EXHIBIT
(10)I


 


TARGET
CORPORATION

DEFERRED COMPENSATION PLAN

DIRECTORS


 


ARTICLE 1

PURPOSE


 


The purpose of this Deferred Compensation
Plan (the “Plan”) is to provide a means whereby Target Corporation (the “Company”)
may afford additional financial security to directors of the Company and its
subsidiaries who have rendered and continue to render valuable services to the
Company or its subsidiaries and who make an important contribution towards the
Company’s continued growth and success by providing for additional future
compensation so that such directors may be retained and their productive
efforts encouraged. The Plan document has been amended to reflect certain administrative
practices in effect as of May 1, 1999.


 


ARTICLE 2

DEFINITIONS AND CERTAIN PROVISIONS


 


Beneficiary. “Beneficiary”
means the person or persons designated as such in accordance with
Article 6.


 


Benefit Deferral Period.
“Benefit Deferral Period” means that period of one (1) or four
(4) Plan Years as determined pursuant to Article 4 over which a
Participant defers a portion of such Participant’s Earnings.


 


Committee. “Committee”
means the plan administration committee appointed to administer the Plan
pursuant to Article 3.


 


Cumulative Deferral Amount.
“Cumulative Deferral Amount” means the total cumulative amount by which a
Participant’s Earnings must be reduced over the period prescribed in
Section 4.1.


 


Declared Rate. “Declared
Rate” means with respect to any Plan Year the applicable rate announced in
advance by the Committee for such Plan Year. Under no circumstances shall the
minimum rate be less than twelve percent (12%) per annum and the maximum rate
shall not exceed twenty percent (20%) per annum. The rate to be announced,
subject to the minimum and maximum percentages referenced above, shall be a
calculated rate using the following formula:


 


Moody’s Corporate Bond Yield Average.
Monthly Average Corporates as published by Moody’s Investors Service, Inc.
or its successor (or if said index is no longer available, its successor index,
or if no successor index exists, such other index as selected by the Committee
as most closely replicates the measure produced by said Moody index) for the
month of June for the year preceding the subject Plan Year to which the
Declared Rate shall apply, said rate of return to be rounded to the nearest
..10% of said reported rate, to


 


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which percentage rate shall be added six (6) percentage points
(e.g. an index of 7.16% rounded to 7.20% plus 6% equals a 13.2% “Declared
Rate”). Provided however, if any tax or insurance change shall occur
which in the reasoned judgment of the Committee shall have an ongoing adverse
economic effect on the underlying COLI financing assumptions related to the
Plan, then the Committee may adjust said Declared Rate to reflect such adverse
economic impact but in no event below the twelve percent (12%) minimum
referenced in the first paragraph hereof.


 


Deferral Account. “Deferral
Account” means the account maintained on the books of account of the Company
pursuant to Section 4.4.


 


Director. “Director”
means any director of the Company or a subsidiary.


 


Earnings. “Earnings”
means the total fees paid to a Participant for service on the Board of
Directors (or any committee thereof) of the Company or a subsidiary.


 


Employer. “Employer”
means the Company and any of its wholly owned subsidiaries.


 


Enrollment Agreement.
“Enrollment Agreement” means the written agreement entered into by the Employer
and a Director pursuant to which the Director becomes a Participant in the
Plan. In the sole discretion of the Company, authorization forms filed by any
Participant by which the Participant makes the elections provided for by this
Plan may be treated as a completed and fully executed Enrollment Agreement for
all purposes under the Plan.


 


Participant. “Participant”
means a Director who has filed a completed and executed Enrollment Agreement or
authorization form with the Committee and is participating in the Plan in
accordance with the provisions of Article 4.


 


Plan Year. “Plan
Year” means the fiscal year beginning February 1 and ending
January 31.


 


Retirement. “Retirement”
means termination of service as a Director for any reason whatsoever, whether
voluntarily or involuntarily, except death.


