Edgar Filing: TARGET CORP

DEPARTURES

ADDITIONS

Mary N. Dillon – Resigned due to substantial change in principal employment

Kenneth L. Salazar – Identified by independent search firm; brings substantial public policy expertise to the Board

Solomon D. Trujillo – Retired after five years elapsed since retiring from active employment and reaching 20 year term limit

Gregg W. Steinhafel – Resigned in connection with stepping down as President & CEO of Target

TARGET CORPORATION - DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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Exchange Act of 1934 (Amendment No. __)

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TARGET CORPORATION

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		PROXY STATEMENT
		AND NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

		Wednesday, June 11, 2014 at 1:30 p.m. CDT
		Union Station 400 South Houston Street Dallas, Texas 75202

Dear Fellow Shareholder,

As we approach our 2014 Annual Meeting of Shareholders, your Board of Directors is proud to look back at the past five decades, during which Target has built a powerful brand and established a strong record of performance through our commitment to bring irresistible value, inspiration and an exceptional shopping experience to our guests. While we continued to invest in key strategies throughout 2013 that upheld our “Expect More. Pay Less.” brand promise and drove sustained growth, we also faced challenges that tested our resilience:

•	our financial results for the year fell short of our expectations,
•	our unprecedented expansion into Canada presented unexpected challenges that adversely affected performance, and
•	just prior to the most recent holiday season, we experienced a data breach following a criminal attack on our systems that shook our guests’ confidence in Target.

Yet, even with these challenges, our financial discipline and strong capital position provided the capacity to return approximately $2.5 billion to our shareholders in the form of dividends and share repurchases. As we look ahead, we remain confident in our core strategy, committed to faster innovation and better execution, and resolute in continuing to reward our shareholders for many years to come.

As we announced on May 5, 2014, after extensive discussions with the Board, Gregg Steinhafel stepped down as President and Chief Executive Officer and as a member of our Board of Directors. We are extremely grateful to Gregg for his tireless leadership and significant contributions to our company throughout his 35-year career.

We believe this transition offers an opportunity to make Target an even stronger company. The Board has commenced a comprehensive search to select Target’s next CEO. Until a replacement is named, John Mulligan, Target’s Chief Financial Officer, assumes the additional responsibilities of Interim President and Chief Executive Officer. At the same time, I have taken on the role of Interim Chair of your Board. John and I will continue to engage Target’s leadership team and leverage the Board’s expertise to deliver Target’s brand promise to guests, accelerate Target’s transformation, and position the company to generate strong financial performance in 2014 and beyond.

On behalf of the Board of Directors, I invite you to attend Target Corporation’s 2014 Annual Meeting of Shareholders. The accompanying proxy statement and 2013 Annual Report on Form 10-K contain information about:

•	the date, location, and time of the meeting,
•	business matters on which you are encouraged to vote at this year’s meeting,
•	executive compensation disclosures, including a description of the extensive shareholder outreach we conducted following last year’s Say on Pay vote and related changes that strengthen the pay-for-performance link in our compensation programs, as well as an explanation of the impact of the recent leadership change, and
•	our 2013 financial results.

If you are not able to join us for the meeting, it is still important for you to vote your shares. We urge you to read the enclosed materials carefully and vote in accordance with the Board of Directors’ recommendations.

Your Board of Directors remains unanimous and steadfast in the belief that Target will emerge from this transition as an even stronger, better performing company.

We value your feedback and thank you for your continued support of Target.

Roxanne S. Austin

Interim Chair of the Board of Directors

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Notice of 2014 Annual Meeting of Shareholders

Wednesday, June 11, 2014

1:30 p.m. Central Daylight Time

Union Station located at 400 South Houston Street, Dallas, Texas 75202

TO OUR SHAREHOLDERS

You are invited to attend Target Corporation’s 2014 Annual Meeting of Shareholders to be held at Union Station located at 400 South Houston Street, Dallas, Texas 75202 on Wednesday, June 11, 2014 at 1:30 p.m. Central Daylight Time.

PURPOSE

Shareholders will vote on the following items of business:

	1.	Election of all 10 directors named in our proxy statement to our Board of Directors for the coming year;
	2.	Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm;
	3.	Approval, on an advisory basis, of our executive compensation;
	4.	The shareholder proposals contained in this proxy statement, if properly presented at the meeting; and
	5.	Transaction of any other business properly brought before the meeting or any adjournment.

	You may vote if you were a shareholder of record at the close of business on April 14, 2014. We hope you will be able to attend the Annual Meeting, but if you cannot do so, it is important that your shares be represented. If you plan to attend the meeting, please follow the instructions provided in Question 12 “How can I attend the Annual Meeting?” on page 73 of the proxy statement. Following the formal business of the meeting, our Interim President and CEO will provide prepared remarks, followed by a question and answer session. We urge you to read the proxy statement carefully, and to vote in accordance with the Board of Directors’ recommendations by telephone or Internet, or by signing, dating, and returning the enclosed proxy card in the postage-paid envelope provided, whether or not you plan to attend the Annual Meeting. Thank you for your continued support. Sincerely,



	Timothy R. Baer
	Corporate Secretary

Approximate Date of Mailing of Proxy Materials

May 20, 2014

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Table of Contents

PROXY SUMMARY	8

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS	9

GENERAL INFORMATION ABOUT CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS	10

Corporate Governance Highlights	10
Our Directors	11
Board Leadership Structure	11
Management Succession Planning	11
Risk Oversight	12
Committees	12
Board and Shareholder Meeting Attendance	13
Director Independence	13
Policy on Transactions with Related Persons	13
Business Ethics and Conduct	14
Communications with Directors	14

ITEM ONE ELECTION OF DIRECTORS	15

Election Process	15
Board Composition	15
Board Renewal and Nomination Process	15
2014 Nominees for Director	16
Director Compensation	22

STOCK OWNERSHIP INFORMATION	25

Stock Ownership Guidelines	25
Beneficial Ownership of Directors and Officers	27
Beneficial Ownership of Target’s Largest Shareholders	28
Section 16(a) Beneficial Ownership Reporting Compliance	28

COMPENSATION COMMITTEE REPORT	29

COMPENSATION DISCUSSION AND ANALYSIS	29

Introduction	29
Executive Summary	30
Our Performance Framework for Executive Compensation	36
Other Benefit Elements	43
Compensation Governance	44

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EXECUTIVE COMPENSATION TABLES	47

Summary Compensation Table	47
Grants of Plan-Based Awards in Fiscal 2013	50
Outstanding Equity Awards at 2013 Fiscal Year-End	51
Option Exercises and Stock Vested in Fiscal 2013	53
Pension Benefits for Fiscal 2013	53
Nonqualified Deferred Compensation for Fiscal 2013	55
Potential Payments Upon Termination or Change-in-Control	57
Equity Compensation Plan Information	61

OTHER VOTING ITEMS	62

Item Two	Ratification of Appointment of Ernst & Young LLP as Independent Registered Public Accounting Firm	62
Item Three	Advisory Approval of Executive Compensation (“Say on Pay”)	64
Item Four	Shareholder Proposal to Eliminate Perquisites	66
Item Five	Shareholder Proposal to Adopt a Policy for an Independent Chairman	67
Item Six	Shareholder Proposal to Adopt a Policy Prohibiting Discrimination “Against” or “For” Persons	68

QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING AND VOTING		70

APPENDIX A RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES		76

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PROXY STATEMENT
Annual Meeting of Shareholders June 11, 2014

The Board of Directors of Target Corporation solicits the enclosed proxy for the 2014 Annual Meeting of Shareholders, and for any adjournment thereof.

PROXY SUMMARY

This summary highlights information described in other parts of this proxy statement, and does not contain all of the information you should consider in voting. Please read the entire proxy statement carefully before voting.

TARGET 2014 ANNUAL MEETING OF SHAREHOLDERS


	June 11, 2014	Union Station
	1:30 p.m. Central Daylight Time	400 South Houston Street
		Dallas, Texas 75202

ITEMS OF BUSINESS


			BOARD’S
	ITEM		RECOMMENDATION
	Election of 10 Directors (page 15)		FOR each Director Nominee
	Ratification of Independent Registered Public Accounting Firm (page 62)		FOR
	Advisory Approval of Executive Compensation (page 64)		FOR
	Shareholder Proposals, if Properly Presented (pages 66-69)		AGAINST

QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING AND VOTING

We encourage you to review the “Questions and Answers About Our Annual Meeting and Voting” beginning on page 70 for answers to common questions on the rules and procedures surrounding the proxy and annual meeting process, as well as the business to be conducted at our Annual Meeting.

ADMISSION AT THE MEETING

If you plan to attend the Annual Meeting in person, please see the information in Question 12 “How can I attend the Annual Meeting?” on page 73. We strongly encourage you to pre-register. If you plan to bring a guest you must pre-register by June 6, 2014. Any attendee who does not present identification and establish proof of ownership will not be admitted to the Annual Meeting.

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VOTING

If you held shares of Target common stock as of the record date (April 14, 2014) you are entitled to vote at the Annual Meeting.

Your vote is important. Thank you for voting.

ADVANCE VOTING METHODS AND DEADLINES

METHOD	INSTRUCTION	DEADLINE

Internet	• Go to website identified on proxy card • Enter Control Number on proxy card • Follow instructions on the screen	Internet and telephone voting are available 24 hours a day, seven days a week up to these deadlines: • Registered Shareholders or Beneficial Owners –11:59 p.m. Eastern Daylight Time on June 10, 2014 • Participants in the Target 401(k) Plan – 6:00 a.m. Eastern Daylight Time on June 9, 2014
Telephone	• Call the toll-free number identified on proxy card • Enter Control Number on proxy card • Follow the recorded instructions

Mail	• Mark your selections on the enclosed proxy card • Date and sign your name exactly as it appears on proxy card • Promptly mail the proxy card in the enclosed postage-paid envelope	Return promptly to ensure it is received before the date of the Annual Meeting or, for participants in the Target 401(k) Plan, by 6:00 a.m. Eastern Daylight Time on June 9, 2014

Any proxy may be revoked at any time prior to its exercise at the Annual Meeting. Please see the information in Question 3 “What is a proxy and what is a proxy statement?” on page 70.

VOTING AT THE MEETING

All registered shareholders may vote in person at the Annual Meeting. Beneficial owners may vote in person at the Annual Meeting if they have a legal proxy. Please see the information in Question 6 “How do I vote?” on page 70. In either case, shareholders wishing to attend the meeting must follow the procedures under “Admission at the Meeting.”

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS

Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to be held on June 11, 2014.

The proxy statement and annual report are available at www.proxyvote.com.

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GENERAL INFORMATION ABOUT CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS

CORPORATE GOVERNANCE HIGHLIGHTS

At Target, we have actively supported strong corporate governance practices for decades. Many of the principles that provide the foundation for the practices and policies that guide us today were initiated by the Dayton brothers during their tenure as our leaders. Our Board of Directors recognizes that our corporate governance practices must continually evolve to appropriately balance the interests of the Board, shareholders and management in order to effectively serve our guests, team members, shareholders and the communities in which we do business. Supporting that philosophy, we have adopted many leading corporate governance practices, including:


		MORE
PRACTICE	DESCRIPTION	INFORMATION
BOARD COMPOSITION AND ACCOUNTABILITY
Independence	A majority of our directors must be independent. Currently, all of our directors are independent, and all of our committees consist exclusively of independent directors.
Diversity of Relevant Experiences	The composition of our Board represents broad perspectives, experiences, and knowledge relevant to our business while maintaining a balanced approach to gender and ethnic diversity.
Lead Independent Director	Our Corporate Governance Guidelines require a Lead Independent Director position with specific responsibilities to ensure independent oversight of management whenever our CEO is also the Chair of the Board.
Annual Management Succession Planning Review	Our Board conducts an annual review of management development and succession planning.
Director Tenure Policies	Our director tenure policies include mandatory retirement at age 72, a maximum term limit of 20 years and a separate five-year term limit for directors who retire from active employment in order to ensure the Board regularly benefits from new, fresh perspectives. In addition, a director is required to submit an offer of resignation for consideration by the Board upon any change in the director’s principal employment.
Director Overboarding Policy	Our director overboarding policy requires a director to submit an offer of resignation for consideration by the Board if the director becomes overboarded. Any director who is not serving as CEO of a public company is expected to serve on no more than five public company boards (including our Board), and any director serving as a CEO of a public company is expected to serve on no more than two outside public company boards (including our Board).
SHAREHOLDER RIGHTS
Annual Election of Directors	All directors are elected annually, which reinforces our Board’s accountability to shareholders.
Majority Voting Standard for Director Elections	Our Articles of Incorporation mandate that directors be elected under a “majority voting” standard in uncontested elections—each director must receive more votes “For” his or her election than votes “Against” in order to be elected.
Director Resignation Policy	An incumbent director who is not re-elected must promptly offer to resign. The Nominating & Governance Committee will make a recommendation on the offer and the Board must accept or reject the offer within 90 days and publicly disclose its decision and rationale.
Single Voting Class	Target common stock is the only class of voting shares outstanding.
10% Threshold for Special Meetings	Shareholders holding 10% or more of Target’s outstanding stock have the right to call a special meeting of shareholders.
No Poison Pill	We do not have a poison pill.
COMPENSATION
Follow Leading Practices	See “Target’s Executive Compensation Practices.”

