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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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)
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Notice of 2017 annual meeting of shareholders
Wednesday, June 14, 2017
9:00 a.m. Eastern Daylight Time
The Westin Cincinnati located at 21 East 5th Street,
Cincinnati, Ohio 45202
To our shareholders,
You are invited to attend Target
Corporation’s 2017 annual meeting of shareholders (Annual Meeting) to be held at The Westin Cincinnati located at 21 East
5th Street, Cincinnati, Ohio 45202 on Wednesday, June 14, 2017 at 9:00 a.m. Eastern Daylight Time.
Purpose
Shareholders will vote on the following items
of business:
| 1. |
Election of all 12 directors named in our proxy statement to our Board of Directors for the coming year; |
| 2. |
Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm; |
| 3. |
Approval, on an advisory basis, of our executive compensation (“Say on Pay”); |
| 4. |
Approval, on an advisory basis, of the frequency of our Say on Pay votes; |
| 5. |
Approval of the Target Corporation Executive Officer Cash Incentive Plan; and |
| 6. |
Transaction of any other business properly brought before the Annual Meeting or any adjournment. |
You may vote if you were a shareholder
of record at the close of business on April 17, 2017. 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 Annual Meeting, please follow the instructions
provided in Question 12 “How can I attend the Annual Meeting?” on page 63 of the proxy statement.
Following the formal business
of the Annual Meeting, our Chairman and Chief Executive Officer 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,
| Don H. Liu |
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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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May 1, 2017 |
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TARGET CORPORATION  2017 Proxy Statement |
3 |
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Table of
contents |
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TARGET CORPORATION 2017 Proxy Statement |
4 |
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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.
The Board of Directors of Target
Corporation solicits the enclosed proxy for the 2017 Annual Meeting of Shareholders and for any adjournment thereof.
Target 2017 annual meeting of shareholders
Date june 14 2017 Time 9:00 a.m.Eastern Daylight Time Location The
Westin Cincinnati 21 East 5th Street Cincinnati, Ohio 45202
Items of business
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Board’s |
| Item |
Recommendation |
| Election
of 12 directors (page 15) |
FOR each
Director Nominee |
| Ratification
of independent registered public accounting firm (page 55) |
FOR |
| Advisory
approval of executive compensation (“Say on Pay”) (page 57) |
FOR |
| Advisory
approval of the frequency of Say on Pay votes (page 58) |
1 YEAR |
| Approval
of the Target Corporation Executive Officer Cash Incentive Plan (page 59) |
FOR |
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 61 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 Annual 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 63.
We strongly encourage you to pre-register. If you plan to bring a guest or are attending as an authorized representative of a
shareholder you must pre-register by June 9, 2017. Any person who does not present identification and establish proof
of ownership will not be admitted to the Annual Meeting.
Voting
If you held shares of Target common stock as of the
record date (April 17, 2017), you are entitled to vote at the Annual Meeting.
Your vote is important. Thank you for voting.
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TARGET CORPORATION 2017 Proxy Statement |
5 |
Advance voting methods and deadlines
| Method |
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Internet |
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Telephone |
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Mail |
| Instruction |
● 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 |
● 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 |
● 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 |
| Deadline |
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 13, 2017
● Participants
in the Target 401(k) Plan – 6:00 a.m. Eastern Daylight Time on June 12, 2017 |
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 12, 2017 |
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 61.
Voting at the Annual 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 61. In either case, shareholders wishing to attend the Annual Meeting must
follow the procedures in Question 12 “How can I attend the Annual Meeting?” on page 63.
Notice of internet availability of proxy materials
Important Notice Regarding
the Availability of Proxy Materials for the Shareholders Meeting to be held on June 14, 2017.
The proxy statement and annual
report are available at www.proxyvote.com.
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TARGET CORPORATION 2017 Proxy Statement |
6 |
General information about corporate governance and the Board
of Directors
Corporate governance highlights
| Practice |
Description |
More
information |
| Board
composition and accountability |
|
| Independence |
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 |
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 |
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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| Management
Succession Planning Review |
Our
Board conducts an annual review of management development and succession planning, with more frequent reviews conducted by
the Human Resources & Compensation Committee. |
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| Director
Tenure Policies |
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 |
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). |
|
| Committee
Membership and Leadership Rotations |
The
Board appoints members of its Committees on an annual basis, with the Nominating & 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 |
The
Board regularly evaluates its performance through self-evaluations, corporate governance reviews and periodic Charter reviews.
Those evaluations, along with assessments of 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 |
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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| Capital
Allocation Policies and Priorities |
We
disclose our capital allocation policies and priorities and how they are overseen by the Board and its Committees. |
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| Shareholder
rights |
|
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| Annual
Election of Directors |
All
directors are elected annually, which reinforces our Board’s accountability to shareholders. |
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| Majority
Voting Standard for Director Elections |
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 |
An
incumbent director who is not re-elected must promptly offer to resign. The Nominating & 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 |
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 |
Target
common stock is the only class of voting shares outstanding. |
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| 10%
Threshold for Special Meetings |
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 |
We
do not have a poison pill. |
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| Compensation |
|
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| Follow
Leading Practices |
See
“Target’s Executive Compensation Practices.” |
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TARGET CORPORATION 2017 Proxy Statement |
7 |
Our directors
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Other current |
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public |
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Director |
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company |
| 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 |
| Roxanne S. Austin |
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56 |
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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 |
| Douglas M. Baker, Jr. |
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58 |
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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 |
| Brian C. Cornell |
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58 |
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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 |
| Calvin Darden |
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67 |
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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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1 |
| Henrique De Castro |
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51 |
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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 |
| Robert L. Edwards |
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61 |
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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 |
| Melanie L. Healey |
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56 |
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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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2 |
| Donald R. Knauss |
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66 |
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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 |
| Monica C. Lozano |
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60 |
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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 |
| Mary E. Minnick |
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57 |
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2005 |
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Lion Capital LLP |
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Partner |
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Yes |
|
0 |
| Anne M. Mulcahy(1) |
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64 |
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1997 |
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Save The Children Federation, Inc. |
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Former Chair of the Board of Trustees |
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Yes |
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3 |
| Derica W. Rice |
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52 |
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2007 |
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Eli Lilly and Company |
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EVP, Global Services & CFO |
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Yes |
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0 |
| Kenneth L. Salazar |
|
62 |
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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 |
| (1) | Ms. Mulcahy will retire from the Board when her current term ends at
the Annual Meeting in connection with our mandatory retirement policy. |
Board leadership structure
We do not have an express policy as to
whether the roles of Chair of the Board and Chief Executive Officer (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. We currently have a combined Chair/CEO leadership structure. The
Board regularly reevaluates our Board leadership structure as part of the Board evaluation process described under
“Board Evaluations and Refreshment” on page 16 and also considers shareholder feedback on the topic. As a
result of its most recent 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.
Douglas M. Baker, Jr. Lead independent
director Regular duties:
Has the authority to convene meetings
of the Board and executive sessions
consisting solely of independent directors
at every meeting;
Presides at all meetings of the Board
of Directors at which the Chair is not
present, including executive sessions of
independent directors;
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;
Provides insights to the Human Resources
&Compensation Committee as it
annually reviews the performance of
the CEO for purposes of all elements of the CEO’s compensation; Approves meeting schedules, agendas and
the information furnished to the Board to
ensure that the Board has adequate time
and information for discussion;
Is expected to engage in consultation
and direct communication with major
shareholders, as appropriate;
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
Consults with the Nominating &Governance
Committee regarding Board and Committee
composition, Committee Chair selection,
the annual performance review of the
Board and its Committees, and director
succession planning. Annual
election:
Elected
annually by the
independent,
non-management
directors.
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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TARGET CORPORATION 2017 Proxy Statement |
8 |
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 65.
Audit & Finance
Committee(1) Responsibilities 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 &Finance Committee” on page 56 and
performs the duties and activities
described in that report Discusses with management our positions
with respect to income and other tax
obligations Reviews with management our risk
assessment and management policies
and our major financial, accounting and
compliance risk exposures; conducts
a joint meeting annually with the Risk &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 Committee
members
Mr. Rice (Chair)
Ms. Lozano
Ms. Minnick Number of
meetings during
fiscal 2016
7 (1) The Board of Directors has determined that all members of the Audit &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 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.
Human
Resources &Compensation Committee(2) Responsibilities 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 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 Reviews the compensation provided to non-management directors and
makes recommendations to the independent members of the Board Prepares the “Human Resources &Compensation Committee
Report” on page 28 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 Committee members Ms. Mulcahy (Chair) Ms. Austin Mr. Darden Mr. De Castro Ms.
Healey Mr. Knauss Number of meetings during fiscal 2016 4 (2) The Board of Directors has determined that all members of the
Human Resources & Compensation Committee satisfy the applicable compensation committee independence requirements of the
NYSE and the SEC.
Nominating &Governance
Committee Responsibilities Oversees our corporate governance
practices Leads director succession planning and
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 Oversees policies and practices regarding
public advocacy and political activities Periodically reviews our Committee
Charters and Corporate Governance
Guidelines Committee
members
Mr. Baker (Chair)
Mr. Darden
Mr. Knauss
Ms. Lozano
Number of
meetings during
fiscal 2016
3
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TARGET CORPORATION 2017 Proxy Statement |
9 |
Risk &Compliance
Committee Responsibilities 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 & Finance Committee
in oversight of compliance with legal and
regulatory requirements Committee
members
Mr. Salazar
(Chair)
Ms. Austin
Mr. Baker
Mr. Edwards
Ms. Mulcahy
Mr. Rice
Number of
meetings during
fiscal 2016
5
Infrastructure
& Investment
Committee Responsibilities 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 resource
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 Committee
members
Mr. Edwards
(Chair)
Mr. De Castro
Ms. Healey
Ms. Minnick
Mr. Salazar
Number of
meetings during
fiscal 2016
3
Committee composition and leadership
The Board appoints members of its Committees
on an annual basis, with the Nominating & 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, and six to twelve months before the date of a director’s anticipated retirement from the Board; |
| ● | 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 & Governance Committee; and |
| ● | To enhance risk oversight coordination, each Committee
Chair serves on the Risk & Compliance Committee. |
As part of the Nominating & Governance Committee’s
annual review, in November 2016 Roxanne Austin was added to the Human Resources & Compensation Committee with the intention
that she will become Chair of the Human Resources & Compensation Committee when Anne Mulcahy retires from the Board when her
current term ends at the Annual Meeting.
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TARGET CORPORATION 2017 Proxy Statement |
10 |
Risk oversight
A summary of the allocation of general risk oversight functions
among management, the Board and its Committees is as follows:
Board of
Directors
Continuous oversight
of overall risks,
with emphasis on
strategic risks, as
well as reputation
and corporate social
responsibility efforts Audit & Finance
Committee
Financial reporting,
internal controls and
financial risks Risk & Compliance
Committee
Principal operating,
business, and
compliance risks,
including information
security and incident
response Human Resources
& Compensation
Committee
Compensation
policies, practices
and incentive-related
risks, organizational
talent and culture,
and management
succession risks Nominating & Governance
Committee
Governance structure,
Board succession
and public policy
engagement risks Infrastructure
& Investment
Committee
Risks related to capital
expenditures, major
expense commitments
and infrastructure
needs Management
Identification,
assessment and
management of risks
The primary responsibility for the identification,
assessment and management of the various risks that we face belongs with management. At the management level, risks are prioritized
and assigned to senior leaders based on the risk’s relationship to the leader’s business area and focus. Those senior
leaders develop plans to address the risks and measure the progress of risk management efforts. Our Chief Risk & Compliance
Officer provides centralized oversight of Target’s enterprise risk management program. Our Chairman and CEO and his direct
reports meet regularly with the Chief Risk & Compliance Officer to identify, assess and manage risks facing the business.
In addition, the Chief Risk & Compliance Officer and other enterprise risk management team members regularly meet with leaders
of business areas to inform, coordinate and manage the enterprise risk management program.
The Board’s oversight of these risks occurs as an integral
and continuous part of the Board’s oversight of our business and seeks to ensure that management has in place processes
to deal appropriately with risk. 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 the company. The Board’s
ongoing oversight of risk also occurs at the Board Committee level on a more focused basis. To help coordinate the oversight of
different risks, each Committee Chair is a member of the Risk & Compliance Committee. The Chief Risk & Compliance Officer
annually presents an overview of the enterprise risk management program to the Board’s Risk & Compliance Committee and
provides them with regular updates on the program and status of key risks facing the business. In addition, the Risk & Compliance
Committee and Audit & Finance Committee annually conduct a joint meeting to review legal and regulatory risk and compliance
matters.
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TARGET CORPORATION 2017 Proxy Statement |
11 |
Our capital allocation policy and
priorities
Three capital allocation priorities
Development and execution of our capital
allocation policy are primarily the responsibility of our management and are overseen by the Board and its Committees. Our management
follows a disciplined and balanced approach to capital allocation based on the following priorities, ranked in order of importance:
| Priorities |
|
Description |
| 1.
Investing in our Business |
|
Fully invest in opportunities to grow our business profitably, create sustainable
long-term value, and maintain our current operations and assets |
| 2.
Annual Dividend |
|
Maintain a competitive quarterly dividend and seek to grow it annually |
| 3.
Share Repurchase |
|
Return excess cash to shareholders by repurchasing
shares within the limits of our credit rating goals |
Dividend and share repurchase philosophy
Our business generates more cash than we
currently need to fully invest in the growth and long-term health of our business, so we return excess cash to shareholders through
an appropriate balance between dividends and share repurchase. We believe that both dividends and share repurchases serve important
purposes. We believe that our dividend should be competitive, reliable and sustainable. We also believe that share repurchase
is the most effective way to return any excess cash to shareholders after we have met our other priorities of fully investing
in our business and maintaining a competitive dividend, because it allows shareholders to redeploy the cash as they choose, while
providing us with appropriate flexibility to respond to changes in our operating performance and investment opportunities. For
example, we suspended all share repurchase activity for a period from the middle of 2013 through early 2015 in response to changes
in our operating performance, but we continued to invest in our business, maintained our quarterly dividend and grew our annual
dividend during the entire period.
Capital allocation oversight
The Board of Directors and its Committees share responsibility
for overseeing capital allocation among our three capital allocation priorities:
| Responsible
party |
|
General
oversight area |
|
Description of responsibilities |
| Board
of Directors |
|
All Capital Allocation Priorities |
|
● |
Balance three main priorities appropriately for the growth and long-term health of our business and shareholders |
| |
|
|
|
● |
Review annual and long-term capital and
operating plans, including planned share repurchase activities |
| |
|
|
|
● |
Authorize dividends and share repurchase programs |
| Infrastructure
& Investment Committee |
|
Investing in Our Business |
|
● |
Monitor the overall level of
investments in opportunities to create sustainable long-term value |
| |
|
|
|
● |
Review alignment of investments with our strategies |
| |
|
|
|
● |
Evaluate effectiveness of investments in achieving appropriate returns |
| Audit
& Finance Committee |
|
Annual Dividend and Share Repurchase Priorities |
|
● |
Oversee liquidity to support operations and investments |
| |
|
|
● |
Evaluate capacity for and competitiveness of annual dividends |
| |
|
|
|
● |
Monitor execution of share repurchase activity |
| |
|
|
|
● |
Review management’s credit rating goals |
| |
|
|
|
● |
Provide recommendations to full Board
on amount of dividends and share repurchase authorization levels |
| Human
Resources & Compensation Committee |
|
Compensation Effects of All Capital Allocation Priorities |
|
● |
Consider effects of our capital
allocation strategy during compensation plan design and goal-setting process |
| |
|
|
|
● |
Receive regular performance updates |
| |
|
|
|
● |
Retain ability to use discretion to
adjust payouts where extraordinary circumstances occur |
The mix of responsibilities between the
Board of Directors and its Committees ensures that we are fully investing in the growth and long-term health of our business and
pursuing our strategic priorities. In addition, it ensures that distribution of any cash remaining after investing our business
is in the best interests of shareholders and without unintended consequences.
| |
TARGET CORPORATION 2017 Proxy Statement |
12 |
Board’s role in management evaluations
and management succession planning
One of the primary responsibilities of the
Board is to ensure that Target has a high-performing management team in place. On an annual basis, the Board conducts a detailed
review of management development and succession planning activities to maximize the pool of internal candidates who can assume
top management positions without undue interruption. In addition to the annual review, the Human Resources & 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.
