<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:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the Commission
only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Under Rule 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)(1) 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:
------------------------------------------------------------------------
<PAGE>
PROXY
Notice of Annual Meeting
of Gap Inc. Shareholders and
Proxy Statement
May 5, 2000
Gallatin, Tennessee
Gap Banana Republic Old Navy
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 5, 2000
To Our Shareholders:
The Annual Meeting of Shareholders of The Gap, Inc. (the "Company") will be held
at The Gap, Inc.'s Distribution Center located at 200 Gap Boulevard, Gallatin,
Tennessee, on Friday, May 5, 2000 at 10:00 a.m., for the following purposes:
1.To elect a Board of Directors;
2.To approve the Company's Executive Management Incentive Cash Award Plan;
3.To ratify the selection of Deloitte & Touche LLP as independent auditors for
the Company for the fiscal year ending on February 3, 2001; and
4.To attend to other business properly presented at the meeting.
These items of business are more fully described in the Proxy Statement
following this Notice.
You must be a shareholder of record at the close of business on March 10, 2000,
to vote at the Annual Meeting. A complete list of shareholders entitled to vote
at this meeting will be available for inspection at our offices at One Harrison
Street, San Francisco, California. Whether or not you plan to attend the Annual
Meeting, please either complete, date, sign and return the enclosed proxy card
or vote your shares by touch-tone telephone from the U.S. and Canada, using the
toll-free telephone number on your proxy card, or via the internet.
If you plan to attend the meeting and you are a shareholder of record (your
shares are in your name), you must bring the enclosed admission ticket and
identification with you to the meeting. If you plan to attend the meeting and
your shares are held in "street name" (your shares are held through a broker or
bank), check the box on the right side of the card so that your broker can send
you a legal proxy. Please bring the legal proxy and identification to the
meeting. YOU WILL NOT BE ALLOWED TO ATTEND THE MEETING WITHOUT THIS PROOF OF
SHARE OWNERSHIP.
By Order of the Board of Directors,
/s/ Anne B. Gust
Anne B. Gust
Secretary
April 3, 2000
Gap Banana Republic Old Navy
<PAGE>
THE GAP, INC.
ONE HARRISON STREET, 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 Shareholders of the Company to be held on May 5, 2000 at 10:00 a.m.
at The Gap, Inc.'s Distribution Center located at 200 Gap Boulevard, Gallatin,
Tennessee, and at any adjournment thereof. This statement and the enclosed form
of proxy were first sent to shareholders on or about April 3, 2000.
The Proxy
The persons named as proxyholders were selected by our Board of Directors and
are officers of the Company.
The proxyholders will vote all proxies, or record an abstention or withholding,
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;
FOR the approval of the Company's Executive Management Incentive Cash Award
Plan; and
FOR the ratification of the selection of Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending February 3, 2001.
We will pay 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. In addition to
solicitation by mail, certain of our officers, directors and employees (who will
receive no extra compensation for their services) or a proxy solicitation firm
retained by us, may solicit proxies by telephone, fax or in person.
You may revoke your proxy at any time before its exercise. You may also revoke
your proxy by voting in person at the Annual Meeting.
Voting Securities and Voting Rights
The only outstanding voting securities of the Company are its shares of common
stock, of which 851,577,689 shares were outstanding at the close of business on
March 10, 2000. Only shareholders of record at the close of business on that
date are entitled to vote at the meeting. Each shareholder is entitled to one
vote per share on each matter submitted at the meeting. All share amounts in
this Proxy Statement have been restated to reflect stock splits.
The election inspector(s) appointed for the Annual Meeting will determine
whether or not a quorum is present and will tabulate votes cast by proxy or in
person at the Annual Meeting. The holders of a majority of the outstanding
shares of our common stock, present in person or by proxy, will constitute a
quorum for the transaction of business at the Annual Meeting. Election of
directors by shareholders will be determined by a plurality of the votes of the
shares present in person or by proxy at the Annual Meeting and entitled to vote
on the election of directors. Approval of the proposal to approve the Company's
Executive Management Incentive Cash Award Plan requires the affirmative vote of
a majority of the shares present in person or by proxy at the Annual Meeting and
entitled to vote. Approval ofthe Board of Directors' selection of Deloitte &
Touche LLP as independent auditors for the Company requires the affirmative vote
of a majority of the shares present in person or by proxy at the Annual Meeting
and entitled to vote.
Abstentions are included in the determination of shares present for quorum
purposes. Because abstentions represent shares entitled to vote, the effect of
an abstention will be the same as a vote against a proposal. However,
abstentions will have no effect on the election of directors.
If you hold shares in "street name" through a broker or other nominee, your
broker or nominee may not be permitted to exercise voting discretion with
respect to certain matters to be acted upon. If you do not give your broker or
nominee specific instructions, your shares may not be voted on those matters and
will not be considered as present and entitled to vote with respect to those
matters. Shares represented by such "broker non-votes" will, however, be counted
in determining whether there is a quorum.
Proxy 00 01
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominees for Election as Directors
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 persons whose names are set forth below, all of whom are current
directors. In the absence of instructions to the contrary, shares represented by
the proxy will be voted for the election of all these 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>
Name, Age, Principal Occupation During Past Five Years and Other Information Served as Director Since
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Adrian D. P. Bellamy, 58 1995
- ------------------------------------------------------------------------------------------------------------------------------
Chairman of Gucci Group NV, luxury accessories and apparel manufacturer and retailer; Director of Reckitt Benckiser plc, The Body
Shop International plc, Shaman Pharmaceuticals Inc. and Williams-Sonoma, Inc. Chairman and Chief Executive Officer of DFS Group
Limited, specialty retailer, 1983-95.
Member of the Compensation and Stock Option Committee
Member of the Corporate Governance Committee
Evan S. Dobelle, 54 1999
- ------------------------------------------------------------------------------------------------------------------------------
President of Trinity College, Hartford, CT, since 1995. Chancellor of City College of San Francisco, 1990-95.
Member of the Audit and Finance Committee
Member of the Corporate Governance Committee
Millard S. Drexler, 55 1983
- ------------------------------------------------------------------------------------------------------------------------------
Chief Executive Officer of the Company since 1995, President of the Company since 1987, Chief Executive Officer of the Gap Division
since 1987 and Chief Executive Officer of Old Navy Inc. since 1997. Chief Operating Officer of the Company, 1993-95; Chief Executive
Officer of Banana Republic, Inc., 1988-97. Director of Restoration Hardware, Inc. and Apple Computer, Inc.
Donald G. Fisher, 71 1969
- ------------------------------------------------------------------------------------------------------------------------------
Chairman of the Company since 1969. Chief Executive Officer of the Company, 1969-95. Director of The Charles Schwab Corporation,
Vodafone AirTouch plc and Cornerstone Properties Inc.
Member of the Corporate Governance Committee
(Donald G. Fisher and Doris F. Fisher are husband and wife)
Doris F. Fisher, 68 1969
- ------------------------------------------------------------------------------------------------------------------------------
Merchandising consultant to the Company.
(Donald G. Fisher and Doris F. Fisher are husband and wife)
Robert J. Fisher, 45 1990
- ------------------------------------------------------------------------------------------------------------------------------
Executive Vice President of the Company, 1992-99; President of Gap Division 1997-99; Chief Operating Officer of the Company, 1992-93
and 1995-97; and Chief Financial Officer of the Company, 1993-95. Director of Sun Microsystems, Inc.
(Robert J. Fisher is the son of Donald G. and Doris F. Fisher)
Glenda A. Hatchett, 48 1999
- ------------------------------------------------------------------------------------------------------------------------------
Consultant since 1999. Chief Judge, Fulton County Juvenile Court, Atlanta, Georgia, 1991-99. Director of Columbia/HCA Healthcare
Corporation and The ServiceMaster Company.