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OUR DIRECTORS

NAME

AGE

DIRECTOR SINCE

COMPANY

TITLE

INDEPENDENT

OTHER CURRENT
PUBLIC COMPANY
BOARDS

Roxanne S. Austin

2002

Austin Investment Advisers

President

Yes

Douglas M. Baker, Jr.

2013

Ecolab Inc.

Chairman & CEO

Yes

Calvin Darden

2003

Darden Development Group, LLC

Chairman

Yes

Henrique De Castro

2013

Yahoo! Inc. (Until January 2014)

Former COO

Yes

James A. Johnson

1996

Johnson Capital Partners

Founder

Yes

Mary E. Minnick

2005

Lion Capital

Partner

Yes

Anne M. Mulcahy

1997

Save The Children Federation, Inc.

Chairman of the Board of Trustees

Yes

Derica W. Rice

2007

Eli Lilly and Company

EVP, Global Services and CFO

Yes

Kenneth L. Salazar

2013

WilmerHale

Partner

Yes

John G. Stumpf

2010

Wells Fargo & Company

Chairman, President & CEO

Yes

BOARD LEADERSHIP STRUCTURE

We do not have an express policy as to whether the roles of Chair of the Board and Chief Executive Officer should be combined or separated. Instead, the Board prefers to maintain the flexibility to determine which leadership structure best serves the interests of Target based on the circumstances. However, if the Chair/CEO roles are combined, our Corporate Governance Guidelines require that we have a Lead Independent Director position to complement the Chair’s role, and to serve as the principal liaison between the non-management directors and the Chair.

The Board believes that there are many strong governance practices in place at Target that balance any risk of concentration of authority that may exist with a combined Chair/CEO position, including the requirement to have an Independent Lead Director in those situations.

As recently announced, Roxanne S. Austin, one of our independent directors, was elected to the role of Interim Chair of the Board by the independent directors in connection with the departure of our former Chairman of the Board, President and CEO. As Interim Chair of the Board, Ms. Austin has primary responsibility for leading the Board. However, because Ms. Austin is currently serving as Interim Chair, and no decision has been made to make the role of independent Chair permanent, the Board determined that James A. Johnson should remain in the role of Lead Independent Director to provide continuity during this period of transition and to work closely with Ms. Austin in leading the Board.


	LEAD INDEPENDENT DIRECTOR
	Annual Election: Elected annually by the independent, non-management directors.
	Regular Duties:
	•	Has the authority to convene meetings of the Board and executive sessions consisting solely of independent directors at every meeting;
	•	Presides at all meetings of the Board of Directors at which the Chair of the Board is not present, including executive sessions of independent directors;
	•	Conducts the annual performance reviews of the CEO, with input from the other independent directors, and serves as the primary liaison between the CEO and the independent directors;
	•	Approves meeting schedules, agendas and the information furnished to the Board to ensure that the Board has adequate time and information for discussion; and
	•	Engages in consultation and direct communication with major shareholders as appropriate.

MANAGEMENT SUCCESSION PLANNING

One of the primary responsibilities of the Board is to ensure that Target has a high-performing management team in place. On an annual basis, the Board conducts a detailed review of management development and succession planning activities to maximize the pool of internal candidates who can assume top management positions without undue interruption.

In connection with the recent departure of our former President & CEO, the Board appointed an experienced executive from that pool of internal candidates, John J. Mulligan, our Chief Financial Officer, to serve in the additional capacities of Interim President & CEO while the Board conducts a comprehensive CEO search for a permanent replacement.

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RISK OVERSIGHT

The primary responsibility for the identification, assessment and management of the various risks that we face belongs with management. The Board’s oversight of these risks occurs as an integral and continuous part of the Board’s oversight of our business. For example, our principal strategic risks are reviewed as part of the Board’s regular discussion and consideration of our strategy, and the alignment of specific initiatives with this strategy. Similarly, at every meeting the Board reviews the principal factors influencing our operating results, including the competitive environment, and discusses with our senior executive officers the major events, activities and challenges affecting their respective functional areas. The Board’s ongoing oversight of risk also occurs at the Board Committee level on a more focused basis, as described in the description of each Committee’s responsibilities, as applicable.

COMMITTEES

The Board has the following Committees and Committee composition as of the date of this proxy statement. All members of each Committee are independent directors.


		COMMITTEE	NUMBER OF MEETINGS
	RESPONSIBILITIES	MEMBERS	DURING FISCAL 2013
AUDIT COMMITTEE⁽¹⁾	• Assists the Board with the oversight of our financial reporting process and our compliance programs • Oversees the integrity of our financial statements and internal controls, the independent auditor’s qualifications and independence and performance of our internal audit function • Oversees compliance with legal and regulatory requirements, our business ethics program and review and approval of transactions with related persons • Performs duties and activities described in the Report of the Audit Committee on page 63 • Supplements the Board’s ongoing oversight of risk, through periodic review of our risk assessment process, which facilitates identification and consideration of our risk exposures in the context of our overall strategic objectives	Ms. Austin (Chair) Ms. Minnick Ms. Mulcahy Mr. Rice	7

COMPENSATION COMMITTEE⁽²⁾	• Determines the composition and value of non-CEO executive officer compensation and makes recommendations with respect to CEO compensation to the independent members of the Board, who collectively have final approval authority • Reviews our compensation philosophy, selection and relative weightings of different compensation elements to balance risk, reward and retention objectives, the alignment of incentive compensation performance measures with our strategy, and specific compensation levels for each executive officer • Reviews the compensation provided to non-management directors and makes recommendations to the independent members of the Board • Discusses with its compensation consultant the results of the regular review of whether our compensation policies and practices create material risks to Target (see page 46 of the Compensation Discussion and Analysis for more details about our most recent compensation policies risk assessment)	Mr. Johnson (Chair) Mr. Baker Mr. Darden Mr. Stumpf	5

NOMINATING & GOVERNANCE COMMITTEE	• Oversees our corporate governance practices • Identifies individuals qualified to become Board members • Makes recommendations on overall composition of the Board and its Committees • Leads annual Board self-evaluation process	Ms. Mulcahy (Chair) Mr. Baker Mr. Darden	3

CORPORATE RESPONSIBILITY COMMITTEE	• Reviews and evaluates our public affairs, community relations, corporate social responsibility and reputation management programs • Is primarily responsible for oversight of reputational risk	Mr. Salazar (Chair) Mr. Darden Mr. De Castro Mr. Johnson Ms. Minnick	3

FINANCE COMMITTEE	• Reviews our primary financial policies and strategies, including our liquidity position, funding requirements, ability to access the capital markets, interest rate exposures and policies regarding return of cash to shareholders • Oversees financial risks, including liquidity, market risks, and use of derivatives	Mr. Rice (Chair) Ms. Austin Mr. De Castro Mr. Stumpf	2

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(1)	The Board of Directors has determined that all members of the Audit Committee satisfy the applicable audit committee independence requirements of the New York Stock Exchange (NYSE) and the Securities and Exchange Commission (SEC). The Board also determined that all members have acquired the attributes necessary to qualify them as “audit committee financial experts” as defined by applicable SEC rules. The determination for each of Ms. Austin, Ms. Mulcahy and Mr. Rice was based on past experiences as a principal financial officer, principal accounting officer, controller, public accountant or auditor, or actively supervising a person holding one of those positions. For Ms. Minnick, the determination was based on her experience with analyzing the financial statements and financial performance of portfolio companies of Lion Capital.

(2)	The Board of Directors has determined that all members of the Compensation Committee satisfy the applicable compensation committee independence requirements of the NYSE and the SEC.

BOARD AND SHAREHOLDER MEETING ATTENDANCE

The Board of Directors met five times during fiscal 2013. 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.

Eleven of our twelve then-serving directors attended our June 2013 Annual Meeting of Shareholders. The Board has a policy requiring all directors to attend all Annual Meetings of Shareholders, absent extraordinary circumstances.

DIRECTOR INDEPENDENCE

The Board of Directors believes that a majority of its members should be independent directors. The Board annually reviews all relationships that directors have with Target to affirmatively determine whether the directors are independent. If a director has a material relationship with Target, that director is not independent. The listing standards of the New York Stock Exchange (NYSE) detail certain relationships that, if present, preclude a finding of independence.

The Board affirmatively determined that all non-management directors are independent. The Board specifically considered the following transactions and concluded that none of the transactions impaired any director’s independence. In addition, none of the transactions listed below are related party transactions because none of the directors have a direct or indirect material interest in the listed transactions.


DIRECTOR	ENTITY AND RELATIONSHIP	TRANSACTIONS	% OF ENTITY’S ANNUAL REVENUES IN EACH OF LAST 3 YEARS
Douglas M. Baker, Jr.	Ecolab Inc. Chairman & CEO	We purchase supplies, servicing, repairs and merchandise from Ecolab.	Less than 0.01%
Henrique De Castro	Yahoo! Inc. Former COO	We purchase advertising, search marketing, and other services from Yahoo!	Less than 0.3%
Mary E. Minnick	Each portfolio company of Lion Capital⁽¹⁾ Partner in Lion Capital	We purchase merchandise for resale from portfolio companies of Lion Capital.	Less than 2% of each portfolio company
Anne M. Mulcahy	Save the Children Federation Chairman of Board of Trustees	We make charitable contributions to Save the Children.	Less than 2%
Kenneth L. Salazar	WilmerHale Partner	After fiscal 2013, WilmerHale was engaged to provide legal services, but did not receive any payments in any of the last three fiscal years.⁽²⁾	Not applicable
John G. Stumpf	Wells Fargo & Company Chairman, President & CEO	Wells Fargo provides commercial banking, brokerage, trust and equipment financing services, and serves as a non-lead participant in Target’s syndicated revolving credit facility.⁽³⁾	Less than 0.02%

(1)	Ms. Minnick’s indirect ownership in each of these portfolio companies is less than 5%.

(2)	WilmerHale represented to us that Mr. Salazar will not receive any of the fees from the Target relationship, and that total fees are expected to be less than 2% of the firm’s annual revenues. Mr. Salazar will not personally provide any of the legal services to Target.

(3)	Target does not use Wells Fargo for any investment banking, consulting or advisory services.

POLICY ON TRANSACTIONS WITH RELATED PERSONS

The Board of Directors has adopted a written policy requiring that any transaction: (a) involving Target; (b) in which one of our directors, nominees for director, executive officers, or greater than five percent shareholders, or their immediate family members, have a direct or indirect material interest; and (c) where the amount involved exceeds $120,000 in any fiscal year, be approved or ratified by a majority of independent directors of the full Board or by a designated committee of the Board. The Board has designated the Audit Committee as having responsibility for reviewing and approving all such transactions except those dealing with compensation of executive officers and directors, or their immediate family members, in which case it will be reviewed and approved by the Compensation Committee.

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

We did not have any transactions requiring review and approval in accordance with this policy during fiscal 2013 and through the date of this proxy statement.

BUSINESS ETHICS AND CONDUCT

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

We intend to disclose any future amendments to, or waivers from, any provision of our Business Conduct Guide involving our directors, our principal executive officer, principal financial officer, principal accounting officer, controller or other persons performing similar functions on our website within four business days following the date of any such amendment or waiver. No waivers were sought or granted in fiscal 2013.

COMMUNICATIONS WITH DIRECTORS

Shareholders and other interested parties seeking to communicate with any individual director or group of directors may send correspondence to Target Board of Directors, c/o Corporate Secretary, 1000 Nicollet Mall, TPS-2670, Minneapolis, Minnesota 55403 or may send an email to BoardOfDirectors@target.com, which is managed by the Corporate Secretary. The Corporate Secretary, in turn, has been instructed by the Board to forward all communications, except those that are clearly unrelated to Board or shareholder matters, to the relevant Board members.

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ITEM ONE

ELECTION OF DIRECTORS

ELECTION PROCESS

Our election process is backed by sound corporate governance principles:

	•	All directors are elected annually;

	•	Directors are elected under a “majority voting” standard – each director in an uncontested election must receive more votes “For” his or her election than votes “Against” in order to be elected; and

	•	An incumbent director who is not re-elected must promptly offer to resign. The Nominating & Governance Committee will make a recommendation on the offer and the Board must accept or reject the offer within 90 days and publicly disclose its decision and rationale.

BOARD COMPOSITION

The criteria the Board follows in determining the composition of the Board is simple: directors are to have broad perspective, experience, knowledge and independence of judgment. The Board as a whole should consist predominantly of persons with strong business backgrounds that span multiple industries.