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. Corporate social responsibility is an enterprise-wide commitment informed by and integrated into
our business strategy.
We are especially proud that since 1946,
we have given 5 percent of our profit to communities. Our Board of Directors monitors and supports 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
2016, 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 65.
Board and shareholder meeting attendance
The Board of Directors met six times during
fiscal 2016. All directors attended at least 75% of the aggregate total of meetings of the Board and Board Committees on which
the director served during the last fiscal year.
Thirteen of our fourteen then-serving directors
attended our June 2016 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 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. Austin and Mr. Darden,
each of whom are up for re-election and 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.
| |
TARGET CORPORATION 2017 Proxy Statement |
13 |
| |
|
|
|
|
|
% of entity’s annual |
| |
|
|
|
|
|
revenues in each of |
| Director |
|
Entity and
relationship |
|
Transactions |
|
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 Former Chair of Board of Trustees |
|
We make charitable contributions to Save the Children. |
|
Less than 2% |
| Kenneth L. Salazar |
|
WilmerHale Partner |
|
In fiscal 2016, WilmerHale was engaged to provide legal services.(2) |
|
Less than 1% |
| (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. |
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 & 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 &
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 2016. Both transactions dealt with compensation of immediate family members of one
of our executive officers, Casey Carl, Executive Vice President & Chief Strategy & Innovation Officer. Mr. Carl’s
brother joined Target in 2005, has been a team member in merchandising since that time and earned annual compensation of $180,116
in 2016. Mr. Carl’s sister-in-law joined Target in 2009, has been a team member in merchandising since that time and
earned annual compensation of $315,318 in 2016. 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. 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.
| |
TARGET CORPORATION 2017 Proxy Statement |
14 |
| 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 & 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 & 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 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 & 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 2018 annual meeting of shareholders?” on page
66 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 & Governance Committee in its director search process.
| |
TARGET CORPORATION 2017 Proxy Statement |
15 |
Board evaluations and refreshment
The Board regularly evaluates its performance to enhance Board
functioning and the effectiveness of the Board-management relationship.
Self-evaluation The Nominating &
Governance Committee, in consultation with the Lead Independent Director, annually leads the performance review of the Board
and its Committees. In 2016, the Board self-evaluation involved a survey completed by each director about the Board and the
Committees on which the director served, followed by individual interviews. Following completion of the interviews, the
results were discussed by the full Board and each Committee. In 2016, the Board self-evaluation was administered by the
Corporate Secretary’s office. The annual self-evaluation has periodically been conducted by a third-party consultant,
as appropriate. The self-evaluation process seeks to obtain each director’s assessment of the effectiveness of the
Board, the Committees and their leadership, Board and Committee composition and Board/management dynamics.
Corporate
governance
review Our Nominating & 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.
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.
Tenure policies Term limit Directors may not serve on the Board for more than 20years Mandatory
retirement Directors must retire
at the end of the term
in which they reach age72 Change in
principal
employment
Directors must offer
to resign upon any
substantial change in
principal employment
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 Less than
5 years
8 directors 5 to
10 years
1 director More than
10 years
4 directors Average
director
tenure
6.5 years 38%
Female 62%
Male Ethnic or
racial
diversity(1) 38%
Diverse 62%
Non-diverse
| (1) | We define diverse directors as those that are ethnically or racially
diverse. Our diverse directors are Mr. Darden, Ms. Healey, Ms. Lozano, Mr. Rice
and Mr. Salazar. |
| |
TARGET CORPORATION 2017 Proxy Statement |
16 |
2017 nominees for director
After considering the recommendations of
the Nominating & Governance Committee, the Board has set the number of directors at 12 and nominated all of the current directors
to stand for re-election, except for Anne Mulcahy who will retire from the Board at the end of her current term. 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
on behalf of 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
is a large retailer that offers everyday essentials and fashionable, differentiated merchandise at discounted prices in stores
and through digital channels. |
|
Retail
industry experience |
Large
retail or consumer products company experience. |
| 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
operate a large network of stores and 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 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 or enterprise risk management 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. |
| |
TARGET CORPORATION 2017 Proxy Statement |
17 |
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 56
Director since 2002
Independent Committees
Human Resources & Compensation
Risk & 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 & Chief Executive Officer of Move Networks, Inc.,
President & Chief Operating Officer of DIRECTV, Inc., Executive Vice President & 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 Past 5 years
Abbott Laboratories LM Ericsson Telephone Company
AbbVie Inc.
Teledyne Technologies Incorporated
Douglas M.
Baker, Jr. Age 58
Director since 2013
Lead Independent
Director Committees Nominating & Governance (Chair) Risk & Compliance Background
Douglas M. Baker, Jr., is Chairman & 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. 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 Past 5 years
Ecolab Inc. None
U.S. Bancorp
| |
TARGET CORPORATION 2017 Proxy Statement |
18 |
Brian C. Cornell Age 58 Director since 2014
Committees None Background Brian C. Cornell has served as Chairman of the Board & 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 & 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 Past 5 years Yum!
Brands, Inc. Polaris Industries Inc.
Calvin Darden Age 67
Director since 2003
Independent Committees Human Resources & Compensation Nominating & 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 Past 5 years
Cardinal Health, Inc. Coca-Cola Enterprises, Inc.
| |
TARGET CORPORATION 2017 Proxy Statement |
19 |
Henrique De Castro Age 51 Director since
2013 Independent Committees Human Resources & Compensation Infrastructure & 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 Past 5 years None None
Robert L. Edwards Age 61 Director since
2015 Independent Committees Infrastructure & Investment (Chair) Risk & Compliance Background Robert L. Edwards is the
former President & 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
& Chief Executive Officer from May 2013 to April 2015, President & Chief Financial Officer from April 2012 to May
2013, and Executive Vice President & 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 provide
the Board with extensive public company accounting and financial reporting expertise and a top-level perspective in
organizational management. Other public company boards Current Past 5 years Blackhawk Network Holdings, Inc. Flextronics
International Ltd. KKR Financial Holdings LLC Safeway Inc.
| |
TARGET CORPORATION 2017 Proxy Statement |
20 |
Melanie L. Healey Age 56 Director since 2015
Independent Committees Human Resources & Compensation Infrastructure & 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 & Advisor to the Chairman & 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 Past 5
years PPG Industries, Inc. None Verizon Communications Inc.
Donald R.
Knauss Age 66
Director since 2015
Independent Committees Human Resources & Compensation Nominating & 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 & 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, which strengthens the Board’s collective knowledge, capabilities and experience. Other public company boards
Current Past 5 years
Kellogg Company The Clorox Company
McKesson Corporation URS Corporation
| |
TARGET CORPORATION 2017 Proxy Statement |
21 |
Monica C.
Lozano Age 60
Director since 2016
Independent Committees Audit & Finance Nominating & 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 Past 5 years
Bank of America Corporation The Walt Disney Company
Mary E.
Minnick Age 57
Director since 2005
Independent Committees Audit & Finance Infrastructure & 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,
including Chief Operating Officer of the Asian region, Division President roles in the Japan, South Pacific and Asian
regions, and ending as the company’s Chief Marketing Officer and Global President of Strategy and Innovation in
February 2007. Qualifications
Ms. Minnick provides the Board with substantial expertise in operations management, building brand awareness,
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 Past 5 years
None Heineken NV
The WhiteWave Foods Company
| |
TARGET CORPORATION 2017 Proxy Statement |
22 |
Derica W.
Rice Age 52
Director since 2007
Independent Committees Audit & Finance
(Chair) Risk & Compliance Background
Derica W. Rice is Executive Vice President, Global Services & 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 Past 5 years
None None
Kenneth L.
Salazar Age 62
Director since 2013
Independent Committees Risk & Compliance
(Chair) Infrastructure & 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, as 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, government regulation and leadership on matters involving multiple
stakeholder stewardship. Other public company boards
Current Past 5 years
None None
| |
TARGET CORPORATION 2017 Proxy Statement |
23 |
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
Fixed value of
$500,000 CEO 7x base salary Other NEOs 3x base salary Equity
used to
meet
stock
ownership
guidelines Yes Outstanding shares that the
person beneficially owns or is
deemed to beneficially own,
directly or indirectly, under the
federal securities laws RSUs and PBRSUs (at their
minimum share payout, which
is 75% of the at-goal payout
level), whether vested or
unvested Deferred compensation
amounts that are indexed to
Target common stock, but
ultimately paid in cash No Options, regardless of when
they are exercisable Performance Share Units
(PSUs) because their minimum
share payout is 0% of the
at-goal payout level
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 (in all cases net of
exercise costs and taxes) until compliance is achieved.
| |
TARGET CORPORATION 2017 Proxy Statement |
24 |
The following table shows the holdings of our current directors
and NEOs recognized for purposes of our stock ownership guidelines as of March 29, 2017, 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 | |
| 25,359 | |
| 0 | |
| 35,359 | |
$ | 1,950,049 | |
| Douglas M. Baker, Jr. | |
| 0 | |
| 12,445 | |
| 0 | |
| 12,445 | |
$ | 686,342 | |
| Calvin Darden | |
| 0 | |
| 25,359 | |
| 803 | |
| 26,162 | |
$ | 1,442,860 | |
| Henrique De Castro | |
| 0 | |
| 15,335 | |
| 0 | |
| 15,335 | |
$ | 845,725 | |
| Robert L. Edwards | |
| 10,000 | |
| 6,503 | |
| 0 | |
| 16,503 | |
$ | 910,140 | |
| Melanie L. Healey(3) | |
| 0 | |
| 5,963 | |
| 0 | |
| 5,963 | |
$ | 328,859 | |
| Donald R. Knauss | |
| 10,000 | |
| 6,503 | |
| 0 | |
| 16,503 | |
$ | 910,140 | |
| Monica C. Lozano(3) | |
| 0 | |
| 4,856 | |
| 0 | |
| 4,856 | |
$ | 267,808 | |
| Mary E. Minnick | |
| 886 | |
| 60,811 | |
| 460 | |
| 62,157 | |
$ | 3,427,932 | |
| Anne M. Mulcahy | |
| 7,114 | |
| 33,199 | |
| 0 | |
| 40,313 | |
$ | 2,223,262 | |
| Derica W. Rice | |
| 0 | |
| 55,301 | |
| 0 | |
| 55,301 | |
$ | 3,049,850 | |
| Kenneth L. Salazar | |
| 0 | |
| 11,871 | |
| 0 | |
| 11,871 | |
$ | 654,686 | |
| Current named | |
| |
| |
| |
| |
Multiple of base | |
| executive officers | |
| |
| |
| |
| |
salary(2) | |
| Brian C. Cornell | |
| 128,416 | |
| 118,856 | |
| 8,497 | |
| 255,770 | |
| 10.9 | |
| Cathy R. Smith(4) | |
| 19,537 | |
| 20,911 | |
| 0 | |
| 40,448 | |
| 2.8 | |
| John J. Mulligan | |
| 65,624 | |
| 42,735 | |
| 19,804 | |
| 128,163 | |
| 7.1 | |
| Don H. Liu | |
| 4,000 | |
| 53,557 | |
| 0 | |
| 57,557 | |
| 4.9 | |
| Mark J. Tritton(4) | |
| 0 | |
| 21,998 | |
| 0 | |
| 21,998 | |
| 1.8 | |
| (1) | The “Total Stock Ownership” calculation, like the required
disclosure of “Total Shares Beneficially Owned” on page 26, 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 28, 2017, 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 29, 2017. |
| (2) | Based on closing stock price of $55.15 as of March 29, 2017. |
| (3) | 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
$500,000 stock ownership level. |
| (4) | Ms. Smith became Executive Vice President & Chief Financial Officer
on September 1, 2015, and Mr. Tritton became Executive Vice President &
Chief Merchandising Officer on June 5, 2016. 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. |
| |
TARGET CORPORATION 2017 Proxy Statement |
25 |
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
29, 2017 or which the person has the right to acquire within 60 days of March 29, 2017 for each director, named executive officer
in the Summary Compensation Table on page 42, and all current Target directors and executive officers as a group.
| | |
Shares | | |
Shares | | |
Stock options | | |
|
| | |
directly or | | |
issuable | | |
exercisable | | |
Total shares |
| | |
indirectly | | |
within | | |
within | | |
beneficially |
| Directors | |
owned | | |
60 days(1) | | |
60 days | | |
owned(2) |
| Roxanne S. Austin | |
| 10,000 | | |
| 23,557 | | |
| 20,392 | | |
| 53,949 |
| Douglas M. Baker, Jr. | |
| 0 | | |
| 10,643 | | |
| 5,570 | | |
| 16,213 |
| Calvin Darden | |
| 0 | | |
| 23,557 | | |
| 0 | | |
| 23,557 |
| Henrique De Castro | |
| 0 | | |
| 13,533 | | |
| 5,570 | | |
| 19,103 |
| Robert L. Edwards | |
| 10,000 | | |
| 4,701 | | |
| 0 | | |
| 14,701 |
| Melanie L. Healey | |
| 0 | | |
| 4,161 | | |
| 0 | | |
| 4,161 |
| Donald R. Knauss | |
| 10,000 | | |
| 4,701 | | |
| 0 | | |
| 14,701 |
| Monica C. Lozano | |
| 0 | | |
| 3,054 | | |
| 0 | | |
| 3,054 |
| Mary E. Minnick | |
| 886 | | |
| 59,009 | | |
| 0 | | |
| 59,895 |
| Anne M. Mulcahy | |
| 7,114 | | |
| 31,397 | | |
| 19,368 | | |
| 57,879 |
| Derica W. Rice | |
| 0 | | |
| 52,227 | | |
| 0 | | |
| 52,227 |
| Kenneth L. Salazar | |
| 0 | | |
| 10,069 | | |
| 3,601 | | |
| 13,670 |
| Named executive officers | |
| | | |
| | | |
| | | |
| |
| Brian C. Cornell | |
| 128,416 | | |
| 0 | | |
| 0 | | |
| 128,416 |
| Cathy R. Smith | |
| 19,537 | | |
| 0 | | |
| 0 | | |
| 19,537 |
| John J. Mulligan | |
| 65,624 | | |
| 6,474 | | |
| 257,391 | | |
| 329,489 |
| Don H. Liu(3) | |
| 4,000 | | |
| 0 | | |
| 0 | | |
| 4,000 |
| Mark J. Tritton(3) | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 |
| All current directors and executive officers | |
| | | |
| | | |
| | | |
| |
| As a group (24 persons) | |
| 332,673 | (4) | |
| 247,083 | | |
| 530,340 | | |
| 1,110,096 |
| (1) | Includes shares of common stock
that the named individuals may acquire on or before May 28,
2017 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. Liu became Executive Vice
President, Chief Legal Officer & Corporate Secretary on
August 22, 2016, and Mr. Tritton became Executive Vice president
& Chief Merchandising Officer on June 5, 2016. |
| (4) | Includes shares of common stock
owned by executive officers in the Target 401(k) Plan as of
March 29, 2017. |
| |
TARGET CORPORATION 2017 Proxy Statement |
26 |
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 |
|
|
| Name and address |
|
common shares |
|
Percent of |
| of
>5% beneficial owner |
|
beneficially
owned |
|
class(1) |
| State Street Corporation |
|
51,204,237(2) |
|
9.3% |
| One Lincoln Street |
|
|
|
|
| Boston, Massachusetts 02111 |
|
|
|
|
| The Vanguard Group |
|
40,599,172(3) |
|
7.4% |
| 100 Vanguard Boulevard |
|
|
|
|
| Malvern, Pennsylvania 19355 |
|
|
|
|
| BlackRock, Inc. |
|
38,296,297(4) |
|
6.9% |
| 55 East 52nd Street |
|
|
|
|
| New York, New York 10055 |
|
|
|
|
| (1) | Based on shares outstanding on
March 29, 2017. |
| (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 14, 2017. The filing indicates that as of December
31, 2016, State Street had sole voting power for 0 shares, shared
voting power for 51,204,237 shares, sole dispositive power for
0 shares and shared dispositive power for 51,204,237 shares. |
| (3) | The Vanguard Group (Vanguard)
reported its direct and indirect beneficial ownership on a Schedule
13G/A filed with the SEC on February 10, 2017. The filing indicates
that as of December 31, 2016, Vanguard had sole voting power
for 887,398 shares, shared voting power for 121,104 shares,
sole dispositive power for 39,595,350 shares and shared dispositive
power for 1,003,822 shares. |
| (4) | BlackRock, Inc. (BlackRock) reported
its direct and indirect beneficial ownership on a Schedule 13G/A
filed with the SEC on January 27, 2017. The filing indicates
that as of December 31, 2016, BlackRock had sole voting power
for 31,784,390 shares, shared voting power for 19,504 shares,
sole dispositive power for 38,276,793 shares and shared dispositive
power for 19,504 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 28, 2017, all Section 16(a) filing
requirements were met.
| |
TARGET CORPORATION 2017 Proxy Statement |
27 |
Human Resources & Compensation Committee
Report
The Human Resources &
Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis with management. Based on
this review and discussion, the Human Resources & 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 & Compensation Committee
Anne M. Mulcahy, Chair
Roxanne
S. Austin
Calvin Darden
Henrique De Castro
Melanie L. Healey
Donald R. Knauss
Compensation Discussion and Analysis
Introduction
This Compensation Discussion
and Analysis (CD&A) focuses on how our Named Executive Officers (NEOs) were compensated for fiscal 2016 (January 31, 2016 through
January 28, 2017) and how their fiscal 2016 compensation aligns with our pay for performance philosophy.