Member of the Compensation and Stock Option Committee
Member of the Corporate Governance Committee
</TABLE>
Gap Banana Republic Old Navy
<PAGE>
<TABLE>
<S> <C>
Steven P. Jobs, 45 1999
- ------------------------------------------------------------------------------------------------------------------------------
Chief Executive Officer, Apple Computer, Inc., a computer hardware and software company, since 2000; Interim Chief Executive Officer
1997-2000. Chairman, Pixar, a software company, since 1991; Chief Executive Officer since 1986; President since 1995. Chairman and
Chief Executive Officer, NeXT Software, Inc., a software company, from 1985-97. Director of Apple Computer, Inc.
Member of the Corporate Governance Committee
John M. Lillie, 63 1992
- ------------------------------------------------------------------------------------------------------------------------------
President, Sequoia Associates LLC, private investment firm, since 1998. Chairman, The Epic Team, bicycle and accessory products,
1996-98; and Chairman and Chief Executive Officer of American President Companies, Ltd., transportation company, 1992-95. Director
of Consolidated Freightways, Ltd and Walker Interactive Systems, Inc.
Member of the Compensation and Stock Option Committee
Member of the Corporate Governance Committee
Charles R. Schwab, 62 1986
- ------------------------------------------------------------------------------------------------------------------------------
Chairman and Co-Chief Executive Officer of The Charles Schwab Corporation, financial services firm, since 1997. Chairman and Chief
Executive Officer of The Charles Schwab Corporation, 1986-97. Director of Vodafone AirTouch plc and Siebel Systems, Inc.
Member of the Audit and Finance Committee
Member of the Corporate Governance Committee
Brooks Walker, Jr., 71 1972
- ------------------------------------------------------------------------------------------------------------------------------
General Partner, Walker Investors, venture capital investment partnership, since 1979. Director of Pope & Talbot, Inc.
Member of the Audit and Finance Committee
Member of the Corporate Governance Committee
Sergio S. Zyman, 54 1997
- ------------------------------------------------------------------------------------------------------------------------------
President, Z Group, consulting company, since 1998. Senior Vice President and Chief Marketing Officer of The Coca-Cola Company,
1993-98. Director of Netcentives Inc., Launch Media Inc. and CTN Media Group, Inc.
Member of the Audit and Finance Committee
Member of the Corporate Governance Committee
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 January 29, 2000.
</TABLE>
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 the non-employee directors and one
employee director.
The Audit and Finance Committee assists the Board of Directors in fulfilling its
oversight responsibilities relating to the quality and integrity of the
accounting, auditing, and reporting practices of the Company. The functions of
the committee include (i) recommending the engagement of the Company's
independent auditors and reviewing with them the plan, scope and results of
their audit for each year, (ii) reviewing with the Company's Consulting and
Auditing Services department the plan, scope and results of their operations,
(iii) considering and reviewing other matters relating to the financial and
accounting affairs of the Company, and (iv) overseeing the Company's Corporate
Compliance Program. 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. Dobelle, Schwab,
Walker (who is Chairman) and Zyman.
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 and divisional officers under the Company's Relocation Loan Plan, to
grant stock and options to purchase stock to selected employees under the
Company's stock plans, to make awards under the Company's annual and long-term
incentive plans to key employees, and to make recommendations to the Board
concerning the compensation of non-employee directors. This committee is
composed exclusively of directors who have not received stock options or awards
under the Company's stock plans (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 and Lillie (who is Chairman), and Ms. Hatchett.
Proxy 02 03
<PAGE>
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 directors, the size and function of
the Board of Directors, the functions and duties of the committees of the Board,
the effectiveness and procedures of the Board, retirement policies of non-
employee directors, and succession planning for important Company functions. The
present members of the Corporate Governance Committee are Messrs. Bellamy (who
is Chairman), Dobelle, Donald Fisher, Jobs, Lillie, Schwab, Walker, and Zyman,
and Ms. Hatchett.
During the last fiscal year, the Board of Directors held five meetings, the
Compensation and Stock Option Committee held three meetings, the Audit and
Finance Committee held three meetings and the Corporate Governance Committee
held no meetings. Each director attended at least 75% of the Board meetings and
committee meetings on which he or she served.
Compensation of Directors
We do 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, we reimburse travel
expenses to attend Board and committee meetings. All directors are eligible to
receive discounts on Company merchandise.
We pay each of our non-employee directors 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. Mr. Jobs has elected not to receive the retainer.
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 on a
quarterly basis in exchange for an option to purchase 937 shares of our common
stock per quarter. Any such option will have an exercise price which is
discounted to reflect the amount of the foregone retainer, will be exercisable
immediately, and will have a maximum term of seven years. Shares issued under
the plan will come from treasury shares. Each non-employee director, except for
Messrs. Dobelle and Jobs, participated in the plan in fiscal 1999.
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 15,000 shares at the then-current fair market value; and (ii) each
continuing non-employee director automatically receives yearly an option to
purchase 3,750 shares at the then-current fair market value. All initial options
to new non-employee directors are granted on the date of appointment to the
Board. All continuing non-employee director options are granted on the first
business day after each annual meeting of shareholders. The options normally
become exercisable three years after the date of grant. In addition, the
Compensation and Stock Option Committee is authorized to grant discretionary
options to non-employee directors using treasury shares. Mr. Jobs elected not to
receive the initial stock option grant.
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. Directors in
office at January 27, 1997 are still eligible for plan benefits, assuming they
meet the requirements of the plan; however, the benefit payable will be capped
at the current level (i.e., 75% of $36,000).
In fiscal 1999, Doris Fisher received $24,001 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.
Gap Banana Republic Old Navy
<PAGE>
PROPOSAL NO. 2
APPROVAL OF THE COMPANY'S EXECUTIVE MANAGEMENT INCENTIVE CASH AWARD PLAN
The Board of Directors has adopted an amended and restated Executive Management
Incentive Cash Award Plan (the "Executive MICAP"), subject to shareholder
approval. Adoption of the amended and restated Executive MICAP is subject to the
approval of a majority of the shares of the Company's common stock that are
present in person or by proxy and entitled to vote at the Annual Meeting.
Background and Reasons for Amendment
Under section 162(m) of the Internal Revenue Code ("Section 162(m)"), the
federal income tax deductibility of compensation paid to the Company's Chief
Executive Officer and to each of its next four most highly compensated executive
officers may be limited to the extent that it exceeds $1 million in any one
year. The Company can deduct compensation in excess of that amount if it
qualifies as "performance-based compensation" under Section 162(m). The
Executive MICAP is intended to permit the Company to pay incentive compensation
that qualifies as performance-based compensation, thereby permitting the Company
to receive a federal income tax deduction for the payment of such incentive
compensation.
The Company originally adopted the Executive MICAP in order to provide financial
incentives for the Company's eligible officers to meet and exceed the Company's
annual financial goals. The primary changes to the Executive MICAP are to (1)
add a new performance goal (economic value added) that may be used in making
awards, and (2) change the general rule that requires a participant to forfeit
his or her award if the participant terminates employment before payment is made
in order to permit partial or full awards to be paid to participants who
terminate employment due to permanent disability or death.
Description of the Executive MICAP
The following paragraphs provide a summary of the principal features of the
Executive MICAP (as amended and restated) and its operation. The Executive MICAP
is set forth in its entirety as Exhibit A to this Proxy Statement. The following
summary is qualified in its entirety by reference to Exhibit A.
Purpose of the Executive MICAP
The Executive MICAP is intended to provide financial incentives for the
Company's eligible officers to meet and exceed the Company's annual financial
goals.
Administration of the Executive MICAP
The Executive MICAP is administered by the Compensation and Stock Option
Committee of the Company's Board of Directors (the "Committee"). The members of
the Committee must qualify as "outside directors" under Section 162(m). Subject
to the terms of the Executive MICAP, the Committee has the sole discretion to
determine the key employees who shall be granted awards, and the amounts, terms
and conditions of each award.