At least annually the Board seeks input from each of its members with respect to the current composition of the Board in light of our current and future business strategies as a means to identify any backgrounds or skill sets that may be helpful in maintaining or improving alignment between Board composition and our business. This input is then used by our Nominating & Governance Committee in its director search process.

The Board does not have a specific policy regarding consideration of gender, ethnic or other diversity criteria in identifying director candidates; however, the Board has had a longstanding commitment to, and practice of, maintaining diverse representation on the Board.

BOARD RENEWAL AND NOMINATION PROCESS

The Nominating & Governance Committee is responsible for identifying individuals qualified to become Board members and making recommendations on director nominees to the full Board. The Committee considers the following two factors in its efforts to identify potential director candidates:

	•	The input from the Board’s self-evaluation process to identify the backgrounds or skill sets that are desired; and

	•	The future needs of the Board in light of anticipated director retirements under our Board tenure policies.

The Board maintains the following tenure policies (contained in our Corporate Governance Guidelines) as a means of ensuring that the Board is regularly renewed with fresh perspectives:


	TENURE POLICIES
	Term Limit		Directors may not serve on the Board for more than 20 years, or five years after they retire from active employment, whichever occurs first
	Mandatory Retirement		Directors must retire at age 72
	Change in Principal Employment		Directors must offer to resign upon any substantial change in principal employment

We had the following changes in our Board since our 2013 Annual Meeting:

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In addition to the changes listed above, the following directors are scheduled to complete their service on our Board within the next five years under our tenure policies:


DIRECTOR	TENURE POLICY IMPLICATED	YEAR
James A. Johnson	Mandatory Retirement	2015
Anne M. Mulcahy	Term Limit	2017

The Nominating & Governance Committee has retained an independent search firm to assist in identifying director candidates, and will also consider recommendations from shareholders. Any shareholder who wishes the Committee to consider a candidate should submit a written request and related information to our Corporate Secretary no later than December 31 of the calendar year preceding the next Annual Meeting of Shareholders.

2014 NOMINEES FOR DIRECTOR

After considering the recommendations of the Nominating & Governance Committee, the Board has set the number of directors at 10 and nominated the persons described below to stand for election. All nominees are incumbent directors. The Board believes that each of these nominees is qualified to serve as a director of Target and the specific qualifications of each nominee that were considered by the Board follow each nominee’s biographical description. Equally as important, the Board believes that the combination of backgrounds, skills and experiences has produced a Board that is well-equipped to exercise oversight responsibilities for Target’s shareholders and other stakeholders.

The following table describes key characteristics of our business and experiences of our Board.


	TARGET’S BUSINESS CHARACTERISTICS		COLLECTIVE EXPERIENCES
	Target’s scale and complexity requires aligning many different areas of our operations, including marketing, merchandising, supply chain, technology, human resources, property development, credit card servicing and our community and charitable activities.		Leadership. Experience as executive officer level business leader or senior government leader.
	Our brand is the cornerstone of our strategy to provide a relevant and affordable differentiated shopping experience for our guests.		Marketing or Brand Management. Marketing or managing well-known brands or the types of consumer products and services we sell.
	We own most of our stores and a network of distribution centers.		Real Estate. Real estate acquisitions and dispositions or property management experience.
	We have a large and global workforce, which represents one of our key resources, as well as one of our largest operating expenses.		Workforce Management. Managing a large or global workforce.
	Our business has become increasingly complex as we have expanded our offerings as well as the channels and geographies in which we deliver our shopping experience. This increased complexity requires increasingly sophisticated technology infrastructure.		Technology. Leadership and understanding of technology, digital platforms and new media, data security, and data analytics.
	Our business has both U.S. and Canada retail operations, and involves sourcing merchandise domestically and internationally from a large number of vendors and distributing it through our network of distribution centers.		Multi-National Operations or Supply Chain Logistics. Executive officer roles at multi-national organizations or in global operations.
	We are a large public company committed to disciplined financial and risk management, legal and regulatory compliance and accurate disclosure.		Finance or Risk Management. Financial stewardship, risk management or credit card servicing.
	To be successful, we must preserve, grow and leverage the value of our reputation with our guests, team members, the communities in which we operate and our shareholders.		Public Affairs or Corporate Governance. Public sector experience, community relations or corporate governance expertise.

In addition, our Board’s composition represents a balanced approach to director tenure, allowing the Board to benefit from the experience of longer-serving directors combined with fresh perspectives from newer directors:


		NUMBER OF
	TENURE ON BOARD	DIRECTOR NOMINEES
	More than 10 years	4
	5 to 10 years	2
	Less than 5 years	4

We have no reason to believe that any of the nominees will be unable or unwilling for good cause to serve if elected. However, if any nominee should become unable for any reason or unwilling for good cause to serve, proxies may be voted for another person nominated as a substitute by the Board, or the Board may reduce the number of directors.

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(1)

AbbVie Inc. became a public company in January 2013 following its separation from Abbott Laboratories. Ms. Austin was serving on the Board of Abbott Laboratories at the time of the separation and became a director of AbbVie Inc. in connection with the separation.

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DIRECTOR COMPENSATION

General Description of Director Compensation

Our non-employee director compensation program allows directors to choose one of two forms of annual compensation:

•

a combination of cash and restricted stock units (RSUs); or

•

RSUs only.

Effective January 8, 2014, to be consistent with our decision to eliminate stock options as part of executive officer compensation, we ceased granting stock options to our non-employee directors.

Each form under the compensation program is intended to provide $260,000 in value to non-employee directors as follows:


		CASH		RSUs
Combination (Cash and RSUs)	$	90,000	$	170,000
RSUs Only	$	0	$	260,000

The forms of annual compensation have the following terms:

	•	The cash retainer is paid pro-rata in quarterly installments. Directors may defer receipt of all or a portion of any cash retainer into the Director Deferred Compensation Plan. Deferrals earn market returns based on the investment alternatives chosen by them from the funds offered by Target’s 401(k) Plan, including the Target Corporation Common Stock Fund.

	•	RSUs are settled in shares of Target common stock immediately following a director’s departure from the Board. Dividend equivalents are paid on RSUs in the form of additional RSUs. RSUs are granted in January and vest quarterly over a one-year period.

The Lead Independent Director and Committee Chairpersons receive additional compensation for those roles, which is paid (a) in cash if the director elects a combination of cash and RSUs, or (b) in RSUs if the director elects all RSUs. Compensation for Lead Independent Director and Committee Chairpersons is as follows:


ROLE	AMOUNT
Lead Independent Director	$	25,000
Audit Committee Chairperson	$	30,000
Compensation Committee Chairperson	$	20,000
Nominating & Governance Committee Chairperson	$	15,000
Corporate Responsibility Committee Chairperson	$	15,000
Finance Committee Chairperson	$	15,000

New directors also receive a one-time grant of RSUs with a $50,000 grant date fair value upon joining the Board, as well as a pro-rated portion of the annual compensation based on the date they joined the Board using the combination of cash and RSUs and, for new directors who joined before January 8, 2014, options. The size of the option grants are based on the estimated fair value as determined under the Towers Watson Black-Scholes option pricing methodology. Stock options are immediately vested, but are not exercisable until one year after the grant date, and have a ten-year term.

Interim Chair of the Board

On May 5, 2014, Mr. Steinhafel stepped down as President & CEO, and resigned as a Director and Chairman. Roxanne S. Austin, one of our independent directors, was elected by the independent directors to serve as Interim Chair of the Board. In connection with Ms. Austin’s additional duties as Interim Chair, the Board determined to provide her an additional annual cash retainer of $190,000, pro-rated for the time Ms. Austin serves as Interim Chair.

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Director Compensation Table


							CHANGE IN
							PENSION VALUE
							AND NONQUALIFIED
							DEFERRED
	FEES EARNED OR		STOCK		OPTION		COMPENSATION
NAME	PAID IN CASH		AWARDS⁽¹⁾⁽²⁾		AWARDS⁽¹⁾⁽²⁾		EARNINGS⁽³⁾⁽⁴⁾		TOTAL⁽⁵⁾
Roxanne S. Austin⁽⁶⁾	$	120,000	$	170,013	$	0	$	0	$	290,013
Douglas M. Baker, Jr.	$	75,000	$	295,058	$	54,049	$	0	$	424,107
Calvin Darden	$	90,000	$	170,013	$	0	$	0	$	260,013
Henrique De Castro	$	75,000	$	385,105	$	54,049	$	0	$	514,154
Mary N. Dillon⁽⁷⁾	$	0	$	0	$	0	$	0	$	0
James A. Johnson⁽⁶⁾	$	135,000	$	170,013	$	0	$	17,037	$	322,050
Mary E. Minnick	$	0	$	260,061	$	0	$	0	$	260,061
Anne M. Mulcahy⁽⁶⁾	$	0	$	170,013	$	0	$	0	$	170,013
Derica W. Rice⁽⁶⁾	$	12,500	$	275,027	$	0	$	0	$	287,527
Kenneth L. Salazar	$	45,000	$	265,096	$	40,780	$	0	$	350,876
Stephen W. Sanger⁽⁶⁾⁽⁷⁾	$	0	$	0	$	0	$	1,831	$	1,831
John G. Stumpf	$	90,000	$	170,013	$	0	$	0	$	260,013
Solomon D. Trujillo⁽⁶⁾⁽⁷⁾	$	105,000	$	170,013	$	0	$	41,597	$	316,610

(1)

Amounts represent the aggregate grant date fair value of RSUs and stock options that were granted in fiscal 2013, as computed in accordance with FASB ASC Topic 718, Stock Compensation, which uses assumptions that differ from the assumptions used in the Towers Watson Black-Scholes methodology referred to above. See Note 24, Share-Based Compensation, to our consolidated financial statements for fiscal 2013 for a description of our accounting and the assumptions used. Details on the stock awards granted during fiscal 2013 are as follows:


	STOCK AWARDS (RSUs)				OPTION AWARDS
			GRANT DATE				GRANT DATE
NAME	# OF UNITS		FAIR VALUE		# OF SHARES		FAIR VALUE
Ms. Austin		2,715	$	170,013		0	$	0
Mr. Baker		4,615	$	295,058		5,570	$	54,049
Mr. Darden		2,715	$	170,013		0	$	0
Mr. De Castro		6,053	$	385,105		5,570	$	54,049
Ms. Dillon		0	$	0		0	$	0
Mr. Johnson		2,715	$	170,013		0	$	0
Ms. Minnick		4,153	$	260,061		0	$	0
Ms. Mulcahy		2,715	$	170,013		0	$	0
Mr. Rice		4,392	$	275,027		0	$	0
Mr. Salazar		4,098	$	265,096		3,601	$	40,780
Mr. Sanger		0	$	0		0	$	0
Mr. Stumpf		2,715	$	170,013		0	$	0
Mr. Trujillo		2,715	$	170,013		0	$	0

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(2)	The aggregate number of unexercised stock options (which were granted in years prior to fiscal 2013) and unvested RSUs outstanding at fiscal year-end held by directors was as follows:


	STOCK	RESTRICTED
NAME	OPTIONS	STOCK UNITS
Ms. Austin	42,513	2,715
Mr. Baker	5,570	2,715
Mr. Darden	48,904	2,715
Mr. De Castro	5,570	4,153
Ms. Dillon	0	0
Mr. Johnson	86,222	2,715
Ms. Minnick	0	4,153
Ms. Mulcahy	35,124	2,715
Mr. Rice	0	4,392
Mr. Salazar	3,601	2,715
Mr. Sanger	112,485	0
Mr. Stumpf	17,889	2,715
Mr. Trujillo	65,689	2,715

(3)	Amount reported represents above-market earnings on nonqualified deferred compensation, consisting of an additional 8.18% annual return on a frozen deferred compensation plan. Prior to December 31, 1996, deferrals were allowed under our Deferred Compensation Plan Directors (DCP-Director). No new deferrals or participants were allowed after that year. Participants’ DCP-Director accounts are credited each month with earnings based on the average Moody’s Bond Indices Corporate AA rate for June of the preceding calendar year, plus an additional annual return of 6%. The minimum crediting rate is 12% and the maximum is 20%.

(4)	In addition to amounts reported, non-employee directors who were elected prior to 1997 are eligible to receive a lump-sum payment in the February following the date they leave their directorship. The payment is equal to the present value of an annual payment stream of $25,000 (i.e., the director’s fee in effect as of December 31, 1996) for a period equal to the number of years of service of the individual as a director before December 31, 1996. The present value is based on a discount rate of 4.67% based on the Moody’s Bond Indices Corporate AA rate on December 31, 2013. During fiscal 2013, there were three directors eligible to receive a benefit under this program, one of whom retired before the end of the year and one of whom retired subsequent to the end of the year. Those directors, and their benefit values are:


		RETIREMENT
	NAME	BENEFIT
	Mr. Johnson	$ 18,780
	Mr. Sanger	$ 17,181
	Mr. Trujillo	$ 53,094

(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)	The following directors received additional compensation in fiscal 2013 for their roles as Committee Chairpersons and, in the case of Mr. Johnson, as Lead Independent Director. The additional compensation is reflected in “Fees Earned or Paid in Cash” and/or “Stock Awards” based on the form of annual compensation selected by the director as described above under the heading “General Description of Director Compensation.” Amounts paid as Stock Awards were granted in January of fiscal 2012.


