” in the “investors” column and click on “Request Materials”) |
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Other Information
Other
Periodic Reports: •
Forms 10-Q •
Forms 8-K |
www.target.com/investors Register to receive email alerts by entering your email address under “Investor Email Alerts.” |
Contact Investor Relations: Email investorrelations@target.com |
Contact Investor Relations: Email investorrelations@target.com Phone (800) 775-3110 |
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Corporate Governance
Documents:
• Articles of Incorporation
• Bylaws
• Corporate Governance Guidelines
• Board Committee Charters
• Business Conduct Guide |
www.target.com/investors
(hover over “company,” then click
on “corporate governance” in the
“investors” column) |
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Mail
Target Corporation
Attn: Investor Relations
1000 Nicollet Mall
Minneapolis, Minnesota 55403 |
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Corporate Social
Responsibility Report |
https://corporate.target.com/corporate-responsibility/goals-reporting |
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2016 Proxy Statement │ TARGET CORPORATION 72
15. |
WHAT
IS HOUSEHOLDING? |
We have adopted a procedure approved by the SEC called “householding.”
Under this procedure, certain shareholders 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 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 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 Department by email, phone or mail using the information in the “Hard Copy” column
of Question 14.
If you participate in householding and would like to receive
a separate copy of our 2015 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.
16. |
HOW
ARE PROXIES BEING SOLICITED AND WHO PAYS THE RELATED EXPENSES? |
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 $45,000, plus reimbursement of out-of-pocket expenses. We will pay the expenses in connection with our
solicitation of proxies.
17. |
HOW
CAN I COMMUNICATE WITH TARGET’S BOARD OF 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.
18. |
HOW
DO I SUBMIT A PROPOSAL OR NOMINATE A DIRECTOR CANDIDATE FOR THE 2017 ANNUAL MEETING OF SHAREHOLDERS? |
Proposals by shareholders that are submitted for inclusion in
our proxy statement for our 2017 Annual Meeting must follow the procedures provided in Rule 14a-8 under the Securities Exchange
Act of 1934. To be timely under Rule 14a-8, they must be received by our Corporate Secretary by December 26, 2016. The contact
information for our Corporate Secretary is Target Corporation, 1000 Nicollet Mall, Mail Stop TPS-2670, Minneapolis, Minnesota
55403.
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 2017 Annual Meeting,
notice must be received by March 10, 2017, 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 2017 Annual Meeting must be received by March 10, 2017, 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.
2016 Proxy Statement │ TARGET CORPORATION 73
In addition, our bylaws provide that under certain circumstances,
a shareholder or group of shareholders may include director candidates that they have nominated in our proxy statement for an
annual meeting of shareholders. These proxy access provisions of our bylaws provide, among other things, that a shareholder or
group of up to 20 shareholders seeking to include their director candidates in our proxy statement must own 3% or more of Target’s
outstanding common stock continuously for at least the previous three years. The number of shareholder-nominated candidates appearing
in any proxy statement cannot exceed 20% of the number of directors then serving on the Board, but may be at least two directors.
If 20% is not a whole number, the maximum number of shareholder-nominated candidates would be the closest whole number below 20%.
Based on the current Board size of 14 directors, the maximum number of proxy access candidates that we would be required to include
in our proxy statement is two. Nominees submitted under the proxy access procedures that are later withdrawn or are included in
the proxy materials as Board-nominated candidates will be counted in determining whether the 20% maximum has been reached. If
the number of shareholder nominated candidates exceeds 20%, each nominating shareholder or group of shareholders may select one
nominee for inclusion in the proxy materials until the maximum number is reached. The order of selection would be determined by
the amount (largest to smallest) of shares of Target common stock held by each nominating shareholder or group of shareholders.
Requests to include shareholder-nominated candidates in our proxy materials for next year’s annual meeting must be received
by our Corporate Secretary not less than 120 days and not more than 150 days prior to the anniversary of the date that the Target
distributed its proxy statement to shareholders for the preceding year’s annual meeting. For our 2017 Annual Meeting, notice
must be received by not earlier than November 26, 2016 and not later than December 26, 2016. The nominating shareholder or group
of shareholders also must deliver the information required by our bylaws, and each nominee must meet the qualifications required
by our bylaws.
2016 Proxy Statement │ TARGET CORPORATION 74
APPENDIX A
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES
We report our financial results in conformity with U.S. generally
accepted accounting principles (GAAP). We also use certain non-GAAP financial measures as part of our compensation program and
to provide context to the relationship between pay and our performance. Our reconciliation of those non-GAAP financial measures
to our GAAP measures is included in this Appendix. Our non-GAAP financial measures should not be considered in isolation or as
a substitution for analysis of our results as reported under GAAP. Other companies may calculate similar non-GAAP financial measures
differently than we do, limiting the usefulness of the measure for comparisons with other companies.
