<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[_] Preliminary Proxy Statement RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
THE GAP, INC.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997
To Our Stockholders:
The Annual Meeting of Stockholders of The Gap, Inc. will be held at the Town
Hall of the Delancey Street Foundation, 600 The Embarcadero, San Francisco,
California, on Tuesday, May 20, 1997 at 1:30 P.M., for the following purposes:
1. To elect a Board of Directors;
2. To consider and act upon the selection by the Board of Directors of
Deloitte & Touche LLP as independent auditors for the Company for the
fiscal year ending on January 31, 1998; and
3. To transact such other business as may properly come before the
meeting.
The foregoing items of business are more fully described in the Proxy
Statement following this Notice.
Only stockholders of record at the close of business on March 24, 1997, are
entitled to notice of and to vote at the Annual Meeting and any adjournments
or postponements thereof.
A copy of the Company's annual report is being mailed with this proxy
statement to stockholders entitled to notice of this meeting.
By Order of the Board of Directors,
/s/ANNE B. GUST
---------------
Anne B. Gust
Secretary
April 21, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE DATE, SIGN AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE.
PRINTED ON RECYCLED PAPER LOGO
<PAGE>
THE GAP, INC.
ONE HARRISON
SAN FRANCISCO, CALIFORNIA 94105
PROXY STATEMENT
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF
PROXIES BY THE BOARD OF DIRECTORS OF THE GAP, INC. (THE "COMPANY") FOR USE AT
THE ANNUAL MEETING OF STOCKHOLDERS OF THE COMPANY TO BE HELD ON MAY 20, 1997
AT 1:30 P.M. AT THE TOWN HALL OF THE DELANCEY STREET FOUNDATION IN SAN
FRANCISCO, AND AT ANY ADJOURNMENT THEREOF. THIS STATEMENT AND THE ENCLOSED
FORM OF PROXY WERE FIRST SENT TO STOCKHOLDERS ON OR ABOUT APRIL 21, 1997.
THE PROXY
The persons named as proxyholders were selected by the Board of Directors of
the Company and are officers of the Company.
All proxies will be voted, or an abstention or withholding recorded, in
accordance with the directions on the proxy. If no contrary direction is
given, the shares will be voted:
FOR the election of directors nominated by the Board of Directors; and
FOR the approval of the selection by the Board of Directors of Deloitte &
Touche LLP as independent auditors for the Company for the fiscal year ending
January 31, 1998.
All expenses in connection with the solicitation of the enclosed proxy,
including the charges of brokerage houses and other custodians, nominees or
fiduciaries for forwarding documents to security owners, will be paid by the
Company. In addition to solicitation by mail, officers, directors and
employees of the Company, who will receive no extra compensation for their
services, may solicit proxies by telephone, fax or in person.
A stockholder giving the enclosed proxy may revoke it at any time prior to
its exercise by a written revocation delivered to the Company, by a subsequent
proxy, or by attending the Annual Meeting and voting in person.
VOTING SECURITIES AND VOTING RIGHTS
The only outstanding voting securities of the Company are its shares of
Common Stock, of which 273,698,780 shares were outstanding at the close of
business on March 24, 1997. Only stockholders of record at the close of
business on that date are entitled to vote at the meeting. Each stockholder is
entitled to one vote per share on each matter submitted to the meeting.
The holders of a majority of the outstanding shares of the Common Stock of
the Company, present in person or by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting or any adjournment thereof.
Election of directors by stockholders shall be determined by a plurality of
the votes cast by the stockholders entitled to vote at the election present in
person or by proxy.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspector(s) appointed for the meeting and will determine whether
or not a quorum is present. The election inspector(s) will treat abstentions
as shares that are present and entitled to vote for purposes of determining
the presence of a quorum but as unvoted for purposes of determining the
approval of any matter submitted to the stockholders for a vote. If a broker
indicates on the proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
1
<PAGE>
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth certain information as of March 24, 1997, to
indicate beneficial ownership of the Common Stock of the Company by (i) each
person known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Company's Common Stock; (ii) each director and
nominee and each executive officer named in the Summary Compensation Table;
and (iii) all directors and executive officers of the Company, as a group.
Unless otherwise indicated, beneficial ownership is direct and the person
indicated has sole voting and investment power.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT
NAME OF BENEFICIAL OWNER OWNED OF CLASS
------------------------ ------------ --------
<S> <C> <C>
Adrian D. P. Bellamy.......................... 9,000 *
John G. Bowes................................. 374,400(1) *
Millard S. Drexler............................ 5,046,200(2)(3) 1.8%
Donald G. Fisher.............................. 65,340,960(4) 23.9%(4)
Doris F. Fisher............................... 65,340,960(4) 23.9%(4)
Robert J. Fisher.............................. 10,801,828(3)(5) 3.9%
Lucie J. Fjeldstad............................ 2,125(6) *
William A. Hasler............................. 4,500(7) *
Warren R. Hashagen............................ 169,352(3)(8) *
John M. Lillie................................ 14,000(9) *
Richard M. Lyons.............................. 274,273(3)(10) *
Charles R. Schwab............................. 17,083(11) *
Brooks Walker, Jr. ........................... 149,600(12) *
John B. Wilson................................ 20,300(3) *
All directors and executive officers as a
group (15 persons)........................... 82,272,416 30.1%
</TABLE>
- -------
* Indicates ownership of less than 1% of the outstanding shares of the
Company's Common Stock.
(1) Includes 12,000 shares which Mr. Bowes has the right to acquire within 60
days after March 24, 1997 upon exercise of stock options.
(2) Includes 237,200 shares which Mr. Drexler has the right to acquire within
60 days after March 24, 1997 upon exercise of stock options.