 


ARTICLE 3

ADMINISTRATION OF THE PLAN


 


A Committee shall be appointed by the Chief
Executive Officer of the Company to administer the Plan and to establish, adopt
or revise such rules and regulations as it may deem necessary or advisable for
the administration of the Plan. The Committee shall have discretionary
authority to determine eligibility for benefits and to construe the terms of
the Plan. Interpretations of the Plan by the Committee shall be conclusive.
Members of the Committee shall be eligible to participate in the Plan while
serving as members of the


 


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Committee, but a member of the Committee shall not vote or act upon any
matter which relates solely to such member’s interest in the Plan as a
Participant.


 


ARTICLE 4

PARTICIPATION


 


4.1  Election to Participate.
Any Director may enroll in the Plan by filing a completed and fully executed
Enrollment Agreement or authorization form with the Committee. Pursuant to said
Enrollment Agreement or authorization form, the Director shall irrevocably
designate a dollar amount (the “Cumulative Deferral Amount”) by which the
aggregate Earnings of such Participant would be reduced over one (1) or
four (4) Plan Years next following the execution of the Enrollment
Agreement (the “Benefit Deferral Period”), provided, however, that:


 


(a)  Minimum
Deferral. The reduction for any Plan Year shall not be less than Five
Thousand Dollars ($5,000.00).


 


(b)  Reduction
in Earnings.


 


(i)  In General. Except as otherwise provided in this
Section 4.1, the Earnings of the Participant for each of the Plan Years in
the Benefit Deferral Period shall be reduced by the amount specified in the
Enrollment Agreement (including any authorization form) applicable to such Plan
Year.


 


(ii)  Accelerated Reduction. A Participant may elect
in a written notice with the consent of the Committee to increase the amount of
the reduction of Earnings otherwise provided for by Section 4.1(b)
(i) for any of the Plan Years remaining in the Benefit Deferral Period,
provided, however, that any such increase in the reduction of Earnings for any
remaining Plan Years in the Benefit Deferral Period shall not increase the
Cumulative Deferral Amount, but shall act to shorten the length of the Benefit
Deferral Period.


 


(c)  Maximum Reduction in Earnings. A Participant may
not elect a Cumulative Deferral Amount or an increase in reduction of Earnings
pursuant to Section 4.1(b) (ii), or any combination of the two, that would
cause the aggregate total reduction in Earnings in any Plan Year to exceed one
hundred percent (100%) of the Earnings payable during such Plan Year. In the
event that a Participant elects a Cumulative Deferral Amount or increase in
reduction of Earnings that would violate the limitation described in this
paragraph (c), the election shall be valid except that the Cumulative
Deferral Amount or increase in reduction of Earnings so elected shall
automatically be reduced to comply with such limitation, whichever is most
appropriate in the sole discretion of the Committee.


 


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4.2  Deferral Accounts. The
Committee shall establish and maintain a separate Deferral Account for each
Participant. The amount by which a Participant’s Earnings are reduced pursuant
to Section 4.1 shall be credited by the Employer to the Participant’s
Deferral Account on the fifteenth (15th) day of the month in which such
Earnings would otherwise have been paid. Such Deferral Account shall be debited
by the amount of any payments made by the Employer to the Participant or the
Participant’s Beneficiary pursuant to this Plan.


 


(a)  Interest. Each Deferral Account of a Participant
shall be deemed to bear interest from the date such Deferral Account was
established through the date of commencement of payment of the Retirement
Benefit at a rate equal to the Declared Rate which is announced by the
Committee for each Plan Year, compounded annually, on the balance from
month-to-month in such Deferral Account. Following the date of commencement of
payment of the Retirement Benefit, a Participant’s Deferral Account shall be
deemed to bear interest on the balance in such Deferral Account from month to
month at a rate equal to Declared Rate, compounded annually.


 


4.3  Rollover Deferred
Compensation Account. In its sole discretion, the Committee may permit any
Participant to make a special rollover election to transfer any amounts which
were previously deferred under any existing deferred compensation plans of the
Company to this Plan.


