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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

 

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

PROXY STATEMENT
Annual Meeting of Shareholders
June 13, 2012

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To Our Shareholders:

        You are invited to attend Target Corporation's 2012 Annual Meeting of Shareholders. The Annual Meeting will be held at 1:30 p.m. Central Daylight Time, on Wednesday, June 13, 2012 at the CityTarget Store located at 1 South State Street, Chicago, Illinois. Details regarding admission to the Annual Meeting and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting of Shareholders and proxy statement.

        At this year's Annual Meeting, you will be asked to elect all 11 directors to our Board of Directors and to vote on the other items described in this proxy statement.

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

        Thank you for your continued support.

Sincerely,

Gregg Steinhafel

Chairman of the Board, Chief Executive Officer and President

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VOTING METHODS

        The accompanying proxy statement describes important issues affecting Target Corporation ("Target"). To vote:

1.

BY INTERNET



a.

Go to the website identified on your proxy card or Notice of Internet Availability of Proxy Materials, 24 hours a day, seven days a week by the deadline set forth below.



b.

Enter the control number that appears on your proxy card or Notice of Internet Availability of Proxy Materials.



c.

Follow the simple instructions.



2.

BY TELEPHONE



a.

On a touch-tone telephone, call the toll-free number identified on your proxy card 24 hours a day, seven days a week by the deadline set forth below.



b.

Enter the control number that appears on your proxy card.



c.

Follow the simple recorded instructions.



3.

BY MAIL



a.

Mark your selections on the enclosed proxy card.



b.

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



c.

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

        In order to vote by Internet or by telephone, you must follow the relevant instructions above and vote by the following deadlines:

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For shareholders of record, 11:59 p.m. Eastern Daylight Time on June 12, 2012.



•

For shareholders holding shares through an intermediary (other than the Target 401(k) Plan), such as a bank or broker, 11:59 p.m. Eastern Daylight Time on June 12, 2012.



•

For shareholders holding shares in the Target 401(k) Plan, 6:00 a.m. Eastern Daylight Time on June 11, 2012.

Your vote is important. Thank you for voting.

ADMISSION POLICY

        All shareholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting. You must reserve an admission ticket in order to attend. If you are a shareholder of record and plan to attend, please contact Target's Investor Relations Department by email at investorrelations@target.com or by telephone at (800) 775-3110 to reserve a ticket. Your ticket will be available for pick-up at the meeting. If you hold shares through an intermediary, such as a bank or broker, and you plan to attend, you will need to send a written request for a ticket either by regular mail, fax or email, along with proof of share ownership, such as a bank or brokerage firm account statement or a letter from the broker, trustee, bank or nominee holding your shares, confirming ownership to: Investor Relations, Target Corporation, 1000 Nicollet Mall, TPN-1145, Minneapolis, MN 55403 (fax: 612-761-5555 or email: investorrelations@target.com). Requests to reserve admission tickets will be processed in the order in which they are received and must be received no later than June 8, 2012.

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS

        Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to be held on June 13, 2012.

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

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

Approximate Date of Mailing of Proxy Materials
Or Notice of Internet Availability:
April 30, 2012

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TABLE OF CONTENTS

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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
June 13, 2012

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        The Board of Directors of Target Corporation solicits the enclosed proxy for the Annual Meeting of Shareholders to be held at the CityTarget Store, 1 South State Street, Chicago, Illinois on Wednesday, June 13, 2012, at 1:30 p.m. Central Daylight Time, and for any adjournment thereof.

GENERAL INFORMATION ABOUT THE MEETING AND VOTING

What is the purpose of the Annual Meeting?

        At our Annual Meeting, shareholders will act upon the matters described in the accompanying notice of meeting. In addition, our management will report on Target's performance during fiscal 2011 and respond to questions from shareholders.

Who may vote?

        We have one class of voting shares outstanding. Only shareholders of record at the close of business on the record date, April 16, 2012, are entitled to receive notice of the Annual Meeting and to vote. Each share of common stock will have one vote on each matter to be voted on.

Who may attend the Annual Meeting?

        All shareholders as of the record date, or their duly appointed proxies, may attend the Annual Meeting. If you plan to attend, please review the admission policy at the beginning of this proxy statement.

What constitutes a quorum?

        The presence at the meeting, in person or by proxy, of the holders of a majority of our common stock outstanding on the record date will constitute a quorum, permitting the meeting to conduct its business. As of the record date, 662,001,328 shares of our common stock were outstanding. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting for purposes of determining whether there is a quorum.

How do I vote?

        You may vote by completing and properly signing the enclosed proxy card and returning it to us in the envelope provided. If you are a registered shareholder (whose shares are owned in your name and not in "street name") and attend the meeting, you may deliver your completed proxy card in person. In addition, you may vote either by telephone or through the Internet by following the instructions on your proxy card or Notice of Internet Availability of Proxy Materials. "Street name" shareholders should follow the voting instructions on the proxy form received from the broker or other institution that holds their shares.

May I vote confidentially?

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

        If you so request, your proxy will not be available for examination and your vote will not be disclosed prior to the tabulation of the final vote at the Annual Meeting, except (a) to meet applicable legal requirements, (b) to allow the independent election inspectors to count and certify the results of the vote, or (c) if there is a proxy solicitation in opposition to the Board of Directors, based upon an opposition

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proxy statement filed with the Securities and Exchange Commission (SEC). The independent election inspectors may at any time inform us whether or not a shareholder has voted.

May I change my vote?

        Yes. Even after you have submitted your proxy, you may change your vote at any time by mailing a later-dated proxy card or by voting again via telephone or Internet before the applicable deadline—see the instructions under "Voting Methods." If you are a registered shareholder, you can also change your vote by attending the meeting in person and delivering a proper written notice of revocation of your proxy. Attendance at the meeting will not by itself revoke a previously granted proxy.

How does the Board recommend I vote?

        In summary, the Board of Directors recommends a vote:

FOR election of its director nominees (see pages 4-8);

FOR ratification of the appointment of Ernst & Young LLP as Target's independent registered public accounting firm (see page 50);

FOR approval of the Target Corporation Officer Short-Term Incentive Plan (see pages 52-54);

FOR advisory approval of our on executive compensation ("Say-on-Pay") (see page 55); and

AGAINST the two shareholder proposals (see pages 56-59).

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

How many votes are required to approve each item?

        Election of Directors.    The number of votes required for the election of directors is described in the section captioned "Election of Directors."

        Say-On-Pay.    The Say-on-Pay vote is a non-binding advisory vote. The Board of Directors will consider our executive compensation to have been approved by shareholders if the Say-on-Pay item receives more votes "For" than "Against." The effect of this non-binding advisory vote is discussed on page 55.

