TARGET CORPORATION DEF 14A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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TARGET CORPORATION

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Letter from our Lead Independent Director

 

Dear Fellow Shareholders,

2020 was a year of unique hardships for our country and communities, a year that put business models—and perhaps most significantly, companies' values—to the test. Target's purpose is to help all families discover the joy of everyday life, and the company's heritage of long-term value creation for all stakeholders was on full display last year. While our 2020 financial results certainly stand out, those results were years in the making; they simply wouldn't have been possible without a strong connection to guests and communities, or deep investments made over time. Those investments gave the Target team the capabilities they needed to deliver on their overriding ambition of 2020: taking care of everyone around them in the midst of great economic and social challenges.

Target's continued growth and strong shareholder returns are the result of our durable business model. As a business leader and an independent director I also believe they are proof that caring wins. In the face of the devastating COVID-19 pandemic, domestic political uncertainty and widespread activism for racial equity and social justice, my colleagues on the board and I worked to both oversee and support the tireless efforts by management to deliver what was essential for team members, guests, communities, and shareholders. This included:

Keeping team members and guests safe

Taking care of the more than 350,000 Target team members and ensuring a safe environment for essential shopping and services was management's first priority. Throughout the year, the board supported large incremental investments totaling over $1 billion more than the previous fiscal year. These investments allowed us to:

Ensure team members had (and continue to have) what they need to care for themselves and their families—including illness and quarantine pay, paid leave for team members who were most susceptible to COVID-19 infection, backup family care for all team members, premium pay for front-line teams, which management kept in place longer than other retailers, and five rounds of bonuses for front-line team members, including the most recent $500 payout to all hourly team members in January 2021. Importantly, management placed a focus on total well-being for team members, investing not just to prevent COVID-19 transmission but in mental health resources, virtual healthcare, and anti-stress offerings. The company also accelerated our previously announced commitment to institute a $15 per hour minimum starting wage.

Create a safe physical shopping experience in the pandemic—including rapidly scaling store-based fulfillment services in anticipation of exploding demand for contactless shopping and instituting dedicated shopping times for vulnerable guests.

Advancing racial equity

As a Twin Cities business leader, I can tell you that the killing of George Floyd in Minneapolis was a shocking trauma for this community. Coming so soon after the deaths of Ahmaud Arbery and Breonna Taylor, and in the midst of a pandemic which disproportionately harmed Black families and communities of color, Floyd's killing sparked worldwide demands for racial justice. It also caused a redoubling of efforts by leading organizations to address unequal treatment and advancement of racial equity. Building on our longstanding commitment to diversity and inclusion, Target:

Acted immediately after George Floyd's deathcontributing $10 million to local and national partnerships addressing unequal treatment and advancement of racial equity and social justice and offering 10,000 hours of pro-bono assistance to Black-, Indigenous-, and People-of-Color-owned businesses.

Organized for long-term positive impactreleasing our most detailed Workforce Diversity Report to date (including demographic information using the categories disclosed in our EEO-1 report) and committing to increase representation of Black team members by 20% across the company.

Focusing on future governance

In the midst of these urgent challenges, the board also maintained our long-term orientation, our practice of regularly refreshing board composition, and our commitment to diverse director perspectives.

Two independent directors, Christine Leahy and Derica Rice, joined the board during fiscal year 2020, complementing the skills and viewpoints of the incumbent directors. Their backgrounds are described in our proxy statement for the 2021 annual meeting of shareholders, and they're welcome additions as the board and management continue to grow the business, deepen guest engagement, invest in the team's well-being, growth and development, and remain focused on being a responsible corporate citizen.

     
  TARGET CORPORATION  2021 Proxy Statement 3

One of our core governance policies is to rotate board leadership positions on a regular basis, and after six years I will reach the end of my term as Lead Independent Director following our 2021 Annual Meeting. It has been an honor to serve in this role, and it is with great confidence that the board has selected Monica C. Lozano to assume the Lead Independent Director position in June 2021.

Finally, on behalf of the board I want to recognize our Target team for their unbelievable efforts to position Target for an even brighter future. And I want to thank you as shareholders for your trust, which we do not take lightly.

Sincerely,

 

Douglas M. Baker, Jr.

Lead Independent Director

     
  TARGET CORPORATION  2021 Proxy Statement 4

Notice of 2021 annual meeting of shareholders

To our shareholders,

You are invited to attend Target Corporation’s 2021 annual meeting of shareholders (2021 Annual Meeting) to be held as follows:

 

Purpose

Shareholders will vote on the following items of business:

Item

Board’s Recommendation

Election of 12 directors (page 21)

FOR each Director Nominee

Ratification of Ernst & Young LLP as our independent registered public accounting firm (page 62)

FOR

Advisory approval of executive compensation (Say on Pay) (page 64)

FOR

Shareholder proposals, if properly presented at the meeting (page 65)

AGAINST each proposal

Due to continuing uncertainty regarding the COVID-19 pandemic (the Pandemic), we are holding the 2021 Annual Meeting in a virtual-only meeting format as we did last year to support the health and well-being of our team members and shareholders. You will not be able to attend the 2021 Annual Meeting at a physical location. If we are able to safely do so, we intend to resume holding in-person annual meetings beginning in 2022. For more information about the virtual-only meeting format, please see Question 12 “How can I attend the 2021 Annual Meeting?” and Question 13 “How will the 2021 Annual Meeting be conducted?” on page 70 of this proxy statement for the 2021 Annual Meeting (the 2021 Proxy Statement).

You may vote if you were a shareholder as of the record date. We urge you to read the 2021 Proxy Statement carefully and to vote in accordance with the recommendations of the Board of Directors (Board). If voting in advance, you should vote by the deadlines specified in the 2021 Proxy Statement, and may do so by telephone or Internet, or by signing, dating, and returning the enclosed proxy card in the postage-paid envelope provided. If you do not vote in advance and instead plan to vote during the 2021 Annual Meeting, you may do so if you enter the 16-digit control number found on your proxy card, voter instruction form, or Notice of Internet Availability of Proxy Materials (Internet Availability Notice), as applicable, at the time you log into the meeting at virtualshareholdermeeting.com/TGT2021.

Following the formal business of the 2021 Annual Meeting, our Chairman & Chief Executive Officer will provide prepared remarks, followed by a question and answer session. Shareholders can submit written questions in advance at www.proxyvote.com and attending shareholders will have an opportunity to submit written questions during the 2021 Annual Meeting.

Thank you for your continued support.

Sincerely,

Don H. Liu

Corporate Secretary

Approximate Date of Mailing of Proxy Materials or

Internet Availability Notice:

 

April 26, 2021

     
  TARGET CORPORATION  2021 Proxy Statement 5

 

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  TARGET CORPORATION  2021 Proxy Statement 6

Table of
contents

Proxy summary

8

General information about corporate governance and the Board

10

Corporate governance highlights

10

Our directors

11

Board leadership structure

12

Board and shareholder meeting attendance

12

Committees

13

Risk oversight

16

Director independence

19

Policy on transactions with related persons

19

Business ethics and conduct

20

Communications with directors and shareholder outreach

20

21

Election and nomination process

21

Board evaluations and refreshment

22

2021 nominees for director

23

Stock ownership information

30

Stock ownership guidelines

30

Beneficial ownership of directors and officers

32

Beneficial ownership of Target’s largest shareholders

33

Human Resources & Compensation Committee Report

34

Compensation Discussion and Analysis

34

Introduction

34

Executive summary

35

Our framework for executive compensation

40

Other benefit elements

45

Compensation governance

46

Compensation tables

50

Summary compensation table

50

Grants of plan-based awards in fiscal 2020

52

Outstanding equity awards at 2020 fiscal year-end

53

Option exercises and stock vested in fiscal 2020

54

Pension benefits for fiscal 2020

54

Nonqualified deferred compensation for fiscal 2020

55

Potential payments upon termination or change-in-control

56

Table of potential payments upon termination or change-in-control

57

Pay ratio disclosure

59

Director compensation

59

Equity compensation plan information

61

Management proposals

62

62

64

Shareholder proposals

65

65

Questions and answers about the 2021 Annual Meeting and voting

67


     
  TARGET CORPORATION  2021 Proxy Statement 7

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Proxy
summary

This summary highlights information described in other parts of this proxy statement (2021 Proxy Statement) and does not contain all information you should consider in voting. Please read the entire 2021 Proxy Statement carefully before voting.

The Board of Directors of Target Corporation (Board) solicits the enclosed proxy for the 2021 annual meeting of shareholders (2021 Annual Meeting) and for any adjournment of the 2021 Annual Meeting.

2021 Annual Meeting

Items of business

Item

Board’s

Recommendation

Election of 12 directors (page 21)

FOR each Director Nominee

Ratification of Ernst & Young as our independent registered public accounting firm (page 62)

FOR

Advisory approval of executive compensation (Say on Pay) (page 64)

FOR

Shareholder proposals, if properly presented at the meeting (page 65)

AGAINST each proposal

Questions and answers about the 2021 Annual Meeting and voting

We encourage you to review the “Questions and answers about the 2021 Annual Meeting and voting” beginning on page 67 for answers to common questions on the rules and procedures that apply to the 2021 Proxy Statement and the 2021 Annual Meeting as well as the business to be conducted at the 2021 Annual Meeting.

Attending the 2021 Annual Meeting in the virtual-only meeting format

Due to the continuing uncertainty regarding the COVID-19 pandemic (the Pandemic), we are holding the 2021 Annual Meeting in a virtual-only meeting format as we did last year to support the health and well-being of our team members and shareholders. You will not be able to attend the 2021 Annual Meeting at a physical location. If we are able to safely do so, we intend to resume holding in-person annual meetings beginning in 2022. The website for the virtual-only 2021 Annual Meeting is virtualshareholdermeeting.com/TGT2021. For more information about the virtual-only meeting format and attending the 2021 Annual Meeting, please see Question 12 “How can I attend the 2021 Annual Meeting?” and Question 13 “How will the 2021 Annual Meeting be conducted?” on page 70.

Voting

If you held shares of Target common stock as of the record date (April 12, 2021), you are entitled to vote on the items of business.

  Your vote is important. Thank you for voting.

     
     
  TARGET CORPORATION  2021 Proxy Statement 8

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Advance voting methods and deadlines

 

Method

Internet Telephone Mail

Instruction

Go to the website identified on proxy card, voter instruction form, or Notice of Internet Availability of Proxy Materials (Internet Availability Notice).

Enter control number on proxy card, voter instruction form, or Internet Availability Notice.

Follow instructions on the screen.

Call the toll-free number identified on the enclosed proxy card or voter instruction form or, after viewing the proxy materials on the website provided in your Internet Availability Notice, call the toll-free number for telephone voting identified on the website.

Enter control number on the proxy card, voter instruction form, or Internet Availability Notice.

Follow the recorded instructions.

Mark your selections on the enclosed proxy card or voter instruction form.

Date and sign your name exactly as it appears on the proxy card or voter instruction form.

Promptly mail the proxy card or voter instruction form in the enclosed postage-paid envelope.

Deadline

Internet and telephone voting are available 24 hours a day, seven days a week up to these deadlines:

Registered Shareholders or Beneficial Owners — 11:59 p.m. Eastern Daylight Time on June 8, 2021.

Participants in the Target 401(k) Plan — 6:00 a.m. Eastern Daylight Time on June 7, 2021.

Return promptly to ensure proxy card or voter instruction form is received before the date of the 2021 Annual Meeting or, for participants in the Target 401(k) Plan, by 6:00 a.m. Eastern Daylight Time on June 7, 2021.

 

If you received an Internet Availability Notice and would like to vote by mail, you must follow the instructions on the Internet Availability 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 2021 Annual Meeting. Please see the information in Question 3 “What is a proxy and what is a proxy statement?” on page 67.

Voting at the 2021 Annual Meeting

If you plan to vote during the 2021 Annual Meeting, you may do so if you enter the 16-digit control number found on your proxy card, voter instruction form, or Internet Availability Notice, as applicable, at the time you log into the meeting at virtualshareholdermeeting.com/TGT2021. Please see the information in Question 6 “How do I vote?” on page 67.

Notice of internet availability of proxy materials

Important notice regarding the availability of proxy materials for the shareholders meeting to be held on June 9, 2021:
The 2021 Proxy Statement and our annual report on Form 10-K for fiscal 2020 (2020 Annual Report) are available at www.proxyvote.com.

     
  TARGET CORPORATION  2021 Proxy Statement 9

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General information about corporate governance and the Board

Corporate governance highlights

We have the core corporate governance practices listed below. In addition, we regularly evaluate our practices against prevailing best practices and emerging and evolving topics identified through shareholder outreach, current literature, and corporate governance organizations.

Practice

Description

More information

Accountability to shareholders

 

Board evaluations and refreshment

The Board regularly evaluates its performance in a variety of ways. Those evaluations, changes in business strategy and operations, and anticipated director retirements are used to identify desired characteristics for future Board members.

22

Annual elections

All directors are elected annually, which reinforces our Board’s accountability to shareholders.

21

Majority voting standard

Our Articles of Incorporation require a “majority voting” standard in uncontested director elections—each director must receive more votes “For” their election than votes “Against” in order to be elected.

21

Director resignation
policy

An incumbent director that does not meet the majority voting standard must promptly offer to resign. The Governance Committee will make a recommendation and the Board must act on the offer within 90 days and publicly disclose its decision and rationale.

21

Proxy access

Any shareholder or group of up to 20 shareholders owning 3% or more of Target common stock continuously for at least the previous three years may nominate and include in our proxy materials director nominees totaling up to the greater of 20% of the Board or at least two directors.

72

No poison pill

We do not have a poison pill.

 

10% special meeting threshold

Shareholders owning 10% or more of Target's outstanding stock have the right to call a special meeting of shareholders.

Shareholder voting rights are proportionate to economic interests

Single voting class

Target common stock is the only class of voting shares outstanding.

67

One share, one vote

Each share of Target common stock is entitled to one vote.

