Edgar Filing: TARGET CORP

Roxanne S. Austin

Age 54

Director since 2002

Independent

Committees

• Finance (Chair)

• Audit

• Corporate Risk & Responsibility

BACKGROUND

Roxanne S. Austin is President of Austin Investment Advisors, a private investment and consulting firm, a position she has held since 2004. From May 2014 to August 2014 she served as Interim Chair of Target Corporation. From July 2009 through July 2010, Ms. Austin also served as President and Chief Executive Officer of Move Networks, Inc., a provider of Internet television services. Ms. Austin also previously served as President and Chief Operating Officer of DIRECTV, Inc., Executive Vice President and Chief Financial Officer of Hughes Electronics Corporation and as a partner of Deloitte & Touche LLP.

QUALIFICATIONS

Through her extensive management and operating roles, including her financial roles, Ms. Austin provides the Board with financial, operational and risk management expertise, and substantial knowledge of new media technologies.

OTHER PUBLIC COMPANY BOARDS

Current

Abbott Laboratories⁽¹⁾

AbbVie Inc.⁽¹⁾

Teledyne Technologies Incorporated

LM Ericsson Telephone Company

Past 5 Years

None

TARGET CORPORATION - DEF 14A

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. __)

Filed by the Registrant

Filed by a Party other than the Registrant

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	Definitive Proxy Statement
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	Soliciting Material under §240.14a-12

TARGET CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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PROXY STATEMENT

AND NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS

Wednesday, June 10, 2015 at 8:00 a.m. PDT

Bently Reserve
400 Sansome Street
San Francisco, California 94111

Dear Fellow Shareholder,

We are providing the enclosed proxy materials in preparation for our 2015 Annual Meeting of Shareholders. At last year’s meeting, we were in a period of significant transition, and I am pleased to report that your Board and Company have made significant progress since that time. In particular:

•	The Board named Brian Cornell as Chairman & Chief Executive Officer in July, 2014. Mr. Cornell is the first ever CEO hired directly from outside the organization and brings a wealth of experience in both retailing and consumer product marketing to Target.
•	The Board supported management’s recommendation to discontinue our Canadian operations. Although this decision was difficult, your Board believes that it will lead to improved financial results and, most importantly, allow the management team to focus its energy on accelerating profitable growth in the U.S. market.
•	Given the evolving environment around risk oversight, during 2014 we embarked on a comprehensive review of risk oversight at the management, Board and Committee levels, with the assistance of a third-party strategy, risk management and regulatory compliance consultant. As a result of that comprehensive review, in January 2015 we clarified and enhanced existing practices to provide more transparency about how risk oversight is exercised at the Board and Committee levels.

We also experienced a significant transition at the Board level. After nearly 20 years of dedicated service, Jim Johnson, who had been our Lead Independent Director, will be retiring from our Board at the end of his current term. The Board is grateful to Jim for his leadership, wisdom and exemplary service.

In light of Jim’s retirement, the Board engaged in an in-depth process to select a new Lead Independent Director, and it is with a mix of honor and humility that I have agreed to take on this role. In this role I will work to support and enable the Board and management as we work to deliver on our responsibilities to our shareholders of continuing Target’s long history of profitable growth, great citizenship and shareholder responsiveness.

On behalf of the Board of Directors, I invite you to attend Target Corporation’s 2015 Annual Meeting of Shareholders. The accompanying proxy statement and 2014 Annual Report on Form 10-K contain information about:

•	The date, location, and time of the meeting.
•	Business matters on which you are encouraged to vote.
•	Governance and executive compensation disclosures, including the changes we made this past year in response to developments in our business and our continuing shareholder outreach efforts.
•	Our 2014 financial results.

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

Douglas M. Baker, Jr.

Lead Independent Director

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Notice of 2015 Annual Meeting
of Shareholders

Wednesday, June 10, 2015

8:00 a.m. Pacific Daylight Time

Bently Reserve located at 400 Sansome Street, San Francisco, California 94111

TO OUR SHAREHOLDERS

You are invited to attend Target Corporation’s 2015 Annual Meeting of Shareholders to be held at Bently Reserve located at 400 Sansome Street, San Francisco, California 94111 on Wednesday, June 10, 2015 at 8:00 a.m. Pacific Daylight Time.

PURPOSE

Shareholders will vote on the following items of business:

	1.	Election of all 10 directors named in our proxy statement to our Board of Directors for the coming year;
	2.	Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm;
	3.	Approval, on an advisory basis, of our executive compensation;
	4.	Approval of the Target Corporation Amended & Restated 2011 Long-Term Incentive Plan;
	5.	The shareholder proposals contained in this proxy statement, if properly presented at the meeting; and
	6.	Transaction of any other business properly brought before the meeting or any adjournment.

You may vote if you were a shareholder of record at the close of business on April 13, 2015. We hope you will be able to attend the Annual Meeting, but if you cannot do so, it is important that your shares be represented. If you plan to attend the meeting, please follow the instructions provided in Question 12 “How can I attend the Annual Meeting?” on page 85 of the proxy statement.

Following the formal business of the meeting, our Chairman and CEO will provide prepared remarks, followed by a question and answer session.

We urge you to read the proxy statement carefully, and to vote in accordance with the Board of Directors’ recommendations by telephone or Internet, or by signing, dating, and returning the enclosed proxy card in the postage-paid envelope provided, whether or not you plan to attend the Annual Meeting.

Thank you for your continued support.

Sincerely,

Timothy R. Baer

Corporate Secretary

Approximate Date of Mailing of Proxy Materials or

Notice of Internet Availability:

April 27, 2015

2015 Proxy Statement │ TARGET CORPORATION 5

Table of Contents

PROXY SUMMARY	8

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS	9

GENERAL INFORMATION ABOUT CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS	10

Corporate Governance Highlights	10
Our Directors	11
Board Leadership Structure	11
Management Evaluations and Succession Planning	12
Risk Oversight	12
Committees	13
Board and Shareholder Meeting Attendance	14
Director Independence	15
Policy on Transactions with Related Persons	15
Business Ethics and Conduct	16
Communications with Directors	16

ITEM ONE ELECTION OF DIRECTORS	17

Election and Nomination Process	17
Determining Board and Committee Composition	17
Board Evaluations and Refreshment	18
2015 Nominees for Director	19

STOCK OWNERSHIP INFORMATION	25

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

COMPENSATION COMMITTEE REPORT	29

COMPENSATION DISCUSSION AND ANALYSIS	29

Introduction	29
Executive Summary	30
Our Performance Framework for Executive Compensation	37
Other Benefit Elements	44
Compensation Governance	45

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COMPENSATION TABLES		49

Summary Compensation Table		49
Grants of Plan-Based Awards in Fiscal 2014		52
Outstanding Equity Awards at 2014 Fiscal Year-End		53
Option Exercises and Stock Vested in Fiscal 2014		55
Pension Benefits for Fiscal 2014		56
Nonqualified Deferred Compensation for Fiscal 2014		57
Potential Payments Upon Termination or Change-in-Control		59
Table of Potential Payments Upon Termination or Change-in-Control		60
Director Compensation		64
Equity Compensation Plan Information		67
Advances of Defense Costs for Certain Litigation Matters		67

OTHER VOTING ITEMS		68

Item Two	Ratification of Appointment of Ernst & Young LLP as Independent Registered Public Accounting Firm	68
Item Three	Advisory Approval of Executive Compensation (“Say on Pay”)	70
Item Four	Approval of Amended and Restated Target Corporation 2011 Long-Term Incentive Plan	72
Item Five	Shareholder Proposal to Adopt a Policy for an Independent Chairman	79
Item Six	Shareholder Proposal to Adopt a Policy Prohibiting Discrimination “Against” or “For” Persons	80

QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING AND VOTING		82

APPENDIX A RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES		88

APPENDIX B AMENDED AND RESTATED TARGET CORPORATION 2011 LONG TERM INCENTIVE PLAN		90

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PROXY STATEMENT
Annual Meeting of Shareholders June 10, 2015

The Board of Directors of Target Corporation solicits the enclosed proxy for the 2015 Annual Meeting of Shareholders, and for any adjournment thereof.

PROXY SUMMARY

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

TARGET 2015 ANNUAL MEETING OF SHAREHOLDERS


June 10, 2015	Bently Reserve
8:00 a.m. Pacific Daylight Time	400 Sansome Street
	San Francisco, California 94111

ITEMS OF BUSINESS

		BOARD’S
ITEM		RECOMMENDATION
Election of 10 Directors (page 17)		FOR each Director Nominee
Ratification of Independent Registered Public Accounting Firm (page 68)		FOR
Advisory Approval of Executive Compensation (page 70)		FOR
Approval of the Target Corporation Amended & Restated 2011 Long-Term Incentive Plan (page 72)		FOR
Shareholder Proposals, if Properly Presented (pages 79-81)		AGAINST

QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING AND VOTING

We encourage you to review the “Questions and Answers About Our Annual Meeting and Voting” beginning on page 82 for answers to common questions on the rules and procedures surrounding the proxy and annual meeting process, as well as the business to be conducted at our Annual Meeting.

ADMISSION AT THE MEETING

If you plan to attend the Annual Meeting in person, please see the information in Question 12 “How can I attend the Annual Meeting?” on page 85. We strongly encourage you to pre-register. If you plan to bring a guest you must pre-register by June 5, 2015. Any person who does not present identification and establish proof of ownership will not be admitted to the Annual Meeting.

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VOTING

If you held shares of Target common stock as of the record date (April 13, 2015) you are entitled to vote at the Annual Meeting.

Your vote is important. Thank you for voting.

ADVANCE VOTING METHODS AND DEADLINES

METHOD	INSTRUCTION	DEADLINE
Internet	• Go to website identified on proxy card, voter instruction form or Notice of Internet Availability of Proxy Materials • Enter Control Number on proxy card, voter instruction form or Notice of Internet Availability of Proxy Materials • Follow instructions on the screen	Internet and telephone voting are available 24 hours a day, seven days a week up to these deadlines: • Registered Shareholders or Beneficial Owners –11:59 p.m. Eastern Daylight Time on June 9, 2015 • Participants in the Target 401(k) Plan – 6:00 a.m. Eastern Daylight Time on June 8, 2015
Telephone	• Call the toll-free number identified on the enclosed proxy card or voter instruction form or, after viewing the proxy materials on the website provided in your Notice of Internet Availability of Proxy Materials, call the toll-free number for telephone voting identified on the website • Enter Control Number on the proxy card, voter instruction form or Notice of Internet Availability of Proxy Materials • Follow the recorded instructions
Mail	• Mark your selections on the enclosed proxy card or voter instruction form • Date and sign your name exactly as it appears on the proxy card or voter instruction form • Promptly mail the proxy card or voter instruction form in the enclosed postage-paid envelope		Return promptly to ensure proxy card or voter instruction form is received before the date of the Annual Meeting or, for participants in the Target 401(k) Plan, by 6:00 a.m. Eastern Daylight Time on June 8, 2015

If you received a Notice of Internet Availability of Proxy Materials and would like to vote by mail, you must follow the instructions on the Notice to request a written copy of the proxy materials, which will include a proxy card or voter instruction form.

Any proxy may be revoked at any time prior to its exercise at the Annual Meeting. Please see the information in Question 3 “What is a proxy and what is a proxy statement?” on page 82.

VOTING AT THE MEETING

All registered shareholders may vote in person at the Annual Meeting. Beneficial owners may vote in person at the Annual Meeting if they have a legal proxy. Please see the information in Question 6 “How do I vote?” on page 82. In either case, shareholders wishing to attend the meeting must follow the procedures under “Admission at the Meeting.”

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS

Important Notice Regarding the Availability of Proxy Materials for the Shareholders Meeting to be held on June 10, 2015.