(3) Includes shares as to which restrictions have not lapsed which were
granted under the Company's Management Incentive Restricted Stock Plan
and/or the 1996 Stock Option and Award Plan, and/or shares held by the
executive officer in his or her retirement account under the GapShare
Plan, a retirement plan that qualifies under Section 401(k) of the
Internal Revenue Code of 1986, as amended.
(4) Donald G. Fisher and Doris F. Fisher, who are husband and wife, are the
founders of the Company, directors, and, respectively, the Chairman of,
and a merchandising consultant to, the Company. Their address is the same
as that shown for the Company on the first page of this Proxy Statement.
In the table shown above, 65,340,960 shares beneficially owned by Donald
G. Fisher and Doris F. Fisher are reflected as being beneficially owned
by each of them; therefore, the number of shares and percentage of class
reflected for each of them should not be added in determining the actual
number of shares or percentage owned by both of them. Of the shares shown
as owned by each of them, 43,436,062 shares, representing 15.9% of the
Company's Common Stock, are held as community property. The remainder of
the shares are held in various trusts and foundations of which they are
trustees. The shares shown as owned by each of them exclude an aggregate
of 35,115,072 shares beneficially held by family members, as to which
shares Mr. and Mrs. Fisher each disclaim any beneficial interest.
(5) Includes 147,800 shares which Robert Fisher has the right to acquire
within 60 days after March 24, 1997 upon exercise of stock options. Also
included are 275,600 shares held jointly by Robert Fisher and his spouse,
31,628 shares owned by his spouse and 48,550 shares held by Robert Fisher
as trustee for his nieces and nephews.
(6) Includes 400 shares held in an Individual Retirement Account for which
Ms. Fjeldstad has sole voting and investment power.
(7) Includes 2,000 shares which Mr. Hasler has the right to acquire within 60
days after March 24, 1997 upon exercise of stock options.
(8) Includes 54,400 shares which Mr. Hashagen has the right to acquire within
60 days after March 24, 1997 upon exercise of stock options.
2
<PAGE>
(9) Includes 12,000 shares which Mr. Lillie has the right to acquire within
60 days after March 24, 1997 upon exercise of stock options. Also
included are 2,000 shares held under the Lillie Family Living Trust, over
which Mr. Lillie and his wife share voting and investment power.
(10) Includes 35,200 shares which Mr. Lyons has the right to acquire within 60
days after March 24, 1997 upon exercise of stock options. Also included
are 32,720 shares owned jointly by Mr. Lyons and his spouse, and 2,540
shares held for the benefit of his minor children.
(11) Includes 12,000 shares which Mr. Schwab has the right to acquire within
60 days after March 24, 1997 upon exercise of stock options. Also
included are 1,000 shares owned by Mr. Schwab's spouse.
(12) Includes 12,000 shares which Mr. Walker has the right to acquire within
60 days after March 24, 1997 upon exercise of stock options. Also
included are 60,000 shares owned by the Brooks Walker, Jr. Charitable
Remainder Trust, of which Mr. Walker is the trustee and over which he has
sole voting and investment power.
(13) Includes 544,200 shares which certain directors and executive officers
have the right to acquire within 60 days after March 24, 1997 upon
exercise of stock options.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS
All directors were elected at the Annual Meeting held in 1996. Directors
will be elected at the Annual Meeting to serve until the next Annual Meeting
and until their successors are elected. The Board of Directors proposes to
nominate the eleven current directors. In the absence of instructions to the
contrary, shares represented by the proxy will be voted for the election of
all such nominees to the Board of Directors. The Board of Directors has no
reason to believe that any of these nominees will be unable to serve. However,
if any nominee should for any reason be unavailable to serve, the proxies will
be voted for the election of such other person to the office of director as
the Board of Directors may recommend in place of such nominee. Set forth below
is certain information concerning the nominees which is based on data
furnished by them.
<TABLE>
<CAPTION>
SERVED AS
NAME, AGE, PRINCIPAL OCCUPATION DURING PAST FIVE YEARS AND OTHER DIRECTOR
INFORMATION SINCE
---------------------------------------------------------------- ---------
<S> <C>
ADRIAN D. P. BELLAMY, 55l* ......................................... 1995
Director of The Body Shop International, P.L.C., personal care
retailer; Director of Gucci Group, NV, luxury accessories and
apparel manufacturer and retailer; and Director of Paragon Trade
Brands, Inc., manufacturer of store brand diapers. Chairman and
Chief Executive Officer of DFS Group Limited, specialty retailer,
1983-95.
JOHN G. BOWES, 68l*................................................. 1974
Chairman of Yakima Products, Inc. since 1994 and Fastrack, Inc.
since 1995. Chairman of Kransco Group Companies, manufacturer of
recreational products, 1962-94.
MILLARD S. DREXLER, 52.............................................. 1983
Chief Executive Officer of the Company since 1995, President of the
Company since 1987 and Chief Executive Officer of the Gap Division
since 1987. Chief Operating Officer of the Company 1993-95; Chief
Executive Officer of Banana Republic, Inc. 1988-97. Director of
Williams-Sonoma, Inc., specialty retailer.
DONALD G. FISHER, 68 * +............................................ 1969
Chairman of the Company. Chief Executive Officer from 1969 to 1995.
Director of The Charles Schwab Corporation, discount securities
brokerage; and Director of AirTouch Communications,
telecommunications company.
DORIS F. FISHER, 65 +............................................... 1969
Merchandising consultant to the Company.
