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Form PRE 14A GAP INC For: Mar 15

March 15, 2024 4:23 PM
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No. )

 

 Filed by the Registrant

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))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12

 

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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 ALL BOXES THAT APPLY):

 

No fee required

Fee paid previously with preliminary materials

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 


 

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Preliminary Proxy Statement - Subject to Completion

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Notice of Annual Meeting of Shareholders

 

DATE AND TIME

 

Tuesday, May 7, 2024 10:00 a.m., Eastern Time

 

 

 

PLACE

 

Via the Internet at www.virtualshareholdermeeting.com/GAP2024

 

 

 

ITEMS OF BUSINESS

 

Elect as directors the 11 director nominees named in this Proxy Statement;
Ratify the selection of Deloitte & Touche LLP as our independent accountant for the fiscal year ending on February 1, 2025;
Hold an advisory vote to approve the compensation of our named executive officers;
Approve an amendment to our Amended and Restated Certificate of Incorporation to update the exculpation provision to cover officers; and
Transact such other business as may properly come before the meeting.

 

 

 

RECORD DATE

 

You must have been a shareholder of record at the close of business on March 11, 2024 to vote at the Annual Meeting.

 

 

 

INTERNET AVAILABILITY

 

In accordance with U.S. Securities and Exchange Commission rules, we are using the Internet as our primary means of furnishing our proxy materials to most of our shareholders. Rather than sending those shareholders a paper copy of our proxy materials, we are sending them a notice with instructions for accessing the materials and voting via the Internet. We believe this method of distribution makes the proxy distribution process more efficient, less costly and limits our impact on the environment. This Proxy Statement and our 2023 Annual Report to Shareholders are available at www.gapinc.com (follow the Investors, Financial Information links).

 

 

 

ATTENDING THE ANNUAL MEETING

 

You are entitled to attend the Annual Meeting, which will be held via the Internet through a virtual web conference at www.virtualshareholdermeeting.com/GAP2024 on May 7, 2024 at 10:00 a.m., Eastern Time, and any adjournments or postponements thereof. You will be able to attend the Annual Meeting online, vote your shares electronically and submit questions online during the Annual Meeting by logging into the website listed above using the 16-digit control number included in your Notice of Internet Availability of Proxy Materials, on your proxy card or on any additional voting instructions accompanying these proxy materials. The platform for the virtual Annual Meeting includes functionality that affords validated shareholders substantially the same meeting participation rights and opportunities they would have at an in-person meeting. We recommend that you log in a few minutes before the Annual Meeting to ensure you are logged in when the Annual Meeting starts.

 

 

 

 

PROXY VOTING

 

Whether or not you plan to attend the Annual Meeting, please vote as soon as possible. You may vote via the Internet, by telephone or, if you receive a paper proxy card in the mail, by mailing the completed proxy card.

 

 

 

By Order of the Board of Directors,

 

 

 

 

 

Julie Gruber

Corporate Secretary

March 27, 2024

 

 

 

 


Table of Contents

 

Proxy Summary

 

 

Proxy Summary

References in this Proxy Statement to “Gap Inc.,” “the Company,” “we,” “us,” and “our” refer to The Gap, Inc.

These proxy materials are being delivered in connection with the solicitation of proxies by the Board of Directors (the "Board") of The Gap, Inc. for use at our Annual Meeting of Shareholders to be held via the Internet through a virtual web conference at www.virtualshareholdermeeting.com/GAP2024 on May 7, 2024, at 10:00 a.m., Eastern Time, and any adjournment or postponement thereof (the “Annual Meeting”). You will be able to attend the Annual Meeting online, vote your shares electronically and submit questions online during the Annual Meeting by logging into the website listed above using the 16-digit control number included in your Notice of Internet Availability of Proxy Materials, on your proxy card or on any additional voting instructions accompanying these proxy materials. The platform for the Annual Meeting includes functionality that affords validated shareholders substantially the same meeting participation rights and opportunities they would have at an in-person meeting. We recommend that you log in a few minutes before the Annual Meeting to ensure you are logged in when the meeting starts.

On or about March 27, 2024, we intend to commence distribution of our proxy materials to our shareholders entitled to vote at the Annual Meeting.

The holders of our common stock at the close of business on March 11, 2024 (the “Record Date”) are entitled to one vote per share on each matter voted upon at the Annual Meeting or any adjournment or postponement thereof. As of the Record Date, there were 372,226,326 shares of common stock outstanding.

For a period of at least 10 days prior to the Annual Meeting, a complete list of shareholders entitled to vote at the Annual Meeting will be open to the examination of any shareholder during ordinary business hours by contacting Investor Relations at [email protected]. In addition, a complete list of shareholders entitled to vote at the Annual Meeting will be open to the examination of any validated shareholder during the meeting by following the instructions on the Annual Meeting website once they enter the meeting.