	NAME	ROLE(S) DURING FISCAL 2013
	Ms. Austin	Audit Chairperson
	Mr. Johnson	Lead Independent Director
		Compensation Chairperson
	Ms. Mulcahy	Finance Chairperson (until March 2013)
		Nominating & Governance Chairperson (from March 2013)
	Mr. Rice	Finance Chairperson (from March 2013)
	Mr. Sanger	Nominating & Governance Chairperson (until March 2013)
	Mr. Trujillo	Corporate Responsibility Chairperson

(7)

Mr. Sanger retired from the Board on March 13, 2013 as a result of five years elapsing since retiring from active employment. Ms. Dillon resigned from the Board on June 24, 2013 as a result of her appointment as Chief Executive Officer of Ulta Salon, Cosmetics & Fragrance, Inc. Mr. Trujillo retired from the Board on March 31, 2014 as a result of five years elapsing since retiring from active employment and reaching the 20 year term limit. Mr. Sanger, Ms. Dillon and Mr. Trujillo served as independent directors until their respective retirements and resignation.

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STOCK OWNERSHIP INFORMATION

STOCK OWNERSHIP GUIDELINES

Stock ownership that must be disclosed in this proxy statement includes shares directly or indirectly owned, and shares issuable or options exercisable that the person has the right to acquire within 60 days. Our stock ownership guidelines vary from the required ownership disclosure in that they do not include any options, but do include share equivalents held under deferred compensation arrangements, as well as unvested RSUs and performance-based RSUs (PBRSUs) at the minimum share payout. We believe our stock ownership guidelines for our directors and executive officers are aligned with shareholders’ interests because the guidelines reflect equity that has economic exposure to both upside and downside risk.

All directors and executive officers are expected to achieve the required levels of ownership under our stock ownership guidelines within five years of their election or appointment. If a director or executive officer has not satisfied the ownership guideline amounts by the compliance deadline, he or she must retain all shares acquired on the vesting of equity awards or the exercise of stock options (in all cases net of exercise costs and taxes) until compliance is achieved. All directors and named executive officers (NEOs) currently comply with our guidelines.


OWNERSHIP GUIDELINES BY POSITION
DIRECTORS	CEO	OTHER NEOS
Fixed Value of $270,000	5X base salary	3X base salary


	EQUITY USED TO MEET STOCK OWNERSHIP GUIDELINES
	YES		NO
	Outstanding shares that the person beneficially owns or is deemed to beneficially own, directly or indirectly, under the federal securities laws		Options, regardless of when they are exercisable
	RSUs and PBRSUs (at their minimum share payout, which is 75% of the target payout level), whether vested or unvested		Performance Share Units (PSUs) because their minimum share payout is 0% of the target payout level
	Deferred compensation amounts that are indexed to Target common stock, but ultimately paid in cash

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The following table shows the holdings of our directors and NEOs recognized for purposes of our stock ownership guidelines as of April 14, 2014, and the respective ownership guidelines calculations.


	SHARES						TOTAL STOCK		STOCK
	DIRECTLY OR						OWNERSHIP FOR		OWNERSHIP
	INDIRECTLY		RSUs &		SHARE		GUIDELINES		GUIDELINES
	OWNED		PBRSUs		EQUIVALENTS		(# OF SHARES)⁽¹⁾		CALCULATION
DIRECTORS									TOTAL VALUE⁽²⁾
Roxanne S. Austin		0		16,375		0		16,375	$	973,003
Douglas M. Baker, Jr.⁽³⁾		0		4,650		0		4,650	$	276,303
Calvin Darden		4,042		16,375		735		21,152	$	1,256,873
Henrique De Castro⁽³⁾		0		6,098		0		6,098	$	362,343
James A. Johnson		0		16,562		905		17,467	$	1,037,906
Mary E. Minnick		886		47,468		421		48,775	$	2,898,185
Anne M. Mulcahy		7,114		23,517		0		30,631	$	1,820,094
Derica W. Rice		0		39,149		0		39,149	$	2,326,234
Kenneth L. Salazar⁽³⁾		0		4,129		0		4,129	$	245,345
John G. Stumpf		0		8,726		0		8,726	$	518,499
NAMED EXECUTIVE									MULTIPLE OF
OFFICERS									BASE SALARY⁽²⁾
Gregg W. Steinhafel⁽⁴⁾		537,628		128,133		548,890		1,214,651		48.1
John J. Mulligan⁽⁴⁾		12,322		42,278		10,223		64,822		5.5
Kathryn A. Tesija		202,689		60,661		9,164		272,513		17.0
Tina M. Schiel		18,876		40,008		11,400		70,284		5.8
Jeffrey J. Jones II		192		61,905		0		62,097		5.3

(1)	The “Total Stock Ownership” calculation, like the required disclosure of “Total Shares Beneficially Owned” on page 27, starts with “Shares Directly or Indirectly Owned” but differs by (a) excluding all options, regardless of whether they can be converted into common stock on or before June 13, 2014, and (b) including (i) share equivalents that are held under deferred compensation arrangements and (ii) RSUs and PBRSUs (at their minimum share payout, which is 75% of the target payout level), whether vested or unvested, even if they will be converted into common stock more than 60 days from April 14, 2014.

(2)	Based on closing stock price of $59.42 as of April 14, 2014.

(3)	Mr. Baker and Mr. De Castro joined the Board on March 13, 2013, and Mr. Salazar joined the Board on July 2, 2013. They currently comply with our stock ownership guidelines because they have five years from those respective dates to meet the required $270,000 stock ownership level.

(4)	On May 5, 2014, Mr. Steinhafel stepped down as President & CEO and Mr. Mulligan was appointed to serve in the additional capacities of Interim President & CEO.

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BENEFICIAL OWNERSHIP OF DIRECTORS AND OFFICERS

Included below is information regarding the shares of Target common stock (our only outstanding class of equity securities) which are beneficially owned on April 14, 2014 or which the person has the right to acquire within 60 days of April 14, 2014 for each director, executive officer named in the Summary Compensation Table on page 47, and all current Target directors and executive officers as a group.


	SHARES
	DIRECTLY OR		SHARES	STOCK OPTIONS	TOTAL SHARES
	INDIRECTLY		ISSUABLE	EXERCISABLE	BENEFICIALLY
	OWNED		WITHIN 60 DAYS⁽¹⁾	WITHIN 60 DAYS	OWNED⁽²⁾
DIRECTORS
Roxanne S. Austin	0		14,323	42,513	56,836
Douglas M. Baker, Jr.⁽³⁾	0		2,598	5,570	8,168
Calvin Darden	4,042		14,323	48,904	67,269
Henrique De Castro⁽³⁾	0		2,961	5,570	8,531
James A. Johnson	0		14,510	86,222	100,732
Mary E. Minnick	886		44,331	0	45,217
Anne M. Mulcahy	7,114		21,465	35,124	63,703
Derica W. Rice	0		35,832	0	35,832
Kenneth L. Salazar⁽³⁾	0		2,077	3,601	5,678
John G. Stumpf	0		6,674	17,889	24,563
NAMED EXECUTIVE OFFICERS
Gregg W. Steinhafel⁽⁴⁾	537,628		0	1,410,825	1,948,453
John J. Mulligan⁽⁴⁾	12,322		0	151,563	163,885
Kathryn A. Tesija	202,689		0	293,860	496,549
Tina M. Schiel	18,876		171	158,023	177,070
Jeffrey J. Jones II	192		0	68,154	68,346
ALL CURRENT DIRECTORS AND EXECUTIVE OFFICERS
As a group (19 persons)	327,838	⁽⁵⁾	162,011	2,258,675	2,748,524

(1)	Includes shares of common stock that the named individuals may acquire on or before June 13, 2014 pursuant to the conversion of vested RSUs into common stock.

(2)	All directors and executive officers as a group own less than 1% of Target’s outstanding common stock. The persons listed have sole voting and investment power with respect to the shares listed except that Mr. Steinhafel has shared voting and investment power over 361,101 shares.

(3)	Mr. Baker and Mr. De Castro joined the Board on March 13, 2013, and Mr. Salazar joined the Board on July 2, 2013.

(4)	On May 5, 2014, Mr. Steinhafel stepped down as President & CEO and Mr. Mulligan was appointed to serve in the additional capacities of Interim President & CEO.

(5)	Includes shares of common stock owned by executive officers in the Target 401(k) Plan as of April 14, 2014.

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BENEFICIAL OWNERSHIP OF TARGET’S LARGEST SHAREHOLDERS

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 our common stock:


	NUMBER OF
	COMMON SHARES		PERCENT OF CLASS⁽¹⁾
NAME AND ADDRESS OF >5% BENEFICIAL OWNER	BENEFICIALLY OWNED		PERCENT OF CLASS⁽¹⁾
State Street Corporation	61,211,911	⁽²⁾	9.7	%
One Lincoln Street
Boston, Massachusetts 02111
The Vanguard Group	34,467,771	⁽³⁾	5.4	%
100 Vanguard Boulevard
Malvern, Pennsylvania 19355

(1)	Based on shares outstanding on April 14, 2014.

(2)	State Street Corporation (State Street) reported its direct and indirect beneficial ownership in various fiduciary capacities (including as trustee under Target’s 401(k) Plan) on a Schedule 13G filed with the SEC on February 4, 2014. The filing indicates that as of December 31, 2013, State Street had sole voting power for 0 shares, shared voting power for 61,211,911 shares, sole dispositive power for 0 shares and shared dispositive power for 61,211,911 shares.

(3)	The Vanguard Group (Vanguard) reported its direct and indirect beneficial ownership on a Schedule 13G/A filed with the SEC on February 12, 2014. The filing indicates that as of December 31, 2013, Vanguard had sole voting power for 1,024,898 shares, shared voting power for 0 shares, sole dispositive power for 33,507,165 shares and shared dispositive power for 960,606 shares.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

SEC rules require disclosure of those directors, officers and beneficial owners of more than 10% of our common stock who fail to timely file reports required by Section 16(a) of the Securities Exchange Act of 1934 during the most recent fiscal year. Based solely on review of reports furnished to us and written representations that no other reports were required during the fiscal year ended February 1, 2014, all Section 16(a) filing requirements were met.

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COMPENSATION COMMITTEE REPORT

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

COMPENSATION COMMITTEE

James A. Johnson, Chair

Douglas M. Baker, Jr.

Calvin Darden

John G. Stumpf

COMPENSATION DISCUSSION AND ANALYSIS

INTRODUCTION

This Compensation Discussion and Analysis (CD&A) focuses on how hour Named Executive Officers (NEOs) where compensated for fiscal 2013 (February 3, 2013 through February 1, 2014) and how their fiscal 2013 compensation aligns with our pay for performance philosophy.

On May 5, 2014, Mr. Steinhafel stepped down as President & Chief Executive Officer and resigned as a Director. Mr. Mulligan assumed the additional responsibilities of Interim President & Chief Executive Officer. For fiscal 2013, our NEOs were:


	NAME	PRINCIPAL POSITION
	Gregg W. Steinhafel	Former Chairman, President & Chief Executive Officer
	John J. Mulligan	Interim President & Chief Executive Officer, Chief Financial Officer
	Kathryn A. Tesija	Executive Vice President, Merchandising & Supply Chain
	Tina M. Schiel	Executive Vice President, Stores
	Jeffrey J. Jones II	Executive Vice President & Chief Marketing Officer

Our CD&A is divided into the following sections:

	•	Executive Summary

	•	Our Performance Framework for Executive Compensation

	•	Other Benefit Elements

	•	Compensation Governance

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EXECUTIVE SUMMARY

We have undertaken a significant overhaul of our compensation programs since our June 2013 shareholder meeting. Each program change was grounded in direct feedback from our shareholders, and every compensation decision for 2013 was made against a backdrop of 2013 actual results which fell short of our expectations. We are confident these changes and 2013 compensation decisions demonstrate Target’s strong commitment to our pay for performance philosophy and high standards of corporate governance. Fiscal year 2013 pay decisions are described throughout this CD&A.

Our Leadership Transition

As announced on May 5, 2014, after extensive discussions with the Board, Gregg Steinhafel stepped down as President & Chief Executive Officer and resigned as a Director. The Board appointed John Mulligan, our Chief Financial Officer, to serve in the additional capacities of Interim President & CEO.

In connection with Mr. Steinhafel’s departure from Target, he is eligible to receive severance benefits under our existing Income Continuance Policy (ICP) when his employment terminates. The severance benefits and the other consequences of Mr. Steinhafel’s departure, including repayment of certain enhanced early retirement benefits and forfeiture of certain equity awards, all of which are consistent with our pre-existing compensation plans, are described in more detail in “CEO Departure” on page 57.

