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 24.9 million and 32.5 million at February 2, 2013 and January 28, 2012, 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. Total share-based compensation expense recognized in the Consolidated Statements of Operations was $105 million, $90 million and $109 million in 2012, 2011 and 2010, respectively. The related income tax benefit was $42 million, $35 million and $43 million in 2012, 2011 and 2010, respectively.

Stock Options

We grant nonqualified stock options to certain team members under the Plan that generally vest and become exercisable annually in equal amounts over a four-year period and expire 10 years after the grant date. We also grant options with a ten-year term to the non-employee members of our Board of Directors which vest immediately, but are not exercisable until one year after the grant date. We use a Black-Scholes valuation model to estimate the fair value of the options at the grant date.

Stock Option Activity	Stock Options


	Total Outstanding							Exercisable
	Number of Options (a)			Exercise Price (b)		Intrinsic Value (c)		Number of Options (a)		Exercise Price (b)		Intrinsic Value (c)

January 28, 2012		38,154		$	47.59	$	166		23,283	$	47.06	$	121
Granted		5,063			60.57
Expired/forfeited		(971	)		49.15
Exercised/issued		(7,788	)		42.55

February 2, 2013		34,458		$	50.60	$	366		21,060	$	48.25	$	273

(a): In thousands.
(b): Weighted average per share.
(c): Represents stock price appreciation subsequent to the grant date, in millions.

Black-Scholes Model Valuation Assumptions	2012			2011			2010



Dividend yield		2.4	%		2.5	%		1.8	%
Volatility (a)		23	%		27	%		26	%
Risk-free interest rate (b)		1.0	%		1.0	%		2.1	%
Expected life in years (c)		5.5			5.5			5.5
Stock options grant date fair value	$	9.70		$	9.20		$	12.51

(a): Volatility represents an average of market estimates for implied volatility of Target common stock.
(b): The risk-free interest rate is an interpolation of the relevant U.S. Treasury security maturities as of each applicable grant date.
(c): The expected life is estimated based on an analysis of options already exercised and any foreseeable trends or changes in recipients' behavior.

Stock Option Exercises (millions)	2012		2011		2010



Cash received for exercise price	$	331	$	93	$	271
Intrinsic value		139		27		132
Income tax benefit		55		11		52

At February 2, 2013, there was $88 million of total unrecognized compensation expense related to nonvested stock options, which is expected to be recognized over a weighted average period of 1.2 years. The weighted average remaining life of currently exercisable options is 5.1 years, and the weighted average remaining life of all outstanding options is 6.6 years. The total fair value of options vested was $68 million, $75 million and $87 million in 2012, 2011 and 2010, respectively.

Performance Share Units

We have issued performance share units to certain team members annually since January 2003. These units 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 two measures: domestic market share change and EPS growth. 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 $58.61, $48.63 and $52.62 in 2012, 2011 and 2010, respectively.

Performance Share Unit Activity	Total Nonvested Units


	Performance Share Units (a)			Grant Date Price (b)

January 28, 2012		1,552		$	39.93
Granted		422			58.61
Forfeited		(135	)		31.53
Vested		(583	)		27.19

February 2, 2013		1,256		$	51.53

(a): Assumes attainment of maximum payout rates as set forth in the performance criteria based in thousands of share units. Applying actual or expected payout rates, the number of outstanding units at February 2, 2013 was 876 thousand.
(b): Weighted average per unit.

The expense recognized each period is dependent upon our estimate of the number of shares that will ultimately be issued. Future compensation expense for currently unvested awards could reach a maximum of $24 million assuming payout of all unvested awards. The unrecognized expense is expected to be recognized over a weighted average period of 0.8 years. The fair value of performance share units vested and converted was $16 million in 2012 and was not significant in 2011 and 2010.

Restricted Stock

We issue restricted stock units and restricted stock awards (collectively restricted stock) to certain team members with three-year cliff vesting from the grant date. 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. Restricted stock units represent shares potentially issuable in the future whereas restricted stock awards represent shares issued upon grant that are restricted. The fair value for restricted stock units and restricted stock awards is calculated based on the stock price on the date of grant. The weighted average grant date fair value for restricted stock was $60.44, $49.42 and $55.17 in 2012, 2011 and 2010, respectively.

Restricted Stock Activity	Total Nonvested Units


	Restricted Stock (a)			Grant Date Price (b)

January 28, 2012		1,610		$	50.76
Granted		1,540			60.44
Forfeited		(41	)		53.88
Vested		(214	)		50.76

February 2, 2013		2,895		$	56.12

(a): Represents the number of restricted stock units and restricted stock awards, in thousands.
(b): Weighted average per unit.

The expense recognized each period is dependent upon our estimate of the number of shares that will ultimately be issued. At February 2, 2013, there was $103 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 was $11 million, $9 million and $3 million in 2012, 2011 and 2010, respectively.