How to Vote Your Shares

You may vote your shares by Internet, mail or phone. If you vote by Internet or by phone, you will need to have a proxy card or voting instruction card, or the Notice of Internet Availability of Proxy Materials, in hand when you access the voting website or call to vote by phone. If you vote by Internet or phone, you do not need to return anything by mail. Specific voting instructions are found on the proxy card, voting instruction card, or the Notice of Internet Availability of Proxy Materials.

 

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By Internet

 

www.proxyvote.com

 

(or scan the QR code on the proxy card or voting instruction card)

By Mail

 

Sign and return a proxy card (for shareholders of record) or voting instruction card (for beneficial owners of shares)

By Phone

 

1-800-690-6903

 

During the Annual Meeting:

 

www.virtualshareholdermeeting.com/GAP2024

 

 

 

 

 

 

 

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 2024 Proxy Statement

 


Table of Contents

 

Proxy Summary

 

 

Proposal 1 – Election of Directors (Page 1)

 

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The Board of Directors Recommends a Vote “FOR” each Director Nominee.

 

 

 

 

 

 

 

 

 

 

Committee
Membership

Name and Occupation

 

Age

 

Director
Since

 

Independent

 

Other
Public
Boards

 

AC

 

CC

 

GC

Richard Dickson
President and CEO, Gap Inc.

 

56

 

2022

 

No

 

 

 

 

 

 

 

Elisabeth B. Donohue
Former CEO, Publicis Spine

 

58

 

2021

 

Yes

 

1

 

 

 

M

 

 

Robert J. Fisher
Managing Director, Pisces, Inc.

 

69

 

1990

 

Yes

 

 

 

 

 

 

C

William S. Fisher
Founder and CEO, Manzanita Capital Limited

 

66

 

2009

 

Yes

 

 

 

 

 

 

 

Tracy Gardner
Principal, Tracy Gardner Consultancy

 

60

 

2015

 

Yes

 

 

 

 

C

 

 

Kathryn Hall
Founder and Co-Chair, Hall Capital Partners

 

66

 

2022

 

Yes

 

 

M F

 

 

 

 

Amy Miles
Former Chair and CEO, Regal Entertainment Group

 

57

 

2020

 

Yes

 

2

 

C F

 

 

 

M

Chris O'Neill
Managing Partner, Bobcaygeon Capital

 

51

 

2018

 

Yes

 

 

M

 

 

 

 

Mayo A. Shattuck III
Former Chairman, Exelon Corporation

 

69

 

2002

 

Yes

 

1

 

M F

 

 

 

M

Tariq Shaukat
Co-CEO, SonarSource

 

51

 

2023

 

Yes

 

1

 

M F

 

 

 

 

Salaam Coleman Smith
Former EVP, Disney ABC Television Group

 

54

 

2021

 

Yes

 

1

 

 

 

M

 

 

C Chair M Member F Financial Expert

 

AC: Audit and Finance Committee

CC: Compensation and Management Development Committee

GC: Governance and Sustainability Committee

 

 

 

 

 

 

 

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 2024 Proxy Statement

 


Table of Contents

 

Proxy Summary

 

 

Director Nominee Demographics, Skills and Experience

 

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* Tenure and age are measured as of the filing date of this Proxy Statement.

 

 

 

 

 

 

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 2024 Proxy Statement

 


Table of Contents

 

Proxy Summary

 

 

Proposal 2 – Ratification of Auditors (Page 28)

 

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The Board of Directors Recommends a Vote “FOR” the Selection of Deloitte & Touche LLP as Our Independent Accountant for Fiscal 2024.

 

Based on the Audit and Finance Committee’s assessment of Deloitte & Touche LLP’s qualifications and performance, the Board believes that retention of Deloitte & Touche for fiscal 2024 is in our shareholders’ best interests.

 

Proposal 3 – Say-on-Pay (Page 31)

 

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The Board of Directors Recommends a Vote “FOR” the Approval, on an Advisory Basis, of the Overall Compensation of the Company’s Named Executive Officers.

 

AVERAGE EXECUTIVE TARGET COMPENSATION

 

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* This chart reflects the average target compensation for fiscal 2023 for our named executive officers other than Mr. Dickson and Mr. Blakeslee, who were hired in 2023, and Mr. Martin, who served as Interim CEO in 2023, as each had non-standard long-term incentive arrangements. This chart is based on salary and target bonus amounts as of April 1, 2023 and the target grant value of fiscal 2023 long-term incentives. These percentages are based on the intended target compensation for each included executive and will not match the percentages calculable from the Summary Compensation Table. See "Compensation Discussion and Analysis—Elements of Compensation—Long-Term Incentives" for an explanation of the share prices used to calculate actual target shares granted under long-term incentive awards.

