Target Corporation Director Deferred Compensation Plan

 

 

TARGET CORPORATION

DDCP

(2009 Plan Statement)

 

TABLE OF CONTENTS

 

SECTION 1 INTRODUCTION; DEFINITIONS			3
	1.1   Name of Plan; History		3
	1.2 Definitions		3
	1.2.1 Account		3
	1.2.2 Affiliate		3
	1.2.3 Beneficiary		3
	1.2.4 Board		3
	1.2.5 Change-in-Control		3
	1.2.6 Code		4
	1.2.7 Committee		4
	1.2.8 Company		4
	1.2.9 Crediting Rate Alternative		5
	1.2.10 Deferral Credit		5
	1.2.11 Director		5
	1.2.12 Earnings Credit		5
	1.2.13 Effective Date		5
	1.2.14 Newly Eligible Director		5
	1.2.15 Participant		5
	1.2.16 Participating Employer		5
	1.2.17 Plan		5
	1.2.18 Plan Administrator		5
	1.2.19 Plan Rules		5
	1.2.20 Plan Statement		6
	1.2.21 Plan Year		6
	1.2.22 Retainer		6
	1.2.23 Specified Employee		6
	1.2.24 Termination of Employment		6
	1.2.25 Trust		6
	1.2.26 Unforeseeable Emergency		6
	1.2.27 Valuation Date		6
SECTION 2 PARTICIPATION AND DEFERRAL ELECTIONS			7
	2.1 Eligibility		7
	2.2 Termination of Participation		7
	2.3 No Guarantee of Continued Directorship		7
	2.4 Deferral Elections		7
	2.5 Deferral of Retainers		8
	2.6 Elective Deferral Credit		8
	2.7 Cancellation of Deferral Elections		8
SECTION 3 ADJUSTMENTS OF ACCOUNTS			9
	3.1 Establishment of Accounts		9
	3.2 Adjustments of Accounts		9

 

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	3.3 Investment Adjustment		9
	3.4 Account Adjustments Upon a Change-in-Control or Plan Termination		9
SECTION 4 VESTING			10
	4.1 Participant Accounts		10
SECTION 5 DISTRIBUTION			11
	5.1 Distribution Elections		11
	5.2 General Requirements		11
	5.3 Six-Month Suspension for Specified Employees		12
	5.4 Distribution on Account of Death		12
	5.5 Distribution on Account of Unforeseeable Emergency.		12
	5.6 Designation of Beneficiaries		13
	5.7 Facility of Payment		14
	5.8 Tax Withholding		15
	5.9 Application for Distribution		15
	5.10 Acceleration of Distributions		15
	5.11 Delay of Distributions		15
SECTION 6 SOURCE OF PAYMENTS; NATURE OF INTEREST			16
	6.1 Source of Payments		16
	6.2 Unfunded Obligation		16
	6.3 Establishment of Trust		16
	6.4 Spendthrift Provision		16
SECTION 7 ADOPTION, AMENDMENT AND TERMINATION			17
	7.1 Adoption		17
	7.2 Amendment		17
	7.3 Termination and Liquidation		17
SECTION 8 CLAIM PROCEDURES			19
	8.1 Claim Procedures		19
	8.2 Rules and Regulations		20
	8.3 Limitations and Exhaustion		21
SECTION 9 PLAN ADMINISTRATION			23
	9.1 Plan Administration		23
	9.2 Conflict of Interest		23
	9.3 Committee Membership and Authority		24
	9.4 Service of Process		24
	9.5 Choice of Law		24
	9.6 Responsibility for Delegate		24
	9.7 Expenses		24
	9.8 Errors in Computations		24
	9.9 Indemnification		24
	9.10 Notice		25
SECTION 10 CONSTRUCTION			26
	10.1 IRC Status		26
	10.2 Rules of Document Construction		26
	10.3 References to Laws		26

 

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SECTION 1
INTRODUCTION; DEFINITIONS

 

1.1                       Name of Plan; History.  This Plan (formerly known as the Target Corporation Director Deferred Compensation Plan) is a non-qualified, unfunded plan established for the purpose of allowing directors of the Company to defer the receipt of income.  This Plan was originally adopted effective as of January 1, 1997 and was amended at various times thereafter.  Effective January 1, 2005 (and other effective dates as specifically provided), this Plan was operated in compliance with Code section 409A.  Effective January 29, 2006, members of the Board ceased to be eligible to receive enhanced earnings on their account balances.  This Plan Statement, which is intended to comply with Code section 409A, is effective January 1, 2009.

 

1.2                       Definitions.  When the following terms are used herein with initial capital letters, they shall have the following meanings:

 

1.2.1                      Account.  “Account” means the separate bookkeeping account representing the separate unfunded and unsecured general obligation of the Participating Employers established with respect to each person who is a Participant in this Plan.  Within each Participant’s Account, separate subaccounts shall be maintained to the extent the Plan Administrator determines it to be necessary or desirable for the administration of this Plan.