For fiscal 2016, our NEOs
were:
Name and principal position Brian C. Cornell Chairman &
Chief Executive Officer Cathy R. Smith Executive Vice President & Chief Financial Officer John J. Mulligan Executive
Vice President & Chief Operating Officer Don H. Liu Executive Vice President, Chief Legal Officer & Corporate Secretary
Mark J. Tritton Executive Vice President & Chief Merchandising Officer
On June 5, 2016, Mr. Tritton
joined Target as Executive Vice President & Chief Merchandising Officer. On August 22, 2016, Mr. Liu joined Target as Executive
Vice President, Chief Legal Officer & Corporate Secretary.
Our CD&A is divided into
the following sections:
| |
TARGET CORPORATION 2017 Proxy Statement |
28 |
Executive summary
Guiding principles of our compensation
program
We believe executive compensation
should be directly linked to performance and the creation of long-term value for our shareholders. With that in mind, the three
guiding principles of our compensation program are to:
| ● |
Attract, retain and motivate a premier management team to sustain our distinctive
brand and its competitive advantage in the marketplace |
| ● |
Provide a framework that encourages outstanding financial results and shareholder returns
over the long-term |
| ● |
Deliver on our pay for performance philosophy in support of our strategy |
A significant portion of
our executive compensation is at risk and therefore may vary from targeted compensation based upon the level of achievement of
specified performance objectives and stock price performance.
Shareholder support for our 2016 advisory vote on executive
compensation and shareholder outreach program
At our June 2016 annual meeting
of shareholders, shareholders approved our Say on Pay proposal in support of our executive compensation program by 96.4%, consistent
with the fiscal 2015 vote of 96.6%. We believe open dialogue with our shareholders and incorporation of their feedback into our
executive compensation program has been instrumental in obtaining shareholder support for our compensation program’s design
and direction.
We regularly engage in outreach
efforts with our shareholders relating to a variety of topics and involve one or more independent directors in these conversations
as appropriate. We use the information gathered through these outreach efforts to help inform our compensation decisions. We look
forward to continued dialogue on compensation matters and other issues relevant to our business.
Summary of key compensation decisions
made in fiscal 2016
| Topic | |
Description | |
More
information |
| Financial Component of STIP | |
Based on below threshold performance for fiscal 2016, the financial component of our short-term incentive plan (STIP) had a zero payout. Therefore, our CEO did not receive a STIP payout for the year. | |
 |
| Team Scorecard Component of STIP | |
Beginning in fiscal 2016 and to replace the personal performance component of the non-CEO NEOs’ STIP, we introduced the team scorecard. The scorecard was designed to strongly align non-CEO NEO pay opportunity to our strategy, focusing on certain key initiatives believed to ensure a foundation for future growth. | |
 |
| Strategic Alignment Award Payout | |
Strategic Alignment Awards were granted in 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. Payout of these awards was based on important absolute metrics, each selected to drive focused outcomes that complement the relative performance metrics in our annual long-term incentive (LTI) awards. | |
 |
| NEO New Hire Compensation | |
As part of the offers given to Mr. Tritton and Mr. Liu to join Target, the Human Resources & Compensation Committee approved sign-on bonuses, make-whole RSUs and pro-rata equity grants consisting of PSUs and PBRSUs. | |
 |
For context to understand
the key compensation decisions made in fiscal 2016, it is also important to understand a compensation decision that took place
after the end of fiscal 2016. At our February 2017 Financial Community meeting, we announced that Target is aggressively accelerating
investments in its strategic initiatives, including:
| ● |
An expected capital investment of over $2 billion in fiscal 2017, and over $7 billion expected in the next three years,
principally in store remodels, new small format stores, and digital and supply chain capabilities; and |
| ● |
A planned $1 billion investment in operating margin in fiscal 2017 to enhance the digital and in-store experience of our
guests. |
These investments, which
are intended to position Target for sustained and profitable sales growth and market share gains in the long-term, may result in
lower near-term profitability that could negatively affect outstanding LTI awards granted before the decision to make those investments.
Accordingly, with the perspective of this extensive long-term investment plan, in April 2017 the Board decided to grant price-vested
stock options (Price-Vested Options) to maintain continuity of the executive team throughout this investment period, galvanize
them around the key initiatives and reward success in this transformational effort. The Price-Vested Options serve as a supplemental
compensation element based exclusively on stock price performance, to complement outstanding LTI awards through the investment
period announced in February 2017. The Price-Vested Options have an effective grant date of May 22, 2017, the first trading day
that begins after 72 hours following our first quarter earnings release, and the exercise price will be equal to the fair market
value on the effective grant date. The key design features of the Price-Vested Options align management’s interests with
shareholders:
| |
TARGET CORPORATION 2017 Proxy Statement |
29 |
| ● |
Vesting is Based on Both Time and Stock Price Criteria – The Price-Vested Options are not exercisable during the first three years and will become exercisable only if Target’s stock price exceeds a hurdle of $75 for 20 consecutive trading days within the seven-year term of the options. |
| ● |
The Stock Price Criteria are Challenging – The performance hurdle of $75 maintained for a period of 20 days is challenging, both in terms of historic stock price levels and in relation to our more recent share price following the February 2017 announcement. The $75 price hurdle represents a 40% premium over our closing price of $53.68 on April 17, 2017, the date the awards were approved. The $75 price hurdle is also well above our average price for the period between the February 2017 announcement and approval date, which was $54.62. The 20-consecutive day requirement helps to mitigate temporary stock price fluctuations from influencing potential gains. Finally, at any time prior to the effective grant date, the Board can decide not to issue the Price-Vested Options if it determines that unexpected circumstances have arisen which undermine the purpose of the Price-Vested Options, such as the stock price criteria becoming no longer sufficiently challenging. |
| ● |
Mandatory Post-Exercise Holding Period – The shares received upon exercise, net of exercise costs and taxes, are subject to a one-year post-exercise holding period, even if this period extends beyond termination of employment. During the post-exercise holding period, the shares received upon exercise may not be used by the executive in satisfying our stock ownership guidelines. |
| ● |
Strict Forfeiture Provisions – For voluntary terminations, Price-Vested Options are completely forfeited if the executive leaves within the first three years. |
| ● |
No Retirement-Based Extensions – Notably, and in contrast to the terms of our annual LTI awards, there are no retirement-based extensions of vesting or exercisability for these Price-Vested Options. |
| ● |
Relationship to Other Compensation Elements – 100% of our annual LTI grant features
performance-based metrics that measure our performance relative to our peers. In addition, our outstanding PSUs feature an
EPS Growth metric, which was affected by the February 2017 announcement to aggressively accelerate investments. The Committee
believes the Price-Vested Options provide a market-based complement to the relative performance measures of the other outstanding
compensation elements through the investment period announced in February 2017. |
As a result of these actions,
Mr. Cornell and each of the other NEOs would receive Price-Vested Options with effective grant date fair values of $2 million and
$1 million, respectively. The grant date present value of the Price-Vested Options was considered in relation to the most recently
completed fiscal year with the grant representing approximately 21% of CEO’s annual LTI grant for fiscal 2016. Because these
awards were not granted in fiscal 2016, they will be reflected in the Summary Compensation Table for fiscal 2017.
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 short-term incentives are based on annual absolute financial goals and progress
made toward key strategic priorities. 100% of our LTI program features performance-based metrics and is tied to relative performance
versus our retail peers over a three-year time period.
The charts below illustrate
close alignment of executive compensation and our performance. The charts show actual payouts, as a percentage of goal, over the
last five years for our STIP and PSU plans. PSU awards and STIP made up more than 65% of at-goal annual total direct compensation
(TDC) for our NEOs in fiscal 2016. The calculation of our at-goal TDC is described on page 33. No payout was earned under the financial
component of STIP for fiscal 2016; therefore our CEO did not receive a STIP payout. The fiscal 2016 STIP payout as a percentage
of goal below reflects the team scorecard payout for our non-CEO NEOS.
As disclosed in prior proxy
statements, PSUs spanning the 2012-2014, 2013-2015 and 2014-2016 performance periods and 2014 STIP payouts were forfeited for active
executive officers (including current NEOs Mr. Cornell and Mr. Mulligan) when we did not meet the minimum performance condition
under 162(m) for fiscal 2014, due to the discontinuation of Canadian operations. If the awards were not forfeited, the financial
results versus our peers would have yielded payouts well below goal. Refer to page 37 for payout information on special, one-time
Strategic Alignment Awards granted in 2015 to executive officers to re-connect pay with performance in achieving goals designed
to re-position Target and drive long-term growth consistent with our key priorities.
| |
TARGET CORPORATION 2017 Proxy Statement |
30 |
Performance highlights
The following highlights
show our historical performance on key metrics we use in our executive compensation program over each of the last three years.
Our performance on these metrics drives our compensation outcomes and provides context to our decisions in setting our goal levels
under those metrics. These metrics, including the goal levels and actual results for fiscal 2016, are described in more detail
in the narratives for each compensation element.
| (1) |
Total
Adjusted Sales is calculated by excluding pharmacy and clinic sales for fiscal 2014-2016 GAAP from consolidated sales. This
adjustment is made for comparison purposes due to the sale of the pharmacy and clinic business to CVS at the end of fiscal
2015. |
| (2) |
The
computation of segment earnings before interest expense and income taxes (Segment EBIT) under GAAP is found in Note 30, Segment
Reporting, to our consolidated financial statements for fiscal 2016. Incentive EBIT, which is one of the metrics we use in
our short-term incentive plan, represents Segment EBIT on a pre-incentive compensation basis and is calculated by excluding
incentive expense from our Segment EBIT. |
| (3) |
Adjusted
Earnings Per Share (EPS) from Continuing Operations is calculated by starting with GAAP EPS from Continuing Operations and
excluding losses on early retirement of debt, the impact of the 2015 sale of our pharmacy and clinics business, 2015 restructuring
costs, net expenses related to the 2013 data breach, and resolution of income tax matters. A reconciliation of Adjusted EPS
from Continuing Operations to GAAP EPS from Continuing Operations can be found on page 21 of our annual report on Form 10-K
for fiscal 2016. |
| (4) |
After-Tax
Return on Invested Capital (ROIC) from Continuing Operations is a ratio based on GAAP information, with the exception of adjustments
made to capitalize operating leases. 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. |
Our performance has allowed
us to fully invest in opportunities to grow our business profitably, create sustainable long-term value, maintain our current operations
and assets and return excess capital to shareholders over the past three fiscal years.
Total three-year shareholder return 28% Dividends
paid in the last three years $3.9B Since 2014, $3.9 billion has been returned to shareholders through dividends. 2016 increase
in annual dividend per share 7.4% Our 45th successive year of dividend growth. Shares repurchased in the last three years $72 B
Since 2014, $7.2 billion has been returned to shareholders through share repurchases.
| |
TARGET CORPORATION 2017 Proxy Statement |
31 |
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 $500,000 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 to ensure that our compensation programs and policies do not incentivize excessive risk-taking behavior. | |
 |
| 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 & 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 NEOs has an employment contract. |
|
 |
| |
TARGET CORPORATION 2017 Proxy Statement |
32 |
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
based on the guiding principles discussed above. See the following page for more details on the elements of our compensation program.
| (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 2017. For this purpose, TDC excludes items shown under “Change in Pension Value and Nonqualified
Deferred Compensation Earnings” and “All Other Compensation”. |
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 0% to 230% of goal when
Incentive EBIT and Total Adjusted Sales performance levels are below threshold and at or above maximum, 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.
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TARGET CORPORATION 2017 Proxy Statement |
33 |
Elements of fiscal 2016 executive
total direct compensation
Fixed Element Key characteristics Link to
shareholder
value How we
determine
amount Key
decisions 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. For fiscal 2016, one
NEO received a base
salary increase. See
page 35. Performance-
Based Short-Term
Incentives Variable compensation
component payable
in cash based on
performance against
annually established
financial goals and
assessment of team
performance (excluding
CEO). Incentive targets are
tied to achievement
of key annual financial
measures.
NEOs other than
the CEO are also
evaluated against
identified strategic
initiatives important to
driving profitable sales
growth.
Our CEO’s STIP is
exclusively tied to
financial measures. Financial component of
award based on:
- Incentive EBIT
- Total Adjusted Sales
For NEO STIP
(excluding CEO), there
is a team scorecard
component based on
the Human Resources
& Compensation
Committee’s
assessment of
management’s progress
toward strategic
priorities. For fiscal 2016, the
financial component of
our STIP resulted in 0%
payout.
Beginning in fiscal
2016, we replaced the
personal performance
component of NEO
STIP (excluding CEO)
with a team scorecard
component, which paid
out at 30% of salary.
See page 35. Performance Share
Unit Awards (75% of
annual LTI grants) PSUs cliff vest at the
end of the three-year
performance period
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 on three
key metrics:
- 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 performance
versus retail peer group
over the three-year
performance period. No significant changes
from prior year grant
levels and award terms. As previously disclosed,
we did not meet the
162(m) minimum
performance condition
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 at the
end of the three-year
performance period
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 award levels
based on individual
performance, potential
future contributions,
historical grant
amounts, retention
considerations and
market data. No significant changes
from prior year grant
levels and award terms.
As previously disclosed,
we did not meet the
162(m) minimum
performance condition
for fiscal 2014,
effectively cancelling
the fiscal 2014-2016
PBRSU award.
| |
TARGET CORPORATION 2017 Proxy Statement |
34 |
Base salary
We provide base salary as
a means to deliver 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.
In January 2016, the Human
Resources & Compensation Committee approved a fiscal 2016 base salary increase of $75,000 for Ms. Smith in recognition of her
performance and market considerations. No other NEO received a base salary increase.
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.
The financial component of our STIP program is based on two financial metrics to align our annual incentives with our strategy
of driving growth, with an emphasis on profitability: Incentive EBIT (75%) and Total Adjusted Sales (25%). The CEO STIP design
is exclusively based on the financial component. See the Performance Highlights tables and footnotes on page 31 for a description
of how Incentive EBIT and Total Adjusted Sales are calculated from our financial statements.
For our non-CEO NEOs, 80%
of their STIP is based on the financial component. The remaining 20% of their STIP is based on a team scorecard, designed to strongly
align pay opportunity to Target’s strategic agenda. The team scorecard component is new for fiscal 2016 and replaced the
personal component of STIP that was used for the non-CEO NEOs in prior years. The intent of the scorecard is to align the team
around a key set of collective strategic priorities.