Eligibility to Receive Awards
Eligibility for the Executive MICAP is determined in the discretion of the
Committee. In selecting participants for the Executive MICAP, the Committee will
choose officers of the Company and its affiliates whose responsibilities
significantly influence Company results. For the 2000 fiscal year, there are six
participants in Executive MICAP. Participants in future years will be at the
discretion of the Committee, but it is currently expected that a similar number
of officers will participate each year.
Awards and Performance Goals
Under the Executive MICAP, the Committee will establish (1) a target award for
each participant, (2) the performance goals that must be achieved in order for
the participant to actually be paid an award, and (3) a formula for calculating
a participant's award, depending upon how actual performance compares to the
pre-established performance goals. Each participant's target award will be
expressed as a percentage of his or her base salary for the fiscal year (as
defined). A participant's award will increase or decrease as actual performance
increases or decreases. The period for measuring actual performance will be the
Company's fiscal year. The Committee may set performance goals that differ from
participant to participant. For example, the Committee may choose performance
goals based on either a Company-wide or divisional basis and/or a comparison of
actual performance by the Company or a division to actual performance by a group
of competitors determined in the discretion of the Committee.
Proxy 04 05
<PAGE>
There are a total of seven performance measures that may be used by the
Committee in setting the performance goals for any fiscal year. Specifically,
the performance goals applicable to any participant will provide for a targeted
level of achievement using one or more of the following measures: comparable
store sales growth, earnings, return on equity, return on net assets, sales
volume, total sales, and/or economic value added.
Comparable store sales growth means the Company's or a division's same store net
sales growth for the fiscal year in excess of the prior year. Earnings means
either (1) operating income of the Company or one of its divisions for a given
fiscal year less certain allocated expenses, or (2) income before interest and
taxes of the Company or one of its divisions. Return on equity means the
Company's or a division's earnings for the fiscal year, expressed as a
percentage of the Company's or a division's average shareholders' equity over
the fiscal year. Return on net assets means the Company's or a division's
earnings for the fiscal year, expressed as a percentage of the Company's or a
division's average assets for the fiscal year. Sales volume means the total
sales volume per store of the Company or one of its divisions for the fiscal
year. Total sales means the Company's or a division's net sales for the fiscal
year. Economic value added means the Company's or a division's net operating
profit after tax for a specific fiscal year less charges for use of capital
assets. At the beginning of each fiscal year, the Committee may determine that
one or more significant elements may be excluded from the calculation of any
performance goal.
Determination of Actual Awards
After the end of each fiscal year, the Committee will determine the extent to
which the performance goals applicable to each participant were achieved or
exceeded. The actual award (if any) for each participant will be determined by
applying the formula to the level of actual performance that was achieved. No
award is payable to a participant if the minimum performance level specified by
the Committee for the fiscal year is not achieved. In any event, no participant
may receive an actual award of more than $5 million for any fiscal year.
The Committee retains discretion to eliminate or reduce the actual award payable
to any participant below that which otherwise would be payable under the
applicable formula. The Committee does not have discretion to increase the award
otherwise payable to any participant under the applicable formula. Awards under
the Executive MICAP generally will be payable in cash on or about April 1
following the end of the applicable fiscal year. However, if a participant
terminates employment before payment is made, the participant will forfeit the
unpaid award. The only exception is that if termination of employment is due to
disability or death, the Committee has discretion to pay out part or all of the
award.
Pro Forma Benefits for the Executive MICAP
Given that payments under the Executive MICAP are determined by comparing actual
performance to the performance goals established by the Committee, it is not
possible to accurately predict the amount of benefits that will be paid under
the Executive MICAP. In March 2000, the Committee set performance goals for the
Company's 2000 fiscal year. The performance goals for the 2000 fiscal year
provide for a targeted level of achievement for earnings. The following table
sets forth the target awards that would be payable to the persons named in the
Summary Compensation Table and to all current executive officers as a group,
assuming that the performance goals established by the Committee for the 2000
fiscal year are exactly 100% achieved, the participants' salaries remain
constant, and the Committee chooses not to reduce the award otherwise payable to
any participant. There can be no assurance that these assumptions actually will
occur, and therefore there can be no assurance that the target awards shown
below will be paid.
Gap Banana Republic Old Navy
<PAGE>
<TABLE>
<CAPTION>
Executive MICAP
Name and Position Dollar Value
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Millard S. Drexler
President and Chief Executive Officer of the Company $1,725,000
- -------------------------------------------------------------------------------------------------------------------------------
Donald G. Fisher
Chairman of the Company 302,650
- -------------------------------------------------------------------------------------------------------------------------------
John B. Wilson
Chief Operating Officer of the Company 425,000
- -------------------------------------------------------------------------------------------------------------------------------
Anne B. Gust
Executive Vice President of the Company 247,500
- -------------------------------------------------------------------------------------------------------------------------------
Charles K. Crovitz
Executive Vice President of the Company 225,000
- -------------------------------------------------------------------------------------------------------------------------------
All current executive officers as a group 3,181,650
- -------------------------------------------------------------------------------------------------------------------------------
All directors who are not current executive officers (1) 0
- -------------------------------------------------------------------------------------------------------------------------------
All employees who are not current executive officers 0
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. The Company's non-employee directors are not eligible to participate in the
Executive MICAP.
Amendment and Termination of the Executive MICAP
The Board of Directors of the Company may amend or terminate the Executive MICAP
at any time and for any reason, provided, however, that any amendment shall be
subject to shareholder approval if necessary to ensure the Executive MICAP's
qualification under Section 162(m).
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF
THE COMPANY'S EXECUTIVE MANAGEMENT INCENTIVE CASH AWARD PLAN. Unless a contrary
choice is specified, the proxyholders will vote all proxies solicited by the
Board of Directors FOR approval of the plan.
PROPOSAL NO. 3
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending February 3, 2001. Deloitte &
Touche LLP has acted as auditors for the Company since 1972. If shareholders
fail to approve the selection of such auditors, the Board of Directors will
reconsider the selection.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE SELECTION OF
DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting and available to make statements to, and respond to appropriate
questions of, shareholders.
Proxy 06 07
<PAGE>
BENEFICIAL OWNERSHIP OF SHARES
The following table sets forth certain information as of March 10, 2000, 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>
Name of Beneficial Owner Shares Beneficially Owned (1) Additional Notes Percent of Class
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Directors and Executive Officers
- ------------------------------------------------------------------------------------------------------------
Adrian D. P. Bellamy 93,699 -- *
- ------------------------------------------------------------------------------------------------------------
Charles K. Crovitz 303,753 -- *
- ------------------------------------------------------------------------------------------------------------
Evan S. Dobelle 0 -- --
- ------------------------------------------------------------------------------------------------------------
Millard S. Drexler 10,896,612 (2) 1.3%
- ------------------------------------------------------------------------------------------------------------
Donald G. Fisher (3) (3)
and Doris F. Fisher 180,629,707 (3) 21.2% (3)
- ------------------------------------------------------------------------------------------------------------
Robert J. Fisher 53,441,508 (4, 5) 6.3%
- ------------------------------------------------------------------------------------------------------------
AnneB. Gust 292,208 -- *
- ------------------------------------------------------------------------------------------------------------
Glenda A. Hatchett 4,598 -- *
- ------------------------------------------------------------------------------------------------------------
Steven P. Jobs 0 -- --
- ------------------------------------------------------------------------------------------------------------
John M. Lillie 42,549 (6) *
- ------------------------------------------------------------------------------------------------------------
Charles R. Schwab 102,151 (7) *
- ------------------------------------------------------------------------------------------------------------
Brooks Walker, Jr. 439,124 (8) *
- ------------------------------------------------------------------------------------------------------------
John B. Wilson 169,366 -- *
- ------------------------------------------------------------------------------------------------------------
Sergio S. Zyman 21,033 (9) *
- ------------------------------------------------------------------------------------------------------------
All directors and executive officers as a group
(16 persons) 246,436,308 (10) 28.8%
- ------------------------------------------------------------------------------------------------------------
Certain Other Beneficial Holders
- ------------------------------------------------------------------------------------------------------------
John J. Fisher 55,197,326 (11) 6.5%
- ------------------------------------------------------------------------------------------------------------
AXA Assurances I.A.R.D. Mutuelle, AXA Assurances
Vie Mutuelle, AXA Counseil Vie Assurance Mutuelle,
AXA Courtage Assurance Mutuelle, AXA,
AXA Financial, Inc. 49,335,222 (12) 5.8%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* Indicates ownership of less than 1% of the outstanding shares of the
Company's common stock.