        Other Items.    For all other matters described in this proxy statement and any other items that properly come before the meeting, the affirmative vote of the greater of (a) a majority of the outstanding shares of our common stock present in person or by proxy and entitled to vote on the item at the Annual Meeting and (b) a majority of the minimum number of shares entitled to vote that would constitute a quorum for the transaction of business at the Annual Meeting, will be required for approval.

        Abstentions.    A properly executed proxy marked "Abstain" with respect to any matter will be counted for purposes of determining whether there is a quorum and will be considered present in person or by proxy and entitled to vote. Accordingly, for all items other than Items 1 and 4, an abstention will have the effect of a negative vote.

What is a broker non-vote?

        If you hold your shares in "street name," such as through a broker or other institution, you generally cannot vote your shares directly and must instead instruct the broker how to vote your shares using the voting instruction form provided by the broker. If you are a "street name" holder and do not provide

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voting instructions to your broker, your broker may not vote on your behalf for any of the non-discretionary items at the Annual Meeting, which include Items 1, 3, 4, 5 and 6. Your failure to provide voting instructions to your broker for those non-discretionary items results in a "broker non-vote." Shares constituting broker non-votes will be counted as present for the purpose of determining a quorum at the Annual Meeting, but generally are not counted or deemed to be present in person or by proxy for the purpose of voting on any of the non-discretionary items. If quorum for the Annual Meeting cannot be established without including broker non-votes, then those broker non-votes required to establish a minimum quorum will have the same effect as votes "Against" Items 3, 5 and 6.

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

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

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

        Expenses in connection with the solicitation of proxies will be paid by us. Proxies are being solicited principally by mail, by telephone, and through the Internet. In addition to sending you these materials, some of our directors and officers, as well as management employees, may contact you by telephone, mail, email or in person. You may also be solicited by means of news releases issued by Target, postings on our website, www.target.com, and print advertisements. None of our officers or employees will receive any extra compensation for soliciting you. We have retained Georgeson Inc. to act as a proxy solicitor for a fee estimated to be $25,000, plus reimbursement of out-of-pocket expenses.

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

        This proxy statement is being used to solicit voting instructions from participants in the Target 401(k) Plan with respect to shares of our common stock that are held by the trustee of the plan for the benefit of plan participants. If you are a plan participant and also own shares as a record holder, you will separately receive proxy materials to vote the shares you hold as a record holder. If you are a plan participant, you must instruct the plan trustee to vote your shares by utilizing one of the methods described on the voting-instruction form that you receive in connection with your shares held in the plan. If you do not give voting instructions, the trustee will vote the shares allocated to your personal account in proportion to the instructions actually received by the trustee from participants who give voting instructions.

How may I get additional copies of the Annual Report?

        Our Annual Report for the fiscal year ended January 28, 2012, including financial statements, is furnished with this proxy statement. The Annual Report is also available online at www.target.com (click on "Investor Relations" and "Annual Reports"). For additional printed copies, please contact our Investor Relations representative by email at investorrelations@target.com, by phone at (800) 775-3110, by mail at the address listed on the cover of this proxy statement, Attention: Investor Relations, or online at www.target.com (click on "Investor Relations," then "Shareholder Services" and "Request Materials").

How may I access or receive materials electronically?

        You can access our proxy materials, Annual Report and other periodic reports and information under the "Investors" section of our website, www.target.com (click on "Investor Relations"). You can also register at this same location to receive email alerts, which we send to registered users when new information is posted on our website (click on "Investor Relations" and "E-Mail Alerts"). Shareholders may request electronic delivery of our proxy materials and Annual Report online at www.target.com (click on "Investor Relations," then "Shareholder Services" and "Sign up for E-Delivery"). To receive other shareholder information, contact us via email at investorrelations@target.com.

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ITEM ONE—ELECTION OF DIRECTORS

Election Process

        Under our Articles of Incorporation and Governance Guidelines:

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The number of directors is determined by the Board, with a minimum of 5 and a maximum of 21 directors;



•

All directors are elected annually; and



•

As is the case this year, where the number of nominees does not exceed the number of directors to be elected, directors are elected under a "majority voting" standard. This means that each director must receive more votes "For" his or her election than votes "Against" in order to be elected. If an incumbent director fails to receive a sufficient number of votes to be elected, he or she must promptly offer to resign, and 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.

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 uses the Board Membership Criteria set forth in our Governance Guidelines when evaluating director candidates. Under these criteria, the Committee seeks director candidates that have broad perspective, experience, knowledge and independence of judgment. The Committee also reviews the backgrounds, skills and experiences of existing directors to identify complementary attributes to seek in new director candidates. The Committee does not have a specific policy regarding consideration of gender, ethnic or other diversity criteria in identifying candidates; however, the Board has had a longstanding commitment to, and practice of, maintaining diverse representation on the Board.

        The Nominating & Governance Committee will consider a recommendation by a shareholder of a candidate for election as a Target director. 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.

2012 Nominees for Director

        After considering the recommendations of the Nominating & Governance Committee, the Board has set the number of directors at 11 and nominated the persons described below to stand for election. All nominees are incumbent directors. The Board believes that each of these nominees is qualified to serve as a director of Target and the specific qualifications of each nominee that were considered by the Board are set forth following each nominee's biographical description. Equally as important, the Board believes that the combination of backgrounds, skills and experiences has produced a Board that is well-equipped to exercise oversight responsibilities for Target's shareholders and other stakeholders. Specifically:

•

All nominees have strong business backgrounds, with eight nominees having CEO experience in complex business organizations;



•

All nominees have senior management-level experience with multinational enterprises, an area of increased importance as we expand our retail operations outside of the United States;



•

Five nominees have expertise in consumer marketing, an area critical to our continued success as a leading retail brand;

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•

Five nominees have significant experience in financial matters, which provides valuable perspective in connection with our investment of capital in our retail operations, real estate, and financial services assets; and



•

The overall 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:



•

Four nominees have served for more than ten years;



•

Six nominees have served for five to ten years; and



•

One nominee has served for less than five years.

        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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GENERAL INFORMATION ABOUT THE BOARD OF DIRECTORS
AND CORPORATE GOVERNANCE

Director Independence

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

        The Board affirmatively determined that all non-management directors are independent. Mr. Steinhafel is the only management director and is not independent. In making this determination, the Board specifically considered the following transactions, all of which were entered into in the ordinary course of business:

•

For Mr. Stumpf, the payments by Target to Wells Fargo for commercial banking, brokerage, trust and equipment financing services, and commitment fees for Wells Fargo's role as a non-lead participant in Target's syndicated revolving credit facility. Target's total payments to Wells Fargo amounted to less than 0.01% of Wells Fargo's annual revenues in each of the last three fiscal years. Target does not use Wells Fargo for any investment banking, consulting or advisory services.