The following table shows
financial and scorecard goals expressed as a percentage of salary.
| * |
CEO’s maximum: lesser of $7 million and 400% of base salary |
Fiscal 2016 (payout as a % of salary) CEO Component Weight Threshold Goal Maximum Actual Payout % Financial (Incentive EBIT 75%,
Total Adjusted Sales 25%)100% 75% 175% 400%* 0% Other NEOs Financial (Incentive EBIT 75%,
Total Adjusted Sales 25%)
80% 16% 72% 160% 0% Scorecard 20% 4% 18% 40% 30% Total 20% 90% 200% 30%
Fiscal 2016 financial
STIP performance
The final financial STIP
goals were based on our overall 2016 performance goals, which were reviewed, discussed and approved by the independent members
of the full Board at the beginning of the year. When approving these goals, the Human Resources & Compensation Committee takes
into account our business strategies, the economic environment, and how the annual goal aligns with our long-range plan, including
anticipated capital allocation needs.
Historically, STIP goals
have proven rigorous. For fiscal 2016, our Incentive EBIT and Total Adjusted Sales goal amounts were $5,737 million and $71,622
million, respectively. Our actual Incentive EBIT and Total Adjusted Sales results of $5,114 million and $69,495 million resulted
in below threshold performance and a $0 financial payout.
Based on below threshold
financial performance, our CEO did not receive a STIP payout for fiscal 2016.
Fiscal 2016 team
scorecard assessment
The team scorecard portion
of the STIP for our non-CEO NEOs is based on the broad priorities of core retail foundations and guest initiatives. The team scorecard
provides a general structure for discussing and measuring performance on a team basis for the management team, excluding our CEO.
Throughout the year, our CEO provided the Human Resources & Compensation Committee interim assessments of team scorecard performance.
For fiscal 2016, primary
team scorecard progress indicators identified at the beginning of the year included increased reliability across channels through
out-of-stock management; improved stability in digital, stores and point of sale systems; and signature category growth within
style, baby, kids and wellness that outperformed the total company.
Despite falling well short
of the financial goals set at the beginning of the year, our management team drove meaningful progress against these key indicators.
We delivered historically low out-of-stock rates for stores, digital and our top 2,000 items. We delivered significantly improved
system stability and our digital systems flawlessly performed over the holiday season, which resulted in 100% availability of the
website through all-time high peak volume. In our stores, team member satisfaction with systems was at a three-year high. Additionally
our signature categories grew 3 percentage points faster than the total company, fueled by digital growth that outpaced the industry.
Taking into consideration
the outcomes described above, the CEO recommended, and the Human Resources & Compensation Committee approved, a team scorecard
payout of 30% of base salary for our non-CEO NEOs.
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TARGET CORPORATION 2017 Proxy Statement |
35 |
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 & 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 for our NEOs
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
& Compensation Committee made no changes to the NEOs’ annual LTI grants versus the prior year.
Mix of LTI
Once the total annual grant
date present value for a NEO is determined, the Human Resources & 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 and is intended to incent management
to outperform the peer group over the long term. 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
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 the top-line relative to the retail sector, to grow
it profitably, and to ensure prudent deployment of capital to drive the business. The following example illustrates PSU payouts
at various levels of performance:
For more information about
our peer groups, see pages 39-40.
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TARGET CORPORATION 2017 Proxy Statement |
36 |
PSU adjustments
The intent of our PSU program is to
measure performance relative to our peer group on the previously described metrics. To achieve this measurement in an
objective manner, we base the initial rankings on annual reported financial results of each member of the retail peer group
and Target (unless determined otherwise at the time of grant). The Human Resources & Compensation Committee has reserved
discretion to adjust the reported financial results for Target or any member of the retail peer group if it believes such
adjustments necessary to properly gauge Target’s relative performance. Adjustments to Target and peer results, if any,
are disclosed in the proxy in the year of payout.
Historically, adjustments
to Target’s results have not been material in nature, eliminated items that did not reflect our core operations, and ultimately
decreased participants’ resulting payouts. The only adjustment to our peers’ results historically has been a reduction
in sales to remove the impact of the 53rd week in the retail accounting calendar to ensure consistency on relative market
share comparisons.
2014-2016 PSU
payout
We did not meet the 162(m)
minimum performance condition for fiscal 2014 required to earn the 2014-2016 PSU payout.
PBRSUs
In January 2017, the Human
Resources & Compensation Committee granted PBRSU awards in connection with fiscal 2016 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 at the end of the three-year performance
period.
| 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. |
2014-2016 PBRSU
payout
We did not meet the 162(m)
minimum performance condition for fiscal 2014 required to earn a payout for the 2014-2016 PBRSU performance period, so the PBRSUs
for that performance period were forfeited.
Strategic alignment
award payout
As described in our CD&A
the past two years, Strategic Alignment Awards were granted and reported as compensation in 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.
Shareholder feedback gained in 2015 informed our decision to grant these one-time awards.
Payout of these awards was based on
important absolute metrics, each selected to drive focused outcomes that complement the relative performance metrics in our
annual LTI awards. The core metrics include total sales growth, digital channel sales growth, and earnings before interest
and taxes growth, which can deliver up to 150% of goal payout. Additionally, ROIC can modify awards upward by 50% of goal
payout for a total maximum payout of 200% of goal. Payouts are based on fiscal 2015 and fiscal 2016 performance and assessed
based on the metrics below and paid out in March 2017 at 104.7% of goal, as detailed below.
Core Metrics Goal Actual Actual Payout % Sales compound annual
growth rate (CAGR)
3.0% 0.7% 23.3% Digital channel sales CAGR 30.0% 26.6% 88.7% Segment EBIT dollar growth (in millions) $500 $261 52.2% ROIC Modifier 13.75% 15.0% 50.0% Total Payout Calculation
(expressed as a % of goal) Average of
Core Metrics
54.7% + ROIC Modifier 50.0% Total Payout 104.7%
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TARGET CORPORATION 2017 Proxy Statement |
37 |
Competitive sign-on
compensation related to new hires
On June 5, 2016, Mr. Tritton
joined Target as Executive Vice President & Chief Merchandising Officer. To attract Mr. Tritton to Target, he received a sign-on
bonus of $500,000, RSUs valued at $1 million which cliff vest three years from the grant date and pro-rata equity grants consisting
of PSUs and PBRSUs valued at $1 million. In addition, he received a STIP payout for fiscal 2016 performance pro-rated based on
his hire date.
On August 22, 2016, Mr. Liu
joined Target as Executive Vice President & Chief Legal Officer and Corporate Secretary. To attract Mr. Liu to Target, he received
a sign-on bonus of $500,000, RSUs valued at $3 million, which ratably vest over three years, and pro-rata equity grants consisting
of PSUs and PBRSUs valued at $1.5 million. In addition, he received a STIP payout for fiscal 2016 performance pro-rated
based on his hire date.
Sign-on compensation for Mr. Tritton
and Mr. Liu is reflective of their respective significant experience 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 2016. The respective RSU grants to Mr. Tritton and Mr. Liu were designed to make them whole for
compensation they forfeited from their former employers when they joined Target (Make-Whole RSUs).
We have a relocation policy
that provides a transfer allowance and pays for certain expenses, including travel related to finding a new home, moving family
and reporting to work, home sale assistance for selling a current home and purchasing a new home, interim living and moving personal
property. Mr. Tritton and Mr. Liu received approximately $475,000 and $250,000, respectively, in benefits under our relocation
policy to help facilitate their moves to our corporate office. 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 the relocation benefit.
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 or contributed to our
deferred compensation plan. |
| ● |
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 & 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 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 2016. |
Greater detail on these components
is provided in the tables that follow the Summary Compensation Table on page 42.
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.
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TARGET CORPORATION 2017 Proxy Statement |
38 |
Compensation
governance
Process for determining
executive compensation (including NEOS)
Human Resources
& Compensation Committee
The Human Resources &
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 & 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
& Compensation Committee. The Human Resources & 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
& Compensation Committee’s independent consultant
SBCG has been retained by
and reports directly to the Human Resources & 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 & Compensation Committee, in the form of a range of
possible outcomes, for the Human Resources & 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 & Compensation
Committee.
Compensation
of other executive officers and role of management
In developing compensation
recommendations for other executive officers, the Executive Vice President & 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 Korn Ferry 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 & Compensation
Committee or our CEO, but do interact with the Executive Vice President & 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
& Chief Human Resources Officer and the CEO work together to develop our CEO’s compensation recommendations to the Human
Resources & 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 & 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 Korn Ferry 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.
The retail peer group was formulated
based on an initial screen of companies in the Global Industry Classification Standard 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 Human Resources & Compensation Committee. No changes were made to our peer groups in fiscal 2016.
The companies included in the 2016 market comparisons are listed below.
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TARGET CORPORATION 2017 Proxy Statement |
39 |
2016
peer
groups Retail Amazon.com, Inc. Lowe’s
Companies, Inc. Best Buy Co., Inc. Macy’s, Inc. Cost co Wholesale
Corporation Publix Super
Markets, Inc. CVS Health
Corporation Rite Aid
Corporation Dollar General
Corporation Sears Holdings
Corporation The Gap, Inc. Staples, Inc. The Home Depot,
Inc. The TJX
Companies, Inc. Kohl’s
Corporation Walgreens Boots
Alliance, Inc. The Kroger Co. Wal-Mart Stores,
Inc. General
industry 3M Company Johnson Controls, Inc. Abbott Laboratories McDonald’s Corporation Anthem, Inc. MetLife, Inc. Archer-Daniels-Midland
Company Mondelez International,
Inc. The Coca-Cola
Company PepsiCo, Inc. Deere Company Pfizer Inc. The Dow Chemical
Company The Procter & Gamble
Company Express Scripts
Holding Company Time Warner Inc. FedEx Corporation United Parcel Services,
Inc. General Mills, Inc. UnitedHealth Group
Incorporated Johnson & Johnson United Technologies
Corporation
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 28, 2017:
| | |
2016
peer group comparison(1)(2) |
|
| | |
Retail | | |
General
industry |
|
| | |
| Revenues | | |
| Market
cap | | |
| Employees | | |
| Revenues | |
|
| Market
cap | | |
Employees |
|
| 25th Percentile | |
$ | 25,629 | | |
$ | 9,240 | | |
| 125,250 | | |
$ | 29,795 | |
|
$ | 51,324 | | |
53,942 |
|
| Median | |
| 36,073 | | |
| 25,729 | | |
| 162,450 | | |
| 49,608 | |
|
| 74,090 | | |
98,450 |
|
| 75th Percentile | |
| 109,124 | | |
| 81,467 | | |
| 227,100 | | |
| 67,101 | |
|
| 149,355 | | |
182,650 |
|
| Target Corporation | |
$ | 69,495 | | |
$ | 36,044 | | |
| 323,000 | | |
$ | 69,495 | |
|
$ | 36,044 | | |
323,000 |
|
| (1) |
All amounts in millions, except employees. |
| (2) |
Data Source: Equilar |
Compensation policies
and risk
As part of our regular review
of our compensation practices, we conduct an analysis of whether our compensation policies and practices for our employees create
material risks to the company. Our risk assessment is two pronged. First, we take a “tops-down” approach by evaluating
whether our compensation programs and policies exacerbate top enterprise-wide risks. Next, we take a “bottoms-up” approach
to assess the following key compensation risk areas: performance measures, pay mix, goal setting and performance curve, leverage,
magnitude of pay, calculation of performance, participant communication, severance and corporate governance.
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 & Compensation Committee’s independent consultant and discussed
with the Human Resources & 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 & 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.
|
| |
TARGET CORPORATION 2017 Proxy Statement |
40 |
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 & Compensation Committees’s 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. All
of our executive officers and members of the Board of Directors are in compliance with this policy.
Grant timing practices
The following practices regarding
the timing of equity compensation grants have not been formalized in a written policy, but they have been regularly followed:
| ● |
Our annual LTI grant date has been the date of our regularly scheduled January Board of Directors meeting. This meeting is scheduled more than one year in advance. The Board has retained discretion to change the annual grant date in the future under appropriate circumstances. |
| ● |
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 to executive officers 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 2016, 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 & Compensation Committee. The Human Resources & 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 & Compensation Committee’s exercise of its negative discretion to determine
the actual payouts. We may provide non-deductible compensation in situations the Human Resources & Compensation Committee or
our Board of Directors believes appropriate.
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TARGET CORPORATION 2017 Proxy Statement |
41 |
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.
Name
and
principal position |
Fiscal
year | |
Salary | |
Bonus(1) | | |
Stock
awards(2)(3) | |
Option
awards(2) | |
Non-equity
incentive plan
compensation(4) | |
Change
in
pension
value and
nonqualified
deferred
compensation
earnings(5) | |
All
other
compensation(6) | |
Total | |
Brian
C. Cornell
Chairman & Chief Executive Officer |
| 2016 | |
$ | 1,300,000 | |
$ | 0 | $ | |
| 9,650,837 | |
$ | 0 | |
$ | 0 | |
$ | 0 | |
$ | 330,532 | |
$ | 11,281,369 | |
| | 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 | |
Cathy
R. Smith
Executive Vice President & Chief Financial Officer |
| 2016 | |
$ | 798,558 | |
$ | 240,000 | $ | |
| 3,301,662 | |
$ | 0 | |
$ | 0 | |
$ | 0 | |
$ | 99,123 | |
$ | 4,439,343 | |
| | 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 |
| 2016 | |
$ | 1,000,000 | |
$ | 300,000 | $ | |
| 5,079,385 | |
$ | 0 | |
$ | 0 | |
$ | 55,765 | |
$ | 595,493 | |
$ | 7,030,643 | |
| | 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 | |
Don
H. Liu
Executive Vice President, Chief Legal Officer & Corporate Secretary |
| 2016 | |
$ | 275,000 | |
$ | 597,500 | $ | |
| 6,812,539 | |
$ | 0 | |
$ | 0 | |
$ | 0 | |
$ | 263,804 | |
$ | 7,948,843 | |
| | | |
| | |
| | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | | |
| | |
| | | |
| | |
| | |
| | |
| | |
| | |
| | |
Mark
J. Tritton
Executive Vice President & Chief Merchandising Officer |
| 2016 | |
$ | 396,635 | |
$ | 625,000 | $ | |
| 3,643,812 | |
$ | 0 | |
$ | 0 | |
$ | 0 | |
$ | 484,867 | |
$ | 5,150,313 | |
| | | |
| | |
| | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | | |
| | |
| | | |
| | |
| | |
| | |
| | |
| | |
| | |
| (1) |
For
NEOs other than our CEO, the “Bonus” amount shows actual payouts earned under our Short-Term Incentive Plan for
the team scorecard component in 2016 and the personal component for 2015. The CEO has no team scorecard or personal component
to his Short-Term Incentive Plan payout. For Mr. Liu and Mr. Tritton, the “Bonus” amount for 2016 also includes
$500,000 each for sign-on bonuses included in their new hire compensation. |
| |
|
| (2) |
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 2016 and Note 26, Share-Based
Compensation, to our consolidated financial statements for fiscal 2015 for a description of our accounting and the assumptions
used. |
| |
TARGET CORPORATION 2017 Proxy Statement |
42 |
| (3) |
Represents
the aggregate grant date fair value of 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. For Mr. Liu and Mr. Tritton, this also includes the aggregate grant date fair value of
RSUs, PSUs and PBRSUs granted as part of their new hire compensation. |
| |
The
range of payments for the PSUs granted in fiscal 2016 is as follows: |
| Name | |
Minimum
amount | | |
Amount
reported | | |
Maximum
amount | |
| Mr.
Cornell | |
| | | |
| | | |
| | |
| PSU
Granted 1/11/17 | |
$ | 0 | | |
$ | 7,125,037 | | |
$ | 12,468,815 | |
| Ms.
Smith | |
| | | |
| | | |
| | |
| PSU
Granted 1/11/17 | |
$ | 0 | | |
$ | 2,437,545 | | |
$ | 4,265,703 | |
| Mr.
Mulligan | |
| | | |
| | | |
| | |
| PSU
Granted 1/11/17 | |
$ | 0 | | |
$ | 3,750,008 | | |
$ | 6,562,514 | |
| Mr.