 

1.2.2                      Affiliate.  An “Affiliate” is the Company and all persons, with whom the Company would be considered a single employer under Code section 414(b) or 414(c).

 

1.2.3                      Beneficiary.  “Beneficiary” means an individual (human being), a trust that is a United Sates person within the meaning of the Code, a person that has been recognized as a charitable organization under Code section 170(b), or the Participant’s estate designated in accordance with Section 5.6 to receive all or a part of the Participant’s Account in the event of the Participant’s death prior to full distribution thereof.  A person so designated shall not be considered a Beneficiary until the death of the Participant.

 

1.2.4                      Board.  “Board” is the Board of Directors of the Company, or such committee of the Board of Directors to which the Board of Directors of the Company has delegated the respective authority.

 

1.2.5                      Change-in-Control.

 

(a)                                   A “Change-in-Control” shall be deemed to have occurred if:

 

(i)                                50% or more of the directors of the Company shall be persons other than persons

 

A)                            for whose election proxies shall have been solicited by the Board or

 

B)                              who are then serving as directors appointed by the Board to fill vacancies on the Board caused by death or resignation (but not by removal) or to fill newly created directorships, or

 

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(ii)                                 30% or more of the outstanding voting power of the Voting Stock of the Company is acquired or beneficially owned (as defined in Article IV of the Restated Articles of Incorporation, as amended, of the Company) by any person (as defined in Article IV of the Restated Articles of Incorporation, as amended, of the Company), other than an entity resulting from a Business Combination in which clauses (x) and (y) of subparagraph (iii) apply, or

 

(iii)                              the consummation of a merger or consolidation of the Company with or into another entity, a statutory share exchange, a sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the Company’s assets or a similar business combination (each, a “Business Combination”), in each case unless, immediately following such Business Combination, (x) all or substantially all of the beneficial owners of the Company’s Voting Stock immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the voting power of the then outstanding shares of voting stock (or comparable voting equity interests) of the surviving or acquiring entity resulting from such Business Combination (including such beneficial ownership of an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), in substantially the same proportions (as compared to the other beneficial owners of the Company’s Voting Stock immediately prior to such Business Combination) as their beneficial ownership of the Company’s Voting Stock immediately prior to such Business Combination, and (y) no person (as defined in Article IV of the Restated Articles of Incorporation, as amended, of the Company) beneficially owns, directly or indirectly, 30% or more of the voting power of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity (other than a direct or indirect parent entity of the surviving or acquiring entity, that, after giving effect to the Business Combination, beneficially owns, directly or indirectly, 100% of the outstanding voting stock (or comparable equity interests) of the surviving or acquiring entity), or

 

(iv)                             approval by the shareholders of a definitive agreement or plan to liquidate or dissolve the Company.

 

For purposes of this 1.2.5, “Voting Stock” has the same meaning as defined in Article IV of the Restated Articles of Incorporation, as amended, of the Company.

 

1.2.6                      Code.  “Code” means the Internal Revenue Code of 1986, as amended (including, when the context requires, all regulations, interpretations and rulings issued hereunder).

 

1.2.7                      Committee.  “Committee” means the administrative committee appointed in accordance with Section 9.3.

 

1.2.8                      Company.   “Company” means Target Corporation, a Minnesota corporation, or any successor thereto.

 

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1.2.9                      Crediting Rate Alternative.   “Crediting Rate Alternative” means a hypothetical investment option used for the purpose of measuring income, gains and losses to the Accounts of Participants (as if the Accounts had in fact been so invested).  The Crediting Rate Alternatives shall be designated in writing by the Plan Administrator.

 

1.2.10               Deferral Credit.   A “Deferral Credit” is the amount credited to a Participant’s Account pursuant to Section 2.6.

 

1.2.11               Director.   “Director” means any person who is a director of the Company or Participating Employer.

 

1.2.12               Earnings Credit.  “Earnings Credit” means the investment adjustment credited to a Participant’s Account pursuant to Section 3.3 or Section 3.4 as applicable.

 

1.2.13               Effective Date.   The “Effective Date” of this Plan Statement is January 1, 2009, except as otherwise provided.

 

1.2.14               Newly Eligible Director.  “Newly Eligible Director” means a Director who either (i) was not previously eligible to participate in this Plan or any other non-qualified, deferred compensation plans maintained for directors or independent contractors by a Participating Employer or other Affiliate, (ii) had been paid all amounts previously deferred under all non-qualified, deferred compensation plans maintained for directors or independent contractors by a Participating Employer or other Affiliate and had ceased to be eligible to continue to participate in such plans on or before the date of payment of all amounts due under such plans, or (iii) was not eligible to participate in any non-qualified deferred compensation plans (other than the accrual of earnings) maintained for directors or independent contractors by a Participating Employer or other Affiliate at any time during the 24-month period ending on the date the Director has again become eligible to participate in the Plan.