•

For Ms. Minnick, her indirect ownership position in portfolio companies of Lion Capital that are merchandise vendors of Target. Her indirect ownership in these portfolio companies is less than 5%, and Target's annual purchases constitute less than 2% of each portfolio company's annual revenues for each of the last three fiscal years.



•

For Ms. Dillon, the amount of payments to U.S. Cellular for telecommunication services, which amounted to less than 0.01% of U.S. Cellular's annual revenues in each of the last three fiscal years.



•

For Ms. Mulcahy, the charitable contributions by Target to Save The Children Federation, which amounted to less than 2% of Save the Children's annual revenues in each of the last three fiscal years.

Corporate Governance Documents Available on Our Website

        Copies of our key corporate governance documents are available on our website, www.target.com (click on "Investor Relations" and "Corporate Governance"). These documents include our Articles of Incorporation, Bylaws, Corporate Governance Guidelines, Position Descriptions (charters) for each of the Board's committees, our Business Conduct Guide and our Corporate Responsibility Report.

Board Meetings; Attendance at Annual Shareholders Meeting

        The Board of Directors met five times during fiscal 2011. 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.

        All directors attended our June 2011 Annual Meeting of Shareholders. The Board has a policy requiring all directors to attend all Annual Meetings of Shareholders, absent extraordinary circumstances.

Board Leadership Structure

        The Board is led by Mr. Steinhafel in his role as Chairman. Mr. Steinhafel is also the Chief Executive Officer. The Board also has designated a lead independent director position to complement the Chairman's role, and to serve as the principal liaison between the non-management directors and the Chairman.

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        The Board continues to believe that its current structure is the appropriate one for Target at this time. Specifically, the Board believes that in light of Target's clear strategy and the strength of its overall governance practices, a combined Chairman/CEO role will more effectively unify the Board and management around the specific initiatives to support Target's strategy. The Board continues to separately evaluate Mr. Steinhafel annually in each of his roles, and it has retained the discretion to separate the Chairman/CEO roles at any time if the Board believes it would better serve the interests of Target. The Board also concluded that its lead independent director position effectively balances any risk of concentration of authority that may exist with a combined Chairman/CEO position.

        Mr. Johnson is our lead independent director. As lead director, Mr. Johnson:

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



•

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



•

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



•

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

Management Succession Planning

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

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 in the context of specific aspects of our business is supplemented by periodic reviews of our enterprise risk management process, which facilitates consideration of our overall strategic objectives, risk exposures and risk management programs in a holistic fashion.

        The oversight of risks also occurs at the Board Committee level on a more focused basis, as described in the description of each Committee's responsibilities.

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

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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 incentive structure with near-term and long-term strategic goals.



•

Performance Metrics:  A variety of performance metrics are used in both the short-term and long-term incentive plans. This "portfolio" approach to performance metrics encourages focus on sustained overall company performance. Additional detail on our performance metrics can be found in the Compensation Discussion and Analysis.



•

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:



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The Compensation Committee's ability to use "negative discretion" to determine appropriate payouts under formula-based plans;



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A clawback policy to recover incentive compensation that was based on inaccurate financial statements; and



•

Stock ownership guidelines for executive officers, supplemented with an anti-hedging policy.

Committees

        The Board has the following committees and committee composition (all of whom are independent directors) as of the date of this proxy statement:

        A description of each Committee's function and number of meetings during fiscal 2011 follows.

Nominating & Governance Committee

        The Nominating & Governance Committee oversees our corporate governance practices and identifies individuals qualified to become Board members. After identifying qualified Board candidates, the Nominating & Governance Committee will make a recommendation to the full Board with respect to candidates to stand for election or otherwise be added to the Board.

        Under our Corporate Governance Guidelines, non-management directors may not serve on the Board for more than 20 years, or 5 years after they retire from active employment, whichever occurs first. In addition, directors must resign at age 72 and must submit an offer of resignation for consideration by the Nominating & Governance Committee and the full Board upon any substantial change in principal

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employment. During fiscal 2011, no non-management directors experienced a change in principal employment.

        The Nominating & Governance Committee held three meetings during the last fiscal year.

Compensation Committee

        The Compensation Committee has responsibility for determining the composition and value of non-CEO executive officer compensation and making recommendations with respect to CEO compensation to the independent members of the Board, who collectively have final approval authority. The Compensation Committee's responsibilities include reviewing our compensation philosophy, selection and relative weightings of different compensation elements to balance risk, reward and retention objectives, the alignment of incentive compensation performance measures with our strategy, and specific compensation levels for each executive officer. The Compensation Committee also reviews the compensation provided to non-management directors and makes recommendations to the independent members of the Board.

        The Compensation Committee may not delegate its primary responsibility of overseeing executive officer compensation, but it may delegate to management the administrative aspects of our compensation plans that do not involve the setting of compensation levels for executive officers. Additional information on the processes and procedures for executive compensation determinations, including the role of management and compensation consultants, is contained in the Compensation Discussion and Analysis beginning on page 20. The Compensation Committee held four meetings during the last fiscal year.

Audit Committee

        The Audit Committee assists the Board with the oversight of our financial reporting process and our compliance programs. The Audit Committee's financial reporting process oversight responsibilities include the integrity of our financial statements and internal controls, the independent auditor's qualifications and independence and performance of our internal audit function. The Audit Committee's compliance program oversight responsibilities include compliance with legal and regulatory requirements, our business ethics program and review and approval of transactions with related persons.

        The Board of Directors has determined that all members of the Committee satisfy the independence requirements of the NYSE and SEC, and all members have acquired the attributes necessary to qualify them as "audit committee financial experts" as defined by applicable SEC rules.

        The duties and activities of the Audit Committee are further described in the Report of the Audit Committee on page 51. The Audit Committee held five meetings during the last fiscal year.

Finance Committee

        The Finance Committee reviews our primary financial policies and strategies, including our liquidity position, funding requirements, ability to access the capital markets, interest rate exposures and policies regarding return of cash to shareholders. The Finance Committee held two meetings during the last fiscal year.

Corporate Responsibility Committee

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

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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 to the relevant Board members, except those that are clearly unrelated to Board or shareholder matters.

Director Compensation

General Description of Director Compensation

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

        The three forms of annual compensation have the following terms:

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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.



•

The size of stock option grants are based on the estimated fair value as determined under the Towers Watson Black-Scholes option pricing methodology. Stock options are granted in January and are immediately vested, but are not exercisable until one year after the grant date. Stock options granted in January 2012 have a ten-year term. Stock options granted in January 2011 and prior years have a term equal to the lesser of ten years from the date of grant or five years following a director's departure from the Board.