In addition to the 2013 pay decisions described throughout this CD&A, the following compensation decisions were approved in May 2014:

	•	The Board and Mr. Steinhafel have agreed that he will remain employed by Target in an advisory capacity to assist with the leadership transition through no later than August 23, 2014. During this advisory period, he will continue to receive the same base salary and benefits that were in effect on the date he stepped down as President & CEO. In addition, due to Mr. Steinhafel’s age and years of service with Target, under the pre-existing program he will remain eligible for a fiscal 2014 short-term incentive opportunity under Target’s Short-Term Incentive Plan based on Target’s actual financial performance, with the cash payout, if any, pro-rated based on his length of employment during the year. The Board determined that the amount of the short-term incentive payout opportunity for the portion of the payout, if any, attributable to the advisory period will be based on the same terms as in effect on the date he stepped down as President and CEO.

	•	The Board increased Mr. Mulligan’s base salary from $700,000 to $1 million, and approved a one-time grant, effective May 22, 2014, of restricted stock units (RSUs) outside of our annual grant. The RSUs have a market value on the grant date of $1 million and will vest in one-third increments on each anniversary of the grant date. In addition, in connection with the appointment of Mr. Mulligan to the additional capacities of Interim President and Chief Executive Officer, the Board increased his fiscal 2014 short-term incentive opportunity from 80% to 90% of his base salary. The increase in the short-term incentive opportunity will be pro-rated for the time period during which Mr. Mulligan serves in the additional capacities.

The Board remains committed to attracting and retaining premier talent, and has commenced a comprehensive search to select our next CEO.

Results of 2013 Advisory Vote to Approve Executive Compensation

We have always believed that open dialogue with our shareholders is critical to our success, and we take their feedback seriously. At our June 2013 annual meeting of shareholders, shareholders approved our Say on Pay proposal in support of our executive compensation program. However, the support level was well below what we deem to be acceptable. As a result, we embarked on a significant shareholder outreach effort to listen to concerns about our executive compensation plans and governance, and we have taken specific actions in response to this feedback.

Shareholder Outreach and Compensation Program Changes

Since our June 2013 Say on Pay vote, we have held meetings or hosted calls with shareholders representing approximately 40% of shares voted and two proxy advisory firms. The majority of the conversations were led by either Jim Johnson, Lead Independent Director and Chair of our Board’s Compensation Committee, or Anne Mulcahy, the Chair of our Board’s Nominating & Governance Committee. We value the feedback provided by our shareholders and look forward to continued, open dialogue on compensation matters and other issues relevant to our business.

The Board’s overarching goal is to deliver on our pay for performance philosophy by offering compensation strategies that incent strong results, attract and retain a premier management team, and are supported by shareholders.

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The summary below highlights the key themes we heard from our shareholders, the actions the Compensation Committee has taken, and the results of those actions.


SHAREHOLDER FEEDBACK	COMPENSATION COMMITTEE ACTIONS	RESULT
CEO pay: Overall pay for our former CEO was too high given Target’s performance relative to peers, most clearly in our trailing 3-year Total Shareholder Return (TSR).	Recalibrated our former CEO’s total at-goal compensation package, resulting in a target level that was below the median compensation level of our combined retail and general industry peer groups for 2013. Reduced the annual long-term incentive (LTI) grant for our former CEO to $8 million⁽¹⁾, representing a reduction of $3.75 million from prior year. Approved fiscal 2013 short-term incentive plan (STIP) payout of $0 given below threshold financial performance. Eliminated the age-acceleration feature from our former CEO’s pension plan with no replacement value.	Results in 2013 actual total direct compensation (TDC) of $9.5 million⁽¹⁾, which is a decrease of $6.6 million (41%) from the prior year and well below the median actual compensation of our combined retail and general industry peer groups. Removing the age-acceleration feature of our former CEO’s legacy pension plan increases the performance-focus of our pay program. No replacement value will be provided in lieu of this removed benefit, which lowered 2013 reported pay by $1.52 million.
Pay for performance link: Linking pay to relative performance is paramount – while most of executive pay is at-risk and requires future share-price performance, more should be explicitly tied to relative performance versus peers.	Increased use of performance share units (PSUs) by removing stock options and increasing PSUs from 25% to 75% of annual LTI mix. Added performance-based restricted stock units (PBRSUs) tied to relative TSR as 25% of annual LTI mix.	100% of annual LTI mix is performance-based and tied to relative performance vs. our retail peers. Increased use of PSUs and the introduction of PBRSUs, which will be adjusted based on relative TSR, strengthens the link between pay and relative performance.

PSU plan: Our PSU plan – which demands 60th percentile performance vs. peers to achieve goal payout – is good, but expanding its weight within the LTI mix and adding a returns-based metric to the plan would make it better.	Along with increasing PSUs from 25% to 75% of annual LTI mix, we also added a third relative metric, return on invested capital (ROIC), to our PSU plan.	This creates a balanced PSU portfolio focused on the key metrics we use to manage our business and drive shareholder returns over time: • Top line growth (change in market share) • Earnings per share (EPS) growth • ROIC

(1)	For more details on the components and amounts for TDC, please see the table on page 35.

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Target’s Executive Compensation Practices

The following practices and policies ensure alignment of interests between shareholders and executives and sound corporate governance practices.


COMPENSATION			MORE
PRACTICE	TARGET POLICY		INFORMATION
Pay for Performance	YES \|	A significant percentage of the total direct compensation package is performance-based. 100% of our annual LTI is performance-based.

Robust stock ownership guidelines	YES \|	We have stock ownership guidelines for executive officers of 5x base salary for CEO, 3x base salary for non-CEO executive officers and $270,000 for directors.

Annual Shareholder “Say on Pay”	YES \|	We value our shareholders’ input on our executive compensation programs. Our Board of Directors seeks an annual non-binding advisory vote from shareholders to approve the executive compensation disclosed in our CD&A, tabular disclosures and related narrative of this proxy statement.

Annual compensation risk assessment	YES \|	A risk assessment of our compensation programs is performed on an annual basis.

Clawback policy	YES \|	Our policy allows recovery of incentive cash and equity compensation if it is earned based on inaccurate financial statements.

Independent compensation consultant	YES \|	The Compensation Committee retains an independent compensation consultant to advise on the executive compensation program and practices.

Hedging of company stock	NO \|	Executive officers and members of the Board of Directors may not directly or indirectly engage in transactions intended to hedge or offset the market value of Target common stock owned by them.

Pledging of company stock	NO \|	Executive officers and members of the Board of Directors may not directly or indirectly pledge Target common stock as collateral for any obligation.

Tax gross-ups	NO \|	We do not provide tax gross-ups to our executive officers.

Dividends on unearned performance awards	NO \|	We do not pay dividends on unearned performance awards.

Repricing or exchange of underwater stock options	NO \|	Our equity incentive plan does not permit repricing or exchange of underwater stock options without shareholder approval.

Employment contracts	NO \|	None of our current named executive officers has an employment contract.

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Performance Highlights

Target’s Total Sales, Reported EPS, U.S. Segment ROIC, and TSR performance over the past five fiscal years are shown below:

Total Sales (in millions)		Reported EPS



U.S. Segment ROIC		Total Shareholder Return

(1)	2012 reflects 53 weeks of sales.

The Board and management team have demonstrated a strong commitment to returning capital to shareholders over the past five fiscal years.

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Target’s senior management team is responsible for and committed to driving the following key strategies that position Target for future growth:


	Canadian Retail Market Entry	A real estate acquisition representing a significant opportunity for Target to extend our brand and stores beyond the U.S. for the first time. Target opened 124 Canadian stores in 2013, which is the largest one year set of store openings in company history.

	Omnichannel Investments	A seamless and integrated guest experience across all of Target’s stores and digital platforms including mobile, social and Target.com. We are committed to an omnichannel strategy that enables our guests to engage with Target anywhere, anytime.

	REDcard Rewards Program	A compelling loyalty program in which REDcard guests receive an additional 5% off our already low prices every day on nearly all purchases in our stores and at Target.com. This game changing program drives guest engagement and loyalty which significantly increases trip frequency and spending.

	CityTarget	A new, smaller urban market format. This flexible format allows us to operate stores in densely populated urban areas, reaching guests who find it difficult to visit our suburban stores.

	Credit Card Receivables Transaction	The sale in March 2013 of our entire consumer credit card portfolio, which freed up approximately $6 billion of company capital.

	Store Remodel Program	An innovative layout in more than 1,200 of our general merchandise stores that features perishable food and an expanded assortment of dry, dairy and frozen food, as well as category enhancements throughout the store, which is leading our guests to choose to shop more often.

2013 Performance Review

While Target has a strong record of performance over time, our financial results in 2013 fell well short of our expectations. We experienced softer-than-expected sales in our U.S. segment, reflecting a challenging consumer environment, including the impact of the payroll tax increase and the fourth quarter impact of the data breach. At the same time, 2013 sales and profits from 124 new store openings in Canada, our first international expansion, were well below our initial expectations, resulting in significant earnings dilution.

Even with these pressures, our strong financial position provided the capacity to return approximately $2.5 billion to our shareholders in the form of dividends and share repurchase. While 2013 performance was clearly disappointing, the Board remains confident in Target’s strategy, its commitment to operational excellence and its ability to deliver meaningful shareholder value over time.

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2013 Compensation Decisions

In response to shareholder feedback, we embarked on a comprehensive overhaul of our executive compensation program to even better align compensation with company performance. As a result, the Compensation Committee approved the following compensation decisions in fiscal 2013:

•

Recalibrated our former CEO’s total at-goal compensation package resulting in a target level that was below the median compensation level of our combined retail and general industry peer groups for 2013.

•

Our former CEO did not receive a fiscal 2013 STIP payout due to below-threshold financial performance.

•

Our former CEO’s $8 million annual LTI grant made in connection with fiscal 2013 performance was significantly lower than prior year’s grant.

•

Eliminated the age acceleration feature of our former CEO’s supplemental pension plan which created a reduction in benefit of $1.52 million in 2013 with no replacement value.

•

Our former CEO did not receive a base salary increase for 2014.


	•	Except for Mr. Mulligan, the other NEOs also received no base salary increases for 2014.

•

The Compensation Committee exercised its negative discretion to provide no fiscal 2013 STIP payouts in connection with personal performance for our other NEOs.

•

Annual LTI is 100% tied to our performance relative to our retail peers.

Increased use of PSUs by removing stock options and increasing PSUs from 25% to 75% of annual LTI mix. Also added a third metric, ROIC, to the PSU plan.

Added performance-based RSUs tied to relative TSR as 25% of annual LTI mix.

The TDC package determined by the Compensation Committee for 2013 for each NEO is provided below. This table is not a substitute for the information disclosed in the Summary Compensation Table on page 47. Differences are explained in the footnotes below.


FISCAL 2013 COMPENSATION COMPONENT	MR. STEINHAFEL		MR. MULLIGAN		MS. TESIJA		MS. SCHIEL		MR. JONES
Base Salary	$	1,500,000	$	700,000	$	950,000	$	725,000	$	700,000
STIP Payout	$	0	$	0	$	0	$	0	$	0
Annual LTI Award	$	8,000,000	$	3,000,000	$	5,000,000	$	3,250,000	$	3,000,000
Total 2013 TDC⁽¹⁾	$	9,500,000	$	3,700,000	$	5,950,000	$	3,975,000	$	3,700,000
Total 2012 TDC⁽¹⁾	$	16,130,000	$	4,239,571	$	6,919,700	$	4,724,900	$	4,129,542
% change year-over-year		-41%		-13%		-14%		-16%		-10%

(1)

TDC excludes items shown under “Change in Pension Value and Nonqualified Deferred Compensation Earnings” and “All Other Compensation” in the Summary Compensation Table. TDC for a fiscal year includes (i) base salary levels approved for that year, (ii) STIP payouts related to performance for that year, and (iii) annual LTI awards representing the intended grant date present value approved in connection with performance for that year. Annual LTI Award for 2013 TDC reflects LTI awards approved in January 2014 for fiscal 2013 performance, and for 2012 TDC reflects LTI awards approved in January 2013 and March 2013 for fiscal 2012 performance. The aggregate grant date fair value of awards made each fiscal year as reported in the Summary Compensation Table is computed in accordance with FASB ASC Topic 718, and differs from the Compensation Committee’s intended grant date present value. The number of shares granted for annual LTI awards is determined by dividing the intended grant date present value by the grant date price. The grant date price for PSUs, PBRSUs and RSUs is based on the volume-weighted average price and for options is based on the Towers Watson Black-Scholes option pricing methodology.