 

1.2.15               Participant.  A “Participant” is a Director who becomes a Participant in this Plan in accordance with the provisions of Section 2.  A Director who has become a Participant shall be considered to continue as a Participant in this Plan until the date when the Participant no longer has any Account under this Plan, or the date of the Participant’s death, if earlier.

 

1.2.16               Participating Employer.  “Participating Employer” means the Company and each other Affiliate that, with the consent of the Company adopts this Plan.  A Participating Employer shall cease to be a Participating Employer on the date it ceases to be an Affiliate.

 

1.2.17               Plan.  “Plan” means the nonqualified, unfunded income deferral program maintained by the Company and established for the benefit of Participants eligible to participate therein, as set forth in this Plan Statement.  As used herein, “Plan” does not refer to the documents pursuant to which this Plan is maintained.  That document is referred to herein as the “Plan Statement”.  The Plan shall be referred to as the “Target Corporation DDCP” (formerly known as the Target Corporation Director Deferred Compensation Plan).

 

1.2.18               Plan Administrator.  “Plan Administrator” means the Company or, if affirmatively designated by the Company, some other individual or committee.

 

1.2.19               Plan Rules.  “Plan Rules” are rules, policies, practices or procedures adopted by the Plan Administrator or its delegate pursuant to Section 9.1.5.

 

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1.2.20               Plan Statement.  “ Plan Statement” means this document entitled “Target Corporation DDCP (2009 Plan Statement),” as adopted by the Company, effective as of January 1, 2009, as the same may be amended from time to time.

 

1.2.21               Plan Year.  “Plan Year” means the period from January 1 through December 31.

 

1.2.22               Retainer.  “Retainer” means the total cash fees paid to Participant for service on the Board (or any committee there of).

 

1.2.23               Specified Employee.  For purposes of complying with the requirements of Code section 409A(a)(2)(B)(i) (relating to the 6 month suspension of certain benefit distributions), an individual is a “Specified Employee” if on his or her Termination of Employment, the Company or other Affiliate has stock that is traded on an established securities market within the meaning of Code section 409A(a)(2)(B) and such individual is a “key employee” (defined below).  For this purpose, an individual is a “key employee” during the 12-month period beginning on April 1 immediately following the calendar year in which the individual was employed by the Company and other Affiliates, and satisfied, at any time within such calendar year, the requirements of Code section 416(i)(1)(A)(i), (ii) or (iii) (without regard to Code section 416(i)(5)).  An individual will not be treated as a Specified Employee if the individual is not required to be treated as a Specified Employee under Treasury Regulations issued under Code section 409A.

 

1.2.24               Termination of Employment.  “Termination of Employment” means a severance of a Participant’s directorship, and all independent contractor relationships, with the Company, each Participating Employer and all Affiliates, for any reason.  Notwithstanding the foregoing, a Termination of Employment shall not occur unless such termination also qualifies as a “separation from service,” as defined under Code section 409A and related guidance thereunder.

 

1.2.25               Trust.  “Trust” means the Target Corporation Deferred Compensation Trust Agreement, dated January 1, 2009 by and between the Company and State Street Bank and Trust Company, as it is amended from time to time, or similar trust agreement.

 

1.2.26               Unforeseeable Emergency.  “Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (within the meaning of Code section 152(a)) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, but only if and to the extent such Unforeseeable Emergency constitutes an “unforeseeable emergency” under Code section 409A.

 

1.2.27               Valuation Date.  “Valuation Date” means each business day on which the New York Stock Exchange is open.

 

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SECTION 2
PARTICIPATION AND DEFERRAL ELECTIONS

 

2.1                       Eligibility.  A Director is eligible to participate in this Plan in accordance with and subject to the requirements of this Plan.

 

2.1.1                      Eligibility for Newly Eligible Director.  A Newly Eligible Director is eligible to participate in this Plan on the date that is 30 days after he or she becomes a Director.

 

2.1.2                      Initial Enrollment.  A Director shall, as a condition of participation in this Plan, complete such forms and make such elections in accordance with Plan Rules as the Plan Administrator may require for the effective administration of this Plan.

 

2.2                       Termination of Participation.  Except as otherwise specifically provided in this Plan Statement or by the Committee, a Director who ceases to be a Director is not eligible to continue to participate in the Plan, provided, that any deferral elections in effect, and irrevocable, will continue to apply with respect to any Retainers.  The Participant’s Account will continue to be governed by the terms of the Plan until such time as the Participant’s Account balance is paid in accordance with the terms of the Plan.  A Participant or Beneficiary will cease to be such as of the date on which his or her entire Account balance has been distributed.