 

FISCAL 2023 ANNUAL BONUS STRUCTURE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Base Salary

X

Target %

of

Base

Salary

X

50%

X

FY23

Operating Expense as % of Net Sales

(% Achieved)

+

25%

X

FY23

Individualized EBIT

(% Achieved)

+

25%

X

FY23

Gap Inc.

EBIT

(% Achieved)

=

Funded

Bonus

+/-

Individual

Adjustment

=

Actual

Bonus

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Bonus payments are subject to achievement of a threshold funding goal.

 

 

 

 

 

 

 

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 2024 Proxy Statement

 


Table of Contents

 

Proxy Summary

 

 

Proposal 4 – Amendment of Amended and Restated Certificate of Incorporation (Page 73)

 

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The Board of Directors Recommends a Vote “FOR” the Approval of the Amendment of the Company's Amended and Restated Certificate of Incorporation.

 

The Board believes that amending the Company's Amended and Restated Certificate of Incorporation to update the exculpation provision to cover officers, as allowed by Delaware law, is in our shareholders’ best interests.

 

 

 

 

 

 

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 2024 Proxy Statement

 


Table of Contents

 

Table of Contents

 

 

Table Of Contents

 

PROPOSAL NO. 1 — ELECTION OF DIRECTORS

1

Nominees for Election as Directors

1

Director Selection and Qualification

8

Board Self-Assessment

10

Key Director Attributes

11

Director Independence

12

Corporate Governance

13

Corporate Governance Highlights

13

Corporate Governance Guidelines

15

Additional Corporate Governance Information

15

Risk Oversight

16

Environmental, Social, and Governance (ESG) Oversight

18

Shareholder Engagement

19

Communication with Directors

20

Code of Business Conduct

20

Political Engagement Policy

20

Policies and Procedures with Respect to Related Party Transactions

20

Certain Relationships and Related Transactions

20

Board Leadership Structure and Independent Oversight

21

Board Committees

21

Board and Committee Meetings in Fiscal 2023

23

Attendance of Directors at Annual Meeting of Shareholders

24

Stock Ownership Guidelines for Directors

24

Insider Trading Policy and Restrictions on Hedging and Pledging

24

Compensation of Directors

25

PROPOSAL NO. 2 — RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANT

28

Report of the Audit and Finance Committee

30

PROPOSAL NO. 3 — ADVISORY VOTE ON THE OVERALL COMPENSATION OF THE COMPANY'S NAMED EXECUTIVE OFFICERS

31

COMPENSATION DISCUSSION AND ANALYSIS

32

Compensation Committee Report

54

EXECUTIVE COMPENSATION

55

2023 Summary Compensation Table

55

2023 Grants of Plan-Based Awards

58

2023 Outstanding Equity Awards at Fiscal Year-End

59

2023 Option Exercises and Stock Vested

62

2023 Nonqualified Deferred Compensation

63

2023 CEO Pay Ratio

64

2023 Potential Payments Upon Termination

65

2023 Compensation Actually Paid

69

 

 

 

 

 

 

 

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 2024 Proxy Statement

 


Table of Contents

 

Table of Contents

 

 

Table Of Contents (Cont.)

 

PROPOSAL NO. 4 — AMENDMENT OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

73

EQUITY COMPENSATION PLAN INFORMATION

74

BENEFICIAL OWNERSHIP OF SHARES

75

Beneficial Ownership Table

75

Note Regarding Various Fisher Family Holdings

77

Delinquent Section 16(a) Reports

77

OTHER INFORMATION

78

Questions and Answers about the Annual Meeting and Voting

78

Note About Forward-Looking Statements

83

 

 

 

 

 

 

 

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 2024 Proxy Statement

 


Table of Contents

 

Proposal No. 1 – Election of Directors

1

 

Proposal No. 1 — Election of Directors

Nominees for Election as Directors

The Board, upon recommendation of the Governance and Sustainability Committee, has nominated the 11 people whose names are set forth below for election as directors, each nominated to serve for a one-year term until the 2025 Annual Meeting and until their successors are duly elected and qualified. Each director nominee is a current director.

The Board has no reason to believe that any of the nominees will be unable to serve. However, if any nominee is unable to serve or for good cause will not serve, the Board may reduce the size of our Board in accordance with our Bylaws, or the proxies may be voted for the election of such other person to the office of director as the Board may recommend in place of the nominee. Set forth below is certain information concerning the nominees, including age, experience, qualifications and principal occupation during at least the last five years, based on data furnished by each nominee.