67

Responsiveness to shareholders

Responses to shareholder proposals

The Board responds to shareholder proposals that receive significant support by either making the proposed changes or explaining why the actions were not taken through the shareholder engagement process, proxy statement disclosure, or other means.

65

Understanding opposition to management proposals

As part of its shareholder engagement process, the Board seeks to understand the reasons for, and respond to, significant shareholder opposition to management proposals.

 

Availability of independent directors

Target's Lead Independent Director is expected to communicate with major shareholders, as appropriate, and Target also makes other independent directors available, as appropriate, for shareholder engagement.

12, 20

Strong, independent leadership

Independence

A majority of our directors must be independent. Currently, all of our directors other than our Chief Executive Officer (CEO) are independent, and all of our Committees consist exclusively of independent directors.

14, 19

Lead Independent

Director

Whenever our CEO is also the Chair of the Board, we require a Lead Independent Director position with specific responsibilities to provide independent oversight of management. Both the Lead Independent Director and the Chair of the Board are elected annually by the independent directors.

12

Committee membership and leadership rotations

The Governance Committee reviews and recommends Committee membership. The Board appoints members of its Committees annually, rotates Committee assignments periodically, and seeks to rotate the Lead Independent Director position and Committee Chair assignments every four to six years.

12, 13

     
  TARGET CORPORATION  2021 Proxy Statement 10

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Practice

Description

More information

Structures and practices enhance Board effectiveness

 

Diversity

The composition of our Board represents broad perspectives, experiences, and knowledge relevant to our business while maintaining a balanced approach to gender and ethnic diversity.

21, 22

Director tenure policies

Our director tenure policies include mandatory retirement at age 72 and a maximum term limit of 20 years. 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. These policies encourage Board refreshment and provide additional opportunities to maintain a balanced mix of perspectives and experiences.

22

Director overboarding policy

Any director serving as a CEO of a public company is expected to serve on no more than two public company boards (including our Board), and other directors are expected to serve on no more than four public company boards (including our Board).

Risk oversight

We disclose how risk oversight is exercised at the Board and Committee levels and how risk oversight responsibilities are allocated among the Committees.

16

Information security, cybersecurity, and data privacy

We disclose how oversight responsibility for risks related to information security, cybersecurity, and data privacy are shared by the Board, its Committees, and management.

17

Capital allocation

We disclose our capital allocation policies and priorities and how they are overseen by the Board and its Committees.

17

Environmental, social, and governance issues

We disclose how oversight responsibility for environmental, social, and governance issues is allocated among the Board and its Committees, describe how management integrates those priorities in our business, and report on the issues according to the most common reporting frameworks.

18

Management development and succession planning

Our Board regularly reviews management development and succession planning, with more in-depth reviews regularly conducted by the Human Resources & Compensation Committee.

19

Management incentive structures are aligned with long-term strategy

 

Performance goals linked to long-term strategy drive incentive awards

The Human Resources & Compensation Committee has identified short- and long-term performance goals that align with Target's strategy and has incorporated those goals into executive compensation plans to serve as drivers of incentive awards.

37

Communicating executive compensation to shareholders

The Compensation Discussion & Analysis explains how performance goals drive our executive compensation plans and connect to Target's long-term strategy.

34

Follow leading compensation practices

See “Target's executive compensation practices.”

46

 

For your convenience, we organized the corporate governance highlights listed above to show how our corporate governance practices compare favorably with the corporate governance principles developed by the Investor Stewardship Group (ISG), which includes some of the largest institutional investors and global asset managers and advocates for best practices in corporate governance. ISG's corporate governance principles reflect common corporate governance beliefs featured in its members’ proxy voting guidelines.

Our directors

Name

Age

Director

since

Current or most recent company

Title

Independent

Other public
boards

Douglas M. Baker, Jr.

62

2013

Ecolab Inc.

Executive Chairman

Yes

1

George S. Barrett

66

2018

Cardinal Health, Inc.

Former Chairman & CEO

Yes

1

Brian C. Cornell

62

2014

Target Corporation

Chairman & CEO

No

1

Calvin Darden(1)

71

2003

Darden Petroleum & Energy Solutions, LLC

Chairman

Yes

2

Robert L. Edwards

65

2015

Safeway Inc.

Former President & CEO

Yes

0

Melanie L. Healey

60

2015

The Procter & Gamble Company

Former Group President, North America

Yes

3

Donald R. Knauss

70

2015

The Clorox Company

Former Chairman & CEO

Yes

2

Christine A. Leahy

56

2021

CDW Corporation

President & CEO

Yes

1

Monica C. Lozano

64

2016

The College Futures Foundation

President & CEO

Yes

2

Mary E. Minnick

61

2005

Digital Media Solutions

Chairman

Yes

3

Derica W. Rice

56

2020

CVS Health Corporation

Former Executive Vice President

Yes

3

Kenneth L. Salazar

66

2013

WilmerHale

Partner

Yes

0

Dmitri L. Stockton

57

2018

General Electric Company

Former Senior Vice President & Special Advisor to the Chairman

Yes

3

(1) Mr. Darden will not seek re-election and will leave the Board when his current term ends at the 2021 Annual Meeting.

     
  TARGET CORPORATION  2021 Proxy Statement 11

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Board leadership structure

We do not have an express policy on whether the roles of Chairman of the Board (Chairman) and CEO should be combined or separated. Instead, the Board prefers to maintain the flexibility to determine which leadership structure best serves the interests of Target and our shareholders based on the evolving needs of the company. We currently have a combined Chairman and CEO leadership structure. The Board regularly reevaluates our Board leadership structure as part of the Board evaluation process described under “Board evaluations and refreshment” on page 22 and also considers shareholder feedback on the topic. As a result of its most recent evaluation, the Board decided to continue having Mr. Cornell serve as both Chairman and CEO to allow him to coordinate the development, articulation, and execution of a unified strategy at the Board and management levels. Where the Chairman and CEO roles are combined as they are currently, our Corporate Governance Guidelines require that we have a Lead Independent Director position to complement the Chairman’s role and to serve as the principal liaison between the non-employee directors and the Chairman. Mr. Baker currently serves as our Lead Independent Director, providing effective, independent leadership of our Board through his clearly defined and robust set of roles and responsibilities.

Our Corporate Governance Guidelines require that both the Chairman and Lead Independent Director be elected annually by the independent, non-employee directors, which ensures that the leadership structure is reviewed at least annually. The Board is committed to continuing to seek shareholder feedback on its approach as part of its ongoing shareholder outreach efforts and will continue to reassess its Board leadership structure on a regular basis.

 

Douglas

M. Baker, Jr.

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 at which the Chairman is not present, including executive sessions of independent directors.

Consults with the Human Resources & Compensation Committee as it conducts the annual performance reviews of the CEO, with input from the other independent directors, and serves as the primary liaison between the CEO and the independent directors.

Provides insights to the Human Resources & Compensation Committee as it annually approves the CEO’s compensation.

 

Approves meeting schedules, agendas, and the information furnished to the Board to ensure that the Board has adequate time and information for discussion.

Is expected to engage in consultation and direct communication with major shareholders, as appropriate.

Coordinates with the CEO to establish minimum expectations for non-employee directors to consistently monitor Target’s operations and those of our competitors.

Consults with the Governance Committee regarding Board and Committee composition, Committee Chair selection, the annual performance review of the Board and its Committees, and director succession planning.

 

Annual election:

Elected annually by the independent, non-employee directors.

 

Service:

As a guideline, the Lead Independent Director should serve in that capacity for no more than four to six years.

Lead Independent

Director

(Since 2015)(1)

 
(1)

Monica Lozano was elected as Lead Independent Director to succeed Mr. Baker, effective after the 2021 Annual Meeting.

Board and shareholder meeting attendance

The Board met 7 times during fiscal 2020. 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. In addition to the official meetings, the Board also had a number of informational meetings throughout the year to address current events, including those relating to the Pandemic and racial equity and social justice.

Eleven of our thirteen then-serving directors attended our 2020 annual meeting of shareholders (2020 Annual Meeting). The Board has a policy requiring all directors to attend all annual meetings of shareholders, absent extraordinary circumstances. The only directors who did not attend the 2020 Annual Meeting were Roxanne S. Austin and Henrique De Castro, whose terms ended at the 2020 Annual Meeting.

     
  TARGET CORPORATION  2021 Proxy Statement 12

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Committees

Membership

The Board has the following Committees and Committee composition as of the date of the 2021 Proxy Statement:

 

 

Name

 

Audit &

Finance

Governance

Human

Resources &

Compensation

Infrastructure

& Investment

Risk &

Compliance

 

 

 

 

Douglas M. Baker, Jr.

 

 

C

 

 

 

 

 

 

George S. Barrett

 

 

 

 

 

 

 

 

Calvin Darden(1)

 

 

 

 

 

 

 

 

Robert L. Edwards

 

C

 

 

 

 

 

 

 

Melanie L. Healey

 

 

 

 

 

 

 

 

Donald R. Knauss

 

 

 

 

 

 

 

 

Christine A. Leahy

 

 

 

 

 

 

 

 

Monica C. Lozano

 

 

C

 

 

 

 

 

 

Mary E. Minnick

 

 

 

C

 

 

 

 

 

Derica W. Rice

 

 

 

 

 

 

 

 

Kenneth L. Salazar

 

 

 

 

C

 

 

 

 

Dmitri L. Stockton

 

 

 

 

 

 

 

 

Meetings held in 2020

 

7

5

5

4

3

 

 

 

 

C = Chair

  = Member

 

 

 

 

 

 

 

(1) Mr. Darden will leave the Governance Committee and Human Resources & Compensation Committee when his current Board term ends at the 2021 Annual Meeting.

 

 

 

Determining committee composition and leadership

The Board appoints members of its Committees annually, with the Governance Committee reviewing and recommending Committee membership, and rotates Committee assignments periodically. The following considerations provide the framework for determining Committee composition and leadership:

The guideline for rotating Committee Chair assignments is four to six years.

The Board seeks to have each director serve on two Committees.

The Board considers a number of factors in deciding Committee composition, including individual director experience and qualifications, prior Committee experience, and increased time commitments for directors serving as a Committee Chair or Lead Independent Director.

By virtue of the position, the Lead Independent Director is a member of the Governance Committee.

To enhance risk oversight coordination, the Risk & Compliance Committee must include at least one member from each of the other Committees.

     
  TARGET CORPORATION  2021 Proxy Statement 13

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Information about our committees

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 “How may I access or receive the proxy materials, other periodic filings, key corporate governance documents, and other information?” on page 71.

 

Responsibilities

 

  Assists the Board in overseeing our financial reporting process, including the integrity of our financial statements and internal controls, the independent auditor’s qualifications and independence, performance of our internal audit function, and approval of transactions with related persons.

  Prepares the “Report of the Audit & Finance Committee” on page 63 and performs the duties and activities described in that report.

  Discusses with management our positions with respect to income and other tax obligations.

 

 

  Reviews with management our risk assessment and management policies and our major financial, accounting, and compliance risk exposures.

  Conducts a joint meeting annually with the Risk & Compliance Committee to review legal and regulatory risk and compliance matters.

  Assists the Board in overseeing our financial policies and financial condition, including our liquidity position, funding requirements, ability to access the capital markets, interest rate exposures, and policies regarding return of cash to shareholders.

 

Committee members

Mr. Edwards (Chair)

Ms. Leahy

Ms. Minnick

Mr. Rice

Mr. Stockton

 

Number of meetings during fiscal 2020

 

7

Audit &
Finance
Committee(1)

 

 

(1)

The Board has determined that all members of the Audit & Finance Committee satisfy the applicable audit committee independence requirements of the New York Stock Exchange (NYSE) and the Securities and Exchange Commission (SEC). The Board has 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 Mr. Edwards, Ms. Leahy, and Mr. Rice was based on experience 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. For Mr. Stockton, the determination was based on his financial oversight experiences with General Electric Company.

 

 

Responsibilities

  Oversees our corporate governance practices.

  Leads director succession planning and identifies individuals qualified to become Board members.

  Makes recommendations, in consultation with the Lead Independent Director, on overall composition of the Board and its Committees, and the selection of the Committee Chairs and the Lead Independent Director.

 

  Leads the annual self-evaluation performance review of the Board and its Committees in consultation with the Lead Independent Director.

  Oversees corporate responsibility efforts and policies and practices regarding public advocacy and political activities.

  Periodically reviews our Committee charters and Corporate Governance Guidelines.

 

Committee members

Mr. Baker (Chair)

Mr. Darden

Ms. Healey

Ms. Lozano

Mr. Rice

 

Number of meetings during fiscal 2020

 

5

Governance
Committee

 

 

 

     
  TARGET CORPORATION  2021 Proxy Statement 14

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Responsibilities

 

  Reviews our compensation philosophy, selection, and relative weightings of different compensation elements to balance risk, reward, and retention objectives, and the alignment of incentive compensation performance measures with our strategy.

  In consultation with the Lead Independent Director, reviews and approves goals and objectives for the CEO.

  Reviews and approves the composition and value of all executive officer compensation.

 

 

  Reviews and approves the compensation provided to non-employee members of the Board.

  Prepares the “Human Resources & Compensation Committee Report” on page 34.

  Oversees risks associated with our compensation policies and practices, and annually reviews with its compensation consultant whether those policies and practices create material risks to Target.

  Oversees management development, evaluation, and succession planning, and team member health and wellness, diversity and inclusion, and pay equity matters.

 

Committee members

Ms. Lozano (Chair)

Mr. Barrett

Mr. Darden

Ms. Healey

Mr. Knauss

 

Number of meetings during fiscal 2020

 

5

Human Resources
& Compensation
Committee(1)

 

 

(1)

The Board has determined that all members of the Human Resources & Compensation Committee satisfy the applicable compensation committee independence requirements of the NYSE and the SEC.

 

 

Responsibilities

  Assists the Board in overseeing our investment activity, including alignment of investments with our strategy, and evaluating the effectiveness of investment decisions.

