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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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1000 Nicollet Mall
Minneapolis, Minnesota 55403
(612) 304-6073

PROXY STATEMENT
Annual Meeting of Shareholders
May 28, 2009

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To Our Shareholders:

        You are cordially invited to attend Target Corporation's 2009 Annual Meeting of Shareholders. The Annual Meeting will be held at 1:00 p.m., Central Daylight Time, on Thursday, May 28, 2009 at the Target Store located at 1250 West Sunset Drive, Waukesha, Wisconsin. Details regarding admission to the Annual Meeting and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement.

        At this year's Annual Meeting, you will be asked to elect four directors to our Board of Directors for three-year terms, to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm, to approve the performance measures available under the Target Corporation Long-Term Incentive Plan, and to act on the shareholder proposal in the Proxy Statement, if presented at the Annual Meeting.

        We hope you will be able to attend the Annual Meeting, but if you cannot do so, it is important that your shares be represented. We urge you to read the proxy statement carefully, and to use the WHITE proxy card to vote for the Board of Director's nominees by telephone or Internet, or by signing, dating, and returning the enclosed WHITE proxy card in the postage-paid envelope provided, whether or not you plan to attend the Annual Meeting. Instructions are provided on the WHITE proxy card.

        You should know that Pershing Square Capital Management, L.P. and certain affiliated entities, a group of hedge funds led by William Ackman that own Target shares and derivative securities ("Pershing Square"), have stated their intention to propose alternative director nominees for election at the Annual Meeting in opposition to the Board's recommended nominees.

        We strongly urge you to vote for the nominees proposed by the Board by using the enclosed WHITE proxy card and not to return any proxy card sent to you by Pershing Square. If you vote using a proxy card sent to you by Pershing Square, you can subsequently revoke it by using the WHITE proxy card to vote by telephone or Internet, or by signing, dating and returning the WHITE proxy card in the postage-paid envelope provided. Only your last-dated proxy will count—any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in the Proxy Statement.

        Thank you for your continued support.

Sincerely,

Gregg Steinhafel
Chairman of the Board, Chief Executive Officer and President

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VOTING METHODS

        The accompanying proxy statement describes important issues affecting Target Corporation ("Target"). If you are a shareholder of record, you have the right to vote your shares. To vote:

1.

BY INTERNET



a.

Go to the web site at http://proxy.georgeson.com, 24 hours a day, seven days a week.



b.

Enter the 12-digit number that appears in the box on the right side of the enclosed WHITE proxy card.



c.

Follow the simple instructions.



2.

BY TELEPHONE



a.

On a touch-tone telephone, call toll-free 1-800-732-6167, 24 hours a day, seven days a week.



b.

Enter the 12-digit number that appears in the box on the right side of the enclosed WHITE proxy card.



c.

Follow the simple recorded instructions.



3.

BY MAIL



a.

Mark your selections on the enclosed WHITE proxy card.



b.

Date and sign your name exactly as it appears on your WHITE proxy card.



c.

Mail the WHITE proxy card in the enclosed postage-paid envelope.

        If your shares are held in the name of a bank, broker or other holder of record, you will receive instructions from the holder of record that you must follow in order for your shares to be voted.

Your vote is important. Thank you for voting.

ADMISSION POLICY

        All shareholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting. You must reserve an admission ticket in order to attend. If you are a shareholder of record and plan to attend, please contact Target's Investor Relations Department by email at investorrelations@target.com or by telephone at (612) 761-6742 to reserve a ticket. Your ticket will be available for pick-up at the meeting. If you hold shares through an intermediary, such as a bank or broker, and you plan to attend, you will need to send a written request for a ticket either by regular mail, fax or email, along with proof of share ownership, such as a bank or brokerage firm account statement or a letter from the broker, trustee, bank or nominee holding your shares, confirming ownership to: Investor Relations, Target Corporation, 1000 Nicollet Mall, TPN-1146, Minneapolis, MN 55403 (fax: 612-761-5555 or email: investorrelations@target.com). Requests to reserve admission tickets will be processed in the order in which they are received and must be received no later than May 25, 2009.

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS

        Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to be held on May 28, 2009.

        The proxy statement and annual report are available at www.envisionreports.com/TGT.

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        YOUR VOTE IS EXTREMELY IMPORTANT THIS YEAR IN LIGHT OF THE PROXY CONTEST BEING CONDUCTED BY PERSHING SQUARE.

        Your vote is very important to Target. Whether or not you plan to attend the meeting and regardless of the number of shares of common stock that you own, Target urges you to vote in favor of the nominees of your Board of Directors by promptly marking, signing, dating and returning the enclosed WHITE proxy card and returning it to us in the accompanying postage-paid envelope or by voting by Internet or telephone as described under "Voting Methods" above.

        Target urges you not to sign any proxy card that may be sent to you by Pershing Square. If you have previously returned a proxy card to Pershing Square, you may change your vote by marking, signing, dating and returning the enclosed WHITE proxy card in the accompanying postage-paid envelope or by voting by Internet or telephone as described under "Voting Methods" above. Only the latest dated proxy you submit will be counted.

        If you have any questions about your voting of shares, please contact the Target proxy solicitors, Georgeson and MacKenzie Partners, Inc., toll free at 1-866-295-8105 or 1-800-322-2885 or by e-mail at TGTinfo@georgeson.com or TGTinfo@mackenziepartners.com.

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

Approximate Date of Mailing of Proxy Material:
April     , 2009

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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 28, 2009

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        The Board of Directors of Target Corporation solicits the enclosed proxy for the Annual Meeting of Shareholders to be held at the Target Store, 1250 West Sunset Drive, Waukesha, Wisconsin on Thursday, May 28, 2009, at 1:00 p.m. Central Daylight Time, and for any adjournment thereof.

GENERAL INFORMATION ABOUT THE MEETING AND VOTING

What is the purpose of the Annual Meeting?

        At our Annual Meeting, shareholders will act upon the matters described in the accompanying notice of meeting. In addition, our management will report on Target's performance during fiscal 2008 and respond to questions from shareholders.

Who may vote?

        We have one class of voting shares outstanding. Only shareholders of record at the close of business on the record date, March 30, 2009, are entitled to receive notice of the Annual Meeting and to vote the shares of common stock that they held on the record date. Each share of common stock will have one vote on each matter to be voted on.

Will there be a proxy contest for the election of directors at the Annual Meeting?

        Pershing Square, a group of affiliated hedge funds that own Target shares and derivative securities, has stated its intention to propose alternative director nominees for election at the Annual Meeting. We believe that the current Board, with its breadth of relevant and diverse experience, represents the best interests of our shareholders and that the four directors nominated by the Board should be re-elected. The Board unanimously recommends a vote FOR each of the Board's four nominees for director on the enclosed WHITE proxy card.

        The Pershing Square nominees have NOT been endorsed by our Board of Directors. We are not responsible for the accuracy of any information provided by or relating to Pershing Square contained in any proxy solicitation materials filed or disseminated by, or on behalf of, Pershing Square or any other statements that Pershing Square may otherwise make.

Who may attend the Annual Meeting?

        All shareholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting. If you are a shareholder of record and plan to attend, please contact Target's Investor Relations Department by email at investorrelations@target.com or by telephone at (612) 761-6742 to reserve a ticket. If you hold shares through an intermediary, such as a bank or broker, and you plan to attend, you will need to send a written request for a ticket either by regular mail, fax or email, along with proof of share ownership, such as a bank or brokerage firm account statement or a letter from the broker, trustee, bank or nominee holding your shares, confirming ownership to: Investor Relations, Target Corporation, 1000 Nicollet Mall, TPN-1146, Minneapolis, MN 55403 (fax: 612-761-5555 or email: investorrelations@target.com). Requests to reserve admission tickets will be processed in the order in which they are received and must be received no later than May 25, 2009. Cameras and recording devices are not permitted at the meeting.

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What constitutes a quorum?

        The presence at the meeting, in person or by proxy, of the holders of a majority of our common stock outstanding on the record date will constitute a quorum, permitting the meeting to conduct its business. As of the record date,                shares of our common stock were outstanding. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting for purposes of determining whether there is a quorum.

May I vote by proxy card, by telephone or through the Internet?

        You may vote by completing and properly signing the enclosed WHITE proxy card and returning it to us in the envelope provided. If you are a registered shareholder (those whose shares are owned in their name and not in "street name") and attend the meeting, you may deliver your completed WHITE proxy card in person. In addition, registered shareholders may vote either by telephone or through the Internet by following the instructions under "Voting Methods." "Street name" shareholders should follow the voting instructions on the proxy form received from the institution that holds their shares. We urge you to disregard any proxy card that Pershing Square may send you.

May I vote confidentially?

        Subject to the exceptions described below, our policy is to treat all shareholder meeting proxies, ballots and voting tabulations of a shareholder confidentially, if the shareholder has requested confidentiality on the proxy or ballot.

        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 (i) to meet applicable legal requirements, (ii) to allow the independent election inspectors to count and certify the results of the vote or (iii) if there is a proxy solicitation in opposition to the Board of Directors, based upon an opposition proxy statement filed with the Securities and Exchange Commission (SEC). Because of Pershing Square's planned proxy solicitation, our confidential-voting policy will not apply this year unless Pershing Square withdraws its nominees. The independent election inspectors may at any time inform us whether or not a shareholder has voted.

May I change my vote?

        Yes. Even after you have submitted your proxy, you may change your vote at any time before the proxy is exercised by filing with an officer of Target either a notice of revocation or a duly executed proxy bearing a later date. Alternatively, regardless of the means by which you submitted your proxy, you may change your vote by telephone or through the Internet by following the instructions under "Voting Methods." The powers of the proxy holders will be terminated if you attend the meeting in person and provide a written notice of revocation of your proxy. Attendance at the meeting will not by itself revoke a previously granted proxy.

        If you have previously signed a proxy card sent to you by Pershing Square, you may change your vote by marking, signing, dating and returning the enclosed WHITE proxy card in the accompanying postage-paid envelope or by voting by telephone or through the Internet by following the instructions under "Voting Methods."

How does the Board recommend I vote?

        In summary, the Board of Directors recommends a vote:

FOR election of its director nominees (see pages 6-13);

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FOR ratification of the appointment of Ernst & Young LLP as Target's independent registered public accounting firm (see pages 47-48);

FOR approval of the performance measures available under the Target Corporation Long-Term Incentive Plan (see pages 49-53); and

AGAINST the shareholder proposal in this proxy statement (see pages 53-55).

        Unless you give instructions on your WHITE proxy card, the persons named as proxy holders on the WHITE proxy card will vote in accordance with the recommendations of the Board of Directors. The Board's full recommendation is set forth in the description of each item in this proxy statement. With respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the Board of Directors or, if no recommendation is given, in their own discretion.

What should I do if I receive a proxy card from Pershing Square?

        Pershing Square has stated its intention to propose alternative director nominees for election at the Annual Meeting. You may receive proxy solicitation materials from Pershing Square, including an opposition proxy statement and proxy card. Our Board of Directors urges you not to sign or return any proxy card sent to you by Pershing Square. If you have previously voted using the Pershing Square proxy card, you have every right to change your vote by executing the WHITE proxy card or by voting by telephone or through the Internet by following the instructions under "Voting Methods." Only the latest dated proxy you submit will be counted.

What does it mean if I receive more than one WHITE proxy card?

        If you hold your shares in multiple registrations, or in both registered and street name, you will receive a WHITE proxy card for each account. Please sign, date and return all WHITE proxy cards you receive. If you choose to vote by phone or by Internet, please vote once for each WHITE proxy card you receive. Only your latest dated proxy for each account will be voted.

        If Pershing Square proceeds with its previously announced proxy contest, you may also receive an opposition proxy statement and proxy card from Pershing Square. In this event, to ensure shareholders have our latest proxy information and materials to vote, we will conduct multiple mailings prior to the Annual Meeting date. We will send you a new WHITE proxy card with each mailing, regardless of whether you have previously voted. The latest dated proxy you submit will be counted.

        To vote as the Board of Directors recommends, shareholders must use the WHITE proxy card or vote by telephone or through the Internet by following the instructions under "Voting Methods." Voting against any Pershing Square nominees on the Pershing Square proxy card will not be counted as a vote for the Board's nominees and will result in the revocation of any previous vote you may have cast on the WHITE proxy card. If you wish to vote pursuant to the recommendation of the Board of Directors, you should disregard any proxy card you receive other than the WHITE proxy card. If you have previously voted using the Pershing Square proxy card, you have every right to change your vote by executing the WHITE proxy card or by voting by telephone or through the Internet by following the instructions under "Voting Methods." Only the latest dated proxy you submit will be counted.

How many votes are required to approve each item?

        Election of Directors.    Because of Pershing Square's plans to propose alternative director nominees, there will be more nominees than available positions and directors will be elected on a plurality basis. In other words, the four candidates receiving the highest number of "For" votes will be elected. A properly executed proxy marked "Abstain" with respect to the election of a director nominee will be counted for purposes of determining whether there is a quorum, but will not be considered to have been voted for or against the director nominee.

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        In the event that Pershing Square withdraws its nominees on or prior to the day before we mail this proxy statement to shareholders, our Articles of Incorporation provide for a "majority vote" standard for director elections. Under this standard, a director nominee must receive more votes "For" his or her election than "Against" votes to be elected. If this standard applies and a director nominee who is an incumbent receives an equal or greater number of "Against" votes than "For" votes, the director nominee will remain on the board until he or she resigns. Our Corporate Governance Guidelines require an incumbent director who receives an equal or greater number of "Against" votes than "For" votes to promptly offer to tender his or her resignation. The Nominating Committee will make a recommendation on the offer and the other directors must accept or reject the offer within 90 days and publicly disclose their decision and rationale.

        Other Items.    For all other matters described in this proxy statement and any other items that properly come before the meeting, the affirmative vote of the greater of (i) a majority of the outstanding shares of our common stock present in person or by proxy and entitled to vote on the item at the Annual Meeting and (ii) a majority of the minimum number of shares entitled to vote that would constitute a quorum for the transaction of business at the Annual Meeting, will be required for approval provided that a quorum is present in person or by proxy. A properly executed proxy marked "Abstain" with respect to any such matter will be counted for purposes of determining whether there is a quorum and will be considered present in person or by proxy and entitled to vote. Accordingly, an abstention will have the effect of a negative vote.