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

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GENERAL INFORMATION ABOUT CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS

CORPORATE GOVERNANCE HIGHLIGHTS

At Target, we have actively supported strong corporate governance practices for decades. Our Board of Directors recognizes that our corporate governance practices must continually evolve to appropriately balance the interests of our stakeholders in order to effectively serve our guests, team members, shareholders and the communities in which we do business. Supporting that philosophy, we have adopted a balanced set of corporate governance practices, including:


		MORE
PRACTICE	DESCRIPTION	INFORMATION
BOARD COMPOSITION AND ACCOUNTABILITY
Independence	A majority of our directors must be independent. Currently, all of our directors other than our CEO are independent, and all of our Committees consist exclusively of independent directors.
Diversity of Relevant Experiences	The composition of our Board represents broad perspectives, experiences and knowledge relevant to our business while maintaining a balanced approach to gender and ethnic diversity.
Lead Independent Director	Our Corporate Governance Guidelines require a Lead Independent Director position with specific responsibilities to ensure independent oversight of management whenever our CEO is also the Chair of the Board. The Lead Independent Director is elected annually by the independent directors.
Annual Management Succession Planning Review	Our Board conducts an annual review of management development and succession planning, with the Nominating & Governance Committee coordinating the Board’s review of CEO succession planning.
Director Tenure Policies	Our director tenure policies include mandatory retirement at age 72, a maximum term limit of 20 years and a separate five-year term limit for directors who retire from active employment in order to ensure the Board regularly benefits from a balanced mix of perspectives and experiences. In addition, a director is required to submit an offer of resignation for consideration by the Board upon any change in the director’s principal employment.
Director Overboarding Policy	Any director who is not serving as CEO of a public company is expected to serve on no more than five public company boards (including our Board), and any director serving as a CEO of a public company is expected to serve on no more than two outside public company boards (including our Board).
Committee Membership and Leadership Rotations	The Board appoints members of its Committees on an annual basis, with the Nominating & Governance Committee reviewing and recommending Committee membership, and assignments rotate periodically. The guideline for rotating Committee chair assignments and the Lead Independent Director position is four to six years.
Board Evaluations and Board Refreshment	To enhance Board functioning and the effectiveness of the Board-management relationship for the benefit of Target and its shareholders, the Board regularly evaluates its performance through self-evaluations, corporate governance reviews and periodic charter reviews. Those evaluations, changes in our business strategy or operating environment and the future needs of the Board in light of anticipated director retirements are used to identify desired backgrounds and skillsets for future Board members.
Risk Oversight	During 2014, we clarified and enhanced existing practices to provide more transparency about how risk oversight is exercised at the Board and Committee levels, and reallocated and clarified risk oversight responsibilities among the Committees.
SHAREHOLDER RIGHTS
Annual Election of Directors	All directors are elected annually, which reinforces our Board’s accountability to shareholders.
Majority Voting Standard for Director Elections	Our Articles of Incorporation mandate that directors be elected under a “majority voting” standard in uncontested elections—each director must receive more votes “For” his or her election than votes “Against” in order to be elected.
Director Resignation Policy	An incumbent director who is not re-elected must promptly offer to resign. The Nominating & Governance Committee will make a recommendation on the offer and the Board must accept or reject the offer within 90 days and publicly disclose its decision and rationale.
Single Voting Class	Target common stock is the only class of voting shares outstanding.
10% Threshold for Special Meetings	Shareholders holding 10% or more of Target’s outstanding stock have the right to call a special meeting of shareholders.
No Poison Pill	We do not have a poison pill.
COMPENSATION
Follow Leading Practices	See “Target’s Executive Compensation Practices.”

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OUR DIRECTORS

NAME

AGE

DIRECTOR
SINCE

COMPANY

TITLE

INDEPENDENT

OTHER CURRENT
PUBLIC COMPANY
BOARDS

Roxanne S. Austin

2002

Austin Investment Advisers

President

Yes

Douglas M. Baker, Jr.

2013

Ecolab Inc.

Chairman & CEO

Yes

Brian C. Cornell

2014

Target Corporation

Chairman & CEO

Calvin Darden

2003

Darden Putnam Energy &
Logistics, LLC

Chairman

Yes

Henrique De Castro

2013

Yahoo! Inc. (Until January 2014)

Former COO

Yes

Mary E. Minnick

2005

Lion Capital

Partner

Yes

Anne M. Mulcahy

1997

Save The Children Federation, Inc.

Chairman of the Board of Trustees

Yes

Derica W. Rice

2007

Eli Lilly and Company

EVP, Global Services and CFO

Yes

Kenneth L. Salazar

2013

WilmerHale

Partner

Yes

John G. Stumpf

2010

Wells Fargo & Company

Chairman, President & CEO

Yes

BOARD LEADERSHIP STRUCTURE

Mr. Cornell leads the Board in his role as Chairman. Mr. Cornell is also the Chief Executive Officer. We do not have an express policy as to whether the roles of Chair of the Board and Chief Executive Officer should be combined or separated. Instead, the Board prefers to maintain the flexibility to determine which leadership structure best serves the interests of Target based on the circumstances. However, if the Chair/CEO roles are combined as they are currently, our Corporate Governance Guidelines require that we have a Lead Independent Director position to complement the Chair’s role, and to serve as the principal liaison between the non-management directors and the Chair. Doug Baker currently serves as our Lead Independent Director. The Board regularly reevaluates our Board leadership structure as part of the Board evaluation process described under “Board Evaluations” on page 18.

During the past year the Board supplemented its review of its leadership structure with the assistance of a third-party organizational consultant. The additional review was primarily driven by two events. First, a shareholder proposal at our 2014 Annual Meeting requesting that we adopt a policy to have an independent chairman received approximately 46% support of the shares voted. Second, we hired a new CEO. At the time the Board was engaged in its comprehensive CEO search, the Board made it clear that a decision of whether to combine the Chair and CEO roles would be candidate-specific. The Board concluded that Mr. Cornell’s 30 years of relevant experience, including his CEO and public company board experience, provide the proper leadership qualifications and sensitivity to the different roles of management and the Board. The Board worked directly with the third-party organizational consultant to review its leadership structure, organization and functioning in arriving at an optimal leadership structure. This review included discussion of the academic studies that compare an independent chair model with a combined chair/CEO model and the attributes necessary in a Lead Independent Director to foster strong independent leadership if the chair/CEO roles are combined.

The Board’s decision to offer Mr. Cornell both the Chairman and CEO positions is also expected to serve Target’s goals by allowing Mr. Cornell to coordinate the development, articulation and execution of a unified strategy at the Board and management levels. The Board has maintained its view that Target should have the flexibility to determine whether to combine or separate the roles of chair and CEO. Through our shareholder engagement meetings following Mr. Cornell’s appointment, we concluded that, although shareholders expressed different views on their preferred leadership structure, there was no prevailing theme on a preferred structure for Target Corporation. The Board is committed to continuing to seek shareholder feedback on its approach as part of its ongoing shareholder outreach efforts, and will continue to reassess its approach to this issue on a regular basis.

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	LEAD INDEPENDENT DIRECTOR – DOUGLAS M. BAKER, JR.
	Annual Election: Elected annually by the independent, non-management directors.
	Regular Duties:
	•	Has the authority to convene meetings of the Board and executive sessions consisting solely of independent directors at every meeting;
	•	Presides at all meetings of the Board of Directors at which the Chair is not present, including executive sessions of independent directors;
	•	Conducts the annual performance reviews of the CEO, with input from the other independent directors, and serves as the primary liaison between the CEO and the independent directors;
	•	Provides insights to the Compensation Committee as it annually reviews the performance of the CEO as it relates to all elements of compensation;
	•	Approves meeting schedules, agendas and the information furnished to the Board to ensure that the Board has adequate time and information for discussion;
	•	Is expected to engage in consultation and direct communication with major shareholders as appropriate;
	•	Coordinates with the CEO to establish minimum expectations for non-management directors to consistently monitor Target’s retail operations and those of our competitors; and
	•	Consults with the Nominating & Governance Committee regarding Board and Committee composition, Committee chair selection, the annual performance review of the Board and its Committees, director succession planning, management evaluation, and senior management succession planning.
	Service: As a guideline, the Lead Independent Director should serve in that capacity for no more than four to six years.

MANAGEMENT EVALUATIONS AND SUCCESSION PLANNING

One of the primary responsibilities of the Board is to ensure that Target has a high-performing management team in place. On an annual basis, the Board conducts a detailed review of management development and succession planning activities to maximize the pool of internal candidates who can assume top management positions without undue interruption. The independent directors, led by the Lead Independent Director, review CEO succession planning, and ensure that management is evaluated regularly and that senior management succession planning reviews are conducted at least annually, either by the Nominating & Governance Committee or the independent directors as a group.

During the past year, the Board conducted a comprehensive search with the assistance of a third-party executive leadership consultant that resulted in Brian Cornell becoming our Chairman and CEO. Prior to hiring Mr. Cornell, the Board appointed an experienced executive from our pool of internal candidates, John Mulligan, our Chief Financial Officer, to serve in the additional capacities of Interim President & CEO. The quality leadership provided by Mr. Mulligan during that interim period allowed the Board sufficient time to ensure that its comprehensive search resulted in hiring the right candidate to lead Target.

RISK OVERSIGHT

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

Given the evolving environment around risk oversight, during 2014 we embarked on a comprehensive review of risk oversight at the management, Board and Committee levels, with the assistance of a third-party strategy, risk management and regulatory compliance consultant. As a result of that comprehensive review, in January 2015 we clarified and enhanced existing practices to provide more transparency about how risk oversight is exercised at the Board and Committee levels. In addition, we reallocated and clarified risk oversight responsibilities among the Committees, most notably by elevating the risk oversight role of the Corporate Risk & Responsibility Committee (formerly known as the Corporate Responsibility Committee). A summary of the allocation of general risk oversight functions among management, the Board and its Committees is as follows:


	RESPONSIBLE PARTY	GENERAL DESCRIPTION OF RISK OVERSIGHT FUNCTION
	Management	Identification, assessment and management of risks
	Board of Directors	Continuous oversight of overall risks, with emphasis on strategic risks
	Audit Committee	Financial reporting and internal control risks
	Compensation Committee	Compensation policies, practices and incentive-related risks
	Nominating & Governance Committee	Board and management succession risks
	Corporate Risk & Responsibility Committee	Operating, business, compliance and reputational risks, including information security and technology
	Finance Committee	Financial risks, including liquidity and capital markets risk

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COMMITTEES

The Board has the following Committees and Committee composition as of the date of this proxy statement. All members of each Committee are independent directors. Each Committee operates under a written Charter, a current copy of which is available on our company website, as described in Question 14 on page 86.


	RESPONSIBILITIES		COMMITTEE MEMBERS	NUMBER OF MEETINGS DURING FISCAL 2014
AUDIT COMMITTEE⁽¹⁾	•	Assists the Board in overseeing our financial reporting process, including the integrity of our financial statements and internal controls, the independent auditor’s qualifications and independence, performance of our internal audit function and approval of transactions with related persons	Mr. Rice (Chair) Ms. Austin Ms. Minnick Mr. Stumpf	7
	•	In coordination with the Corporate Risk & Responsibility Committee, oversees compliance with legal and regulatory requirements
	•	Prepares the “Report of the Audit Committee” on page 69 and performs the duties and activities described in that report
	•	Discusses with management our positions with respect to income and other tax obligations
	•	Reviews and discusses with management our policies with respect to risk assessment and risk management, including the risk of fraud, commitment of internal audit resources and policies and procedures to mitigate identified risks
	•	Considers our major financial, accounting and compliance risk exposures and, as appropriate, involves our principal risk officer and compliance officer and our internal audit function

COMPENSATION COMMITTEE⁽²⁾	•	Determines the composition and value of non-CEO executive officer compensation and makes recommendations with respect to CEO compensation to the independent members of the Board, who collectively have final approval authority	Ms. Mulcahy (Chair) Mr. Baker Mr. Darden Mr. De Castro	6
	•	Consults with the Lead Independent Director as part of the annual review of the performance of the CEO as it relates to the appropriate level and elements of compensation	Ms. Mulcahy (Chair) Mr. Baker Mr. Darden Mr. De Castro
	•	Reviews our compensation philosophy, selection and relative weightings of different compensation elements to balance risk, reward and retention objectives and the alignment of incentive compensation performance measures with our strategy
	•	Reviews the compensation provided to non-management directors and makes recommendations to the independent members of the Board
	•	Prepares the “Compensation Committee Report” on page 29
	•	Oversees risks associated with our compensation policies and practices, and annually reviews with its compensation consultant whether those policies and practices create material risks to Target

NOMINATING & GOVERNANCE COMMITTEE	•	Oversees our corporate governance practices	Mr. Stumpf (Chair)	6
	•	Identifies individuals qualified to become Board members	Mr. Baker Mr. Darden Ms. Mulcahy
	•	Makes recommendations, in consultation with the Lead Independent Director, on overall composition of the Board, its Committees, and the selection of the Committee chairs and the Lead Independent Director	Mr. Baker Mr. Darden Ms. Mulcahy
	•	Leads the annual self-evaluation performance review of the Board and its Committees in consultation with the Lead Independent Director
	•	With input from the Lead Independent Director, leads director succession planning, and ensures that management is regularly evaluated and senior management succession planning reviews are conducted at least annually
	•	Oversees risks associated with Board and management succession

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	RESPONSIBILITIES		COMMITTEE MEMBERS	NUMBER OF MEETINGS DURING FISCAL 2014
CORPORATE RISK & RESPONSIBILITY COMMITTEE	•	Assists the Board in overseeing management’s identification and evaluation of major strategic operating, business, compliance and reputational risks, including our risk management framework and the policies, procedures and practices employed to manage risks	Mr. Salazar (Chair) Ms. Austin Mr. Darden Ms. Minnick Mr. Rice	3
	•	Oversees and monitors the effectiveness of our business ethics and compliance program
	•	Reviews and provides oversight of significant strategies and activities relating to our reputation management and social responsibility efforts
	•	Supports the Audit Committee in oversight of compliance with legal and regulatory requirements

FINANCE COMMITTEE	•	Assists the Board in overseeing our financial policies, financial condition, including our liquidity position, funding requirements, ability to access the capital markets, interest rate exposures and policies regarding return of cash to shareholders	Ms. Austin (Chair) Mr. De Castro Ms. Minnick Mr. Salazar	2
FINANCE COMMITTEE	•	Oversees financial risks, including liquidity and capital markets risks by discussing with management our financial risk assessment process, financial risk management activities and strategies and the use of third-party insurance and self-insurance strategies	Ms. Austin (Chair) Mr. De Castro Ms. Minnick Mr. Salazar

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

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

BOARD AND SHAREHOLDER MEETING ATTENDANCE

The Board of Directors met 11 times during fiscal 2014. All directors attended at least 90% of the aggregate total of meetings of the Board and Board Committees on which the director served during the last fiscal year.