 

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The Board of Directors Recommends a Vote “FOR” each Director Nominee.

 

 

 

 

 

 

 

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Richard Dickson

 

 

 

Age: 56

Director since: 2022

Committee Membership:

None

 

 

 

 

 

 

 

Biography:

President and Chief Executive Officer of Gap Inc. since August 2023. President and Chief Operating Officer of Mattel, Inc., a leading global toy company, from 2015 to 2023. Chief Brands Officer of Mattel, Inc. from 2014 to 2015. President and Chief Executive Officer, Branded Businesses of The Jones Group (now Premier Brands Group Holdings), which owned a portfolio of premier apparel, footwear, and accessories brands, from 2010 to 2014. Various senior executive roles at Mattel, Inc. from 2000 to 2010.

 

Experience:

As the current President and Chief Executive Officer of Gap Inc., and with more than two decades in senior leadership roles across fashion, beauty, retail, toys and entertainment, Mr. Dickson brings extensive retail and e-commerce, operations, leadership, financial, and global business experience to the Board. In addition, he brings expertise in brand rejuvenation, digital transformation, and performance improvement, having led Mattel’s revitalization into a culturally relevant and highly innovative company.

 

 

 

 

 

 

 

 

 

 

 

 

 

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 2024 Proxy Statement

 


Table of Contents

 

Proposal No. 1 – Election of Directors

2

 

 

 

 

 

 

 

 

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Elisabeth B. Donohue

 

 

 

Age: 58

Director since: 2021

Committee Membership:

Compensation and Management Development

 

Current Public Company Directorships:

NRG Energy, Inc.

 

Former Public Company Directorships Held in Last Five Years:

Synacor, Inc.

AcuityAds Holdings Inc.

 

 

 

 

 

 

 

Biography:

Former Chief Executive Officer of Publicis Spine and a member of the Publicis Groupe Management Committee from 2017 to 2020. Global Brand President of Starcom Worldwide from 2016 to 2017. Chief Executive Officer of Starcom USA from 2009 to 2016.

 

Experience:

With over 30 years of global marketing experience, including as the former Chief Executive Officer of two leading marketing agencies, Ms. Donohue brings extensive expertise in global consumer, data, and digital marketing leadership. In addition, she brings experience in advising companies on their holistic marketing strategies and helping them navigate shifts into digital and data driven marketing economies.

 

 

 

 

 

 

 

 

 

 

 

 

 

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Robert J. Fisher

 

 

 

Age: 69

Director since: 1990

Committee Membership:

Governance and Sustainability (Chair)

 

 

 

 

 

 

 

Biography:

Managing Director of Pisces, Inc. since 2010. Interim President and Chief Executive Officer of Gap Inc. from January 2007 to August 2007 and November 2019 to March 2020. Chair of the Board of Gap Inc. from 2004 to August 2007 and February 2015 to March 2020. Executive of Gap Inc. from 1992 to 1999. Various positions with Gap Inc. from 1980 to 1992.

 

Experience:

Mr. Fisher has vast retail business experience specific to Gap Inc. and its global operations, as a result of his many years serving in a variety of high-level positions at the Company. His previous leadership and oversight roles at Gap Inc. provide him with a deep understanding and unique insight into the Company’s organizational and operational structure. In addition, Mr. Fisher brings strong leadership to the Board based on perspective gained from his previous management roles and as a key member of the founding family and significant shareholder.

 

 

 

 

 

 

 

 

 

 

 

 

 

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 2024 Proxy Statement

 


Table of Contents

 

Proposal No. 1 – Election of Directors

3

 

 

 

 

 

 

 

 

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William S. Fisher

 

 

 

Age: 66

Director since: 2009

Committee Membership:

None

 

 

 

 

 

 

 

Biography:

Founder and Chief Executive Officer of Manzanita Capital Limited, a private equity fund, since 2001. Executive Vice Chairman of Pisces, Inc. since June 2016. Various positions with Gap Inc. from 1986 to 1998.

 

Experience:

Mr. Fisher brings extensive global retail and business experience to the Board as a result of his many years serving in a variety of high-level positions across Gap Inc., including as President of the International Division. In addition, as a director on the boards of a number of private retail companies, including Space NK and Diptyque, he brings extensive knowledge of the global retail industry and risk oversight expertise.

 

 

 

 

 

 

 

 

 

 

 

 

 

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Tracy Gardner

 

 

 

Age: 60

Director since: 2015

Committee Membership:

Compensation and Management Development (Chair)

 

Former Public Company Directorships Held in Last Five Years:

Crocs, Inc.