ADJUSTED
EPS FROM CONTINUING OPERATIONS
We disclose a non-GAAP Adjusted EPS from Continuing Operations
metric reflecting operating results from our continuing operations, excluding the impact of the 2015 sale of our pharmacy and
clinic businesses, the 2013 sale of our U.S. consumer credit card receivables portfolio, losses on early retirement of debt, net
expenses related to the 2013 data breach and other matters presented in the following table. The most comparable GAAP measure
is diluted earnings per share from continuing operations. Adjusted EPS from Continuing Operations is disclosed on page 35 of the
proxy statement under “Performance Highlights.”
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(PER
SHARE AMOUNTS) |
2011 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2015 |
|
|
|
GAAP diluted earnings per share
from continuing operations |
$ |
4.46 |
|
|
$ |
5.00 |
|
|
$ |
4.20 |
|
|
$ |
3.83 |
|
|
$ |
5.25 |
|
|
|
Adjustments(a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale |
|
— |
|
|
|
(0.15 |
) |
|
|
(0.38 |
) |
|
|
— |
|
|
|
(0.77 |
) |
|
|
Restructuring costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.14 |
|
|
|
Loss on early retirement of debt |
|
0.08 |
|
|
|
— |
|
|
|
0.42 |
|
|
|
0.27 |
|
|
|
— |
|
|
|
Data breach-related costs, net
of insurance |
|
— |
|
|
|
— |
|
|
|
0.02 |
|
|
|
0.15 |
|
|
|
0.04 |
|
|
|
Other |
|
— |
|
|
|
— |
|
|
|
0.06 |
|
|
|
0.03 |
|
|
|
0.05 |
|
|
|
Resolution of income tax matters |
|
(0.12 |
) |
|
|
(0.09 |
) |
|
|
(0.03 |
) |
|
|
(0.06 |
) |
|
|
(0.01 |
) |
|
|
Adjusted EPS from Continuing Operations |
$ |
4.42 |
|
|
$ |
4.76 |
|
|
$ |
4.29 |
|
|
$ |
4.22 |
|
|
$ |
4.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: The sum of the adjustments may not equal the total adjustment
amounts due to rounding.
(a) |
For more information on the types of adjustments we make, see
“Reconciliation of Non-GAAP Financial Measures to GAAP Measures” on page 23 of our Annual Report on Form 10-K
for fiscal 2015. |
2016 Proxy Statement │ TARGET CORPORATION 75
AFTER-TAX
ROIC FROM CONTINUING OPERATIONS
We disclose After-Tax ROIC from Continuing Operations, which
is a ratio based on GAAP information, with the exception of adjustments made to capitalize operating leases. Operating leases
are capitalized as part of the ROIC calculation to control for differences in capital structure between us and our competitors.
After-Tax ROIC from Continuing Operations is disclosed on page 35 of the proxy statement under “Performance Highlights.”
Numerator
|
| |
| |
|
|
| |
TRAILING TWELVE MONTHS | |
|
|
| |
JANUARY 30, | | |
JANUARY 31, | | |
FEBRUARY 1, | | |
FEBRUARY 2, | | |
JANUARY 28, | |
|
|
(MILLIONS) | |
2016 | | |
2015 | | |
2014 | | |
2013 | | |
2012 | |
|
|
Earnings from continuing operations before interest expense and income taxes | |
$ | 5,530 | | |
$ | 4,535 | | |
$ | 5,170 | | |
$ | 5,740 | | |
$ | 5,443 | |
|
|
+ Operating lease interest(a)(b) | |
| 87 | | |
| 89 | | |
| 98 | | |
| 100 | | |
| 101 | |
|
|
Adjusted earnings from continuing operations before interest expense and income taxes | |
| 5,617 | | |
| 4,624 | | |
| 5,268 | | |
| 5,840 | | |
| 5,544 | |
|
|
- Income taxes(c) | |
| 1,827 | | |
| 1,524 | | |
| 1,824 | | |
| 2,011 | | |
| 1,886 | |
|
|
Net operating profit after taxes | |
$ | 3,790 | | |
$ | 3,100 | | |
$ | 3,444 | | |
$ | 3,829 | | |
$ | 3,658 | |
|
|
| |
| | | |
| | | |
| | | |
| | | |
| | |
|
Denominator
|
| |
| |
| |
| |
| |
| |
| |
|
|
| |
JANUARY 30, | |
JANUARY 31, | |
FEBRUARY 1, | |
FEBRUARY 2, | |
JANUARY 28, | |
JANUARY 29, | |
|
|
(MILLIONS) | |
2016 | |
2015 | |
2014 | |
2013 | |
2012 | |
2011 | |
|
|
Current portion of long-term debt and other borrowings | |
$ | 815 | |
$ | 91 | |
$ | 1,143 | |
$ | 2,993 | |
$ | 3,781 | |
$ | 119 | |
|
|
+ Noncurrent portion of long-term debt | |
| 11,945 | |
| 12,634 | |
| 11,351 | |
| 13,267 | |
| 12,347 | |
| 15,519 | |
|
|
+ Shareholders’ equity | |
| 12,957 | |
| 13,997 | |
| 16,231 | |
| 16,558 | |
| 15,821 | |
| 15,487 | |
|
|
+ Capitalized lease obligations(b)(d) | |
| 1,457 | |
| 1,490 | |
| 1,635 | |
| 1,656 | |
| 1,681 | |
| 1,597 | |
|
|