All of our 10 then-serving directors attended our June 2014 Annual Meeting of Shareholders. The Board has a policy requiring all directors to attend all Annual Meetings of Shareholders, absent extraordinary circumstances.

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DIRECTOR INDEPENDENCE

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

The Board affirmatively determined that all non-management directors are independent. Mr. Cornell is the only management director and is not independent. The Board specifically considered the following transactions and concluded that none of the transactions impaired any director’s independence. In addition, none of the transactions are related party transactions because none of the directors have a direct or indirect material interest in the listed transactions.


DIRECTOR	ENTITY AND RELATIONSHIP	TRANSACTIONS	% OF ENTITY’S ANNUAL REVENUES IN EACH OF LAST 3 YEARS
Douglas M. Baker, Jr.	Ecolab Inc. Chairman & CEO	We purchase supplies, servicing, repairs and merchandise from Ecolab.	Less than 0.01%
Mary E. Minnick	Each portfolio company of Lion Capital⁽¹⁾Partner in Lion Capital	We purchase merchandise for resale from portfolio companies of Lion Capital.	Less than 2% of each portfolio company
Anne M. Mulcahy	Save the Children Federation Chairman of Board of Trustees	We make charitable contributions to Save the Children.	Less than 2%
Kenneth L. Salazar	WilmerHale Partner	In fiscal 2014, WilmerHale was engaged to provide legal services.⁽²⁾	Less than 1%
John G. Stumpf	Wells Fargo & Company Chairman, President & CEO	Wells Fargo provides commercial banking, brokerage, trust and equipment financing services, serves as a non-lead participant in Target’s syndicated revolving credit facility and is Target’s transfer agent.⁽³⁾	Less than 0.02%

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

(2)	WilmerHale represented to us that: (a) Mr. Salazar’s compensation was not affected by the amount of legal services performed by WilmerHale for Target, (b) Mr. Salazar did not receive any of the fees from the Target relationship during each of the last three years and (c) Mr. Salazar will not receive any of the fees from the Target relationship in the future. Mr. Salazar does not personally provide any of the legal services to Target.

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

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 ratified two related party transactions in accordance with this policy during fiscal 2014. Both transactions dealt with compensation of immediate family members of one of our executive officers, Casey Carl, Chief Strategy and Innovation Officer, who became an executive officer in December 2014. Mr. Carl’s brother joined Target in 2005, has been a team member in merchandising since that time and earned compensation of $144,590 in fiscal 2014. Mr. Carl’s sister-in-law joined Target in 2009, has been a team member in merchandising since that time and earned compensation of $249,880 in fiscal 2014. For each of these immediate family members, the compensation is commensurate with the immediate family member’s peers.

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BUSINESS ETHICS AND CONDUCT

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

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

COMMUNICATIONS WITH DIRECTORS

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

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ITEM ONE

ELECTION OF DIRECTORS

ELECTION AND NOMINATION PROCESS

Our election process is backed by sound corporate governance principles:

	•	All directors are elected annually;

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

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

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

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

	•	Changes in our business strategy or operating environment and the future needs of the Board in light of anticipated director retirements under our Board tenure policies.

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

DETERMINING BOARD AND COMMITTEE COMPOSITION

The criteria the Board follows in determining the composition of the Board is simple: directors are to have broad perspective, experience, knowledge and independence of judgment. The Board as a whole should consist predominantly of persons with strong business backgrounds that span multiple industries. The Board does not have a specific policy regarding consideration of gender, ethnic or other diversity criteria in identifying director candidates. However, the Board has had a longstanding commitment to, and practice of, maintaining diverse representation on the Board. At least annually the Board seeks input from each of its members with respect to the current composition of the Board in light of changes in our current and future business strategies, as well as our operating environment, as a means to identify any backgrounds or skill sets that may be helpful in maintaining or improving alignment between Board composition and our business. This input is then used by our Nominating & Governance Committee in its director search process.

The Board appoints members of its Committees on an annual basis, with the Nominating & Governance Committee reviewing and recommending Committee membership, and assignments rotate periodically. The guideline for rotating Committee chair assignments is four to six years. The Board seeks to have directors on two to three Committees, and considers a number of factors in deciding Committee composition, including individual director experience and qualifications, the benefits and symmetry of having common directors on Committees with complementary functions (e.g., Audit and Corporate Risk & Responsibility; Audit and Finance; Compensation and Nominating & Governance), prior Committee experience and increased time commitments for directors serving as a Committee Chair or Lead Independent Director.

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BOARD EVALUATIONS AND REFRESHMENT

The Board regularly evaluates its performance to enhance Board functioning and the effectiveness of the Board-management relationship.


	EVALUATION METHOD		DESCRIPTION
	Self-Evaluation		The Nominating & Governance Committee, in consultation with the Lead Independent Director, annually leads the performance review of the Board and its Committees. In 2014, the Board self-evaluation was administered by a third-party governance expert through individual interviews with each director and an online survey completed by each director. After discussion with the Nominating & Governance Committee, the external party facilitated a discussion of the results with the full Board.

			The self-evaluation process seeks to obtain each director’s assessment of the effectiveness of the Board, the Committees and their leadership, and Board/management dynamics in the following categories:
			• The Board’s purpose and mandate
			• Business knowledge and risk management
			• Information sharing
			• Board and Committee composition, roles and contribution
			• Meeting effectiveness
	Corporate Governance Review		Our Nominating & Governance Committee conducts an annual corporate governance review that compares our core corporate governance practices with prevailing best practices, emerging practices and evolving topics as indicated by current literature, corporate governance organizations and institutional shareholders.
	Charter and Corporate Governance Guidelines Review		We periodically review our Committee charters and Corporate Governance Guidelines. In January 2015, as a result of our comprehensive review of risk oversight at the management, Board and Committee levels, we clarified and enhanced existing practices through amendments to our Committee charters and Corporate Governance Guidelines to provide more transparency on how risk oversight is exercised at the Board and Committee levels, and reallocated and clarified risk oversight responsibilities among the Committees.

The Board maintains the following tenure policies (contained in our Corporate Governance Guidelines) as a means of ensuring that the Board regularly benefits from a balanced mix of perspectives and experiences:


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

We had the following changes in our Board since our 2014 Annual Meeting:


	DEPARTURES		ADDITIONS
	• James A. Johnson – Will retire at the end of his term in connection with our mandatory retirement policy		• None

In addition to those changes, the following director is scheduled to complete her service on our Board within the next five years under our tenure policies:


	TENURE POLICY
DIRECTOR	IMPLICATED	YEAR
Anne M. Mulcahy	Term Limit	2017

Calvin Darden experienced a change in his principal employment in February 2015 and submitted an offer of resignation. Following a review and upon recommendation of the Nominating & Governance Committee, the Board declined his offer of resignation.

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2015 NOMINEES FOR DIRECTOR

After considering the recommendations of the Nominating & Governance Committee, the Board has set the number of directors at 10 and nominated all of the current directors to stand for re-election, except for Jim Johnson who will retire from the Board at the end of his current term. The Board believes that each of these nominees is qualified to serve as a director of Target and the specific qualifications of each nominee that were considered by the Board follow each nominee’s biographical description. Equally important, the Board believes that the combination of backgrounds, skills and experiences has produced a Board that is well-equipped to exercise oversight responsibilities for Target’s shareholders and other stakeholders.

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


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

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


		NUMBER OF
	TENURE ON BOARD	DIRECTOR NOMINEES
	More than 10 years	4
	5 to 10 years	3
	Less than 5 years	3
	Average Director Tenure – 6.8 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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(1)	AbbVie Inc. became a public company in January 2013 following its separation from Abbott Laboratories. Ms. Austin was serving on the Board of Abbott Laboratories at the time of the separation and became a director of AbbVie Inc. in connection with the separation.

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STOCK OWNERSHIP INFORMATION

STOCK OWNERSHIP GUIDELINES

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


OWNERSHIP GUIDELINES BY POSITION
DIRECTORS	CEO	OTHER NEOS
Fixed Value of $270,000	7x base salary	3x base salary


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

All directors and executive officers are expected to achieve the required levels of ownership under our stock ownership guidelines within five years of their election or appointment. If a director or executive officer has not satisfied the ownership guideline amounts within those first five years, he or she must retain all shares acquired on the vesting of equity awards or the exercise of stock options (in all cases net of exercise costs and taxes) until compliance is achieved. In 2014 the stock ownership guidelines were amended to add an another requirement that if an executive officer is below the ownership guideline amounts during their first five years, he or she must retain at least 50% of all shares acquired on the vesting of equity awards or the exercise of stock options until compliance is achieved.

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The following table shows the holdings of our current directors and NEOs recognized for purposes of our stock ownership guidelines as of April 7, 2015, and the respective ownership guidelines calculations.


	SHARES DIRECTLY OR INDIRECTLY OWNED		RSUs & PBRSUs		SHARE EQUIVALENTS		TOTAL STOCK OWNERSHIP FOR GUIDELINES (# OF SHARES)⁽¹⁾		STOCK OWNERSHIP GUIDELINES CALCULATION
DIRECTORS									TOTAL VALUE⁽²⁾
Roxanne S. Austin		10,000		19,195		0		29,195	$	2,411,799
Douglas M. Baker, Jr.		0		7,103		0		7,103	$	586,779
Calvin Darden		0		19,195		754		19,949	$	1,648,025
Henrique De Castro		0		9,816		0		9,816	$	810,900
Mary E. Minnick		886		52,449		431		53,766	$	4,441,650
Anne M. Mulcahy		7,114		26,551		0		33,665	$	2,781,066
Derica W. Rice		0		44,077		0		44,077	$	3,641,201
Kenneth L. Salazar		0		6,567		0		6,567	$	542,500
John G. Stumpf		0		11,307		0		11,307	$	934,071
CURRENT NAMED EXECUTIVE OFFICERS									MULTIPLE OF BASE SALARY⁽²⁾
Brian C. Cornell		37,804		145,587		0		183,391		11.7
John J. Mulligan		25,583		40,321		10,488		76,392		6.3
Kathryn A. Tesija		21,996		32,779		9,402		64,176		5.6
Tina M. Tyler		8,400		22,728		11,696		42,825		4.9
Jeffrey J. Jones II		7,805		25,609		0		33,414		3.8

(1)	The “Total Stock Ownership” calculation, like the required disclosure of “Total Shares Beneficially Owned” on page 27, starts with “Shares Directly or Indirectly Owned” but differs by (a) excluding all options, regardless of whether they can be converted into common stock on or before June 6, 2015, and (b) including (i) share equivalents that are held under deferred compensation arrangements and (ii) RSUs and PBRSUs (at their minimum share payout, which is 75% of the target payout level), whether vested or unvested, even if they will be converted into common stock more than 60 days from April 7, 2015.