What is a broker non-vote?

        If you hold your shares in street name and do not provide voting instructions to your broker, your shares will not be voted on any proposal on which your broker does not have discretionary authority to vote. In this situation, a "broker non-vote" occurs. Shares constituting broker non-votes are not counted or deemed to be present or represented for the purpose of determining whether shareholders have approved a matter, but they are counted as present for the purpose of determining a quorum at the Annual Meeting.

        If Pershing Square does not withdraw its competing candidates for the Board of Directors, this year's election of directors will be considered a proposal on which your broker does not have discretionary authority to vote. Thus, if your shares are held in street name and you do not provide instructions as to how your shares are to be voted in the election of directors, your broker or other nominee may not be able to vote your shares in the election of directors, and your shares may not be voted for any of the nominees. We urge you to provide instructions to your broker or nominee so that your votes may be counted on this important matter. You should vote your shares by following the instructions provided on the voting instruction card that you receive from your broker.

What if other matters are presented for determination at the Annual Meeting?

        As of the date of this proxy statement, we know of no matters that will be presented for determination at the meeting other than those referred to herein. If any other matters properly come before the meeting calling for a vote of shareholders, proxies in the enclosed WHITE form returned to us or voted by telephone or through the Internet will be voted in accordance with the recommendation of the Board of Directors or, in the absence of such a recommendation, in accordance with the judgment of the proxy holders.

Who pays the expenses incurred in connection with the solicitation of proxies?

        Expenses in connection with the solicitation of proxies will be paid by us. In addition to sending you these materials, some of our directors and officers as well as management and non-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 web site, www.target.com, and advertisements in

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periodicals. None of our officers or employees will receive any extra compensation for soliciting you. We have retained Georgeson and MacKenzie Partners, Inc. to act as proxy solicitors for aggregate total fees estimated to be $            , plus reimbursement of out-of-pocket expenses.

        Georgeson and MacKenzie Partners expect that approximately            and            of their employees, respectively, will assist in the solicitation. They will ask brokerage houses and other custodians and nominees whether other persons are beneficial owners of Target common stock. If so, we will reimburse banks, nominees, fiduciaries, brokers and other custodians for their costs of sending the proxy materials to the beneficial owners of Target common stock.

        Our total expenses, including those of Georgeson and MacKenzie Partners, related to the solicitation in excess of those normally spent for an annual meeting as a result of the potential proxy contest and excluding salaries and wages of our regular employees and officers are expected to be approximately $            , of which approximately $            has been spent to date. Appendix A sets forth information relating to our director nominees as well as certain of our directors, officers and employees who are considered "participants" in our solicitation under the rules of the SEC by reason of their position as directors or director nominees of Target or because they may be soliciting proxies on our behalf.

How will shares in the Target 401(k) Plan be voted?

        This proxy statement is being used to solicit voting instructions from participants in the Target 401(k) Plan with respect to shares of our common stock that are held by the trustee of the plan for the benefit of plan participants. If you are a plan participant and also own shares as a record holder, you will separately receive proxy materials to vote the shares you hold as a record holder. Shares held in the plan that are entitled to vote will be voted by the plan trustee in proportion to participant instructions. 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 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.

How may I get additional copies of the Annual Report?

        Our Annual Report for the fiscal year ended January 31, 2009, including financial statements, is enclosed. The Annual Report is also available online at www.target.com (click on "Investors" and "Annual Reports"). For additional printed copies, please contact our Investor Relations representative by email at investorrelations@target.com, by mail at the address listed on the cover of this proxy statement, Attention: Investor Relations, or online at www.target.com (click on "Investors," then "Shareholder Services" and "Request Materials").

How may I access or receive materials electronically?

        As described more specifically in the immediately preceding question, you can access our proxy materials, Annual Report and other periodic reports and information under the "Investors" section of our web site, www.target.com. You can also register at this same location to receive email alerts, which we send to registered users when new information is posted on our web site (click on "E-Mail Alerts"). Shareholders may request electronic delivery of our proxy materials and Annual Report online at www.target.com (click on "Investors" and "Enroll for E-Delivery"). To receive other shareholder information, contact us via email at investorrelations@target.com.

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ITEM ONE—ELECTION OF DIRECTORS

        Proxies solicited by the Board of Directors will, unless otherwise directed, be voted for the election of four nominees to serve as Class III directors for three-year terms expiring in 2012 and until their successors are elected. The four nominees are Mary N. Dillon, Richard M. Kovacevich, George W. Tamke, and Solomon D. Trujillo. All of the nominees are currently directors.

        The Board of Directors has no reason to believe that any of the nominees is not available or will not serve if elected. If for any reason a nominee becomes unavailable for election, the Nominating Committee of our Board of Directors may designate substitute nominees, in which event the shares represented by proxies returned to us will be voted for such substitute nominees, unless an instruction to the contrary is indicated on the proxy.

        Our restated articles of incorporation, as amended, provide that our business and affairs will be managed by, or under the direction of, a Board of Directors consisting of not fewer than five or more than 21 persons. Directors are divided into three classes with one class elected each year for a term of three years. The Board of Directors currently consists of 12 directors, including four Class I directors whose terms expire at the 2010 Annual Meeting, four Class II directors whose terms expire at the 2011 Annual Meeting, and four Class III directors whose terms expire at this Annual Meeting.

        Pershing Square has stated its intention to propose alternative director nominees for election at the Annual Meeting. The Board unanimously recommends a vote FOR each of the Board's four nominees for director on the enclosed WHITE proxy card.

        Following is information regarding the nominees and continuing directors, including information furnished by them as to their principal occupations. See page 15 for a table showing the number of shares of Target common stock beneficially owned by each director as of March 20, 2009.

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GENERAL INFORMATION ABOUT THE BOARD OF DIRECTORS

Director Independence

        The Board of Directors believes that a preponderance of its members should be independent directors. The Board annually reviews all relationships that directors have with Target to affirmatively determine whether the directors are independent. If a director has a material relationship with Target, that director is not independent. The listing standards of the New York Stock Exchange (NYSE) set forth certain relationships that, if present, preclude a finding of independence. To assist the Board in making its independence determination, the Board has determined that the following relationships will be considered categorically immaterial and will not, by themselves, impair a director's independence:

•

If the director or any of the director's immediate family members is an executive officer of another company that does business with Target and the annual payments by Target to, or the receipt of payments by Target from, such other company is less than the greater of (i) $1,000,000 or (ii) two percent of the annual consolidated gross revenues of such other company.



•

If the director or any of the director's immediate family members is an executive officer of another company from which Target has obtained loans, if the relationship was entered into in the ordinary course of business and on terms substantially consistent with prevailing market conditions.



•

If the director or any of the director's immediate family members is an executive officer of a foundation, university or other not-for-profit organization that receives from either Target or Target's foundation contributions less than the greater of (i) $1,000,000 or (ii) two percent of the not-for-profit organization's aggregate annual charitable receipts during its fiscal year. For this purpose, any automatic matching of employee charitable contributions by Target or its foundation is not included in determining Target's contributions.



•

If the relationship arises solely because the director or any of the director's immediate family members is a director, the owner of a less than 10% equity interest, or both, of another entity that has a business relationship with Target.

        In making its independence determination the Board specifically considered the following transactions and relationships, all of which were entered into in the ordinary course of business:

•

Mary Dillon is an executive officer of McDonald's Corporation. Target's purchases from McDonald's amounted to less than ..01% of McDonald's revenue in each of the past three fiscal years.



•

Richard Kovacevich is an executive officer of Wells Fargo. Target has various ongoing banking relationships with Wells Fargo, all on terms consistent with prevailing market conditions. The total payments by Target for fees and finance charges amounted to less than .02% of Wells Fargo's revenue in each of the past three fiscal years.



•

Mary Minnick is a partner of Lion Capital, which in turn owns a controlling interest in several private companies that are merchandise vendors to Target. The payments by Target to these merchandise vendors amounted to less than 2% of each merchandise vendor's revenue in each of the past three fiscal years.



•

Anne Mulcahy is an executive officer of Xerox Corporation. Target purchases various goods and services from Xerox. Target's purchases have not exceeded .04% of Xerox's revenue in any of the past three fiscal years.



•

Derica Rice is an executive officer of Eli Lilly and Company. In 2008, Target's purchases from Eli Lilly were less than ..01% of Eli Lilly's revenue.

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•

Stephen Sanger retired as Chairman of the Board of General Mills in 2008. General Mills has been a merchandise vendor of Target's for many years. Target's purchases from General Mills have not exceeded 1.3% of General Mills' revenue in any of the past three fiscal years.



•

George Tamke is a partner of Clayton, Dubilier & Rice, which in turn owns a controlling interest in several companies that provide goods and services to Target. The payments by Target to these companies amounted to less than 2% of each company's revenues in each of the past three fiscal years.

        After considering the above relationships, the Board affirmatively determined that the following directors, constituting all of the non-management directors, met the requirements for independence: Directors Austin, Darden, Dillon, Johnson, Kovacevich, Minnick, Mulcahy, Rice, Sanger, Tamke and Trujillo.

Corporate Governance Documents Available on Our Website

        Copies of our key corporate governance documents are available on our website (www.target.com; click on "Investors" and "Corporate Governance"). These documents include our Corporate Governance Guidelines, Position Descriptions or charters for each of the Board's committees, our Business Conduct Guide and our Corporate Responsibility Report. Any shareholder who wishes to obtain hard copies of these documents may do so by submitting a request to our Investor Relations department by email at investorrelations@target.com or by writing to Investor Relations, Target Corporation, 1000 Nicollet Mall, TPN-1146, Minneapolis, MN 55403.

Board Meetings

        The Board of Directors met seven times during fiscal 2008. 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. At the end of each regular Board meeting, the non-management directors were given an opportunity to meet in executive session without members of management present. We do not have a policy regarding Board member attendance at the Annual Meeting of Shareholders. Robert J. Ulrich, our former Chairman and Chief Executive Officer, and Mr. Steinhafel attended last year's Annual Meeting of Shareholders.

Committees

        The Board has the following committees and committee composition:

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*

Independent Director

M - Member

C - Committee Chair

A description of each Committee's function and number of meetings during fiscal 2008 follows.

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Executive Committee

        The Executive Committee reviews Target's managerial capabilities and requirements, senior management succession plans and other matters of concern to the Chief Executive Officer. The Executive Committee met twice during fiscal 2008; however, each meeting of the Board of Directors typically begins with a private meeting among the non-management directors and the Chief Executive Officer.

Nominating Committee

        The Nominating Committee identifies individuals qualified to become Board members, considers their qualifications and recommends candidates and incumbents for election as a director. The Nominating Committee also nominates candidates to fill Board vacancies.

        The Nominating Committee will consider a recommendation by a shareholder of a candidate for election as a Target director. Any shareholder who wishes the Nominating Committee to consider a candidate should submit a written request and related information to our Corporate Secretary on behalf of the Nominating Committee no later than December 31 of the calendar year preceding the next Annual Meeting of Shareholders.

        Our Corporate Governance Guidelines set forth the optimal size, balance and rotation of the membership of the Board. These criteria require that a preponderance of the Board should consist of independent directors. Any management representation should be top corporate management that have the potential to be Chief Executive Officer. Board members should have broad perspective, experience, knowledge and independence of judgment. Members should represent a predominance of business backgrounds that can bring a different set of experiences and perspectives to the Board. Regional balance is recognized as highly desirable, and a high degree of interest and involvement are prime requisites for membership. Non-management directors have 20-year term limits. Directors must retire at age 68 and must submit a resignation for consideration by the Board upon any substantial change in principal employment.

        When evaluating prospective director candidates, the Nominating Committee conducts individual evaluations against the criteria stated in the Corporate Governance Guidelines. All director candidates, regardless of the source of their nomination, are evaluated using the same criteria. The Nominating Committee has retained two third-party search firms to assist in identifying potential director candidates. Ms. Dillon, who is standing for election for the first time since being appointed to the Board, was recommended by a former independent director of Target.

        Pershing Square, one of our shareholders, has stated its intention to propose alternative director nominees for election at the Annual Meeting. The Board unanimously recommends a vote FOR each of the Board's four nominees for director on the enclosed WHITE proxy card.

        The Nominating Committee did not meet during the last fiscal year, but took action by written consent on two occasions.

Compensation Committee

        The Compensation Committee has responsibility for determining the composition and value of non-CEO executive officer compensation and making recommendations with respect to CEO compensation to the independent members of the Board, who collectively have final approval authority. The Compensation Committee's responsibility includes reviewing our compensation philosophy, plan design, choice of performance measures for incentive compensation, and specific compensation levels and equity awards for each executive officer. The Compensation Committee also reviews the compensation provided to non-management directors and makes recommendations to the full Board. Agendas for Compensation Committee meetings are developed jointly by the chair of the Committee and members of our senior management team, with input from the Committee's independent consultant, Semler Brossy Consulting Group, LLC.

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        The Compensation Committee may not delegate its primary responsibility of overseeing executive officer compensation, but may delegate to management the administrative aspects of our compensation plans that do not involve the setting of compensation levels for executive officers. Additional information on the processes and procedures for executive compensation determinations, including the role of management and compensation consultants, is contained in the Compensation Discussion and Analysis beginning on page 17. The Compensation Committee held three meetings during the last fiscal year.

Audit Committee

        The Audit Committee assists the Board with the oversight of the integrity of Target's financial statements and internal controls, the compliance with legal and regulatory requirements, the review and approval of transactions with related persons, the independent auditor's qualifications and independence, and the performance of our internal audit function. The Board of Directors, in its business judgment, has determined that all members of the Committee are "independent" and qualify as "audit committee financial experts" for purposes of applicable NYSE and SEC rules. The duties and activities of the Audit Committee are further described in the Report of the Audit Committee on page 48. The Audit Committee held five meetings during the last fiscal year.

Finance Committee

        The Finance Committee reviews our financial policies, dividend policy, financing requirements, compliance with indenture covenants and employee benefit plan investment policies. The Finance Committee held two meetings during the last fiscal year.

Corporate Responsibility Committee

        The Corporate Responsibility Committee reviews and evaluates our public affairs, community relations and corporate social responsibility programs. The Corporate Responsibility Committee held one meeting during the last fiscal year.