 

 

 

 

 

 

 

Biography:

Principal of Tracy Gardner Consultancy since 2010. Chief Executive Officer of Delia's, Inc., an omni-channel retail company primarily marketing to teenage girls, from 2013 to 2014 (Delia's, Inc. filed voluntary petitions for relief under Chapter 11 in 2014). Former executive of J. Crew Group, Inc. from 2004 to 2010. Various positions with Gap Inc. from 1999 to 2004.

 

Experience:

With over 30 years of retail experience, Ms. Gardner is an industry veteran who brings deep product and operational expertise and experience as an operator, merchant, creative director, and leader in growing multi-channel brands. In addition, her prior experience as a former senior executive with Gap Inc. and as an advisor to Gap brand provides Ms. Gardner with an in-depth understanding of the Company’s global business structure and operations.

 

 

 

 

 

 

 

 

 

 

 

 

 

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 2024 Proxy Statement

 


Table of Contents

 

Proposal No. 1 – Election of Directors

4

 

 

 

 

 

 

 

 

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Kathryn Hall

 

 

 

Age: 66

Director since: 2022

Committee Membership:

Audit and Finance

 

Former Public Company Directorships Held in Last Five Years:

Cohn Robbins Holding Corporation

 

 

 

 

 

 

 

 

Biography:

Founder and Co-Chair of Hall Capital Partners, an SEC-registered investment advisor, since 1994, and a member of the firm’s Executive Committee and Investment Review Committee. Founder and Co-Executive Chair of Galvanize Climate Solutions, a mission-driven investment platform, since 2021, and a member of the firm’s Operating Committee. General Partner of Laurel Arbitrage Partners from 1989 to 1994.

 

Experience:

Ms. Hall brings extensive financial and investment experience, as well as senior management and leadership experience, including as the Founder and Co-Chair of an investment firm with approximately $42 billion in assets under management. Additionally, she has substantial insights from her experience leading and developing a senior management team that is 50% women and integrating sustainability into the firm’s investment framework.

 

 

 

 

 

 

 

 

 

 

 

 

 

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Amy Miles

 

 

 

Age: 57

Director since: 2020

Committee Membership:

Audit and Finance (Chair)

Governance and Sustainability

 

Current Public Company Directorships:

Norfolk Southern Corporation

Amgen Inc.

 

 

 

 

 

 

 

Biography:

Former Chair and Chief Executive Officer of Regal Entertainment Group, a leading theater chain, from 2015 to 2018, and Chief Executive Officer of Regal Entertainment Group from 2009 to 2015. Executive Vice President, Chief Financial Officer and Treasurer of Regal Entertainment Group from 2002 to 2009.

 

Experience:

As a former Chair, Chief Executive Officer and Chief Financial Officer, Ms. Miles brings extensive finance, accounting, and management experience to the Board. In addition, she brings expertise in information technology, marketing, and strategic planning.

 

 

 

 

 

 

 

 

 

 

 

 

 

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 2024 Proxy Statement

 


Table of Contents

 

Proposal No. 1 – Election of Directors

5

 

 

 

 

 

 

 

 

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Chris O'Neill

 

 

 

Age: 51

Director since: 2018

Committee Membership:

Audit and Finance

 

 

 

 

 

 

 

Biography:

Managing Partner, Bobcaygeon Capital, LLC since 2013. Chief Growth Officer of Xero Limited from 2022 to 2024. Senior Advisor to Portage Ventures, the venture capital arm of Sagard Holdings, from 2021 to 2024, and General Partner from 2020 to 2021. Chief Business Officer of Glean Technologies, Inc. from 2021 to 2022. President and Chief Executive Officer of Evernote Corporation, a global cloud-based technology company, from 2015 to 2018, and Chairman from 2016 to 2018. Various executive roles with Google Inc. from 2005 to 2015, including Managing Director, Google Canada from 2010 to 2014 and Head of Global Business Operations, Google X, from 2014 to 2015.

 

Experience:

Mr. O’Neill's experience as a global technology executive, investor, and as a Chief Executive Officer, and his decade-long experience at Google provide him with extensive expertise in leading high-growth companies and helping ensure that technology is integrated with and driven by strategy.

 

 

 

 

 

 

 

 

 

 

 

 

 

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Mayo A. Shattuck III

 

 

 

Age: 69

Director since: 2002

Committee Membership:

Audit and Finance

Governance and Sustainability

 

Current Public Company Directorships:

Capital One Financial Corporation

Hut 8 Corp.

 

Former Public Company Directorships Held in Last Five Years:

Alarm.com Holdings, Inc.