 

2.3                       No Guarantee of Continued Directorship.  Participation in this Plan does not constitute a guarantee or contract with any Participating Employer guaranteeing that the Director will continue to be a director.  Such participation shall in no way interfere with any rights the shareholders of a Participating Employer would have in the absence of such participation to determine the duration of the director’s service.

 

2.4                       Deferral Elections.   A Director who satisfies the eligibility requirements of Section 2 may, at the time and in the manner provided hereunder, elect to defer the receipt of his or her Retainer.

 

2.4.1                      General.  Except as otherwise provided in this Plan, an election shall be made before the beginning of the Plan Year during which the Participant performs services for which the Retainer is earned.  The election must designate the percentage of the Retainer which shall be deferred under this Plan.  In accordance with Plan Rules, the Plan Administrator will determine the manner and timing required to file a deferral election.  No deferral election shall be effective unless prior to the deadline for making such election, the Participant has filed with the Plan Administrator, in accordance with Plan Rules, an insurance consent form permitting the Participating Employer or Company to purchase and maintain life insurance coverage on the Director with the Participating Employer or Company as the beneficiary.  An election to defer the Retainer for the Plan Year or other period is irrevocable once it has been accepted by the Plan Administrator and the deadline for making such election has expired, except as otherwise provided under this Plan.

 

2.4.2                      Newly Eligible Director.  For a Newly Eligible Director, the deferral election may be made after the first day of a Plan Year provided it is made within 30 days after becoming eligible to participate in this Plan.  Such a deferral election by a Newly Eligible Director is irrevocable once it has been received by the Plan Administrator and the deadline for making such election has expired, except as otherwise provided under this Plan.  Such election will be

 

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effective with respect to Retainers for services commencing with the next full calendar quarter after the deferral election becomes irrevocable.

 

2.4.3                      Terminations of Employment.  A Participant who completes a deferral election in accordance with this Section 2.4, but who has a Termination of Employment prior to the deadline for making such election has expired, will be deemed to have made no deferral election for the respective period.

 

2.5                       Deferral of Retainers.   A Participant’s election to defer a Retainer is subject to the following requirements:

 

2.5.1                      A deferral election will be effective with respect to the first Retainer paid for services performed during the Plan Year and such election will remain in effect through the last Retainer paid for services performed during the Plan Year.

 

2.5.2                      The Retainer deferral percentage may not exceed 100%.

 

2.6                       Elective Deferral Credit .  The Plan Administrator shall credit to the Account of each Participant the amount, if any, of the Retainer the Participant elected to defer pursuant to this Section 2.  Such amount shall be credited as nearly as practicable as of the time or times when the Retainer would have been paid to the Participant but for the election to defer.

 

2.7                       Cancellation of Deferral Elections.  Notwithstanding any provisions in the Plan to the contrary, an election to defer under this Section will be cancelled for the remaining portion of the Plan Year in the event the Participant has received a distribution on account of an Unforeseeable Emergency under Section 5.5.  The revocation shall be made at the time and in the manner specified in Plan Rules and must otherwise comply with the requirements of Section 5.5.

 

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SECTION 4
VESTING

 

4.1          Participant Accounts.  The Participant Accounts are fully (100%) vested and non-forfeitable at all times.

 

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SECTION 5

DISTRIBUTION

 

5.1          Distribution Elections.  Except as otherwise specifically provided in this Plan, a Participant may irrevocably elect for each Plan Year the form and time of distribution of the credits made to his or her Account for such Plan Year.

 

5.2          General Requirements.  A Participant’s distribution election must be made prior to the date the Participant’s deferral election becomes irrevocable.  Earnings Credits will be distributed in the same form and time as in effect for the related Account credit.  The election shall be made in the form and manner prescribed by Plan Rules.

 

5.2.1       Form of Distribution.  The Participant may elect among the following forms of distribution.

 

(a)                                   Installments.  A series of annual installments made over either five (5) years or ten (10) years commencing at a time provided under Section 5.2.2(a) or (b).  For purposes of Code section 409A, installment payments will be treated as a series of separate payments at all times.

 

(b)                                  Lump Sum.  A single lump sum payment.

 

5.2.2       Time of Payment.  The Participant may elect among the following distribution commencement times:

 

(a)                                   Termination of Employment.  Within 60 days following the Participant’s Termination of Employment.

 

(b)                                  One-Year Anniversary of Termination of Employment.  Within 60 days following the one-year anniversary of the Participant’s Termination of Employment.

 

(c)                                   Fixed Payment Date.   Within 60 days of January 1 of the calendar year elected by the Participant