Corporate Governance Committee

        The Corporate Governance Committee oversees our corporate governance practices. The Corporate Governance Committee held one meeting during the last fiscal year.

Lead Director

        Mr. Johnson is the Vice Chairman of the Executive Committee and functions as our lead independent director. As lead director, Mr. Johnson:

•

presides at all meetings of the Board of Directors at which the Chairman of the Board is not present, including executive sessions of non-management directors;



•

serves as liaison between the Chairman of the Board and the non-management directors;



•

conducts the annual performance reviews of the Chief Executive Officer and Chairman of the Board, with input from the other independent directors;



•

has an opportunity to review information and agendas sent to the Board and to assure that there is sufficient time for discussion of all agenda items; and



•

has the authority to convene meetings of non-management directors at every meeting.

Communications with Directors

        Shareholders and other interested parties seeking to communicate with any individual director or group of directors may send correspondence to Target Board of Directors, c/o General Counsel and Corporate Secretary, 1000 Nicollet Mall, TPS-3255, Minneapolis, Minnesota 55403 or may send an email to boardofdirectors@target.com. Communications directed to Board members will be sent to the General Counsel and Corporate Secretary, who has been instructed by the Board to forward all communications, except those that are clearly unrelated to Board or shareholder matters.

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CERTAIN RELATIONSHIPS

        Robert J. Ulrich, our former CEO and Chairman of our Board of Directors, is also the founder and chairman of the Musical Instrument Museum (Museum), a not-for-profit 501(c)(3) organization. The Museum is in the start-up stage and has not yet opened. In 2008 we supported the Museum through in-kind (non-cash) support consisting primarily of services provided by our team members. Those services included, but are not limited to, participating in concept refinement; assisting with building design; facilitating third-party partnerships for the Museum; and assisting with marketing strategy. Team member support of the Museum was provided both during and outside normal business hours in a manner similar to our support of other arts and charitable organizations, and while the extent to which individual team members supported the Museum in fiscal 2008 varied, it was generally consistent with the level of support we provide to our most significant charitable partners. The team members who devoted the greatest amount of time during fiscal 2008 to the Museum were Mr. Ulrich and a part-time team member whose primary role is assisting our charitable partners. We also allowed the Museum to occupy certain vacant office space that we control and one of our subsidiaries provided sourcing services to the Museum. We did not charge the Museum for the office space and the sourcing services were provided in exchange for a fee based on the value of the sourced items. The amount of the fee was consistent with what that subsidiary charged unrelated third parties for similar services. In light of Mr. Ulrich's intention to devote a significant portion of his time to the Museum's activities following his retirement from Target, we also arranged and paid for the construction of leasehold improvements within office space leased by the Museum at a cost of approximately $120,000, committed to contribute approximately $70,000 to offset the occupancy cost of such space, and agreed to provide the Museum with the full-time services of a Target team member to provide administrative support for up to 3 years.

        Curtis J. Ulrich and Jacqueline D. Byers are employees of Target and are children of Mr. Ulrich. The compensation and benefits received by each of them were established in accordance with our compensation policies applicable to employees holding comparable positions.

Policy on Transactions with Related Persons

        The Board of Directors has adopted a written policy requiring that any transaction: (1) involving Target; (2) 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 (3) where the amount involved exceeds $120,000 in any fiscal year, be approved or ratified by a majority of independent directors of the full Board or by a designated committee of the Board. The Board has designated the Audit Committee as having responsibility for reviewing and approving all such transactions except those involving employment of an immediate family member of a director, nominee for director, executive officer or greater than five percent shareholder, in which case it will be reviewed and approved by the Compensation Committee.

        In determining whether to approve or ratify any such transaction, the independent directors or relevant Committee must consider, in addition to other factors deemed appropriate, whether the transaction is on terms no less favorable to Target than those involving unrelated parties. No director may participate in any review, approval or ratification of any transaction if he or she, or his or her immediate family member, has a direct or indirect material interest in the transaction.

        All transactions disclosed above were reviewed and approved or ratified in accordance with this policy.

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BENEFICIAL OWNERSHIP OF CERTAIN SHAREHOLDERS

Share Ownership of Directors and Officers

        Set forth below is information regarding the shares of Target common stock (our only outstanding class of equity securities) owned beneficially on March 20, 2009 by all directors and nominees, each of the executive officers named in the Summary Compensation Table on page 28, and all Target directors and executive officers as a group. The column captioned "Total Shares Beneficially Owned" is the sum of issued shares and shares potentially issuable within 60 days. The column captioned "Common Stock Equivalents" is provided to present a more complete view of each person's economic interest in Target common stock.

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(1)

Includes shares of common stock that the named individuals may acquire on or before May 19, 2009 pursuant to exercisable stock options and the conversion of restricted stock units 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 except that Mr. Sanger has shared voting and investment power over 21,881 shares.

(3)

These amounts represent (i) the share equivalents of Target common stock held under Target's deferred compensation plans as of March 20, 2009, which are payable in cash and (ii) restricted stock units that are scheduled to convert into shares of our common stock more than 60 days after March 20, 2009.

(4)

Includes restricted stock awards that remain subject to forfeiture if the executive's employment terminates prior to age 55 or if the executive does not comply with advance notice of resignation requirements. These share totals are as follows: Mr. Steinhafel—106,016 and Mr. Scovanner—53,724.

(5)

Includes shares of common stock owned by executive officers in the Target 401(k) Plan as of March 20, 2009.

(6)

Includes 3,000 shares of common stock held in a trust of which Mr. Scovanner is the sole trustee. Mr. Scovanner disclaims beneficial ownership of such shares.

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Largest Owners of Target's Shares

        The table below sets forth certain information as to each person or entity known to us to be the beneficial owner of more than five percent of any class of our voting securities (percent of class based on shares outstanding on March 20, 2009):

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(1)

State Street Bank and Trust Company (State Street), trustee under Target's 401(k) Plan, reported its beneficial ownership in various fiduciary capacities on a Schedule 13G filed with the SEC on February 17, 2009. The filing indicates that as of December 31, 2008, State Street had sole voting power for 25,954,546 shares, shared voting power for 41,193,702 shares, sole dispositive power for 0 shares and shared dispositive power for 67,148,248 shares.

(2)

Capital Research Global Investors (CRGI) reported its beneficial ownership on a Schedule 13G filed with the SEC on February 17, 2009. The filing indicates that as of December 31, 2008, CRGI had sole voting power for 22,995,270 shares, shared voting power for 0 shares, sole dispositive power for 63,556,570 shares, and shared dispositive power for 0 shares.

(3)

Pershing Square Capital Management, L.P., PS Management GP, LLC, Pershing Square GP, LLC, Pershing Square Holdings GP, LLC and William A. Ackman (collectively, Pershing) reported their collective beneficial ownership on a Schedule 13D/A filed with the SEC on March 17, 2009. The filing indicates that as of March 17, 2009, Pershing had sole voting power for 0 shares, shared voting power for 58,391,235 shares, sole dispositive power for 0 shares and shared dispositive power for 58,391,235 shares. The number of shares reported as beneficially owned includes an unspecified number of shares that may be acquired within 60 days under physically-settled over-the-counter American-style call options. The filing states that as of March 17, 2009, Pershing had a total economic exposure to 59,642,001 shares of Target common stock, which would represent approximately 7.9% of total common shares outstanding as of that date, including Pershing's ownership of cash-settled call options.

(4)

Capital World Investors (CWI) reported its beneficial ownership on a Schedule 13G filed with the SEC on February 12, 2009. The filing indicates that as of December 31, 2008, CWI had sole voting power for 7,621,500 shares, shared voting power for 0 shares, sole dispositive power for 45,085,540 shares and shared dispositive power for 0 shares.

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EXECUTIVE AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

Executive Summary

        Target's compensation programs are structured to align the interests of our executives and our shareholders. They are designed to attract, retain, and motivate a premier management team to sustain our distinctive brand and competitive advantage in the marketplace, and to provide a framework that encourages outstanding financial results over the long term.

        Our executive officer pay determinations in 2008 were based in significant part on our financial performance and the completion of our CEO leadership succession transition plans which focused on retention during a challenging and volatile economic environment. Under our age 65 mandatory retirement policy for executive officers, Mr. Ulrich retired as CEO in May 2008, at which time Mr. Steinhafel was appointed CEO. See the section titled "Executive- Specific Variations in Targeted Compensation Levels" for more details regarding our CEO succession.

        Target's financial results in 2008 were impacted by significant economic challenges that worsened in the latter half of the year. Despite these economic conditions, total revenues for the year rose 2.5% to $64.9 billion, we generated earnings of $2.2 billion and delivered diluted earnings per share of $2.86. In our Retail Segment, the pace of sales slowed meaningfully in the second half of the fiscal year, reducing operating margin as we incurred higher-than-expected holiday markdowns and experienced a de-leveraging of fixed expenses. In our Credit Card segment, measures of risk in our receivables portfolio deteriorated throughout the year, driving additional bad debt expense as we wrote-off accounts while adding appropriately to our reserve in anticipation of additional write-offs in 2009. As a result of these financial challenges, executive officers did not receive any payouts from our non-equity incentive plan and long-term performance share unit (PSU) payouts were significantly reduced.

        In broad terms, our compensation programs for executive officers reflect the competitive environment in which we operate, and incorporate performance-based criteria. More specifically, we:

•

Embrace a strong pay-for-performance approach, in which variable compensation represents a majority of potential total compensation;



•

Establish incentive plan payout levels to provide an opportunity for compensation payments well above median levels in the marketplace when financial performance goals are exceeded and our stock price increases, and for significantly reduced compensation when our financial performance is below expectations and our stock price decreases;



•

Incorporate a mix of cash and equity compensation elements with varying time horizons and financial measures to motivate and reward sustained outstanding performance that is aligned with shareholder interests and is not overly influenced by a single financial measure or timeframe that could otherwise result in excessive risk-taking;



•

Provide a competitive package of long-term, time-vested equity compensation, retirement and benefit plans to facilitate retention and provide opportunities to realize future value; and



•

Offer limited perquisites to promote efficiency in conducting company business and assist in the health and safety of our executive officers.

        The specific objectives of our variable compensation programs are to:

•

Focus attention on key financial performance measures that correlate with the creation of shareholder value including revenue, earnings per share (EPS), earnings before interest and taxes (EBIT) and economic value added (EVA);

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•

Directly align the interests of our executive officers with those of our shareholders by linking most of long-term compensation to stock price performance; and



•

Allow actual compensation to vary based on individual subjective performance assessments.

Roles of Compensation Committee, Management and Consultants

        The Compensation Committee is responsible for determining the composition and value of our non-CEO executive officer pay packages and for developing a recommendation for the CEO's pay package that is reviewed and approved by the independent directors of the full Board. The Committee receives assistance from two sources: (1) an independent compensation consulting firm, the Semler Brossy Consulting Group, LLC (SBCG); and (2) our internal executive compensation staff, led by our Executive Vice President of Human Resources.

        SBCG has been retained by and reports directly to the Committee and does not have any other consulting engagements with management or Target. Specifically, the Committee has asked SBCG to regularly provide independent advice on current trends in compensation design, including overall levels of compensation, the merits of using particular forms of compensation, the relative weightings of different compensation elements, and the value of particular performance measures on which to base compensation. Within this framework, SBCG has been instructed to work collaboratively with management, including our CEO, our Executive Vice President of Human Resources and her staff to gain an understanding of Target's business and compensation programs to help SBCG advise the Committee.

        Compensation recommendations for executive officers are made to the Committee in two separate ways:

•

With respect to CEO compensation, SBCG provides an independent recommendation to the Committee, in the form of a range of possible outcomes, for the 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 the CEO with respect to his compensation.



•

For other executive officers, the Executive Vice President of Human Resources works with the CEO to develop the CEO's compensation recommendations to the Committee. In developing these recommendations, the Executive Vice President of Human Resources provides the CEO with market data on pay levels and compensation design practices provided by Hewitt Associates, LLC (Hewitt) covering the benchmark companies noted in the next section. Hewitt has no interaction with either the Committee or the CEO, but does interact with the Executive Vice President of Human Resources and her staff. In addition to providing market data, Hewitt performs other services for Target unrelated to the determination of executive compensation. The final recommendations to the Committee are determined by the CEO, and include a recommendation with respect to the compensation of the Executive Vice President of Human Resources. Importantly, SBCG provides the Committee with SBCG's independent view of the CEO's compensation recommendations.

        All decisions regarding executive compensation and final recommendations to the independent members of the full Board are made solely by the Committee.

Compensation Positioning

Competitive Benchmarking

        Specific compensation levels for each executive officer are evaluated annually relative to benchmark companies. The market comparisons are determined by use of compensation data obtained from publicly

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available proxy statements analyzed by SBCG and proprietary survey data assembled by Hewitt. The companies included in the market comparisons are listed below.

        The selected retail peer group provides a cross-section of general merchandise, department store, food and specialty retailers and includes companies that are large (generally exceeding $15 billion in revenues) and meaningful competitors. General industry companies are also included as a peer group because they represent companies with whom we compete for talent. Like the selected retailers, the general industry companies are large and among the leaders in their industries. All of our peers are among the top 250 Fortune-ranked companies and the median annualized total return to shareholders for both groups has outperformed the S&P 500 over the past five years ended January 30, 2009. The composition of the peer groups is reviewed annually to ensure it is relevant and comprehensive, and any changes made are reviewed with SBCG and approved by the Compensation Committee. The Committee regularly reviews the financial performance of our peers as it provides a useful benchmark of companies generating profitable market share growth over time. In addition, in conjunction with our compensation goal-setting process, the Committee reviews how the pay of our executive officers compares to that of the peer groups. See the section entitled "Key Performance Measures and Performance Goals" for more details regarding our compensation goal-setting process.

Benchmarking Elements and Amounts

        For each executive officer position, market data from our benchmark companies is used to compare program design and establish a targeted level of "total direct compensation," which is the sum of:

•

Base salary;



•

Short-term (annual) cash incentive compensation; and



•

Long-term equity incentive compensation.

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        Because we believe that executive compensation should be highly correlated with our financial performance and the creation of shareholder value, variable elements of compensation, particularly long-term equity-based awards, comprise a majority of total direct compensation for performance at goal. Over 60% of each executive officer's total direct compensation at goal is "at risk" and aligned with stock price and/or company financial performance. The following table outlines our pay elements for 2008.