ROBERT J. FISHER, 42 ++............................................. 1990
Executive Vice President and Chief Operating Officer of the Company
since 1995 and 1992-1993. Executive Vice President and Chief
Financial Officer, 1993-1995. Director of Sun Microsystems, Inc.,
manufacturer of computer systems.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SERVED AS
NAME, AGE, PRINCIPAL OCCUPATION DURING PAST FIVE YEARS AND OTHER DIRECTOR
INFORMATION SINCE
---------------------------------------------------------------- ---------
<S> <C>
LUCIE J. FJELDSTAD, 53l*............................................. 1995
President, Video and Networking, Tektronix, Inc., electronics
company, since 1995. President, Fjeldstad International, consulting
company, from 1993 to 1995. Vice President and General Manager,
Multimedia, IBM, from 1992 to 1993. Director of KeyCorp Ohio, bank
holding company; Director of Entergy Corp. DE, utility holding
company; and Director of Bolt Beranek & Newman, Inc., manufacturer
of computer support systems.
WILLIAM A. HASLER, 55 *............................................. 1991
Dean, Haas Graduate School of Business, University of California,
Berkeley since 1991. Director of Tenera, Inc., information services
company; Director of Aphton, Inc., biotechnology pharmaceutical
company; Director of Walker Interactive Systems, Inc., software
company; and Director of TCSI, communications technology company.
Governor of the Pacific Stock Exchange.
JOHN M. LILLIE, 60l*................................................. 1992
Chairman, The Epic Team, bicycle and accessory products, since 1996.
Chairman and Chief Executive Officer of American President
Companies, Ltd., transportation company, 1992-1995. Director of
Consolidated Freightways, Ltd., transportation company; Director of
The Harper Group, Inc., freight logistics and services company; and
Director of Walker Interactive Systems, Inc., software company.
CHARLES R. SCHWAB, 59 *............................................. 1986
Chairman and Chief Executive Officer of The Charles Schwab
Corporation, discount securities brokerage, since 1986. Director of
Transamerica Corporation, insurance and financial services company;
Director of AirTouch Communications, telecommunications company;
and Director of Siebel Systems, Inc., software company.
BROOKS WALKER, JR., 69 *............................................ 1972
General Partner, Walker Investors, venture capital investment
partnership, since 1979. Director of Pope & Talbot, Inc.,
manufacturer of wood products; and Director of AT&T Capital
Corporation, equipment leasing and financing company.
</TABLE>
- -------
Member of the Audit and Finance Committee.
l Member of the Compensation and Stock Option Committee.
* Member of the Corporate Governance Committee.
+ Donald G. Fisher and Doris F. Fisher are husband and wife.
++Robert J. Fisher is the son of Donald G. and Doris F. Fisher.
INFORMATION ABOUT THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
The Board of Directors has three standing committees: the Audit and Finance
Committee, and the Compensation and Stock Option Committee, both of which are
composed of directors who are not employees of the Company, and the Corporate
Governance Committee, which is made up of seven non-employee directors and one
employee director.
The functions of the Audit and Finance Committee are to recommend the
engagement of the Company's independent auditors; to review with them the
plan, scope and results of their audit for each year; to review with the
Company's Consulting and Auditing Services department the plan, scope and
results of their operations; and to consider and review other matters relating
to the financial and accounting affairs of the Company. This committee is
composed exclusively of directors who are, in the opinion of the Board of
Directors, free from any relationship that will interfere with the exercise of
independent judgment as a committee member. The present members of the Audit
and Finance Committee are Messrs. Hasler, Schwab and Walker (who is Chairman).
The functions of the Compensation and Stock Option Committee are to review
and approve salaries and other forms of compensation for all corporate and
divisional officers; to approve the guaranteeing or granting of loans to
certain corporate
4
<PAGE>
and divisional officers under the Company's Relocation Loan Plan; to grant
stock to selected employees under the Company's stock plan; and to make awards
under the Company's annual and long-term incentive plans to key employees.
This committee is composed exclusively of directors who have not been eligible
to receive stock options or awards under such plan (except for predetermined,
formula-based awards, as described below) for a period of at least one year
prior to membership on the committee. The present members of the Compensation
and Stock Option Committee are Messrs. Bellamy, Bowes, and Lillie (who is
Chairman), and Ms. Fjeldstad.
The functions of the Corporate Governance Committee are to make
recommendations to the Board on all matters concerning corporate governance
and directorship practices, including the qualifications of officers,
directors, candidates for election as directors, the size, composition,
compensation and function of the Board of Directors, the functions and duties
of the committees of the Board, the effectiveness and procedures of the Board,
and succession planning for important Company functions. The present members
of the Corporate Governance Committee are Messrs. Bellamy, Bowes, Donald
Fisher, Hasler (who is Chairman), Lillie, Schwab and Walker, and Ms.
Fjeldstad.
During the last fiscal year, the Board of Directors held seven meetings, the
Compensation and Stock Option Committee held three meetings, the Audit and
Finance Committee held two meetings and the Corporate Governance Committee
held one meeting. No directors attended fewer than 75% of the aggregate of (i)
the total number of meetings of the Board of Directors held while they were
members, and (ii) the total number of meetings held by all Committees of the
Board on which they were members.
COMPENSATION OF DIRECTORS
The Company does not pay director fees to directors who are employees of the
Company or any affiliated company. Directors who are not employees of or
consultants to the Company ("non-employee directors") do not receive any form
of direct remuneration other than as described below. In addition, travel
expenses to attend meetings of the Board of Directors are reimbursed by the
Company. All directors are eligible to receive discounts on Company
merchandise.
Each non-employee director of the Company receives director fees in the form
of an annual retainer of $36,000 per year, payable quarterly, which is
diminished by $2,500 for each Board and/or Committee meeting day missed.
Under the Company's 1996 Stock Option and Award Plan, non-employee directors
are eligible to receive stock options according to a pre-determined formula,
as follows: (i) each new non-employee director automatically receives an
option to purchase 10,000 shares at the then-current fair market value; and
(ii) each continuing non-employee director automatically receives an option to
purchase 2,500 shares at the then-current fair market value. All non-employee
director options are granted on the first business day after each annual
meeting of stockholders. The options normally become exercisable three years
after the date of grant. Furthermore, non-employee directors may elect to
receive all or a portion of their fees in Company stock options.