1. Shares issuable upon exercise of stock options that are exercisable within 60
days after March 10, 2000 are treated as beneficially owned as follows: Mr.
Bellamy, 61,299; Mr. Crovitz, 227,475; Mr. Drexler, 1,180,237; Mr. Robert
Fisher, 1,147,500; Ms. Gust, 274,050; Ms. Hatchett, 4,216; Mr. Lillie,
20,799; Mr. Schwab, 74,799; Mr. Walker, 74,799; Mr. Wilson, 168,750; Mr.
Zyman, 20,799; and all directors and executive officers as a group,
3,254,723.
2. Includes 281,250 shares held by the Peggy and Millard Drexler Family
Foundation of which Mr. Drexler disclaims beneficial ownership. Also includes
1,000,000 shares held in a Grantor Retained Annuity Trust (GRAT).
Gap Banana Republic Old Navy
<PAGE>
3. 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, the 180,629,707 shares beneficially owned by Donald G. Fisher
and Doris F. Fisher are beneficially owned by both of them, except that Mrs.
Fisher has no voting or dispositive power over 663,384 of such shares. Of the
shares shown, 65,047,440 shares are held as community property and 86,000,000
are held in a partnership. The remainder of the shares are held by the
Fishers as trustees for various foundations and trusts. Amounts shown include
663,384 shares held by the D2F2 Foundation, beneficial ownership of which is
disclaimed. Amounts shown exclude shares held directly or indirectly by the
Fishers' three adult sons, beneficial ownership of which is disclaimed.
4. 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.
5. Includes 1,577,475 shares held jointly by Robert Fisher and his spouse and
26,642,015 shares held by Robert Fisher as trustee under certain trusts.
Robert Fisher's address is One Maritime Plaza, Suite 1400, San Francisco,
California 94111.
6. Includes 21,750 shares held under the Lillie Family Living Trust, over which
Mr. Lillie and his wife share voting and investment power.
7. Includes 3,375 shares owned by Mr. Schwab's spouse and 200 shares owned by a
trust for which Mr. Schwab is the trustee.
8. Includes 182,800 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.
9. Includes 234 shares held by Mr. Zyman's minor children.
10.Reflects the information in the footnotes set forth above.
11.Includes 26,642,015 shares held by John Fisher as trustee under certain
trusts. John Fisher's address is One Maritime Plaza, Suite 1400, San
Francisco, California 94111.
12.The address of AXA Assurances I.A.R.D. Mutuelle and AXA Assurances Vie
Mutuelle is 21, rue de Chateaudun, 75009 Paris France. The address of AXA
Counseil Vie Assurance Mutuelle is 100-101 Terrasse Boieldieu, 92042 Paris La
Defense France. The address of AXA Courtage Assurance Mutuelle is 26, rue
Louis le Grand, 75002 Paris France. The address of AXA is 9 Place Vendome,
75001 Paris France. The address of AXA Financial, Inc. is 1290 Avenue of the
Americas, New York, New York 10104. Each entity listed, except AXA Financial,
Inc., indicates that it has sole voting power over 22,846,961 shares, shared
voting power over 11,802,947 shares, sole dispositive power over 49,262,520
shares and shared dispositive power over 72,702 shares. AXA Financial, Inc.
indicates that it has sole voting power over 22,659,461 shares, shared voting
power over 11,802,947 shares, sole dispositive power over 49,075,020 shares,
and shared dispositive power over 72,702 shares. AXA Financial, Inc.
indicates that its aggregate amount beneficially owned is 49,147,722 shares.
This disclosure is based on information contained in a report as of December
31, 1999 on Schedule 13G filed with the Securities and Exchange Commission
pursuant to Rule 13d-1(b) of the Securities Exchange Act of 1934, as amended.
Proxy 08 09
<PAGE>
EXECUTIVE COMPENSATION
Summary of Executive Compensation
The following table sets forth for the periods presented compensation paid to,
earned by or awarded to the Chief Executive Officer and the four other most
highly compensated executive officers of the Company in the fiscal year ended
January 29, 2000. The footnotes to the table provide additional information
concerning the Company's compensation and benefit programs.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
---------------------------------------------------
Name and Other Annual
Principal Position Fiscal Year Salary ($) Bonus ($) Compensation ($)(1)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Millard S. Drexler 1999 $2,154,084 $5,672,500 $ 13,618
President and Chief Executive 1998 1,976,870 5,335,000 0
Officer of the Company 1997 1,882,928 1,615,000 0
- ------------------------------------------------------------------------------------------------------
Donald G. Fisher 1999 566,570 572,400 0
Chairman of 1998 532,655 539,500 0
the Company 1997 499,274 425,000 0
- ------------------------------------------------------------------------------------------------------
John B. Wilson 1999 848,848 2,012,500 207,883
Chief Operating Officer 1998 721,926 1,537,074 462
of the Company 1997 626,794 531,250 156,030
- ------------------------------------------------------------------------------------------------------
Anne B. Gust 1999 466,925 752,000 0
Executive Vice President 1998 385,924 605,950 0
of the Company 1997 312,942 192,383 0
- ------------------------------------------------------------------------------------------------------
Charles K. Crovitz 1999 436,063 706,000 4,959
Executive Vice President 1998 395,745 613,500 0
of the Company (4)
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term Compensation Award
-------------------------------
Securities
Name and Restricted Stock Underlying All Other
Principal Position Fiscal Year Awards ($) Options (#)(2) Compensation ($)(3)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Millard S. Drexler 1999 $0 120,000 $ 20,494
President and Chief Executive 1998 0 5,402,250 492,896
Officer of the Company 1997 0 405,000 244,712
- ---------------------------------------------------------------------------------------------------------
Donald G. Fisher 1999 N/A N/A 7,649
Chairman of 1998 N/A N/A 866,244
the Company 1997 N/A N/A 492,278
- ---------------------------------------------------------------------------------------------------------
John B. Wilson 1999 0 75,000 5,501
Chief Operating Officer 1998 0 452,250 10,443
of the Company 1997 0 1,350,000 8,800
- ---------------------------------------------------------------------------------------------------------
Anne B. Gust 1999 0 75,000 6,361
Executive Vice President 1998 0 311,625 13,771
of the Company 1997 0 317,250 8,311
- ---------------------------------------------------------------------------------------------------------
Charles K. Crovitz 1999 0 31,500 6,186
Executive Vice President 1998 0 379,125 7,653
of the Company (4)
- ---------------------------------------------------------------------------------------------------------
</TABLE>
1. While the named executive officers enjoy certain perquisites, for fiscal
years 1997, 1998 and 1999 these did not exceed the lesser of $50,000 or 10%
of each executive officer's salary and bonus, except for perquisites of Mr.
Wilson in 1999 and 1997. The amount listed in 1999 for Mr. Drexler and Mr.