- Cash and cash equivalents | |
| 4,046 | |
| 2,210 | |
| 670 | |
| 725 | |
| 696 | |
| 1,712 | |
|
|
- Net assets of discontinued operations | |
| 226 | |
| 1,479 | |
| 4,270 | |
| 2,866 | |
| 2,022 | |
| 0 | |
|
|
Invested capital | |
$ | 22,902 | |
$ | 24,523 | |
$ | 25,420 | |
$ | 30,883 | |
$ | 30,912 | |
$ | 31,010 | |
|
|
Average invested capital(e) | |
$ | 23,713 | |
$ | 24,971 | |
$ | 28,151 | |
$ | 30,897 | |
$ | 30,961 | |
| | |
|
|
| |
| | |
| | |
| | |
| | |
| | |
| | |
|
|
|
|
|
|
|
|
|
|
After-Tax ROIC from
Continuing |
16.0%(f) |
12.4% |
12.2% |
12.4% |
11.8% |
|
|
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Represents the add-back to operating income
driven by the hypothetical capitalization of our operating leases, using eight times our trailing twelve months rent expense
and an estimated interest rate of six percent. |
|
|
(b) |
See the following Reconciliation of Capitalized Operating
Leases table for the adjustments to our GAAP total rent expense to obtain the hypothetical capitalization of operating leases
and related operating lease interest. |
|
|
(c) |
Calculated using the effective tax rate for continuing
operations, which was 32.5%, 33.0%, 34.6%, 34.4% and 34.0% for the trailing twelve months ended January 30, 2016, January
31, 2015, February 1, 2014, February 2, 2013 and January 28, 2012. |
|
|
(d) |
Calculated as eight times our trailing twelve months
rent expense. |
|
|
(e) |
Average based on the invested capital at the end of
the current period and the invested capital at the end of the prior period. |
|
|
(f) |
Excluding the net gain on the sale of our pharmacy
and clinic businesses, After-Tax ROIC from Continuing Operations was 13.9 percent for the trailing twelve months ended January
30, 2016. |
2016 Proxy Statement │ TARGET CORPORATION 76
Capitalized operating lease obligations and operating lease interest
are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The most comparable
GAAP measure is total rent expense. Capitalized operating lease obligations and operating lease interest should not be considered
in isolation or as a substitution for analysis of our results as reported under GAAP.
Reconciliation of Capitalized Operating Leases
|
|
|
|
|
|
TRAILING
TWELVE MONTHS |
|
|
|
JANUARY
30, |
JANUARY
31, |
FEBRUARY
1, |
FEBRUARY
2, |
JANUARY
28, |
JANUARY
29, |
|
|
(MILLIONS) |
2016 |
2015 |
2014 |
2013 |
2012 |
2011 |
|
|
Total rent expense |
$ 182 |
$ 186 |
$ 204 |
$ 207 |
$ 210 |
$ 200 |
|
|
Capitalized operating lease
obligations (total rent expense x 8) |
1,457 |
1,490 |
1,634 |
1,656 |
1,682 |
1,597 |
|
|
Operating lease interest (capitalized
operating lease obligations x 6%) |
87 |
89 |
98 |
100 |
101 |
96 |
|
|
|
|
|
|
|
|
|
|
TOTAL
ADJUSTED SALES
We disclose a non-GAAP Total Adjusted Sales metric that excludes
pharmacy sales due to our sale of our pharmacy and clinic businesses at the end of fiscal 2015, resulting in pharmacies and clinics
no longer being part of our core operations. The most comparable GAAP measure is consolidated sales. Total Adjusted Sales is disclosed
on page 35 of the proxy statement under “Performance Highlights.”
|
| |
| | |
| | |
| | |
| | |
| |
|
|
(MILLIONS) | |
2011 | | |
2012 | | |
2013 | | |
2014 | | |
2015 | |
|
|
GAAP consolidated sales | |
$ | 68,466 | | |
$ | 71,960 | | |
$ | 71,279 | | |
$ | 72,618 | | |
$ | 73,785 | |
|
|
Adjustments | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
Remove pharmacy sales | |
| (3,699 | ) | |
| (4,040 | ) | |
| (4,016 | ) | |
| (4,148 | ) | |
| (3,815 | ) |
|
|
Total Adjusted Sales | |
$ | 64,767 | | |
$ | 67,919 | | |
$ | 67,263 | | |
$ | 68,469 | | |
$ | 69,970 | |
|
|
| |
| | | |
| | | |
| | | |
| | | |
| | |
|
Note: The sum of the adjustments may not equal the total adjustment
amounts due to rounding.
2016 Proxy Statement │ TARGET CORPORATION 77
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1000
Nicollet Mall |
|
|
Minneapolis,
MN 55403 |
|
612.304.6073 |
|
Target.com |
|
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|
This regulatory filing also includes additional resources:
ltgt2016_def14a.pdf
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