Liu | |
| | | |
| | | |
| | |
| PSU
Granted 8/22/16 | |
$ | 0 | | |
$ | 937,514 | | |
$ | 1,640,650 | |
| PSU
Granted 1/11/17 | |
$ | 0 | | |
$ | 1,875,040 | | |
$ | 3,281,320 | |
| Mr.
Tritton | |
| | | |
| | | |
| | |
| PSU
Granted 6/6/16 | |
$ | 0 | | |
$ | 750,050 | | |
$ | 1,312,588 | |
| PSU
Granted 1/11/17 | |
$ | 0 | | |
$ | 1,200,034 | | |
$ | 2,100,060 | |
| (4) |
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. |
| |
|
| (5) |
For
fiscal 2016, Mr. Mulligan’s change in the qualified pension plan value amount was $55,765. Mr. Cornell, Ms. Smith, Mr.
Liu and Mr. Tritton 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 2016,
2015 and 2014 were 4.42%, 4.71% and 3.87%, 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. |
| |
|
| (6) |
The
amounts reported for fiscal 2016 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 | |
$ | 162,750 | | |
$ | 15,479 | | |
$ | 0 | | |
$ | 0 | | |
$ | 152,303 | | |
$ | 330,532 | |
| Ms. Smith | |
$ | 50,118 | | |
$ | 7,491 | | |
$ | 0 | | |
$ | 27,929 | | |
$ | 13,585 | | |
$ | 99,123 | |
| Mr. Mulligan | |
$ | 96,050 | | |
$ | 8,279 | | |
$ | 459,668 | | |
$ | 0 | | |
$ | 31,496 | | |
$ | 595,493 | |
| Mr. Liu | |
$ | 0 | | |
$ | 4,257 | | |
$ | 0 | | |
$ | 250,092 | | |
$ | 9,455 | | |
$ | 263,804 | |
| Mr. Tritton | |
$ | 3,570 | | |
$ | 3,184 | | |
$ | 0 | | |
$ | 474,540 | | |
$ | 3,573 | | |
$ | 484,867 | |
| |
Supplemental
Pension Plans. The SPP Credits for our NEOs represent additional accruals of supplemental pension plan benefits that are
credited to their deferred compensation accounts. These benefits are based on our normal pension formula, so they are affected
by final average pay, service, age and changes in interest rates. See the narrative following the Pension Benefits for Fiscal
2016 table for more information about our pension plans. |
| |
Relocation.
In connection with the hiring and appointment of Mr. Liu as our Chief Legal Officer and Mr. Tritton as our Chief Merchandising
Officer, we paid $250,092 and $474,540, respectively, under our relocation policy to facilitate moves to our corporate office
in Minnesota. In early fiscal 2016, we paid $27,929 under our relocation policy for Ms. Smith, who was hired as our Chief
Financial Officer in September 2015. See page 38 for more information about the benefits provided under our relocation policy.
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 the relocation benefit. |
| |
Perquisites.
The perquisites for our NEOs other than Mr. Cornell consist of reimbursement of financial management expenses, reimbursement
of home security expenses, on-site parking, 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, namely:
reimbursement of home security expenses, on-site parking, executive physical, 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. The only individual perquisite that exceeded $25,000 was
Mr. Cornell’s personal use of company-owned aircraft for security reasons, which amounted to $147,036. 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. |
| |
TARGET CORPORATION 2017 Proxy Statement |
43 |
Grants of plan-based awards
in fiscal 2016
| | |
| |
| Estimated
possible payouts
under
non-equity incentive
plan
awards(1) | |
| Estimated
future payouts
under
equity incentive
plan
awards(2) | | |
| | |
| Name | |
Grant
date | |
| Threshold | | |
| Target | | |
| Maximum | | |
| Threshold
(#) | | |
| Target
(#) | | |
| Maximum
(#) | | |
| Grant
date
fair value
of stock
awards(3) | |
| Brian C. Cornell | |
3/9/16 | |
$ | 975,000 | | |
$ | 2,275,000 | | |
$ | 5,200,000 | | |
| | | |
| | | |
| | | |
| | |
| | |
1/11/17 | |
| | | |
| | | |
| | | |
| 24,906 | | |
| 33,208 | | |
| 41,510 | | |
$ | 2,525,800 | |
| | |
1/11/17 | |
| | | |
| | | |
| | | |
| 0 | | |
| 99,623 | | |
| 174,341 | | |
$ | 7,125,037 | |
| Cathy R. Smith | |
3/9/16 | |
$ | 128,000 | | |
$ | 720,000 | | |
$ | 1,600,000 | | |
| | | |
| | | |
| | | |
| | |
| | |
1/11/17 | |
| | | |
| | | |
| | | |
| 8,521 | | |
| 11,361 | | |
| 14,202 | | |
$ | 864,118 | |
| | |
1/11/17 | |
| | | |
| | | |
| | | |
| 0 | | |
| 34,082 | | |
| 59,644 | | |
$ | 2,437,545 | |
| John J. Mulligan | |
3/9/16 | |
$ | 160,000 | | |
$ | 900,000 | | |
$ | 2,000,000 | | |
| | | |
| | | |
| | | |
| | |
| | |
1/11/17 | |
| | | |
| | | |
| | | |
| 13,109 | | |
| 17,478 | | |
| 21,848 | | |
$ | 1,329,377 | |
| | |
1/11/17 | |
| | | |
| | | |
| | | |
| 0 | | |
| 52,433 | | |
| 91,758 | | |
$ | 3,750,008 | |
| Don H. Liu | |
8/22/16 | (4) |
$ | 52,000 | | |
$ | 292,500 | | |
$ | 650,000 | | |
| | | |
| | | |
| | | |
| | |
| | |
8/22/16 | (4) |
| | | |
| | | |
| | | |
| 0 | | |
| 42,729 | | |
| 42,729 | | |
$ | 3,000,003 | |
| | |
8/22/16 | (4) |
| | | |
| | | |
| | | |
| 3,339 | | |
| 4,451 | | |
| 5,564 | | |
$ | 335,294 | |
| | |
8/22/16 | (4) |
| | | |
| | | |
| | | |
| 0 | | |
| 13,353 | | |
| 23,368 | | |
$ | 937,514 | |
| | |
1/11/17 | |
| | | |
| | | |
| | | |
| 6,555 | | |
| 8,739 | | |
| 10,924 | | |
$ | 664,688 | |
| | |
1/11/17 | |
| | | |
| | | |
| | | |
| 0 | | |
| 26,217 | | |
| 45,880 | | |
$ | 1,875,040 | |
| Mark J. Tritton | |
6/6/16 | (4) |
$ | 66,667 | | |
$ | 375,000 | | |
$ | 833,333 | | |
| | | |
| | | |
| | | |
| | |
| | |
6/6/16 | (4) |
| | | |
| | | |
| | | |
| 0 | | |
| 14,550 | | |
| 14,550 | | |
$ | 1,000,022 | |
| | |
6/6/16 | (4) |
| | | |
| | | |
| | | |
| 2,729 | | |
| 3,638 | | |
| 4,548 | | |
$ | 268,303 | |
| | |
6/6/16 | (4) |
| | | |
| | | |
| | | |
| 0 | | |
| 10,913 | | |
| 19,098 | | |
$ | 750,050 | |
| | |
1/11/17 | |
| | | |
| | | |
| | | |
| 4,195 | | |
| 5,593 | | |
| 6,992 | | |
$ | 425,404 | |
| | |
1/11/17 | |
| | | |
| | | |
| | | |
| 0 | | |
| 16,779 | | |
| 29,364 | | |
$ | 1,200,034 | |
| (1) |
Awards
represent potential payments under the current STIP. Payments are based on specified target levels of Incentive EBIT and Total
Adjusted Sales, as described in the CD&A. 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 for our CEO and two times salary for
executive officers other than our CEO. |
| |
|
| (2) |
Awards
represent potential payments under PSUs, PBRSUs and RSUs granted under our Amended and Restated 2011 Long-Term Incentive Plan
in fiscal 2016. See the CD&A for a more detailed description of the performance measures for those awards. The other terms
of the PSUs, PBRSUs and RSUs are described in Notes 2 and 3 to the Outstanding Equity Awards at 2016 Fiscal Year-End table. |
| |
|
| (3) |
Grant
date fair value for PSUs, PBRSUs and RSUs was determined pursuant to FASB ASC Topic 718. |
| |
|
| (4) |
Awards
represent the potential payments under the equity grants made to Mr. Liu and Mr. Tritton in connection with their hire dates
of August 22, 2016 and June 5, 2016, respectively. Each received a pro-rata equity grant consisting of PSUs and PBRSUs and
pro-rata STIP award, each on terms consistent with the awards granted to Target’s other executive officers in January
2016. In addition, to compensate for incentive awards from former employers that were forfeited to join Target, Mr. Liu and
Mr. Tritton each received a grant of Make-Whole RSUs that have the same general terms as other RSUs and PBRSUs described in
Notes 2 and 3 to the Outstanding Equity Awards at 2016 Fiscal Year-End table except that Mr. Liu’s Make-Whole RSUs vest
in one-third increments on each anniversary of the grant date. |
| |
TARGET CORPORATION 2017 Proxy Statement |
44 |
Outstanding
equity awards at 2016 fiscal year-end
| |
Option
awards | | |
Stock
awards | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Equity | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
Equity | | |
incentive | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
incentive | | |
plan
awards: | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
plan
awards: | | |
market
or | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
number
of | | |
payout
value | |
| |
Number
of | | |
Number
of | | |
| | |
| | |
Number | | |
| | |
unearned | | |
of
unearned | |
| |
securities | | |
securities | | |
| | |
| | |
of shares | | |
Market
value | | |
shares,
units | | |
shares,
units | |
| |
underlying | | |
underlying | | |
| | |
| | |
or units of | | |
of
shares or | | |
or
other | | |
or
other | |
| |
unexercised | | |
unexercised | | |
Option | | |
Option | | |
stock
that | | |
units
of stock | | |
rights
that | | |
rights
that | |
| |
options(#) | | |
options(#) | | |
exercise | | |
expiration | | |
have
not | | |
that
have not | | |
have
not | | |
have
not | |
| Name |
exercisable(1) | | |
unexercisable(1) | | |
price | | |
date | | |
vested(#)(2) | | |
vested | | |
vested(#)(3) | | |
vested(3) | |
| Brian
C. Cornell |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 640,375 | | |
$ | 40,791,888 | |
| Cathy
R. Smith |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 142,770 | | |
$ | 9,094,449 | |
| John
J. Mulligan |
| 11,557 | | |
| 0 | | |
$ | 55.46 | | |
| 01/12/2021 | | |
| 6,404 | | |
$ | 407,935 | | |
| 242,587 | | |
$ | 15,452,792 | |
| |
| 29,833 | | |
| 0 | | |
$ | 48.88 | | |
| 01/11/2022 | | |
| | | |
| | | |
| | | |
| | |
| |
| 76,983 | | |
| 0 | | |
$ | 50.51 | | |
| 01/24/2022 | | |
| | | |
| | | |
| | | |
| | |
| |
| 139,018 | | |
| 0 | | |
$ | 60.48 | | |
| 01/09/2023 | | |
| | | |
| | | |
| | | |
| | |
| Don
H. Liu |
| | | |
| | | |
| | | |
| | | |
| 43,063 | | |
$ | 2,743,113 | | |
| 75,870 | | |
$ | 4,832,919 | |
| Mark
J. Tritton |
| | | |
| | | |
| | | |
| | | |
| 14,792 | | |
$ | 942,250 | | |
| 52,075 | | |
$ | 3,317,178 | |
| (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: |
| | Options
granted before | |
Options
granted on or after | |
| | September
14, 2011 | |
September
14, 2011 | |
| | |
| Minimum
years | | |
| Vesting
and exercise | | |
| Minimum
years | | |
| Vesting
and exercise | |
| Age | |
| of
service | | |
| extension
period | | |
| of
service | | |
| extension
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 and Make-Whole RSUs granted to Mr. Liu on August 22, 2016, which will vest in
one-third increments on each anniversary of the grant date, and Make-Whole RSUs granted to Mr. Tritton on June 6, 2016, which
will vest in full on the third anniversary of the grant date. After vesting, the RSUs and Make-Whole 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
and Make-Whole RSUs during the vesting period and converted to shares if and after the underlying RSUs and Make-Whole RSUs
vest. Messrs. Mulligan, Liu and Tritton must generally be continuously employed for three years from the date of grant in
order to receive the shares, except that in the event employment is involuntarily terminated without cause Mr. Mulligan’s
unvested RSUs will vest in full and 50% of Mr. Liu’s and Mr. Tritton’s outstanding unvested Make-Whole RSUs will
vest, provided that they must sign an agreement that includes a non-solicitation clause and a release of claims and provides
that the award will be terminated if they become 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 PSU and PBRSU 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 2016 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 CD&A. The market value of stock reported is calculated
by multiplying the number of shares by our 2016 fiscal year-end closing stock price of $63.70. |
| |
|
| |
Dividend
equivalents are accrued (in the form of additional units) on PSUs and PBRSUs, respectively, during the vesting period and
are subject to the same performance and other conditions as the underlying PSUs and PBRSUs. The dividend equivalents are converted
to shares if and after the underlying PSUs and PBRSUs vest. |
| |
TARGET CORPORATION 2017 Proxy Statement |
45 |
The
payment date of the awards, to the extent they are earned, will be within a certain time after the date the Human Resources &
Compensation Committee certifies the financial results following completion of the performance period (60 days for 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 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 (Make-Whole PBRSUs). Those Make-Whole PBRSUs have the same
general terms as the other PBRSUs described in this Note, except that one third vested in each of March 2016 and March 2017, and
the remaining one third vests in March 2018, 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.
Option exercises
and stock vested in fiscal 2016
| | |
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 | | |
| 108,866 | | |
$ | 7,453,708 | |
| Cathy R. Smith | |
| 0 | | |
$ | 0 | | |
| 14,363 | | |
$ | 793,987 | |
| John J. Mulligan | |
| 35,529 | | |
$ | 1,103,714 | | |
| 48,787 | | |
$ | 2,779,439 | |
| Don H. Liu | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 0 | |
| Mark J. Tritton | |
| 0 | | |
$ | 0 | | |
| 0 | | |
$ | 0 | |
| (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), except that where the Human Resources & Compensation Committee must certify the number of shares earned, Value
Realized on Vesting is calculated by multiplying the number of shares earned by the market value of Target common stock on
the date the Human Resources & Compensation Committee certifies the shares that were earned. |
Pension benefits
for fiscal 2016
| Name(1) | |
Plan name | |
Age at FYE | | |
Number of years
credited service(#) | | |
Present value of
accumulated
benefit | |
| John J. Mulligan | |
Target Corporation Pension Plan | |
| 51 | | |
| 20 | | |
$ | 357,362 | |
| (1) |
Mr.
Cornell, Ms. Smith, Mr. Liu and Mr. Tritton 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 2016 table reports benefits under the Target Corporation Pension Plan (Pension Plan), which is a tax qualified retirement
plan that provides retirement benefits to eligible employees who were hired prior to January 2009. The Pension Plan benefit for
Mr. Mulligan is based on his final average pay as limited by the IRC. 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
| |
TARGET CORPORATION 2017 Proxy Statement |
46 |
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). Participants can elect among annuity forms that have an actuarially equivalent value. Early retirement payments
may commence at age 55.
Supplemental pension
plans
We also provide benefits
under supplemental pension plans, which 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, and is based on the same benefit formula used for determining benefits under
the Pension Plan. The Target Corporation Supplemental Pension Plan II (SPP II) restores the lost qualified Pension Plan benefit
due to amounts being deferred under the EDCP (our current deferred compensation plan) and therefore not considered for benefit
purposes under the Pension Plan 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. A final calculation
and an EDCP account adjustment occurs upon termination of employment. 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.