Crovitz represent tax gross-up payments. The amount listed for Mr. Wilson in
1999 includes $2,182 for tax gross-up payments and $167,178 for forgiveness
of interest on an interest free loan. The amount listed for Mr. Wilson in
1998 represents tax gross-up payments in connection with the reimbursement of
relocation expenses. The amount listed for Mr. Wilson in 1997 includes, among
other things, amounts paid to Mr. Wilson in connection with his relocation as
follows: $42,308 for temporary housing, $41,856 for tax gross-up payments in
connection with the reimbursement for temporary housing, and $43,562 for
closing costs.
2. Donald Fisher does not participate in the Company's stock option plan. Stock
option awards have been adjusted to reflect stock splits.
3. These amounts include earnings over 120% of applicable federal long-term rate
in accordance with Securities and Exchange Commission rules on deferred
compensation credited, but not paid or payable, during the fiscal year under
the Company's Executive Capital Accumulation Plan, Executive Deferred
Compensation Plan and/or Supplemental Executive Retirement Plan as follows:
Mr. Drexler, $14,035 for 1999, $486,184 for 1998, and $238,520 for 1997; Mr.
Donald Fisher, $1,097 for 1999, $858,892 for 1998, and $486,109 for 1997; Mr.
Wilson, $199 for 1999, $2,043 for 1998, and $477 for 1997; Ms. Gust $1,125
for 1999, $7,965 for 1998, and $1,617 for 1997; and Mr. Crovitz, $136 for
1999 and $1,138 for 1998. All remaining amounts shown represent the Company's
contributions to the Company's GapShare 401(k) Plan.
4. Mr. Crovitz became an executive officer in September 1998.
Gap Banana Republic Old Navy
<PAGE>
Stock Options
The following tables set forth certain information regarding stock options
granted to, exercised by and held by the executive officers named in the Summary
Compensation Table. All stock option awards in the following tables and
elsewhere in this Proxy Statement have been adjusted to reflect stock splits.
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year
- ---------------------------------------------------------------------------------------------------------------
Individual Grants
- ---------------------------------------------------------------------------------------------------------------
Percent of Total
Number of Options Granted Market Price
Securities Underlying to Employees Exercise or On Grant
Name Options Granted (#)(1,2) in Fiscal Year Base Price ($/Sh)(3) Date ($/Sh)(3)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Millard S. Drexler 120,000 1.0% $44.4375 $44.4375
- ---------------------------------------------------------------------------------------------------------------
Donald G. Fisher N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------
John B. Wilson 75,000 0.6% 44.4375 44.4375
- ---------------------------------------------------------------------------------------------------------------
Anne B. Gust 75,000 0.6% 44.4375 44.4375
- ---------------------------------------------------------------------------------------------------------------
Charles K. Crovitz 31,500 0.3% 44.4375 44.4375
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year
- ----------------------------------------------------------------
Individual Grants
- ----------------------------------------------------------------
Grant Date
Name Expiration Date (4) Value ($)(5)
- ----------------------------------------------------------------
<S> <C> <C>
Millard S. Drexler 3/29/09 $2,482,284
- ----------------------------------------------------------------
Donald G. Fisher N/A N/A
- ----------------------------------------------------------------
John B. Wilson 3/29/09 1,342,395
- ----------------------------------------------------------------
Anne B. Gust 3/29/09 1,342,395
- ----------------------------------------------------------------
Charles K. Crovitz 3/29/09 563,806
- ----------------------------------------------------------------
</TABLE>
1. 50% of the options listed vest on March 29, 2002 and the remaining 50% vest
on March 29, 2003.
2. 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 stock options. Donald Fisher does
not participate in the Company's stock option plans.
3. Average of high and low stock prices for the Company's common stock as
reported in NYSE - Composite Transactions for the date of grant.
4. All options granted in fiscal 1999 were granted for a term of ten years,
subject to termination 90 days following termination of employment in certain
events.
5. 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: stock price volatility of 35%; dividend yield of
0.21%; 4.78 to 6.24-year expected option terms; 6.59% to 6.73% 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 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 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 in the Notes to Consolidated Financial
Statements in the Company's Annual Report to Shareholders for the fiscal year
ended January 29, 2000.
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
- ---------------------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying 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>
Millard S. Drexler 168,750 $ 6,541,016 775,237 / 19,629,750 $29,397,047 / $655,605,560
- ---------------------------------------------------------------------------------------------------------------------------------
Donald G. Fisher (2) 0 0 0 / 0 0 / 0
- ---------------------------------------------------------------------------------------------------------------------------------
John B. Wilson 432,000 17,441,610 0 / 2,214,750 0 / 68,664,781
- ---------------------------------------------------------------------------------------------------------------------------------
Anne B. Gust 7,425 296,038 125,550 / 811,875 4,716,606 / 21,140,594
- ---------------------------------------------------------------------------------------------------------------------------------
Charles K. Crovitz 0 0 146,475 / 599,625 5,527,772 / 14,785,595
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. Represents the difference between the closing price of the Company's Common
Stock on January 28, 2000 ($44.375) and the exercise price of the options.
2. Donald Fisher does not participate in the Company's stock option plans.
Proxy 10 11
<PAGE>
Compensation Committee Interlocks and Insider Participation
During the fiscal year 1999, the Compensation and Stock Option Committee of the
Board of Directors consisted of Messrs. Bellamy and Lillie and Ms. Hatchett, all
of whom were non-employee directors.
Report of Compensation Committee 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.
Compensation Philosophy
The general philosophy of the Company's compensation program, which has been
reviewed and approved by the Committee, is to provide a competitive advantage to
the Company and rewards to the executives based both on the Company's
performance and on the individual's contribution to the Company. Corporate and
divisional performance are evaluated by reviewing the extent to which financial
and strategic goals are met, including such factors as profitability and sales
growth. 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
shareholder 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 shareholders.
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 above the average rates paid by
competitors to enable the Company to attract 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 and other professionals. 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 under the
heading "Performance Graph." Thus, in reviewing the 1999 salaries for executive
officers, the Committee examined market data and salary increase surveys for
specialty retail, consumer/branded goods and general industry groups which were
prepared by national consulting companies. Salaries were adjusted based on
actual individual job performance and/or changes in duties and responsibilities.
Mr. Drexler's base salary for fiscal year 1999 was $2.175 million, representing
an increase of 6% over the prior year. In setting the Chief Executive Officer's
1999 salary, the Committee considered the Company's 1998 results, future
objectives and challenges, and Mr. Drexler's individual performance and
contributions. The Company's 1998 performance was judged by the Committee to be
above expectations and very good compared to industry/competitor results. The
Committee reviewed in detail Mr. Drexler's achievement of his 1998 goals and his
individual contributions to the Company. The Committee concluded that he had
achieved his 1998 goals and had provided a leadership role in achieving the
Company's three strategic priorities for 1998: growing earnings and improving
the return on investments, developing employees and strengthening the brands.
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
shareholders. The Committee believes that Mr. Drexler has continued to provide
the leadership and vision that he has provided throughout his 16-year tenure as
a Company executive, during which, on a compounded annual growth basis, the
Company's net earnings increased by 28%, net sales by 22% and market value by
41%. 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.
Gap Banana Republic Old Navy
<PAGE>
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.
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
fiscal year. Under the 1999 guidelines adopted by the Committee, executive
officers were eligible to receive between 12% and 120% 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 extent to which
earnings goals were achieved and the grade level of the officer. No bonus is
paid if threshold goals are not met.
The Company's 1999 performance was judged by the Committee to be above
expectations. The Company achieved record earnings and surpassed its financial
goals for the year. The Chief Executive Officer was eligible to receive between
20% and 120% of his base salary as a bonus under the 1999 guidelines adopted by
the Committee. No bonus would have been paid to Mr. Drexler if threshold goals
were not met. Because the Company significantly exceeded its goals and achieved
superior results, the actual bonus received by Mr. Drexler was 120% of his base
pay.