(2)	Based on closing stock price of $82.61 as of April 7, 2015.

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BENEFICIAL OWNERSHIP OF DIRECTORS AND OFFICERS

The following table includes information about the shares of Target common stock (our only outstanding class of equity securities) which are beneficially owned on April 7, 2015 or which the person has the right to acquire within 60 days of April 7, 2015 for each director, named executive officer in the Summary Compensation Table on page 49, and all current Target directors and executive officers as a group.


	SHARES DIRECTLY OR INDIRECTLY OWNED		SHARES ISSUABLE WITHIN 60 DAYS⁽¹⁾	STOCK OPTIONS EXERCISABLE WITHIN 60 DAYS	TOTAL SHARES BENEFICIALLY OWNED⁽²⁾
DIRECTORS
Roxanne S. Austin	10,000		17,464	28,055	55,519
Douglas M. Baker, Jr.	0		5,372	5,570	10,942
Calvin Darden	0		17,464	40,811	58,275
Henrique De Castro	0		7,169	5,570	12,739
Mary E. Minnick	886		49,802	0	50,688
Anne M. Mulcahy	7,114		24,820	27,031	58,965
Derica W. Rice	0		41,278	0	41,278
Kenneth L. Salazar	0		4,836	3,601	8,437
John G. Stumpf	0		9,576	17,889	27,465
NAMED EXECUTIVE OFFICERS
Brian C. Cornell⁽³⁾	37,804		0	0	37,804
John J. Mulligan	25,583		6,078	196,706	228,367
Kathryn A. Tesija	21,996		0	308,070	330,066
Tina M. Tyler	8,400		179	179,745	188,324
Jeffrey J. Jones II	7,805		0	100,609	108,414
Gregg W. Steinhafel⁽⁴⁾	27,370		0	0	27,370
ALL CURRENT DIRECTORS AND EXECUTIVE OFFICERS
As a group (19 persons)	158,271	⁽⁵⁾	186,868	1,795,922	2,141,061

(1)	Includes shares of common stock that the named individuals may acquire on or before June 6, 2015 pursuant to the conversion of vested RSUs into common stock.

(2)	All directors and executive officers as a group own less than 1% of Target’s outstanding common stock. The persons listed have sole voting and investment power with respect to the shares listed.

(3)	Mr. Cornell became Chairman & CEO on August 12, 2014.

(4)	Mr. Steinhafel stepped down as President & CEO on May 5, 2014.

(5)	Includes shares of common stock owned by executive officers in the Target 401(k) Plan as of April 7, 2015.

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BENEFICIAL OWNERSHIP OF TARGET’S LARGEST SHAREHOLDERS

The following table includes certain information about each person or entity known to us to be the beneficial owner of more than five percent of our common stock:


	NUMBER OF
	COMMON SHARES
NAME AND ADDRESS	BENEFICIALLY		PERCENT OF
OF >5% BENEFICIAL OWNER	OWNED		CLASS⁽¹⁾
State Street Corporation	59,878,459	⁽²⁾	9.4	%
One Lincoln Street
Boston, Massachusetts 02111
The Vanguard Group	37,945,527	⁽³⁾	5.9	%
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
Franklin Resources, Inc.	32,992,866	⁽⁴⁾	5.2	%
One Franklin Parkway
San Mateo, California 94403-1906
BlackRock, Inc.	32,530,687	⁽⁵⁾	5.1	%
55 East 52^ndStreet
New York, New York 10022

(1)	Based on shares outstanding on April 7, 2015.

(2)	State Street Corporation (State Street) reported its direct and indirect beneficial ownership in various fiduciary capacities (including as trustee under Target’s 401(k) Plan) on a Schedule 13G filed with the SEC on February 12, 2015. The filing indicates that as of December 31, 2014, State Street had sole voting power for 0 shares, shared voting power for 59,878,459 shares, sole dispositive power for 0 shares and shared dispositive power for 59,878,459 shares.

(3)	The Vanguard Group (Vanguard) reported its direct and indirect beneficial ownership on a Schedule 13G/A filed with the SEC on February 11, 2015. The filing indicates that as of December 31, 2014, Vanguard had sole voting power for 1,083,792 shares, shared voting power for 0 shares, sole dispositive power for 36,935,677 shares and shared dispositive power for 1,009,850 shares.

(4)	Franklin Resources, Inc. (FRI) reported its direct and indirect beneficial ownership on a Schedule 13G filed with the SEC on February 10, 2015. The filing indicates that as of December 31, 2014, FRI or its affiliates had sole voting power for 32,501,750 shares, shared voting power for 2,030 shares, sole dispositive power for 32,946,913 shares and shared dispositive power for 45,953 shares.

(5)	BlackRock, Inc. (BlackRock) reported its direct and indirect beneficial ownership on a Schedule 13G filed with the SEC on February 6, 2015. The filing indicates that as of December 31, 2014, BlackRock had sole voting power for 27,070,282 shares, shared voting power for 21,834 shares, sole dispositive power for 32,508,853 shares and shared dispositive power for 21,834 shares.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

SEC rules require disclosure of those directors, officers and beneficial owners of more than 10% of our common stock who fail to timely file reports required by Section 16(a) of the Securities Exchange Act of 1934 during the most recent fiscal year. Based solely on review of reports furnished to us and written representations that no other reports were required during the fiscal year ended January 31, 2015, all Section 16(a) filing requirements were met.

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COMPENSATION COMMITTEE REPORT

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

COMPENSATION COMMITTEE⁽¹⁾

James A. Johnson, Chair⁽²⁾

Douglas M. Baker, Jr.

Calvin Darden

John G. Stumpf⁽²⁾

(1)	Ms. Mulcahy and Mr. De Castro joined the Compensation Committee following the preparation of this report, with Ms. Mulcahy becoming Chair.

(2)	Messrs. Johnson and Stumpf rotated off of the Compensation Committee following the preparation of this report.

COMPENSATION DISCUSSION AND ANALYSIS

INTRODUCTION

This Compensation Discussion and Analysis (CD&A) focuses on how our Named Executive Officers (NEOs) were compensated for fiscal 2014 (February 2, 2014 through January 31, 2015) and how their fiscal 2014 compensation aligns with our pay for performance philosophy. We also discuss significant actions taken in fiscal 2015 that relate to an understanding of fiscal 2014 compensation.

Mr. Cornell was hired as Chairman and Chief Executive Officer on August 12, 2014. Prior to Mr. Cornell’s hire, Mr. Mulligan served in the capacity of Interim President & Chief Executive Officer from May 5, 2014 to August 11, 2014. Our former Chairman, President & Chief Executive Officer, Gregg Steinhafel, ceased serving in those capacities on May 5, 2014, but continued to serve in an advisory role until August 23, 2014. The details of Mr. Steinhafel’s post-termination benefits can be found on page 63. For fiscal 2014, our NEOs were:


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

Our CD&A is divided into the following sections:

	•	Executive Summary

	•	Our Performance Framework for Executive Compensation

	•	Other Benefit Elements

	•	Compensation Governance

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EXECUTIVE SUMMARY

We have made significant progress in the past year. In particular, we named our first ever CEO hired from outside the organization who brings a wealth of experience in both retailing and consumer products marketing to Target. We made the difficult decision to discontinue our Canadian operations which allows our management team to focus all of its energy on pursuing profitable growth in the U.S. market and is expected to lead to improved financial results overall. As a result of discontinuing our Canadian operations we did not meet the minimum threshold established for tax purposes for fiscal 2014 (162(m) threshold) which led to the forfeiture of long-term and short-term incentive compensation for our executive officers described in more detail throughout the CD&A.

Pay for Performance

Proven Record of Accountability in Pay Programs

Our incentive award payouts align with our financial performance.

•	No financial payouts were earned under our short-term incentive plan (STIP) over the past two years. As a result, no STIP payouts were paid to our CEO this year or last year.

•	We significantly enhanced our long-term incentive (LTI) program last year in response to shareholder feedback: 100% of our annual LTI mix features performance-based metrics and is tied to relative performance versus our retail peers.

	–	Our retail peers set the benchmark against which we are measured; our relative performance against set performance metrics under our two most recent performance share unit (PSU) payouts yielded payouts well below goal.

	–	Our PSU award for the 2012-2014 performance period was forfeited entirely, as described under “Discontinuing Our Canadian Operations Results in 162(m) Threshold Not Being Met in Fiscal 2014.” If we had met the 162(m) threshold, the financial results based on our performance versus our peers would have yielded a payout of 41.5% of the goal number of shares.

The charts below illustrate actual payouts, as a percentage of goal, over the last three years for our STIP and PSU plans. PSU awards and the financial component of STIP made up more than 60% of at-goal annual total direct compensation (TDC) for our NEOs in fiscal 2014. The first performance-based restricted stock unit (PBRSU) payout has not yet occurred as PBRSUs were introduced in January 2014.

	Payouts for Financial Component of STIP		Payouts for PSU Awards

Discontinuing Our Canadian Operations Results in 162(m) Threshold Not Being Met in Fiscal 2014

As described above and throughout this CD&A, we utilize performance metrics core to our business within our STI (incentive earnings before interest and taxes and incentive economic value added) and LTI (relative market share growth, earnings per share growth, and return on invested capital) to drive strategy, measure our relative performance against retail competitors and determine actual payouts for each award. In addition, our short-term and long-term compensation programs are intended to qualify as deductible performance-based compensation under Section 162(m) of the Internal Revenue Code based on achieving a minimum level of consolidated earnings before interest and taxes. The minimum level of performance represented by the 162(m) threshold is in addition to the aforementioned performance metrics that are intended to drive payout within our plans.

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On January 14, 2015, in accordance with management’s recommendation, our Board of Directors decided to discontinue our Canadian operations. As a result of the one-time charges associated with this decision, in March 2015 our Compensation Committee determined that we did not meet our 162(m) threshold for fiscal 2014. Based on that determination, long-term and short-term incentive compensation for our NEOs (including our former CEO) was forfeited entirely as illustrated in the following tables:


	IMPACT ON LONG-TERM INCENTIVE ANNUAL GRANTS FOR DIFFERENT FISCAL YEARS
AWARD TYPE	2011	2012	2013	2014
PBRSUs/RSUs⁽¹⁾ Performance Period	No Impact (2012-2014)	No Impact (2013-2015)	Forfeited *(2014-2016)*	No Impact (2015-2017)
PSUs⁽²⁾ Performance Period	Forfeited, would have paid 41.5% *(2012-2014)*	Forfeited *(2013-2015)*	Forfeited *(2014-2016)*	No Impact (2015-2017)
Stock Options⁽³⁾	No Impact	No Impact	Not Applicable	Not Applicable

(1)	The annual grants of PBRSUs and RSUs were made during January of each of the fiscal years referenced in the table.

(2)	The annual grants of PSUs for fiscal 2011 and fiscal 2012 were made in March of fiscal 2012 and March of fiscal 2013, respectively, and the annual grants of PSUs for fiscal 2013 and fiscal 2014 were made in January 2014 and January 2015, respectively.

(3)	The annual grants of Stock Options for fiscal 2011 and fiscal 2012 were made during January of those fiscal years. We discontinued granting options after fiscal 2012.


	IMPACT ON SHORT-TERM INCENTIVE PLAN FOR FISCAL 2014
COMPONENT	CEO / FORMER CEO	OTHER NEOs
Financial⁽¹⁾	Forfeited, would have paid $0	Forfeited, would have paid $0
Personal⁽²⁾	Not Applicable	Forfeited

(1)	The financial component is 100% of STIP for the CEO and former CEO, and two-thirds of STIP at-goal for our other NEOs. Although our STI for fiscal 2014 was forfeited due to us not achieving the 162(m) threshold, our below threshold financial performance would have resulted in a $0 payout even if that forfeiture did not occur.

(2)	The CEO and former CEO do not have a personal component to their STI. The personal component is one-third of STI for our other NEOs. The forfeiture due to us not achieving the 162(m) threshold removed the opportunity for our other NEOs to receive a payout under our existing plan.

See “Compensation Tax Policy” on p. 48 for more information.

Not meeting the 162(m) threshold in 2014 significantly reduced the amount of compensation that could be realized from awards reported in the Summary Compensation Table (SCT) for fiscal 2012, 2013, and 2014. To illustrate, the following table shows the impact on certain compensation components reported in the Summary Compensation Table for fiscal 2013, which includes grants that were only one year into their three-year performance cycle. Although Mr. Cornell is not included in the table below, his 2014 Pro-Rata PSU and PBRSU awards were forfeited because they were subject to the same performance condition and covered the same performance period as the other NEOs’ fiscal 2013 stock awards. See page 39 for more details on his “Pro-Rata TDC for Fiscal 2014”.