•

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.

        New directors also receive a one-time grant of RSUs with a $50,000 grant date fair value upon joining the Board.

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Director Compensation Table

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(1)

Amounts represent the aggregate grant date fair value of RSUs and stock options that were granted in fiscal 2011, 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 25, Share-Based Compensation, to our consolidated financial statements for fiscal 2011 for a description of our accounting and the assumptions used. Details on the stock awards and option awards granted during fiscal 2011 are as follows:

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(2)

The aggregate number of unexercised stock options and unvested RSUs outstanding at fiscal year-end held by directors was as follows:

(3)

Amount reported represents above-market earnings on nonqualified deferred compensation, consisting of an additional 6.52% 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 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 4.03%. There are three active directors eligible to receive a benefit under this program. These directors, and their current benefit values are:

(5)

In addition to the amounts reported, all directors also receive a 10% discount on merchandise purchased at Target stores and Target.com, both during active service and following retirement. Non-employee directors are also provided with $100,000 of accidental death life insurance.

(6)

Ms. Austin received additional annual compensation of $29,168 as a result of her role as Chairperson of the Audit Committee, which is reflected in the table as "Fees Earned or Paid in Cash."

(7)

Mr. Johnson received additional aggregate annual compensation of $16,668 as a result of his roles as Lead Director and Chairperson of the Compensation Committee, which is reflected in the table as "Fees Earned or Paid in Cash."

(8)

Ms. Mulcahy received additional annual compensation of $12,500 as a result of her role as Chairperson of the Finance Committee, which is reflected in the table as "Fees Earned or Paid in Cash."

(9)

Mr. Sanger received additional annual compensation of $12,500 as a result of his role as Chairperson of the Nominating & Governance Committee, which is reflected in the table as "Fees Earned or Paid in Cash."

(10)

Mr. Trujillo received additional annual compensation of $12,500 as a result of his role as Chairperson of the Corporate Responsibility Committee, which is reflected in the table as "Fees Earned or Paid in Cash."

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CERTAIN RELATIONSHIPS

Policy on Transactions with Related Persons

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

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

        We did not have any transactions requiring review and approval in accordance with this policy during fiscal 2011 and through the date of this proxy statement.

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BENEFICIAL OWNERSHIP OF CERTAIN SHAREHOLDERS

Share Ownership of Directors and Officers

        Set forth below is information regarding the shares of Target common stock (our only outstanding class of equity securities) which are owned on March 16, 2012 or which the person has the right to acquire within 60 days of March 16, 2012 for each director, executive officer named in the Summary Compensation Table on page 34, and all Target directors and executive officers as a group.

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(1)

Includes shares of common stock that the named individuals may acquire on or before May 15, 2012 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. Sanger has shared voting and investment power over 30,552 shares and Mr. Steinhafel has shared voting and investment power over 187,480 shares.

(3)

Includes shares of common stock owned by executive officers in the Target 401(k) Plan as of March 16, 2012.

(4)

Includes 39,750 shares of common stock held in trusts of which Mr. Steinhafel is the sole trustee, and 187,480 shares directly owned by a limited liability partnership of which Mr. Steinhafel and his wife are the only general partners.

(5)

Includes 2,250 shares of common stock held in a trust of which Mr. Scovanner is the sole trustee, and 27,054 shares held in a different trust of which Mr. Scovanner is the sole trustee.

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Economic Ownership; Stock Ownership Guidelines

        Because the table above is limited to shares that are owned or which the person has the right to acquire within 60 days, it does not present a complete view of the economic exposure our directors and executive officers have to Target common stock. Excluded from the table above are RSUs which will be converted into common stock more than 60 days from March 16, 2012, and deferred compensation amounts that are indexed to Target common stock, but ultimately paid in cash.

        In 2004, we adopted stock ownership guidelines for our directors and executive officers that are based on economic ownership. These guidelines recognize the following forms of economic ownership:

•

Outstanding shares that the person owns or is deemed to own under the federal securities laws;



•

Restricted stock and RSUs, whether vested or unvested; and



•

Share equivalents that are held under deferred compensation arrangements.

        Our ownership guideline amount for non-employee directors is a fixed value of $270,000, and directors are expected to achieve this level of ownership within five years of their appointment. All directors currently comply with these stock ownership guidelines. The following table shows the economic ownership position of each director as of March 16, 2012:

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(1)

Based on closing stock price of $58.41 as of March 16, 2012.

(2)

Mr. Stumpf joined the Board on March 10, 2010 and has five years from that date to meet the stock ownership guidelines.

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        Our ownership guideline amount for executive officers is based on a multiple of base salary as follows:

•

CEO: 5X base salary



•

Other executive officers: 3X base salary

        Executive officers are expected to achieve compliance within five years of their appointment. All of our named executive officers currently comply with our guidelines. The following table shows the economic ownership position of each named executive officer as of March 16, 2012:

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(1)

Based on closing stock price of $58.41 as of March 16, 2012.

        If a director or executive officer has not satisfied the ownership guideline amounts by the compliance deadline, he or she must retain all shares acquired on the vesting of equity awards or the exercise of stock options (in all cases net of exercise costs and taxes) until compliance is achieved.

Largest Owners of Target's Shares

        The table below sets forth certain information as to each person or entity known to us to be the beneficial owner of more than five percent of any class of our voting securities (percent of class based on shares outstanding on March 16, 2012):

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(1)

State Street Bank 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 13, 2012. The filing indicates that as of December 31, 2011, State Street had sole voting power for 0 shares, shared voting power for 61,922,482 shares, sole dispositive power for 0 shares and shared dispositive power for 61,922,482 shares.

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EXECUTIVE COMPENSATION

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
Calvin Darden
Mary N. Dillon
Stephen W. Sanger

Compensation Discussion and Analysis

Executive Summary

        Our compensation programs are structured to align the interests of our executive officers with the interests of our shareholders. They are designed to attract, retain, and motivate a premier management team to sustain our distinctive brand and its competitive advantage in the marketplace, and to provide a framework that delivers outstanding financial results and shareholder returns over the long term. We pursue this alignment with shareholders through a pay for performance philosophy in which variable compensation represents a majority of an executive officer's potential compensation, a balance of short and long-term performance metrics, and sound governance.

        The chart below demonstrates that our performance has resulted in returns to Target shareholders that over the 3, 5 and 10 year time horizons has outpaced the median of our retail peer group (as defined on page 30):

Total Shareholder Return(1)

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Data Source: Bloomberg

(1)

Total shareholder return period ending January 31, 2012.