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OUR PERFORMANCE FRAMEWORK FOR EXECUTIVE COMPENSATION

Our compensation programs are structured to align the interests of our executive officers with the interests of our shareholders. They are designed to attract, retain, and motivate a premier management team to sustain our distinctive brand and its competitive advantage in the marketplace, and to provide a framework that encourages outstanding financial results and shareholder returns over the long term.




Performance-Based	87%	Performance-Based	84%


	How CEO Pay is Tied to Performance

	The following pay elements are performance-based and represent a significant percentage of the total direct compensation package.

	•	STI – The financial STIP payout was 0% for fiscal 2013. Payouts range from 75% to 300% when performance levels are 5% below and 5% above goal, respectively.

	•	PSUs – Payouts range from 0% to 175% of goal depending on our performance relative to our retail peer group.

	•	PBRSUs – Payouts range from 75% to 125% of goal depending on TSR performance relative to our retail peer group.

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Elements of Fiscal 2013 Executive Total Direct Compensation

ELEMENT

KEY
CHARACTERISTICS

LINK TO
SHAREHOLDER
VALUE

HOW WE DETERMINE
AMOUNT

KEY
DECISIONS

FIXED

Base Salary

Fixed compensation component payable in cash, representing the smallest portion of TDC for our NEOs. Reviewed annually and adjusted when appropriate.

A means to attract and retain talented executives capable of driving superior performance.

Scope and complexity of each executive officer’s roles, individual skills, contributions, market data and prior experience.

Approved in January of 2013, our NEOs, other than our former CEO, received a salary increase.

Approved in January of 2014, our former CEO and NEOs received no base salary increases. Mr. Mulligan received a base salary increase in May 2014.

PERFORMANCE BASED

Short Term Incentives

Variable compensation component payable in cash based on performance against annually established financial goals and assessment of individual performance (excluding former CEO).

Incentive targets are tied to achievement of key annual strategic, operational, and financial measures.

Our former CEO’s STIP is exclusively tied to financial measures.

Financial portion of award based on:

- Earnings Before Interest and Taxes (Incentive EBIT)

- Economic Value Added (Incentive EVA)

Personal scores are based on critical factors upon which we believe leadership and performance should be assessed, but which are not quantifiable. We do not use a personal score in our former CEO’s STIP.

Weak performance against goals resulted in no financial payout for the former CEO and other NEOs for fiscal 2013.

In addition, the Compensation Committee exercised its negative discretion to provide no fiscal 2013 STIP payouts to the other NEOs in connection with personal performance. See page 39.

Performance Share Unit Awards

PSUs cliff vest three years from the date of grant and payouts are based on relative three-year performance versus our retail peer group.

PSUs recognize our executive officers for achieving superior long-term relative performance in:

-Market share change

-EPS growth

-ROIC

Grant award levels based on individual performance, potential future contributions, historical grant amounts, retention considerations and market data.

Actual award payout based on change in market share and EPS compound annual growth rate versus retail peer group (added relative ROIC with the award granted in January 2014).

Payout: PSU award granted in March 2011 and paid out in March 2014 at 77% of the goal number of shares.

Annual LTI Mix: Beginning with the award granted in January 2014, increased PSUs to 75% of total annual LTI award. See page 39.

Performance Based Restricted Stock Unit Awards

PBRSUs cliff vest three years from the date of grant with the number of shares based on relative three-year TSR performance versus our retail peer group.

Fosters a culture of ownership, aligns the long-term interests of Target’s executive officers with our shareholders and rewards or penalizes based on relative TSR performance.

Grant awards based on individual performance, historical grant amounts, retention considerations and market data.

Actual award payout based on TSR versus retail peer group.

PBRSUs comprise 25% of total annual LTI granted. See page 39.

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Base Salary

We provide base salary as a means to provide a stable amount of cash compensation to our executive officers. In alignment with our pay-for-performance philosophy, it represents the smallest portion of TDC.

In January 2013, Ms. Tesija received a fiscal 2013 base salary increase due to her expanded role, including responsibility for our supply chain. Upon completion of the first year in their new respective roles on the Executive Committee, Mr. Mulligan and Mr. Jones received base salary increases for 2012 performance and market considerations. Ms. Schiel also received a base salary increase to reflect her performance in 2012.

In January 2014, the Compensation Committee held our former CEO’s fiscal 2014 base salary flat. Additionally, the Compensation Committee approved no base salary increases for the rest of our NEOs at that time. Mr. Mulligan received an increase in May 2014 at the time he was appointed to his additional capacities as Interim President & CEO.

Short-Term Incentives

All NEOs are eligible to earn cash awards under our STIP program, which is designed to motivate and reward executives for performance on key annual measures. STIP metrics are thoughtfully balanced to incent both profitability (Incentive EBIT) and investment discipline (Incentive EVA).

Performance Metrics

Our STIP program is based on critical metrics and appropriately challenging goals set at the beginning of the performance period:

	•	Incentive EBIT. Incentive EBIT represents 50% of the financial component of the STIP payout. For fiscal 2013, Incentive EBIT included U.S. Segment EBIT and Canadian Segment EBIT.

	•	Incentive EVA. Incentive EVA accounts for the other 50% of the financial component of the STIP payout. Incentive EVA is a measure of earnings after an estimated after-tax cost of capital charge. A positive Incentive EVA performance indicates we are generating returns on invested capital at rates higher than the cost of capital. For fiscal 2013, Incentive EVA included U.S. Segment and Canadian Segment.

	•	Personal Performance (excludes Former CEO). Personal performance payments correspond to a predetermined percentage of base salary tied to a payout matrix for each personal performance review score. The maximum personal performance payout is equal to 46.7% of base salary. Review scores are a subjective element within our mix of variable compensation elements to recognize the critical factors upon which we believe leadership and performance should be assessed, but which are not quantifiable, including: enterprise leadership, the development of a high performing and diverse team, a strong commitment to high ethical standards, and the achievement of strategic goals and objectives for the year.

The following tables summarize the total short-term incentive opportunity for financial performance measures at 5% below goal, goal, and 5% above goal, and a representative incentive opportunity for the personal performance aspect of the short-term incentive program under various performance levels as a percentage of base pay. 2013 actual payouts, included in the table below, are further discussed in the next section. The table is not a substitute for the information disclosed in the Grants of Plan-Based Awards in Fiscal 2013 table located on page 50.


Illustrative Payouts for Former CEO (as a % of base salary)
	PERFORMANCE LEVEL
	5% BELOW GOAL	GOAL	5% ABOVE GOAL	2013 ACTUAL PAYOUT
Financial Component (50% Incentive EBIT, 50% Incentive EVA)	75%	150%	300%	$ 0


Illustrative Payouts for Other NEOs (as a % of base salary)
	PERFORMANCE LEVEL
	BELOW GOAL⁽¹⁾	GOAL⁽²⁾	ABOVE GOAL⁽³⁾	2013 ACTUAL PAYOUT
Financial Component	20%	53%	120%	$ 0
(50% Incentive EBIT, 50% Incentive EVA)
Personal Performance Component	20%	27%	40%	$ 0
Total⁽⁴⁾	40%	80%	160%	$ 0

(1)	Reflects financial performance at 5% below goal and “effective” personal performance.
(2)	Reflects financial performance at-goal and “excellent” personal performance.

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(3)	Reflects financial performance at 5% above goal and “outstanding” personal performance.
(4)	In May 2014, the Board increased Mr. Mulligan’s fiscal 2014 short-term incentive opportunity amounts, pro-rated for the time period during which he serves in the additional capacities of Interim President & CEO. Using this table for illustrative payouts for that opportunity, the below goal payout would be 45%, goal payout would be 90% and above goal payout would be 180%.

Fiscal 2013 Performance Goals and How We Performed in Comparison to These Goals

The final STIP goals were based on our overall 2013 performance goals, which were reviewed, discussed and approved by the Board at the beginning of the year. When approving these goals the Board takes into account our business strategies, the economic environment and how the annual goal aligns with our long range plan.

Historically, STIP goals have proven appropriately challenging, including 0% payout in 2013. For fiscal 2013, our Incentive EBIT and Incentive EVA goal amounts were $5,459 million and $712 million, respectively. The threshold amounts to receive a payout were $5,186 million for Incentive EBIT and $536 million for Incentive EVA. Our actual results were below threshold for both metrics resulting in a $0 financial payout, as further detailed in our Reconciliation of Incentive EBIT to Consolidated GAAP EBIT in Appendix A.

Based on below threshold financial performance, our former CEO did not receive a payout for fiscal 2013. Our other NEOs also received no payout for financial performance. In addition, the Compensation Committee exercised its negative discretion to provide no fiscal 2013 STIP payouts to the other NEOs in connection with personal performance.

Long-Term Incentives

To align our executive officers’ pay outcomes with long-term performance, annual LTI grants are 100% performance-based and comprise the majority of each NEO’s total compensation.

Value of LTI Awarded

In determining the amount of individual long-term incentive awards, the Compensation Committee considered each NEO’s performance during the fiscal year, shareholder feedback garnered from the outreach conducted, potential future contributions, historical annual grant amounts, retention considerations, as well as market data for comparable executives from our retail and general industry peer groups.

The Board of Directors targeted our former CEO’s total at-goal compensation package below the median compensation level of our combined retail and general industry peer groups for 2013. As a result, our former CEO’s annual grant for 2013 performance represented a significant reduction from the prior year. The Compensation Committee also left the rest of the NEOs’ LTI grants for 2013 performance unchanged from the prior year’s annual grant amounts.

Mix of LTI

Once the total annual grant amount is determined, the Compensation Committee grants 75% of this value in PSUs and 25% in PBRSUs. As noted previously, the annual grant made in January 2014 in connection with fiscal 2013 performance is the first to reflect this change. In prior years, the annual grant was comprised of 50% stock options, 25% PSUs, and 25% RSUs. Under the new LTI approach, strong long-term performance relative to peers on critical metrics becomes the key driver of compensation realized by executive officers.

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PSUs

In January 2014, the Committee granted the 2014 PSU awards in connection with fiscal 2013 performance. Our PSUs have a three-year performance period and are settled in stock. As described previously, we added ROIC as a third metric of our PSU plan beginning in 2014 to ensure that the plan payout reflects the same key metrics we use to manage our business and drive shareholder returns over time.

•

Change in market share. A company’s change in market share, expressed as a percentage, is calculated by subtracting (a) from (b), as described below:

		(a)	The Company’s domestic net sales in the baseline year is divided by the market’s domestic net sales for the baseline year. The “market” is the sum of the domestic net sales for us and our retail peer group.

		(b)	The Company’s domestic net sales in the final year of the performance period is divided by the market for the final year.

	•	EPS Growth. Compound annual growth rate of reported EPS for both our results and our retail peer group.

	•	ROIC. Three year average net operating profit after-tax (NOPAT) divided by average invested capital for both our results and our retail peer group.

With these three independent metrics, our PSU program supports the critical drivers of our success: to grow top-line relative to the retail sector, to grow it profitably, and to ensure prudent deployment of capital to drive the business.

For the 2014 PSU grants which will payout in 2017 (2014-2016 PSU cycle), the Canadian Segment is:

		excluded from market share change and EPS growth because inclusion may have caused an inappropriately low baseline from which to measure performance, and

		included in ROIC to ensure participants are held accountable for the significant startup investment related to this key growth initiative.

The Compensation Committee affirmatively excluded the following items related to the sale of our U.S. consumer credit card receivables portfolio because they are not part of our core operations over the period covered by the 2014-2016 PSU cycle:

		one-time gain driven by the sale of our “held for sale” credit card receivables to TD Bank Group (TD) at par value,

		one-time gain due to the recognition of a beneficial interest asset, which effectively represented a receivable for the present value of future profit-sharing Target expected to receive on the receivables sold,

		quarterly reductions to the beneficial interest asset relating to profit-sharing payments received from TD, and

		transaction fees and debt repurchase associated with the deal.

A reconciliation of the non-GAAP measure of EPS for PSUs to GAAP EPS is provided in Appendix A.

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The following example illustrates PSU payouts at various levels of performance:

For more information about our Peer Groups see pages 44-45.

Adjustments

The intent of our PSU program is to measure performance relative to the retail peer group (defined on page 45) on the previously described measures. To achieve this measurement in an objective manner, we base the initial rankings on annual reported financial results of Target and each member of the retail peer group. The Compensation Committee has reserved discretion to adjust the reported financial results for Target or any member of the retail peer group if it believes such adjustments are necessary to properly gauge Target’s relative performance. Since the implementation of our relative performance plan, the only adjustment to our peers’ results was a reduction in sales to remove the impact of the 53rd week in the retail accounting calendar to ensure consistency on relative market share performance across companies. Adjustments to Target and peers’ results, if any, are disclosed in the proxy in the year of award payout.