  Oversees management’s resource allocation plans regarding infrastructure requirements.

 

  Reviews management’s plans for business development, business acquisitions, and other significant business relationships, including alignment of opportunities with our strategic objectives, expected return on investment, and post-acquisition integration and performance of acquired businesses.

 

Committee members

Ms. Minnick (Chair)

Mr. Knauss

Ms. Leahy

Mr. Salazar

Mr. Stockton

 

Number of meetings during fiscal 2020

 

4

Infrastructure

& Investment
Committee

 

 

 

 

Responsibilities

  Assists the Board in overseeing management’s identification and evaluation of our principal operating, business, and compliance and ethics risks (including information security, cybersecurity, data privacy, and workplace conduct).

  Oversees our risk management framework and the policies, procedures, and practices employed to manage risks.

 

  Oversees and monitors the effectiveness of our business ethics and compliance program.

  Supports the Audit & Finance Committee in oversight of compliance with legal and regulatory requirements.

 

Committee members

Mr. Salazar (Chair)

Mr. Baker

Mr. Barrett

Mr. Edwards

 

Number of meetings during fiscal 2020

 

3

Risk &

Compliance

Committee

 

 

 

     
  TARGET CORPORATION  2021 Proxy Statement 15

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Risk oversight

Overview

A summary of the current allocation of general risk oversight functions among management, the Board and its Committees is as follows:

 

 

The primary responsibility for the identification, assessment and management of the various risks that we face belongs with management. At the management level, risks are prioritized and assigned to senior leaders based on the risk’s relationship to the leader’s business area and focus. Those senior leaders develop plans to address the risks and measure the progress of risk management efforts. Our Chief Legal & Risk Officer provides centralized oversight of Target’s enterprise risk management program. Our Chairman & CEO and his direct reports meet regularly with the Chief Legal & Risk Officer to identify, assess, and manage risks facing the business. In addition, the Chief Legal & Risk Officer and other enterprise risk management team members regularly meet with leaders of business areas to inform, coordinate, and manage the enterprise risk management program.

The Risk & Compliance Committee currently coordinates the oversight of different risks by the Board and each Committee, and is structured to support that coordination by having at least one director from each Committee included in its membership. The Board’s oversight of the risks occurs as an integral and continuous part of the Board’s oversight of our business and seeks to ensure that management has processes in place to deal appropriately with risk. For example, our principal strategic risks are reviewed as part of the Board’s regular discussion and consideration of our strategy, and the alignment of specific initiatives with that strategy. Similarly, at every meeting the Board reviews the principal factors influencing our operating results, including the competitive environment, and discusses with our senior executive officers the major events, activities, and challenges affecting the company.

The Board’s ongoing oversight of risk also occurs at the Board Committee level on a more focused basis as detailed above. The Chief Legal & Risk Officer annually presents an overview of the enterprise risk management program to the Board’s Risk & Compliance Committee and provides it with regular updates on the program and status of key risks facing the business. The Risk & Compliance Committee regularly receives updates on key risk areas from members of management with primary responsibility for managing those risk areas. In addition, the Risk & Compliance Committee and Audit & Finance Committee annually conduct a joint meeting to review legal and regulatory risk and compliance matters.

The following sections provide additional detail about risk oversight of the Pandemic and how risk oversight is currently exercised by the Board and its Committees over some other key areas.

     
  TARGET CORPORATION  2021 Proxy Statement 16

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The Pandemic

Throughout the Pandemic, management and the Board have increased their level of communications and interactions to address the evolving needs of our guests, our teams, and the communities we serve. In addition, we created a management-level task force to centrally assess, respond, manage and communicate throughout this crisis.

The Board has been actively monitoring and overseeing management’s response to this crisis, including:

Safety and operations. Implementing operational changes and increased safety and sanitation measures,

Team member pay and benefits. Increasing pay for front-line team members and enhancing team member benefits to address specific needs arising from the Pandemic,

Supply chain. Coordinating our stores, distribution centers, and suppliers so that the items our guests need most move quickly through our supply chain,

Communication. Creating a dedicated website to communicate with guests, team members, and communities about our response to the Pandemic, store safety and sanitation measures, shopping tips, and frequently asked questions, and

Emergency succession planning. Reviewing emergency succession plans in place for key leadership roles.

The actions taken by management and the Board as we responded to the Pandemic show how our risk oversight framework is able to adapt and quickly respond to unexpected risks that affect our business.

Information security, cybersecurity, and data privacy

Securing the information we receive and store about our guests, team members, vendors, and other third parties is important to us. We have systems in place to safely receive and store that information and to detect, contain, and respond to data security incidents. While everyone at Target plays a part in information security, cybersecurity, and data privacy, oversight responsibility is shared by the Board, its Committees, and management:

Responsible party

Oversight area for information security, cybersecurity, and data privacy

Board

Oversight of these topics within Target’s overall risks

Risk & Compliance Committee

Delegated by the Board with primary oversight responsibility for information security, cybersecurity, and data privacy

Audit & Finance Committee

Internal controls designed to mitigate risks related to these topics

Management

Our Chief Information Officer, our Chief Information Security Officer, and senior members of our information security and compliance and ethics teams are responsible for identifying and managing risks related to these topics, and reporting to the Risk & Compliance Committee, Audit & Finance Committee, and/or the full Board

Management provides regular updates to the Board and/or Committees of the Board on these topics throughout the year and, at least annually, the Chief Information Security Officer provides an information security program review to the Risk & Compliance Committee to inform the Committee in its oversight of these topics.

Capital allocation

Management is responsible for developing and executing our capital allocation policy with oversight by the Board and its Committees. Our disciplined and balanced approach to capital allocation is based on the following priorities, ranked in order of importance:

Priorities

Description

1. Investing in our business

Fully invest in opportunities to profitably grow our business, create sustainable long-term value, and maintain our current operations and assets

2. Annual dividend

Maintain a competitive quarterly dividend and seek to grow it annually

3. Share repurchase

Return excess cash to shareholders by repurchasing shares within the limits of our credit rating goals

Our business generates more cash than we currently need to fully invest in the growth and long-term health of our business, so we return excess cash to shareholders through an appropriate balance of dividends and share repurchase. We believe that:

our dividend should be competitive and sustainable,

share repurchase is a necessary component of efficient capital allocation as it returns excess cash to shareholders after we have met our priorities of fully investing in our business and maintaining a competitive dividend, and

cash returned to shareholders through share repurchase can be redeployed to its most productive use.

We use share repurchase to balance the levels of debt and equity on our balance sheet to support our credit rating goals, and have flexibility to adjust the level of share repurchase activity to respond to changes in our operating performance, investment opportunities, and the external environment. For example, at the onset of the Pandemic we temporarily suspended share repurchase activity.

     
  TARGET CORPORATION  2021 Proxy Statement 17

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The Board, its Committees, and management share responsibility for overseeing capital allocation among our three capital allocation priorities:

Responsible party

Oversight area for capital allocation

Board

Primary oversight responsibility over capital allocation policy, balancing the three capital allocation priorities appropriately for the growth and long-term health of our business, and authorizing dividends and share repurchase programs

Infrastructure & Investment Committee

Overall level of investments in our business and their alignment with our strategies and effectiveness in achieving appropriate returns

Audit & Finance Committee 

Liquidity to support operations and investments, capacity for and competitiveness of annual dividends, execution of share repurchase activity, credit rating goals, and recommendations to the full Board on amount of dividends and share repurchase levels 

Human Resources & Compensation Committee

Compensation effects of all capital allocation priorities on plan design, goal-setting process, performance updates, and payouts

Management

Identifying, executing on, and monitoring performance of investment opportunities that meet strategic and return criteria, monitoring dividend policy and periodically recommending changes to maintain a competitive dividend level, and executing the share repurchase program within authorized limits and at a pace that ensures liquidity, maintains our ability to capitalize on investment opportunities, and stays within the limits of our credit ratings goals

 

Environmental, social, and governance issues

Given the breadth of environmental, social, and governance (ESG) issues for a company of Target's size and scale, oversight of those issues occurs within our existing organizational framework for the Board and its Committees. In general:

Responsible party

Oversight area for ESG issues

Board

Oversees our strategic approach to sustainable long-term value creation consistent with our declared purpose of helping all families discover the joy of everyday life, approves major strategic initiatives in support of long-term goals, and addresses critical issues as they arise, such as Target's response to the Pandemic and efforts to address inequities and social justice reform

Governance Committee

Addresses ESG topics on a consolidated basis by allocating responsibilities for ESG topics among the Board and its Committees as part of its reviews of our charter documents, and overseeing our overall approach to corporate responsibility, including our materiality assessment process, the establishment of long-term ambitions and goals for ESG matters and reviewing our annual ESG or Corporate Responsibility Report

Human Resources & Compensation Committee

Oversees matters that impact our team, including training and development, team member health and wellness, diversity and inclusion, and pay equity matters

Risk & Compliance Committee

Oversees our principal operating, business and compliance and ethics risks, including environmental matters, responsible and ethical sourcing, cybersecurity and workplace conduct

At the management level, our ESG-related activities are led and coordinated by our Senior Vice President, Corporate Responsibility, who has regular interactions with the Governance Committee and the full Board. The Senior Vice President, Corporate Responsibility is responsible for:

conducting regular materiality assessments to determine the topics of most significance to our stakeholders,

collaborating with other members of management to instill ESG-related priorities into our business operations, including product design and development, sourcing and supply chain operations, and our new store development, and

developing ESG-related goals and managing our ESG data, measurement, and reporting.

We report ESG topics in our annual Corporate Responsibility Report, which has extensive information on specific ESG areas and appendices that organize the information according to the most common reporting frameworks. Our most recent report is available on our website at https://corporate.target.com/corporate-responsibility/goals-reporting.

 

     
  TARGET CORPORATION  2021 Proxy Statement 18

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Management development and succession planning

One of the primary responsibilities of the Board is to ensure that Target has a high-performing management team. To meet that goal, the Board, the Human Resources & Compensation Committee, and management share responsibility for management development and succession planning:

Responsible party

Oversight area for management development and succession planning

Board

Oversight of these topics as part of its overall oversight role, including regular reviews of management development and succession planning to maximize the pool of internal candidates who can assume top management positions without undue interruption

Human Resources & Compensation Committee

Primary responsibilities for organizational talent and development and management succession planning, including regular reviews of executive performance, potential, and succession planning with a deeper focus than the full Board review, emphasizing career development of promising management talent

Management

The Chief Human Resources Officer and senior Human Resources leaders work with functional leaders across the company in developing and implementing programs to attract, assess, and develop management-level talent for possible future senior leadership positions

Director independence

The Board believes that a majority of its members should be independent directors. The Board annually reviews all relationships that directors have with Target to affirmatively determine whether the directors are independent. If a director has a material relationship with Target, that director is not independent. The listing standards of the NYSE also detail certain relationships that, if present, preclude a finding of independence. The Board affirmatively determined that all non-employee directors are independent. Mr. Cornell is the only employee director and is not independent.

In making its independence determination, the Board specifically considered the following transactions during fiscal 2020 and concluded that none of them impaired any director’s independence:

Mr. Baker serves as Executive Chairman of Ecolab Inc., from which we purchased supplies, merchandise, servicing, repairs, and food safety and compliance audits.

Ms. Leahy serves President & Chief Executive Officer of CDW Corporation, from which we purchased supplies, merchandise, equipment, software, servicing, repairs, and maintenance.

Mr. Salazar serves as a partner in WilmerHale, which provided legal services to us. Mr. Salazar does not personally provide any of the legal services to Target. In addition, 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.

Each of the transactions above involved amounts that represented an immaterial percentage of our, and the other entity's, revenues, and were well below the amounts that would preclude a finding of independence under the NYSE listing standards. In addition, none of the above transactions are related-party transactions because none of the directors have a direct or indirect material interest in the listed transactions.

In addition to the transactions described above, the Board also considered the following and concluded that none of them impaired any director's independence:

Each director’s length of service on the Board. Specifically, the Board determined that Ms. Minnick, who is up for re-election and has served on the Board for more than 12 years, continues to demonstrate the independence of judgment expected of an independent director.

The employment of the son of Donald Knauss as a sales representative by a supplier from which we purchased wholesale merchandise during fiscal 2020. The relationship is discussed in more detail under “Policy on transactions with related persons.”

Policy on transactions with related persons

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

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

     
  TARGET CORPORATION  2021 Proxy Statement 19

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We ratified two related party transactions in accordance with this policy during fiscal 2020. One of the transactions dealt with compensation of an immediate family member of one of our former executive officers, Stephanie Lundquist. Ms. Lundquist’s sister joined Target in 2006, has been a team member in data sciences since that time and earned annual compensation of $143,740 in 2020, which is commensurate with the immediate family member’s peers. In addition, the son of Donald Knauss, a non-employee director, is employed as a sales representative by a supplier from which Target purchases wholesale merchandise. Mr. Knauss's son represented the supplier in its relationship with Target Corporation during fiscal 2020. In fiscal 2020, we purchased approximately $6.7 million of merchandise from the supplier, which represented less than 0.01% of our annual revenues. Target's decisions regarding purchases of merchandise from its suppliers are made by team members in the merchandising departments and no member of the Board has any input or involvement in such decisions. The transaction involving Mr. Knauss's son did not affect Mr. Knauss's independence and, as indicated above under “Director independence,” the Board affirmatively determined that Mr. Knauss is independent.

Business ethics and conduct

We are committed to conducting business ethically and lawfully. 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 Code of Ethics, which applies to all Target team members, including our executive officers and Chief Accounting Officer & Controller, establishes expectations to guide ethical decision-making, including putting ethics into action, working together, maintaining trust, conducting business fairly, safeguarding what's ours, and caring for our world. Included within those topics is how we address conflicts of interest, fair dealing, required information disclosures and compliance with laws, rules and regulations, and prompt reporting. Our Code of Ethics also describes the means by which any employee can provide an anonymous report of an actual or apparent violation of our Code of Ethics.

