Target 2007 Annual Report Download - page 58

acquired with these options will depend on the actual stock price at the exercise date. We control whether
each instrument is exercised, and if we exercise our option, both the purchased and sold call options are
exercised together and are settleable in cash or shares at our election. Each series of options has various
expiration dates within the month listed in the table below. If the market price of our common stock at the
exercise date is less than the lower strike price in the table below, the options will expire worthless. If the
market price of our common stock is between the lower and upper strike price, we have the right to purchase
shares for the amount of the lower strike price. If the market price of our common stock is greater than the
listed upper strike price, we will have the right to purchase shares for the sum of (a) the lower strike price and
(b) the market price less the upper strike price. The cost of the call options was recorded as a reduction of
equity, and subsequent market price changes will not affect earnings. The aggregate fair value of these
options at February 2, 2008 was $398 million.
Call Options Outstanding at February 2, 2008
(per share)
Number of Expiration Net Premiums Lower Upper
Series Options Month Paid (millions) Premium Strike Price Strike Price
Series I 10,000,000 April 2008 $110 $11.04 $40.32 $57.96
Series II 10,000,000 May 2008 109 10.87 39.31 56.51
Series III 10,000,000 June 2008 112 11.20 39.40 56.64
February 2, 2008 30,000,000 $331 $11.04 $39.68 $57.04
25. Share-Based Compensation
We maintain a long-term incentive plan for key team members and non-employee members of our Board
of Directors. Our long-term incentive plan allows us to grant equity-based compensation awards, including
stock options, performance share unit awards, restricted stock unit awards, or a combination of awards. A
majority of granted awards are nonqualified stock options that vest annually in equal amounts over a four-year
period and expire no later than 10 years after the grant date. Options granted to the non-employee members
of our Board of Directors become exercisable after one year and have a 10-year term. We have issued
performance share or performance share unit awards annually since January 2003. These awards represent
shares potentially issuable in the future based upon the attainment of performance criteria including
compound annual growth rates in revenue and EPS. In 2006, we issued restricted stock units with three-year
cliff vesting to our executive officers other than our chief executive officer. We also regularly issue restricted
stock and restricted stock units to our Board of Directors. The number of unissued common shares reserved
for future grants under the share-based compensation plans was 36,190,569 at February 2, 2008 and
42,974,387 at February 3, 2007.
Share-Based Compensation Awards
Stock Options
Total Outstanding Currently Exercisable
(number of options and Number Exercise Intrinsic Number Exercise Intrinsic Performance Restricted
shares in thousands) of Options Price (a) Value (b) of Options Price (a) Value (b) Share Units Stock Units
January 29, 2005 31,991 $32.59 $540 22,102 $ 28.79 $458 1,608 —
Granted 4,057 53.94 597 (c) —
Canceled/forfeited (691) 40.67 (252) —
Exercised/Issued (6,643) 26.58 — —
January 28, 2006 28,714 $36.82 $505 19,229 $ 31.64 $438 1,953 —
Granted 4,980 56.84 119 (c) 221
Canceled/forfeited (607) 48.06 (177) —
Exercised/Issued (5,177) 27.08 — —
February 3, 2007 27,910 $41.95 $558 17,659 $ 35.32 $470 1,895 221
Granted 5,725 49.54 650 (d) 21
Canceled/forfeited (434) 52.67 — —
Exercised/Issued (5,061) 28.00 (370) (4)
February 2, 2008 28,140 $45.84 $298 16,226 $41.07 $245 2,175 (e) 238
(a) Weighted average per share.
(b) Represents stock price appreciation subsequent to the grant date, in millions.
(c) Awards will be earned based on performance during three years ending January 31, 2009.
(d) Awards will be earned based on performance during three years ending January 30, 2010.
(e) Approximately 14 percent of these performance share units, if and when earned, will be paid in cash or deferred through a credit to
the deferred compensation accounts of the participants in an amount equal to the value of any earned performance shares.
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