Under the Company's Non-Employee Director Deferred Compensation Plan, each
non-employee director may elect to forego receipt of his or her annual
retainer in exchange for an option to purchase shares of Company Common Stock.
Any such option will have an exercise price equal to the then-current fair
market value of the stock, a maximum term no longer than seven years, and
cover a number of shares to be determined by a widely-used option valuation
formula (so that the option has a value equal to the amount of the foregone
retainer). Alternatively, the director may elect to receive a stock option for
a predetermined number of shares with an exercise price which is discounted to
reflect the amount of the foregone retainer.
The Non-Employee Director Retirement Plan is an unfunded deferred
compensation plan which sets mandatory retirement from service on the Board at
age 72 and provides for annual benefits if a non-employee director has served
on the Board for five consecutive years and is still a director at age 72. The
annual benefit payable to an eligible retired director is equal to 75% of the
annual retainer fee in effect at the time of the director's retirement. The
duration of these annual payments equals the number of years that the director
served on the Board. If the director dies before the maximum payment period
expires, payments will continue for the life of his or her surviving spouse,
or until the end of the maximum payment period, whichever is sooner. In fiscal
1996, the Board of Directors elected to discontinue this plan for future
directors. Then-current participants will continue to be eligible for plan
benefits, assuming they meet the requirements of the plan; however, the
benefit payable will be capped at current levels (i.e., 75% of $36,000).
5
<PAGE>
In fiscal 1996, Doris Fisher received $24,000 for merchandising services
rendered in the course of her employment with the Company. As a Company
employee, Mrs. Fisher participates in all benefits which the Company makes
available to its employees generally, except for stock-based compensation and
bonus programs.
Information concerning executive officers of the Company who are not also
directors is set forth in the Company's annual report on Form 10-K for the
fiscal year ended February 1, 1997.
EXECUTIVE COMPENSATION
The following table sets forth compensation paid to, earned by or awarded to
the Chief Executive Officer and the four other most highly compensated
executive officers of the Company for the periods presented. In addition, the
table also sets forth compensation paid to a former executive officer of the
Company who would have been among the five most highly compensated executive
officers, were it not for the fact that he ceased to be considered an
executive officer of the Company in January 1997. The footnotes to the table
provide additional information concerning the Company's compensation and
benefit programs.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------------- ---------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND FISCAL COMPENSATION AWARDS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) ($)(2) (#)(3) ($)(4)
------------------ ------ --------- --------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Millard S. Drexler...... 1996 1,780,385 1,350,000 135,367 0 120,000 6,037
President and Chief 1995 1,588,616 314,100 108,831 0 4,062,500 10,100
Executive Officer 1994 1,449,731 715,000 22,490 0 38,600 7,616
Donald G. Fisher........ 1996 1,058,047 787,313 273,219 N/A N/A 4,886
Chairman 1995 1,508,777 299,100 155,812 N/A N/A 10,008
1994 1,450,662 715,000 32,085 N/A N/A 9,606
Robert J. Fisher........
Executive Vice 1996 840,940 637,500 86,742 0 100,000 6,485
President 1995 694,162 137,500 1,399 840,625 1,034,000 9,782
Chief Operating Officer 1994 600,940 297,675 0 0 28,000 9,296
John B. Wilson.......... 1996 188,098 1,006,750 27,268 597,581 370,000 0
Executive Vice 1995 0 0 0 0 0 0
President, 1994 0 0 0 0 0 0
Chief Administrative
Officer(5)
Warren R. Hashagen...... 1996 311,660 175,000 822 0 24,000 5,450
Senior Vice President-- 1995 275,192 40,000 0 127,750 60,000 8,468
Chief Financial Officer 1994 249,038 110,000 0 180,750 9,200 7,936
Richard M. Lyons........ 1996 728,248 375,000 758 0 88,500 6,623
Executive Vice 1995 693,240 100,000 329 1,681,250 442,500 10,163
President-- 1994 581,324 288,000 0 0 28,000 9,717
Brand Development,
International
Division(6)
</TABLE>
- -------
(1) While the named executive officers enjoy certain perquisites, for fiscal
years 1994, 1995 and 1996 these did not exceed the lesser of $50,000 or
10% of each officer's salary and bonus. Except as set forth below, the
amounts listed for the named executive officers, if any, represent above-
market earnings on deferred compensation payable during the fiscal year
but deferred at their election under the Company's Executive Capital
Accumulation Plan and/or Executive Deferred Compensation Plan and/or
Supplemental Executive Retirement Plan. The amount listed for Mr. Wilson
includes relocation expenses reimbursed ($12,602); tax gross-up payments
in connection with the reimbursement ($11,812); and below-market interest
on a relocation loan ($2,854).
(2) Donald Fisher does not participate in the Company's restricted stock plan.
As of the end of fiscal 1996, the aggregate restricted stock holdings for
the named executives consisted of 2,294,300 shares worth $65,961,125 at
the then-current
6
<PAGE>
fair market value (as represented by the closing price of the Company's
Common Stock on January 31, 1997), without giving effect to the diminution
of value attributable to the restrictions on such stock. Such amount
included $57,500,000 for Mr. Drexler (2,000,000 shares), $2,587,500 for
Robert Fisher (90,000 shares), $583,625 for Mr. Wilson (20,300 shares),
$690,000 for Mr. Hashagen (24,000 shares), and $4,600,000 for Mr. Lyons
(160,000 shares). Dividends are paid on the restricted shares to the extent
payable on the Company's Common Stock generally. Of the named executive
officers, only Mr. Wilson received a restricted stock grant in fiscal year
1996, to compensate him for certain unvested stock options at a prior
employer. Unless otherwise noted in the following sentences, no shares
granted to the named executives vest in less than three years from the date
of grant. On October 16, 1996, Mr. Wilson was granted a total of 20,300
shares which will vest in full on October 16, 1997. On May 23, 1995, Mr.