Nonqualified
deferred compensation for fiscal 2016
The amounts in the following
table represent deferrals under the EDCP, which includes the supplemental pension benefits discussed in the preceding section.
| 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 | |
$ | 164,000 | | |
$ | 149,250 | | |
$ | 36,586 | | |
$ | 0 | | |
$ | 472,868 | |
| Cathy R. Smith | |
$ | 103,856 | | |
$ | 34,099 | | |
$ | 11,431 | | |
$ | 0 | | |
$ | 155,014 | |
| John J. Mulligan | |
$ | 65,000 | | |
$ | 542,468 | | |
$ | 125,766 | | |
$ | 195,512 | | |
$ | 2,400,942 | |
| Don H. Liu | |
$ | 7,500 | | |
$ | 0 | | |
$ | 218 | | |
$ | 0 | | |
$ | 7,718 | |
| Mark
J. Tritton | |
$ | 13,942 | | |
$ | 120 | | |
$ | 481 | | |
$ | 0 | | |
$ | 14,543 | |
| (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 2006-2015. |
| |
| |
Reported in prior
years’ summary
compensation
tables | |
| |
Mr. Cornell | |
$ | 129,670 | |
| |
Ms. Smith | |
$ | 5,577 | |
| |
Mr. Mulligan | |
$ | 1,269,189 | |
| |
Mr. Liu | |
$ | 0 | |
| |
Mr. Tritton | |
$ | 0 | |
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 2016 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.
| |
TARGET CORPORATION 2017 Proxy Statement |
47 |
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 28, 2017, the last day of our 2016 fiscal year, and
that any change-in-control was at our fiscal year-end closing stock price of $63.70 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 2016 Fiscal Year-End table. Only Mr. Mulligan has
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.
Table
of potential payments upon termination or change-in-control
| | |
| | |
| | |
| | |
| | |
Change-in-control | |
| | |
| | |
| | |
| | |
| | |
| | |
Involuntary | |
| | |
| | |
| | |
| | |
| | |
| | |
or voluntary | |
Name/
Payment
type | |
Voluntary
termination | | |
Involuntary
termination | | |
Death | | |
Disability | | |
No
termination | | |
good
reason
Termination(6) | |
| Brian
C. Cornell | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| ICP
Payments (Severance) | |
$ | 0 | | |
$ | 6,530,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 6,530,000 | |
| PBRSU
Vesting(1)(2) | |
$ | 0 | | |
$ | 3,161,972 | | |
$ | 4,742,959 | | |
$ | 4,742,959 | | |
$ | 0 | | |
$ | 3,503,840 | |
| Make-Whole
PBRSU Vesting(1)(3) | |
$ | 0 | | |
$ | 3,662,591 | | |
$ | 7,325,182 | | |
$ | 7,325,182 | | |
$ | 5,896,406 | | |
$ | 5,896,406 | |
| PSU
Vesting(1) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 9,223,871 | |
| 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 | | |
$ | 13,354,563 | | |
$ | 15,068,140 | | |
$ | 12,509,140 | | |
$ | 5,896,406 | | |
$ | 25,154,117 | |
| Cathy
R. Smith | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| ICP
Payments (Severance) | |
$ | 0 | | |
$ | 2,170,126 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 2,170,126 | |
| PBRSU
Vesting(1)(2) | |
$ | 0 | | |
$ | 878,423 | | |
$ | 1,317,635 | | |
$ | 1,317,635 | | |
$ | 0 | | |
$ | 899,494 | |
| PSU
Vesting(1) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 2,020,425 | |
| 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 | | |
$ | 3,048,549 | | |
$ | 4,317,635 | | |
$ | 1,758,635 | | |
$ | 0 | | |
$ | 5,090,046 | |
| John
J. Mulligan | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| ICP
Payments (Severance) | |
$ | 0 | | |
$ | 2,910,667 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 2,910,667 | |
| RSU
Vesting(1)(4) | |
$ | 0 | | |
$ | 407,935 | | |
$ | 407,935 | | |
$ | 407,935 | | |
$ | 275,276 | | |
$ | 275,276 | |
| PBRSU
Vesting(1)(2) | |
$ | 0 | | |
$ | 1,523,354 | | |
$ | 2,285,030 | | |
$ | 2,285,030 | | |
$ | 0 | | |
$ | 1,656,317 | |
| PSU
Vesting(1) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 5,900,223 | |
| 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 | | |
$ | 4,841,955 | | |
$ | 5,692,965 | | |
$ | 3,133,965 | | |
$ | 275,276 | | |
$ | 10,742,483 | |
| |
TARGET CORPORATION 2017 Proxy Statement |
48 |
| | |
| | |
| | |
| | |
| | |
Change-in-control | |
| | |
| | |
| | |
| | |
| | |
| | |
Involuntary | |
| | |
| | |
| | |
| | |
| | |
| | |
or voluntary | |
Name/
Payment
type | |
Voluntary
termination | | |
Involuntary
termination | | |
Death | | |
Disability | | |
No
termination | | |
good
reason
Termination(6) | |
| Don H. Liu | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| ICP Payments
(Severance) | |
$ | 0 | | |
$ | 1,330,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 1,330,000 | |
| Make-Whole
RSU Vesting(1)(5) | |
$ | 0 | | |
$ | 1,371,557 | | |
$ | 2,743,113 | | |
$ | 2,743,113 | | |
$ | 0 | | |
$ | 1,371,557 | |
| PBRSU
Vesting(1)(2) | |
$ | 0 | | |
$ | 421,216 | | |
$ | 631,824 | | |
$ | 631,824 | | |
$ | 0 | | |
$ | 421,216 | |
| PSU
Vesting(1) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 153,085 | |
| Life Insurance Proceeds | |
$ | 0 | | |
$ | 0 | | |
$ | 1,950,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| Excess Long-Term Disability
Plan | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| (Annual
Payments) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 231,000 | | |
$ | 0 | | |
$ | 0 | |
| Total | |
$ | 0 | | |
$ | 3,122,773 | | |
$ | 5,324,937 | | |
$ | 3,605,937 | | |
$ | 0 | | |
$ | 3,275,858 | |
| Mark
J. Tritton | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| ICP
Payments (Severance) | |
$ | 0 | | |
$ | 1,280,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 1,280,000 | |
| Make-Whole
RSU Vesting(1)(5) | |
$ | 0 | | |
$ | 471,125 | | |
$ | 942,250 | | |
$ | 942,250 | | |
$ | 0 | | |
$ | 471,125 | |
| PBRSU
Vesting(1)(2) | |
$ | 0 | | |
$ | 295,950 | | |
$ | 443,925 | | |
$ | 443,925 | | |
$ | 0 | | |
$ | 295,950 | |
| PSU
Vesting(1) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 159,589 | |
| Life
Insurance Proceeds | |
$ | 0 | | |
$ | 0 | | |
$ | 1,875,000 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | |
| Excess Long-Term Disability
Plan | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| (Annual
Payments) | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 216,000 | | |
$ | 0 | | |
$ | 0 | |
| Total | |
$ | 0 | | |
$ | 2,047,075 | | |
$ | 3,261,176 | | |
$ | 1,602,176 | | |
$ | 0 | | |
$ | 2,206,664 | |
| (1) |
Amounts
are determined by multiplying the number of shares for which vesting is accelerated by our closing stock price on January
27, 2017 ($63.70 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) |
The
RSUs granted to Mr. Mulligan on May 22, 2014 will vest in full in the event of Mr. Mulligan’s death or disability. 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. |
| (5) |
The
Make-Whole RSUs granted to Mr. Liu on August 22, 2016 and the Make-Whole RSUs granted to Mr. Tritton on June 6, 2016 vest
in full in the event of death or disability. In addition, in a change-in-control without termination of employment, there
is no vesting or acceleration. However, if there is a change in control that includes an involuntary termination of employment
without cause or a voluntary termination of employment for good reason, unvested Make-Whole RSUs would accelerate in an amount
equal to the greater of (a) 50% of the total number of outstanding unvested Make-Whole RSUs, or (b) a pro-rata portion the
outstanding unvested Make-Whole RSUs 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. |
| (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. |
| |
TARGET CORPORATION 2017 Proxy Statement |
49 |
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 2016 Fiscal Year-End
table.
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.
| |
TARGET CORPORATION 2017 Proxy Statement |
50 |
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.
| |
TARGET CORPORATION 2017 Proxy Statement |
51 |
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 & Finance Committee Chair | |
$ | 30,000 | |
| Human Resources & Compensation Committee Chair | |
$ | 20,000 | |
| Nominating & Governance Committee Chair | |
$ | 15,000 | |
| Risk & Compliance Committee Chair | |
$ | 15,000 | |
| Infrastructure & 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.
| |
TARGET CORPORATION 2017 Proxy Statement |
52 |
Director
compensation table
| Name | |
Fees
earned or
paid in
cash | | |
Stock
awards(1)(2) | | |
| Option
awards(1)(2) | | |
| Total(3) | |
| Roxanne
S. Austin(4) | |
$ | 105,000 | | |
$ | 170,003 | | |
$ | 0 | | |
$ | 275,003 | |
| Douglas
M. Baker, Jr.(4) | |
$ | 120,000 | | |
$ | 170,003 | | |
$ | 0 | | |
$ | 290,003 | |
| Calvin
Darden | |
$ | 90,000 | | |
$ | 170,003 | | |
$ | 0 | | |
$ | 260,003 | |
| Henrique
De Castro | |
$ | 0 | | |
$ | 170,003 | | |
$ | 0 | | |
$ | 170,003 | |
| Robert
L. Edwards(4) | |
$ | 90,000 | | |
$ | 170,003 | | |
$ | 0 | | |
$ | 260,003 | |
| Melanie
L. Healey | |
$ | 90,000 | | |
$ | 170,003 | | |
$ | 0 | | |
$ | 260,003 | |
| Donald
R. Knauss | |
$ | 90,000 | | |
$ | 170,003 | | |
$ | 0 | | |
$ | 260,003 | |
| Monica
C. Lozano | |
$ | 75,000 | | |
$ | 361,794 | | |
$ | 0 | | |
$ | 436,794 | |
| Mary
E. Minnick | |
$ | 0 | | |
$ | 170,003 | | |
$ | 0 | | |
$ | 170,003 | |
| Anne
M. Mulcahy(4)(5) | |
$ | 110,000 | | |
$ | 170,003 | | |
$ | 0 | | |
$ | 280,003 | |
| Derica
W. Rice(4) | |
$ | 0 | | |
$ | 290,014 | | |
$ | 0 | | |
$ | 290,014 | |
| Kenneth
L. Salazar(4) | |
$ | 105,000 | | |
$ | 170,003 | | |
$ | 0 | | |
$ | 275,003 | |
| John
G. Stumpf(4)(5) | |
$ | 87,500 | | |
$ | 0 | | |
$ | 0 | | |
$ | 87,500 | |
| (1) |
Amounts
represent the aggregate grant date fair value of RSUs and stock options that were granted in fiscal 2016, as computed in accordance
with FASB ASC Topic 718, Stock Compensation. See Note 26, Share-Based Compensation, to our consolidated financial statements
for fiscal 2016 for a description of our accounting and the assumptions used. Details on the stock awards granted during fiscal
2016 are as follows: |
| | |
Stock awards (RSUs) |
| Name | |
# of units | | |
Grant date
fair value | |
| Ms. Austin | |
| 2,377 | | |
$ | 170,003 | |
| Mr. Baker | |
| 2,377 | | |
$ | 170,003 | |
| Mr. Darden | |
| 2,377 | | |
$ | 170,003 | |
| Mr. De Castro | |
| 2,377 | | |
$ | 170,003 | |
| Mr. Edwards | |
| 2,377 | | |
$ | 170,003 | |
| Ms. Healey | |
| 2,377 | | |
$ | 170,003 | |
| Mr. Knauss | |
| 2,377 | | |
$ | 170,003 | |
| Ms. Lozano | |
| 4,741 | | |
$ | 361,794 | |
| Ms. Minnick | |
| 2,377 | | |
$ | 170,003 | |
| Ms. Mulcahy | |
| 2,377 | | |
$ | 170,003 | |
| Mr. Rice | |
| 4,055 | | |
$ | 290,014 | |
| Mr. Salazar | |
| 2,377 | | |
$ | 170,003 | |
| Mr. Stumpf | |
| 0 | | |
$ | 0 | |
| (2) |
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: |
| | |
Stock | | |
Restricted | |
| Name | |
options | | |
stock units | |
| Ms. Austin | |
| 20,392 | | |
| 2,377 | |
| Mr. Baker | |
| 5,570 | | |
| 2,377 | |
| Mr. Darden | |
| 0 | | |
| 2,377 | |
| Mr. De Castro | |
| 5,570 | | |
| 2,377 | |
| Mr. Edwards | |
| 0 | | |
| 2,377 | |
| Ms. Healey | |
| 0 | | |
| 2,377 | |
| Mr. Knauss | |
| 0 | | |
| 2,377 | |
| Ms. Lozano | |
| 0 | | |
| 2,377 | |
| Ms. Minnick | |
| 0 | | |
| 2,377 | |
| Ms. Mulcahy | |
| 19,368 | | |
| 2,377 | |
| Mr. Rice | |
| 0 | | |
| 4,055 | |
| Mr. Salazar | |
| 3,601 | | |
| 2,377 | |
| Mr. Stumpf | |
| 0 | | |
| 0 | |
| (3) |
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. |
| |
TARGET CORPORATION 2017 Proxy Statement |
53 |
| (4) |
The
following directors received additional compensation in fiscal 2016 for their roles as Committee Chairs and, in the case of
Mr. Baker, 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 2015. |
| Name |
Role(s)
during fiscal 2016 |
| Ms.
Austin |
Infrastructure
& Investment Chair (until November 2016) |
| Mr.
Baker |
Lead
Independent Director
Nominating & Governance Chair (since November 2016) |
| Mr.
Edwards |
Infrastructure
& Investment Chair (since November 2016) |
| Ms.
Mulcahy |
Human
Resources & Compensation Chair |
| Mr.
Rice |
Audit
& Finance Chair |
| Mr.
Salazar |
Risk
& Compliance Chair |
| Mr.
Stumpf |
Nominating
& Governance Chair (until October 2016) |
| (5) |
Ms.
Mulcahy will retire from the Board when her current term ends at the Annual Meeting in connection with our mandatory retirement
policy. Mr. Stumpf resigned from the Board on October 17, 2016 in connection with a change in his principal employment.
Mr. Stumpf served as an independent director until his resignation. |
Equity
compensation plan information
| |
|
|
|
|
Number
of securities |
| |
|
|
|
|
remaining
available for |
| |
Number
of securities |
|
|
|
future
issuance under equity |
| |
to
be issued upon |
|
Weighted-average
exercise |
|
compensation
plans as of |
| |
exercise
of outstanding |
|
price
of outstanding |
|
January
28, 2017 |
| Plan |
options,
warrants and rights |
|
options,
warrants and rights |
|
(excluding
securities |
| Category |
as
of January 28, 2017 |
|
as
of January 28, 2017 |
|
reflected
in column (a)) |
| |
(a) |
|
(b) |
|
(c) |
| Equity
compensation plans approved by security holders |
13,521,775 |
(1) |
$53.68 |
|
31,043,439 |
| Equity
compensation plans not approved by security holders |
0 |
|
|
|
|
0 |
| TOTAL |
13,521,775 |
|
$53.68 |
|
31,043,439 |
| (1) |
This
amount includes 7,311,715 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 2016, we advanced defense costs on behalf of the current and
former directors and officers amounting to approximately $83,564.
| |
TARGET CORPORATION 2017 Proxy Statement |
54 |
| Item two |
Ratification of appointment of Ernst & Young LLP as independent registered public
accounting firm |
The Audit & 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 & Finance Committee appointed Ernst & Young LLP as the independent
registered public accounting firm for Target and its subsidiaries for the fiscal year ending February 3, 2018. Ernst & Young
LLP has been retained in that capacity since 1931. The Audit & 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 & 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 qualifications, service quality, sufficiency of resources, quality of communications, independence, working relationship with our management, objectivity, and professional skepticism; |
| ● |
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, which occurs every five years; |
| ● |
At least annually obtains and reviews a report from Ernst & Young LLP describing all relationships between the independent auditor and Target; and |
| ● |
Periodically considers whether the independent registered public accounting firm should be rotated and the advisability and potential impact of selecting a different independent registered public accounting firm. |
The members of the Audit &
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 & Finance Committee of Ernst & Young LLP as the independent registered public accounting firm for Target and its
subsidiaries for the fiscal year ending February 3, 2018.