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        In addition to our results shown above, our sales (market share) and EPS performance versus our 15 company retail peer group (including Target) for the last three years has outpaced the median of our retail peer group. As outlined in our long-term incentive performance on page 29, we ranked 5^th of the 15 companies in sales (market share) growth and 2^nd in EPS growth for the three year period ended with fiscal 2011.

        Turning to our most recent results, Target's full-year fiscal 2011 financial results reflect the ability of our team to manage our businesses in a volatile environment. We delivered diluted GAAP earnings per share (EPS) of $4.28, up 7 percent from fiscal 2010. Adjusted EPS for fiscal 2011, which we report as a measure of the performance of our U.S. businesses, was $4.41, up 14.3 percent from a year ago. A reconciliation of non-GAAP financial measures to GAAP measures is provided on pages 20-21 of our annual report on Form 10-K.

        For fiscal 2011, U.S. Retail comparable-store sales grew by 3 percent, our best annual performance since fiscal 2007. This growth reflects investments made in our remodel program and 5% REDcard Rewards loyalty program, both of which continue to drive incremental traffic and sales. Our team very effectively managed the profitability of our retail sales, largely offsetting the gross margin pressure from our sales-driving initiatives with expense leverage, keeping our operating expense rates in line with our goal and past performance while maintaining strong service levels in our stores. This disciplined focus allowed us to replicate the high EBITDA performance we achieved in fiscal 2009 and fiscal 2010.

        Our U.S. Credit Card segment achieved outstanding results managing our receivables portfolio, generating outstanding profitability on a planned decline in the asset base, with a pretax return on our investment in the portfolio of 24%. Strong cash generation, combined with a strong balance sheet allowed us to return $2.6 billion to our shareholders through dividends and share repurchase, representing more than 88% of our net income for the year.

        Compensation decisions for our executive officers, including the named executive officers (NEOs), in fiscal 2011 (as detailed on page 24-29) reflect this backdrop of continued strong performance and execution of our strategy:

•

Base pay levels reflect modest increases except where appropriate to reflect expanded responsibilities;



•

Our fiscal results produced short-term incentive compensation that was at goal; and



•

Long-term incentive award values were largely consistent with awards in fiscal 2010, except where appropriate to recognize an executive officer for expanded responsibilities and/or exceptional contributions in fiscal 2011.

        In broad terms, our compensation programs for executive officers focus on clear and consistent pay for performance criteria and reflect the competitive environment in which we operate. More specifically, we:

•

Establish short-term incentive payout levels to provide an opportunity for compensation payments in the upper quartile of the marketplace when financial performance goals are exceeded, and for significantly reduced compensation when our financial performance is below expectations;



•

Incorporate a mix of variable cash and equity compensation elements with varying time horizons and financial measures to reward sustained outstanding performance. This approach aligns with shareholder interests by focusing on shareholder value creating performance measures such as market share, earnings per share (EPS), earnings before interest and taxes (EBIT) and economic value added (EVA);

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•

Provide a competitive package of long-term pay at risk and time-vested equity compensation and retirement plans to facilitate retention and provide opportunities to realize future value aligned with shareholders.

        In addition, we continued our focus on sound corporate governance in our pay practices by:

•

Conducting an annual compensation risk assessment reviewed by the Board's independent compensation consultant, Semler Brossy Consulting Group (SBCG);



•

Maintaining stock ownership guidelines, a clawback policy and an anti-hedging policy for executive officers; and



•

Not providing tax gross-ups to our executive officers.

Our Performance Framework for Executive Compensation

Pay Mix Allocation

        Our compensation programs embrace a strong pay for performance approach, in which variable compensation, also referred to as pay at risk, represents a majority of potential total compensation in order to motivate and reward sustained outstanding performance that is aligned with shareholder interests.

        Total direct compensation (TDC) for our executive officers is determined by the sum of three compensation elements: base salary, short-term incentive compensation, and long-term incentive compensation. We allocate TDC among the compensation elements by considering market data from our peer group companies. This is done both by direct comparison of the amount of each element with peer group company data, and also using data on the relative weightings of different elements by our peer companies. This market data is used to establish a range for each element that becomes a reference point to determine a final compensation allocation that is in-line with market conditions, yet maintains a strong bias in favor of long-term and performance linked compensation.

        The chart below illustrates how base salary, short-term incentives and long-term incentives comprised of Stock Options, Performance Share Units (PSUs) and Restricted Stock Units (RSUs), were allocated to create the fiscal 2011 TDC pay mix (at goal) for our CEO and Other NEOs:

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Pay Mix Components

        Our compensation programs use a combination of performance measures with both short (annual) and long-term time horizons to provide a balanced assessment of performance and risk over time and support our financial and strategic objectives.

Pay for Performance Link

        We establish challenging goals for our company and our team. As outlined on page 27, we have consistently set goals and achieved results above prior years' levels. For pay positioning we determine TDC using "at goal" levels of payouts (commonly referred to as "target" levels of performance). In other words, we assume at goal payout levels for determining target level payouts under our short-term incentive

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program and the value of PSU awards. All equity awards are valued at their grant date fair value for purposes of determining TDC. The actual TDC earned by each executive officer will vary significantly depending on both company and their individual performance.

        The following chart highlights the variability of our compensation by showing fiscal 2011 TDC at goal and the value of the TDC package for our CEO one year later with two different performance scenarios: above goal performance reflecting EBIT and EVA results at 10% above goal with 10% stock price appreciation for the year; and below goal performance reflecting EBIT and EVA results at 10% below goal with 10% stock price depreciation:

CEO TDC Variability

        Our other NEOs' TDC packages exhibit a similar level of variability. With this backdrop, the remainder of this section discusses in greater detail each component of TDC.

Determining TDC

        When determining executive officer TDC, many factors are considered to ensure the packages are in line with our pay for performance philosophy while remaining competitive in the market for talent. We consider individual factors such as performance, experience, internal comparisons and compensation history. Peer group market positioning is another important factor considered in determining each executive officer's TDC (as discussed on pages 29-30). Due to imprecise comparability of executive officer positions between companies, peer group market position is used as a reference point in the TDC determination process rather than a formula-driven outcome. The following considerations are utilized when determining executive officer TDC packages that have been established at levels above the median of our peer groups, and for more experienced executive officers, including all of the NEOs, at levels that are in the upper quartile of these peer groups:

•

Job Scope—The job scope of our executive officers is broad and complex. We maintain a flat organizational structure resulting in greater executive officer involvement and insight into the business which leads to high performance expectations of our executive officers. We also have vertical integration where we manage our own international sourcing operations, directly import a significant percentage of our inventory, and develop and manage our large portfolio of owned-brand offerings. In addition, we have supply chain complexity with the variety of categories we offer in our stores, from perishable food products, to apparel and linens, to electronics and movies to pharmacies. Further complexities include our U.S. Credit Card segment and international expansion which resulted in our Canadian segment.