Lyons was granted a total of 100,000 shares, vesting as follows: 10,000
shares on March 21, 1998, 40,000 shares on March 21, 1999 and 50,000 shares
on March 21, 2000.
(3) Donald Fisher does not participate in the Company's stock option plan.
(4) These amounts represent the Company's contributions to the Company's
GapShare Plan for fiscal years 1996, 1995 and 1994.
(5) Mr. Wilson joined the Company in October 1996.
(6) Mr. Lyons' responsibilities were changed significantly in January 1997. He
is no longer considered an executive officer of the Company.
The following two tables set forth certain information regarding stock
options granted to, exercised by and held by the executive officers named in
the foregoing Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------------
NUMBER OF PERCENT OF MARKET
SECURITIES TOTAL OPTIONS PRICE ON GRANT
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS GRANTED EMPLOYEES IN BASE PRICE DATE EXPIRATION PRESENT
NAME (#)(1) FISCAL YEAR ($/SH)(2) ($/SH) DATE(3) VALUE($)(4)
- ---- --------------- ------------- ----------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Millard S. Drexler...... 120,000 1.9% $33.0625 $33.0625 05/21/06 $1,464,672
Donald G. Fisher........ N/A N/A N/A N/A N/A N/A
Robert J. Fisher........ 100,000 1.6% $33.0625 $33.0625 05/21/06 $1,081,300
John B. Wilson(5)....... 300,000 4.8% $29.4375 $29.4375 10/16/06 $2,888,220
70,000 1.1% $14.7188 $29.4375 10/16/06 $1,212,204
Warren R. Hashagen...... 24,000 0.4% $33.0625 $33.0625 05/21/06 $ 259,512
Richard M. Lyons........ 88,500 1.4% $33.0625 $33.0625 05/21/06 $ 956,951
</TABLE>
- -------
(1) Except as noted below for Mr. Wilson, all options granted to the named
executive officers during fiscal 1996 will become exercisable in two equal
installments three and four years from date of grant. Under the terms of
the Company's 1996 Stock Option and Award Plan, the Compensation and Stock
Option Committee retains discretion, subject to plan limits, to modify the
terms of outstanding options. Donald Fisher does not participate in the
Company's stock option plan.
(2) Except as noted below for Mr. Wilson, all options were granted at market
value (average of high and low stock prices for the Company's Common Stock
as reported in the Western edition of The Wall Street Journal) at date of
grant.
(3) All options granted in fiscal 1996 were granted for a term of ten years,
subject to termination 90 days following termination of employment in
certain events.
(4) This column represents the present value of the options on the grant date
using the Black-Scholes option pricing model for the Common Stock,
utilizing the following assumptions: five-year stock price volatility of
0.30; dividend yield of 1%; 4.68 to 5.75-year expected option terms; 5.5
to 6.5% risk-free interest rate; and no adjustment for non-transferability
or forfeiture. The actual value, if any, that an executive officer may
realize will depend on the excess of the market price over the exercise
price on the date the option is exercised so that there is no assurance
that the value realized by an executive will be at or near the value
estimated by the Black-Scholes model, which is based on arbitrary
assumptions as to the variables of stock price volatility, future dividend
yield and interest rate. For an estimate of the impact of all stock option
grants on the Company's financial results using the Black-Scholes
valuation method, see note G to the Consolidated Financial Statements in
the Company's Annual Report to Stockholders for the fiscal year ended
February 1, 1997.
7
<PAGE>
(5) The 300,000 options granted to Mr. Wilson will become exercisable in three
equal installments two, three and four years from date of grant. The
70,000 options will become exercisable as follows: 42,000 shares on
February 1, 1998 and 28,000 shares on October 16, 1999. These shares were
granted at a 50% discount off fair market value to compensate him for
certain unvested stock options at a prior employer.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED OPTIONS AT FY-END(#) OPTIONS AT FY-END($)
NAME ON EXERCISE(#) VALUE REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---- --------------- ----------------- ------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Millard S. Drexler...... 80,000 1,800,000 198,600 4,221,100 3,326,288 37,861,459
Donald G. Fisher(2)..... N/A N/A N/A N/A N/A N/A
Robert J. Fisher........ 10,000 234,375 119,800 1,162,000 1,942,184 11,243,188
John B. Wilson.......... 0 0 0 370,000 0 971,250
Warren R. Hashagen...... 4,000 93,875 62,400 93,200 1,142,000 655,488
Richard M. Lyons........ 42,400 601,725 7,200 559,000 62,100 5,828,078
</TABLE>
- -------
(1) Represents the difference between the closing price of the company's
Common Stock on January 31, 1997 and the exercise price of the options.
(2) Donald Fisher does not participate in the Company's stock option plan.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
When John B. Wilson joined the Company in October 1996, the Company entered
into an arrangement with him providing for the grant of 20,300 shares of
restricted stock and options to purchase 370,000 shares (70,000 at a
discount). See the tables above entitled "Summary Compensation Table" and
"Option Grants in Last Fiscal Year." Mr. Wilson received the restricted stock
and a portion of the options to compensate him for certain unvested stock
options at a prior employer. Mr. Wilson agreed with the Company that if he
receives any acceleration of those stock options ("Accelerated Stock"), then
his grant of restricted stock and stock options will be reduced by his pre-tax
gain on the Accelerated Stock. For this purpose, Mr. Wilson's pre-tax gain on
the Accelerated Stock will be calculated as of the market value on the
accelerated vesting date ("Vesting Date"). Fifty percent of the gain (up to a
maximum of $1.15 million) will be used to reduce the value of his restricted
stock and option grant from the Company by first reducing the number of shares
of restricted stock (calculated at their market value on the Vesting Date) and
then reducing the number of discounted option shares, until the $1.15 million
maximum is recaptured by the Company. In addition, in the event that Mr.