 


In such event, the Committee shall establish
and maintain a separate Rollover Deferral Account for each Participant who
makes a rollover transfer to this Plan. Such Rollover Deferral Account shall be
deemed to bear interest at the same rate and subject to the same conditions as
other Deferral Accounts pursuant to Section 4.2. Each Participant who
makes a rollover transfer to a Rollover Deferral Account shall be treated for
purposes of determining benefits under the Plan as having a separate Cumulative
Deferral Amount which shall initially be in the amount of the rollover
transfer. A Participant who makes a rollover transfer shall be deemed to waive
all rights under the Company’s existing deferred compensation plans from which
rollover transfers are made with respect to the amounts transferred to this
Plan, including the right to make elections regarding the time or manner of
payment as permitted thereunder. Rollover transfers shall be subject to the
minimum deferral amount set forth in Section 4.1(a), but shall not be
subject to any maximum deferral limitation.


 


4.4  Valuation of Accounts.
The value of a Deferral Account as of any date shall equal the amounts
theretofore credited to such account less any payments debited to such account
plus the interest deemed to be earned on such account in accordance with
Section 4.2. Interest shall be credited monthly on the fifteenth (15th)
day of each month.


 


4.5  Statement of Accounts.
The Committee shall submit to each Participant, within one hundred twenty
(120) days after the close of each Plan Year, a statement in such form as
the Committee deems desirable setting forth the balance standing to the credit
of each Participant in his Deferral Account.


 


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ARTICLE 5

BENEFITS


 


5.1  Retirement. Upon
Retirement, the payment of benefits shall commence on the first day of the
month following retirement, or following such later date which the Participant
elected in his Enrollment Agreement (including any authorization form). A
Participant may elect in his Enrollment Agreement (including any authorization
form) to have payments commence from one (1) to ten (10) years
following retirement, but not later than age 65 (or five (5) years after
the first day of the Benefit Deferral Period, if later).


 


(a)  Single Participant. In the case of a Participant
who is single when payments commence, the Employer shall pay to the Participant
an amount each month for the life of the Participant, but not less than one
hundred eighty (180) months. The payments shall be the actuarial equivalent
of the aggregate of the Participant’s Deferral Account at the time payments
commence and the interest that will accrue on the unpaid balance in such
Deferral Account during the payment period pursuant to Section 4.2(a). The
monthly amount of payment will be redetermined annually to reflect changes in
the Declared Rate.


 


(b)  Married Participant. In the case of a Participant
who is married when payments commence, the Employer shall make actuarially
reduced monthly payments to the Participant for his life and thereafter, if the
Participant is survived by a spouse who was married to the Participant when
Retirement Benefit payments commenced, shall continue to make monthly payments
to the Participant’s spouse for her life, with payments to be made for an aggregate
period of not less than one hundred eighty (180) months. The payments
shall be the actuarial equivalent of the payment which would be made to the
Participant pursuant to Section 5.1(a) if he were single. The monthly
amount of payments will be redetermined annually to reflect the change in the
Declared Rate.


 


5.2  Survivor
Benefits.


 


(a)  If a Participant dies prior to Retirement, the Employer
will pay to the Participant’s Beneficiary an annual benefit for the greater of:


 


(i)  ten
(10) years, or


 


(ii)  until
the Participant would otherwise have attained age 65,


 


equal to fifty
percent (50%) of the Cumulative Deferral Amount. However, if the Committee
determines that a distribution of the Participant’s Deferral Account would
produce a greater benefit, such Deferral Account balance shall be paid to the
Participant’s Beneficiary in equal annual installments over the same period as
specified above based on crediting the balance from month-to-month in such


 


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Deferral
Account at a rate equal to twelve percent (12%) per annum, compounded annually.