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2008 Compensation Actions Table

        We have included a table outlining compensation decisions made in connection with the 2008 fiscal year for the named executive officers that differs from the Summary Compensation Table in the following ways:

•

It reflects determinations made by our Compensation Committee based on our annual grant cycle that includes equity awards granted in different fiscal years. The annual grant cycle includes long-term incentive awards approved in January of each year. The awards are comprised of stock options and RSUs granted in January and PSUs granted two months later in March (to align with our financial goal-setting process).



•

It reflects the annual grant date fair value of equity awards granted during our annual grant cycle (based on FAS 123(R) assumptions) rather than the annual accounting expense of equity awards over multiple years.

2008 Key Performance Measures and Performance Goals

        Our incentive programs use a combination of revenue, profit and investment metrics with annual and three-year time horizons to provide a balanced assessment of our performance over time and ensure that our compensation performance metrics support our financial and strategic objectives. For each performance measure, we set a goal level of performance that is approved in advance by our Compensation Committee and independent directors and takes into consideration the financial performance of our peer companies. Actual performance against these goals determines the amount, if any, of payments to executive officers under our variable compensation plans.

        The following section describes the performance measures used under our short-term and long-term incentive compensation plans in 2008, the financial or strategic objective they are intended to reinforce, and the variable compensation element(s) with which they are aligned.

Variable Short-Term Cash-Based Incentive Measures (Personal Performance and Non-Equity Incentive Plan)

•

EBIT—One of two financial performance measures for payments under our annual non-equity incentive plan. This measurement is designed to reinforce our focus on the annual growth in our profitability before interest and taxes. Because the majority of our credit card receivables portfolio earns interest based on a variable interest rate, changes in interest rates affect finance charge

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revenues that, in turn, affect reported EBIT. Accordingly, we adjust EBIT to generally neutralize the impact of interest rate fluctuations (either up or down) on incentive plan calculations.

•

Investment Discipline—EVA is the second financial performance measure for payments under our annual non-equity incentive plan. EVA is a measure of annual earnings after an estimated after-tax cost of capital charge and is used to evaluate the degree to which capital is being efficiently invested. A positive EVA performance indicates we are generating returns on invested capital at rates higher than the cost of capital. Among other things, our use of EVA helps us temper the objective of increasing revenues through new store construction with a measure of how profitably we are investing in new stores. In calculating EVA, we use an annualized after-tax blended cost of debt and equity capital of nine percent for capital used to fund our core retail operations and approximately five percent for capital used to fund our credit card operations. For store-based assets, our calculation of EVA is measured against a prototype store return profile over time, which has been derived from our historical pattern of results as a function of store age.



•

Personal Performance—All executive officers are eligible to earn a personal performance payment. For all executive officers other than the CEO (see page 27 for further discussion regarding the CEO), personal performance payments correspond to a predetermined percentage of their base salary tied to a payout matrix for each personal performance review score. The maximum personal performance payout is equal to 46.7% of an executive officer's base salary. Review scores are approved by the Compensation Committee and are discretionary based on subjective management criteria, including the executive officer's ability to develop a high performance team, their ability to lead strategic initiatives and their demonstration of a strong commitment to high ethical standards. We include this subjective element within our mix of variable compensation elements to recognize the critical factors upon which we believe performance should be judged, but which are not quantifiable or linked to our financial statements. For fiscal 2008, the Compensation Committee approved the CEO's recommended personal review scores for executives; due to our disappointing financial results in 2008, however, the Committee exercised its discretion to reduce the personal performance payments from the amount determined by the payout matrix to a level equivalent to the executives' 2007 personal performance payouts.

Variable Long-Term Equity-Based Incentive Measures (Option Awards and Stock Awards)

•

Stock Price—We believe consistent execution of our strategy over multi-year periods will lead to an increase in our stock price. Stock options, PSUs and RSUs are the vehicles we use to provide our executive officers with a stake in this potential reward of their efforts. The actual compensation realized from stock options is dependent on increases in our stock price after the option grant dates and on each executive officer's decision of when to exercise. The value of PSU and RSU awards is also dependent on our stock price performance over time.



•

Revenue—One-half of PSU awards are based on generating revenue growth over a three-year performance period. Our principal sources of this growth are contributions from new store expansion and increases in both comparable store sales and net credit card revenues. Our objective is to consistently grow revenue at a sufficient pace to facilitate continued market share gains and drive sustainable earnings growth.



•

EPS—The other one-half of PSU awards are based on three-year EPS growth. We believe our focus on achieving sufficiently high growth in EPS over a sustained period will generate substantial value for our shareholders over the long term.

2008 Performance Goals for Variable Plans and Actual Results

•

Non-Equity Incentive Plan—Payouts are based on achieving pre-approved annual EBIT and EVA goals for 2008. One-half of each executive officer's potential non-equity incentive plan payout is

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determined by performance related to each measure. Because our 2008 performance was well below the threshold level for both EBIT and EVA, executive officers did not receive a non-equity incentive payout. The goals in effect for 2008 were as follows:

Non-Equity Incentive Plan—Fiscal 2008

•

Long-Term Equity Incentive Plan—Payouts of PSUs are based on actual compound EPS and revenue growth over a three-year period compared with pre-determined goals as shown in the following table:

Equity Incentive Plan (Performance Share Units)
Performance Levels for Outstanding Awards

Details regarding each of the outstanding awards shown above are as follows:

•

2008 Final Performance Year award:  Because our three-year performance ending with fiscal 2008 was only slightly above the threshold for revenue growth and well below the threshold level for EPS, executive officers received a PSU payout near the minimum of our payout matrix for the revenue growth component of the award and no payout for the EPS component of the award.



•

2009 Final Performance Year award:  Executive officers will earn a payout for this PSU award if we achieve compound annual growth rates over a three-year period for revenue and EPS as shown in the preceding table. The fiscal 2006 baseline revenue was adjusted to a 52-week basis for comparability. For purposes of calculating this PSU award, fiscal 2009 EPS will be determined using a fixed effective tax rate established in March 2007 to prevent future tax volatility from having an unintended effect on payouts.



•

2010 Final Performance Year award:  Executive officers will earn a payout for this PSU award if we achieve compound annual growth rates over a three-year period for revenue and EPS as shown in the preceding table. For purposes of calculating this PSU award, fiscal 2010 EPS will be determined using a fixed effective tax rate established in March 2008.

2009 Variable Short-Term and Long-Term Incentive Plans

•

Non-Equity Incentive Plan—Annual payouts for fiscal year 2009 will continue to be based on EBIT and EVA performance measures. However, due to the level of uncertainty in the current economic environment and to correspond with our natural business cycles, the goals for 2009 will be split and based on two separate performance periods, spring season and fall season. The sum of the payouts from each season, if any, will be paid to executive officers in March 2010.

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•

Personal Performance Payments—There is no change to this plan for fiscal year 2009.



•

Long-Term Equity Incentive Plan—In response to the uncertain economic environment, we are moving away from the use of absolute measures of revenue growth and EPS within our long-term equity incentive plan. For PSUs granted in 2009, payouts are based on our relative performance as compared to our retail peer companies for both domestic net sales and EPS. We have replaced revenue with domestic net sales to measure our performance in the United States against the performance of our retail peers in the United States. Executive officers will earn a goal payout for PSUs granted in March 2009 if we achieve a rank of 6 among 15 retail peers including ourselves for both the domestic net sales and EPS measures over a three-year period. Fiscal 2008 domestic net sales and EPS will provide the baseline for the March 2009 awards.

Policies on Stock Ownership and Equity Grant Timing

Stock Ownership Requirements

        To ensure that the interests of our executive officers remain aligned with long-term shareholder interests, we have stock ownership guidelines that require our executive officers to hold a specific multiple of their base salary in Target common stock. Executive officers have five years to comply with these guidelines from the first day of the fiscal year after they became an executive officer. If compliance is not achieved by the deadline, the executive officer must hold any shares acquired on the exercise of stock options (net of the exercise price and applicable taxes) or the vesting of PSUs or RSUs (net of applicable taxes) until compliance is achieved. If a decline in our stock price is the cause of non-compliance, an executive officer will have one year to achieve compliance.

        In determining compliance with these guidelines, executives are considered to own all shares that are subject to SEC Section 16 reporting requirements other than stock options. This includes:

•

PSUs that have been earned but not yet issued due to a deferral election;



•

Restricted stock and RSUs, whether vested or unvested;



•

Shares/share equivalents held in our 401(k) plan and the executive deferred compensation plan; and



•

Shares owned directly.

        Our guidelines and the compliance status as of March 20, 2009 for the executive officers named in this proxy statement are shown below. All of our named executive officers have met or exceeded their guidelines.

Grant Timing Policy

        We have the following practices regarding the timing of equity compensation grants which includes stock option exercise price determinations. These practices have not been formalized in a written policy, but they are strictly observed.

•

Stock options and RSUs are granted on the date of our regularly scheduled January Compensation Committee meeting. PSUs are granted on the date of our regularly scheduled March Compensation

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Committee meeting in order to align the grant date of the award with our financial goal-setting process. These meetings are scheduled more than one year in advance.

•

We set the exercise price of stock awards at the volume-weighted average trading price of our stock on the grant date. We believe that the volume-weighted average price is a better measure of the fair value of our shares than the closing price on the grant date, as it eliminates the effect of any variations in stock price that may occur in the final minutes of trading if the closing price were used.



•

We have no practice or policy of coordinating or timing the release of company information around our grant dates. Our information releases are handled in a process completely separate from our equity grants.



•

On occasion we make equity compensation grants outside of our annual grant cycle for new hires, promotions and recognition or retention purposes. Grants to executive officers are approved by the Compensation Committee with an effective date on or after the date of approval. If the grant date is after the date of approval, it is on a date specified by the Committee at the time of approval.

Retention Elements

Long-Term Incentive Compensation

        We have designed certain aspects of our long-term variable equity compensation program to encourage executives to continue their employment with us. Specifically, we use a:

•

four-year installment vesting schedule for stock options;



•

three-year performance period for PSUs;



•

three-year cliff vesting for RSUs; and



•

a long-term incentive extension provision that provides a minimum of two additional years to exercise stock options (with continued vesting) following termination. This feature requires at least 15 years of service.

        Our other, non-variable compensation programs also contain elements to encourage our executives to remain at Target. These programs are our:

•

Pension plans;



•

Deferred compensation and 401(k) plans; and



•

Perquisites.

Pension Plan

        We provide pension benefits to eligible employees. Eligible employees are generally limited to those employed by the corporation prior to January 1, 2009. A detailed description of our pension benefits is set forth in the notes to the compensation tables that follow. Our pension benefits are determined solely with reference to base salary, personal performance payments and non-equity incentive plan payments. Any value realized from equity compensation awards does not influence pension benefits.

        Although the pension benefit formula is the same for all eligible employees, for more highly compensated eligible employees we provide this benefit through a combination of a tax-qualified pension plan and related supplemental plans. Because tax regulations limit the amount of compensation that can be used to determine benefits provided by a tax-qualified plan, the supplemental plans are designed to provide the same benefit an eligible employee would have received under the tax-qualified plan if the limitations did not apply. Participation in the supplemental plans is determined solely on the basis of whether an eligible employee's compensation exceeds the limitations applicable to tax-qualified plans and is not limited to an eligible employee's status as an executive officer.

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        For eligible officers, we transfer the value of the supplemental pension benefit to their deferred compensation account to allow them to direct the investment of the value of their pension benefit, give them more flexibility regarding the timing of receipt of their benefits, and provide them with more visibility into the value of their pension benefit. We believe this feature assists our retention objective.

Deferred Compensation

        We currently offer a nonqualified deferred compensation plan, called the Target Corporation Officer EDCP (EDCP), which is generally available to all employees at the management level. This plan is designed to allow for retirement savings above the limits imposed by the IRS for 401(k) plans on a tax-deferred basis. Amounts deferred into EDCP can be indexed to the same investment alternatives, including Target common stock, that are available to all eligible employees under our 401(k) plan.

        For a small number of executive officers, we provide "above-market" earnings that represent an interest credit under an older, frozen deferred compensation plan, called the Target Corporation Officer Deferred Compensation Plan (ODCP). Deferrals into this plan were discontinued in 1996, and no new participants were allowed into the plan after that year. Since then, we have continued to pay an above-market interest credit on plan balances in accordance with the plan's terms.

        Balances in the deferred compensation plans reflect the savings, earnings and supplemental pension benefits that have accumulated over time. The amounts directly correlate to the long tenure of our executives, individual investment choices and individual decisions regarding the level of savings over time.

Perquisites

        We provide certain perquisites to our executive officers, principally to allow them to devote more time to company business and to promote their health and safety. The Compensation Committee reviews these perquisites annually to ensure they are consistent with our philosophy and appropriate in magnitude. The personal use of our aircraft and local commuting services provided to our CEO are provided for security reasons. Other perquisites are described on pages 29-30 of this proxy statement.

Employment Contracts

        None of our executive officers, including our CEO, have employment contracts.

Income Continuance

        We have an Income Continuance Policy (ICP) that is provided to executives who are involuntarily terminated without cause because we believe it is appropriate to provide continued income to assist in their occupational transition. The maximum payment under this policy (paid during regular pay cycles over two years) is two times the sum of base salary plus the average of the last three years of personal performance and non-equity incentive plan payments.

Executive-Specific Variations in Targeted Compensation Levels

        The design of our compensation elements is generally the same for all executive officers, except as follows:

Mr. Ulrich

        Mr. Ulrich turned 65 in April 2008 and retired as our CEO effective May 1, 2008, as required by our mandatory retirement policy. He remained Chairman of the Board through January, 2009. Mr. Ulrich became CEO on April 13, 1994. During his tenure, Target Stores nearly tripled the number of locations, increased sales more than four times, and has become one of the most recognized and valuable brands in retail.

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        As a result of his long career with the organization, his choice to defer the majority of his compensation regularly, and our financial success under his stewardship, Mr. Ulrich received significant deferred compensation payments in 2008. In addition, Mr. Ulrich received much of his compensation in the mid-1980s and into the 1990s through the ODCP, designed to retain premier talent and to reward longevity with the company. As mentioned earlier, this plan was frozen in 1996.