•

Size—With respect to the retail peer group in all metrics and for our general industry peer group with respect to revenue and number of employees, we are among the largest of our peer companies.

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•

Pay at Risk—Pay at risk (short-term and long-term incentive compensation) represents a higher percentage of TDC for our executive officers in comparison to our retail and general industry peer groups. For our CEO and other NEOs, 90% and 84% of TDC is pay at risk, respectively—aligning pay with our financial and/or stock price performance. Our executive officers are accountable for, and compensated based on, our performance and the functions that they manage. When our performance is strong, payouts will be higher. Conversely, when our performance is weak, payouts will be lower.



•

Talent—We seek to attract and retain the best available management talent to protect and advance the iconic Target brand.



•

Long-term Performance—As illustrated in the chart on page 20, our total shareholder return over the 3, 5 and 10 year time horizons has outpaced the median of our retail peer group. All five of our NEOs have been officers of our company over the 10-year time horizon (four of the five have been executive officers since at least 2003) and have had a direct impact on our long-term performance.

Base Salary

        Based on the rationale described above, we have established base salaries at levels above the median levels of our peer groups, and for more experienced executive officers, including all of the NEOs, at levels that are in the upper quartile of these peer groups. Specific actions in the current year related to base salaries for NEOs who received increases of more than 4% were:

•

An increase for Ms. Tesija for increased responsibilities over our multichannel initiatives.



•

An increase for Mr. Scully for his expanded responsibilities over our shared service operations.

Short-term Incentives

        Incentive opportunities under our short-term incentive compensation program are based on percentages of an executive officer's base salary that are tied to objective financial performance measures used under the program, and for executive officers other than our CEO, their subjectively determined personal performance level. For at goal performance, the CEO short-term incentive pays 150% of base salary and for executive officers, 80% of base salary (see table below). The performance measures are as follows:

•

Profitability (Incentive EBIT)—Incentive EBIT is one of two financial performance measures for payments under our annual short-term incentive program. This measurement is designed to reinforce our focus on the growth in our earnings before interest and taxes and accounts for 50% of the financial component of the short-term incentive payout. Incentive EBIT is U.S. Retail EBIT plus U.S. Credit Spread to LIBOR (see Credit Spread to LIBOR definition and discussion in Item 7 of our annual report on Form 10-K). Because the majority of our credit card receivables portfolio earns interest based on a variable interest rate, changes in interest rates affect finance charge revenues that, in turn, affect reported EBIT. Accordingly, we adjust EBIT to generally eliminate the effect of interest rate fluctuations (either up or down) on short-term incentive payout calculations. In establishing the goal for fiscal 2011, the Compensation Committee determined to exclude the Canadian segment results as those results consist solely of start-up costs incurred during the performance period.



•

Investment Discipline (Incentive EVA)—Incentive EVA is the other financial performance measure for payments under our annual short-term incentive program and accounts for the other 50% of the financial component of the short-term incentive payout. Incentive EVA is a measure of earnings after an estimated after-tax cost of capital charge and is used to evaluate the degree to which capital is being efficiently invested. The effective tax rate used to calculate Incentive EVA is fixed to prevent future tax volatility from having an unintended effect on payouts. A positive Incentive EVA

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performance indicates we are generating returns on invested capital at rates higher than the cost of capital. Among other things, our use of Incentive EVA helps us temper the objective of increasing revenues through new store construction with a measure of how profitably we are investing in new stores. In calculating Incentive EVA, we use an annualized after-tax blended cost of debt and equity capital of 9% for capital used to fund our core retail operations and approximately 5% for capital used to fund our credit card operations. Consistent with our calculation for Incentive EBIT, our Canadian segment results were excluded from fiscal 2011 Incentive EVA by design.

•

Personal Performance—All executive officers are eligible to earn a personal performance payment. For all executive officers other than our CEO, personal performance payments correspond to a predetermined percentage of their base salary tied to a payout matrix for each personal performance review score. The maximum personal performance payout is equal to 46.7% of an executive officer's base salary. Our CEO does not receive a personal performance payment under this program, but he may receive a personal performance payment outside of the program, at the Board's discretion.

        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 percent of base pay:

Illustrative Payouts for CEO
(as a % of base salary)

Illustrative Payouts for Other NEOs
(as a % of base salary)

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(1)

Reflects financial performance at 5% below goal, and "effective" personal performance.

(2)

Reflects financial performance at goal, and "excellent" personal performance.

(3)

Reflects financial performance at 5% above goal, and "outstanding" personal performance.

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        The short-term incentive program provides for an annual maximum incentive opportunity of 400% of base salary for each executive officer and occurs at performance levels more than 5% above goal.

        Short-term incentive payouts have varied significantly based on our financial performance over the last five years. The following chart illustrates short-term incentive payouts in relation to goal payouts from fiscal 2007 to fiscal 2011 for our CEO:

CEO Short-Term Incentive History

•

2011 Financial Component—Incentive EBIT and Incentive EVA Performance Results—In fiscal 2011, the Board approved financial goals above fiscal 2010 and fiscal 2009 results. We achieved Incentive EBIT and Incentive EVA performance that was 0.1% above goal and 1.3% below goal respectively. The following chart summarizes historical performance as well as fiscal 2011 financial performance versus goal:

•

Personal Component—Review scores, which determine payouts for the personal performance component of our short-term incentive program for our executive officers other than the CEO are based on subjective management criteria, including the executive officer's ability to develop a high performing team, their ability to lead strategic priorities and their demonstration of a strong commitment to high ethical standards. We include this subjective element within our mix of variable compensation elements to recognize the critical factors upon which we believe their leadership and performance should be judged, but which are not quantifiable or linked to our consolidated financial statements. For fiscal 2011, the Compensation Committee approved our CEO's recommended personal review scores for the other executive officers.

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•

CEO Discretionary Award—The Board awarded Mr. Steinhafel a discretionary short-term incentive payment for personal performance in the amount of $1.25 million for fiscal 2011, compared to an award of $1.2 million in fiscal 2010. The primary purpose of the award amount for fiscal 2011 was to recognize his personal performance as Chief Executive Officer in leading our company in delivering record EPS in fiscal 2011 in a challenging environment, and making significant progress on our strategic initiatives including our expansion into Canada, the success of our remodel program and 5% REDcard Rewards loyalty program initiatives and their contribution to our profitability. We believe those strategic initiatives will drive value to shareholders over short- and long-term time horizons.

        All personal performance payments are reported in the "Bonus" column of the Summary Compensation Table, and any payments based on financial performance measures in our short-term incentive program are reported in the "Non-Equity Incentive Plan Compensation" column.