 


(b)  If a Participant dies after Retirement, but prior to
commencement of payment of any Retirement Benefit under the Plan, the Employer
will pay to the Participant’s Beneficiary the benefit that such Participant
would have received had the Participant retired on the day prior to such
Participant’s death, provided, however, that if the present value of the
benefit described in this Section 5.2(b) is less than the present value of
the benefit described in Section 5.2(a), using in each case twelve percent
(12%) as the discount factor, then the Beneficiary described in this
Section 5.2(b) shall receive the benefit described in Section 5.2(a)
and not the benefit described in this Section 5.2(b).


 


(c)  If a Participant (who was unmarried at the commencement
of the payment of any Retirement Benefit, or whose spouse who was married to
the Participant at the time of commencement of payment of any Retirement
Benefit predeceases the Participant) dies after the commencement of the payment
of any Retirement Benefit, the Employer will pay to the Participant’s
Beneficiary the remaining installments of any such benefit for the balance of
the one hundred eighty (180) months minimum payment period. If a spouse
who was married to the Participant at the time of commencement of payment of
the Retirement Benefit survives beyond such one hundred eighty
(180) months minimum payment period, payments shall continue to be made to
the spouse until the spouse’s death. If the spouse who was married to the
Participant at the time of commencement of payment of the Retirement Benefit
survives the Participant, but does not survive past the one hundred eighty
(180) months minimum payment period, the Employer will pay to the
Participant’s Beneficiary the remaining installments of any such benefit for
the balance of the one hundred eighty (180) months minimum payment period.
In computing any benefits to be paid following the Participant’s death pursuant
to this paragraph (c), the Participant’s Deferral Account shall be deemed
to bear interest following the Participant’s death on the balance in such
Deferral Account from month-to-month at a rate equal to the Declared Rate,
compounded annually.


 


(d)  Notwithstanding other provisions of the Plan, if the
Beneficiary is not a spouse, the present value of the installments shall be
paid as soon as administratively feasible after the death of the Participant.
The interest rate used to compute the present value shall be the average of the
declared rate for the Plan Year in which the Participant dies and twelve
percent (12%).


 


5.3  Small Benefit. In the
event that the Committee determines in its sole discretion that the amount of
any benefit is too small to make it administratively convenient to pay such
benefit over time, the Committee may pay the benefit in the form of a lump sum,
notwithstanding any provision of this Article 5 to the contrary. Such lump
sum shall be computed as the net present value of the benefit otherwise payable
using a twelve percent (12%) per annum discount factor.


 


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5.4  Withholding. To the
extent required by the law in effect at the time payments are made, the
Employer shall withhold from payments made hereunder the minimum taxes required
to be withheld by the federal or any state or local government.


 


5.5  Lump Sum Election.
Other provisions of Section 5.1 notwithstanding, if a Participant in his
Enrollment Agreement (including any authorization form) has elected a lump sum
payment to be made after his Retirement, the amount of his Deferral Account
(including interest) for the Benefit Deferral Period covered by that Agreement
shall be paid to the Participant in a lump sum at the time specified in that
Agreement.


 


5.6  Lump Sum Payout Option.
Notwithstanding any other provisions of the Plan, at any time after Retirement,
but not later than ten (10) years after Retirement of the Participant, a
Participant or a Beneficiary of a deceased Participant may elect to receive an
immediate lump sum payment of 50% or 100% of the balance of his Deferral
Account, reduced by a penalty, which shall be forfeited to the Company, equal
to eight percent (8%) of the amount of his Deferral Account he elected to
receive, in lieu of payments in accordance with the form previously elected by
the Participant, or provided elsewhere in this Plan. Such election, if not
100%, may be made only twice. If less than 100% of his Deferral Account is paid
out, the remainder of his Deferral Account will be paid in accordance with the
form previously elected by the Participant, or provided elsewhere in this Plan.
However, the penalty shall not apply if the Committee determines, based on
advice of counsel or a final determination by the Internal Revenue Service or
any court of competent jurisdiction, that by reason of the foregoing provision
any Participant or Beneficiary has recognized or will recognize gross income
for federal income tax purposes under this Plan in advance of payment to him of
Plan benefits. The Company shall notify all Participants (and Beneficiaries of
deceased Participants) of any such determination. Whenever any such
determination is made, the Company shall refund all penalties which were
imposed hereunder on account of making lump sum payments at any time during or
after the first year to which such determination applies (i.e., the first year
when gross income is recognized for federal income tax purposes). Interest
shall be paid on any such refunds at ten percent (10%) for each Plan Year,
compounded annually. The Committee may also reduce or eliminate the penalty if
it determines that this action will not cause any Participant or Beneficiary to
recognize gross income for federal income tax purposes under this Plan in advance
of payment to him of Plan benefits.