Exelon Corporation

 

 

 

 

 

 

 

Biography:

Former Chairman of Exelon Corporation, an energy company, from 2013 to 2022, and Executive Chairman of Exelon Corporation from 2012 to 2013. Chairman, Chief Executive Officer, and President of Constellation Energy Group from 2002 to 2012. Mr. Shattuck also has extensive experience in the financial services industry.

 

Experience:

With his experience as a director of three other public companies, as the former Chief Executive Officer of Constellation Energy Group, and as the former Executive and Non-Executive Chairman of Exelon Corporation, Mr. Shattuck brings extensive leadership experience as well as expertise in risk oversight, financial literacy and reporting, corporate governance, and compliance.

 

 

 

 

 

 

 

 

 

 

 

 

 

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Tariq Shaukat

 

 

 

Age: 51

Director since: 2023

Committee Membership:

Audit and Finance

Current Public Company Directorships:

Public Storage

 

 

 

 

 

 

 

 

Biography:

Co-Chief Executive Officer of SonarSource SA, an open source enterprise software company developing artificial intelligence and analytical solutions to improve the quality and security of software, since August 2023. President of Bumble Inc. from 2020 to 2023. President, Google Cloud at Google LLC from 2016 to 2020. Chief Commercial Officer of Caesars Entertainment Corporation from 2014 to 2016, after joining the company in 2012 as Chief Marketing Officer (Caesars Entertainment Operating Company, Inc., a subsidiary of Caesars Entertainment Corporation, and for which Mr. Shaukat served as an executive officer, filed voluntary petitions for relief under Chapter 11 in 2015). Prior to Caesars, Mr. Shaukat was a Partner at McKinsey & Company focused on consumer businesses in the travel, financial services, media and technology industries.

 

Experience:

As the Co-Chief Executive Officer of SonarSource, and as the former President of Bumble, President of Google Cloud, and Chief Commercial Officer and Chief Marketing Officer of Caesars, Mr. Shaukat brings extensive experience in overseeing finance, legal, operations, revenue management, marketing, information technology, analytics and machine learning initiatives. He also brings to the Board his leadership experience in these roles, as well as his other prior roles as a Partner at McKinsey & Company and at various technology-based companies.

 

 

 

 

 

 

 

 

 

 

 

 

 

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Salaam Coleman Smith

 

 

 

Age: 54

Director since: 2021

Committee Membership:

Compensation and Management Development

 

Current Public Company Directorships:

Pinterest, Inc.

 

Former Public Company Directorships Held in Last Five Years:

Enjoy Technology, Inc.

 

 

 

 

 

 

 

Biography:

Former Executive Vice President at The Walt Disney Company’s Disney ABC Television Group from 2014 to 2016, overseeing strategy and programming for ABC Family’s Freeform channel. Various senior executive roles at Comcast NBCUniversal from 2003 to 2014, including President of Style Network from 2008 to 2013. Senior executive at Viacom from 1993 to 2002, including serving as a senior executive within MTV Networks International Division and supporting Nickelodeon’s global expansion in Europe, Asia, and Latin America.

 

Experience:

Ms. Coleman Smith has over 23 years of media and entertainment industry experience at three global companies. She also brings experience in strategy and change management, having lead organizations through periods of significant transformation and growth. Additionally, she has substantial insights from her experience developing and leading a diverse and inclusive management team in the media industry.

 

 

 

 

 

 

 

Departing Director

Bob L. Martin, who has served as a director of the Company since 2002, as Board Chair since 2020, and as Interim CEO from July 2022 to August 2023, is not standing for reelection at our 2024 Annual Meeting. The Board thanks Mr. Martin for his many years of dedicated service to the Board and significant contributions to the Company.

 

 

 

 

 

 

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Director Selection and Qualification

Directors are elected at each Annual Meeting to serve until the next Annual Meeting and until their successors are duly elected and qualified. Pursuant to our Bylaws, in the event of a vacancy on the Board (resulting from an increase in the authorized number of directors or otherwise), the Board will appoint a director to serve until his or her successor is duly elected and qualified.

The Governance and Sustainability Committee understands the vital role that a strong board composition with a diverse set of skills plays in effective oversight. The Committee is responsible for identifying, evaluating, and recommending qualified candidates to the Board and it regularly assesses the current needs of the Board to help ensure that directors possess an appropriate mix of skills considering the Company’s current and anticipated strategic needs. In addition, the Board believes that varying tenures and perspectives create a balance between directors with a deeper knowledge of the Company's business, operations and history, and directors who bring new and fresh perspectives, which is important to the effectiveness of the Board’s oversight of the Company.