Similarly, our directors are subject to a separate Code of Ethics contained within our Corporate Governance Guidelines, which is tailored to the unique role fulfilled by members of the Board and addresses conflicts of interest, corporate opportunities, maintaining confidentiality, compliance with laws, fair dealing, and compliance procedures.

On our website we disclose any amendments to, or waivers from, any provision of the applicable Code of Ethics involving our directors, executive officers, Chief Accounting Officer & Controller, or other persons performing similar functions.

Communications with directors and shareholder outreach

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

We regularly engage in outreach efforts with our shareholders, both large and small, relating to our business, compensation practices, and environmental, social, and governance issues. We involve one or more independent directors in these conversations, as appropriate. While we benefit from an ongoing dialogue with many of our shareholders, we recognize that we have not communicated directly with all of our shareholders. If you would like to engage with us, please send correspondence to Target Corporation, Attn: Investor Relations, 1000 Nicollet Mall, TPN-0841, Minneapolis, Minnesota 55403 or email investorrelations@target.com.

     
  TARGET CORPORATION  2021 Proxy Statement 20

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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.

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

The 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 and management and feedback from our shareholders to identify the backgrounds and skill sets that are desired.

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 criteria the Board follows in determining the composition of the Board are as follows:

Directors are to have broad perspective, experience, knowledge, and independent 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, but understands the value of diversity and inclusion and has a strong history of gender and racial/ethnic diversity on the Board.

The Governance Committee periodically uses a third-party search firm to assist in identifying director candidates and will also consider recommendations from shareholders. Any shareholder who wants to recommend a candidate for the Governance Committee to consider nominating for the 2022 annual meeting of shareholders (the 2022 Annual Meeting) should submit a written request and related information to our Corporate Secretary no later than December 31, 2021 in order to allow for sufficient time to consider the recommendation. Shareholders may also nominate director candidates directly if they comply with our bylaws, which are described in more detail in Question 18 “How do I submit a proposal or nominate a director candidate for the 2022 Annual Meeting?” on page 72.

     
  TARGET CORPORATION  2021 Proxy Statement 21

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Board evaluations and refreshment

Self-evaluation

The Governance Committee, in consultation with the Lead Independent Director, annually leads the performance review of the Board and its Committees. The most recent Board self-evaluation, which was administered by the Corporate Secretary's Office, involved a survey completed by each director about the Board and the Committees on which the director served, followed by one-on-one conversations between the Lead Independent Director and each director seeking candid feedback. Following completion of those conversations the results were discussed by the full Board and each Committee. The annual self-evaluation has periodically been conducted by a third-party consultant, as appropriate.

 

The self-evaluation process seeks to obtain each director’s assessment of the effectiveness of the Board, the Committees and their leadership, Board and Committee composition, and Board/management dynamics. In addition, as part of the self-evaluation process the Board evaluates individual director performance through questions in the survey focused on obtaining candid feedback on individual directors and through the one-on-one conversations between the Lead Independent Director and each director.

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

 

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

 

 

(1)

Our racially or ethnically diverse directors are Mr. Darden, Ms. Healey, Ms. Lozano, Mr. Rice, Mr. Salazar, and Mr. Stockton.

 

On August 31, 2020, the Board elected Derica W. Rice to fill a vacancy on the Board. Mr. Rice was identified as a candidate by an independent director and was familiar to the Board based on his prior service on the Board from 2007 to 2018. Mr. Rice brings practical knowledge of executive management of complex, worldwide businesses, and extensive experience in a wide range of financial and accounting matters including management of worldwide financial operations, financial oversight, risk management, and the alignment of financial and strategic initiatives to the Board. You can view biographical information about Mr. Rice on page 28. On January 1, 2021, the Board elected Christine A. Leahy to fill a vacancy on the Board. Ms. Leahy was identified as a candidate by members of our management team other than the CEO. Ms. Leahy brings significant experience in strategic planning and leadership of complex organizations, technology and digital solutions, and operations and distribution to the Board. You can view biographical information about Ms. Leahy on page 27.

 

     
  TARGET CORPORATION  2021 Proxy Statement 22

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2021 nominees for director

After considering the recommendations of the Governance Committee, the Board has set the number of directors at 12 and nominated all current directors to stand for re-election, except for Calvin Darden who will depart 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, in addition to the skills listed in the table below, the specific qualifications of each nominee that were considered by the Board follow each nominee’s biographical description.

The Board believes that the combination of backgrounds, skills, and experiences has produced a Board that is well-equipped to exercise oversight responsibilities on behalf of Target’s shareholders and other stakeholders. In addition, the following tables describe key characteristics of our business, the desired skills for those business characteristics, what those skills represent, and which independent members of our Board nominated for election at the 2021 Annual Meeting possess those skills, based on the directors self-identifying as having those skills.

Target’s business characteristics

Desired skill

What the skill represents

Target is a large retailer that offers everyday essentials and fashionable, differentiated merchandise at discounted prices in stores and through digital channels.

Retail Industry Experience

Large retail and/or consumer products
company experience.

Target’s scale and complexity requires aligning many 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 and/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 / Brand Management

Marketing and/or managing well-known brands and/or the types of consumer products and services we sell.

We operate a large network of stores and distribution centers.

Real Estate

Real estate acquisitions and dispositions and/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 and/or global workforce.

Our business has become increasingly complex as we have expanded our offerings as well as the channels in which we deliver our shopping experience. This increased complexity requires sophisticated technology infrastructure.

Technology

Leadership and understanding of technology, digital platforms and new media, data security, and/or data analytics.

Our business involves sourcing merchandise domestically and internationally from numerous vendors and distributing it through our network of distribution centers.

Multi-National Operations / Supply Chain Logistics

Executive officer roles at multi-national organizations and/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 / Risk Management

Public company management, financial stewardship, and/or enterprise risk management experience.

To be successful, we must preserve, grow, and leverage the value of our reputation with our guests, team members, vendors, the communities in which we operate, and our shareholders.

Public Affairs / Reputation

Public sector experience and/or community relations or public company governance expertise.

Desired skill

Mr.

Baker

Mr.

Barrett

Mr.

Edwards

Ms.

Healey

Mr.

Knauss

Ms.

Leahy

Ms.

Lozano

Ms.

Minnick

Mr.

Rice

Mr.

Salazar

Mr.

Stockton

Retail Industry Experience

 

 

 

 

 

Senior Leadership

Marketing / Brand Management

 

 

 

 

Real Estate

 

 

 

 

 

 

Workforce Management

Technology

 

 

 

 

 

 

Multi-National Operations / Supply Chain Logistics

 

 

 

Finance / Risk Management

Public Affairs / Reputation

     
  TARGET CORPORATION  2021 Proxy Statement 23

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We believe that all nominees will be able and willing to serve if elected. However, if any nominee should become unable or unwilling to serve for any reason, proxies may be voted for another person nominated as a substitute by the Board, or the Board may reduce the number of directors.

Background

Douglas M. Baker, Jr. is Executive Chairman of Ecolab Inc., a provider of water and hygiene services and technologies for the food, hospitality, industrial, and energy markets. He has served in this role since January 2021. He previously served Ecolab as Chairman of the Board & Chief Executive Officer from May 2006 to December 2020 and Chief Executive Officer from July 2004 to April 2006. Mr. Baker previously held various other leadership positions within Ecolab, including President and Chief Operating Officer.

 

Qualifications

Mr. Baker provides the Board with valuable global marketing, sales, and general management experience, as well as operational and governance perspectives. His recent role as CEO of a large publicly-held company provides the Board with additional top-level perspective in organizational management.

 

 

Other public company boards

Douglas M.
Baker, Jr.

Age 62

Director since 2013

Lead Independent Director(1)

Committees

Governance (Chair)

Risk & Compliance

Current

Ecolab Inc.

Within past five years

U.S. Bancorp

(1)

Monica Lozano was elected as Lead Independent Director to succeed Mr. Baker, effective after the 2021 Annual Meeting.

 

 

Background

George S. Barrett is the former Chairman & Chief Executive Officer of Cardinal Health, Inc., a global integrated healthcare services and products company. He held that position from August 2009 until the end of 2017, when he became Executive Chairman, a position he held until November 2018. Mr. Barrett previously held a number of executive positions with global pharmaceutical manufacturer Teva Pharmaceutical Industries Ltd., including Chief Executive Officer of its North American business and Executive Vice President for global pharmaceuticals.

 

Qualifications

Through his services in leadership positions with companies in the healthcare industry for over 30 years, Mr. Barrett provides the Board with extensive experience in the areas of executive leadership, distribution and manufacturing operations, regulatory compliance, finance, strategic planning, human resources, and corporate governance.

 

Other public company boards

George S.
Barrett

Age 66

Director since 2018

Independent

Committees

Human Resources & Compensation

Risk & Compliance

Current

Montes Archimedes Acquisition Corp.

Within past five years

Cardinal Health, Inc.

     
  TARGET CORPORATION  2021 Proxy Statement 24

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Background

Brian C. Cornell has served as Chairman of the Board & Chief Executive Officer of Target Corporation since August 2014. Mr. Cornell previously served as Chief Executive Officer of PepsiCo Americas Foods, a division of PepsiCo, Inc. He also served as Chief Executive Officer & President of Sam’s Club, a division of Wal-Mart Stores, Inc., and as an Executive Vice President of Wal-Mart Stores, Inc.

 

Qualifications

Through his more than 30 years in escalating leadership positions at leading retail and global consumer product companies, including three CEO roles and more than two decades doing business in North America, Asia, Europe, and Latin America, Mr. Cornell provides meaningful leadership experience and retail knowledge. His experience includes time as both a vendor partner and a competitor to Target, and he brings insights from those roles to the company today.

 

Other public company boards

Brian C.
Cornell

Age 62

Director since 2014

Committees

None

Current

Yum! Brands, Inc.

Within past five years

None

 

Background

Robert L. Edwards is the former President & Chief Executive Officer of Safeway Inc., a United States food and drug retail company. He also served as President & Chief Executive Officer of AB Acquisition LLC, a North American food and drug retail company due to Albertsons’ acquisition of Safeway Inc. Mr. Edwards previously held several other executive level positions with Safeway Inc., including President & Chief Financial Officer and Executive Vice President & Chief Financial Officer. He also held executive positions at Maxtor Corporation and Imation Corporation.

 

Qualifications

Mr. Edwards provides the Board with substantial food and drug retail expertise and perspectives. In addition, his prior experiences as a CEO of a large publicly-held company and as CFO of multiple public companies provide the Board with extensive public company accounting and financial reporting expertise and a top-level perspective in organizational management.

 

Other public company boards

Robert L.
Edwards

Age 65

Director since 2015

Independent

Committees

Audit & Finance (Chair)

Risk & Compliance

Current

None

Within past five years

Blackhawk Network Holdings, Inc.

     
  TARGET CORPORATION  2021 Proxy Statement 25

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Background

Melanie L. Healey is the former Group President, North America, of The Procter & Gamble Company, one of the world’s leading providers of branded consumer packaged goods. Ms. Healey also served as Group President & Advisor to the Chairman & Chief Executive Officer of The Procter & Gamble Company. Ms. Healey held a number of other leadership roles at Procter & Gamble, including Group President, Global Health, Feminine and Adult Care Sector. Prior to working at Procter & Gamble, Ms. Healey served in a variety of marketing leadership roles for Johnson & Johnson and S.C. Johnson & Sons.

 

Qualifications

Ms. Healey provides the Board with valuable strategic, branding, distribution, and operating experience on a global scale obtained over her more than 30-year career in the consumer goods industry at three multinational companies. Her deep experience in marketing, including her 18 years outside the United States, provides the Board with strategic and operational leadership and critical insights into brand building and consumer marketing trends globally.

 

Other public company boards

Melanie L.

Healey

Age 60

Director since 2015

Independent

Committees

Governance

Human Resources & Compensation

Current

Hilton Worldwide Holdings Inc.

PPG Industries, Inc.

Verizon Communications Inc.

Within past five years

None

 

Background

Donald R. Knauss is the former Chairman & Chief Executive Officer of The Clorox Company, a leading multinational manufacturer and marketer of consumer and professional products. He also served as Executive Chairman of The Clorox Company. Mr. Knauss previously served as Executive Vice President and Chief Operating Officer of Coca-Cola North America and in various other senior management roles for its subsidiary businesses, and held various marketing and sales positions with PepsiCo, Inc. and The Procter & Gamble Company. Mr. Knauss also served as an Officer in the United States Marine Corps.

 

Qualifications

Mr. Knauss possesses substantial senior management level experience in a variety of areas, including branded consumer products and consumer dynamics, manufacturing and supply chain, the retail environment, and sales and distribution, which strengthens the Board’s collective knowledge, capabilities, and experience.

 

Other public company boards

Donald R.

Knauss

Age 70

Director since 2015

Independent

Committees

Human Resources & Compensation

Infrastructure & Investment

Current

Kellogg Company

McKesson Corporation

Within past five years

None

 

     
  TARGET CORPORATION  2021 Proxy Statement 26

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Background

Christine A. Leahy is the President and Chief Executive Officer of CDW Corporation, a multi-brand technology solutions provider to business, government, education, and healthcare customers. She has served in this role since January 2019. She previously served CDW Corporation as Chief Revenue Officer from July 2017 to December 2018, Senior Vice President–International from May 2016 to July 2017, and Chief Legal Officer/General Counsel and Corporate Secretary from January 2002 to July 2017. Before joining CDW Corporation, she was a corporate partner in the Chicago office of Sidley Austin.

 

Qualifications

Ms. Leahy provides the Board significant experience in strategic planning and leadership of complex organizations, technology and digital solutions, and operations and distribution.

 

Other public company boards

Christine A.