        Due to his retirement, Mr. Ulrich did not receive any stock option or RSU awards in fiscal 2008. Mr. Ulrich did not receive a personal performance payment for fiscal 2008.

Mr. Steinhafel

        Mr. Steinhafel became our CEO on May 1, 2008 and was named Chairman of the Board effective February 1, 2009. He has been with Target for nearly 30 years, and has helped create and implement many of the strategies that have contributed to our long-term success. Mr. Steinhafel's most recent long-term incentive awards (January 2009 stock options and RSUs, and March 2009 PSUs) were based on total direct compensation positioning around the 60^th and 75^th percentiles of our general and retail industry benchmark data for CEOs at goal, respectively. Mr. Steinhafel's personal performance payment is 100% discretionary. For fiscal 2008, the Board considered a number of factors in determining Mr. Steinhafel's personal performance payment, including the additional responsibilities related to his promotion to chief executive officer, the strength of his leadership during a period of significant economic challenges and his focus on greater strategic alignment, transparency and clarity throughout the organization. In balancing these positive considerations with our disappointing financial results during 2008, the Board determined that Mr. Steinhafel's 2008 personal performance payment would be equivalent to his 2007 personal performance payment of $447,680.

Tax Considerations—Code Section 162(m)

        Our compensation programs are designed to allow us to comply with the tax deductibility limitations of Section 162(m) of the Internal Revenue Code in the following ways:

•

Under a shareholder-approved plan, most of our long-term equity awards qualify as deductible performance-based compensation under Section 162(m).



•

Our non-equity incentive plan payments are paid under a shareholder-approved plan and intended to qualify as deductible performance-based compensation. The 2008 personal performance payments, which are classified as bonus payments in the Summary Compensation Table, do not qualify as deductible performance-based compensation.



•

For any compensation that is not deductible under Section 162(m), we encourage executive officers to defer the portion of their compensation that would not be deductible. Because deferred compensation is generally not payable until after termination of employment, it is not subject to the deduction limits of Section 162(m) when ultimately paid. However, we will pay compensation above the limit to maintain flexibility and help retain and motivate our executive officers.

Compensation Committee Report

        The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our annual report on Form 10-K and this proxy statement.

        Compensation Committee members:

James A. Johnson, Chair
Calvin Darden
Stephen W. Sanger
Solomon D. Trujillo

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Summary Compensation Table

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(1)

Amount expensed in fiscal 2008 pursuant to FAS 123(R) for performance share units and restricted stock units awarded in fiscal 2008 and prior years, offset for each named officer by reversals in fiscal 2008 and 2007 of a portion of the amounts expensed in 2006 and reported in the 2006 Summary Compensation Table, due to reductions in assumptions regarding payout levels. The amounts reported have been adjusted to eliminate service-based forfeiture assumptions and exclude reversals of amounts expensed but not reported in prior years' Summary Compensation Tables, both of which are used for financial reporting purposes. See Note 25, Share-Based Compensation, to our consolidated financial statements for each of fiscal 2008, 2007 and 2006 for a description of our accounting and the assumptions used.

(2)

Amount expensed in fiscal 2008 pursuant to FAS 123(R) for stock options awarded in fiscal 2008 and prior years. The amounts reported have been adjusted to eliminate service-based forfeiture assumptions used for financial reporting purposes, and reflect accelerated expensing for named executive officers who are eligible for post-termination vesting extensions. Stock option values are based on the Black-Scholes option pricing model. See Note 25, Share-Based Compensation, to our consolidated financial statements for each of fiscal 2008, 2007 and 2006 for a description of our accounting and the assumptions used.

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(3)

For 2008, the following amounts are related to the change in pension value and above-market earnings on nonqualified deferred compensation:

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 2008, 2007 and 2006 were 6.50%, 6.45% and 5.80% respectively. The Change in Pension Value column reflects the additional pension benefits attributable to service and changes in the discount rate.

The above-market earnings on nonqualified deferred compensation consist of an additional 6.0% annual return on a frozen deferred compensation plan, the Target Corporation Officer Deferred Compensation Plan. See the narrative following the Nonqualified Deferred Compensation table for additional information.

(4)

The amounts reported for 2008 include matching credits of up to a maximum of 5% of cash compensation allocated among the Target 401(k) Plan and the EDCP, the dollar value of life insurance premiums paid by Target, credits to the EDCP representing annual changes in supplemental pension plan values (as described in more detail in the narrative following the Pension Benefits table), perquisites and, for Mr. Ulrich, amounts accrued in connection with his retirement.

(a)

Mr. Ulrich received a negative SPP credit of $(88,851) in 2008, which was deducted from his EDCP account.



(b)

The accrued post-employment benefits consist of Mr. Ulrich's accrued vacation balance of $367,100 (payable in cash) and the post-retirement local commuting and security benefit of $364,107 described in the section captioned "Potential Payouts Upon Termination or Change-in-Control."

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Further detail on the perquisites provided to the named executive officers is as follows:

        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. Mr. Ulrich's and Mr. Steinhafel's personal use of private aircraft and Mr. Ulrich's local commuting services are dictated by a security study. 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. Incremental cost for local commuting services include the direct costs of using third-party driving services, fuel, maintenance, and annual depreciation of a company-owned car used primarily for these services.

        The "other" perquisites, none of which individually exceed $25,000, consist of a company provided car or car allowance, reimbursement of financial management expenses, reimbursement of home security expenses, on-site parking, on-site exercise room, spousal travel on business trips, gifts, executive physicals, and for Mr. Francis, reimbursement of commercial airfare. In addition to the perquisites included in the table above, the named executive officers receive certain other personal benefits for which we have no incremental cost, as follows:

•

Membership in a downtown business club. The club is used almost exclusively for business functions; however, executives may occasionally use the club for personal purposes provided they pay for any meal or other incremental costs;



•

Occasional use of support staff time for personal matters;



•

Occasional personal use of empty seats on business flights of company-owned aircraft;



•

Allowing a companion to accompany them on company-owned aircraft; and



•

Occasional personal use of event tickets when such tickets are not being used for business purposes.

(5)

Mr. Ulrich retired as Chief Executive Officer on May 1, 2008, and remained as a team member through January 30, 2009.

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Grants of Plan-Based Awards in Fiscal 2008

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(1)

Awards represent potential payments under our Executive Short-Term Incentive Plan for fiscal 2008. Payments are based on specified target levels of EBIT and EVA, as described in the Compensation Discussion and Analysis. The payment range for Mr. Ulrich represents 25% of a full year payout range, as he was CEO for 25% of the year.

The actual amounts earned for fiscal 2008 are reported in the Summary Compensation table as Non-Equity Incentive Plan Compensation. Executives 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 after age 55 with at least five years of service. The maximum payments are based on the plan maximum, which is generally four times salary less, for executives other than the CEO, the minimum personal performance bonus payable as a condition to receiving a financial performance payout under the Plan.

(2)

Awards represent potential payments under PSUs granted under our Long-Term Incentive Plan in fiscal 2008. Payments are based on specified target levels of earnings per share growth and revenue growth. See the Compensation Discussion and Analysis for the performance targets on PSUs granted in Fiscal 2008. The other terms of the PSUs are described in Note 3 to the Outstanding Equity Awards table.

(3)

Awards represent RSUs granted under our Long-Term Incentive Plan. The terms of the RSUs are described in Note 3 to the Outstanding Equity Awards table.

(4)

Awards represent stock options granted under our Long-Term Incentive Plan. The terms of stock option grants are described in Note 1 to the Outstanding Equity Awards table.

(5)

The exercise price of all options was based on the volume weighted average price of Target common stock on the date of grant.

(6)

Grant date fair value for stock options, PSUs and RSUs was determined pursuant to FAS 123(R). For PSUs, the actual number of units that can be earned ranges from 0 to 150% of the target amount. For this type of award, the amount reported is based on an assumption that 100% of the target number of units will be earned.

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Outstanding Equity Awards at 2008 Fiscal Year-End

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(1)

Stock options have a ten-year term and generally vest and become exercisable in 25% increments on each anniversary of the grant date. Recipients of stock options must be continuously employed by us from the grant date to the applicable vesting date to become vested. If an executive officer's employment is terminated, unvested options are forfeited and the executive officer will have 210 days to exercise any vested options. An extension of the vesting and post-termination exercise periods may

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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:

For stock options granted prior to January 12, 2005, the potential extension of the vesting and post-termination exercise periods is based on the following age and years of service schedule:

To receive these extension provisions, the executive must provide a one-year advance notice if the termination is voluntary and sign an agreement that includes a non-solicitation clause and provides that the award will be terminated if the executive becomes employed by specified competitors. These vesting-extension provisions are not available if an executive is involuntarily terminated due to a dishonest or illegal act.

A five-year exercise period (not to exceed the original ten-year term of the option) will apply in the event of the executive's termination due to death or a disability. Vesting is accelerated upon death and continues during the five-year post termination exercise period in the event of disability. Options are transferable during the life of the recipient to certain family members and family-controlled entities.

The extension provisions described above do not apply to the June 14, 2006 grant to Mr. Steinhafel. Additionally, the June 14, 2006 grant to Mr. Steinhafel does not vest until the earlier of June 14, 2010, his death or his disability. The award is forfeited if he voluntarily terminates before those events. If Mr. Steinhafel is involuntarily terminated prior to the scheduled vesting date under circumstances that entitle him to severance under our Income Continuance Policy, he will be 50% vested in the June 14, 2006 grant.

(2)

Includes: (A) RSUs granted in fiscal 2006 (2006 RSUs) and related dividend equivalents; (B) RSUs granted in fiscal 2008 (2008 RSUs) and (C) for Messrs. Scovanner and Steinhafel, outstanding restricted stock awards that were awarded from 1993 to 1995.

RSUs are subject to cliff-vesting three years after the date of grant. Recipients of RSUs must generally be continuously employed through the vesting date to become vested. For the 2006 RSUs, continuous employment is not required if the executive is age 55 or older and has 15 years of service, provides a one-year advance notice of retirement, and signs a non-solicitation agreement. The terms of the 2008 RSUs are the same as the terms of the 2006 RSUs described in Note 2 above, except a pro rata portion of the 2008 RSUs will vest after the second anniversary of the grant date if the executive is age 55 or older, has 15 years of service (or age 65 with 5 years of service), and provides a one-year advance notice of retirement. In addition, vesting is accelerated in the event of death or disability, and 50% of the RSUs will vest if the recipient is involuntarily terminated prior to the scheduled vesting date under circumstances that entitle him to severance under our Income Continuance Policy (see discussion of the ICP in the section captioned "Potential Payments Upon Termination or Change-in-Control"). Upon vesting, units are converted into shares of our common stock on a 1:1 basis. Recipients of the 2006 RSUs may elect to defer receipt of any shares issuable upon vesting of

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the award. If a deferral is elected, the issuance of shares is deferred to the time specified in the deferral election. Dividend equivalents are paid (in the form of additional units) on RSUs during the vesting period and the deferral period (if applicable).


The restricted stock awards that were awarded from 1993 to 1995 will vest upon the executive's retirement provided that retirement occurs after age 55 and the executive provides one-year's advance notice of his retirement date. The vesting date will be accelerated in the following circumstances:

•

Death or total disability (100% vesting)



•

Qualifying involuntary termination after age 55 (100% vesting)



•

Qualifying involuntary termination prior to age 55 (50% vesting)



•

Change-in-control (100% vesting)

(3)

The shares reported in this column represent potentially issuable shares under outstanding PSU awards. PSUs represent the right to receive a variable number of shares based on actual performance over the performance period. Up to one-half of the maximum number of shares can be earned based on our compound annual revenue growth and one-half based on our compound annual EPS growth. The number of shares reported is based on our performance period to date growth rates for revenue and EPS and assuming that the payout will occur at the next highest level (all are reported at threshold payout levels). The performance levels required for payouts on outstanding awards are described in the Compensation Discussion and Analysis.

Dividends or dividend equivalents are not paid on PSUs during the performance period. The recipients of PSU awards may elect to defer receipt of any shares issuable upon earning the award. If a deferral is elected, the issuance of shares is deferred to the time specified in the deferral election, and dividend equivalents are paid (in the form of additional units) during the deferral period.

The payment date of the awards, to the extent they are earned, will be the date the Compensation Committee certifies the financial results following completion of the performance period. 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;

•

Executive is age 65 or greater and has at least five years of service;

•

Executive is age 55-64 and has at least 15 years of service; or

•

Executive 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).

To receive these vesting-extension provisions, the executive 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 above.

(4)

Mr. Ulrich has transferred a portion of the options to a trust established for estate planning purposes. Mr. Ulrich transferred 172,681, 184,099, and 94,942 of the options expiring 2014, 2015, and 2016, respectively. Mr. Ulrich has retained control over the options through the terms of the trust.

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Option Exercises and Stock Vested in Fiscal 2008

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(1)

Shares represent the number of PSUs that were earned with respect to the three-year performance period ending with fiscal 2008. The number earned represents 3.4% of the target number of units originally awarded. See note 4 for additional shares included for Mr. Ulrich.

(2)

Value Realized on Vesting was determined by using the volume weighted average price of Target common stock on the date of vesting.

(3)

Mr. Baer elected to defer receipt of one-half of the shares earned to a specified future date. The shares will be held as stock units, and earn dividend equivalents, until the payment date.

(4)

Includes 435,456 shares of restricted stock awarded from 1993 to 1995 that vested upon Mr. Ulrich reaching age 65.

Pension Benefits for Fiscal 2008

        The table above reports benefits under our principal pension plan, the Target Corporation Pension Plan (Pension Plan), which is a tax qualified retirement plan that provides retirement benefits to our employees who are at least 21 years of age, have completed at least three years of service and in general, were hired prior to January 2009. We also provide benefits under supplemental pension plans, as described below, because of limits imposed on tax qualified plans by the Internal Revenue Code. Benefits under those plans are reflected in the Nonqualified Deferred Compensation table.