	MR. MULLIGAN				MS. TESIJA				MS. TYLER				MR. JONES				MR. STEINHAFEL
FISCAL 2013 COMPENSATION COMPONENT	2013 SCT		ACTUAL REALIZED COMP		2013 SCT		ACTUAL REALIZED COMP		2013 SCT		ACTUAL REALIZED COMP		2013 SCT		ACTUAL REALIZED COMP		2013 SCT		ACTUAL REALIZED COMP
Base Salary	$	700,000	$	700,000	$	950,000	$	950,000	$	725,000	$	725,000	$	700,000	$	700,000	$	1,500,000	$	1,500,000
Bonus	$	150,000	$	150,000	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Stock Awards	$	3,505,105	$	0	$	5,841,653	$	0	$	3,797,152	$	0	$	3,505,105	$	0	$	10,224,120	$	0
Option Awards	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Non-Equity Incentive Plan Compensation	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Total 2013 Compensation⁽¹⁾	$	4,355,105	$	850,000	$	6,791,653	$	950,000	$	4,522,152	$	725,000	$	4,205,105	$	700,000	$	11,724,120	$	1,500,000
% of 2013 Compensation Realized				20%				14%				16%				17%				13%

(1)

Total 2013 compensation excludes items shown under “Change in Pension Value and Nonqualified Deferred Compensation Earnings” and “All Other Compensation” in the Summary Compensation Table. Total 2013 Compensation for a fiscal year includes: (a) base salary levels approved for that year, (b) STIP payouts related to performance for that year, and (c) annual LTI awards representing the aggregate grant date fair value of awards granted in March 2013 and January 2014. Beginning in January 2014, we changed our grant timing practices to grant both PBRSUs and PSUs in January.

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Strategic Alignment Awards and Bonuses for Fiscal 2014 Performance

The Board of Directors and Compensation Committee recognize that the current management team no longer includes those most directly responsible for developing and executing Target’s strategy to enter Canada. The current team, however, worked tirelessly to salvage that strategy and, together with our Board, ultimately made the tough decision—and the right one for shareholders—to discontinue our Canadian operations while strengthening performance in the U.S. The Board and Committee note that the decision to discontinue our Canadian operations resulted in a write-off in 2014 that, due to the 162(m) threshold, caused the forfeiture of three years of PSUs and the January 2014 PBRSU grant, as well as the 2014 STIP for Executive Officers.

The Board and Committee acknowledge the current management team’s performance in creating shareholder value as demonstrated by the attempts to optimize the Canadian investment while driving the strong momentum shown in fiscal 2014 third and fourth quarter U.S. results. Further, in connection with the five key priorities to transform our business for long-term growth announced in early March 2015 and described in more detail on page 36, our executive officers have been tasked with specific goals to deliver on Target’s transformation with important foundational steps to be taken over the next two years.

Strategic Alignment Awards

In March 2015 the Compensation Committee and the independent members of the Board approved Strategic Alignment Awards. The awards are designed to connect the current management team’s pay with its performance in achieving goals designed to re-position Target and drive long-term growth consistent with our transformational plan along the five key priorities announced earlier in the month. In addition to strengthening pay with performance, the Committee considered the overall retentive value of the awards in a key time of transition. The awards are in addition to the annual LTI grants, and were granted off-cycle to allow the Compensation Committee and full Board to carefully consider this matter in the context of Target’s full year financial performance, as well as to gain input from shareholders in advance of making the awards.

Specifically, in March 2015, our active NEOs received performance-based awards with grant date present values as follows: Mr. Cornell – $3.75 million, Mr. Mulligan – $3 million, Ms. Tesija – $3 million, Mr. Jones – $2.85 million, Ms. Tyler – $2.85 million.

The grants are based on performance, have a two-year performance period, are settled in stock and will be reflected in the Summary Compensation Table for fiscal 2015. The two-year performance period and performance metrics are explicitly designed to align with timing and metrics that drive the transformational plan set by our CEO and Board. A two-year performance period bolsters the performance-based nature of our executive pay program during this important time in Target’s transformation, as all other outstanding LTI with active performance metrics do not vest until 2018. The award is forfeited if termination occurs prior to the conclusion of the performance period, except in the event of death and disability.

Payout of these awards is based on important absolute metrics, each selected to drive focused outcomes that complement the relative performance metrics in our annual LTI awards. The payouts up to 150% of goal will be assessed based on three core metrics closely aligned with our transformation, as outlined below, with an additional ability to earn up to 200% of goal payout with an After-tax Return on Invested Capital (ROIC) modifier:


METRIC	IMPORTANCE	PERFORMANCE GOALS
Total Sales Growth	Drive sales through a focus on signature categories, increased personalization, and localization	Goal: 3% Compound Annual Growth Rate (CAGR) Maximum: 4.5% CAGR No payout for 0% CAGR
Digital Channel Sales Growth	Continued focus on omnichannel strategy that enables our guests to engage with Target anywhere, anytime	Goal: 30% CAGR Maximum: 45% CAGR No payout for 0% CAGR
Earnings Before Interest and Taxes (EBIT) Growth	Ensure that we are growing sales profitably, and optimizing expenses to fuel this profitable growth	Goal: increase Segment EBIT by $500M (2016 v. 2014), surpassing all time high EBIT performance Maximum: $750 million increase No payout for less than $250 million increase
Return on Invested Capital Modifier	Invest smartly in our business, effectively allocating capital to drive profit	To earn additional upside, requires at least 13.75% for fiscal 2016, representing the highest in recent history

Additional information regarding the Strategic Alignment Awards will be disclosed in our proxy statement for the 2016 annual meeting.

2015 Proxy Statement │ TARGET CORPORATION 32

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Bonuses for Fiscal 2014 Performance

To recognize the NEOs for dedicated performance during an extended leadership transition last year, the Compensation Committee determined it appropriate to approve bonus payments for the currently employed NEOs, excluding our CEO. The management team was responsible for developing and delivering on the strategies that led to positive U.S. results in comparable sales, digital channel sales growth and year-over-year gross margin rate performance improvement which drove earnings above expectations in the third and fourth quarter of fiscal 2014. These payments, are included in the “Bonus” column of the Summary Compensation Table and described in further detail on page 41.

Current CEO Hire

Effective August 12, 2014, Mr. Cornell was appointed to the position of Chairman & Chief Executive Officer. As part of Mr. Cornell’s offer, he received:

	•	Fiscal 2014 pro-rata total direct compensation (TDC) of $5,320,000 derived from at-goal annual compensation of $12,250,000 to approximate the median of our combined retail and general industry peer group. TDC consists of base salary, at-goal STIP opportunity and grant date present value of LTI. Mr. Cornell realized only $595,000 of his pro-rata TDC because STIP paid out at $0 and LTI was forfeited due to our not meeting the 162(m) threshold.

	•	Make-whole grant of $13,979,481 intended to replace forfeited equity from former employer and subject to further performance and time-based restrictions.

More details of Mr. Cornell’s pay package can be found on page 39.

Results of 2014 Advisory Vote to Approve Executive Compensation

At our June 2014 annual meeting of shareholders, shareholders approved our Say on Pay proposal in support of our executive compensation program by 78%, a significant improvement over the prior year. We believe that open dialogue with our shareholders and reflecting their feedback in our compensation decisions is critical to our success.

Shareholder Outreach

Following the announcement to discontinue our Canadian operations, we hosted calls or held meetings with shareholders representing approximately 41% of shares voted. The majority of the conversations were led by Anne Mulcahy, then-current Chair of our Board’s Nominating & Governance Committee and the current Chair of our Board’s Compensation Committee, and included soliciting feedback on key compensation and governance issues that informed our decision to award bonuses for fiscal 2014 performance and the design of the Strategic Alignment Awards. We value the feedback provided by our shareholders and look forward to continued, open dialogue on compensation matters and other issues relevant to our business.

The Board’s overarching goal is to deliver on our pay for performance philosophy by offering compensation strategies that incent strong results, attract and retain a premier management team, and are supported by shareholders. In 2013, we undertook a significant overhaul of our compensation programs to ensure that our pay practices demonstrate Target’s strong commitment to our pay for performance philosophy and high standards of corporate governance. In 2014, we continued that momentum by making additional changes described under “Compensation Program Enhancements in Response to Shareholder Feedback” on page 39.

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Target’s Executive Compensation Practices

The following practices and policies ensure alignment of interests between shareholders and executives, and effective ongoing compensation governance.


COMPENSATION PRACTICE	TARGET POLICY		MORE INFORMATION
Pay for Performance	YES \|	A significant percentage of the total direct compensation package features performance-based metrics, including 100% of our annual LTI.
Robust stock ownership guidelines	YES \|	We have stock ownership guidelines for executive officers of 7x base salary for CEO (increased from 5x), 3x base salary for non-CEO executive officers and $270,000 for directors.
Annual Shareholder “Say on Pay”	YES \|	We value our shareholders’ input on our executive compensation programs. Our Board of Directors seeks an annual non-binding advisory vote from shareholders to approve the executive compensation disclosed in our CD&A, tabular disclosures and related narrative of this proxy statement.
Double Trigger Change-in-Control	YES \|	We now grant equity awards that require both a change-in-control and an involuntary termination or voluntary termination with good reason before vesting.
Annual compensation risk assessment	YES \|	A risk assessment of our compensation programs is performed on an annual basis.
Clawback policy	YES \|	Our policy allows recovery of incentive cash and equity compensation if it is earned based on inaccurate financial statements.
Independent compensation consultant	YES \|	The Compensation Committee retains an independent compensation consultant to advise on the executive compensation program and practices.
Hedging of company stock	NO \|	Executive officers and members of the Board of Directors may not directly or indirectly engage in transactions intended to hedge or offset the market value of Target common stock owned by them.
Pledging of company stock	NO \|	Executive officers and members of the Board of Directors may not directly or indirectly pledge Target common stock as collateral for any obligation.
Tax gross-ups	NO \|	We do not provide tax gross-ups to our executive officers.
Dividends on unearned performance awards	NO \|	We do not pay dividends on unearned performance awards.
Repricing or exchange of underwater stock options	NO \|	Our equity incentive plan does not permit repricing or exchange of underwater stock options without shareholder approval.
Employment contracts	NO \|	None of our current named executive officers has an employment contract.

2015 Proxy Statement │ TARGET CORPORATION 34

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Performance Highlights

Target’s Segment Total Sales, Digital Channel Sales Growth, Adjusted Earnings Per Share (EPS) from Continuing Operations, Segment After-Tax ROIC and Total Shareholder Return (TSR) performance over the past five fiscal years are shown below:

Segment Total Sales (in millions)		Digital Channel Sales Growth



Adjusted EPS from Continuing Operations⁽²⁾		Segment After-Tax ROIC

Total Shareholder Return

(1)	2012 reflects a 53-week accounting year.
(2)	A reconciliation of Adjusted EPS from Continuing Operations to GAAP EPS is provided in Appendix A.

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

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2014 Performance Review

Fiscal 2014 was a year of transition in which we began to lay the foundation for the transformation we will accomplish in the next few years. A year ago we were in recovery mode, working to repair guest relationships following the data breach while we undertook an assessment of the long-term prospects for our Canadian business. The recovery of our business was evident in the progression of our financial results throughout the year. Specifically, comparable sales, digital channel sales growth and year-over-year gross margin rate performance improved throughout 2014, as our guests moved beyond the impact of the breach and we began to see early progress on our transformation.

Strategic Priorities

With the data breach more than a year behind us and the difficult decision to discontinue our Canadian operations made, our team is focused and aligned on the following five key priorities to transform our business for long-term growth, which were announced in early March 2015:

	•	Leading in omnichannel and taking a “channel agnostic” view to growing our business. Our digital channel growth led the industry in 2014 and we are working to build on that success in 2015 and beyond.

	•	Defining category roles and re-establishing leadership in signature categories of baby, kids, beauty, style and wellness. These are the categories we are well known for and our guests have asked us to lead with them in the years ahead. Beyond these signature categories, we are defining appropriate roles for all of our categories and will invest in them appropriately to ensure we’re providing our guests convenience through a differentiated, inspirational, one-stop-shopping experience.

	•	Becoming much more localized in the assortment and experience we provide in our stores, and more personalized in the digital experience we deliver.