Leahy

Age 56

Director since 2021

Independent

Committees

Audit & Finance

Infrastructure & Investment

Current

CDW Corporation

Within past five years

None

 

Background

Monica C. Lozano is President and Chief Executive Officer of The College Futures Foundation, a position she has held since December 2017. She also co-founded The Aspen Institute Latinos and Society Program and served as Chair of its Advisory Board from January 2015 to October 2019. Ms. Lozano previously served as Chairman of U.S. Hispanic Media, Inc., a leading Hispanic news and information company. Ms. Lozano previously served in the roles of Chair and Chief Executive Officer of ImpreMedia, LLC, a wholly owned subsidiary of U.S. Hispanic Media, Inc. Ms. Lozano also served as Chief Executive Officer and Publisher of La Opinion, a subsidiary of ImpreMedia, LLC, and in several management-level roles with the company.

 

Qualifications

Ms. Lozano possesses substantial senior management experience in areas such as operations, strategic planning and marketing, including multi-media content. She also has a deep understanding of issues that are important to Hispanics, a growing U.S. demographic. Ms. Lozano has board-level experience overseeing large organizations with diversified operations on matters such as governance, risk management, and financial reporting.

 

Other public company boards

Monica C.

Lozano

Age 64

Director since 2016

Independent(1)

Committees

Human Resources & Compensation (Chair)

Governance

Current

Apple Inc.

Bank of America Corporation

Within past five years

The Walt Disney Company

(1)

Monica Lozano was elected as Lead Independent Director to succeed Mr. Baker, effective after the 2021 Annual Meeting.

 

     
  TARGET CORPORATION  2021 Proxy Statement 27

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Background

Mary E. Minnick is Chairman of Digital Media Solutions, a publicly traded, leading global adtech company leveraging proprietary technology to connect consumers with advertisers, a position she has held since July 2020. Previously, she served as a Partner of Lion Capital LLP, a consumer-focused private investment firm, from 2007 to 2018. Ms. Minnick had a 23-year career with The Coca-Cola Company, a manufacturer, marketer and distributor of nonalcoholic beverage concentrates and syrups, and served in a variety of senior management positions, including Chief Operating Officer of the Asian region, Division President roles in the Japan, South Pacific and Asian regions, and ending as the company’s Chief Marketing Officer and Global President of Strategy and Innovation.

 

Qualifications

Ms. Minnick provides the Board with substantial expertise in operations management, building brand awareness, product development, marketing, distribution, and sales on a global scale obtained over her career with The Coca-Cola Company. Her current position as Chairman of Digital Media Solutions provides the Board with additional insights into digital marketing and public company governance. Her previous position with Lion Capital provides the Board with additional insights into the retail business and consumer marketing trends outside the United States.

 

Other public company boards

Mary E.

Minnick

Age 61

Director since 2005

Independent

Committees

Infrastructure & Investment (Chair)

Audit & Finance

Current

Digital Media Solutions, Inc.

Leo Holdings Corp. II

Leo Holdings III Corp

Within past five years

Glanbia plc

Heineken NV

The WhiteWave Foods Company

 

Background

Derica W. Rice is the former Executive Vice President of CVS Health Corporation, a provider of health services and plans in the United States, and former President of CVS Caremark, the pharmacy benefits management business of CVS Health Corporation. He served in those positions from March 2018 to February 2020. Mr. Rice previously held several other executive level positions over nearly three decades with Eli Lilly and Company, a pharmaceutical company, including Executive Vice President, Global Services from January 2010 through December 2017 and Chief Financial Officer from May 2006 through December 2017. He also previously served on Target Corporation’s board of directors from September 2007 to January 2018.

 

Qualifications

Mr. Rice’s career has provided him with practical knowledge of executive management of complex, worldwide businesses, and extensive experience in a wide range of financial and accounting matters including management of worldwide financial operations, financial oversight, risk management, and the alignment of financial and strategic initiatives.

 

Other public company boards

Derica W.

Rice

Age 56

Director since 2020

Independent

Committees

Audit & Finance

Governance

Current

Bristol-Myers Squibb

The Carlyle Group Inc.

The Walt Disney Company

Within past five years

Target Corporation

     
  TARGET CORPORATION  2021 Proxy Statement 28

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Background

Kenneth L. Salazar is a Partner at WilmerHale, a full service business law firm, a position he has held since June 2013. Mr. Salazar previously served as the U.S. Secretary of the Interior. He also served Colorado as a U.S. Senator and as Attorney General. Mr. Salazar serves on the Mayo Clinic Board of Trustees and is a member of its Audit & Compliance Committee, Finance & Investment Committee, and Information Management & Technology Governance Committee. Mr. Salazar and his family are farmers and ranchers in Colorado.

 

Qualifications

Mr. Salazar has substantial public policy and executive level management experience at both the state and federal levels. Mr. Salazar provides the Board with additional insights on public policy issues, government regulation, and leadership on matters involving multiple stakeholder stewardship.

 

Other public company boards

Kenneth L.
Salazar

Age 66

Director since 2013

Independent

Committees

Risk & Compliance (Chair)

Infrastructure & Investment

Current

None

Within past five years

None

 

Background

Dmitri L. Stockton is the former Senior Vice President & Special Advisor to the Chairman of General Electric Company, a global infrastructure and technology conglomerate. He held that position from July 2016 to March 2017. He served as Chairman, President, & Chief Executive Officer of GE Asset Management Incorporated, a global asset management company, and Senior Vice President of General Electric Company from May 2011 to December 2016. Mr. Stockton previously served as President & Chief Executive Officer of GE Capital Global Banking and Senior Vice President of General Electric Company based in London, President & Chief Executive Officer of GE Consumer Finance, Central & Eastern Europe, and Vice President of General Electric Company.

 

Qualifications

Mr. Stockton’s 30 year career with General Electric Company has provided him with substantial experience in managing worldwide financial operations. His expertise gives the Board additional skills in the areas of leadership, financial oversight, risk management, consumer banking, asset management, employee benefits, governance, regulatory compliance, and the alignment of financial and strategic initiatives.

 

Other public company boards

Dmitri L.

Stockton

Age 57

Director since 2018

Independent

Committees

Audit & Finance

Infrastructure & Investment

Current

Deere & Company

Ryder System, Inc.

Stanley Black & Decker, Inc.

Within past five years

None

 

The Board recommends that shareholders vote For each of the nominees named above for election to our Board.

     
  TARGET CORPORATION  2021 Proxy Statement 29

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Stock ownership information

Stock ownership guidelines

Stock ownership that must be disclosed in the 2021 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 SEC's 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. Further, our stock ownership guidelines do not include shares that are subject to a mandatory post-exercise holding period (while the shares are subject to that holding period). We believe our stock ownership guidelines for our directors and executive officers are aligned with shareholders’ interests because the guidelines reflect equity that has economic exposure to both upside and downside risk.

 

 

Ownership guidelines by position

 

Directors

 

Fixed value of $500,000

 

CEO

 

7x base salary

 

Other NEOs

 

3x base salary

 

Equity used to meet stock ownership guidelines

 

Yes

Outstanding shares that the person beneficially owns or is deemed to beneficially own, directly or indirectly, under the federal securities laws.

PBRSUs (at their minimum share payout, which is 75% of the at-goal payout level) and RSUs, whether vested or unvested.

Deferred compensation amounts that are indexed to Target common stock, but ultimately paid in cash.

 

No

Options, regardless of when they are exercisable.

Performance Share Units (PSUs) because their minimum share payout is 0% of the at-goal payout level.

Shares that are subject to a mandatory post-exercise holding period (while the shares are subject to that holding period).

 

All directors and executive officers are expected to achieve the required levels of ownership under our stock ownership guidelines before the end of the fifth full fiscal year occurring after their election or appointment (the Compliance Date). If a director or executive officer has not satisfied the ownership guideline amounts on the Compliance Date, they 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 the required level of ownership is achieved. In addition, if an executive officer is below the ownership guideline amounts before the Compliance Date, they must retain at least 50% of all shares acquired on the vesting of equity awards or the exercise of stock options (in all cases net of exercise costs and taxes) until the required level of ownership is achieved.

     
  TARGET CORPORATION  2021 Proxy Statement 30

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The following table shows the holdings of our current directors and named executive officers (NEOs) recognized for purposes of our stock ownership guidelines as of April 6, 2021 and the respective ownership guidelines calculations.

 

 

RSUs &

PBRSUs

 

Share

equivalents

 

Other

shares held

(not subject

to post-

exercise

holding

period)(1)

Total stock

ownership for

guidelines

(# of shares)(1)

Stock

ownership

guidelines

calculation

Directors

 

 

 

 

 

 

 

 

Total value(2)

Douglas M. Baker, Jr.

 

27,691

 

0

 

0

 

27,691

$

5,688,562

George S. Barrett

 

9,518

 

0

 

0

 

9,518

$

1,955,283

Calvin Darden

 

36,497

 

898

 

0

 

37,395

$

7,682,018

Robert L. Edwards

 

15,268

 

0

 

10,000

 

25,268

$

5,190,805

Melanie L. Healey

 

14,665

 

0

 

0

 

14,665

$

3,012,631

Donald R. Knauss

 

15,268

 

0

 

11,228

 

26,496

$

5,443,169

Christine A. Leahy(3)

 

1,376

 

0

 

0

 

1,376

$

282,672

Monica C. Lozano

 

13,408

 

0

 

0

 

13,408

$

2,754,405

Mary E. Minnick

 

77,045

 

513

 

886

 

78,444

$

16,114,850

Derica W. Rice

 

2,583

 

0

 

0

 

2,583

$

530,626

Kenneth L. Salazar

 

21,308

 

0

 

0

 

21,308

$

4,377,302

Dmitri L. Stockton

 

10,228

 

0

 

0

 

10,228

$

2,101,138

Current named executive officers

 

 

 

 

 

 

 

 

Multiple of base

salary(2)

Brian C. Cornell

 

99,340

 

9,495

 

214,306

 

323,141

 

47.4

Michael J. Fiddelke

 

12,741

 

0

 

12,595

 

25,336

 

7.2

John J. Mulligan

 

43,205

 

0

 

207,342

 

250,547

 

51.5

Michael E. McNamara

 

28,952

 

0

 

73,181

 

102,133

 

28.9

Don H. Liu

 

21,604

 

0

 

39,718

 

61,322

 

19.4

(1)

The “Total stock ownership for guidelines” calculation, like the required disclosure of “Total shares beneficially owned” on page 32, includes “Other shares held” but differs by (a) excluding (i) all options, regardless of whether they can be converted into common stock on or before June 5, 2021 and (ii) shares that are subject to a mandatory post-exercise holding period (while the shares are subject to that holding period) and (b) including (i) share equivalents that are held under deferred compensation arrangements and (ii) RSUs and PBRSUs (at their minimum share payout, which is 75% of the at-goal payout level), whether vested or unvested, even if they will be converted into common stock more than 60 days from April 6, 2021.

(2)

Based on closing stock price of $205.43 as of April 6, 2021.

(3)

Ms. Leahy joined the Board on January 1, 2021. She currently complies with our stock ownership guidelines because she has five years from the start of fiscal 2021 to meet the required $500,000 stock ownership level.

     
  TARGET CORPORATION  2021 Proxy Statement 31

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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 6, 2021 or which the person has the right to acquire within 60 days of that date for each director, named executive officer in the “Summary compensation table” on page 50, and all current Target directors and executive officers as a group.

Directors

 

Shares

issuable

within

60 days(1)

 

Stock options

exercisable

within

60 days

 

Other

shares held

 

Total shares

beneficially

owned(2)

Douglas M. Baker, Jr.

 

26,938

 

5,570

 

0

 

32,508

George S. Barrett

 

8,284

 

0

 

0

 

8,284

Calvin Darden

 

35,744

 

0

 

0

 

35,744

Robert L. Edwards

 

14,515

 

0

 

10,000

 

24,515

Melanie L. Healey

 

13,912

 

0

 

0

 

13,912

Donald R. Knauss

 

14,515

 

0

 

11,228

 

25,743

Christine A. Leahy

 

623

 

0

 

0

 

623

Monica C. Lozano

 

12,655

 

0

 

0

 

12,655

Mary E. Minnick

 

75,738

 

0

 

886

 

76,624

Derica W. Rice

 

1,349

 

0

 

0

 

1,349

Kenneth L. Salazar

 

20,555

 

3,601

 

0

 

24,156

Dmitri L. Stockton

 

8,994

 

0

 

0

 

8,994

Named executive officers

 

 

 

 

 

 

 

 

Brian C. Cornell

 

0

 

0

 

310,237

 

310,237

Michael J. Fiddelke

 

0

 

0

 

25,031

 

25,031

John J. Mulligan

 

0

 

0

 

248,461

 

248,461

Michael E. McNamara

 

0

 

0

 

121,637

 

121,637

Don H. Liu

 

0

 

0

 

81,535

 

81,535

All current directors and executive officers

 

 

 

 

 

 

 

 

As a group (25 persons)

 

233,822

 

174,361

 

1,012,770(3)

 

1,420,953

(1)

Includes shares of common stock that the named individuals may acquire on or before June 5, 2021 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)

Includes shares of common stock owned by executive officers in the Target Corporation 401(k) Plan (Target 401(k) Plan) as of April 6, 2021.

     
  TARGET CORPORATION  2021 Proxy Statement 32

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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:

Name and address of >5% beneficial owner

Number of

common shares

beneficially owned

Percent of

class(1)

The Vanguard Group

100 Vanguard Boulevard

Malvern, Pennsylvania 19355

43,100,482(2)

8.7%

State Street Corporation

One Lincoln Street

Boston, Massachusetts 02111

37,603,636(3)

7.6%

BlackRock, Inc.
55 East 52nd Street
New York, New York 10055

37,134,621(4)

7.5%

(1)

Based on shares outstanding on April 6, 2021.

(2)

The Vanguard Group (Vanguard) reported its direct and indirect beneficial ownership on a Schedule 13G/A filed with the SEC on February 10, 2021. The filing indicates that as of December 31, 2020, Vanguard had sole voting power for 0 shares, shared voting power for 816,210 shares, sole dispositive power for 40,913,837 shares, and shared dispositive power for 2,186,645 shares.