Wilson is involuntarily terminated for any reason other than cause within the
first 24 months of employment, the Company will provide him with the following
protection: (i) one year of severance pay at his then-effective base rate,
payments to cease as soon as new employment is effective; (ii) if his
termination occurs prior to October 16, 1997, the vesting of his shares of
restricted stock which vest in October 1997 will be accelerated to the date of
termination; and (iii) if his termination occurs prior to February 1, 1998,
the vesting of his discounted options which vest in February 1998 (42,000
shares) will be accelerated to the date of termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee of the Board of Directors
consists of Ms. Fjeldstad and Messrs. Bellamy, Bowes, and Lillie, all of whom
are outside directors.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board of Directors is
responsible for reviewing and approving the Company's compensation policies
and the compensation paid to executive officers. The Committee is comprised of
the members named below, all of whom are non-employee Directors.
8
<PAGE>
COMPENSATION PHILOSOPHY
The general philosophy of the Company's compensation program, which has been
reviewed and approved by the Committee, is to offer employees competitive
compensation opportunities based both on the Company's performance and on the
individual's contribution and performance. Corporate and divisional
performance are evaluated by reviewing the extent to which financial and
strategic goals are met, including such factors as profitability, sales growth
and expense control. These performance criteria are reviewed each year to
ensure that they are consistent with the Company's mission and strategies.
Officers are also given annual goals and their individual performance is
evaluated by reviewing progress against these objectives.
The Company's compensation policies are intended to motivate and reward
highly qualified executives for long-term strategic management and the
enhancement of stockholder value, to support a performance-oriented
environment that rewards achievement of specific internal Company and
individual goals, and to attract and retain executives whose abilities are
critical to the long-term success and competitiveness of the Company. The
program is heavily oriented toward incentive compensation tied to the annual
and longer-term financial performance of the Company and to the longer-term
return realized by the Company's stockholders.
There are three main components in the Company's executive compensation
program:
. Base Salary
. Annual Incentives
. Long-Term Incentives
BASE SALARY
Executive officers' salaries have been targeted at or above the average
rates paid by competitors to enable the Company to attract, motivate, reward
and retain highly skilled executives. The Committee believes that the
historical growth in the Company's revenues, stores and profitability has made
the Company a target for other companies seeking employees and that,
therefore, these rates are necessary to retain key officers. The Committee
reviews the performance of and approves salaries for the Chief Executive
Officer and the executive officers on an annual basis, generally in the first
quarter.
The Committee believes that the market for retailing executives, and thus
the relevant competitive data, includes a broader group of companies than that
shown in the stock price performance graph presented in this proxy statement
on page 12. Thus, in reviewing the 1996 salaries for executive officers, the
Committee examined salary increase surveys for specialty retail and general
industry groups which were prepared by national consulting companies. Salaries
were adjusted based on actual individual job performance and/or changes in a
person's duties and responsibilities.
Mr. Drexler's base salary for fiscal year 1996 was $1,800,000, representing
an increase of 7% over the prior year. In setting the Chief Executive
Officer's 1996 salary, the Committee considered the Company's 1995 results,
future objectives and challenges, and Mr. Drexler's individual performance and
contributions. The Company's 1995 performance was judged by the Committee to
be below expectations but good compared to industry/competitor results. The
Committee reviewed in detail Mr. Drexler's achievement of his 1995 goals and
his individual contributions to the Company. The Committee concluded that he
had achieved his 1995 goals and had provided a leadership role in achieving
the Company's three strategic priorities for 1995: growing earnings, enhancing
employee performance and satisfaction, and exceeding customers' expectations.
The Committee also considered Mr. Drexler's decisive management of operational
and strategic issues, his drive to reinforce a culture of innovation and his
ability and dedication to enhance the long-term value of the Company for the
stockholders. The Committee believes that Mr. Drexler has continued to provide
the leadership and vision that he has provided throughout his 14-year tenure
as a Company executive, during which, on a compound annual growth basis, the
Company's earnings increased by 26%, sales by 19% and market value by 34%. In
making its salary decisions with respect to Mr. Drexler, the Committee
exercised its discretion and judgment based on the above factors, and no
specific formula was applied to determine the weight of each factor.
ANNUAL INCENTIVE BONUS
Annual incentive bonuses for executive officers are intended to reflect the
Committee's belief that a significant portion of the annual compensation of
each executive officer should be contingent upon the performance of the
Company.
9
<PAGE>
To carry out this philosophy, the Company has implemented a performance-
based Executive Management Incentive Cash Award Plan (Executive MICAP), in
which executive officers are measured solely on Company performance targets.
As a pay-for-performance plan, the Executive MICAP is intended to motivate and
reward executive officers by directly linking the amount of any cash bonus to
specific corporate and/or divisional financial goals. Specific measurements
are chosen each year among earnings, sales growth and volume, return on
assets, and/or return on equity; and threshold, target and maximum payout
levels are established to reflect the Company's objectives. These goals and
the potential bonuses are reviewed and approved by the Committee in the first
quarter of each year. Under the 1996 guidelines adopted by the Committee,
executive officers were eligible to receive between 16.6% and 75% of their
salary as a bonus, depending on actual earnings performance compared to target
earnings goals set for each division. Actual bonus amounts are calculated
within this range pursuant to a set formula which takes into account the
growth potential of a division, the extent to which earnings goals were
achieved, and the grade level of the officer.
The Company's 1996 performance was judged by the Committee to be excellent.
The Company achieved record earnings and surpassed its financial goals for the
year. As a result, the Chief Executive Officer and other named executive
officers received annual incentive bonuses for 1996 which aggregated
$3,482,563 and which were at maximum levels.