Long-term Incentives

        We believe consistent execution of our strategy over multi-year periods will lead to an increase in our stock price. Stock options, PSUs and RSUs are the variable equity instruments we use to incent our executive officers to maintain this long-term focus and as a reward vehicle for their efforts, if successful, over the long-term. In addition to alignment with shareholder interests, the use of multiple equity-based LTI award vehicles supports our pay for performance philosophy:

•

Stock options provide a strong incentive for stock price appreciation, as without stock price appreciation these instruments do not provide any value to the executive officer. To emphasize stock price growth, 50% of the LTI award value as of the grant date is delivered as stock options, 25% as PSUs and 25% as RSUs.



•

RSUs facilitate retention and cliff vest three years from the date of grant.



•

PSUs focus on measures directly aligned with profitable market share growth relative to peers over a three-year time horizon. Above-median performance is required to earn the goal level payment.

        Payouts of PSUs are based on our relative performance within our 15 company retail peer group (including Target) for two performance metrics:

•

Market Share—This measurement is designed to incent continued market share gains and measures the domestic net sales growth captured relative to peers. One-half of the PSU awards are based on our ability to deliver incremental market share over a three-year performance period.



•

EPS—This measurement focuses on achieving sufficiently high growth in EPS over a sustained period, generating substantial value for shareholders over the long term. One-half of the PSU awards are based on our three-year EPS growth relative to peers.

        The following table summarizes the performance requirements that will determine PSU payouts using the relative measurements for the 2009, 2010 and 2011 PSU grants:

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        PSU payouts at goal (100% payout) require performance above the median of the peer group (a rank of 6^th among the 15 companies in the group including Target). Maximum payout at 150% of goal is attained if we rank 3^rd or better in both measures at the end of the performance period. A rank of 13-15 will result in a 0% payout. For rankings 4-5 and 7-12, payouts will be determined based on the degree of differential between each ranking. The following table summarizes the rankings and payout results for awards granted in fiscal 2009 with a base year of fiscal 2008 and a final performance year of fiscal 2011:

        Based on the results shown above, the Compensation Committee approved (and board certified for Mr. Steinhafel) payouts at 126.5% of original shares granted in March 2009. These results exclude the impact of our Canadian segment. Including or excluding Canada makes no difference in total payout for those awards.

        In fiscal 2011, the Compensation Committee took the following notable actions related to LTI grants for our NEOs:

•

Mr. Scovanner received a reduced long-term incentive award in consideration of his upcoming retirement.



•

Ms. Tesija and Mr. Scully received increased long-term incentive awards to reflect additional responsibilities over our multichannel business for Ms. Tesija and for Mr. Scully's leadership in the successful launch of our 5% REDcard Rewards program.

Competitive Market Analysis

        The TDC levels and elements described in the preceding pages are evaluated annually for each executive officer relative to our retail and general industry peer group companies. The market comparisons are determined by use of compensation data obtained from publicly available proxy statements analyzed by Semler Brossy Consulting Group (SBCG) and proprietary survey data assembled by Towers Watson and Hay Group. The selected retail peer group provides a cross section of general merchandise, department store, food and specialty retailers and includes companies that are large (generally exceeding $15 billion in revenues) and meaningful competitors. Further, our PSU program (detailed on pages 28-29) hinges on our ability to perform successfully relative to our retail peers. 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

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Committee. Both the retail and general industry peer groups for fiscal 2011 remain unchanged from fiscal 2010. The companies included in the market comparisons are listed below.

        The following table summarizes our recent rankings in our retail and general industry peer groups. All data is from fiscal year end 2010 with the exception of Market Cap, which is from fiscal year end 2011:

Data Source: Equilar

Additional Compensation Elements

        We offer additional compensation elements designed to encourage retention of key talent. These elements include:

•

Pension plan—We maintain a pension plan that covers team members that were hired prior to January 2009 and 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. With the exception of one older supplemental plan that covers persons who have been officers since 1989 (which includes our current CEO, Mr. Steinhafel), our pension formula under these plans is the same for all participants—there are no enhanced benefits provided to executive officers.



•

401(k); and



•

Deferred compensation plan.

        Details on each of these elements of our compensation programs are provided in the tables that follow the Summary Compensation Table beginning on page 34.

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

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perquisites annually to ensure they are consistent with our philosophy and appropriate in magnitude. The personal use of our aircraft is provided to our CEO for security reasons. Other perquisites are described on pages 35-36 of this proxy statement.

Employment Contracts

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

Income Continuance

        We have an Income Continuance Policy (ICP) that is provided to executive officers who are involuntarily terminated without cause because we believe it is appropriate to provide continued income to assist in their occupational transition. The maximum payment under this policy (paid during regular pay cycles over two years) is two times the sum of (1) base salary and (2) the average of the last three years of short-term incentive and personal performance payments.

Compensation Governance

Roles of Compensation Committee, Management and Consultants

        The Compensation Committee is responsible for determining the composition and value of our non-CEO executive officer pay packages and for developing a recommendation for our CEO's pay package that is reviewed and approved by the independent directors of the full Board. The Compensation Committee receives assistance from two sources: (1) an independent compensation consulting firm, SBCG; and (2) our internal executive compensation staff, led by our Executive Vice President of Human Resources. SBCG has been retained by and reports directly to the Compensation Committee and does not have any other consulting engagements with management or Target.

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

•

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 his compensation.



•

For other executive officers, our Executive Vice President of Human Resources works with our CEO to develop our CEO's compensation recommendations to the Compensation Committee. In developing these recommendations, 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 consultant covering the peer group companies. Management's outside consultant does not have any interaction with either the Compensation Committee or our CEO, but does interact with the Executive Vice President of Human Resources and her staff. In addition to providing market data, management's external compensation consultant performs other services for Target unrelated to the determination of executive compensation. The final recommendations to the Compensation Committee are determined by our CEO, and include a recommendation with respect to the compensation of the Executive Vice President of Human Resources. Importantly, SBCG provides the Compensation Committee with SBCG's independent view of our CEO's compensation recommendations.

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

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Say-on-Pay

        The Compensation Committee reviewed the results of the annual non-binding "say-on-pay" proposal. At the annual meeting of shareholders held in June 2011, our executive compensation was approved by shareholders holding a substantial majority (92%) of the shares voted on our "say-on-pay" proposal. The Compensation Committee and our Board of Directors believe the results of the vote in the most recent year support our approach to executive compensation and did not indicate a need to implement any major changes to our executive compensation programs in fiscal 2011. The Board will continue to carefully consider the outcome of the advisory vote on executive compensation, and shareholder opinions received from other communications, when making future compensation decisions.