(3)

State Street Corporation (State Street), as a parent holding company, reported its direct and indirect beneficial ownership in various fiduciary capacities (including as trustee under the Target 401(k) Plan) on a Schedule 13G/A filed with the SEC on February 24, 2021. The filing indicates that as of December 31, 2020, State Street had sole voting power for 0 shares, shared voting power for 34,725,712 shares, sole dispositive power for 0 shares, and shared dispositive power for 37,550,717 shares, and that State Street Global Advisors Trust Company (SSgA Trust), a subsidiary of State Street, had sole voting power for 0 shares, shared voting power for 10,874,413 shares, sole dispositive power for 0 shares, shared dispositive power for 26,613,525 shares, and beneficial ownership of 26,629,858 shares. Based on that information, SSgA Trust is also a >5% beneficial owner, holding 5.4% of Target's outstanding common shares.

(4)

BlackRock, Inc. (BlackRock) reported its direct and indirect beneficial ownership on a Schedule 13G/A filed with the SEC on February 1, 2021. The filing indicates that as of December 31, 2020, BlackRock had sole voting power for 31,752,473 shares, shared voting power for 0 shares, sole dispositive power for 37,134,621 shares, and shared dispositive power for 0 shares.

     
  TARGET CORPORATION  2021 Proxy Statement 33

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Human Resources & Compensation Committee Report

The Human Resources & Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis with management. Based on this review and discussion, the Human Resources & Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the 2020 Annual Report and the 2021 Proxy Statement.

Human Resources & Compensation Committee

Monica C. Lozano, Chair
George S. Barrett
Calvin Darden
Melanie L. Healey
Donald R. Knauss

Compensation Discussion and Analysis

Introduction

This Compensation Discussion and Analysis (CD&A) focuses on how our Named Executive Officers (NEOs) were compensated for fiscal 2020 (February 2, 2020 through January 30, 2021) and how their fiscal 2020 compensation aligned with our pay for performance philosophy.

For fiscal 2020, our NEOs were:

 

Name and
principal position

 

Brian C. Cornell

Chairman & Chief Executive Officer

 

 

 

Michael J. Fiddelke

Executive Vice President & Chief Financial Officer

 

 

 

John J. Mulligan

Executive Vice President & Chief Operating Officer

 

 

 

Michael E. McNamara

Executive Vice President & Chief Information Officer

 

 

 

Don H. Liu

Executive Vice President and Chief Legal & Risk Officer

 

 

 

 

CD&A
table of contents

 

Executive summary

35

 

 

     

Our framework for executive compensation

40

   
     

Other benefit elements

45

   
     

Compensation governance

46

   
     
  TARGET CORPORATION  2021 Proxy Statement 34

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Executive summary

Throughout fiscal 2020, Target served as a dependable essential retailer for consumers as our country faced multiple challenges, including unprecedented economic hardship brought on by the Pandemic and growing demands for social justice. Despite the dramatic impact of these challenges on our business, our team delivered outstanding results, following years of investment in our strategy and assets. Our multi-year plan to develop new capabilities established a strong foundation prior to 2020, and as a result, guests increasingly relied on our suite of fulfillment services and multi-category assortment to make Target their one-stop shopping destination.

Our 2020 performance demonstrates the durability and sustainability of the business model, which enabled Target to satisfy the explosive growth in guest demand for same-day services. More than ever, in 2020 we integrated our store and digital platforms, successfully using our stores as hubs for digital fulfillment to meet the essential needs of our guests. As a result, guests benefited from Drive Up and Shipt fulfillment services, which experienced comparable sales growth of more than 600% and 300%, respectively. Our digitally originated sales grew exponentially, with comparable sales growth of 145% in addition to stores originated comparable sales growth of more than 7%, resulting in our full-year comparable sales growth of nearly 20 percent.

We accomplished these results while upholding our purpose and core values. Without hesitation, significant investment decisions were made in support of the well-being, health and safety of our team, guests, and communities. With respect to our team of more than 350,000 team members, incremental investments totaling over $1 billion included:

paid leaves for team members most susceptible to COVID-19 infection,

premium pay for front-line team members,

wellness resources, including virtual healthcare and mental health resources,

personal protective equipment, plexiglass dividers, and rigorous sanitizing operations to ensure a safe physical work environment,

donations to the Target Team Member Giving Fund in support of COVID-19 relief efforts,

acceleration of previously announced commitment to institute a $15 per hour starting wage, and

recognition and performance bonuses throughout the year, as illustrated by the following timeline:

 

 

 

 

These actions taken by management led to strong team member engagement throughout 2020. Our team's ability to adapt and overcome the unpredictable circumstances of 2020 was key to the success of our operations. The integration of our strategies, fulfillment capabilities, and multi-category assortment set Target apart from other essential retailers. We delivered exceptional results, gaining approximately $9 billion in market share, reflecting share gains across each of our core merchandising categories. Our sales grew more than $15 billion during fiscal 2020, more than we grew in the prior 11 years. In addition, we reached a record high full-year Adjusted EPS of $9.42.

     
  TARGET CORPORATION  2021 Proxy Statement 35

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Throughout a year of unprecedented challenge and complexity, management balanced the needs of all stakeholders while delivering superior results:

 

 

(1)

Adjusted EPS, a non-GAAP metric, excludes the impact of certain items. See page 23 of the 2020 Annual Report for a reconciliation of Adjusted EPS to GAAP diluted earnings per share from continuing operations (EPS) and page 18 of the 2020 Annual Report for the calculation of the “Adjusted EPS growth” provided above.

(2)

ROIC is a ratio based on GAAP information, with the exception of the add-back of operating lease interest to operating income. The calculation of the number provided above is disclosed on page 24 of the 2020 Annual Report.

(3)

Calculated based upon the average of the prior two years of pre-tax profits. Includes cash and in-kind donations.

 

The pay programs described throughout our CD&A are structured based on financial and operational performance and shareholder outcomes. Incentive payouts based on 2020 performance stemmed from years of ambitious investments towards a durable business model.

     
  TARGET CORPORATION  2021 Proxy Statement 36

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Shareholder support for our 2020 advisory vote on executive compensation and shareholder outreach program

At the 2020 Annual Meeting, shareholders approved our Say on Pay proposal in support of our executive compensation program by a vote of 93.6%, consistent with the 2019 vote of 94.8% and 2018 vote of 94.9%. We believe open dialogue with our shareholders and incorporation of their feedback into our executive compensation program have been instrumental in obtaining shareholder support for our compensation program.

We regularly communicate with our shareholders relating to a variety of topics and involve one or more independent directors in these conversations, as appropriate. We use the information gathered through these outreach efforts to help inform our compensation decisions. We look forward to continued dialogue on compensation matters and other issues relevant to our business.

Pay for performance

We have a long-standing belief that our executive compensation should directly reflect our organization's performance with substantial emphasis on the creation of long-term value for our shareholders. We do that by providing our NEOs a mix of base salary, short-term, and long-term incentives with compensation opportunities measured by a variety of time horizons to balance our near-term and long-term strategic goals.

Annual total direct compensation (Annual TDC) is the summed at-goal value of each pay component and is used by the Human Resources & Compensation Committee as the measure of the intended total value of pay at the time the pay decision is made, understanding that the actual amount earned will be higher or lower based on actual performance.

Consistent with our guiding principles, 91% of CEO Annual TDC and 83% of other NEO Annual TDC is performance-based. In addition, 100% of our annual long-term incentive (LTI) grants feature relative performance-based metrics.

Importantly, the financial metrics we use for our pay programs are either based directly on Generally Accepted Accounting Principles (GAAP) financial measures, or in the specific circumstances where they are not, we explain how and why they differ from GAAP.

 

 

 

 

 

(1)

Annual TDC differs from the “Total” for fiscal 2020 in the “Summary compensation table” on page 50 because it (a) includes short-term incentive plan (STIP) opportunity at-goal as approved, rather than the actual payout that was earned, (b) includes the annual PSU and PBRSU grants based on the dollar value used by the Human Resources & Compensation Committee in determining the number of shares granted, rather than the aggregate grant date fair value of awards, as computed in accordance with FASB ASC Topic 718, and (c) excludes the items shown under the “Change in pension value and nonqualified deferred compensation earnings” and “All other compensation” columns.

 

 

 

How annual CEO pay is tied to performance

 

The following pay elements are performance-based and represent a significant percentage of Annual TDC. The payout ranges below are based on awards outstanding as of the end of fiscal 2020.

STIP — Payouts range from 0% to 200% of goal depending on Sales, Incentive Operating Income, and the assessment of the Team Scorecard.

PSUs — Payouts range from 0% to 200% of goal depending on Adjusted Sales growth, EPS growth, and ROIC performance relative to our retail peer group. Payout value is also tied to stock price performance.

PBRSUs — Payouts range from 75% to 125% of goal depending on total shareholder return (TSR) performance relative to our retail peer group. Payout value is also tied to stock price performance.

     
  TARGET CORPORATION  2021 Proxy Statement 37

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Performance highlights

The following graphs highlight our historical performance on key metrics that we used in our executive compensation programs over each of the last three years. The metrics used in our compensation program are described in more detail in the CD&A narratives for each compensation element, as well as in the footnotes below.

 

 

(1)

Sales is as reported on page 35 of the 2020 Annual Report. We use Sales as reported above as one of the metrics in both our PSU and STIP compensation elements.

(2)

Operating Income is as reported on page 35 of the 2020 Annual Report and provides the basis for Incentive Operating Income, which is one of the metrics we use in our STIP compensation element. Incentive Operating Income, a non-GAAP metric, represents Operating Income on a pre-short-term-incentive compensation basis and is calculated by excluding short-term incentive expense from our Operating Income.

(3)

Diluted earnings per share (EPS) from continuing operations is as reported on page 35 of the 2020 Annual Report. We use EPS as reported above as one of the metrics in our PSU compensation element.

(4)

ROIC is a ratio based on GAAP information, with the exception of the add-back of operating lease interest to operating income. For fiscal 2020 and fiscal 2019 it is as reported on page 24 of the 2020 Annual Report and, for fiscal 2018, page 22 of our annual report on Form 10-K for fiscal 2019 (2019 Annual Report). We use ROIC as reported above as one of the metrics in our PSU compensation element.

     
  TARGET CORPORATION  2021 Proxy Statement 38

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Incentive measures and actual performance

Actual payouts vary based on performance against goals approved by the Human Resources & Compensation Committee at the beginning of the performance period. Our ongoing incentive programs have a proven track record of variable payouts based on performance over time.

Our STIP is based on a combination of annual absolute financial goals and progress made toward key strategic priorities. As shown in the table below, our financial component and team scorecard resulted in a maximum payout. For further discussion of our fiscal 2020 financial goals and performance, refer to page 41. For additional information on our 2020 team scorecard assessment, refer to page 42.

100% of our ongoing LTI program features performance-based metrics and is tied to relative performance versus our retail peers over a three-year time period.

 

 

 

 

 

 

 

 

 

 

Weight

 

 

Goal(1)

 

Result(1)

Actual performance

percentage of goal

Actual payout

percentage of goal

2020 STI Performance Metrics

80%

Sales

$

80,110

$

92,400

115.3%

160%

Incentive Operating Income(2)

$

5,198

$

7,176

138.0%

20%

Team Scorecard

 

 

 

 

N/A

40%

 

 

 

 

 

 

 

Total

200%

 

 

 

 

 

Performance

rank relative to

peers

Payout

percentage

Total

Payout

2018-2020 LTI Performance Metrics

PSUs

Adjusted sales growth

5 of 19

186%

150.5%

EPS growth

7 of 19

120%

ROIC

5 of 19

146%

 

 

 

 

Performance

rank relative to

peers

TSR(3)

Total

Payout

PBRSUs

TSR

 

1 of 17

191%

125%

(1)

In millions.

(2)

Refer to “Performance highlights” tables and footnotes on page 38 for a description of how Incentive Operating Income is calculated from our financial statements.

(3)

TSR is calculated based on the stock price of each company on the first and last day of the performance period using the average of each company's stock price for the 90 calendar days immediately preceding the two measurement dates.

     
  TARGET CORPORATION  2021 Proxy Statement 39

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Our framework for executive compensation

Guiding principles

We believe executive compensation should be directly linked to performance and long-term value creation for our shareholders. With that in mind, three principles guide our compensation program:

Deliver on our pay for performance philosophy in support of our strategy.

Provide a framework that encourages outstanding financial results and shareholder returns over the long-term.

Attract, retain, and motivate a premier management team to sustain our distinctive brand and its competitive advantage in the marketplace.

A significant portion of our executive compensation is at risk and, therefore, may vary from targeted compensation based upon the level of achievement of specified performance objectives and stock price performance.

Elements of Annual TDC(1)

 

Element

Key

characteristics

Link to

shareholder

value

How we

determine

amount

Fixed

Base salary

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

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

Consider individual contributions to business outcomes, the scope and complexity of each role, future potential, market data, and internal pay equity.

 

 

 

 

 

Performance-based

Short-term incentives

Variable compensation component payable in cash based on performance against annually established financial goals and assessment of team performance.

Incentive targets are tied to achievement of key annual financial measures.

 

NEOs are also evaluated against identified strategic initiatives important to driving sustainable, durable, and profitable sales growth.

 

 

Financial component of award based on:

Sales

Incentive Operating Income

 

For STIP, there is a team scorecard component based on the Human Resources & Compensation Committee’s assessment of management’s progress toward strategic priorities.

Performance share unit awards

PSUs cliff vest at the end of the three-year performance period and payouts are based on relative three-year performance versus our retail peer group.

PSUs recognize our executive officers for achieving superior long-term relative performance on three key metrics:

Sales growth

EPS growth

ROIC

 

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

Performance-based restricted stock unit awards

PBRSUs cliff vest at the end of the three-year performance period with the number of shares based on relative three-year TSR performance versus our retail peer group.