While we do not maintain a formal diversity policy, the Board believes that diversity, including differences in backgrounds, qualifications, experiences, and personal characteristics, including gender and ethnicity/race, is important to the effectiveness of the Board’s oversight of the Company, and considers diversity as a factor when evaluating and recommending potential nominees. The Board believes that its criteria for selecting nominees are effective in promoting overall diversity.

The Governance and Sustainability Committee engages third-party search firms from time to time to assist in identifying potential director nominees. The Committee, in collaboration with the search firm, may develop targeted search specifications. Any search firm used to identify potential nominees is instructed to include qualified candidates who reflect diverse backgrounds in its initial list of candidates. These consultants have assisted the Committee in identifying a diverse pool of qualified candidates and in evaluating and pursuing individual candidates at the direction of the Committee. Directors may also leverage their business and personal networks to help identify potential directors nominees.

The Governance and Sustainability Committee will also consider director nominees recommended by our shareholders pursuant to our Bylaws. See Other Information—Questions and Answers about the Annual Meeting and Voting for more information.

 

 

 

 

 

 

 

 

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Director Nomination Process

 

1. Assess Board Composition and Collect Candidate Pool

 

Results

     The Governance and Sustainability Committee considers, among other things, the Board’s current skill set, the Company’s long-term strategic plan and objectives, potential director retirements, and director feedback provided in connection with the Board’s annual self-assessment process.

     Director nominees are then identified and considered on the basis of knowledge, experience, integrity, leadership, reputation, and ability to understand the Company’s business, as well as their inclination to engage and intellectual approach.

 

Five new directors brought on to the Board since 2021, including:

     CEO, President, COO and senior leadership experience

     Media and digital marketing expertise

     Finance and investment expertise

     Brand strategy and revitalization expertise

     Technology, analytics and machine learning expertise

     Public company board experience

     Three women and two racially diverse directors

2. Evaluation of Candidates

 

     Nominees are pre-screened to ensure each candidate has qualifications which complement the overall core competencies of the Board, including background evaluations and independence determinations.

     The Chair of the Board, Chief Executive Officer, and at least two independent directors interview any qualified candidates prior to nomination. Other directors and members of management interview each candidate as requested by the Chair of the Board, Chief Executive Officer, or Chair of the Governance and Sustainability Committee.

 

3. Recommendation to the Board

 

     The Governance and Sustainability Committee recommends qualified candidates to the full Board for review and approval.

 

Director Nominee Demographics

 

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* Tenure and age are measured as of the filing date of this Proxy Statement.

 

 

 

 

 

 

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Board Self-Assessment

Annually, the Board conducts a formal review process to assess the composition and performance of the Board, each standing committee of the Board, and each individual director. The Governance and Sustainability Committee oversees the annual review process. The self-assessment is conducted to identify opportunities for improvement and skill set needs, as well as to ensure that the Board, the standing committees, and individual directors have the appropriate blend of diverse experiences and backgrounds, and are effective and productive.

As part of the process, each director completes a survey questionnaire. Results are aggregated and summarized for discussion purposes. Responses are not attributed to any individual director and are kept confidential to ensure honest and candid feedback is received. Each director also participates in private one-on-one conversations, which have been facilitated in recent years by the Chief Legal and Compliance Officer, the Chair of the Governance and Sustainability Committee, and the Lead Independent Director, where additional feedback is solicited on the Board's performance and individual directors' contributions. Following these discussions, the Governance and Sustainability Committee reviews the self-assessment results and discusses opportunities and makes recommendations for improvement as appropriate with the full Board, which implements agreed upon improvements. A director will not be nominated for reelection to the Board unless it is affirmatively determined that he or she is substantially contributing to the overall effectiveness of the Board.

2023 Board Self-Assessment Process

 

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Key Director Attributes

The Board endeavors to represent a range of skills, characteristics, and qualifications that contribute to the Board’s oversight responsibilities. The following matrix displays the most significant skills and qualifications that each director nominee possesses, and that the Board believes are relevant to oversight of our business strategies. The Committee and the Board considered these skills and qualifications in determining whether to recommend each director to be nominated for election.

Director Nominee Skills and Qualifications

 

SKILLS AND QUALIFICATIONS

 

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Retail or Consumer Products

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Experience in the retail or consumer product sectors, including specific experience overseeing product design or merchandising, or developing strategies for real estate, store operations and logistics.

 

 

 

 

 

 

 

 

 

 

 

 

International Business and Markets

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Experience driving business success in global markets, with an understanding of diverse business environments, economic conditions, cultures, and regulatory frameworks, and a broad perspective on global market opportunities.