Recoupment Policy

        Our recoupment (or "clawback") policy, which covers all officers, allows for recovery of the following compensation elements:

•

All amounts paid under the Short-Term Incentive Plan (includes discretionary component) 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 the Corporation's consolidated financial statements.

Anti-Hedging Policy

        Executive officers and members of the Board of Directors may not directly or indirectly engage in capital transactions intended to hedge or offset the market value of Target common stock owned by them.

Policies on Equity Compensation

General

        Our use of equity compensation is intended to enhance the alignment of executive officer and shareholder interests, and also to provide a means for our executive officers and directors to accumulate an ownership stake in Target. Our executive officer and director stock ownership guidelines, and their current ownership positions, are discussed on pages 18-19 of this proxy statement.

        Our Compensation Committee recognizes that the use of equity as a form of compensation can result in potential shareholder dilution. Our equity compensation awards have been granted under a shareholder approved plan (our Long-Term Incentive Plan). On an annual basis, the Compensation Committee reviews and approves an aggregate pool of shares that are available for grant, and in doing so, reviews metrics relating to both the annual grant rate and the cumulative dilutive impact of outstanding awards. In addition, the plan expressly prohibits the repricing of any outstanding stock option without shareholder approval. Individual grants to executive officers must be approved by the Compensation Committee. The Compensation Committee has delegated authority to make grants to team members below the executive officer level to our CEO.

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Grant Timing Policy

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

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Stock options and RSUs are granted on the date of our regularly scheduled January Compensation Committee meeting. PSUs are granted on the date of our regularly scheduled March Compensation Committee meeting in order to align the grant date of the award with our financial goal-setting process. These meetings are scheduled more than one year in advance.



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



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



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On occasion we make equity compensation grants outside of our annual grant cycle for new hires, promotions and recognition or retention purposes. All such grants have an effective date on or after the date of approval. If the grant date is after the date of approval, it is on a date specified at the time of approval.

Tax Considerations—Code Section 162(m)

        Our short-term and long-term compensation programs, including the compensation paid in fiscal 2011, were intended to qualify as deductible performance based compensation under Section 162(m) of the Internal Revenue Code. We may provide non-deductible compensation in situations the Compensation Committee or our Board of Directors believes appropriate.

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Summary Compensation Table

        The Summary Compensation Table below contains values calculated and disclosed according to SEC reporting requirements. Salary, bonus, and non-equity incentive plan compensation amounts are reflective of the compensation earned during the fiscal year. The stock awards and option awards reflect awards with a grant date during the fiscal year.

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(1)

Mr. Steinhafel received a restricted stock award of $3.25 million in March 2010, which represented his fiscal 2009 bonus of $1.1 million and a portion of his fiscal 2009 Non-Equity Incentive Plan Compensation. Because this stock award was granted during fiscal 2010, it is reported in the Stock Awards column of the Summary Compensation Table for fiscal 2010 rather than fiscal 2009.

(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 25, Share-Based Compensation, to our consolidated financial statements for each of fiscal 2011, 2010 and 2009 for a description of our accounting and the assumptions used.

(3)

Includes the aggregate grant date fair value of performance share units (PSUs) that were computed based on the probable outcome of the performance conditions as of the grant date. Actual payments will be based on our performance. The range of payments under the awards granted in fiscal 2011 is set forth below.

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(4)

For 2011, the following amounts are related to the change in the qualified pension plan value and above-market earnings on nonqualified deferred compensation:

Consistent with applicable law, the accrued benefits under the pension plan cannot be reduced; however, the present value of the benefit is dependent on the discount rate used. The discount rates used in 2011, 2010 and 2009 were 4.65%, 5.50% and 5.85%, respectively. The Change in Pension Value column reflects the additional pension benefits attributable to service and changes in the discount rate.

The above-market earnings on nonqualified deferred compensation consist of an additional 6.52% 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. See the narrative following the Nonqualified Deferred Compensation table for additional information.

(5)

The amounts reported for 2011 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.

The SPP Credits for our named executive officers represent supplemental pension plan benefits that are credited to their deferred compensation accounts. These benefits are based on our normal pension formula, so they are affected by final average pay, age (and the early retirement factor) and changes in interest rates. See the narrative following the Pension Benefits for Fiscal 2011 table for more information about our pension plans. In particular, Mr. Steinhafel's supplemental pension plan benefits in 2011 were most impacted by:

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His higher cash compensation since becoming Chief Executive Officer;



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An early retirement factor in the pension formula that allows all plan participants, including Mr. Steinhafel, to increase the value of their pension payments by waiting to draw their pension, and



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A decline in the discount rate due to lower interest rates which had the effect of significantly increasing the amount credited to Mr. Steinhafel's deferred compensation account.

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.

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The only individual perquisite which exceeded $25,000 was Mr. Steinhafel's personal use of company-owned aircraft, which amounted to $52,702. 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 named executive officers receive certain other personal benefits for which we have no incremental cost, as follows:

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Messrs. Steinhafel and Scovanner have memberships 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, they may occasionally use the club for personal purposes provided they pay for any meal or other incremental costs;



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Occasional use of support staff time for personal matters;



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



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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 2011

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Outstanding Equity Awards at 2011 Fiscal Year-End

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Option Exercises and Stock Vested in Fiscal 2011

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Pension Benefits for Fiscal 2011

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

        The final average pay normal retirement benefit under the Pension Plan, expressed as a monthly, single-life annuity commencing at age 65, is equal to the sum of: (a) 0.8% of the participant's final average monthly pay multiplied by the years of service (not to exceed 25 years of service), plus (b) 0.25% of the participant's final average monthly pay multiplied by the years of service in excess of 25 years of service, plus (c) 0.5% of the participant's final average monthly pay in excess of 12.5% of the average of the Social Security Taxable Wage Base for the 35-year period ending when the participant terminates employment multiplied by the years of service (not to exceed 25 years of service). Final average monthly pay is equal to one-twelfth of the highest average annual salary, Bonus and Non-Equity Incentive Plan compensation earned during any five years of the last ten-year period the participant earned service in the Pension Plan, subject to IRS limits. The present value of the accumulated benefit is based on the same assumptions and valuation dates used for the valuation of pension plan liabilities in our financial statements. Participants can elect other annuity forms that have an actuarially equivalent value. We do not grant extra years of service to supplement retirement benefits.

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

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

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

Nonqualified Deferred Compensation for Fiscal 2011

        The amounts in the table below represent deferrals under the EDCP (which includes the supplemental pension benefits discussed in the preceding section), deferrals under the ODCP, and deferrals of PSUs that are held as stock units. The ODCP was frozen to new deferrals in 1996.

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(4)

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