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

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

(1)

See page 37 for a description of how the Human Resources & Compensation Committee uses Annual TDC and how it differs from the “Total” in the “Summary compensation table” on page 50.

Base salary

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

     
  TARGET CORPORATION  2021 Proxy Statement 40

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Short-term incentives

All NEOs are eligible to earn cash awards under our STIP program, which is designed to motivate and reward executives for performance on key annual measures. The financial component of our STIP program is based on two financial metrics: Sales (50%) and Incentive Operating Income (50%). See the “Performance highlights” tables and footnotes on page 38 for a description of how Sales are reported and how Incentive Operating Income is calculated from our financial statements.

For fiscal 2020, we placed additional emphasis on our core financial metrics, by weighting our financial component 80% and the team scorecard 20%. Beginning in fiscal 2020, CEO STIP includes the same team scorecard component as the other NEOs to reinforce a “one team” mentality and to achieve consistent payout outcomes as a percentage of goal. In doing so, we reduced the threshold payout as a percent of goal from 33% in 2019 to 20% in 2020 for the CEO, consistent with threshold levels of the other NEOs.

The following table shows financial and team scorecard payouts expressed as a percentage of goal, based on actual financial performance and progress made on key team scorecard indicators discussed on page 42. The at-goal pay opportunity is 200% of base salary for our CEO and 100% of base salary for our other NEOs.

 

Fiscal 2020 (payout as a % of goal)

 

Component

Weight

Threshold

Goal

Maximum

Actual payout(1)

Financial

(Sales 50%, Incentive Operating Income 50%)

80%

16%

80%

160%

160%

Team Scorecard

20%

4%

20%

40%

40%

Total

 

20%

100%

200%

200%

(1)

Actual payout is 400% of base salary for our CEO and 200% of base salary for our other NEOs.

Fiscal 2020 financial STIP design, performance goals, and how we performed in comparison to these goals

The fiscal 2020 goals and actual performance were:

 

 

Fiscal 2020 goal(1)

 

 

Fiscal 2020 actual(1)

Metric

 

$

vs Fiscal

2019

 

 

$

vs Fiscal

2019

Sales

$

80,110

+3.9%

 

$

92,400

+19.8%

Incentive Operating Income

$

5,198

+3.2%

 

$

7,176

+42.5%

(1)

Dollars in millions.

 

 

When approving incentive design and goals in March 2020, the magnitude of the impact of the Pandemic was unknown. Ultimately, the Committee did not amend goals or STIP design during the year due to circumstances surrounding the Pandemic.

At that time, the Human Resources & Compensation Committee took into account our business strategies, the economic environment, and how the annual goals align with our longer-term financial expectations. The goals set at the beginning of the year required meaningful performance versus the prior year as follows:

At-goal performance level for Sales represented 3.9% sales growth over the prior year. Threshold and maximum performance amounts were -/+2% of the Sales goal, respectively.

At-goal performance level for Incentive Operating Income represented 3.2% Incentive Operating Income growth over the prior year, or 4.1% Operating Income growth. Threshold and maximum performance amounts were -/+10% of the Incentive Operating Income goal, respectively.

From the onset of the Pandemic in the first quarter, the first priority of the management team was to protect and care for our team members and our guests in alignment with our longstanding purpose and values. These bold commitments to ensure the well-being, health, and safety of our team members, guests, and communities required significant investments, including increased wages, paid leaves, front-line team member bonuses, and relief fund contributions, made at a time when sales performance and recoverability of such expenses were uncertain.

Fiscal 2020 performance was record-breaking for the Company on many fronts, dramatically exceeding historical results and goals established at the beginning of the year. As an essential retailer, we benefited from keeping stores open to provide for the needs of our guests, while non-essential retailers were required to temporarily close stores for a portion of the year. Aggressive and strategic investments in our digital fulfillment options, merchandise assortment, and store operating model over the prior three years positioned us to thrive in the challenges brought by the external environment in 2020:

Following several years of investment in our multi-category assortment, our business successfully adjusted to rapidly changing spending patterns, supplying the needs of our guests as the year progressed. We captured approximately $9 billion of incremental market share in 2020, driven by unprecedented gains across every one of our core merchandising categories.

Sales growth of 19.8% in 2020 outpaced 2019 sales growth by more than 16 percentage points, led by increased digital sales. Our model seamlessly adapted to rapid swings in consumer behavior, supporting dramatic shifts between stores and digital shopping as our guests adjusted to different ways of shopping safely during the Pandemic.

     
  TARGET CORPORATION  2021 Proxy Statement 41

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Strong top-line growth translated to meaningful profit growth. Incentive Operating Income increased 42.5% from 2019, benefiting from favorable leverage on SG&A expense, record low markdown rates, and strong profitability across our digital channels with approximately 44% of digital orders fulfilled by lower cost same-day fulfillment services. The combination of these drivers more than offset over $1 billion of incremental investments made in the well-being, health, and safety of our team members.

 

In its assessment of the context described above, the Human Resources & Compensation Committee concluded a maximum payout for financial performance was appropriate.

Fiscal 2020 team scorecard assessment

The team scorecard provides a general structure for discussing and measuring performance of the management team as a group. The team scorecard portion of the STIP in 2020 emphasized the business outcomes we expect from the execution of our strategic priorities, and represents indicators that demonstrate the health of Target's business and team.

Similar to the financial goals, the primary team scorecard progress indicators for fiscal 2020 were established prior to understanding the dramatic impact the Pandemic would have on our business. The indicators included: market share gains at both the enterprise and category level in Apparel & Accessories, Food & Beverage, Essentials & Beauty, Hardlines, and Home Furnishings & Décor; digital performance including increased sales and decreased unit cost; increased store comparable sales and utilization of same-day fulfillment services; increased guest engagement with Target Circle; and maintaining strong team engagement.

Performance against these key indicators significantly exceeded expectations set at the beginning of the year, including:

Market share gains of approximately $9 billion spanning every core merchandise category, driven by our multi-category assortment and flexible fulfillment model,

Full year digital sales growth of 145%, significantly outpacing 2019 digital sales growth of 29% and 2020 digital sales growth goal of +25%, while significantly reducing cost per unit,

Store comparable sales of more than 7%,

Exponential growth in same-day services, represented by 603% growth in Drive Up and 317% growth in Shipt, powered by significant investments made in supply chain, store operations, and technology capabilities, which enabled us to use our stores as hubs to satisfy increased guest demand,

Target Circle enrollment exceeded goal, bringing our total enrollment to approximately 90 million members since launch, and

Team member survey results show that team member engagement remained strong throughout 2020; attributed to Target's response during the Pandemic.

Taking into consideration the outcomes described above, the Human Resources & Compensation Committee approved a maximum team scorecard payout.

Long-term incentives

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

Value of LTI awarded at grant

In determining the amount of individual LTI awards, the Human Resources & Compensation Committee considered each NEO’s individual contributions to business outcomes during the fiscal year, potential future contributions, historical annual grant amounts, and retention considerations, as well as market data for comparable executives from our retail and general industry peer groups. The annual LTI grants are made in March of each year to ensure the full-year financial results for the most recently completed fiscal year may be considered prior to making the grants. Once the total annual grant amount for a NEO is determined, the Human Resources & Compensation Committee grants 60% of that value in PSUs and 40% in PBRSUs. Under this approach, strong long-term performance relative to peers becomes the key driver of compensation realized by executive officers.

The Human Resources & Compensation Committee increased Mr. Cornell's annual LTI grant by $1,090,000, reflective of Mr. Cornell's performance over his tenure at Target. This resulted in positioning his overall TDC between the 50th and 75th percentile of the combined peer group, which aligns with our pay for performance philosophy. No other NEOs received annual LTI grant increases for fiscal 2020.

     
  TARGET CORPORATION  2021 Proxy Statement 42

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PSUs

Our PSUs have a three-year performance period and are settled in stock. The plan payout is intended to reflect the same metrics we use to manage our business, drive shareholder returns, and incent management to outperform the retail peer group over the long term. The three relative metrics used in our PSU plan are:

Adjusted Sales growth. The compound annual growth rate in Adjusted Sales over the performance period, relative to our retail peer group, including adjustments to our reported results or those of our peer group, as described below.

EPS growth. The compound annual growth rate of our EPS versus the reported EPS of our retail peer group.

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

See the “Performance highlights” tables and footnotes on page 38 for a description of where Sales, EPS, and ROIC are reported in our financial statements.

With these three independent metrics, our PSU program supports the critical drivers of our success: to grow the top-line relative to the retail sector, to grow it profitably, and to ensure prudent deployment of capital to drive the business. The following example illustrates PSU payouts at various levels of performance:

 

 

For more information about our peer groups, see pages 47-48.

PSU adjustments

The intent of our PSU program is to measure performance relative to our peer group on the previously described metrics. To achieve this measurement objectively, we base the initial rankings on annual reported financial results of each member of the retail peer group and Target (unless determined otherwise at the time of grant). The Human Resources & Compensation Committee has reserved discretion to adjust the reported financial results for Target or any member of the retail peer group if it believes such adjustments necessary to properly gauge Target's relative performance.

Historically, adjustments to Target’s results have included items that did not reflect our ongoing core operations or were needed to ensure consistent time frame comparisons over the performance period. These adjustments typically decreased participants’ resulting payouts. The Human Resources & Compensation Committee does not make adjustments that are inconsistent with Target's performance.

For the 2018 PSU award, as described below, this included adjusting peer sales results to exclude the 53rd week from their retail accounting calendars, as applicable.

 

     
  TARGET CORPORATION  2021 Proxy Statement 43

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2018-2020 PSU payout

In April 2021, the NEOs received payouts with respect to the PSU awards that were granted in March 2018 for the three-year performance period ended January 30, 2021. These awards were paid at 150.5% of the goal number of shares.

The following table summarizes the rankings and payout results for awards granted in fiscal 2018. This outcome is based on comparing our results to those of the retail peer group we disclosed in our proxy statement covering the time of grant. The adjusted sales growth and EPS growth metrics utilize a base year of fiscal 2017 and a final performance year of fiscal 2020, while for ROIC we use an average of 2018, 2019, and 2020.

In its assessment of the payout under the plan, the Committee noted that, as of the second year of the three-year performance period (prior to the onset of the Pandemic), Target was well-positioned relative to peers to deliver a payout above goal, as our projected sales growth, EPS growth, and average ROIC were ranked above the majority of retailers considered to be non-essential during the Pandemic.

 

Metric

Performance rank

relative to peers

Payout percentage

Total payout

Adjusted sales growth

5 of 19

186%

150.5%

EPS growth

7 of 19

120%

ROIC

5 of 19

146%

In consideration of the results discussed above, the Human Resources & Compensation Committee approved a total payout of 150.5%.

PBRSUs

Our PBRSUs have a three-year performance period with the number of shares based on relative three-year TSR performance versus our retail peer group. The PBRSU amount will be adjusted up or down by 25 percentage points if Target’s TSR is in the top one-third or bottom one-third for the retail peer group, respectively, over the three-year vesting period. These stock-settled awards cliff vest at the end of the performance period.

 

 

2018-2020 PBRSU payout

In March 2021, the NEOs received payouts with respect to the PBRSU awards that were granted in March 2018 for the three-year performance period ended January 30, 2021. With a TSR ranking of 1 out of 17 relative to our retail peers, these awards were paid at 125% of the goal number of shares. This outcome is based on comparing our results to those of the retail peer group we disclosed in our proxy statement covering the time of grant.

     
  TARGET CORPORATION  2021 Proxy Statement 44

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Looking ahead: changes to fiscal 2021 short-term incentive plan

Design changes to our go-forward incentive program reflect a wide range of potential outcomes in 2021, based on expected volatility in the economy and consumer sentiment. This uncertainty is heightened by the unique mix of categories we sell, including discretionary categories like Apparel & Accessories, Hardlines, and Home Furnishings & Décor. Translating this uncertainty into an assessment of performance, and ultimately tying to payout levels, is challenging to prescribe at the onset of the plan. While the core structure of our program remains intact and continues to support our strategy, we made the following design changes to our fiscal 2021 STIP program to manage near-term uncertainty:

Separated the financial component of STIP into two equally weighted semi-annual periods.

Shifted the at-goal weighting back to 67% financial and 33% team scorecard. This weighting was effectively used for our STIP program in fiscal 2017 through fiscal 2019, a period of challenged goal-setting, as we focused on aggressively investing in our business to emerge with a durable financial model.

At the conclusion of fiscal 2021, the Committee intends to assess whether the collective STIP financial outcomes are appropriate relative to full-year company performance. The Committee will consider holistic inputs to confirm the reasonableness of the payouts, including, but not limited to: market share performance, full-year 2021 results relative to prior year performance and goals set prior to the onset of the Pandemic, stakeholder treatment, and the impact of macroeconomic factors. A visual depiction of our 2021 STIP is below.

 

 

 

These changes will be described in our 2022 Proxy Statement, in conjunction with our fiscal 2021 performance and payout results.

Other benefit elements

We offer the following other benefits to our NEOs:

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

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

Deferred compensation plan. For a broad management group we offer a non-qualified, unfunded, individual account deferred compensation plan. The plan has investment options that generally mirror the Target 401(k) Plan, but also includes a fund based on Target common stock.

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. In addition, we provide benefits to our NEOs that we believe serve a business purpose for Target, but which are considered perquisites under SEC disclosure rules. The Human Resources & Compensation Committee reviews perquisites annually to ensure they are consistent with our philosophy and appropriate in magnitude. Mr. Cornell is only eligible for perquisites that serve a business purpose for Target or support his safety, health and well-being, such as home security, parking, executive physical, and personal use of company-owned aircraft for security reasons.

Income continuation plan. We provide an Income Continuation Plan (ICP) to executive officers who are involuntarily terminated without cause to assist in their occupational transitions.