	•	Developing and testing new formats that will help us to better serve our guests over time. We have experienced strong financial results from our first eight CityTarget stores and very strong initial performance in the test of our first Target Express location.

	•	Reducing complexity and controlling costs in order to fuel our investments in strategies that will grow our business. The management team is committed to moving decisively to modernize the way we work and create the capacity we need to invest in the priorities that will drive our growth and return on invested capital.

We have a fantastic foundation to build on, with a great brand, loyal guests and an outstanding team, and we are committed to maintaining our focus on our key priorities and making the tough decisions to position Target for long-run success.

2015 Proxy Statement │ TARGET CORPORATION 36

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OUR PERFORMANCE FRAMEWORK FOR EXECUTIVE COMPENSATION

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

CURRENT CEO PAY MIX⁽¹⁾		OTHER ACTIVE NEOs PAY MIX



Performance-Based	89%	Performance-Based	84%

(1)	Represents annual at-goal TDC.


	How Annual CEO Pay is Tied to Performance

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

	•	STIP – The financial STIP payout was 0% for fiscal 2014. Payouts range from 75% to 300% when performance levels are at or between 5% below and 5% above goal, respectively.

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

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

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Elements of Fiscal 2014 Executive Total Direct Compensation

ELEMENT

KEY
CHARACTERISTICS

LINK TO SHAREHOLDER
VALUE

HOW WE DETERMINE
AMOUNT

KEY
DECISIONS

FIXED

Base Salary

Fixed compensation component payable in cash, representing less than 20% of TDC for our NEOs. Reviewed annually and adjusted when appropriate.

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

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

Approved in January of 2014, our former CEO and NEOs received no base salary increases. Mr. Mulligan received a base salary increase in May 2014 when he became Interim President & CEO.

For fiscal 2015, Mr. Jones received a base salary increase. See page 40.

Short Term
Incentives

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

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

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

Financial portion of award based on:

- Earnings Before Interest and Taxes (Incentive EBIT)

- Economic Value Added (Incentive EVA)

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

Weak performance against goals resulted in no financial payout for the CEO and other NEOs for fiscal 2014.

To reinforce the importance of profitable growth, for fiscal 2015, we added sales as a metric. We also removed Incentive EVA since we have a measure of capital management (After-tax ROIC) appropriately positioned within our LTI mix. See page 41.

PERFORMANCE BASED

Performance Share
Unit Awards

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

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

-Market share change

-EPS growth

-After-tax ROIC

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

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

As discussed on pages 30-31, we did not meet the 162(m) threshold, effectively cancelling the fiscal 2011, 2012, and 2013 PSU awards.

Performance Based
Restricted Stock
Unit Awards

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

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

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

Payout varies from 75% to 125% of award based on TSR versus retail peer group.

As discussed on pages 30-31, we did not meet the 162(m) threshold, effectively cancelling the fiscal 2013 PBRSU award.

2015 Proxy Statement │ TARGET CORPORATION 38

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Compensation Program Enhancements in Response to Shareholder Feedback

During 2013, we embarked on a comprehensive overhaul of our executive compensation program. We continued to make meaningful changes to our pay programs over the last year, including:

	•	Double Trigger Change-in-Control. For grants made starting in January 2015, the Committee adopted a double trigger treatment that requires both a change-in-control and either an involuntary termination without cause or voluntary termination with good reason before vesting is accelerated. The amount accelerated is generally a pro-rata share amount based on the date of termination, unless the amount of shares the executive officer would have received upon termination had the change in control not occurred is a greater amount.

	•	Ownership Guidelines. We increased our CEO’s ownership guidelines from 5x base salary to 7x base salary.

	•	Pre-guideline Holding Requirement. If an executive officer is below the applicable ownership threshold prior to the compliance date, he or she must retain 50% of all shares acquired on the vesting of equity awards or the exercise of stock options (net of exercise costs and taxes) until the ownership guideline amount is satisfied.

	•	Compensation Peer Groups. We updated our retail peer group to broaden the view of the competitive landscape in assessing relative performance under the PSU and PBRSU plans, as well as assessing executive officer compensation levels. Our general industry peer group was updated to increase alignment from a revenue and market capitalization perspective and maintain diverse industry representation across the peer group.

	•	Limited Current CEO Perquisites. Mr. Cornell is only eligible for perquisites that support his safety, health and well-being. See page 44 for more details.

	•	Fiscal 2015 Short-Term Incentive Plan Redesign. Beginning in fiscal 2015, the short-term incentive plan is based on Incentive Earnings Before Interest and Taxes (weighted 75% at-goal) and sales (weighted 25% at-goal) to align annual incentives with our strategy of driving growth, with an emphasis on profitability. In conjunction, Incentive Economic Value Added was eliminated as a metric. With the introduction of Return on Invested Capital in our performance share unit plan, assessing capital management is now appropriately positioned within our long-term plan.

Current CEO Compensation Focused on Long-Term Performance

On August 12, 2014, Mr. Cornell became Chairman & Chief Executive Officer. To attract Mr. Cornell to the company and ensure his compensation was structured in accordance with current best practices and principles of pay for performance, the Compensation Committee constructed a compensation package with the following elements:

	•	Pro-Rated TDC for Fiscal 2014. Aligned Mr. Cornell’s pro-rated fiscal 2014 TDC with the incentive structure applied to our other executive officers, and approximated the at-goal median compensation for CEOs of our peer groups.

	•	Make-Whole Compensation. Provided Mr. Cornell make-whole compensation to replace compensation he forfeited from his former employer when he became our Chairman & Chief Executive Officer. The LTI awards are subject to further performance and time-based restrictions.


Current CEO Compensation Package
	PRO-RATED TDC FOR FISCAL 2014					MAKE-WHOLE COMPENSATION

PURPOSE
	Aligned structure, timing and forms of compensation with other executive officers, and approximates the at-goal median compensation for CEOs of our combined retail and general industry peer groups. Compensation pro-rated based on Mr. Cornell’s start date of August 12, 2014.					Replaced the estimated value of awards Mr. Cornell gave up from his former employer to join Target. The make-whole compensation consists primarily of Target stock subject to further performance and time-vesting restrictions.

COMPENSATION ELEMENTS
Salary		$	595,000				$	0
Short-Term lncentives⁽¹⁾		$	975,000		Represents at-goal		$	48,390
PSUs		$	2,812,500	—	value at time of offer, actual realized		$	0
PBRSUs		$	937,500		value was $0.		$	9,785,637	⁽²⁾
RSUs		$	0				$	4,193,844	⁽²⁾
Total		$	5,320,000				$	14,027,871

(1)

The Short-Term Incentives for the “Pro-Rated TDC for Fiscal 2014” represents an at-goal amount that is 150% of Annual Base Salary, based on the number of months worked during the year. The Short-Term Incentives for the “Make-Whole Compensation” represents the portion of Mr. Cornell’s $835,890 annual bonus payment that he forfeited when he left his former employer.

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(2)

At the time of hire, it was uncertain how much LTI Mr. Cornell would forfeit from his former employer. Target committed to the estimated value of awards Mr. Cornell would forfeit of $19,250,000 and agreed to reduce it by the target value of any incentive awards from his former employer that he was eligible to retain. Mr. Cornell ultimately retained $5,270,519 from his previous employer, making his final make-whole LTI grant equal to $13,979,481. The PBRSUs represent 70% of the make-whole LTI and 75% to 125% of the PBRSUs vest in March 2016, 2017 and 2018 based on Target’s TSR relative to its retail peers from the grant date of the award through each of those dates. The RSUs, which vested in March 2015, represent 30% of the make-whole LTI and approximate the value and timing of payments he was scheduled to receive from his former employer. See the Grants of Plan-Based Awards in Fiscal 2014 table on page 52 for the grant date fair value of these awards as determined pursuant to FASB ASC Topic 718.

Base Salary

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

In January 2014, the Compensation Committee approved no fiscal 2014 base salary increases for our NEOs. Mr. Mulligan received an increase in May 2014 at the time he was appointed to his additional capacities as Interim President & Chief Executive Officer in connection with his increased role and to reflect him assuming responsibility for the Target properties function, which continued after Mr. Cornell was hired as our CEO.

In January 2015, the Compensation Committee approved a fiscal 2015 base salary increase of $25,000 for Mr. Jones for his leadership in rebuilding the brand following the data breach.

Short-Term Incentives

All NEOs are eligible to earn cash awards under our STIP program, which is designed to motivate and reward executives for performance on key annual measures. For fiscal 2014, STIP metrics included both profitability (Incentive EBIT) and investment discipline (Incentive EVA). To incent and reward performance aligned with our goals and strategy as a business going-forward, we replaced Incentive EVA with sales beginning in fiscal 2015, as described in more detail on page 41.

Fiscal 2014 Performance Metrics

Our STIP program for fiscal 2014 was based on two metrics and appropriately challenging goals set at the beginning of the performance period:

	•	Incentive EBIT. Incentive EBIT represented 50% of the financial component of the STIP payout. For fiscal 2014, Incentive EBIT consisted of Consolidated EBIT, as determined under GAAP, with certain adjustments that can be found in Appendix A.

	•	Incentive EVA. Incentive EVA accounted for the other 50% of the financial component of the STIP payout. Incentive EVA is a measure of earnings after an estimated after-tax cost of capital charge. A positive Incentive EVA performance indicates we are generating returns on invested capital at rates higher than the cost of capital. For fiscal 2014, Incentive EVA included the U.S. Segment and the Canadian Segment.

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

The following tables summarize the total short-term incentive opportunity for financial performance measures at 5% below goal, goal, and 5% above goal, and a representative incentive opportunity for the personal performance aspect of the short-term incentive program under various performance levels as a percentage of base pay. The tables are not substitutes for the information disclosed in the Grants of Plan-Based Awards in Fiscal 2014 table located on page 52.

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


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

(1)	Reflects financial performance at 5% below goal and “effective” personal performance.
(2)	Reflects financial performance at-goal and “excellent” personal performance.
(3)	Reflects financial performance at 5% above goal and “outstanding” personal performance.
(4)	In May 2014, the Board increased Mr. Mulligan’s fiscal 2014 short-term incentive opportunity amounts, pro-rated for three months during which he served in the additional capacities of Interim President & CEO. Using this table for illustrative payouts, the annualized payouts would be as follows: below goal payout would be 42%, at-goal payout would be 84% and above goal payout would be 167% of base salary.

Fiscal 2014 Performance Goals and How We Performed in Comparison to These Goals

The final STIP goals were based on our overall 2014 performance goals, which were reviewed, discussed and approved by the Board at the beginning of the year. When approving these goals the Board takes into account our business strategies, the economic environment and how the annual goal aligns with our long range plan.

As previously described, we did not achieve our 162(m) threshold for fiscal 2014 required to earn a payout for financial or personal performance under the STIP. As a result, our CEO and other NEOs did not receive payouts under the STIP for fiscal 2014.

Historically, our STIP goals have proven challenging, with 0% payouts for both fiscal 2013 and fiscal 2014. For fiscal 2014, our Incentive EBIT and Incentive EVA goal amounts were $4,822 million and $299 million, respectively. The threshold amounts to receive a payout were $4,581 million for Incentive EBIT and $142 million for Incentive EVA, as further detailed in our Reconciliation of Incentive EBIT to Consolidated GAAP EBIT in Appendix A. Our actual results were below threshold for both metrics, which would have resulted in a $0 financial payout even if we had achieved our 162(m) threshold for fiscal 2014.

Fiscal 2014 Performance Bonuses

To recognize the NEOs for dedicated performance during an extended leadership transition last year, the Compensation Committee determined it appropriate to approve bonus payments for the currently employed NEOs, excluding our CEO, of 40% of salary. The management team was tasked with developing and delivering on the strategies that led to positive U.S. results in comparable sales, digital channel sales growth and year-over-year gross margin rate performance improvement which drove earnings above expectations in the third and fourth quarter of fiscal 2014.

Fiscal 2015 Performance Metrics

Beginning in fiscal 2015, we introduced sales as a metric to complement Incentive EBIT within the financial component of the CEO and other NEOs’ STIP. We placed additional weight on profitability (Incentive EBIT at 75% at-goal and sales at 25% at-goal) to align our annual incentives with our strategy of driving growth, with an emphasis on profitability. We removed incentive EVA from our short-term plan because assessing capital management is now appropriately positioned within our LTI mix with the introduction of After-tax ROIC to our PSU plan beginning with fiscal 2013’s annual grant. This change will continue to motivate and reward our executives for performance on key annual measures.