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2011-2013 PSU Payout

In March 2014, the NEOs received payouts with respect to the PSU awards that were granted in March 2011 for the three-year performance period ended February 1, 2014. These awards were paid at 77% of the goal number of shares. The following table summarizes the rankings and payout results for awards granted in fiscal 2011 with a base year of fiscal 2010 and a final performance year of fiscal 2013:


METRIC	RANKING	PAYOUT	TOTAL PAYOUT
Market Share	7^th	88%	77%
EPS Growth	11^th	66%	77%

No adjustments were made to competitors’ results. At the time of grant, the Compensation Committee excluded the impact over this period of the sale of our U.S. consumer credit card receivables portfolio to TD Bank Group from Target’s EPS results as it does not reflect our core operations. The Compensation Committee also excluded the impact of our Canadian Segment from Target’s EPS results at the beginning of the performance period as the Canadian Segment was not an operating entity during the entire three-year period. Similarly, the metric of domestic market share change by definition also excluded the impact of the Canadian Segment. In this case, including the Canadian Segment would have otherwise increased Target’s market share results as Canada was not an operating entity in the base year. A reconciliation of the non-GAAP measure of EPS for PSUs to GAAP EPS is provided in Appendix A.

PBRSUs

Beginning in January 2014, we introduced PBRSUs to our NEOs annual LTI grant mix so that it is 100% tied to Target’s performance relative to retail peers. The PBRSU amount will be adjusted up or down by 25 percentage points if Target’s TSR is in the top one-third or bottom one-third for the retail peer group, respectively, over the three year vesting period. These stock-settled awards cliff vest three years from the date of grant.


	PBRSU Payout Schedule
	TSR PERFORMANCE RANKING		PERCENT OF GOAL
	1-5		125%
	6-10		100%
	11-15		75%

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OTHER BENEFIT ELEMENTS

We offer other benefit components designed to encourage retention of key talent including:

	•	Pension plan. We maintain a pension plan for team members hired prior to January 2009 who meet certain eligibility criteria. We also maintain supplemental pension plans for those team members who are subject to IRS limits on the basic pension plan or whose pensions are adversely impacted by participating in our deferred compensation plan. Our pension formula under these plans is the same for all participants—there are no enhanced benefits provided to executive officers beyond extending the pension formula to earnings above the qualified plan limits.

		Mr. Steinhafel was the only remaining participant in a legacy pension plan with an age acceleration feature that treated him as five years older than his actual age starting at age 55, but never older than 65. Mr. Steinhafel voluntarily relinquished his right to this benefit and the Board of Directors approved the elimination of this feature of his supplemental pension plan effective February 3, 2013. The elimination of this feature created a reduction in benefit of $1.52 million for Mr. Steinhafel’s compensation in 2013.

	•	401(k) plan. Available to all team members who work more than 1,000 hours for the company. There is no enhanced benefit for executives.

	•	Deferred compensation plan. For a broad management group (approximately 3,700 eligible team members), we offer a non-qualified, unfunded, individual account deferred compensation plan. The plan has investment options that mirror our 401(k) plan. We also have a legacy officer deferred compensation plan (ODCP) that was frozen to new participants and further compensation deferrals in 1996, as described in more detail on page 56.

	•	Perquisites. We provide certain perquisites to our executive officers, principally to allow them to devote more time to our business and to promote their health and safety. The Compensation Committee reviews these perquisites annually to ensure they are consistent with our philosophy and appropriate in magnitude. Perquisites are described on page 49.

Greater detail on these components is provided in the tables that follow the Summary Compensation Table on page 47.

Income Continuance

We provide an Income Continuance Policy (ICP) to executive officers who are involuntarily terminated without cause to assist in their occupational transitions. The maximum payment under this policy (paid during regular pay cycles over two years) is two times the sum of base salary and the average of the last three years of short-term incentive and personal performance payments. None of our current named executive officers has an employment contract, enhanced change of control benefits or rights to tax gross-ups. In connection with his departure from Target, Mr. Steinhafel is eligible to receive severance benefits under our ICP. See “CEO Departure” on page 57 for more details.

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COMPENSATION GOVERNANCE

Process For Determining Executive Compensation (Including NEOs)

Compensation Committee

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

All decisions regarding executive compensation and final recommendations to the independent members of the full Board are made solely by the Compensation Committee. The Compensation Committee may not delegate its primary responsibility of overseeing executive officer compensation, but it may delegate to management the administrative aspects of our compensation plans that do not involve the setting of compensation levels for executive officers.

Compensation Committee’s Independent Consultant

SBCG has been retained by and reports directly to the Compensation Committee and does not have any other consulting engagements with management or Target. The Committee assessed SBCG’s independence in light of the U.S. Securities and Exchange Commission and NYSE listing standards and determined that no conflict of interest or independence concerns exist.

With respect to CEO compensation, SBCG provides an independent recommendation to the Compensation Committee, in the form of a range of possible outcomes, for the Compensation Committee’s consideration. In developing its recommendation, SBCG relies on its understanding of Target’s business and compensation programs and SBCG’s independent research and analysis. SBCG does not meet with our CEO with respect to CEO compensation. SBCG also provides an independent assessment of the CEO’s recommendations on NEO compensation to the Compensation Committee.

Compensation of Other Executive Officers and Role of Management

In developing compensation recommendations for other executive officers, the Executive Vice President of Human Resources provides our CEO with market data on pay levels and compensation design practices provided by management’s external compensation consultants, Towers Watson and Hay Group, covering our retail and general industry peer group companies. Management’s outside consultants do not have any interaction with either the Compensation Committee or our CEO, but do interact with the Executive Vice President of Human Resources and her staff. In addition to providing market data, management’s external compensation consultants perform other services for Target unrelated to the determination of executive compensation.

Our Executive Vice President of Human Resources and the CEO work together to develop our CEO’s compensation recommendations to the Compensation Committee for other executive officers. The CEO alone is responsible for providing final compensation recommendations for the other executive officers to the Compensation Committee.

Benchmarking Using Compensation Peer Groups

Peer group market positioning is another important factor considered in determining each executive officer’s TDC.

The TDC levels and elements described in the preceding pages are evaluated annually for each executive officer relative to our retail and general industry peer group companies. The market comparisons are determined by use of compensation data obtained from publicly available proxy statements analyzed by SBCG and proprietary survey data assembled by Towers Watson and Hay Group.

Due to imperfect comparability of NEO positions between companies, market position served as a reference point in the TDC determination process rather than a formula-driven outcome. For 2013, our former CEO’s total compensation package was targeted below the combined median compensation level of the retail and general industry peer groups.

Our legacy officer deferred compensation plan, the ODCP, includes the accrual of above-market interest. The Compensation Committee considered the annual value of this feature in setting total pay opportunity, so the amount of above-market interest is considered as part of total pay. Our former CEO was the only NEO eligible for this plan because it was frozen to new deferrals in 1996.


	FISCAL 2013 PEER GROUP CHANGES

	Removed from Target’s Retail peer group

	•	Supervalu was removed due to its sale of significant assets

	Removed from Target’s General Industry peer group

	•	Dell was removed because it became a private company

	•	Wells Fargo was removed in consideration of its CEO having joined our Compensation Committee

	Substitution to Target’s General Industry peer group

	•	Mondelez International replaced Kraft Foods upon the completion of a spin-off of Kraft Foods Group

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The selected retail peer group represents 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. The retail peer group is also used within our LTI plans. Target’s relative performance compared to this peer group on key metrics determines overall payout for our PSU and PBRSU awards.

General industry companies are also included as a peer group because they represent companies with whom we compete for talent. Like the selected retailers, the general industry companies are large and among the leaders in their industries.

The composition of the peer groups is reviewed annually to ensure it is appropriate in terms of company size and business focus, and any changes made are reviewed with SBCG and approved by the Compensation Committee.

The companies included in the 2013 market comparisons are listed below.


RETAIL PEER GROUP		GENERAL INDUSTRY PEER GROUP
Amazon.com	Kroger	3M	MetLife
Best Buy	Lowe’s	Abbott Labs	Microsoft
Costco	Macy’s	Archer Daniels Midland	Mondelez
CVS Caremark	Safeway	Coca-Cola	PepsiCo
Home Depot	Sears	Deere	Pfizer
J.C. Penney	Walgreens	Dow Chemical	Procter & Gamble
Kohl’s	Walmart	FedEx	Time Warner
		General Mills	UPS
		Johnson & Johnson	UnitedHealth Group
		Johnson Controls	United Technologies
		McDonald’s	Walt Disney

The following table summarizes our scale relative to our retail and general industry peer groups. The financial information reflects fiscal year end data available as of December 2013:


	Retail Peer Group						General Industry Peer Group
	REVENUES ($MMs)		MARKET CAP ($MMs)		EMPLOYEES		REVENUES ($MMs)		MARKET CAP ($MMs)		EMPLOYEES
25th Percentile		$ 40,942		$ 8,908		127,000		$ 37,086		$ 36,751		72,094
Median		55,899		28,476		172,000		51,072		67,182		115,500
75th Percentile		91,252		56,866		256,250		66,791		104,899		169,000
Target Corporation		73,301		38,746		361,000		73,301		38,746		361,000

Data Source: Equilar

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Compensation Policies and Risk

As part of our regular review of our compensation practices, we conducted an analysis of whether our compensation policies and practices create material risks to the company. The results of this analysis were reviewed by the Compensation Committee’s independent consultant and discussed with the Compensation Committee, which agreed with management’s conclusion that our compensation programs do not create risks that are reasonably likely to have a material adverse effect on the company. More specifically, this conclusion was based on the following considerations:


	Pay Mix		Compensation mix of base salary, short-term and long-term incentives provides compensation opportunities measured by a variety of time horizons to balance our near-term and long-term strategic goals.
	Performance Metrics		A variety of distinct performance metrics are used in both the short-term and long-term incentive plans. This “portfolio” approach to performance metrics encourages focus on sustained and holistic overall company performance.
	Performance Goals		Goals are approved by our independent directors and take into account our historical performance, current strategic initiatives and the expected macroeconomic environment. In addition, short-term and long-term incentive compensation programs are designed with payout curves and leverage that support our pay for performance philosophy.
	Equity Incentives		Equity incentive programs and stock ownership guidelines are designed to align management and shareholder interests by providing vehicles for executive officers to accumulate and maintain an ownership position in the company.
	Risk Mitigation Policies		We incorporate several risk mitigation policies into our officer compensation program, including: • The Compensation Committee’s ability to use “negative discretion” to determine appropriate payouts under formula based plans; • A clawback policy to recover incentive compensation that was based on inaccurate financial statements; • Stock ownership guidelines for executive officers and directors; and • Anti-hedging and anti-pledging policies.

Clawback Policy

Our clawback policy, which covers all officers, allows for recovery of the following compensation elements:

	•	All amounts paid under the Short-Term Incentive Plan (including any discretionary payments) that were paid with respect to any fiscal year that is restated; and

	•	All awards under the Long-Term Incentive Plan whether exercised, vested, unvested, or deferred.

All demands for repayment are subject to Compensation Committee discretion. For an officer to be subject to recovery or cancellation under this policy, he or she must have engaged in intentional misconduct that contributed to the need for a restatement of our consolidated financial statements.

Anti-Hedging and Anti-Pledging Policy

Executive officers and members of the Board of Directors may not directly or indirectly engage in capital transactions intended to hedge or offset the market value of Target common stock owned by them, nor may they pledge Target common stock owned by them as collateral for any loan.

Compensation Tax Policy

Our short-term and long-term compensation programs, including the compensation paid in fiscal 2013, are intended to qualify as deductible performance based compensation under Section 162(m) of the Internal Revenue Code (IRC). These compensation programs are generally structured such that executive officers are entitled to receive a maximum payout amount upon achievement of consolidated earnings before interest and taxes performance metric determined by the Compensation Committee. The Compensation Committee then uses its negative discretion to determine the actual payout amount. The performance objectives that are communicated to our executive officers, which are described in detail above, guide the Compensation Committee’s exercise of its negative discretion to determine the actual payouts. We may provide non-deductible compensation in situations the Compensation Committee or our Board of Directors believes appropriate.

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EXECUTIVE COMPENSATION TABLES

SUMMARY COMPENSATION TABLE

The Summary Compensation Table below contains values calculated and disclosed according to SEC reporting requirements. Salary, Bonus, and Non-Equity Incentive Plan compensation amounts are reflective of the compensation earned during each fiscal year. The stock awards and option awards reflect awards with a grant date during each fiscal year. Beginning in January 2014, we aligned our equity grant dates to enhance visibility to the annual grant amount going forward. However, for 2013, it artificially increases the “Stock Awards” amount reported in this proxy statement by including awards from two separate annual grant cycles. As a result, 2013 pay as shown in the Summary Compensation Table includes LTI awards granted for 2013 as well as part of the 2012 LTI grant, as described in more detail in Note 3 to the table.