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 shareholder value by delivering a significant portion of
total compensation opportunity through both stock options and through a cash
performance plan with multi-year overlapping performance cycles. This
compensation program is designed to focus on Company performance.
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 beneficially own approximately 22.6% of the outstanding
shares of common stock. In particular, Mr. Donald Fisher, the Company's founder
and Chairman, beneficially owns jointly with his wife Doris Fisher approximately
21.2% of the outstanding shares.
Long-Term Performance Plan
In order to emphasize its compensation philosophy oriented to longer-term
results, the Company has an Executive Long-Term Cash Award Performance Plan
("ELCAPP"), in which officers are measured and compensated on Company and/or
business unit performance targets. Typically, 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, ELCAPP is intended to motivate
and reward officers by directly linking the amount of any cash bonus to specific
corporate and/or divisional long-term financial goals. Typically, specific
measurements are chosen each year for each successive three-year cycle. The
types of measurements considered include 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 officer bonuses are
reviewed and approved by the Committee in the first quarter of each fiscal year.
Under the guidelines adopted by the Committee, officers will be eligible to
receive between 15% and 150% of their three-year average 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 extent to which goals were achieved and the grade
level of the officer. No bonus is paid if threshold goals are not met.
ELCAPP was established in 1996, with the first cycle comprising fiscal years
1996-1998. The Company's performance for the 1997-1999 cycle was judged by the
Committee to exceed expectations, with financial results surpassing goals for
the three-year cycle.
The Committee believes that the ELCAPP program provides an excellent link
between long-term results and financial incentives paid to executives. Because
of the Company's superior results, Mr. Drexler received a bonus of 150% of the
average of his salary over the three-year cycle.
Proxy 12 13
<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. It has been the
Committee's practice to grant stock options to executive officers on an annual
basis, usually in the first quarter of each fiscal year. Generally, the options
vest in three years or more 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 has done so when
it was deemed 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.
In order to determine the appropriate number of options to be granted to its
executive officers in 1999, the Company considered competitive practices for a
wide array of companies in a large number of industries. 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 1999 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
level. Actual shares awarded were based on the eligible employees' yearly
individual performance evaluation.
In 1999, Mr. Drexler was granted an option to purchase 120,000 shares. The
shares become exercisable in three and four years from the date of grant. This
grant is consistent with the Committee's philosophies of increasing shareholder
value and including at-risk compensation as a significant part of an executive's
overall compensation.
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 the
Company's preference is to qualify to the maximum extent possible its
executives' compensation for deductibility under applicable tax laws. The
Company's compensation plans generally have been designed to permit the
Committee to grant awards (other than restricted stock and discounted stock
options) which qualify for deductibility under Section 162(m).
To allow for maximum 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 the Company's
deferred compensation plans.
John M. Lillie (Chairman)
Adrian D. P. Bellamy
Glenda A. Hatchett
Gap Banana Republic Old Navy
<PAGE>
Performance Graph
The graph below compares the percentage changes in the Company's cumulative
total shareholder return* on its common stock for the five-year period ended
January 29, 2000, with the cumulative total return of the S&P 500 Index and the
Dow Jones Retailers All Specialty Index.
Total Return to Stockholders
(Assumes $100 investment on 01/28/1995)
[GRAPH]
<TABLE>
<CAPTION>
Total Return Analysis
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
01/28/1995 02/03/1996 02/01/1997 01/31/1998 01/30/1999 01/29/2000
- -----------------------------------------------------------------------------------------------------------------
Gap Inc. $ 100.00 $ 147.99 $ 178.70 $ 365.98 $ 905.30 $ 947.41
- -----------------------------------------------------------------------------------------------------------------
Dow Jones Retailers
All Specialty Index $ 100.00 $ 105.43 $ 125.11 $ 190.46 $ 331.55 $ 308.13
- -----------------------------------------------------------------------------------------------------------------
S&P 500 $ 100.00 $ 139.26 $ 174.41 $ 221.17 $ 286.88 $ 316.56
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
*Total return assumes quarterly reinvestment of dividends.
Source: Carl Thompson and Associates / (800) 959-9677. Data from Bloomberg
Financial Markets and Dow Jones Total Return Indices.
Employment Contracts
In December 1998, the Company entered into an income continuation agreement with
John B. Wilson. Under the terms of the agreement, if the Company decides to
significantly decrease Mr. Wilson's level of responsibilities, the Company will
provide him with continued employment for two years. Subject to certain
exceptions, during the two-year period, Mr. Wilson will continue to receive his
latest base salary and will continue to participate in other standard Company
benefits, as well as certain Executive MICAP and ELCAPP payouts. At the start of
any such two-year period, 50% of the options that vest during the two-year
period will be decelerated to vest at the end of the two-year period.
Other Reportable Transactions
The Company has an agreement with Fisher Development, Inc. ("FDI"), a company
which is wholly owned by Robert S. Fisher (and his immediate family), the
brother of Donald G. Fisher, the Chairman and a principal shareholder of the
Company. The agreement sets forth the terms under which FDI may act as a general
contractor in connection with the Company's construction activities. During the
1999 fiscal year, FDI supervised the construction of new store leasehold
improvements for 547 stores and expansions and remodels of 123 stores. The total
amount paid for such construction was approximately $485.3 million, including
profit and overhead costs of approximately $46.9 million paid by the Company to
FDI relating to this construction. This relationship is reviewed annually by the
Audit and Finance Committee of the Board of Directors.
Robert J. Fisher, an adult son of Donald G. and Doris F. Fisher, was employed as
Executive Vice President of the Company and President of Gap Division during
part of the 1999 fiscal year, but ceased to hold those positions prior to the
end of the fiscal year. Robert J. Fisher remains a director of the Company.
Proxy 14 15
<PAGE>
Pursuant to the Company's Relocation Loan Plan, the Company made a $550,000 loan
to Mr. Wilson on November 30, 1996 at the interest rate of 3% per year, secured
by a second deed of trust on his home and by the stock and options granted to
him under the Company's 1996 Stock Option and Award Plan. Mr. Wilson paid off
this loan on January 10, 2000.
In 1999, the Company made a $3,000,000 loan to Mr. Wilson at no interest,
secured by a third deed of trust on his home and by the stock options granted to
him under the Company's 1996 Stock Option and Award Plan. The loan will be
payable in five equal annual installments beginning in 2005, or earlier upon
termination of employment.
OTHER BUSINESS
If any matter not mentioned in this Proxy Statement is properly brought before
the meeting, including without limitation matters about which the proponent
failed to notify the Company on or before February 19, 2000, the proxyholders
will vote upon such matters in accordance with their best judgment pursuant to
the discretionary authority granted by the proxy. The Company believes that one
shareholder may propose at the meeting that the Company adopt a "direct-stock-
purchase (DSP) and dividend reinvestment plan (DRIP)". This proposal was
presented to the Company last year and has not been included in this Proxy
Statement in reliance upon Securities and Exchange Commission rules. If such
proposal is properly brought before the meeting, the proxyholders intend to use
their discretionary authority to vote against the proposal. The Company's
management is not aware of any other matters that may be presented for
consideration at the meeting.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the Company's Annual
Meeting in 2001 must be received by the Company on or before December 7, 2000 to
be considered for inclusion in the Company's Proxy Statement and form of proxy
relating to that meeting. Proposals must be addressed to the Company's Secretary
at One Harrison Street, San Francisco, California 94105.
