Target 2015 Annual Report Download - page 61

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26. Share-Based Compensation
We maintain a long-term incentive plan (the Plan) for key team members and non-employee members of our Board
of Directors. The Plan allows us to grant equity-based compensation awards, including stock options, stock appreciation
rights, performance share units, restricted stock units, restricted stock awards, or a combination of awards (collectively,
share-based awards). The number of unissued common shares reserved for future grants under the Plan was 31.5
million and 14.0 million at January€30, 2016 and January€31, 2015, respectively.
Compensation expense associated with share-based awards is recognized on a straight-line basis over the shorter
of the vesting period or the minimum required service period. Share-based compensation expense for continuing
operations recognized in the Consolidated Statements of Operations was $118 million, $73 million, and $106 million
in 2015, 2014, and 2013, respectively. The related income tax benefit was $46 million, $29 million, and $41 million in
2015, 2014, and 2013, respectively.
Share information includes all outstanding awards for continuing and discontinued operations.
Restricted Stock
We issue restricted stock units and performance-based restricted stock units generally with three-year cliff vesting
from the grant date (collectively restricted stock) to certain team members. The final number of shares issued under
performance-based restricted stock units will be based on our total shareholder return relative to a retail peer group
over a three-year performance period. We also regularly issue restricted stock units to our Board of Directors, which
vest quarterly over a one-year period and are settled in shares of Target common stock upon departure from the Board.
The fair value for restricted stock is calculated based on the stock price on the date of grant, incorporating an analysis
of the total shareholder return performance measure where applicable. The weighted average grant date fair value
for restricted stock was $73.76, $70.50, and $62.76 in 2015, 2014, and 2013, respectively.
Restricted Stock Activity Total Nonvested Units
Restricted
Stock (a) Grant Date
Fair Value (b)
January 31, 2015 4,713 $65.11
Granted 1,677 73.76
Forfeited (704)65.87
Vested (1,460)61.51
January 30, 2016 4,226 $69.49
(a) Represents the number of shares of restricted stock, in thousands. For performance-based restricted stock units, assumes attainment
of maximum payout rates as set forth in the performance criteria. Applying actual or expected payout rates, the number of outstanding
restricted stock units and performance-based restricted stock units at January€30, 2016 was 3,471 thousand.
(b) Weighted average per unit.
The expense recognized each period is partially dependent upon our estimate of the number of shares that will ultimately
be issued. At January€30, 2016, there was $149 million of total unrecognized compensation expense related to restricted
stock, which is expected to be recognized over a weighted average period of 1.3 years. The fair value of restricted
stock vested and converted to shares of Target common stock was $90 million, $40 million, and $28 million in 2015,
2014, and 2013, respectively.
Performance Share Units
We issue performance share units to certain team members that represent shares potentially issuable in the future.
Issuance is based upon our performance relative to a retail peer group over a three-year performance period on certain
measures including domestic market share change, return on invested capital, and EPS growth. In 2015 we also issued
strategic alignment performance share units to certain team members. Issuance is based on performance against
four strategic metrics identified as vital to Target's success, including total sales growth, digital channel sales growth,
EBIT growth, and return on invested capital, over a two-year performance period. The fair value of performance share
units is calculated based on the stock price on the date of grant. The weighted average grant date fair value for
performance share units was $74.19, $73.12, and $57.22 in 2015, 2014, and 2013, respectively.
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