NAME AND PRINCIPAL POSITION	FISCAL YEAR	SALARY		BONUS⁽¹⁾		STOCK AWARDS⁽²⁾⁽³⁾		OPTION AWARDS⁽²⁾		NON-EQUITY INCENTIVE PLAN COMPENSATION		CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS⁽⁴⁾		ALL OTHER COMPENSATION⁽⁵⁾		TOTAL
Gregg W. Steinhafel Former Chairman, President & Chief Executive Officer*	2013	$	1,500,000	$	0	$	10,224,120	$	0	$	0	$	720,219	$	508,875	$	12,953,214
	2012	$	1,500,000	$	0	$	5,285,245	$	5,248,573	$	2,880,000	$	665,528	$	5,068,118	$	20,647,464
	2011	$	1,500,000	$	1,250,000	$	4,857,502	$	3,696,982	$	2,205,000	$	673,635	$	5,523,988	$	19,707,107
John J. Mulligan Interim President & Chief Executive Officer, Chief Financial Officer*	2013	$	700,000	$	150,000	$	3,505,105	$	0	$	0	$	5,465	$	273,286	$	4,633,856
	2012	$	602,404	$	371,917	$	1,395,687	$	1,340,064	$	415,250	$	35,381	$	313,505	$	4,474,207

Kathryn A. Tesija Executive Vice President, Merchandising & Supply Chain	2013	$	950,000	$	0	$	5,841,653	$	0	$	0	$	8,080	$	398,268	$	7,198,001
	2012	$	900,000	$	371,700	$	2,306,493	$	2,233,443	$	648,000	$	54,159	$	653,424	$	7,167,219
	2011	$	850,000	$	351,050	$	2,068,055	$	1,663,643	$	442,000	$	81,178	$	578,492	$	6,034,418
Tina M. Schiel Executive Vice President, Stores	2013	$	725,000	$	0	$	3,797,152	$	0	$	0	$	7,595	$	149,975	$	4,679,722
	2012	$	700,000	$	270,900	$	1,516,896	$	1,451,738	$	504,000	$	30,031	$	166,606	$	4,640,170

Jeffrey J. Jones II Executive Vice President & Chief Marketing Officer	2013	$	700,000	$	0	$	3,505,105	$	0	$	0	$	0	$	87,169	$	4,292,275
	2012	$	537,500	$	202,042	$	3,000,088	$	2,072,624	$	390,000	$	0	$	597,017	$	6,799,271

*	On May 5, 2014, Mr. Steinhafel stepped down as President & CEO, and resigned as a Director. The Board appointed Mr. Mulligan to serve in the additional capacities of Interim President & CEO. Mr. Steinhafel agreed to remain employed by Target in an advisory capacity to assist with the transition.

(1)	Amount for Mr. Mulligan includes a payment in the amount of $150,000 in each year under a special retention award he was granted in October 2011 when he was Senior Vice President, Treasury, Accounting and Operations. The special retention award was for a total amount of $300,000, with $150,000 paid in October 2012 and the remaining $150,000 paid in October 2013.

(2)	Amounts represent the aggregate grant date fair value of awards made each fiscal year, as computed in accordance with FASB ASC Topic 718. See Note 24, Share Based Compensation, to our consolidated financial statements for fiscal 2013 and Note 26, Share Based Compensation, to our consolidated financial statements for fiscal 2012 for a description of our accounting and the assumptions used.

(3)	Represents the aggregate grant date fair value of PSUs and PBRSUs that were computed based on the probable outcome of the performance conditions as of the grant date. Actual payments will be based on degree of attainment of the performance conditions and our stock price on the settlement date. Beginning January 2014, we changed our grant timing policy to grant both PBRSUs and PSUs in January. Our prior policy of granting RSUs in January and PSUs in March straddled two fiscal years, causing PSU grants to be reported in the proxy statement one year after RSU grants were reported. The new grant timing enhances visibility of the annual grant amount by reporting PBRSUs and PSUs in the same proxy statement. However, the transition artificially increases the Stock Awards amount reported in this proxy statement by including awards from two separate annual grant cycles. For example, the Stock Awards total for this year reflects the 2013 award of PSUs and PBRSUs for our former CEO of $7,474,365, and also includes an additional $2,749,755 from his 2012 PSU award that was granted in March 2013.

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The range of payments for the PSUs granted in fiscal 2013 is set forth below.


NAME	MINIMUM AMOUNT		AMOUNT REPORTED		MAXIMUM AMOUNT
Mr. Steinhafel
• PSU Granted 3/13/13		$ 0	$	2,749,755	$	4,124,632
• PSU Granted 1/8/14		$ 0	$	5,339,881	$	9,344,792
Mr. Mulligan
• PSU Granted 3/13/13		$ 0	$	702,125	$	1,053,188
• PSU Granted 1/8/14		$ 0	$	2,002,490	$	3,504,358
Ms. Tesija
• PSU Granted 3/13/13		$ 0	$	1,170,146	$	1,755,219
• PSU Granted 1/8/14		$ 0	$	3,337,447	$	5,840,532
Ms. Schiel
• PSU Granted 3/13/13		$ 0	$	760,620	$	1,140,930
• PSU Granted 1/8/14		$ 0	$	2,169,346	$	3,796,355
Mr. Jones
• PSU Granted 3/13/13		$ 0	$	702,125	$	1,053,188
• PSU Granted 1/8/14		$ 0	$	2,002,490	$	3,504,358

(4)	For fiscal 2013, the following amounts are related to the change in the qualified pension plan value and above-market earnings on nonqualified deferred compensation:


NAME	CHANGE IN PENSION VALUE		NONQUALIFIED DEFERRED COMPENSATION ABOVE-MARKET EARNINGS
Mr. Steinhafel	$	637	$	719,582
Mr. Mulligan	$	5,465	$	0
Ms. Tesija	$	8,080	$	0
Ms. Schiel	$	7,595	$	0
Mr. Jones	$	0	$	0

Consistent with applicable law, the accrued benefits under the pension plan cannot be reduced; however, the present value of the benefit is dependent on the discount rate used. The discount rates used in fiscal 2013, 2012 and 2011 were 4.77%, 4.40% and 4.65%, respectively. The Change in Pension Value column reflects the additional pension benefits attributable to additional service, increases in eligible earnings and changes in the discount rate.

The above-market earnings on nonqualified deferred compensation consist of an additional 8.18% annual return on our former deferred compensation plan, the Target Corporation Officer Deferred Compensation Plan (ODCP), which was frozen for new participants and further compensation deferrals after 1996. Mr. Steinhafel was the only NEO eligible for the ODCP. See the narrative following the Nonqualified Deferred Compensation for Fiscal 2013 table for additional information.

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(5)

The amounts reported for fiscal 2013 include matching credits of up to a maximum of 5% of cash compensation allocated among the Target 401(k) Plan and our current executive deferred compensation plan (EDCP), the dollar value of life insurance premiums paid by Target, credits to the EDCP representing annual changes in supplemental pension plan values and perquisites.


NAME	MATCH CREDITS		LIFE INSURANCE		SPP CREDITS		PERQUISITES		TOTAL
Mr. Steinhafel	$	216,404	$	14,885	$	116,348	$	161,239	$	508,875
Mr. Mulligan	$	66,796	$	5,085	$	158,916	$	42,489	$	273,286
Ms. Tesija	$	98,423	$	7,962	$	259,660	$	32,224	$	398,268
Ms. Schiel	$	70,613	$	5,192	$	44,997	$	29,172	$	149,975
Mr. Jones	$	47,687	$	4,683	$	0	$	34,798	$	87,169

Supplemental Pension Plan. The SPP Credits for our NEOs represent additional accruals of supplemental pension plan benefits that are credited to their deferred compensation accounts. These benefits are based on our normal pension formula, so they are affected by final average pay, service, age and changes in interest rates. See the narrative following the Pension Benefits for Fiscal 2013 table for more information about our pension plans.

Perquisites. The perquisites consist of a company-provided car or car allowance, personal use of company-owned aircraft, reimbursement of financial management expenses, reimbursement of home security expenses, on-site parking, on-site exercise room, spousal travel on business trips, gifts and executive physicals. The only individual perquisite which exceeded $25,000 was Mr. Steinhafel’s personal use of company-owned aircraft for security reasons, which amounted to $113,185. No tax gross-ups are provided on these perquisites.

The dollar amount of perquisites represents the incremental cost of providing the perquisite. We generally measure incremental cost by the additional variable costs attributable to personal use, and we disregard fixed costs that do not change based on usage. Incremental cost for personal use of company-owned aircraft was determined by including fuel cost, landing fees, on-board catering and variable maintenance costs attributable to personal flights and related unoccupied positioning, or “deadhead,” flights.

In addition to the perquisites included in the table above, the NEOs receive certain other personal benefits for which we have no incremental cost, as follows:

	•	Mr. Steinhafel has a membership in a downtown business club as the result of a grandfathered perquisite that is no longer available. The club is used almost exclusively for business functions; however, he may occasionally use the club for personal purposes provided that he pays for any meal or other incremental costs;

	•	Occasional use of support staff time for personal matters, principally to allow them to devote more time to our business;

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

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

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GRANTS OF PLAN-BASED AWARDS IN FISCAL 2013


NAME	GRANT DATE	ESTIMATED POSSIBLE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS⁽¹⁾						ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS⁽²⁾⁽³⁾					GRANT DATE FAIR VALUE OF STOCK AWARDS⁽⁴⁾
		THRESHOLD		TARGET		MAXIMUM		THRESHOLD (#)		TARGET (#)	MAXIMUM (#)
Gregg W. Steinhafel	3/13/13	$	562,500	$	2,250,000	$	6,000,000
	3/13/13								0	43,765		65,648	$	2,749,755
	1/08/14								23,955	31,939		39,924	$	2,134,483
	1/08/14								0	95,817		167,680	$	5,339,881
John J. Mulligan	3/13/13	$	70,000	$	373,800	$	2,730,000
	3/13/13								0	11,175		16,763	$	702,125
	1/08/14								8,984	11,978		14,973	$	800,490
	1/08/14								0	35,932		62,881	$	2,002,490
Kathryn A. Tesija	3/13/13	$	95,000	$	507,300	$	3,705,000
	3/13/13								0	18,624		27,936	$	1,170,146
	1/08/14								14,972	19,962		24,953	$	1,334,060
	1/08/14								0	59,886		104,801	$	3,337,447
Tina M. Schiel	3/13/13	$	72,500	$	387,150	$	2,827,500
	3/13/13								0	12,106		18,159	$	760,620
	1/08/14								9,732	12,976		16,220	$	867,186
	1/08/14								0	38,926		68,121	$	2,169,346
Jeffrey J. Jones II	3/13/13	$	70,000	$	373,800	$	2,730,000
	3/13/13								0	11,175		16,763	$	702,125
	1/08/14								8,984	11,978		14,973	$	800,490
	1/08/14								0	35,932		62,881	$	2,002,490

(1)	Awards represent potential payments under the current Target Corporation Officer Short-Term Incentive Plan (STIP). Payments are based on specified target levels of Incentive EBIT and Incentive EVA, as described in the Compensation Discussion and Analysis.

	No amounts were earned under this plan for fiscal 2013. Executive officers must be employed on the date the payments are made (typically in March of each year with respect to the preceding fiscal year) to be eligible for a payment, except in the event of death, disability or retirement eligibility (termination other than for cause after age 55 with at least five years of service). The maximum payment is the annual plan maximum, which is generally four times salary less, for executive officers other than our former CEO, the minimum personal performance bonus payable as a condition to receiving a financial performance payout under the STIP.

(2)	Awards represent potential payments under PSUs and PBRSUs granted under our 2011 Long-Term Incentive Plan in fiscal 2013. Payments are based on our performance relative to a retail peer group over a three-year measurement period. The PSUs granted on March 13, 2013 have two relative performance measures: domestic market share change and earnings per share growth. The PSUs granted on January 8, 2014 have three relative performance measures: domestic market share change, earnings per share growth, and return on invested capital. The PBRSUs granted on January 8, 2014 are based on our total shareholder return relative to our retail peer group. See the Compensation Discussion and Analysis for a more detailed description of these performance measures. The other terms of the PSUs and PBRSUs are described in Note 3 to the Outstanding Equity Awards at 2013 Fiscal Year-End table.

(3)	Beginning January 2014, we changed our grant timing policy to grant both PBRSUs and PSUs in January. Our prior policy of granting RSUs in January and PSUs in March straddled two fiscal years, causing PSU grants to be reported in the proxy statement one year after RSU grants were reported. The new grant timing enhances visibility of the annual grant amount by reporting PBRSUs and PSUs in the same proxy statement. However, the transition causes two different PSU grants to reported in this proxy statement—PSUs granted on March 13, 2013 and PSUs granted on January 8, 2014.

(4)	Grant date fair value for PSUs and PBRSUs was determined pursuant to FASB ASC Topic 718.

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OUTSTANDING EQUITY AWARDS AT 2013 FISCAL YEAR-END

OPTION AWARDS

STOCK AWARDS

EQUITY

INCENTIVE

PLAN

AWARDS:

EQUITY

MARKET OR

INCENTIVE

PAYOUT

PLAN AWARDS:

VALUE OF