The Chief Executive Officer was eligible to receive between 16.6% and 75% of
his base salary as a bonus under the 1996 guidelines adopted by the Committee.
Because the Company exceeded its goals and achieved superior results, the
actual bonus received by Mr. Drexler was 75% of his base salary.
The Committee believes that the Executive MICAP program provides an
excellent link between annual results and the incentives paid to executives.
LONG-TERM INCENTIVES
Long-term incentives represent over half the total income opportunity for
executive officers. These incentives create a direct linkage between executive
rewards and increased stockholder value by delivering approximately 50% of the
compensation opportunity through stock options and 50% through a cash
performance plan with three-year overlapping performance cycles. This
compensation program is designed to balance Company performance, individual
performance and individual risk.
The Committee believes that executive officers and other key employees
should have significant ownership of the Company's stock. Notably, all
executive officers as a group own approximately 29.8% of the outstanding
shares of Common Stock. In particular, Mr. Donald Fisher, the Company's
founder and Chairman, owns jointly with his wife Doris Fisher approximately
23.9% of the outstanding shares.
Long-Term Performance Plan
In order to emphasize its compensation philosophy oriented to longer-term
results, the Company has implemented an Executive Long-Term Cash Performance
Plan (ELCAPP), in which officers are measured and compensated on Company
and/or business unit performance targets. A three-year performance cycle is
established each year, with participants receiving a cash payout if certain
minimum, target or maximum predetermined performance goals are achieved at the
end of the cycle. As a pay-for-performance plan, the ELCAPP is intended to
motivate and reward executive officers by directly linking the amount of any
cash bonus to specific corporate and/or divisional long-term financial goals.
Specific measurements are chosen each year for each successive three-year
cycle. The type of measurements include comparable store sales, earnings,
return on equity, return on net assets, return on invested capital, sales
volume and total sales. Threshold, target and maximum payout levels are
established to reflect the Company's objectives. These goals and the potential
amounts of executive officer bonuses are reviewed and approved by the
Committee in the first quarter of each year. Under the 1997 guidelines adopted
by the Committee, executive officers will be eligible to receive between 30%
and 100% of their salary as a bonus, depending on actual performance compared
to target goals set for each division. Actual bonus amounts are calculated
within this range pursuant to a set formula which takes into account the
growth potential of a division, the extent to which earnings goals were
achieved, and the grade level of the officer. Because the ELCAPP was
established in 1996, no payouts have yet been made under the plan for the
1996-98 cycle.
10
<PAGE>
Stock Option and Award Plan
The Committee has the power to grant both stock options and restricted stock
under the Company's 1996 Stock Option and Award Plan. With respect to
executive officers, it has been the Committee's practice to grant stock
options on an annual basis, usually in the first quarter. Generally, the
options vest in two equal installments three and four years from date of grant
and executives must be employed by the Company at the time of vesting in order
to exercise the options. The Committee has discretion to grant discounted
stock options and it has done so when it felt it was necessary to attract
and/or retain key executives. The Committee believes that stock option grants
provide an incentive that focuses the executives' attention on managing the
Company from the perspective of an owner with an equity stake in the business.
The Company's stock options are tied to the future performance of the
Company's stock and will provide value to the recipient only when the price of
the Company's stock increases above the option grant price, that is, only to
the extent that stockholders as a whole have benefitted.
In order to determine the appropriate number of options to be granted to its
executive officers, in 1996 the Company relied on competitive guidelines
prepared by an independent outside compensation consultant based on practices
for a wide array of companies in a large number of industries. The consultant
was solely responsible for the criteria used to select the companies included
in the comparison group. The calculations underlying these guidelines are
based on the grant value of the option (i.e., number of shares times the
exercise price) in relation to the employee's salary and performance level.
The Company's actual 1996 option grants to executive officers were in line
with those ranges. The size of each grant was based on a range of potential
shares (high, medium, low) for each eligible employee's salary level. Actual
shares awarded were based on the score obtained by eligible employees on their
yearly individual performance evaluation. No consideration was given to the
amount of shares previously granted to executive officers.
In 1996, Mr. Drexler was granted options to purchase 120,000 shares at
market value at the date of grant. The shares become exercisable in two equal
installments three and four years from date of grant. This grant is consistent
with the Committee's philosophy that at-risk compensation should comprise a
significant part of an executive's overall compensation.
In the past, restricted stock grants were also a significant part of the
Company's long-term incentives. Under the new guidelines set by the Committee
in fiscal year 1996, restricted stock was de-emphasized as a long-term
compensation vehicle for executives, in favor of a combination of the long-
term performance plan and stock options and was refocused as a tool for
recruiting and retaining key employees. Generally, restrictions on the shares
lapse in three to five years from the grant date and the employee must be
employed by the Company on the date the restrictions lapse in order to receive
the stock. The ultimate value of any restricted stock received varies based
both on the amount of dividends which may be paid and on the value of the
stock at the time when shares vest.
Mr. Drexler was not granted any restricted stock during fiscal year 1996.
IMPACT OF SECTION 162(M) OF THE INTERNAL REVENUE CODE
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code on its compensation plans and has determined that it is
the Company's preference to qualify to the maximum extent possible its
executives' compensation for deductibility under applicable tax laws. The
Company's compensation plans have been designed to permit the Committee to
grant awards (other than restricted stock) which qualify for deductibility
under Section 162(m).
In addition, to allow for full deductibility of base salaries, those Named
Executive Officers whose base salaries exceed the $1,000,000 limit have in the
past deferred that portion of their compensation above the limit under either
or both of the Company's nonqualified deferred compensation plans, the
Executive Capital Accumulation Plan and the Executive Deferred Compensation
Plan.
