Target 2008 Annual Report Download - page 64

common shares reserved for future grants under the share-based compensation plans was 25,755,800 at
January 31, 2009 and 36,190,569 at February 2, 2008.
Share-Based Compensation Award Activity
Stock Options (a)
Total Outstanding Exercisable
(number of options and No. of Exercise Intrinsic No. of Exercise Intrinsic Performance Restricted
units in thousands) Options Price (b) Value (c) Options Price (b) Value (c) Share Units (d) Stock Units
January 28, 2006 28,714 $36.82 $505 19,229 $31.64 $438 1,953 —
Granted 4,980 56.84 119 (e) 221
Expired/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 (f) 21
Expired/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 2,175 238
Granted 9,914 34.64 764 (g) 315
Expired/forfeited (756) 51.28 (176)(h) (2)
Exercised/Issued (937) 33.36 (740) (2)
January 31, 2009 36,361 $43.00 $ 4 19,292 $43.80 $ 4 2,023(i) 549
(a) Includes Stock Appreciation Rights granted to certain non-U.S. team members.
(b) Weighted average per share.
(c) Represents stock price appreciation subsequent to the grant date, in millions.
(d) Assumes attainment of maximum compound annual growth rates as set forth in the performance criteria.
(e) Awards were earned based on performance during the three years ending January 31, 2009.
(f) Awards will be earned based on performance during the three years ending January 30, 2010.
(g) Awards will be earned based on performance during the three years ending January 29, 2011.
(h) Includes differences resulting from attainment of actual versus maximum compound annual growth rates as set forth in the
performance criteria. The number of share units not attained was approximately 133 thousand.
(i) Based on performance criteria for the three years ending January 31, 2009, we expect approximately 637 thousand share units will
not be attained in 2009.
We used a Black-Scholes valuation model to estimate the fair value of the options at grant date based on
the assumptions noted in the following table. Volatility represents an average of market quotes for implied
volatility of 5.5-year options on Target common stock. The expected life is estimated based on an analysis of
options already exercised and any foreseeable trends or changes in recipients’ behavior. The risk-free interest
rate is an interpolation of the relevant U.S. Treasury security maturities as of each applicable grant date. The
assumptions disclosed below represent a weighted average of the assumptions used for all of our stock
option grants throughout the years.
Valuation of Share-Based Compensation 2008 2007 2006
Stock options weighted average valuation assumptions:
Dividend yield 1.9% 1.1% 0.8%
Volatility 47% 39% 23%
Risk-free interest rate 1.5% 3.2% 4.7%
Expected life in years 5.5 5.5 5.5
Stock options grant date weighted average fair value $12.87 $18.08 $16.52
Performance share units grant date weighted average fair
value $51.68 $59.45 $49.98
Restricted stock units grant date weighted average fair value $34.78 $57.70 $57.60
Total share-based compensation expense recognized in the Consolidated Statements of Operations was
$72 million, $73 million, and $99 million in 2008, 2007, and 2006, respectively. The related income tax benefit
was $28 million, $28 million, and $39 million in 2008, 2007, and 2006, respectively.
Stock Options Exercises (millions) 2008 2007 2006
Compensation expense realized $14 $187 $142
Related income tax benefit 573 56
Net cash proceeds 31 198 176
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