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 appropriate questions during the Annual 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 2016 and 2015, the review of our interim consolidated financial statements for each quarter in fiscal 2016 and 2015,
and for audit-related, tax and all other services performed in 2016 and 2015:
| | |
Fiscal
year end |
| | |
January
28, 2017 | | |
January
30, 2016 |
| Audit
Fees(1) | |
$ | 4,599,000 | | |
$ | 5,124,000 |
| Audit-Related
Fees(2) | |
| 581,000 | | |
| 678,000 |
| Tax Fees: | |
| | | |
| |
| Compliance(3) | |
| 497,000 | | |
| 1,104,000 |
| Planning
& Advice(4) | |
| 17,000 | | |
| 314,000 |
| Total | |
$ | 5,694,000 | | |
$ | 7,220,000 |
| (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. |
| |
TARGET CORPORATION 2017 Proxy Statement |
55 |
The Audit & 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 & 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 & Finance Committee has delegated authority
to grant certain pre-approvals to the Audit & Finance Committee Chair. Pre-approvals granted by the Audit & Finance Committee
Chair are reported to the full Audit & Finance Committee at its next regularly scheduled meeting.
 |
The Audit & 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
& Finance Committee
The role of the Audit & 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, Ernst & Young LLP, 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 & Finance
Committee Charter, which has been adopted by our Board of Directors and further describes the role of the Audit & Finance
Committee in overseeing our financial reporting process, is available online at investors.target.com (hover over “company,”
then click on “corporate governance” in the “investors” column, then click on “More about Board
Committees”). All members of the Audit & Finance Committee satisfy the applicable audit committee independence requirements
of the NYSE and the SEC and have acquired the attributes necessary to qualify them as “audit committee financial experts”
as defined by applicable SEC rules.
In performing its functions,
the Audit & 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 & 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 & Finance Committee
referred to above and in the Audit & Finance Committee Charter, the Audit & 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
28, 2017, for filing with the SEC.
Audit & Finance Committee
Derica W. Rice, Chair
Monica C. Lozano
Mary E. Minnick
| |
TARGET CORPORATION 2017 Proxy Statement |
56 |
| Item three |
Advisory approval of executive compensation (Say on Pay) |
Consistent with the views expressed
by shareholders at our 2011 annual meeting of shareholders, 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 2016 annual meeting
of shareholders, 96.4% of shareholder votes were cast in support of our executive compensation program for our Say on Pay proposal.
|
The Board of Directors, upon recommendation of the Human Resources & 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 & 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 & Compensation Committee.
The Board believes that the Human
Resources & Compensation Committee is in the best position to consider the extensive information and factors necessary to make
independent, objective, and competitive compensation recommendations and decisions that are in the best interests of Target and
its shareholders.
The Board values the opinions
of Target’s shareholders as expressed through their votes and other communications. Although the resolution is non-binding,
the Board will carefully consider the outcome of the advisory vote on executive compensation and shareholder opinions received
from other communications when making future compensation decisions.
| |
TARGET CORPORATION 2017 Proxy Statement |
57 |
| Item four |
Advisory approval of the frequency of Say on Pay votes |
Pursuant to Section 951 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act, at least once every six years we are required to submit for a shareholder
vote a non-binding resolution to determine whether the advisory shareholder vote on executive compensation shall occur every one,
two, or three years.
Since shareholders first voted
in favor of an annual Say on Pay vote at our 2011 annual meeting of shareholders, the Board of Directors sought 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. After careful consideration of the various arguments supporting each frequency level, the Board
believes that continuing to submit the advisory vote on executive compensation to shareholders on an annual basis is appropriate
for Target and its shareholders at this time.
The proxy card provides shareholders
with four choices (every 1 year, 2 years, 3 years, or abstain). Shareholders are not voting to approve or disapprove the Board’s
recommendation.
|
The Board of Directors, upon recommendation of the Human Resources & Compensation Committee,
recommends a vote for a frequency of every 1 year. |
Effect of item
The Say on Pay frequency vote
is non-binding. The outcome of voting on this item by shareholders will not require the Board or the Human Resources & Compensation
Committee to take any action regarding the frequency of future Say on Pay votes. Although the resolution is non-binding, the Board
and the Human Resources & Compensation Committee will carefully consider the outcome of the advisory vote on this item in the
decision on how often to present the Say on Pay vote to shareholders.
| |
TARGET CORPORATION 2017 Proxy Statement |
58 |
| Item
five |
Approval of the Target Corporation
Executive Officer Cash Incentive Plan |
Introduction
The independent members of
the Board of Directors, upon recommendation by the Human Resources & Compensation Committee of the Board of Directors,
adopted the Target Corporation Executive Officer Cash Incentive Plan on March 8, 2017, subject to shareholder approval
(“Incentive Plan”). The Incentive Plan is substantially similar to the Target Corporation Officer Short-Term
Incentive Plan approved in 2012 (referred to as the “current STIP” for purposes of this Item Five). We are
seeking shareholder approval of the Incentive Plan because one of the conditions for qualification as
“performance-based compensation” for U.S. tax purposes is that the shareholders must approve the material terms
of the plan and re-approve those material terms every five years. Shareholder approval of the Incentive Plan will allow us to
preserve the tax deduction for our performance-based officer compensation payable under the Incentive Plan that may otherwise
exceed the deduction limit established by Section 162(m) of the Internal Revenue Code (see “Tax Matters”
below).
The purpose of the Incentive
Plan, like our current STIP, is to promote our pay-for-performance compensation philosophy by providing cash incentive awards to
executive officers, who through their efforts directly and significantly impact the achievement of our goals and objectives. The
Incentive Plan gives the Human Resources & Compensation Committee discretion to choose one or more appropriate performance
measures by which to measure executive officers’ performance in any given performance period. The performance measures are
set at the beginning of each performance period.
Summary of the plan
The basic features of the Incentive
Plan are summarized below. The Incentive Plan will not become effective unless approved by the shareholders.
Administration. The Human
Resources & Compensation Committee, all of whose members are independent, outside directors, will administer the Incentive
Plan. The Human Resources & Compensation Committee will have the authority to grant cash incentive awards upon such terms,
consistent with the terms of the Incentive Plan, as it considers appropriate, to our executive officers. The Human Resources &
Compensation Committee will have authority to interpret all provisions of the Incentive Plan, to adopt, amend and rescind rules
and regulations pertaining to the administration of the Incentive Plan and to make all other determinations necessary or advisable
for the administration of the Incentive Plan.
Eligibility. Any executive
officer designated by the Human Resources & Compensation Committee from time to time is eligible to participate in the Incentive
Plan for a given performance period. In fiscal 2016, approximately 13 executive officers were selected to participate in the current
STIP, and participation in the Incentive Plan is expected to be comparable.
Determination of Performance
Measures. Awards may be based on one or more of the following performance measures chosen by the Human Resources & Compensation
Committee:
| |
Performance
measures |
|
|
| |
● |
Revenues |
● |
Profitability measured
by return ratios (including, but not limited to, return on assets, return on equity, return on invested capital and return
on revenue) |
| |
● |
Sales |
● |
Cash flow (including, but not limited to,
operating cash flow, free cash flow and cash flow return on investment) |
| |
● |
Comparable sales |
● |
Margins (including, but not limited to, one
or more of gross, operating and net earnings margins) |
| |
● |
Earnings before one or more of interest,
taxes, depreciation and amortization |
● |
Cost and expense management |
| |
● |
Net earnings |
● |
Economic value added or similar value added
measurements |
| |
● |
Earnings
per share |
● |
Total
shareholder return |
| |
TARGET CORPORATION 2017 Proxy Statement |
59 |
In addition, for any award to
a participant who is not a covered officer under Section 162(m) of the Internal Revenue Code or that is not intended to constitute
performance-based compensation under Section 162(m) of the Internal Revenue Code, the performance measures may include, alone or
in combination with the performance measures listed above, any other measure of performance as determined by the Human Resources
& Compensation Committee.
The Human Resources & Compensation
Committee may select different performance measures for different participants in any performance period. The Human Resources &
Compensation Committee also selects the relevant performance periods, which must be at least one fiscal quarter. In addition to
selecting the performance measures, the Human Resources & Compensation Committee will also approve the level of attainment
required to earn a payment under an award. The required level of attainment can be measured as an absolute amount, on a per share
basis, measured as a change from prior periods, measured against or in relationship to other companies comparably, similar or otherwise
situated, or measured against other indices or external measures, and may relate to consolidated results or performance of a segment,
subsidiary, operating company, division, unit or test strategy or new venture of Target. Each measure may also be adjusted as the
Committee determines to exclude the effects of extraordinary items, unusual or non-recurring events and certain other items as
the Committee determines to be required to permit computation of the operating results on a consistent basis with the measures
established for the performance period. In recent years, the Human Resources & Compensation Committee has selected a combination
of EBIT and sales as the performance measures for the financial component of awards to our executive officers.
Determination of Cash Incentive
Amounts. The target opportunity for each participant will be determined by the Human Resources & Compensation Committee
at the beginning of the performance period. The target opportunity may be established as a set dollar amount or as a percentage
of the participant’s compensation (typically based on a percentage of base salary). In addition, the Human Resources &
Compensation Committee may establish an incentive pool and determine each participant’s award based on a ratio of the participant’s
award to all awards earned under the Incentive Plan multiplied by the pool. At the end of the performance period, the Human Resources
& Compensation Committee will certify levels of achievement of the performance measures and pay out any earned awards in the
form of cash payments. The Human Resources & Compensation Committee has discretion to exclude the effects of extraordinary
items, unusual or non-recurring events and other items to permit consistent computation, so long as such adjustments to awards
intended to constitute performance-based compensation under Section 162(m) of the Internal Revenue Code do not preclude the awards
from so qualifying.
Maximum Payments. No executive
officer shall receive awards intended to constitute performance-based compensation under Section 162(m) of the Internal Revenue
Code payable in any fiscal year that exceed the lesser of $7 million or 400% of the participant’s base salary as of the date
of grant of the award.
Tax Matters. As described
in the CD&A in this Proxy Statement, Section 162(m) of the Internal Revenue Code limits the deductibility of compensation paid
to our covered officers to $1 million per year. This limitation does not apply to “performance-based compensation.”
One of the conditions for qualification as “performance-based compensation” is that the shareholders must approve the
material terms of the plan, which include a general description of the employees eligible to receive compensation under the plan,
a description of the business criteria on which any performance goals are to be based, and the maximum amount of the compensation
that could be paid to any employee if the applicable performance goals are attained, and re-approve those material terms every
five years. Amounts paid under the objective performance measures established under the Incentive Plan will, under current tax
law, continue to qualify as performance-based compensation if shareholders approve the Incentive Plan.
New plan benefits
The Incentive Plan will be effective
February 4, 2018 so long as it is approved by shareholders prior to June 30, 2017. As a result, the first awards granted under
the Incentive Plan will relate to fiscal 2018. Amounts payable under the Incentive Plan for fiscal 2018 are not determinable because
the performance measures and target opportunities will not be set by the Human Resources & Compensation Committee until early
in fiscal 2018. However, the benefits paid under the current STIP for fiscal 2016 (which are the same benefits reported under the
Non-Equity Incentive Plan Compensation column and, for officers other than the CEO, the Bonus column of the Summary Compensation
Table on page 42) are as follows:
| Name | |
Principal position | |
Fiscal
2016
benefits paid |
|
| Brian
C. Cornell | |
Chairman & Chief Executive
Officer | |
$ | 0 | |
| Cathy
R. Smith | |
Executive Vice President
& Chief Financial Officer | |
$ | 240,000 | |
| John J. Mulligan | |
Executive Vice President & Chief
Operating Officer | |
$ | 300,000 | |
| Don
H. Liu | |
Executive Vice President,
Chief Legal Officer & Corporate Secretary | |
$ | 97,500 | |
| Mark
J. Tritton | |
Executive
Vice President & Chief Merchandising Officer | |
$ | 125,000 | |
|
The Board of Directors recommends a vote For approval
of the Target Corporation Executive Officer Cash Incentive Plan. |
| |
TARGET CORPORATION 2017 Proxy Statement |
60 |
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 2017 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 2016
and responds to questions from shareholders.
| 2. |
What is included in the proxy materials? |
The proxy materials for our Annual Meeting include
the accompanying Notice of 2017 Annual Meeting of Shareholders, this proxy statement and our Annual Report on Form 10-K for the
year ended January 28, 2017 (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 Annual Meeting—Brian C. Cornell, Cathy R. Smith and Don H. Liu. 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 17, 2017, 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, 551,601,217
shares of our common stock were outstanding.
We need a quorum to be able to hold the Annual Meeting.
The presence at the Annual 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 Annual 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:
| ● |
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 12, 2017. For all registered shareholders or other beneficial owners, the deadline is 11:59 p.m. Eastern Daylight Time on June 13, 2017. |
| |
TARGET CORPORATION 2017 Proxy Statement |
61 |
| ● |
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 12, 2017. For all registered shareholders or other beneficial owners, the deadline is 11:59 p.m. Eastern Daylight Time on June 13, 2017. |
| ● |
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 12, 2017. |
In addition, you may vote in person at the Annual
Meeting if you follow these procedures:
| ● |
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 Annual Meeting and vote in person or legally appoint another proxy to vote on your behalf. Registered shareholders and beneficial owners planning to attend the Annual Meeting and vote in person must follow the instructions provided in Question 12 “How can I attend the Annual Meeting?” on page 63. |
| 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.
| ● |
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. |
| ● |
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 Annual 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.
| 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.
| |
TARGET CORPORATION 2017 Proxy Statement |
62 |
| 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? |
| Item
of business | |
Board
recommendation | |
Voting
approval
standard | |
Effect
of
abstention | |
Effect
of
broker
non-vote |
| Item
1: Election of 12 Directors | |
FOR
each Director Nominee | |
More
votes “FOR” than “AGAINST” | |
No
effect | |
No
effect |
| Item
2: Ratification of Appointment of Ernst & Young LLP as Independent Registered Public Accounting Firm | |
FOR | |
Majority
of shares present and
entitled to vote(1) | |
Vote
Against | |
Not
applicable |
| Item
3: Advisory Approval of Executive Compensation | |
FOR | |
More
votes “FOR” than “AGAINST” | |
No
effect | |
No
effect |
| Item
4: Advisory Approval of the Frequency of Say on Pay Votes | |
1
YEAR | |
Frequency
that receives the greatest number of votes | |
No
effect | |
No
effect |
| Item
5: Approval of the Target Corporation Executive Officer Cash Incentive Plan | |
FOR | |
Majority
of shares present and
entitled to vote(1) | |
Vote
Against | |
No
effect(2) |
| (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) |
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.
| 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.
| 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 61. If you are a registered shareholder,
you can also change your vote by attending the Annual Meeting in person and delivering a proper written notice of revocation of
your proxy. Attendance at the Annual 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 17, 2017), or their
duly appointed proxies, may attend the Annual Meeting. If you plan to attend the Annual Meeting, you must:
| ● |
Present a government-issued photo identification on the day of the Annual Meeting, such as a driver’s license, state-issued ID card, or passport, and |
| ● |
Establish proof of ownership using one of the following permitted methods: |
| |
TARGET CORPORATION 2017 Proxy Statement |
63 |
Attendee Permitted proof of ownership Registered
shareholder Any one of the following:•Registered Shareholder List. Your name will be verified against our list
of registered shareholders as of the record date;•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”;•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 •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. Beneficial owner through the Target 401(K) plan
Any one of the following:•Account Statement. Your account statement showing your share ownership as of the
record date;•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”;•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;•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;• Legal Proxy. A valid legal proxy containing a valid control number or a letter from a
registered shareholder naming you as proxy; or • Letter from Intermediary. A letter from a broker, trustee, bank
or nominee holding your shares confirming your ownership as of the record date. Other beneficial owner Any one of the
following:•Account Statement. Your account statement showing your share ownership as of the record
date;•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;•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;•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;• Legal Proxy. A valid legal proxy containing a valid control number or a letter from a registered
shareholder naming you as proxy; or • Letter from Intermediary. A letter from a broker, trustee, bank or nominee
holding your shares confirming your ownership as of the record date. Guest • You must be accompanied by a
shareholder who pre-registered no later than June 9, 2017 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. Authorized representative •Where the shareholder is an entity or the shareholder is unable to attend the Annual Meeting, the shareholder
may have an authorized representative attend on that shareholder’s behalf.•A shareholder desiring to have an authorized representative attend on the shareholderfs behalf must pre-register
that authorized representative no later than June 9, 2017 by submitting a request to Target’s Investor Relations Department,
providing proof of the shareholder’s ownership, identifying the authorized representative and authorizing the authorized representative
to attend the Annual Meeting on the shareholder’s behalf.•Only one authorized representative is permitted per shareholder.