In accordance with Rule 14a-4(c)(1) of the Securities Exchange Act of 1934, as
amended, management proxyholders intend to use their discretionary voting
authority with respect to any shareholder proposal raised at the Company's
Annual Meeting in 2001 as to which the proponent fails to notify the Company on
or before February 18, 2001 (one year after 45 days prior to the date on which
this Proxy Statement was first mailed to shareholders). Notifications must 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
Gap Banana Republic Old Navy
<PAGE>
EXHIBIT A
THE GAP, INC.: EXECUTIVE MANAGEMENT INCENTIVE CASH AWARD PLAN
(JANUARY 25, 2000 AMENDMENT AND RESTATEMENT)
1. Purpose of the Plan
The purpose of the Executive Management Incentive Cash Award Plan (the "Plan")
is to provide financial incentives for certain of the Company's officers to meet
and exceed the Company's annual financial goals. The Plan is intended to qualify
as "performance-based compensation" under Code section 162(m).
2. Definitions
2.1 "Affiliated Company" means any company controlling, controlled by, or under
common control with the Company.
2.2 "Award" means a cash award pursuant to the provisions of the Plan.
2.3 "Base Salary" means, as to a Fiscal Year, a Participant's average actual
annual salary rate during the Fiscal Year, based on the numbers of days at
each actual salary rate, but assuming that the actual salary rate in effect
immediately after focal review in the Spring of each Fiscal Year had been in
effect on the first day of the Fiscal Year. Such salary shall be before (1)
deductions for taxes and benefits, and (2) deferrals of compensation
pursuant to Company-sponsored plans.
2.4 "Code" means the Internal Revenue Code of 1986, as amended. Reference to a
specific section of the Code shall include such section, any valid
regulation promulgated thereunder, and any comparable provision of any
future legislation or regulation amending, supplementing or superseding such
section or regulation.
2.5 "Committee" means the Compensation and Stock Option Committee of the
Company's Board of Directors, or any other Committee appointed by the Board
pursuant to Section 3 of the Plan.
2.6 "Company" means The Gap, Inc., a Delaware corporation.
2.7 "Comparable Store Sales Growth" means the Company's or a division's same
store net sales growth for the Fiscal Year in excess of the prior year.
2.8 "Determination Date" means, as to a Fiscal Year, the latest date possible
which will not jeopardize the Plan's qualification as "performance-based
compensation" under Code section 162(m).
2.9 "Earnings" shall mean either: (i) operating income of the Company or one of
its divisions for a given Fiscal Year less certain allocated expenses (e.g.,
headquarters, distribution centers, etc.); or (ii) income before interest
and taxes of the Company or one of its divisions; provided that prior to the
Determination Date the Committee shall determine (1) whether Earnings will
be measured under clause (i) or (ii), and (2) whether any significant
adjustments should be made to the calculation. Non-recurring or unusual
expenses shall be excluded from the calculation of Earnings.
2.10 "Economic Value Added" means the Company's or a division's Net Operating
Profit After Tax (NOPAT) for a given Fiscal Year less Capital Charges.
NOPAT means net operating income after taxes. NOPAT for a division includes
direct revenues and expences, but also may include an allocation for shared
costs for applicable Information Technology, Distribution, and other
services from which the division benefits. Captial Charges means the
Company's or a division's Capital Balances multiplied by the Weighted
Average Cost of Capital. Divisional Capital Balances include division
specific assets and liabilities, the present value of operating leases, and
also may include an allocation for shared assets and shared liabilities.
Total Company Capital Balances includes most assets, the present value of
operating leases less most non-interest bearing liabilities. The Committee
(prior to the Determination Date) determines the measuresof NOPAT, and
Capital Balances.
2.11 "Fiscal Year" means the 2000 fiscal year of the Company and each succeeding
fiscal year of the Company.
2.12 "Officer" means an officer (whether or not a member of the Company's Board
of Directors) employed by the Company or any Affiliated Company.
2.13 "Participant" means as to any Fiscal Year, an Officer who has been selected
by the Committee for participation in the Plan for such Fiscal Year.
Proxy 16 17
<PAGE>
2.14 "Performance Goals" means the goal(s) (or combined goal(s)) determined by
the Committee (in its sole discretion) to be applicable to a Participant
for a Fiscal Year. As determined by the Committee, the Performance Goals
applicable to each Participant shall provide for a targeted level or levels
of achievement using one or more of the following measures: (a) Comparable
Store Sales Growth, (b) Earnings, (c) Return on Equity, (d) Return on Net
Assets, (e) Sales Volume, (f) Total Sales, and (g) Economic Value Added. As
determined in the discretion of the Committee, the Performance Goals for
any Fiscal Year may differ from Participant to Participant, relate to
performance on a Company-wide or divisional basis, and/or provide for a
comparison of actual performance by the Company or a division to actual
performance by a group of competitors determined in the discretion of the
Committee. For each Fiscal Year, the Performance Goals applicable to each
Participant shall be set forth in writing on or prior to the Determination
Date.
2.15 "Return on Equity" means the Company's or a division's Earnings for the
Fiscal Year expressed as a percentage of the Company's or a division's
average shareholders' equity over the Fiscal Year.
2.16 "Return on Net Assets" means the Company's or a division's Earnings for the
Fiscal Year expressed as a percentage of the Company's or a division's
average assets over the Fiscal Year.
2.17 "Sales Volume" means the total sales volume per store of the Company or one
of its divisions for the Fiscal Year.
2.18 "Termination of Employment" means the time when the employee-employer
relationship between the Participant and the Company and its Affiliated
Companies is terminated for any reason, including, but not limited to, a
termination by resignation, discharge, death, permanent disability,
retirement, or the disaffiliation of an Affiliated Company, but excluding
any such termination where there is a simultaneous reemployment by either
the Company or one of its Affiliated Companies.
2.19 "Total Sales" means the Company's or a division's net sales for the Fiscal
Year.
2.20 "Weighted Average Cost of Capital" (or "WACC") means the weighted average
of the Company's cost of debt and cost of capital. The weighting is
determined by comparing the balance of the Company's debt (aquired debt
plus capitalized leases) to the balance of the Company's equity based upon
market value (rather than book value).
3. Administration of the Plan
3.1 The Plan shall be administered by the Committee, which shall consist of no
fewer than two members of the Company's Board of Directors, who shall be
appointed and serve at the pleasure of the Company's Board of Directors. No
member of the Company's Board of Directors who is not an "outside director"
under Code section 162(m) shall serve on the Committee.
3.2 Subject to the provisions of the Plan, the Committee shall have exclusive
authority to select the Participants, and to determine the target Award levels,
the times when Awards will be granted, and the Performance Goals which must be
achieved prior to payment of any Awards. For each Fiscal Year, all actions by
the Committee shall be taken by the Determination Date.
3.3 The Committee shall have all discretion and authority necessary or
appropriate to administer the Plan, including, but not limited to, the power to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, and to make all other determinations necessary or advisable in
the administration of the Plan, and such determination shall be final and
binding upon all persons having an interest in the Plan.
3.4 A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at a meeting at which a quorum is present or any
action taken without a meeting by a writing executed by a majority of the
Committee shall constitute the act of the Committee.
3.5 All expenses and liabilities incurred by the Committee in the administration
of the Plan shall be borne by the Company. The Committee may employ attorneys,
consultants, accountants, or other persons. The Committee and the Company and
its officers and directors shall be entitled to rely upon the advice, opinion,
or valuations of any such persons. No member of the Committee shall be
personally liable for any action, determination, or interpretation taken or made
with respect to the Plan, unless such action, determination, or interpretation
constitutes criminal misconduct or willful negligence or demonstrates bad faith,
and all members of the Committee shall be fully protected by the Company in
respect of any such action, determination or interpretation.
4. Eligibility and Participation
The Plan is designed for Officers whose responsibilities significantly influence
Company results. Participants shall be selected by the Committee prior to or on
the Determination Date. Participation in the Plan is on a Fiscal Year basis and
in the sole discretion of the Committee. Thus, an Officer who is selected for
participation in a given Fiscal Year is in no way guaranteed to be selected for
participation in any subsequent Fiscal Year or Fiscal Years.
