This excerpt taken from the TGT DEF 14A filed Apr 9, 2007.
Our non-employee director compensation program allows directors to choose one of three forms of annual compensation as follows:
· Basic Form:
· Cash retainer of $80,000, paid in quarterly installments;
· Grant of stock options having a face value of $200,000 on the date of grant, which occurs in January of each year. The exercise price of all options is based on the volume weighted average price of Target common stock on the date of grant; and
· Grant of restricted stock units (RSUs) with a face value of $65,000. RSUs are granted in June of each year.
· All RSUsaward of RSUs with a face value of $215,000 (one-half of the RSUs are granted in January, and the balance in June).
· All OptionsIf the director has satisfied Targets stock ownership guidelines for directors, a grant of stock options having a face value of $615,000 on the date of grant (one-half of the options are granted in January, and the balance in June).
Stock options are exercisable one year after the date of grant and have a term equal to the lesser of 10 years or five years following a directors departure from the Board. RSUs generally vest over a three-year period and are settled in shares of Target common stock after the directors departure from the Board. Dividend equivalents are paid on RSUs in the form of additional RSUs.
Our stock ownership guidelines for directors require them to hold three times the annual cash retainer in Target common stock. Directors have five years to comply with these guidelines, either from the adoption date (if they were a director at that time) or the first day of the fiscal year following their election. If compliance is not achieved by the deadline, they must hold all shares acquired through the exercise of stock options (net of exercise price and taxes) until the guideline amount is met.
Effective January 2007, our Board compensation program was amended to increase the basic form of compensation to: cash retainer$90,000; stock options$230,000 face value; and RSUs$75,000 face value. Corresponding changes were made to the two alternative forms of receiving compensation.
In addition to the annual compensation described above, newly-elected non-employee directors receive a one-time award of RSUs with a face value of $50,000 upon joining the Board. This RSU grant vests over a three-year period and is settled in shares of Target common stock after the directors departure from the Board. Directors who are employed by Target are not separately compensated for their service on the Board.
The chairpersons of the Audit and Compensation Committees receive additional annual compensation of $25,000 and $15,000, respectively, and the Vice Chairman of the Executive Committee receives an additional $10,000. These additional amounts are paid in cash unless a director has elected to receive his or her annual compensation in RSUs or stock options. If RSUs are elected, the director receives additional RSUs with a face value equal to this additional annual compensation. If the director has elected to be compensated in stock options, the additional amount is awarded in stock options having a face value of $75,000 for the Audit Committee Chair, $45,000 for the Compensation Committee Chair and $30,000 for the Vice Chairman of the Executive Committee.
All directors also receive a 10% discount on merchandise purchased at Target stores and Target.com, both during active service and following retirement. Non-employee directors are also provided with $100,000 of accidental death life insurance.
Non-employee directors may defer receipt of all or a portion of any cash retainer they would otherwise receive into the Director Deferred Compensation Plan. If they do, their deferred fees are indexed to the investment alternatives chosen by them from the funds offered by Targets 401(k) Plan (as described in the narrative following the Non-Qualified Deferred Compensation table on page 36).