 


ARTICLE 6

BENEFICIARY DESIGNATION


 


Each Participant shall have the right, at any
time, to designate any person or persons as Beneficiary or Beneficiaries to
whom payment under this Plan shall be made in the event of the Participant’s
death prior to complete distribution to the Participant of the benefits due
under the Plan. Each Beneficiary designation shall become effective only when
filed in writing with the Committee during the Participant’s lifetime on a form
prescribed by the Committee.


 


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The filing of a new Beneficiary designation
form will cancel all Beneficiary designations previously filed. Any finalized
divorce or marriage (other than a common law marriage) of a Participant
subsequent to the date of filing of a Beneficiary designation form shall revoke
such designation unless in the case of divorce the previous spouse was not
designated as Beneficiary and unless in the case of marriage the Participant’s
new spouse had previously been designated as Beneficiary. The spouse of a
married Participant domiciled in a community property jurisdiction shall join
in any designation of Beneficiary or Beneficiaries other than the spouse.


 


If a Participant fails to designate a
Beneficiary as provided above, or if his Beneficiary designation is revoked by
marriage, divorce, or otherwise without execution of a new designation, or if
all designated Beneficiaries predecease the Participant or die prior to
complete distribution of the Participant’s benefits, then the Committee shall
direct the distribution of such benefits to the Participant’s estate.


 


ARTICLE 7

AMENDMENT AND TERMINATION OF PLAN


 


7.1  Amendment. The Board of
Directors of the Company may at any time amend the Plan, in whole or in part
for any reason, including but not limited to tax, accounting or insurance
changes, a result of which may be to terminate the Plan for future deferrals;
provided, however, that no amendment shall be effective to decrease the benefits,
nature or timing thereof payable under the Plan to any Participant with respect
to deferrals made (and benefits thereafter accruing) prior to the date of such
amendment. Written notice of any amendment shall be given each Participant then
participating in the Plan.


 


7.2  Automatic Termination of
Plan. The Plan shall terminate only under the following circumstances. The
Plan shall automatically terminate upon a determination by the Company that a
final decision of a court of competent jurisdiction has declared that the
Participants under the Plan are in constructive receipt under the Internal
Revenue Code of their vested Plan benefits.


 


7.3  Payments Upon Automatic
Termination. Upon any Plan termination under Section 7.2, the
Participants will be deemed to have terminated their enrollment under the Plan
as of the date of such termination. The Company will pay all Participants the
value of each Participant’s Deferral Accounts in a lump sum. The interest rate
used to compute the present value shall be the average of the declared rate for
the Plan Year in which the lump sum is to be paid and twelve percent (12%).


 


7.4  Payments Upon Change of
Control. Notwithstanding any provision of this Plan to the contrary, if a “Change
of Control” as defined in the Target Corporation Deferred Compensation Trust
Agreement (as it may be amended from time to time) occurs and results in
funding of the trust established under that Agreement, each Participant (or
Beneficiary of a deceased Participant) will be paid the entire value of his or
her Deferral Accounts in a lump sum, determined as if the Plan had
automatically terminated under Section 7.2 on the date the Change of
Control occurs, with the amount of the payment to


 


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be determined in the manner provided in Appendix B to the Target
Corporation Deferred Compensation Trust Agreement. However, this section shall
not apply, and no amounts shall be payable to Participants or Beneficiaries
under this section, in the event the assets of said trust are returned to the
Participating Employers Pursuant to the Trust Agreement because no Change of
Control actually occurred.