        The final average pay normal retirement benefit under the Pension Plan, expressed as a monthly, single-life annuity commencing at age 65, is equal to the sum of: (a) 0.8% of the participant's final average monthly pay multiplied by the years of service (not to exceed 25 years of service), plus (b) 0.25% of the participant's final average monthly pay multiplied by the years of service in excess of 25 years of service, plus (c) 0.5% of the participant's final average monthly pay in excess of 12.5% of the average of the Social Security Taxable Wage Base for the 35 year period ending when the participant terminates employment multiplied by the years of service (not to exceed 25 years of service). Final average monthly pay is equal to one-twelfth of the highest average annual salary, Bonus and Non-Equity Incentive Plan compensation

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earned during any five years of the last ten-year period the participant earned service in the Pension Plan, subject to IRS limits. The present value of the accumulated benefit is based on the same assumptions and valuation dates used for the valuation of pension plan liabilities in our financial statements. Participants can elect other annuity forms that have an actuarially equivalent value. We do not grant extra years of service to supplement retirement benefits.

        The Pension Plan allows for early retirement payments to commence at age 55, subject to a benefit reduction for termination of employment before age 55 and a separate reduction for commencing a benefit before age 65. A participant who terminates employment before age 55 has his or her vested benefit calculated based on the final average monthly pay as of their termination date, but service is projected to age 65. The vested benefit is then multiplied by the ratio of the participant's actual completed service to their projected service through age 65. The result will always be equal to or less than the vested benefit as of the termination date. Benefits are also reduced for early commencement by 6.67% per year between age 65 and age 60 and 3.33% per year between age 60 and age 55 (based upon the participant's age when benefits commence).

        The Target Corporation Supplemental Pension Plan I (SPP I) restores the lost qualified pension plan benefit due to an officer's compensation being greater than the compensation limits imposed by the IRS for qualified retirement plans. The Target Corporation Supplemental Pension Plan II (SPP II) restores the lost qualified pension plan benefit due to amounts being deferred under the EDCP and therefore not considered for benefit purposes under the Pension Plan. The Target Corporation Supplemental Pension Plan III (SPP III) provides for a subsidized early retirement benefit once a participant attains age 55 by increasing the participant's age by 5 years, but not greater than age 65, for purposes of determining the reduction factors for early commencement of their pension benefits from the qualified pension plan, SPP I and SPP II. As a result, the benefit under SPP III increases when the participant is 55 through 60 years old and decreases in value after age 60, until at age 65 the benefit under SPP III is $0. No new participants have been allowed in SPP III since 1989, and Mr. Ulrich and Mr. Steinhafel are the only named executive officers who participate in SPP III.

        In 2002, the vested benefits accrued under SPP I, II and III were converted into an actuarial equivalent lump sum value that was transferred to the EDCP. Each year, the annual change in the actuarial lump sum amount is calculated and added to, or deducted from, the participant's EDCP account. This same calculation and an EDCP account adjustment also occurs upon termination of employment. To determine the amount of the change in actuarial equivalent lump sum amount, the prior transfers are adjusted by an assumed annual earnings rate based on the rate of return of the stable value fund crediting rate alternative in EDCP. Actuarial equivalents are determined using the discount methodology we use in calculating lump sum payments under our qualified plan. Currently, we use the applicable interest rate and mortality factors under Section 417(e) of the Internal Revenue Code published in the month of transfer for active officers, and in the month prior to the month of termination for terminated officers. Because of this transfer feature, the benefits accrued under SPP I, II and III are reflected in the Nonqualified Deferred Compensation table.

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Nonqualified Deferred Compensation for Fiscal 2008

        The amounts in the table below represent deferrals under the EDCP (which includes the supplemental pension benefits discussed in the preceding section), deferrals of PSUs that are held as stock units, and deferrals under the ODCP. The ODCP was frozen to new deferrals in 1996. Because of the long tenure of our executives, the balances reflected below represent accumulated savings, earnings and supplemental pension benefits over many years—for Mr. Steinhafel, 29 years, Mr. Scovanner, 15 years, Mr. Francis, 19 years, Mr. Griffith, 10 years, Mr. Baer, 15 years and Mr. Ulrich, 42 years.

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(1)

The following amounts of Executive Contributions from the table above have been reported in the current year Summary Compensation table:

(2)

All of the Registrant Contributions from the table above have been reported in the current year Summary Compensation table. Registrant Contributions include transfers of supplemental pension benefits and 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 IRS limits).

(3)

The following amounts of Aggregate Earnings from the table above have been reported in the current year Summary Compensation table:

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 26, Defined Contribution Plans, to our consolidated financial statements for additional information.

(4)

The amounts reflect the distributions made to executives based on their elections.

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(5)

The following amounts of the Aggregate Balance from the table above were reported in the Summary Compensation table in 2006 or 2007:

        Participants in the EDCP may generally elect to defer up to 80% of their salary, Bonus and Non-Equity Incentive Plan payments; however, certain executives may defer up to 100% of their compensation if Section 162(m) of the Internal Revenue Code could limit our deductibility of such compensation. In addition, recipients of PSU awards in fiscal 2002, 2003 and 2004 were permitted to defer the dollar value of their payouts under these awards into the EDCP. 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.

        No additional deferrals have been made to the ODCP after 1996. Participants' ODCP accounts are credited with earnings based on the Moody's Corporate Bond Yield Average for the June of the preceding calendar year, plus an additional annual return of 6%. The minimum crediting rate is 12% and the maximum is 20%. The Moody's Corporate Bond Yield was 6.3% as of June 2007, when the rate for calendar 2008 was set. This additional return is included in the above-market earnings on deferred compensation in the Summary Compensation table.

        At the time of deferral, participants can elect to receive a distribution of their EDCP account at a fixed date or upon termination of employment. EDCP payouts at a fixed date will be made as lump sum payments. EDCP payouts made on termination of employment can be made as a lump sum payment, installment payments over five years, or installment payments over ten years commencing immediately or one-year after termination of employment. EDCP payouts are also made in the case of the termination of EDCP, a qualifying change in control, or unforeseeable financial emergency of the participant creating severe financial hardship. In 2008, consistent with guidance issued by the IRS, participants in EDCP were allowed to make new distribution elections of their entire EDCP account balances, including a distribution of benefits while still employed.

        Payouts from the ODCP cannot be made until termination of employment, death, termination of the ODCP, a qualifying change in control, or unforeseeable financial emergency of the participant creating severe financial hardship. Participants can elect distributions as a lump sum payment or lifetime periodic payments with guaranteed payments for 15 years. The payments can commence immediately or up to ten years after termination of employment, however payments must commence when a participant has terminated employment and reached age 65.

        Both the EDCP and ODCP are intended to comply with Section 409A of the Internal Revenue Code. As a result, payments to executive officers based on a termination of employment will be delayed six months.

        The EDCP and the ODCP are unfunded plans and represent general unsecured obligations of Target. Participants' account balances will be paid only if Target has the ability to pay. Accordingly, account balances may be lost in the event of Target's bankruptcy or insolvency.

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Potential Payments Upon Termination or Change-in-Control

        This section explains the payments and benefits to which the named executive officers are entitled in various termination of employment scenarios. These are hypothetical situations only, as all of our named executive officers, except Mr. Ulrich, are currently employed by us. For purposes of this explanation, we have assumed that termination of employment occurred on January 31, 2009, the last day of our 2008 fiscal year, and for the change-in-control analysis, that we incurred a change-in-control at our fiscal year-end closing stock price of $31.20 per share.

        The intent of this section is to isolate those payments and benefits for which the amount, vesting or time of payment is altered by the termination of employment in the described circumstances. This section does not cover all amounts the named executive officers will receive following termination. Specifically, the named executive officers are entitled to receive their vested balances under our pension and deferred compensation plans, as disclosed in the preceding tables, and payment of accrued vacation balances under all employment termination scenarios. In addition, unless the termination is due to a dishonest or illegal act, they retain their vested stock option awards, and if they meet specified minimum age and years of service requirements at the time of termination, the unvested portion of stock options, PSUs and RSUs are not forfeited, and vesting will continue according to the original schedule. A description of these age and years of service requirements, applicable to all employees who receive equity awards, is set forth in the notes under the Outstanding Equity Awards table.

        The paragraphs below explain the payments and benefits for which the amount, vesting or time of payment is altered by each employment termination situation (referred to as Post-Termination Benefits). The age and years of service for each executive officer is located in the Pension Benefits table.

Voluntary Termination

        If a named executive officer voluntarily terminates employment, the potential Post-Termination Benefits consist of the potential right to continue to receive above-market interest in our former deferred compensation plan, the ODCP, or receive his account balance as a lump sum payment.

        Under the ODCP, if the voluntary termination occurs after reaching age 55, the participant will continue to receive interest at the plan's crediting rate (as described in the narrative under the Nonqualified Deferred Compensation table) over the time period during which his account balance is distributed. If the voluntary termination occurs before reaching age 55, the participant will generally receive his account balance in an immediate lump sum payment six months following termination.

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(1)

None of the officers listed above is currently eligible for the continuation of above-market interest because they are under age 55. The amounts reported reflect the present value of above-market interest during the six month payment delay period. Messrs. Baer and Griffith do not participate in the ODCP.

        Mr. Ulrich retired during fiscal 2008. Because he was over age 55 at the time of his retirement, he will continue to receive interest under the ODCP at the plan's crediting rate. The present value of the above-market interest he will receive is $5,258,170. The present value is based on his life expectancy using the RP-2000 Combined Healthy Participant mortality table, assumed annual earnings rate on the account of 12.4% during calendar 2009 (based on the actual rate used in calendar 2009), 12.8% as the assumed earnings rate in subsequent calendar years (based on a rate using the Moody's Corporate Average rate determined as of January 31, 2009), and a discount rate of 6.8% (reflecting the Moody's Corporate Average rate determined as of January 31, 2009). In addition, Mr. Ulrich will receive the local commuting

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and security benefit that he received while he was CEO for 3 years, which has an estimated present value of $364,107, and his accrued vacation balance of $367,100.

Involuntary Termination

        If the named executive officer was involuntarily terminated for deliberate and serious disloyal or dishonest conduct, he would not be eligible for any of the Post-Termination Benefits described in this section, but would receive the ODCP benefit described in the Voluntary Termination section above.

        If a named executive officer is involuntarily terminated for reasons other than deliberate and serious disloyal or dishonest conduct, the potential Post-Termination Benefits consist of:

•

severance payments under our ICP;



•

the right to continued above-market interest under the ODCP;



•

accelerated vesting of 50% or 100% of restricted stock awards (depending on age) and 50% of restricted stock unit awards; and



•

for Mr. Steinhafel, accelerated vesting of 50% of his June 2006 stock option award.

        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 named executive officers is eligible for 24 months of income continuation under the ICP. Payments under the ICP are conditioned on the executive releasing any claims against us and a non-solicitation clause, and are subject to reduction if the executive becomes employed by specified competitors.

        The right to continued above-market interest under the ODCP is the same as for a voluntary termination, with the exception that if the executive is age 50 or older and has at least 10 years of service with us, he will receive the above-market interest (or present value equivalent) that he would have received if distributions were made as elected.

        The accelerated vesting provisions of restricted stock unit awards, restricted stock awards and stock options are set forth in the notes under the Outstanding Equity Awards table.

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(1)

Messrs. Steinhafel and Scovanner satisfy the requirements to continue to receive the above-market earnings after an involuntary termination of employment. The amount in the table above has been calculated in the same manner as described in Note 1 to the Voluntary Termination table above.

(2)

Amounts determined by multiplying the number of shares for which vesting is accelerated by our closing stock price on January 30, 2009 ($31.20 per share).

(3)

Amounts determined by multiplying the number of option shares for which vesting is accelerated by our closing stock price on January 30, 2009 ($31.20 per share) and subtracting the exercise price of such option shares.

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Death

        If a named executive officer dies while employed, the Post-Termination Benefits consist of:

•

The right to continued above-market interest under the ODCP; and



•

Accelerated vesting of stock options, restricted stock units and restricted stock awards.

        Under the ODCP, a participant's death results in payments to his/her beneficiaries in the form of an annuity for the greater of 10 years or until the participant would have reached age 65.

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(1)

Amounts represent the present value of the above market earnings that the participant's beneficiary would receive during the payment period, calculated using 12.0% as the earnings rate (as set forth in the plan) and a discount rate of 6.8% (reflecting the Moody's Corporate Average rate determined as of January 31, 2009).

(2)

Amounts determined by multiplying the number of shares for which vesting is accelerated by our closing stock price on January 30, 2009 ($31.20 per share).

(3)

Amounts determined by multiplying the number of option shares for which vesting is accelerated by our closing stock price on January 30, 2009 ($31.20 per share) and subtracting the exercise price of such option shares.

Disability

        If a named executive officer becomes totally and permanently disabled while employed, the Post-Termination Benefits consist of:

•

Monthly payments under the Excess Long-Term Disability Plan if they also participated in the widely available long-term disability plan;



•

The right to continued above-market interest under the ODCP;



•

Accelerated vesting of restricted stock and restricted stock unit awards; and



•

For Mr. Steinhafel, accelerated vesting of his June 2006 stock option award.

        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 $250,000 but not exceeding $2,000,000. Payments from the plan are taxable to participants. The plan is intended to replace the participant's eligible compensation on an after-tax basis at approximately the same benefit levels under the long-term disability plan that is widely available for eligible employees. Participants who become disabled before age 65 are eligible to receive

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payments under the plan while they are totally and permanently disabled through the age 65 (with a minimum of three years of disability payments) or death, if sooner.

---

(1)

Payments represent the annual amount payable from the Excess Long-Term Disability Plan. Amounts are based on assumed average individual tax rate of 42.2% (which considers federal, state, local, and employment taxes).

(2)

See Note 1 in the Voluntary Termination discussion above.

(3)

Amounts determined by multiplying the number of shares for which vesting is accelerated by our closing stock price on January 30, 2009 ($31.20 per share).

(4)

Amounts determined by multiplying the number of option shares for which vesting is accelerated by our closing stock price on January 30, 2009 ($31.20 per share) and subtracting the exercise price of such option shares.

Change-in-Control

        The following discussion describes the payments and benefits that: (1) are triggered by the occurrence of a change-in-control; and (2) are triggered only by a termination of employment following a change-in-control. In general terms, we will experience a change-in-control, as defined in our compensation plans, whenever any of the following events occur:

•

50% or more of our Board of Directors consists of persons who have not been nominated or appointed by incumbent directors;



•

Any person or group acquires 30% or more of our common stock; or



•

We merge with or into another company and our shareholders own less than 60% of the combined company.

