Target 2010 Annual Report Download - page 79

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26. Defined Contribution Plans
Team members who meet certain eligibility requirements can participate in a defined contribution 401(k) plan
by investing up to 80 percent of their compensation, as limited by statute or regulation. Generally, we match
100 percent of each team member’s contribution up to 5 percent of total compensation. Company match
contributions are made to the fund designated by the participant.
In addition, we maintain a nonqualified, unfunded deferred compensation plan for approximately 3,500 current
and retired team members whose participation in our 401(k) plan is limited by statute or regulation. These team
members choose from a menu of crediting rate alternatives that are the same as the investment choices in our
401(k) plan, including Target common stock. We credit an additional 2 percent per year to the accounts of all active
participants in this plan, excluding executive officer participants, in part to recognize the risks inherent to their
participation in a plan of this nature. We also maintain a nonqualified, unfunded deferred compensation plan that
was frozen during 1996, covering substantially fewer than 100 participants, most of whom are retired. In this plan,
deferred compensation earns returns tied to market levels of interest rates plus an additional 6 percent return, with a
minimum of 12 percent and a maximum of 20 percent, as determined by the plan’s terms. In response to changing
requirements regarding the federal income tax treatment of nonqualified deferred compensation arrangements
resulting from Section 409A to the Internal Revenue Code, we allowed participants to elect to accelerate the
distribution dates for their account balances during 2009 and 2008. This election was not available in 2010.
Participant elections resulted in payments of $29 million in 2009 and $86 million in 2008.
We mitigate some of our risk of offering the nonqualified plans through investing in vehicles, including
company-owned life insurance and prepaid forward contracts in our own common stock, that offset a substantial
portion of our economic exposure to the returns of these plans. These investment vehicles are general corporate
assets and are marked to market with the related gains and losses recognized in the Consolidated Statements of
Operations in the period they occur. The total change in fair value for contracts indexed to our own common stock
recognized in earnings was pretax income/(loss) of $4 million in 2010, $36 million in 2009 and $(19) million in 2008.
During 2010 and 2009, we invested approximately $41 million and $34 million, respectively, in such investment
instruments, and this activity is included in the Consolidated Statements of Cash Flows within other investing
activities. Adjusting our position in these investment vehicles may involve repurchasing shares of Target common
stock when settling the forward contracts. In 2010, 2009 and 2008, these repurchases totaled 1.1 million, 1.5 million
and 4.7 million shares, respectively, and are included in the total share repurchases described in Note 24.
Prepaid Forward Contracts on Target Common Stock
Contractual
Number of Price Paid Contractual Total Cash
(millions, except per share data) Shares per Share Fair Value Investment
January 30, 2010 1.5 $42.77 $79 $66
January 29, 2011 1.2 $44.09 $63 $51
The settlement dates of these instruments are regularly renegotiated with the counterparty.
Plan Expenses
(millions) 2010 2009 2008
401(k) Plan
Matching contributions expense $190 $178 $178
Nonqualified Deferred Compensation Plans
Benefits expense/(income) (a) $ 63 $ 83 $ (80)
Related investment loss/(income) (b) (31) (77) 83
Nonqualified plan net expense $ 32 $6 $3
(a) Includes market-performance credits on accumulated participant account balances and annual crediting for additional benefits earned
during the year.
(b) Includes investment returns and life-insurance proceeds received from company-owned life insurance policies and other investments used
to economically hedge the cost of these plans.
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PART II