John M. Lillie (Chairman)
Adrian D. P. Bellamy
John G. Bowes
Lucie J. Fjeldstad
11
<PAGE>
PERFORMANCE GRAPH
The graph below compares the percentage changes in the Company's cumulative
total stockholder return* on its Common Stock for the five-year period ended
February 1, 1997, with the cumulative total return of the S&P 500 Index and
the Dow Jones Retailers-All Specialty Index.
[PERFORMANCE GRAPH APPEARS HERE]
The following chart represents data points on the performance graph which
appears in the printed version of the proxy.
<TABLE>
<CAPTION>
Cumulative Total Return
<S> <C> <C> <C> <C> <C> <C>
1/92 1/93 1/94 1/95 1/96 1/97
Gap Inc. 100 65 81 63 93 114
S&P 500 100 111 125 125 174 220
DJ Retailers 100 115 109 113 120 144
All Specialty Index
</TABLE>
- -------
* Total return assumes quarterly reinvestment of dividends.
OTHER REPORTABLE TRANSACTIONS
The Company has an agreement with Fisher Development, Inc. ("FDI"), which is
wholly owned by Robert S. Fisher, the brother of Donald G. Fisher, the
Chairman and a principal stockholder of the Company. The agreement, which is
reviewed annually by the Audit and Finance Committee of the Board of
Directors, sets forth the terms under which FDI may act as general contractor
in connection with the Company's construction activities. During the 1996
fiscal year, FDI supervised the construction of new store leasehold
improvements for 177 stores, expansions of 38 stores, and remodels of existing
stores and administrative offices. The total cost of such construction was
$111,871,000, including profit and overhead costs of $10,751,000 paid by the
Company to FDI relating to this construction.
Robert J. Fisher and William S. Fisher, adult sons of Donald G. and Doris F.
Fisher, are employed as: Executive Vice President and Chief Operating Officer
of the Company; and President, International Division of the Company,
respectively. Robert J. Fisher is also a director of the Company. William S.
Fisher was paid a salary and bonus of $652,706 during the 1996 fiscal year;
Company contributions to his account under GapShare for fiscal year 1996
amounted to $5,707.
Comparable transactions with the persons described above are expected to
continue during the current fiscal year.
Pursuant to the Company's Relocation Loan Plan, on November 30, 1996, the
Company made a $550,000 loan to Mr. Wilson at the interest rate of 3% per
year, secured by a second mortgage on his home and by the stock granted to him
under the Company's 1996 Stock Option and Award Plan. The loan is payable in
full on November 25, 2001, or earlier upon termination of employment. Mr.
Wilson is also required to apply a prorata share of the proceeds of any sale
of stock options to decrease the amount of this loan. Interest on the loan is
payable via bi-weekly payroll deductions. The amount outstanding on April 15,
1997 with respect to this loan was $550,000.
12
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange. Officers, directors and greater than
ten percent stockholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the period from
February 4, 1996 to February 1, 1997, all filing requirements applicable to
its officers, directors and greater than ten percent beneficial owners were
complied with, except that in February 1997 Mr. Hashagen reported on a Form 4
filed two days late one transaction involving a stock option exercise and sale
of the underlying stock.
PROPOSAL NO. 2
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending January 31, 1998. Deloitte
& Touche LLP has acted as auditors for the Company since 1972. Although action
by the stockholders is not required by law, the Board of Directors has
determined that it is desirable to request approval of this selection by the
stockholders of the Company. If the stockholders fail to approve the selection
of such auditors, the Board of Directors will reconsider the selection.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting of Stockholders and available to make statements to, and
respond to appropriate questions of, stockholders.
OTHER BUSINESS
The Company's management is not aware of any other matters to come before
the meeting. If any matter not mentioned herein is properly brought before the
meeting, the persons named in the enclosed proxy will have discretionary
authority to vote all proxies with respect thereto in accordance with their
judgment.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the next annual
meeting must be received by the Company for inclusion in the Company's proxy
statement and form of proxy relating to that meeting on or before December 1,
1997. Proposals should be addressed to the Company's Secretary at One Harrison
Street, San Francisco, California 94105.
By Order of the Board of Directors,
/s/ANNE B. GUST
---------------
Anne B. Gust
Secretary
13
<PAGE>
THE GAP, INC.
-------------
ANNUAL MEETING OF STOCKHOLDERS - MAY 20, 1997
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Donald G. Fisher, Warren R. Hashagen and Anne B.
Gust, or any of them, each with full power of substitution, as proxies to vote
all shares of common stock of The Gap, Inc. which the undersigned is entitled to
vote at the Annual Meeting of Stockholders to be held on May 20, 1997, and any
postponements and adjournments thereof, on all matters properly coming before
the meeting.
IMPORTANT - THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE
REVERSE SIDE. IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL
---
NOMINEES LISTED ON THE REVERSE SIDE, FOR PROPOSAL 2, AND, WITH RESPECT TO ANY
---
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING, IN ACCORDANCE WITH THE
DISCRETION OF THE PROXIES.
THE GAP, INC.
PLEASE MARK IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
1. Election of Directors, Nominees: FOR WITHHOLD FOR ALL
Adrian D. P. Bellamy, John G. Bowes, ALL ALL EXCEPT AS
Millard S. Drexler, Donald G. Fisher, LISTED
Doris F. Fisher, Robert J. Fisher,
Lucie J. Fjeldstad, William A. Hasler,
John M. Lillie, Charles R. Schwab, Brooks Walker, Jr.
____________________________________________
2. Ratify the appointment of Deloitte & Touche LLP FOR AGAINST ABSTAIN
as independent auditors.
Date: ___________________________________________, 1997
_______________________________________________________
(Signature)
_______________________________________________________
(Signature)
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as Attorney, executor, administrator, trustee or guardian, please
give full title as such.
