Steinhafel could get $26 million in Target severance

Target Corp.'s Gregg Steinhafel is eligible for approximately $26 million as he steps down from the top leadership position at the nation's second-largest retailer.

The final number is dependent on the filing of the Minneapolis company's annual proxy statement, which discloses pay for the previous year and severance under a variety of scenarios.

The company early Monday announced Steinhafel's departure as chairman, president and chief executive officer. He led Target through a tumultuous six years that included the 2008-09 recession, growing competition from online-focused retailers, a troubled expansion in Canada and a data breach that put the confidential data of tens of millions of customers in the hands of cyberthieves.

Target's proxy statement is overdue, though the company is not yet out of compliance with securities industry rules. Target is required to file the statement within 120 days from the Feb. 1 end of its fiscal year, making its deadline June 1. However, Target recently told the Securities and Exchange Commission that it would provide its proxy statement "on or about April 28th."

The delay may be an indication that the company has been negotiating a severance package for Steinhafel.

As recently as March 21, Target said in a statement e-mailed to the Star Tribune: "Gregg Steinhafel has the full confidence of the board. We believe he is the right leader for Target to navigate through the current challenges we are facing."

On Monday, the company said: "In connection with Mr. Steinhafel's departure from Target, he is entitled to severance payments under Target's Income Continuation Plan."

Using last year's proxy as a guide, Steinhafel would be eligible for annual cash compensation over a period of 12 to 24 months. The cash portion would be based on Steinhafel's base salary and the average of his last three annual bonuses.

Steinhafel's ultimate payment would be dependent on the bonus he earned in fiscal 2013, which ended Feb. 1, 2014. It also would include a lump-sum payment from his deferred compensation plan and accelerated vesting of restricted stock awards.

As of last year's proxy, Steinhafel was eligible for $11 million under the Income Continuance Policy, $9.3 million from his Officer Deferred Compensation Plan, and $6.3 million from accelerated vesting of restricted stock awards based on the company's stock price on Feb. 1, 2013.

The final number may be somewhat less than $26 million since the stock price of Target was considerably lower at the end of this fiscal year compared than the previous fiscal year. His annual bonus may also be less than last year based on financial performance of the company.

Shareholders have previously expressed concerns about Target's executive compensation.

Last year, Target barely passed its say-on-pay advisory vote on executive compensation. Only 51.7 percent of the shares voted to approve the executive compensation package. Any approval rating below 70 percent is considered by compensation experts as cause for concern.

Shareholders will get another nonbinding advisory vote on Target's executive compensation at the company's annual meeting in June.

Patrick Kennedy • 612-673-7926