Any person who does not have identification and
establish proof of ownership will not be admitted to the Annual Meeting.
We will decide at our sole discretion whether the
documentation you present for admission to the Annual Meeting meets the admission requirements. If you hold your shares in a joint
account, both owners can be admitted to the Annual 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 9, 2017.
| |
TARGET CORPORATION 2017 Proxy Statement |
64 |
| 13. |
How will the Annual Meeting be conducted? |
Same-day registration and admittance will begin at
8:00 a.m. Eastern 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. Eastern 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 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 recording functions, and while
you may bring these phones into the venue, you may not use the camera or recording functions 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:
| |
|
|
|
Methods of access |
|
|
| |
|
Website |
|
Electronic delivery |
|
Hard copy |
| Proxy Materials |
|
|
|
|
|
|
Proxy
Statement
Annual Report |
|
investors.target.com
Register to receive email alerts by
entering your email address under
“Investor Email Alerts.” |
|
Sign
up at investors.target.com
(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
investors.target.com
(hover over “company” then click on “shareholder services” in the “investors” column and
click on “Request Materials”) |
| Other Information |
|
|
|
|
|
|
Other
Periodic Reports:
● Forms
10-Q
● Forms
8-K |
|
investors.target.com
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
Mail
Target Corporation
Attn: Investor Relations
1000 Nicollet Mall
Minneapolis, Minnesota 55403 |
Corporate
Governance
Documents:
● Articles
of Incorporation
● Bylaws
● Corporate
Governance Guidelines
● Board
Committee Charters
● Business
Conduct Guide |
|
investors.target.com
(hover over “company,” then click on “corporate governance” in the “investors” column) |
|
|
|
Corporate
Social
Responsibility Report |
|
https://corporate.target.com/
corporate-responsibility/goals-reporting |
|
|
|
| 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 2016 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.
| |
TARGET CORPORATION 2017 Proxy Statement |
65 |
| 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 Morrow Sodali LLC 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 2018 annual meeting of shareholders? |
Shareholder proposals
Proposals by shareholders that are submitted for inclusion
in our proxy statement for our 2018 annual meeting of shareholders 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 January 1,
2018. 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 of shareholders. For our 2018
annual meeting of shareholders, notice must be received by March 16, 2018, 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.
Nomination of director candidates
Any shareholder who wishes the Nominating & Governance
Committee to consider a candidate for nomination 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. Under our bylaws, if a shareholder
plans to directly nominate a person as a director at an annual meeting of shareholders, 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 of shareholders. Shareholder-proposed nominations for our 2018 annual meeting of
shareholders must be received by March 16, 2018, 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.
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 12 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 of shareholders 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 of shareholders. For our 2018 Annual
Meeting, notice must be received by not earlier than December 2, 2017 and not later than January 1, 2018. 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.
| |
TARGET CORPORATION 2017 Proxy Statement |
66 |
Appendix A
Target Corporation Executive Officer Cash
Incentive Plan
(Adopted on March 7,
2017)
| 1.1 |
Name. The name of this plan is the “Target Corporation Executive Officer Cash Incentive Plan.” It is sometimes hereinafter referred to as the “Plan.” Unless otherwise defined in the Plan or the context clearly indicates to the contrary, capitalized terms are defined in Article II. |
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|
| 1.2 |
Compensation Policy and Plan Intent. The Plan is intended to promote the Company’s pay-for-performance compensation philosophy by providing incentive cash bonus payments to Executive Officers, who through their efforts, directly and significantly impact the achievement of Company goals and objectives. |
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|
| 1.3 |
Eligibility. Bonuses may be granted to any Executive Officer who is designated as a Participant from time to time by the Committee. Designation as a Participant for a Bonus in one period shall not confer on a Participant the right to participate in the Plan for any other period. |
| 2.1 |
Board. “Board” means the Board of Directors of the Company. |
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|
| 2.2 |
Bonus. “Bonus” means an incentive award which, subject to such terms and conditions as may be prescribed by the Committee, entitles a Participant to receive a cash bonus payment from the Company pursuant to Article III. |
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|
| 2.3 |
Code. “Code” refers to the Internal Revenue Code of 1986, as amended. |
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|
| 2.4 |
Company. “Company” refers to Target Corporation and its subsidiaries. |
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| 2.5
|
Committee. “Committee” means the Human Resources & Compensation Committee of the Board and if no such named committee shall be designated by the Board, it shall mean the Committee of the Board most nearly performing the duties of the Human Resources & Compensation Committee as defined at the time of its elimination as a Board Committee. |
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| 2.6 |
Covered Officer. “Covered Officer” includes all Participants whose compensation, in the Performance Period for which the Bonus is calculated, is or, in the Committee’s discretion, may be subject to the compensation expense deduction limitations set forth in Section 162(m) of the Code. |
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|
| 2.7 |
Executive Officer. “Executive Officer” is as defined in Rule 3b-7 under the Securities Exchange Act of 1934, as amended. |
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|
| 2.8 |
Participants. “Participants” means Executive Officers participating in the Plan. |
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|
| 2.9 |
Performance-Based
Compensation. “Performance-Based Compensation” means a Bonus that is intended to constitute “performance-based
compensation” within the meaning of Section 162(m)(4)(C) of the Code and the regulations promulgated thereunder. |
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|
| 2.10 |
Performance Measures. “Performance Measures” means one or a combination of two or more of the following performance-based metrics, as approved by the Committee; provided, however, that different Performance Measures may be approved for different Participants during the same Performance Period: revenues; sales; comparable sales; earnings before one or more of interest, taxes, depreciation and amortization; net earnings; earnings per share; profitability as measured by return ratios (including, but not limited to, return on assets, return on equity, return on invested capital and return on revenue); cash flow (including, but not limited to, operating cash flow, free cash flow and cash flow return on investment); margins (including, but not limited to, one or more of gross, operating and net earnings margins); cost and expense management; economic value added or similar value added measurements; and total shareholder return. In addition, for any Bonus to a Participant that is not intended to constitute Performance-Based Compensation, Performance Measures may include, alone or in combination with the foregoing Performance Measures, any other measure of performance as determined by the Committee. |
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| 2.11 |
Performance Period. “Performance Period” is the period, which shall be a period of at least one fiscal quarter, specified by the Committee at the time a Bonus is granted during which specified Performance Measures must be attained as a condition to the payment of the Bonus. |
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TARGET CORPORATION 2017 Proxy Statement |
67 |
| 3.1 |
General. Bonuses may be granted to a Participant in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee. The Committee, at the time a Bonus is granted, shall specify the terms and conditions which govern the Bonus, which terms and conditions will prescribe the degree of attainment of such Performance Measures required for payment of a Bonus and that the Bonus shall be earned only upon, and to the extent that, Performance Measures as described in Section 3.2 are satisfied within the Performance Period for the Bonus. The Committee may establish terms and conditions for payment of Bonuses in the event of changes of duties of any Participant with the Company during the Performance Period or in the event of a Participant’s termination of employment (including death, disability, retirement, or termination with or without cause) or leave of absence; provided that no such payment shall be made if it would cause a Bonus intended to constitute Performance-Based Compensation to fail to qualify as Performance-Based Compensation. Different terms and conditions may be established by the Committee for different Bonuses and for different Participants. |
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| 3.2 |
Performance Measures. Payment of Bonuses shall be contingent upon the degree of attainment of specified Performance Measures over the Performance Period. Multiple Performance Periods may be established, each with different lengths and which run concurrently. Performance Measures may be absolute in their terms, on a per share basis, measured as a change from prior periods, measured against or in relationship to other companies comparably, similarly or otherwise situated or measured against other indices or external measures, and may relate to the Company or a segment, subsidiary, operating company, division, unit or test strategy or new venture of the Company. Each measure that is a financial measure shall be adjusted if so determined by the Committee, to exclude the effects of extraordinary items, unusual or non-recurring events, changes in accounting principles or methods, realized investment gains or losses, discontinued operations, acquisitions, divestitures, material restructuring or impairment charges, retained and uninsured losses for natural catastrophes and any other items as the Committee determines to be required so that the operating results of the Company, segment, subsidiary, operating company, division, unit or test strategy or new venture, as applicable, shall be computed on a basis consistent with the Performance Measures established for the Performance Period. |
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| 3.3 |
Payment of Bonuses. Following the completion of each Performance Period, the Committee shall certify the level of attainment of the applicable Performance Measures for each Participant. Bonuses shall be paid to Participants in cash at a time determined by the Committee, but in no event later than two and one-half months after the end of the fiscal year in which the Performance Period ends. However, any Participant who is a participant in a deferred compensation plan may defer payment of his/her Bonus if and to the extent permissible under any such plan. |
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| 3.4 |
Adjustments. The Committee is authorized at any time during or after a Performance Period, in its sole and absolute discretion, to reduce or eliminate a Bonus payable to any Participant for any reason. No reduction in a Bonus payable to any Participant shall increase the amount of the Bonus payable to any other Participant. In addition, the Committee may adjust the specified Performance Measures or the degree of attainment required to earn a Bonus for such factors as may permit consistent computation, such as those factors set forth in Section 3.2 above; provided that no such adjustment shall be made if the effect of such adjustment would be to cause a Bonus intended to constitute Performance-Based Compensation to fail to qualify as Performance-Based Compensation. |
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| 3.5 |
Terms Applicable to Performance-Based Compensation; Maximum Bonus Amount. With respect to each Performance Period, Performance Measures for Performance-Based Compensation will be established and approved by the Committee on or before the earlier of (i) 90 days following the commencement of the Performance Period or (ii) the passage of 25% of the duration of the Performance Period. In no event shall a Covered Officer receive Bonuses intended to qualify as Performance-Based Compensation payable in any fiscal year that exceeds the lesser of (i) $7,000,000 or (ii) 400% of the Covered Officer’s base salary (prior to any salary reduction or deferral elections) as of the date of the grant of the Bonus. |
| 4.1 |
Administration and Interpretation of Plan. This Plan shall be interpreted by the Committee and its interpretations shall be final and binding on Participants and all other parties in interest. |
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The Plan shall be
administered by the Committee. The Committee reserves the right, from time to time, to prescribe rules and regulations which
are not inconsistent with the provisions of the Plan, and to modify or revoke such rules and regulations at such time and in
such manner as it may deem proper. The Committee may specify a pool from which some or all Bonuses may be paid to all or a
subset of Participants in accordance with this Plan and grant Bonuses under Section 3.1 based on allocations from such
pool. A copy of the then current Plan shall be maintained in the Company’s offices and shall be available, upon
request, for review by any Participant or his duly authorized agent. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in this Plan or in any Bonus in the manner and to the extent it shall deem desirable.
The determinations of the Committee in the administration of this Plan, as described herein, shall be final, binding and
conclusive, subject to the provisions of this Plan. A majority of the members of the Committee shall constitute a quorum for
any meeting of the Committee. |
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|
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All persons in the Plan shall be bound by the terms of the Plan and of all rules and regulations pursuant thereto, all as now in effect or hereafter amended, promulgated or passed which shall likewise be maintained at the Company. |
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| 4.2 |
Rights of Participants and Beneficiaries. The Plan is not an employment agreement and does not ensure or evidence to any degree the continued employment or the claim to continued employment of any Participant for any time or period or job. |
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|
| |
No Participant or beneficiary shall, by virtue of this Plan, have any interest in any specific asset or assets of the Company. If a Bonus has been granted, a Participant or beneficiary has only an unsecured contract right to receive cash payments in accordance with and at the times specified by the Plan. |
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|
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No Participant shall have the right or ability to assign, pledge, or otherwise dispose of any part of a Bonus hereunder. |
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TARGET CORPORATION 2017 Proxy Statement |
68 |
| 4.3 |
Amendment, Modification and Termination of the Plan. The Committee may at any time terminate, suspend or modify the Plan and the terms and provisions of any Bonus to any Participant which has not been paid. Amendments are subject to approval of the shareholders of the Company only if such approval is necessary to maintain the Plan in compliance with the requirements of Section 162(m) of the Code, its successor provisions or any other applicable law or regulation. No Bonus may be granted during any suspension of the Plan or after its termination. |
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| 4.4 |
Unfunded Plan. The Plan shall be unfunded, and the Company shall not be required to segregate any assets that may at any time be represented by Bonuses under the Plan. |
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| 4.5 |
Other Benefit and Compensation Programs; No Right to Employment. Neither the adoption of the Plan by the Committee nor its submission to the shareholders of the Company shall be construed as creating any limitation on the power of the Board to adopt such other incentive arrangements as it may deem appropriate. Payments received by a Participant under a Bonus granted pursuant to the Plan shall not be deemed a part of the Participant’s regular recurring compensation for purposes of the termination, indemnity or severance pay law of any state, and shall not be included in, nor have any effect on, the determination of benefits under any other employee benefit plan, contract, or arrangement, unless the Committee expressly determines otherwise. Nothing in the Plan or any Bonus constitutes or implies any obligation or undertaking to employ or retain a Participant for any period of time or in any position or any limitation of the Company to terminate a Participant’s employment at any time with or without notice or cause. |
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| 4.6 |
Governing Law. To the extent that federal laws do not otherwise control, the Plan and all determinations made and actions taken pursuant to the Plan shall be governed by the laws of the State of Minnesota without regard to its conflicts-of-law principles and shall be construed accordingly. The exclusive forum and venue for any legal action arising out of or related to the Plan shall be the United States District Court for the District of Minnesota, and each Participant, as a condition of participating in the Plan, submits to the personal jurisdiction of that court. If neither subject matter nor diversity jurisdiction exists in the United States District Court for the District of Minnesota, then the exclusive forum and venue for any such action shall be the courts of the State of Minnesota located in Hennepin County, and each Participant, as a condition of participating in the Plan, submits to the personal jurisdiction of that court. |
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| 4.7 |
Tax Withholding. The Company shall have the right to withhold from cash payments under the Plan to a Participant or other person an amount sufficient to cover any withholding taxes the Company reasonably determines are legally payable by the Participant. |
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| 4.8 |
Compensation Recoupment Policy. Bonuses may be made subject to any compensation recoupment policy adopted by the Board or the Committee at any time prior to or after the effective date of the Plan, and as such policy may be amended from time to time after its adoption. |
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| 4.9 |
Miscellaneous Provisions. |
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|
| |
a.
|
Headings. Headings at the beginning of sections
hereof are for convenience of reference, shall not be considered a part of the text of the Plan, and shall not influence its construction. |
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|
| |
b.
|
Construed as a Whole. The provisions of the
Plan shall be construed as a whole in such manner as to carry out the provisions thereof and shall not be construed separately
without relation to the context. |
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|
| 4.10 |
Effective Date of the Plan. The Plan shall become effective as of February 4, 2018; provided that this Plan is approved and ratified by the shareholders of the Company no later than June 30, 2017. The Plan shall remain in effect until it has been terminated pursuant to Section 4.3. |
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TARGET CORPORATION 2017 Proxy Statement |
69 |
This page is intentionally left blank.
1000
Nicollet Mall
Minneapolis, MN 55403
612.304.6073
Target.com |
|
 |
This regulatory filing also includes additional resources:
ltgt2017_def14a.pdf
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