        Importantly, our plans do not provide for any gross-ups for taxes due on any payments described in this section.

        The consequence of a change-in-control to the named executive officers, without termination of employment, is as follows:

•

The deferred compensation balance under the ODCP, together with the present value of the continued above-market interest under the ODCP, as well as the deferred compensation balance in the EDCP, will be paid in a lump sum as soon as allowed under Section 409A of the Internal Revenue Code, unless the Board of Directors determines not to accelerate payment of these amounts.



•

Outstanding restricted stock awards will be immediately vested and released.



•

A pro rata portion of outstanding PSU awards (those still in their respective performance period) will be deemed to have been earned at the target payout level and paid out within 10 days following

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the change-in-control. The pro rata payout is based on the percentage of the three-year performance period that has elapsed as of the date of the change-in-control.

•

A pro rata portion of outstanding RSUs will vest and be paid out within 10 days following the change-in-control. The pro rata vesting is based on the percentage of the three year vesting period that has elapsed as of the date of the change-in-control.

        If a change-in-control occurred on January 31, 2009, the named executive officers would have received the following:

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(1)

The present value is determined by assuming that payments of the executive's account will be made based on the executive's payment elections, and then determining the present value of the above-market earnings using the RP-2000 Combined Healthy Participant mortality table, an assumed annual earnings rate of 12.4% (reflecting the earnings rate in effect for the ODCP during 2009) and a discount rate of 6.4% (reflecting a discount rate that is 6% less than the assumed earnings rate, as set forth in the terms of the plan).

(2)

Amounts determined by multiplying the number of shares for which vesting is accelerated by our closing stock price on January 30, 2009 ($31.20 per share).

        If a named executive officer's employment terminates involuntarily or voluntarily with good reason (a material reduction in compensation or responsibilities or a required relocation following a change-in-control), the Post-Termination Benefits that may be received consist of severance under the ICP and accelerated vesting of outstanding stock options. The estimated amount of additional Post-Termination Benefits in excess of the benefits triggered by the change-in-control transaction are as follows:

        The ICP was amended in November 2008 to impose a good reason for termination requirement in order to receive severance for a voluntary termination following a change-in-control. Under the terms of the ICP, this amendment has a two-year delayed effective date. Accordingly, if a change-in-control occurs prior to the second anniversary of this amendment, executives are entitled to receive the severance amounts shown above without demonstrating good reason for their resignation.

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Director Compensation

General Description of Director Compensation

        Our non-employee director compensation program allows directors to choose one of three forms of annual compensation—(a) a mix of cash, stock options, and RSUs, (b) all stock options (if the director meets our stock ownership guidelines), or (c) all RSUs. Each form under the compensation program is intended to provide approximately the same level of compensation to non-employee directors as follows:

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The differences in compensation among directors as reported in the Director Compensation table below are principally attributable to: (a) the required accounting treatment for stock options and RSUs, and (b) a change in the grant date for all equity awards that was effective in January 2009, that resulted in the entire 2009 option grant being reported in fiscal 2008.

(1)

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.

(2)

The chart above reflects the estimated present value of the stock option awards based on the Black-Scholes option pricing model. Stock options are exercisable one year after the date of grant and have a term equal to the lesser of ten years or five years following a director's departure from the Board. Prior to January 2009, directors electing the basic form received all options in January, and directors electing the all options form received half of their options in January and half in June. Beginning in January 2009, all options are granted in January regardless of which form of compensation is elected.

(3)

RSUs are settled in shares of Target common stock after the director's departure from the Board. Dividend equivalents are paid on RSUs in the form of additional RSUs. Prior to January 2009, RSUs vested over a three-year period and were granted in June if the basic form was elected and half in January and half in June if the all RSU form was elected. Beginning in January 2009, all RSUs are granted in January regardless of which form of compensation is elected, and RSUs granted on or after that date will vest quarterly over a one-year period.

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Director Compensation Table

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(1)

Amount reported represents the dollar value of outstanding RSUs and stock options that was recognized for financial reporting purposes in fiscal 2008 pursuant to FAS 123(R). See Note 1 to the Summary Compensation table for more information on the assumptions used in accounting for equity awards. Details on the stock awards and option awards granted during fiscal 2008 are as follows:

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(2)

The aggregate number of stock options, shares of restricted stock and restricted stock units outstanding at fiscal year-end held by directors was as follows:

Our stock ownership guidelines for directors require them to hold three times the annual cash retainer in Target common stock. Directors have five years from the first day of the fiscal year following their election to comply with these guidelines. If compliance is not achieved by the deadline, they must hold all shares acquired through the exercise of stock options (net of exercise price and taxes) until the guideline amount is met.

(3)

Amount reported represents above-market earnings on nonqualified deferred compensation, consisting of an additional 6.0% annual return on a frozen deferred compensation plan. Prior to December 31, 1996, deferrals were allowed under our Deferred Compensation Plan Directors (DCP-Director). No new deferrals or participants were allowed after that year. Participants' DCP-Director accounts are credited each month with earnings based on the Moody's Corporate Bond Yield Average for the June of the preceding calendar year, plus an additional annual return of 6%. The minimum crediting rate is 12% and the maximum is 20%.

(4)

In addition to amounts reported, non-employee directors who were elected prior to 1997 are eligible to receive a lump sum payment the February following the date they leave their directorship. The payment is equal to the present value of an annual payment stream of $25,000 (i.e., the director's fee in effect as of December 31, 1996) for a period equal to the number of years of service of the individual as a director before December 31, 1996. The present value is based on a discount rate of 5.54%. There are four active directors eligible to receive a benefit under this program. These directors, and their current benefit values are:

(5)

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.

(6)

Ms. Austin received additional annual compensation of $25,000 as a result of her role as Chairperson of the Audit Committee.

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(7)

Mr. Johnson received additional annual compensation of $25,000 as a result of his role as Vice Chairman of the Executive Committee and Chairman of the Compensation Committee.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        The SEC rules require disclosure of those directors, officers and beneficial owners of more than 10% of our common stock who fail to file on a timely basis 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 31, 2009, all Section 16(a) filing requirements were met.

ITEM TWO—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        Proxies solicited by the Board of Directors will, unless otherwise directed, be voted to ratify the appointment by the Audit Committee of Ernst & Young LLP as the independent registered public accounting firm for Target and its subsidiaries for the fiscal year ending January 30, 2010. We have retained Ernst & Young LLP in this capacity since 1931.

        A representative from Ernst & Young LLP will be at the Annual Meeting and will have the opportunity to make a statement if such representative so desires and will be available to respond to questions during the meeting.

Audit and Non-audit Fees

        The following table presents fees for professional services performed by Ernst & Young LLP for the annual audit of our consolidated financial statements for fiscal 2008 and 2007, the review of our interim consolidated financial statements for each quarter in fiscal 2008 and 2007 and for audit-related, tax and all other services performed in fiscal 2008 and 2007:

---

(a)

Includes annual audit of consolidated financial statements, accounting consultation, Sarbanes-Oxley Section 404 attestation services, comfort letters, consents for securities offerings and other agreed upon procedures.

(b)

Includes benefit plan audits and review of accounting treatment of contemplated transactions.

(c)

Includes Form 5500 preparation, tax compliance services and tax consultation and advisory services.

        The Audit Committee's current practice requires pre-approval of all audit services and permissible non-audit services to be provided by the independent registered public accounting firm. The Audit Committee reviews each non-audit service to be provided and assesses the impact of the service on the firm's independence. In addition, the Audit Committee has delegated authority to grant certain pre-approvals to the Audit Committee Chair. Pre-approvals granted by the Audit Committee Chair are reported to the full Audit Committee at its next regularly scheduled meeting.

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        The Audit Committee pre-approved all of the audit and non-audit services performed by Ernst & Young LLP during fiscal 2008 and 2007.

        THE AUDIT 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 Committee

        The role of the Audit Committee is to assist the Board of Directors in fulfilling its responsibility to oversee Target's financial reporting process. Management has primary responsibility for our consolidated financial statements and reporting process, including our systems of internal controls. Target's independent registered public accounting firm is responsible for expressing an opinion on the conformity of our consolidated financial statements with accounting principles generally accepted in the United States. In addition, the independent registered public accounting firm will express its opinion on the effectiveness of our internal control over financial reporting.

        A copy of the Audit Committee Position Description, which has been adopted by our Board of Directors and further describes the role of the Audit Committee in overseeing our financial reporting process, is available online at www.target.com (click on "Investors," "Corporate Governance" and "Board Committees").

        In performing its functions, the Audit 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 Statement on Auditing Standards No. 61 (Communications with Audit Committees), as modified and supplemented; 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 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 Committee referred to above and in the Audit Committee Position Description, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2009, for filing with the SEC.

AUDIT COMMITTEE

Roxanne S. Austin, Chair
Richard M. Kovacevich
Anne M. Mulcahy
George W. Tamke

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ITEM THREE—APPROVAL OF THE PERFORMANCE MEASURES AVAILABLE UNDER THE TARGET CORPORATION LONG-TERM INCENTIVE PLAN

        Section 162(m) of the Internal Revenue Code of 1986, as amended (Code), limits the amount of compensation expense that we can deduct for income tax purposes. In general, a public corporation cannot deduct compensation in excess of $1 million paid to any of the named executive officers in the proxy statement other than the Chief Financial Officer. However, compensation that qualifies as "performance-based" is not subject to this deduction limitation.

        The Target Corporation Long-Term Incentive Plan (Plan) allows the grant of performance awards that qualify as performance-based compensation under Section 162(m). One of the conditions to qualify as performance-based is that the material terms of the performance goals, and any amendments to those terms, must be approved by the shareholders at least every five years. The last such shareholder approval was when the Plan itself was approved in 2004. In March 2009, the Board of Directors approved an amendment to the list of the performance measures that are available under the Plan, subject to further approval by shareholders. Accordingly, to preserve the tax status of certain awards as performance-based, and thereby to allow us to continue to fully deduct the compensation expense related to these awards, we are asking shareholders to approve these amendments. Importantly, we are NOT seeking any increase to the number of shares authorized under the Plan.

        If this proposal is not adopted, the Compensation Committee of our Board of Directors (Committee) intends to continue to grant awards under the Plan, but certain awards to executive officers would no longer be fully tax deductible by us.

        In the following sections we have set forth:

•

A brief summary of the principal features of the Plan;



•

A description of the available performance measures that we are asking shareholders to approve; and



•

Certain other required information.

Principal Features of the Plan

Shares Subject to Plan

        The maximum number of shares of Target common stock that may be issued for grants under the Plan is the sum of:

•

81,000,000 shares;



•

Shares that were issuable under awards made under the previous shareholder-approved plans (the Executive Long-Term Incentive Plan of 1981 and the Director Stock Option Plan of 1995) that were outstanding as of May 19, 2004 and are subsequently cancelled, settled for cash or expire without issuance of shares;



•

Shares tendered by participants to pay the exercise price or tax withholding obligations on awards granted under the Plan; and



•

Shares acquired by the Corporation on the open market using the cash proceeds received from the exercise of stock options.

        The maximum number is subject to adjustment for stock splits, stock dividends, spin offs, reclassifications or other relevant changes affecting Target common stock.

        In determining the number of shares that remain available for grant, each stock option or stock appreciation right granted under the Plan will reduce the number of shares available for grant by one share

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for every one share granted, and except as provided below, each award other than a stock option or stock appreciation right will reduce the number of shares available for grant by two shares for every one share granted. If two awards are granted in tandem, so that only awards of one type can be exercised, only the award that would result in the higher reduction of the number of shares available will be counted. Dividend Equivalents that are payable in the form of shares will reduce the number of shares available by twice the number of shares into which their accumulated value could be converted at then current fair market value of the Corporation's Common Stock. Awards that are never payable in the form of common stock do not reduce the number of shares available for grant. If any award under the Plan is forfeited, cancelled, expires, is settled for cash or otherwise does not result in the issuance of shares, the shares associated with the award will be available for future grants.

Eligible Participants

        Under the Plan all employees and officers, non-employee directors, advisors and consultants are eligible to participate. We currently have over 350,000 employees and 11 non-employee directors. The selection of participants and the nature and size of awards under the Plan are within the discretion of the Committee. Consequently, we cannot specifically identify those employees, directors or other participants to whom awards may be granted since no such determination has been made.

Performance Awards

        The Committee may grant performance awards under which payment is made if our performance meets certain performance goals established by the Committee for a specified performance period. The specific business criteria upon which performance goals may be based are described in the "Items for Shareholder Approval" section below. The Committee establishes the performance goals on or before the date of grant of the award and within a reasonable period of time after the beginning of the performance period. The Committee also establishes the performance period (not less than one calendar year or fiscal year) and the amount payable at various performance levels.

        Awards may be payable either in shares of Target common stock (Stock Performance Awards) or in dollar amounts (Dollar Performance Awards). In order to receive payment, a participant must generally remain employed by the company to the end of the performance period. The Committee may impose additional conditions on a participant's entitlement to receive payment under a performance award.

        At any time prior to payment, the Committee can adjust awards for the effect of unforeseen events that have a substantial effect on the performance goals and would otherwise make application of the performance goals unfair. However, the Committee may not increase the amount that would otherwise be payable to individuals who are subject to Section 162(m) of the Code.

Stock Options and Stock Appreciation Rights

        The Committee may grant nonqualified options or incentive stock options. The Committee establishes the option price, which may not be less than the fair market value of the stock on the date of grant. Options may not be repriced. The Committee also establishes the vesting date and the term of the option. The term may not be longer than 10 years, except in the event of death of the option holder.

        The Committee may also grant stock appreciation rights (SARs), which represent the right to receive an amount based on appreciation in the fair market value of shares of Target common stock over a base price. If granted without a related stock option, the base price of the SARs may not be less than the fair market value of the stock on the date of grant, and the term of the SARs may not be more than 10 years after the grant date, except in the event of death of the SARs holder.

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Restricted Stock Grants or Restricted Stock Units

        The Committee may grant restricted stock, which will set forth a restriction period during which the shares may not be transferred. If the participant's employment terminates during the restriction period, the grant terminates and the shares are returned to the company. However, the Committee can provide complete or partial exceptions to that requirement as it deems appropriate. If the grantee remains employed beyond the end of the restriction period, the restrictions lapse and the shares become freely transferable.