 

Greater detail on our pension plan, 401(k) plan, deferred compensation plan, and perquisites is provided in the footnotes and tables that follow the “Summary compensation table” on page 50. See Note 2 to the “Table of potential payments upon termination or change-in control” for additional detail about the ICP.

     
  TARGET CORPORATION  2021 Proxy Statement 45

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Compensation governance

Target’s executive compensation practices

Practice

Description

More

information

Pay for performance

A significant percentage of the total direct compensation package features performance-based metrics, including 100% of our annual LTI.

37

Robust stock ownership guidelines

We have stock ownership guidelines for executive officers of 7x base salary for CEO, 3x base salary for non-CEO executive officers, and $500,000 for directors.

30

Annual shareholder
“Say on Pay”

We value our shareholders’ input on our executive compensation programs. Our Board 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 the 2021 Proxy Statement.

64

Double trigger change-in-control

We grant equity awards that require both a change-in-control and an involuntary termination or voluntary termination with good reason before vesting.

56

Annual compensation
risk assessment

A risk assessment of our compensation programs is performed on an annual basis to ensure that our compensation programs and policies do not incentivize excessive risk-taking behavior.

48

Clawback policy

Our policy allows recovery of incentive cash, equity compensation, and severance payments where a senior executive's intentional misconduct results in material financial or reputational harm or results in a need for a restatement of our consolidated financial statements.

49

Independent compensation consultant

The Human Resources & Compensation Committee retains an independent compensation consultant to advise on the executive compensation program and practices.

46

No hedging of company
stock

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

49

No pledging of company stock

Executive officers and members of the Board may not directly or indirectly pledge Target common stock as collateral for any obligation.

49

No tax gross-ups

We do not provide tax gross-ups to our executive officers.

 

No dividends on unearned performance awards

We do not pay dividends on unearned performance awards.

53

No repricing or exchange
of underwater stock
options

Our equity incentive plan does not permit repricing or exchange of underwater stock options without shareholder approval.

 

No employment contracts

We do not use employment contracts with our NEOs, except in special circumstances.

 

Process for determining executive compensation (including NEOs)

Human Resources & Compensation Committee

The Human Resources & Compensation Committee is responsible for determining the composition and value of the pay packages for all of our executive officers, including the CEO. The Human Resources & Compensation Committee receives assistance from two sources: (a) an independent compensation consulting firm, Semler Brossy, and (b) our internal executive compensation staff, led by our Executive Vice President & Chief Human Resources Officer. All decisions regarding executive compensation are made solely by the Human Resources & Compensation Committee. The Human Resources & Compensation Committee may not delegate its primary responsibility of overseeing executive officer compensation, but it may delegate to management authority for our compensation plans that do not involve the setting of compensation levels for executive officers. In addition, the Human Resources & Compensation Committee has established an Equity Subcommittee comprised of Ms. Lozano, Mr. Barrett, Mr. Darden, and Ms. Healey for the purposes of granting equity awards to members of the Board and any officers who are subject to Section 16 of the Exchange Act and to take any action required to be performed by a committee or subcommittee of “non-employee directors” to preserve the exemption available under Rule 16b-3 of the Exchange Act.

Human Resources & Compensation Committee’s independent consultant

Semler Brossy has been retained by and reports directly to the Human Resources & Compensation Committee and does not have any other consulting engagements with management or Target. The Committee assessed Semler Brossy’s independence in light of the SEC and NYSE listing standards and determined that no conflict of interest or independence concerns exist.

With respect to CEO compensation, Semler Brossy provides an independent recommendation to the Human Resources &

     
  TARGET CORPORATION  2021 Proxy Statement 46

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

Compensation of other executive officers and role of management

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

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

Benchmarking using compensation peer groups

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

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

Due to a range of factors, including the scope of NEO positions, tenure in role, and company-specific concerns, there is an imperfect comparability of NEO positions between companies. As such, market position served as a reference point in the Annual TDC determination process rather than a formula-driven outcome.

The retail peer group was formulated based on an initial screen of companies in the Global Industry Classification Standard retailing index with revenue from core retail operations greater than $15 billion. The retail peer group is also used within our LTI plans. Target’s relative performance compared to this peer group on key metrics determines overall payout for our PSU and PBRSU awards.

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

The composition of the peer groups is reviewed annually to ensure it is appropriate in terms of company size and business focus, and any changes made are reviewed with Semler Brossy and approved by the Human Resources & Compensation Committee. In fiscal 2020, we added The Gap Inc., Albertsons Companies, Inc., and Ross Stores, Inc. to the retail peer group. Raytheon Technologies Corporation replaced United Technologies Corporation within the general industry peer group due to its merger with United Technologies Corporation.

 

2020 peer groups

 

Retail

Albertsons Companies, Inc.

The Kroger Co.

 

 

General industry

3M Company

McDonald's Corporation

Amazon.com, Inc.

Lowe's Companies, Inc.

 

Abbott Laboratories

MetLife, Inc.

Best Buy Co., Inc.

 

Macy's, Inc.

 

Anthem, Inc.

Mondelez International, Inc.

Costco Wholesale Corporation

Nordstrom, Inc.

 

Archer-Daniels-Midland Company

NIKE, Inc.

CVS Health Corporation

Publix Super Markets, Inc.

 

Cigna Corporation

PepsiCo, Inc.

Dollar General Corporation

Rite Aid Corporation

 

The Coca-Cola Company

The Procter & Gamble Company

Dollar Tree, Inc.

Ross Stores, Inc.

 

FedEx Corporation

Raytheon Technologies Corporation

The Gap, Inc.

The TJX Companies, Inc.

 

General Mills, Inc.

Starbucks Corporation

 

 

The Home Depot, Inc.

Walgreens Boots Alliance, Inc.

 

 

Johnson & Johnson

United Parcel Service, Inc.

 

 

Kohl's Corporation

Walmart Inc.

 

 

Johnson Controls International plc

UnitedHealth Group Incorporated

 

 

 

 

 

 

Marriott International, Inc.

 

     
  TARGET CORPORATION  2021 Proxy Statement 47

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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, 2021:

 

2020 peer group comparison(1)(2)

Retail

General industry

 

Revenues

Market cap

Employees

 

Revenues

 

Market cap

Employees

25th Percentile

$

23,190

$

8,374

116,875

$

25,868

$

67,349

75,400

Median

$

42,678

$

35,079

178,000

$

64,656

 $

101,936

99,000

75th Percentile

$

126,599

$

104,343

287,000

$

74,094

 $

193,340

243,200

Target Corporation

$

93,561

$

90,725

409,000

$

93,561

$

90,725

409,000

(1)

All dollar amounts in millions.

(2)

Data Source: Equilar.

 

Compensation policies and risk

Compensation risk assessment

As part of our regular review of our compensation practices, we conduct an analysis of whether our compensation policies and practices for our employees create material risks to the company. Our risk assessment is two pronged. First, we take a “top-down” approach by evaluating whether our compensation programs and policies exacerbate top enterprise-wide risks. Next, we take a “bottom-up” approach to assess the following key compensation risk areas: performance measures, pay mix, goal setting and performance curve, leverage, magnitude of pay, calculation of performance, participant communication, severance, and corporate governance.

The results of this analysis, which concluded that our policies and practices do not create risks that are reasonably likely to have a material adverse effect on the company, were reviewed by the Human Resources & Compensation Committee’s independent consultant and discussed with the Human Resources & Compensation Committee. More specifically, this conclusion was based on the following considerations:

Compensation risk considerations

Pay mix

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

Performance metrics

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

Performance goals

Goals are approved by our independent directors and take into account our historical performance, current strategic initiatives, and the expected macroeconomic environment. In addition, short-term and long-term incentive compensation programs are designed with payout curves and leverage that support our pay for performance philosophy.

Equity incentives

Equity incentive programs and stock ownership guidelines are designed to align management and shareholder interests by providing vehicles for executive officers to accumulate and maintain an ownership position in the company.

Risk mitigation policies

We incorporate several risk mitigation policies into our officer compensation program, including:

The Human Resources & Compensation Committee’s ability to use “negative discretion” to determine appropriate payouts under formula-based plans,

A clawback policy to recover incentive compensation if an executive officer's intentional misconduct results in material financial or reputational harm, or results in a need for a restatement of our consolidated financial statements,

Stock ownership guidelines for executive officers and directors, and

Anti-hedging and anti-pledging policies.

     
  TARGET CORPORATION  2021 Proxy Statement 48

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Clawback policy

Our clawback policy allows for recovery of compensation if a senior executive's intentional misconduct:

violates the law, our code of ethics, or any significant ethics or compliance policy, and

results in material financial or reputational harm or results in a need for a restatement of our consolidated financial statements.

The compensation elements that are subject to recovery under this policy include all:

amounts paid under the STIP (including any discretionary payments),

awards under our LTI plans whether exercised, vested, unvested, or deferred, and

amounts paid under the ICP.

All recoveries are determined in the discretion of the Human Resources & Compensation Committee.

Anti-hedging and anti-pledging policy

Executive officers and members of the Board may not directly or indirectly engage in capital transactions intended to hedge or offset the market value of Target common stock owned by them, nor may they pledge Target common stock owned by them as collateral for any loan. All of our executive officers and members of the Board are in compliance with this policy. Target's anti-hedging and anti-pledging policies do not apply to other employees.

Grant timing practices

The following practices have not been formalized in a written policy, but have been regularly followed:

Our annual LTI grant coincides with a regularly scheduled Board meeting that is scheduled more than one year in advance. Currently, the annual LTI grant is made at the March Board meeting. The Board has retained discretion to change the annual grant date in the future under appropriate circumstances.

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

We occasionally grant equity compensation to executive officers outside of our annual LTI grant cycle for new hires, promotions, recognition, retention, or other purposes. If the grant date is after the approval date, it must be on a date specified at the time of approval.

Compensation tax approach

Consistent with our guiding principles, our annual short-term incentives and long-term equity awards impose performance conditions for our CEO and named executive officers. Prior to the Tax Cuts and Jobs Act (Tax Act) passing in fiscal 2017, we were able to deduct most of our performance-based executive compensation under Section 162(m) of the Internal Revenue Code (IRC). While the Tax Act significantly reduced the amount of compensation we can deduct under IRC Section 162(m), our pay-for-performance philosophy remains central to our compensation programs.

     
  TARGET CORPORATION  2021 Proxy Statement 49

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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 reflect the compensation earned during each fiscal year. Stock Awards reflect awards with a grant date during each fiscal year.

Name and
principal position
  Fiscal
year
   Salary   Bonus(1)   Stock
awards(2)(3)
   Non-equity
incentive plan
compensation(4)
   Change
in pension
value and
nonqualified
deferred
compensation
earnings(5)
   All other
compensation(6)
   Total
Brian C. Cornell   2020   $1,400,000   $1,120,000   $12,266,366   $4,480,000   $0   $488,822   $19,755,188
Chairman & Chief   2019   $1,400,000   $0   $13,623,153   $3,322,667   $0   $592,543   $18,938,363
Executive Officer   2018   $1,384,615   $0   $9,995,883   $5,266,195   $0   $557,376   $17,204,069
Michael J. Fiddelke(7)   2020   $625,000   $250,000   $1,729,915   $1,000,000   $11,584   $88,783   $3,705,282
Executive Vice   2019   $540,192   $138,563   $2,190,598   $348,413   $10,897   $85,817   $3,314,480
President & Chief                                       
Financial Officer                                       
John J. Mulligan   2020   $1,000,000   $400,000   $5,242,027   $1,600,000   $272,541   $2,842,143   $11,356,711
Executive Vice   2019   $1,000,000   $450,000   $6,491,932   $795,067   $178,491   $1,576,064   $10,491,554
President & Chief   2018   $1,000,000   $350,000   $5,126,087   $1,270,933   $9,396   $819,317   $8,575,733
Operating Officer                                       
Michael E. McNamara   2020   $725,000   $290,000   $3,512,229   $1,160,000   $0   $101,733   $5,788,962
Executive Vice   2019   $725,000   $326,250   $4,762,233   $576,423   $0   $203,108   $6,593,014
President & Chief   2018   $725,000   $253,750   $3,332,033   $921,427   $0   $123,958   $5,356,168
Information Officer                                       
Don H. Liu   2020   $650,000   $260,000   $2,621,013   $1,040,000   $0   $110,410   $4,681,423
Executive Vice   2019   $650,000   $292,500   $3,620,968   $516,793   $0   $120,372   $5,200,633
President and Chief
Legal & Risk Officer
   2018   $650,000   $227,500   $2,563,081   $826,107   $0   $64,676   $4,331,364
(1)

The “Bonus” amount shows actual payouts earned under our STIP for the team scorecard component. For fiscal 2019, Mr. Fiddelke’s “Bonus,” like the other NEOs, includes the team scorecard component attributable to time spent as a NEO upon becoming Executive Vice President & Chief Financial Officer, but also includes the actual payouts made under the discretionary component of STIP applicable to the time he served in his prior role as Senior Vice President, Operations.

(2)

Amounts represent the aggregate grant date fair value of awards made each fiscal year, as computed in accordance with FASB ASC Topic 718. See Notes 22 and 21, Share-Based Compensation, to our consolidated financial statements in the 2020 Annual Report and the 2019 Annual Report, respectively, for a description of our accounting and the assumptions used.

(3)

Represents the aggregate grant date fair value of PSUs and PBRSUs that were computed based on the probable outcome of the performance conditions as of the grant date. Actual payments will be based on degree of attainment of the performance conditions and our stock price on the settlement date. The range of payments for the PSUs granted in fiscal 2020 is as follows:

              
     Minimum   Amount   Maximum
  Name  amount   reported   amount
  Mr. Cornell              
  PSU Granted 3/11/20  $0   $7,020,068   $14,040,136
  Mr. Fiddelke              
  PSU Granted 3/11/20  $0   $990,015   $1,980,030
  Mr. Mulligan              
  PSU Granted 3/11/20  $0   $3,000,033   $6,000,066
  Mr. McNamara&