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Long-Term Incentives

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

Value of LTI Awarded

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

As agreed to in his offer letter, Mr. Cornell received an annual LTI grant date present value of $9,000,000 in January 2015. The grant date present value of this award was positioned just below the median at-goal LTI amount for CEOs of our combined peer groups at the time of his offer.

The Compensation Committee made three changes to the NEOs’ annual LTI grants versus the prior year. Mr. Mulligan’s LTI grant was increased by $500,000 in recognition of the positive results delivered stemming from his leadership as Interim President & CEO and for assuming responsibility for Target’s properties function. Mr. Jones’ LTI was increased by $250,000 for his leadership in rebuilding the brand following the data breach. Ms. Tesija’s LTI grant was decreased by $750,000 due to a shift in responsibilities and to achieve an appropriate alignment relative to other executive officers.

Mix of LTI

Once the total annual grant amount is determined, the Compensation Committee grants 75% of this value in PSUs and 25% in PBRSUs. Under this approach, strong long-term performance relative to peers on critical metrics becomes the key driver of compensation realized by executive officers.

PSUs

In January 2015, the Committee granted PSU awards in connection with fiscal 2014 performance. Our PSUs have a three-year performance period and are settled in stock. As previously described, we added After-tax ROIC as a third metric of our PSU plan beginning in fiscal 2013 to ensure that the plan payout reflects the same key metrics we use to manage our business and drive shareholder returns over time. The three relative metrics used in our PSU plan are:

•

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

(a)

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

(b)

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

•

EPS Growth. Our compound annual growth rate of a non-GAAP measure of EPS for PSUs versus the reported EPS of our retail peer group.

•

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

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

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

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

For more information about our Peer Groups see pages 45-47.

Adjustments

The intent of our PSU program is to measure performance relative to the retail peer group (defined on page 46) on the previously described measures. To achieve this measurement in an objective manner, we base the initial rankings on annual reported financial results of each member of the retail peer group and Target (except as may be determined at the time of grant). The Compensation Committee has reserved discretion to adjust the reported financial results for Target or any member of the retail peer group if it believes such adjustments are necessary to properly gauge Target’s relative performance. Since the implementation of our relative performance plan, the only adjustment to our peers’ results was a reduction in sales to remove the impact of the 53rd week in the retail accounting calendar to ensure consistency on relative market share performance across companies. Adjustments to Target and peers’ results, if any, are disclosed in the proxy in the year of award payout. There were no adjustments to the 2012-2014 PSUs after the grant date.

2012-2014 PSU Payout

We did not achieve our 162(m) threshold for fiscal 2014 required to earn a payout for three PSU award cycles: 2012-2014, 2013-2015, and 2014-2016.

With respect to PSU awards that were granted in March 2012 for the three-year performance period ended January 31, 2015, our NEOs would have earned 41.5% of the goal number of shares if the 162(m) threshold had been met. This outcome is based on our 13-company retail peer group at the time of that grant: Amazon.com, Best Buy, Costco, CVS Caremark, Home Depot, J.C. Penney, Kohl’s, Kroger, Lowe’s, Macy’s, Sears, Walgreens and Walmart. The following table summarizes the rankings and results for awards granted in March 2012 with a base year of fiscal 2011 and a final performance year of fiscal 2014:


			PAYOUT IF 162(m)	ACTUAL TOTAL
METRIC	RANKING	PAYOUT	THRESHOLD ACHIEVED	PAYOUT
Market Share	11^th	58%	41.5%	0%
EPS Growth	9^th	25%	41.5%	0%

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No adjustments were made to competitors’ results. A reconciliation of the non-GAAP measure of EPS for PSUs to GAAP EPS is provided in Appendix A.

PBRSUs

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


	PBRSU Payout Schedule
	TSR PERFORMANCE RANKING⁽¹⁾		PERCENT OF GOAL
	1-6		125%
	7-12		100%
	13-18		75%

(1)	The retail peers for PBRSUs exclude Publix. The value of Publix’s stock price is established on an annual basis, making them an inappropriate comparator for the purpose of assessing our relative TSR performance.

We did not achieve our 162(m) threshold for fiscal 2014 required to earn a payout for the 2014-2016 PBRSU performance period, so the PBRSUs for that performance period were forfeited.

OTHER BENEFIT ELEMENTS

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

•

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

•

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

•

Deferred compensation plan. For a broad management group (approximately 3,800 eligible team members), we offer a non-qualified, unfunded, individual account deferred compensation plan. The plan has investment options that mirror our 401(k) plan.

•

Perquisites. We provide certain perquisites to our executive officers, principally to allow them to devote more time to our business and to promote their health and safety. The Compensation Committee reviews these perquisites annually to ensure they are consistent with our philosophy and appropriate in magnitude. Mr. Cornell is only eligible for perquisites that support his safety, health and well-being—home security, parking, executive physical, exercise room access and personal use of company owned aircraft for security reasons. Mr. Cornell is required to reimburse Target for the incremental costs of using company-owned aircraft for personal purposes if his personal use exceeds $175,000 per year. Mr. Cornell did not exceed that amount in fiscal 2014. He is not provided a company car or car allowance, financial management or incidental gifts.

Greater detail on these components is provided in the tables that follow the Summary Compensation Table on page 49.

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Income Continuance

We provide an Income Continuance Policy (ICP) to executive officers who are involuntarily terminated without cause to assist in their occupational transitions. The maximum payment under this policy (paid during regular pay cycles over two years) is two times the sum of base salary and the average of the last three years of short-term incentive and personal performance payments. None of our currently employed named executive officers has an employment contract, enhanced change-of-control benefits or rights to tax gross-ups.

COMPENSATION GOVERNANCE

Process for Determining Executive Compensation (Including NEOs)

Compensation Committee

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

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

Compensation Committee’s Independent Consultant

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

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

Compensation of Other Executive Officers and Role of Management

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

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

Benchmarking Using Compensation Peer Groups

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

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

Due to imperfect comparability of NEO positions between companies, market position served as a reference point in the TDC determination process rather than a formula-driven outcome.

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The composition of the peer groups is reviewed annually to ensure it is appropriate in terms of company size and business focus, and any changes made are reviewed with SBCG and approved by the Compensation Committee. The changes for fiscal 2014 are as follows:


	2014 Peer Group Changes
	RETAIL	GENERAL INDUSTRY
Additions	• Publix	• Anthem
	• TJX	• Express Scripts
	• Rite Aid
	• Staples
	• Dollar General
	• Gap
Removals	• J.C. Penney	• Microsoft
		• Walt Disney

With a significant portion of the executive officer’s annual grant LTI mix (75% PSUs/25% PBRSUs) contingent on relative performance versus the retail peer group, a focus of this year’s annual review was to broaden the view of the competitive landscape in assessing relative performance under the PSU and PBRSU plans, as well as assessing the executive officer’s compensation levels. The retail peer group was formulated based on an initial screen of companies in the Global Industry Classification Standard (GICS) retailing index with revenue from core retail operations greater than $15 billion. From there, four automotive or food distribution companies with which we do not compete were excluded (Sysco, AutoNation, Murphy USA, and Penske Automotive Group). This approach yielded six additions (Publix, TJX, Rite Aid, Staples, Dollar General, and Gap) and one removal (J.C. Penney) for a peer group of nineteen companies.

To increase alignment from a revenue and market capitalization perspective and maintain diverse industry representation across the peer group, we replaced Walt Disney and Microsoft with Anthem and Express Scripts resulting in a general industry peer group of twenty-two companies.

The companies included in the 2014 market comparisons are listed below.


2014 Peer Groups
RETAIL		GENERAL INDUSTRY
Amazon.com	Macy’s	3M	Johnson Controls
Best Buy	Publix	Abbott Labs	McDonald’s
Costco	Rite Aid	Anthem	MetLife
CVS Caremark	Safeway	Archer Daniels Midland	Mondelez
Dollar General	Sears	Coca-Cola	PepsiCo
Gap	Staples	Deere	Pfizer
Home Depot	TJX Companies	Dow Chemical	Procter & Gamble
Kohl’s	Walgreens Boots Alliance	Express Scripts	Time Warner
Kroger	Walmart	FedEx	UPS
Lowe’s		General Mills	UnitedHealth Group
		Johnson & Johnson	United Technologies

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The following table summarizes our scale relative to our retail and general industry peer groups. The financial information reflects fiscal year end data available as of January 30, 2015:


	2014 Peer Group Comparison
	RETAIL						GENERAL INDUSTRY
	REVENUES		MARKET CAP		EMPLOYEES		REVENUES		MARKET CAP		EMPLOYEES
25th Percentile	$	26,475	$	11,865		114,650	$	35,491	$	49,998		54,448
Median		36,188		22,568		140,000		53,511		67,502		97,834
75th Percentile		77,602		74,658		183,000		70,317		106,038		166,500
Target Corporation	$	72,618	$	48,084		347,000	$	72,618	$	48,084		347,000

(1)	All amounts in millions, except employees.
(2)	Data Source: Equilar

Compensation Policies and Risk

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


	COMPENSATION RISK CONSIDERATIONS
	Pay Mix	Compensation mix of base salary, short-term and long-term incentives provides compensation opportunities measured by a variety of time horizons to balance our near-term and long-term strategic goals.

	Performance Metrics	A variety of distinct performance metrics are used in both the short-term and long-term incentive plans. This “portfolio” approach to performance metrics encourages focus on sustained and holistic overall company performance.

	Performance Goals	Goals are approved by our independent directors and take into account our historical performance, current strategic initiatives and the expected macroeconomic environment. In addition, short-term and long-term incentive compensation programs are designed with payout curves and leverage that support our pay for performance philosophy.
	Equity Incentives	Equity incentive programs and stock ownership guidelines are designed to align management and shareholder interests by providing vehicles for executive officers to accumulate and maintain an ownership position in the company.

	Risk Mitigation Policies	We incorporate several risk mitigation policies into our officer compensation program, including: • The Compensation Committee’s ability to use “negative discretion” to determine appropriate payouts under formula based plans; • A clawback policy to recover incentive compensation that was based on inaccurate financial statements; • Stock ownership guidelines for executive officers and directors; and • Anti-hedging and anti-pledging policies.

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Clawback Policy

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

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

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

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

Anti-Hedging and Anti-Pledging Policy

Executive officers and members of the Board of Directors may not directly or indirectly engage in capital transactions intended to hedge or offset the market value of Target common stock owned by them, nor may they pledge Target common stock owned by them as collateral for any loan. In compliance with this policy, none of our executive officers or members of the Board of Directors have any hedges or pledges of Target common stock.

Grant Timing Practices

We have the following practices regarding the timing of equity compensation grants. These practices have not been formalized in a written policy, but they are strictly observed.

	•	Our annual LTI grant is made on the date of our regularly scheduled January Board of Directors meeting. These meetings are scheduled more than one year in advance.

	•	We have no practice or policy of coordinating or timing the release of company information around our grant dates.

	•	On occasion we grant equity compensation outside of our annual LTI grant cycle for new hires, promotions, recognition, retention or other purposes. If the grant date is after the approval date, it must be on a date specified at the time of approval.

Compensation Tax Policy

Our short-term and long-term compensation programs, including the compensation paid in fiscal 2014, are intended to qualify as deductible performance based compensation under Section 162(m) of the Internal Revenue Code (IRC). These compensation programs are generally structured such that executive officers are entitled to receive a maximum payout amount upon achievement of consolidated earnings before interest and taxes performance metric determined by the Compensation Committee. The Compensation Committee then uses its negative discretion to determine the actual payout amount. The performance objectives that are communicated to our executive officers, which are described in detail above, guide the Compensation Committee’s exercise of its negative discretion to determine the actual payouts. We may provide non-deductible compensation in situations the Compensation Committee or our Board of Directors believes appropriate. As described under “Discontinuing Our Canadian Operations Results in 162(m) Threshold Not Being Met in Fiscal 2014,” this year we did not meet our 162(m) threshold, which affected our named executive officers’ compensation.

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COMPENSATION TABLES

SUMMARY COMPENSATION TABLE

The following Summary Compensation Table contains values calculated and disclosed according to SEC reporting requirements. Salary, Bonus, and Non-Equity Incentive Plan compensation amounts are reflective of the compensation earned during each fiscal year. The stock awards and option awards reflect awards with a grant date during each fiscal year. Beginning in January 2014, we aligned our equity grant dates for executives officers so that all annual equity grants occur in January each year, instead of our previous practice of granting RSUs or PBRSUs in January and PSUs in March. The change enhances visibility to the annual grant amount because all equity related to a given year is reported in the Summary Compensation Table for that year. However, for 2013, it artificially increases the “Stock Awards” amount reported in this proxy statement by including awards from two separate annual grant cycles. As a result, 2013 pay as shown in the Summary Compensation Table includes LTI awards granted for 2013 as well as part of the 2012 LTI grant, as described in more detail in Note 4 to the table.

