Corporate Governance

At Target, we have actively supported strong corporate governance practices for decades. Many of the practices and policies that guide our company today were initiated more than 50 years ago by the Dayton brothers during their tenure as the company’s leaders. Our Board of Directors recognizes that our corporate governance practices must continually evolve to appropriately balance the interests of the Board, shareholders and management in order to effectively serve our guests, team members, shareholders and the communities in which we do business. The three core elements of our approach to governance are:

A highly independent and engaged Board of Directors with a diverse set of relevant experiences

• A substantial majority of our 12-member Board is independent.
• Candidates for director seats are selected with regard to success in their field, the relevancy of their background to our business needs and how well their skill sets and background will complement the diversity of the Board.
• All committees of the Board consist exclusively of independent directors.
• Tenure policies institute a mandatory retirement age, a maximum term limit and a separate three-year post-retirement term limit for directors in order to ensure the Board regularly benefits from new, fresh perspectives. In addition, all directors are required to submit an offer of resignation upon any change in principal employment for consideration by the Board.
• During periods in which the Chairman and CEO roles are combined, the Board separately designates a Lead Independent Director with specific responsibilities to ensure independent oversight of management.

A management team whose interests are aligned with shareholders

• Executives are subject to stock ownership guidelines that require them to hold specified multiples of salary in Target stock.
• A significant portion of senior management compensation is in the form of long-term equity awards, a portion of which is based on Target’s relative performance within a 15 company retail peer group.
• Incentive compensation opportunities are based on goal levels of performance that are approved in advance by independent directors, aligned with Target’s strategic objectives and disclosed to shareholders.
• Executives are subject to a “clawback” policy for incentive compensation payouts based on financial results that are later restated.

Mechanisms that provide accountability to shareholders

• Target adopted a majority voting standard for uncontested director elections in 2007.
• In 2010 the Board recommended and shareholders approved a declassified Board. The rule applied to directors elected at the 2010 Annual Meeting of Shareholders and was fully implemented for the 2011 Annual Meeting.
• In 2010, in support of the Board’s recommendation, shareholders also approved elimination of a supermajority voting requirement for certain business combinations.
• Through our investor relations team, we maintain an “open door” policy to receive feedback from shareholders on governance, corporate responsibility and other matters important to shareholders.

The details of our approach to corporate governance can be found in our Corporate Governance Guidelines and our Annual Proxy Statements.

Business Conduct

We set a high standard for our conduct: Every Target team member, officer and director is obligated to act at all times with honesty and integrity. We expect team members to bring good judgment and integrity to every business decision. We’re committed not only to maintaining legal compliance but to operating our business with the highest legal and ethical standards, which supports our reputation as being the best for our guests, team members, shareholders and communities.

In spring 2010, Ethisphere magazine recognized our commitment to ethical conduct in ranking Target among the world’s most ethical companies for the fourth year in a row. In its audit of more than 10,000 companies across 30 industries, the magazine recognized companies that “have demonstrated an understanding that ethical practices are not only necessary, but can support a stronger and more solid business overall.” Our reputation for legal and ethical behavior enhances our brand.

Every Target team member has access to our Business Conduct Guide, which helps guide team members to make the right decisions; we expect our team members to know and comply with our policies. In 2008, we launched the Integrity@Target Web site, a centralized resource for our business conduct and compliance policies and other related information. Additionally, supervisors are responsible for ensuring that their team members are aware of the company’s commitment to ethical and legal business conduct; of course, no supervisor or manager may require or in any way imply that a team member should act illegally. Team members can ask for confidential ethics and compliance advice about any business decision or situation by e-mailing the Corporate Compliance and Ethics team at Integrity@Target.com.