Target 2013 Annual Report Download - page 61

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25. Defined Contribution Plans
Team members who meet 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 funds
designated by the participant.
In addition, we maintain a nonqualified, unfunded deferred compensation plan for approximately 3,000 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,
excluding members of our management executive committee, in part to recognize the risks inherent to their participation
in this plan. We also maintain a nonqualified, unfunded deferred compensation plan that was frozen during 1996,
covering approximately 60 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. Our total liability under these plans was $520 million and $505 million
at February 1, 2014 and February 2, 2013, respectively.
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 $(5) million, $14 million and $(4) million in 2013, 2012 and 2011, respectively. During 2013 and 2012,
we invested $23 million and $19 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 as described
in Note 23. The settlement dates of these instruments are regularly renegotiated with the counterparty.
Prepaid Forward Contracts on Target
Common Stock
(millions, except per share data) Number of Shares Contractual Price Paid per Share Contractual Fair Value Total Cash Investment
February 2, 2013 1.2 $ 45.46 $ 73 $ 54
February 1, 2014 1.3 $ 48.81 $ 73 $ 63
Plan Expenses
(millions) 2013 2012 2011
401(k) plan matching contributions expense $ 229 $ 218 $ 197
Nonqualified deferred compensation plans
Benefits expense (a) 41 78 38
Related investment income (b) (23) (43) (10)
Nonqualified plan net expense $ 18 $ 35 $ 28
(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.
26. Pension and Postretirement Health Care Plans
We have qualified defined benefit pension plans covering team members who meet age and service requirements,
including in certain circumstances, date of hire. Effective January 1, 2009, our U.S. qualified defined benefit pension
plan was closed to new participants, with limited exceptions. We also have unfunded nonqualified pension plans for
team members with qualified plan compensation restrictions. Eligibility for, and the level of, these benefits varies
depending on each team members' date of hire, length of service and/or team member compensation. Upon early