NAME AND PRINCIPAL POSITION	FISCAL YEAR	SALARY		BONUS⁽²⁾		STOCK AWARDS⁽³⁾⁽⁴⁾		OPTION AWARDS⁽³⁾		NON-EQUITY INCENTIVE PLAN COMPENSATION		CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS⁽⁵⁾		ALL OTHER COMPENSATION⁽⁶⁾		TOTAL
Brian C. Cornell Chairman & Chief Executive Officer	2014	$	595,000	$	48,390	$	27,354,887	$	0	$	0	$	0	$	165,747	$	28,164,024


John J. Mulligan Executive Vice President & Chief Financial Officer⁽¹⁾	2014	$	919,231	$	400,000’	$	4,555,603	$	0	$	0	$	89,446	$	328,348	$	6,292,627
	2013	$	700,000	$	150,000	$	3,505,105	$	0	$	0	$	5,465	$	273,286	$	4,633,856
	2012	$	602,404	$	371,917	$	1,395,687	$	1,340,064	$	415,250	$	35,381	$	313,505	$	4,474,207
Kathryn A. Tesija Executive Vice President & Chief Merchandising & Supply Chain Officer	2014	$	950,000	$	380,000	$	4,317,535	$	0	$	0	$	143,604	$	532,366	$	6,323,505
	2013	$	950,000	$	0	$	5,841,653	$	0	$	0	$	8,080	$	398,268	$	7,198,001
	2012	$	900,000	$	371,700	$	2,306,493	$	2,233,443	$	648,000	$	54,159	$	653,424	$	7,167,219
Tina M. Tyler Executive Vice President & Chief Stores Officer	2014	$	725,000	$	290,000	$	3,301,716	$	0	$	0	$	71,911	$	135,964	$	4,524,591
	2013	$	725,000	$	0	$	3,797,152	$	0	$	0	$	7,595	$	149,975	$	4,679,722
	2012	$	700,000	$	270,900	$	1,516,896	$	1,451,738	$	504,000	$	30,031	$	166,606	$	4,640,170
Jeffrey J. Jones II Executive Vice President & Chief Marketing Officer	2014	$	700,000	$	290,000	$	3,301,716	$	0	$	0	$	0	$	67,343	$	4,359,059

	2013	$	700,000	$	0	$	3,505,105	$	0	$	0	$	0	$	87,169	$	4,292,275
	2012	$	537,500	$	202,042	$	3,000,088	$	2,072,624	$	390,000	$	0	$	597,017	$	6,799,271
Gregg W. Steinhafel Former Chairman, President & Chief Executive Officer⁽¹⁾	2014	$	865,385	$	0	$	0	$	0	$	0	$	996,366	$	(4,901,334)	$	(3,039,584)
	2013	$	1,500,000	$	0	$	10,224,120	$	0	$	0	$	720,219	$	508,875	$	12,953,214
	2012	$	1,500,000	$	0	$	5,285,245	$	5,248,573	$	2,880,000	$	665,528	$	5,068,118	$	20,647,464

(1)

On May 5, 2014, Mr. Steinhafel stepped down as President & CEO, and resigned as a Director. The Board appointed Mr. Mulligan to serve in the additional capacities of Interim President & CEO, which he did until August 12, 2014. Mr. Steinhafel remained employed by Target in an advisory capacity to assist with the transition until August 23, 2014. Mr. Steinhafel is a named executive officer because he was our President & CEO for part of fiscal 2014. In connection with Mr. Steinhafel’s departure, which was an involuntary termination without cause, Mr. Steinhafel is eligible for 24 months of income continuation severance benefits under our ICP. The ICP payments are not included in the table because they do not commence until fiscal 2015. As a condition to receiving those payments, Mr. Steinhafel signed an agreement that included a non-solicitation clause and a release of claims, and provided that severance payments may be recovered and that any outstanding equity awards held by him may be terminated if he becomes employed by specified competitors. Due to his ICP eligibility, during fiscal 2014 Mr. Steinhafel had to pay back all of his enhanced early retirement benefits under the Target Corporate Supplemental Pension Plan III (SPP III), which is discussed in more detail in Note 6 to this table. For more information about Mr. Steinhafel’s departure, including his Post-Termination Benefits, please see “Former CEO Departure” on page 63, located in the “Potential Payments Upon Termination of Change-in-Control” section of this proxy statement.

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(2)	Amount for Mr. Cornell includes his “Make-Whole Bonus” he received in connection with his hiring compensation package, representing the amount of annual bonus payment that he gave up when he left his former employer. See page 39 of the CD&A for a discussion of his hiring compensation package. Amount for Mr. Mulligan includes a payment in the amount of $150,000 in each of fiscal 2013 and 2012 under a special retention award he was granted in October 2011 when he was Senior Vice President, Treasury, Accounting and Operations. The special retention award was for a total amount of $300,000, with $150,000 paid in October 2012 and the remaining $150,000 paid in October 2013.
(3)	Amounts represent the aggregate grant date fair value of awards made each fiscal year, as computed in accordance with FASB ASC Topic 718. See Note 24, Share Based Compensation, to our consolidated financial statements for fiscal 2014 and fiscal 2013 for a description of our accounting and the assumptions used.
(4)	Represents the aggregate grant date fair value of PSUs and PBRSUs that were computed based on the probable outcome of the performance conditions as of the grant date. Actual payments will be based on degree of attainment of the performance conditions and our stock price on the settlement date.

The range of payments for the PSUs granted in fiscal 2014 is as follows:

	MINIMUM		AMOUNT		MAXIMUM
NAME	AMOUNT		REPORTED		AMOUNT
Mr. Cornell
• PSU Granted 8/21/14	$	0	$	2,577,875	$	4,511,281
• PSU Granted 1/14/15	$	0	$	6,750,009	$	11,812,516
Mr. Mulligan
• PSU Granted 1/14/15	$	0	$	2,625,008	$	4,593,763
Ms. Tesija
• PSU Granted 1/14/15	$	0	$	3,187,515	$	5,578,151
Ms. Tyler
• PSU Granted 1/14/15	$	0	$	2,437,555	$	4,265,721
Mr. Jones
• PSU Granted 1/14/15	$	0	$	2,437,555	$	4,265,721

	The PSU granted on August 21, 2014 was part of a Pro-Rata Equity Grant intended to align Mr. Cornell with the PSUs granted in January 2014 to the other named executive officers, which use fiscal 2014 as the first year of their three-year performance period. See page 39 of the CD&A for a discussion of his hiring compensation package. The PSU under the Pro-Rata Equity Grant to Mr. Cornell was forfeited as a result of the Compensation Committee’s determination in March 2015 that we did not meet our 162(m) threshold for fiscal 2014.
	Beginning January 2014, we changed our grant timing practice to grant both PBRSUs and PSUs in January. Our prior policy of granting RSUs in January and PSUs in March straddled two fiscal years, causing PSU grants to be reported in the proxy statement one year after RSU grants were reported. The new grant timing enhances visibility of the annual grant amount by reporting PBRSUs and PSUs in the same proxy statement. However, the transition artificially increases the Stock Awards amount reported in fiscal 2013 by including awards from two separate annual grant cycles. For example, the Stock Awards total for fiscal 2013 reflects the 2013 award of PSUs and PBRSUs for our former CEO of $7,474,365, and also includes an additional $2,749,755 from his 2012 PSU award that was granted in March 2013. Our former CEO did not receive a PSU grant in fiscal 2014.
(5)	For fiscal 2014, the following amounts are related to the change in the qualified pension plan value, which applies to all eligible NEOs, and above-market earnings on nonqualified deferred compensation, which only applies to Mr. Steinhafel:

			NONQUALIFIED DEFERRED
	CHANGE IN PENSION		COMPENSATION
NAME	VALUE		ABOVE-MARKET EARNINGS
Mr. Mulligan	$	89,446	$	0
Ms. Tesija	$	143,604	$	0
Ms. Tyler	$	71,911	$	0
Mr. Steinhafel	$	243,478	$	752,888

Mr. Cornell and Mr. Jones are not eligible for the Target Corporation Pension Plan or any supplemental pension plans because they were hired after January 2009.

Consistent with applicable law, the accrued benefits under the pension plan cannot be reduced; however, the present value of the benefit is dependent on the discount rate used. The discount rates used in fiscal 2014, 2013 and 2012 were 3.87%, 4.77% and 4.40%, respectively. The Change in Pension Value column reflects the additional pension benefits attributable to additional service, increases in eligible earnings and changes in the discount rate.

The above-market earnings on nonqualified deferred compensation consist of an additional 7.69% annual return on our former deferred compensation plan, the Target Corporation Officer Deferred Compensation Plan (ODCP), which was frozen for new participants and further compensation deferrals after 1996. Mr. Steinhafel was the only NEO eligible for the ODCP. See the narrative following the Nonqualified Deferred Compensation for Fiscal 2014 table for additional information.

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(6)

The amounts reported for fiscal 2014 include matching credits of up to a maximum of 5% of cash compensation allocated among the Target 401(k) Plan and our current executive deferred compensation plan (EDCP), the dollar value of life insurance premiums paid by Target, credits to the EDCP representing annual changes in supplemental pension plan values and perquisites.

NAME	MATCH CREDITS		LIFE INSURANCE		SPP CREDITS			PERQUISITES		TOTAL
Mr. Cornell	$	0	$	6,549	$	0		$	159,198	$	165,747
Mr. Mulligan	$	45,875	$	5,621	$	232,144		$	44,707	$	328,348
Ms. Tesija	$	43,389	$	8,009	$	454,383		$	26,584	$	532,366
Ms. Tyler	$	34,493	$	4,590	$	53,956		$	42,925	$	135,964
Mr. Jones	$	35,000	$	4,341	$	0		$	28,002	$	67,343
Mr. Steinhafel	$	27,404	$	8,931	$	(5,083,232	)	$	145,563	$	(4,901,334	)

Supplemental Pension Plan. The SPP Credits for our NEOs represent additional accruals of supplemental pension plan benefits under the Target Corporation Supplemental Pension Plan I (SPP I) and the Target Corporation Supplemental Pension Plan II (SPP II) that are credited to their deferred compensation accounts. These benefits are based on our normal pension formula, so they are affected by final average pay, service, age and changes in interest rates. Mr. Steinhafel’s SPP Credits consist of:

	•	($5,277,556) in enhanced early retirement benefits he paid back under our SPP III because he was eligible for severance benefits under our ICP in connection with his departure on August 23, 2015; and

	•	$194,324 for his final credit of accrued supplemental pension plan benefits under SPP I and SPP II.

Mr. Steinhafel was the only NEO who had enhanced early retirement benefits under the SPP III as no new participants have been allowed since 1989. See “Former CEO Departure” on page 63 of this proxy statement. See the narrative following the Pension Benefits for Fiscal 2014 table for more information about our pension plans.

Perquisites. The perquisites for our NEOs other than Mr. Cornell consist of a company-provided car or car allowance, reimbursement of financial management expenses, reimbursement of home security expenses, on-site parking, on-site exercise room, spousal travel on business trips, gifts and executive physicals. Mr. Cornell is only eligible for perquisites that support his safety, health and well-being—reimbursement of home security expenses, on-site parking, executive physical, on-site exercise room, and personal use of company-owned aircraft for security reasons. Mr. Cornell is required to reimburse Target for the incremental costs of using company-owned aircraft for personal purposes if his personal use exceeds $175,000 per year.

The only individual perquisites which exceeded $25,000 were Mr. Cornell’s and Mr. Steinhafel’s personal use of company-owned aircraft for security reasons, which amounted to $112,486 and $73,162, respectively, and home security for Mr. Steinhafel, which amounted to $35,467. 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 in this footnote, the NEOs receive certain other personal benefits for which we have no incremental cost, as follows:

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

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

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

Until he left the company, Mr. Steinhafel had a membership in a Minneapolis business club as the result of a grandfathered perquisite that is no longer available. The club was used almost exclusively for business functions; however, he was permitted to occasionally use the club for personal purposes provided that he paid for any meal or other incremental costs.

2015 Proxy Statement │ TARGET CORPORATION 51

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GRANTS OF PLAN-BASED AWARDS IN FISCAL 2014