        The Committee may also grant restricted stock unit awards subject to vesting and transfer restrictions determined by the Committee. The value of each restricted stock unit equals the fair market value of Target common stock and may include the right to receive the equivalent of dividends on the shares granted. Payment is made in the form of Target common stock once the vesting conditions are satisfied.

Maximum Awards to any One Participant

        The Plan provides the following limitations on awards that can be granted to any individual participant over any period of thirty-six consecutive months:

•

The maximum number of shares that may be issued to a participant under Stock Performance Awards, restricted stock and restricted stock units, considered together, is 700,000 shares.



•

The maximum amount of Dollar Performance Awards that may be paid to a participant is $15 million.



•

The maximum number of stock options and SARs, considered together, that may be granted to a participant is 4,000,000 shares.

Authority of Committee

        The Plan is administered and interpreted by the Committee, each member of which must be a "non-employee" director within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 and an "outside director" within the meaning of Section 162(m) of the Code. The Committee selects persons to receive grants from among the eligible participants, determines the type of grants and number of shares to be awarded, and sets the terms and conditions of the grants. The Committee may establish rules for administration of the Plan and may delegate its authority to others, subject to limitations imposed by SEC, IRS rules and New York Stock Exchange rules and state law.

Item for Shareholder Approval

        The Plan that was approved by shareholders in 2004 listed 21 separate business criteria on which performance goals can be based. After consideration of our current business model and competitive environment, the Plan was amended, subject to further approval by shareholders, to provide for the use of one or more of the following business criteria for measuring performance against goals established by the Committee:

•

Net sales

•

Comparable store sales

•

Total revenue

•

Gross Margin rate

•

Selling, general and administrative expense rate

•

Earnings before interest, taxes, depreciation and amortization

•

Earnings before interest and taxes

•

Earnings before taxes

•

Net earnings

•

Earnings per share

•

Target Corporation share price

•

Total shareholder return

•

Return on equity

•

Return on sales

•

Return on assets

•

Return on invested capital

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•

Cash flow return on investment

•

Economic value added

•

Credit card segment profitability

•

Credit card segment pre-tax return on invested capital

•

Credit card spread to LIBOR

•

Operating cash flow

•

Free cash flow

•

Working capital

•

Interest coverage

•

Net debt to earnings before interest, taxes, depreciation, amortization and rent expense ratio

•

Debt leverage

•

Total net debt

        The specific performance goals using the business criteria listed above will be determined by the Committee, and may be absolute in their terms or measured against or in relationship to the performance of other companies or indices. In addition, the performance goals may be based on our consolidated results or the results of any segment or other subset of our business, and may be calculated in accordance with generally accepted accounting principles or any other management accounting method, as determined by the Committee.

Other Information

        The Plan remains effective until May 19, 2014, unless earlier terminated by the Board. The Board may amend the Plan as it deems advisable, except that shareholder approval is required for any amendment that would (i) increase the number of shares authorized for issuance, or (ii) require shareholder approval by law or the rules of the New York Stock Exchange.

        The future amounts that will be received by grantees under the Plan are not determinable. In fiscal 2008, the named executive officers received grants of stock options, and restricted stock units as set forth on page 31 in the Grants of Plan-Based Awards Table, and payouts of Stock Performance Awards as set forth on page 35 in the Option Exercises and Stock Vested Table. In fiscal 2008, the executive officers as a group received stock option grants for 1,473,831 shares and all other employees (approximately 2,900 employees) received option grants for 8,251,170 shares. In fiscal 2008, the executive officers as a group received grants of restricted stock units totaling 257,401 shares and received payouts for Stock Performance Awards totaling 13,224 shares. All other employees received restricted stock units and payouts of Stock Performance Awards totaling 8,781 shares.

        THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE PERFORMANCE MEASURES AVAILABLE UNDER THE LONG-TERM INCENTIVE PLAN.

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Securities Authorized for Issuance Under Equity Compensation Plans

        The following table presents information as of January 31, 2009, regarding our compensation plans under which shares of Target common stock have been authorized for issuance.

---

(1)

This amount includes 2,570,914 PSUs and RSUs potentially issuable under our Long-Term Incentive Plan. According to the existing plan provisions, approximately 0.42 percent of these potentially issuable performance shares, if and when earned, will be paid in cash in an amount equal to the value of any earned performance shares. The actual number of performance shares to be issued or cash to be paid, if any, depends on our financial performance over a period of time. Performance shares and RSU shares do not have an exercise price and thus they have been excluded from the weighted average exercise price calculation in column (b).

ITEM FOUR—SHAREHOLDER PROPOSAL REGARDING ANNUAL ADVISORY VOTE ON EXECUTIVE COMPENSATION

        Allen Edward Hancock, trustee of Allen Edward Hancock Revocable Living Trust, 2244 Alder Street, Eugene, Oregon 97405, who held 97 shares of common stock on December 8, 2008, intends to submit the following resolution to shareholders for approval at the 2009 annual meeting:

Resolution

        RESOLVED, that the shareholders of Target Corporation request the board of directors to adopt a policy that provides shareholders the opportunity at each annual shareholder meeting to vote on an advisory resolution, proposed by management, to ratify the compensation of the named executive officers ("NEOs") set forth in the proxy statement's Summary Compensation Table (the "SCT") and the accompanying narrative disclosure of material factors provided to understand the SCT (but not the Compensation Discussion and Analysis). The proposal submitted to shareholders should make clear that the vote is non-binding and would not affect any compensation paid or awarded to any NEO.

Supporting Statement

        Investors are increasingly concerned about mushrooming executive compensation, especially when insufficiently linked to performance. While shareholders were experiencing negative total shareholder return for 2007, then-CEO Robert Ulrich received more than $12 million in reported total compensation, which is over 850 times the average pay of production workers in the 'general merchandise stores' industry. In 2008, shareholders filed close to 100 "Say on Pay" resolutions. Votes on these resolutions have averaged over 43% in favor, with ten votes over 50%, demonstrating strong shareholder support for this reform.

        An Advisory Vote establishes an annual referendum process for shareholders about senior executive compensation. We believe the results of this vote, combined with dialogue with investors, would provide

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the board and management useful information about shareholder views on the company's senior executive compensation.

        In its 2008 proxy, Aflac submitted an advisory vote resulting in a 93% vote in favor, indicating strong investor support for good disclosure and a reasonable compensation package. Daniel Amos, Chairman and CEO said, "An advisory vote on our compensation report is a helpful avenue for our shareholders to provide feedback on our pay-for-performance compensation philosophy and pay package."

        To date, ten other companies have also agreed to an advisory vote, including Verizon, MBIA, H&R Block, Ingersoll Rand, Blockbuster, and Tech Data. TIAA-CREF, the country's largest pension fund, has successfully utilized the advisory vote twice.

        Influential proxy voting service RiskMetrics Group recommends votes in favor, noting: "RiskMetrics encourages companies to allow shareholders to express their opinions of executive compensation practices by establishing an annual referendum process. An advisory vote on executive compensation is another step forward in enhancing board accountability."

        The Council of Institutional Investors endorsed advisory votes, and a bill to allow annual advisory votes passed the U.S. House of Representatives by a 2-to-1 margin. We believe the statesmanlike approach for company leaders is to adopt an advisory vote voluntarily before being required to do so by law.

        We believe that existing U.S. Securities and Exchange Commission rules and stock exchange listing standards do not provide shareholders with sufficient mechanisms for providing input to boards on senior executive compensation. In contrast, in the United Kingdom, public companies allow shareholders to cast a vote on the "directors' remuneration report," which discloses executive compensation. Such a vote is not binding, but gives shareholders a clear voice that could help shape senior executive compensation.

Position of the Board of Directors

        The Board has considered this proposal and believes that its adoption is unnecessary and would not be in the best interests of Target or our shareholders. We believe that we already have in place strong corporate governance and executive compensation practices structured to align the interests of our executive officers with those of our shareholders and that other more meaningful avenues exist for shareholders to communicate with the Board on executive compensation issues.

        The Board believes its fully independent Compensation Committee is in the best position to carefully balance the competing interests and make the complex decisions involved in executive compensation policies. The Compensation Committee has responsibility for reviewing all aspects of executive officer compensation and making recommendations with respect to CEO compensation to the independent members of the Board, which has final approval authority. The Compensation Committee spends considerable time reviewing our compensation philosophy and specific compensation awards and is advised by an independent professional compensation consultant. The Board has a track record of being responsive to shareholder concerns and proactively designing compensation programs that embrace a strong pay-for-performance approach by linking most of long-term compensation to stock price performance and financial performance measures that correlate with the creation of shareholder value.

        The Directors are in a unique position to review and design executive compensation programs. The Compensation Committee considers both public and confidential information including sensitive information about Target's strategies and operations and the performance of its executive officers. Because such confidential information is not available to shareholders, and cannot be disclosed to shareholders without also providing this confidential information to our competitors, any vote by shareholders would be based upon incomplete information.

        While shareholders may not have access to the same detailed sensitive information available to the Board, we are committed to providing shareholders sufficient information regarding our executive

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compensation programs to provide transparency to a complicated process. Shareholders can find comprehensive disclosures regarding our executive compensation programs in the "Compensation Discussion and Analysis" on page 17 of this proxy statement. This detailed disclosure provides sufficient information to allow shareholders to understand our executive compensation philosophy and how the Board has satisfied its duties.

        The proposed advisory vote will not improve communications with shareholders and does not assist directors in carrying out their duties. An advisory vote does not provide the Board with useful feedback regarding shareholders' specific concerns and wishes. A simple "yes or no" vote provides no guidance to the Board regarding what component of the executive compensation strategy shareholders are satisfied or dissatisfied with nor does it provide shareholders an opportunity to advise the Board as to what they would like done to remedy any concerns.

        A better approach is for the shareholders to directly communicate their specific concerns and suggestions regarding our executive compensation programs with the Board. As discussed under "Communications with Directors" on page 13 of this proxy statement, shareholders can write any member of the Board and express their views. Unlike an advisory vote which fails to convey to the Board the specific reasons behind the shareholders' vote, direct communication with the Board allows a shareholder to specifically describe their concerns to the Board in a meaningful manner.

        THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THE SHAREHOLDER PROPOSAL TO REQUIRE AN ANNUAL ADVISORY VOTE ON EXECUTIVE COMPENSATION.

ADDITIONAL INFORMATION

Business Ethics and Conduct

        We are committed to conducting business lawfully and ethically. All of our directors and employees, including our Chief Executive Officer and senior financial officers, are required to act at all times with honesty and integrity. Our Business Conduct Guide covers areas of professional conduct, including conflicts of interest, the protection of corporate opportunities and assets, employment policies, confidentiality, vendor standards and intellectual property, and requires strict adherence to all laws and regulations applicable to our business. Our Business Conduct Guide also describes the means by which any employee can provide an anonymous report of an actual or apparent violation of our Business Conduct Guide.

        We intend to disclose any future amendments to, or waivers from, any provision of our Business Conduct Guide involving our directors, our principal executive officer, principal financial officer, principal accounting officer, controller or other persons performing similar functions on our web site within four business days following the date of any such amendment or waiver.

Vendor Standards and Compliance

        To ensure that the products we carry in our stores are made legally and ethically, we require our vendors to abide by certain standards. Copies of those standards and a report relating to vendor compliance with those standards are included within our Corporate Responsibility Report.

Commitment to Diversity

        We believe that attracting and retaining an employee population reflecting the diversity of our guests and communities we serve is an important goal and will provide a competitive advantage. We are an equal opportunity employer, and we communicate to our employees information regarding equal employment opportunities. We also encourage the use of minority and women-owned contractors and service providers,

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and we support the efforts of our employees, suppliers and vendors to adhere to these principles of corporate responsibility.

        We provide detailed statistical information on equal employment opportunity to the federal government as required by law. Information regarding our diversity programs and diverse employee population is included within our Corporate Responsibility Report.

        For the benefit of hearing impaired persons, a sign language interpreter will be present at our 2009 Annual Meeting.

SHAREHOLDER INFORMATION

Shareholder Proposals

        Shareholder proposals (other than director nominations) for consideration at our 2010 Annual Meeting must follow the procedures set forth in Rule 14a-8 under the Securities Exchange Act of 1934 and our By-Laws. To be timely under Rule 14a-8, they must be received by our Corporate Secretary at Target Corporation, 1000 Nicollet Mall, Mail Stop TPS 3255, Minneapolis, Minnesota 55403 by December     , 2009 in order to be included in the proxy statement. Under Target's By-Laws, as amended, if a shareholder plans to propose an item of business to be considered at any annual meeting of shareholders (other than director nominations), that shareholder is required to give notice of such proposal to our Corporate Secretary at least 90 days prior to the anniversary of the most recent annual meeting, or by February 27, 2010 for our 2010 Annual Meeting, and to comply with certain other requirements. The proposals also must comply with all applicable statutes and regulations.

        Under Target's restated articles of incorporation, as amended, if a shareholder plans to nominate a person as a director at a meeting, the shareholder is required to place a proposed director's name in nomination by written request received by our Corporate Secretary at least 60 days prior to an annual or special meeting, together with the written consent of such person to serve as a director.

Householding Information

        We have adopted a procedure approved by the SEC called "householding." Under this procedure, certain shareholders of record who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of our annual report and proxy statement, unless one or more of these shareholders notifies us that they would like to continue to receive individual copies. This will reduce our printing costs and postage fees. Shareholders who participate in householding will continue to receive separate proxy cards. Also, householding will not in any way affect dividend check mailings.

        If you and other shareholders of record with whom you share an address currently receive multiple copies of our annual report and/or proxy statement, or if you hold stock in more than one account, and in either case, you would like to receive only a single copy of the annual report or proxy statement for your household, please contact our Investor Relations representative by email at investorrelations@target.com, by mail to the address listed on the cover of this proxy statement, Attention: Investor Relations, or by telephone at (612) 761-6736.

        If you participate in householding and would like to receive a separate copy of our 2008 annual report or this proxy statement, please contact us in the manner described in the immediately preceding paragraph. We will deliver the requested documents to you promptly upon receipt of your request.

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