 


ARTICLE 8

MISCELLANEOUS


 


8.1  Unsecured General Creditor.
Participants and their Beneficiaries, heirs, successors, and assigns shall have
no legal or equitable rights, claims, or interests in any specific property or
assets of Employer, nor shall they be beneficiaries of, or have any rights,
claims, or interests in any life insurance policies, annuity contracts, or the proceeds
therefrom owned or which may be acquired by Employer (“Policies”). Such
Policies or other assets of Employer shall not be held under any trust for the
benefit of Participants, their Beneficiaries, heirs, successors, or assigns, or
held in any way as collateral security for the fulfilling of the obligations of
Employer under this Plan. Any and all of Employer’s assets and Policies shall
be, and remain, the general, unpledged, unrestricted assets of Employer.
Employer’s obligation under the Plan shall be merely that of an unfunded and
unsecured promise of Employer to pay money in the future.


 


8.2  Nonassignability.
Neither a Participant nor any other person shall, have any right to commute,
sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber,
hypothecate or convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof, or interest therein which are, and all rights
to which are, expressly declared to be unassignable and non-transferable. No
part of the amounts payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a Participant’s or any other
person’s bankruptcy or insolvency.


 


8.3  Service Not Guaranteed.
Nothing contained in this Plan nor any action taken hereunder shall be
construed as a contract of employment or as giving any Director any right to be
retained as a Director of the Employer.


 


8.4  Protective Provisions.
Each Participant shall cooperate with the Employer by furnishing any and all
information requested by the Employer in order to facilitate the payment of
benefits hereunder, taking such physical examinations as the Employer may deem
necessary and taking such other relevant action as may be requested by the
Employer. If a Participant refuses so to cooperate, the Employer shall have no
further obligation to the Participant under the Plan, other than payment to
such Participant of the cumulative reductions in Earnings theretofore made
pursuant to this Plan. If a Participant commits suicide during the two
(2) year period beginning on the later of (a) the date of adoption of
this Plan or (b) the first day of the first Plan Year of such Participant’s
participation in the Plan, or if the Participant makes any material
misstatement of information or nondisclosure of medical history, then no
benefits will be payable


 


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hereunder to such Participant or his Beneficiary, other than payment to
such Participant of the cumulative reductions in Earnings theretofore made
pursuant to this Plan, provided, that in the Employer’s sole discretion,
benefits may be payable in an amount reduced to compensate the Employer for any
loss, cost, damage or expense suffered or incurred by the Employer as a result
in any way of such misstatement or nondisclosure.


 


8.5  Gender, Singular and Plural.
All pronouns and any variations thereof shall be deemed to refer to the
masculine or feminine as the identity of the person or persons may require. As
the context may require, the singular may be read as the plural and the plural
as the singular.


 


8.6  Captions. The captions
of the articles, sections, and paragraphs of this Plan are for convenience only
and shall not control or affect the meaning or construction of any of its
provisions.


 


8.7  Validity. In the event
any provision of this Plan is held invalid, void, or unenforceable, the same
shall not affect, in any respect whatsoever, the validity of any other
provision of this Plan.


 


8.8  Notice. Any notice or
filing required or permitted to be given to the Committee under the Plan shall
be sufficient if in writing and hand delivered, or sent by registered or
certified mail, to the principal office of the Employer, directed to the
attention of the President of the Employer. Such notice shall be deemed given
as of the date of delivery or, if delivery is made by mail, as of the date
shown on the postmark on the receipt for registration or certification.


 


8.9  Applicable Law. This
Plan shall be governed and construed in accordance with the laws of the State
of Minnesota as applied to contracts executed and to be wholly performed in
such state.


 


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