Gap Banana Republic Old Navy
<PAGE>
5. Determination of Awards
5.1 Prior to or on the Determination Date, the Committee, in its sole
discretion, shall assign each Participant a target Award expressed as a
percentage of Base Salary. The maximum percentage of Base Salary that may be
assigned to any Participant is 100%.
5.2 On or prior to the Determination Date, the Committee, in its sole
discretion, shall establish a payout table or formula for purposes of
determining the Award (if any) payable to each Participant. Each payout formula
or table shall (a) be in writing, (b) be based on a comparison of actual
performance to the Performance Goals, (c) provide for the payment of a
Participant's target Award if the Performance Goals for the Fiscal Year are
achieved, and (d) provide for an actual Award greater than or less than the
Participant's target Award, depending upon the extent to which actual
performance exceeds or falls below the Performance Goals.
5.3 After the end of each Fiscal Year, the Committee shall certify in writing
the extent to which the Performance Goals applicable to each Participant for the
Fiscal Year were achieved or exceeded. The actual Award for each Participant
shall be determined by applying the formula established pursuant to Section 5.2
of the Plan to the level of actual performance that has been certified by the
Committee. However, each Participant's actual Award (if any) shall be subject to
the maximum provided in Section 6.
5.4 No Awards shall be paid to a Participant for a Fiscal Year unless at least
the minimum actual performance for the Fiscal Year specified by the Committee
pursuant to Section 5.2 of the Plan is achieved.
5.5 The Committee, in its sole discretion, may eliminate any Participant's
Award, or reduce it below that which otherwise would be payable in accordance
with the Plan.
6. Maximum Award Payable
For any Fiscal Year, the maximum Award payable to any Participant under the Plan
shall be $5,000,000.
7. Payment of Award
7.1 Except as provided in Section 7.2 of the Plan or as otherwise determined by
the Committee, payment of Awards (if any) for a Fiscal Year will be made in cash
or its equivalent on or about April 1st following the end of the Fiscal Year.
7.2 Unless otherwise specifically determined by the Committee, a Participant
actually will be entitled to payment of an Award only if the Participant is an
Officer on the date of payment (and except to the limited extent provided in the
following sentence). If, after the completion of a Fiscal Year, a Participant
incurs a Termination of Employment due to death or permanent disability, the
Participant still shall be entitled to the payment of any Award for such Fiscal
Year otherwise payable to the Participant (subject to Section 5.5). In the event
an Award is payable to a Participant subsequent to the Participant's death, such
payment shall be made to the Participant's estate.
7.3 The Company shall withhold all applicable income and other taxes from any
Award payment to any Participant, including any federal, FICA, state and local
taxes.
7.4 Each Award shall be payable solely from the general assets of the Company.
Each Participant's right to payment of an Award (if any) shall be solely as an
unsecured general creditor of the Company.
8. Employment Rights
Nothing in the Plan shall confer upon any Participant the right to continue in
the employ of the Company or its Affiliated Companies or shall interfere with or
restrict in any way the rights of the Participant's employer to discharge or
change the terms of employment of any Participant at any time for any reason
whatsoever, with or without cause.
9. Effect on Other Plans
The adoption of the Plan shall not affect any other equity or other compensation
or incentive plan in effect for the Company or any Affiliated Company, and the
Plan shall not preclude the Company's Board of Directors from establishing any
other forms of incentive compensation for Officers.
10. Amendment, Suspension or Termination of the Plan
The Board, in its sole discretion, may alter, amend, or terminate the Plan or
any part thereof at any time and for any reason; provided, however, that if and
to the extent required to ensure the Plan's qualification under Code section
162(m) as "performance-based compensation", any such amendment shall be subject
to stockholder approval.
Proxy 18 19
<PAGE>
11. Effective Date
The Plan originally was effective as of March 21, 1995. This amended and
restated Plan is effective as of January 25, 2000, subject to the approval of
the Plan by a majority of the shares of the common stock of the Company that are
present in person or by proxy and entitled to vote at the 2000 Annual Meeting of
Shareholders.
Gap Banana Republic Old Navy
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<PAGE>
PROXY
Notice of Annual Meeting of Shareholders
(C) GAP INC. 2000
Gap Banana Republic Old Navy
One Harrison Street SF CA 94105 // 650 952 4400 // gapinc.com
PRINTED ON RECYCLED PAPER
<PAGE>
ANNUAL MEETING OF SHAREHOLDERS
Friday, May 5, 2000 Gallatin, Tennessee
10:00 a.m. Local Time
Admission Ticket
This is your admission ticket to the 2000 Annual Meeting of Shareholders of The
Gap, Inc.
Presentation of this ticket on the day of the meeting will grant admission to
the shareholder(s) named on the
reverse side of this card.
Attendance will be limited to shareholders only.
Gap Inc.
- -------------------------------------------------------------------------------
PROXY Gap Inc.
- -------------------------------------------------------------------------
Annual Meeting of Shareholders -- May 5, 2000
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Millard Drexler, Heidi Kunz and Anne Gust, or
any of them, each with full power of substitution, as proxies to vote, in
accordance with the instructions set forth in this Proxy, all shares of common
stock of The Gap, Inc. which the undersigned is entitled to vote at the Annual
Meeting of Shareholders to be held on May 5, 2000 at 10:00 a.m. local time in
Gallatin, Tennessee, and any postponements and adjournments thereof. The proxies
are authorized in their discretion to vote upon such other business as may
properly come before the meeting.
IMPORTANT -- This proxy must be signed and dated on the reverse side.
THE SHARES COVERED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE ON THE REVERSE SIDE. IF NO CHOICES ARE INDICATED, THE SHARES
COVERED BY THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ON THE REVERSE SIDE,
---
FOR PROPOSAL 2, FOR PROPOSAL 3, AND, WITH RESPECT TO ANY OTHER MATTERS AS MAY
- --- ---
PROPERLY COME BEFORE THE MEETING, IN ACCORDANCE WITH THE DISCRETION OF THE
PROXIES.
See reverse for voting instructions.
<PAGE>
COMPANY #
CONTROL #
There are three ways to vote your Proxy
Your telephone or Internet vote authorizes the Named Proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY *** IMMEDIATE
. Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week,
until 12:00 p.m. on May 4, 2000.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
. Follow the simple instructions the Voice provides you.
VOTE BY INTERNET -- http://www.eproxy.com/gps/ -- QUICK *** EASY *** IMMEDIATE
. Use the Internet to vote your proxy 24 hours a day, 7 days a week, until 12:00
p.m. on May 4, 2000.
. You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to The Gap, Inc., c/o Shareowner Services/SM/, P.O.
Box 64873, St. Paul, MN 55164-0873.
If you vote by Phone or Internet, please do not mail your Proxy Card
[arrow] Please detach here [arrow]
The Board of Directors Recommends a Vote FOR Items 1, 2, and 3.
1. Election of
directors:
01 Adrian D. P. Bellamy
02 Evan S. Dobelle
03 Millard S. Drexler
04 Donald G. Fisher
05 Doris F. Fisher
06 Robert J. Fisher
07 Glenda A. Hatchett
08 Steven P. Jobs
09 John M. Lillie
10 Charles R. Schwab
11 Brooks Walker, Jr.
12 Sergio S. Zyman
[ ] Vote FOR
all nominees
(except as marked)
[ ] Vote WITHHELD
from all nominees
(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.)
[ ]
2. Approve the Executive Management Incentive Cash Award Plan.
[ ] For [ ] Against [ ] Abstain
3. Ratify the appointment of Deloitte & Touche LLP as independent auditors.
[ ] For [ ] Against [ ] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
---
Address Change? Mark Box [ ]
Indicate changes below: Date:_____________ , 2000
[ ]
Signature(s) in Box
NOTE: Please sign exactly as your name(s) appear hereon.
Joint owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