 

 

 

 

 

 

 

 

 

 

 

 

Leadership

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Experience as a CEO or CFO, or other extended leadership experience for a significant enterprise, resulting in a practical understanding of strategy, risk management, general operations, human capital management and succession planning, and driving change and long-term growth.

 

 

 

 

 

 

 

 

 

 

 

 

Financial

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Leadership of a financial firm or management of the finance function of an enterprise, resulting in proficiency in complex financial management, capital allocation, and financial reporting processes.

 

 

 

 

 

 

 

 

 

 

 

 

Technology

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Significant experience leveraging technology to generate disruptive innovation and extend or create new business models.

 

 

 

 

 

 

 

 

 

 

 

 

Marketing, Media and Public Relations

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Experience overseeing or managing consumer marketing, media or public relations strategy for a complex organization, including crisis management and managing publicity risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Director Independence

There will be at least a majority of independent directors as defined under SEC and NYSE rules on the Board. In addition, the Board believes that it is most desirable for independent directors to constitute two-thirds or more of the Board, and is committed to maintaining such levels barring unforeseen circumstances, including mid-year resignations. For a nominee to be considered an independent director, the Board must affirmatively determine that the director has no material relationship with the Company.

The Board evaluated the independence of each person who served as a director during fiscal 2023 and has determined that Elisabeth B. Donohue, Robert J. Fisher, William S. Fisher, Tracy Gardner, Kathryn A. Hall, Amy Miles, Chris O’Neill, Mayo A. Shattuck III, Tariq Shaukat, and Salaam Coleman Smith are independent under SEC and NYSE rules and have no direct or indirect material relationships with the Company. In particular, the Board has determined that none of these directors have relationships that would cause them not to be independent under the specific criteria of Section 303A.02 of the NYSE Listed Company Manual. In making this determination with respect to Robert and William Fisher, the Board considered the following: (A) with the exception of Robert Fisher’s brief periods of service during 2007 and 2019 to 2020 as Interim Chief Executive Officer of the Company during Chief Executive Officer transitions, neither Robert nor William Fisher has served as an officer of the Company in over 20 years, (B) NYSE guidance indicates that employment as an Interim Chief Executive Officer does not disqualify directors from being considered independent following that employment, and (C) NYSE guidance indicates that ownership of even a significant amount of stock does not preclude a finding of independence. After considering these factors, the Board concluded that there is no material relationship between the Company and Robert or William Fisher that would impact their independence under NYSE rules. Bob L. Martin and Richard Dickson were determined to not be independent by virtue of their employment with the Company.

Director Nominee Independence

 

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Corporate Governance

Corporate Governance Highlights

 

ACCOUNTABILITY TO SHAREHOLDERS

Annual Board Elections

 

All directors are elected annually. We do not have a classified / staggered Board.

Majority Voting Standard for Uncontested Director Elections

 

Our Bylaws provide for a majority voting standard in uncontested director elections. Any incumbent director who does not meet the majority voting standard must offer to resign from the Board.

Shareholder Action by Written Consent

 

Our Bylaws provide for shareholders to act by written consent to approve any action that would otherwise be required or permitted to be taken at a meeting of shareholders.

Shareholder Ability to Call Special Meetings

 

Our Bylaws provide for shareholders holding 10% or more of our common stock to call special meetings.

No Shareholder Rights Plan / Poison Pill

 

We have not adopted a shareholder rights plan / poison pill.

 

INDEPENDENT OVERSIGHT

Majority Independent Board

 

We are committed to maintaining at least two-thirds independent directors on our Board. 10 of 11 director nominees are independent.

Independent Board Committees

 

Each of our standing Board committees is composed solely of independent directors.

Board Committee Charters

 

Each of our standing Board committees has a charter outlining the committee’s duties and responsibilities. We review each committee’s charter at least annually to align with new requirements and developing best practices.

Separate Board Chair and CEO Roles

 

Since 2015, other than during periods of CEO transitions, we have separated the positions of CEO and Board Chair.

Lead Independent Director

 

Our Corporate Governance Guidelines provide that if the Board Chair is not an independent director and the Board determines it is appropriate, the independent directors will designate an independent director to serve as Lead Independent Director. Most recently, Mr. Shattuck has served as Lead Independent Director since 2022. The Lead Independent Director serves as a liaison between the independent directors and management and provides independent leadership to the Board.

Independent Executive Sessions

 

At each quarterly Board meeting, time is set aside for the independent directors to meet in executive session.

 

 

 

 

 

 

 

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BOARD STRUCTURE

Director Diversity

 

Our directors have a diversity of backgrounds, qualifications, experiences, and personal characteristics. As described in our Corporate Governance Guidelines, the Board believes that diversity is important to the effectiveness of the Board’s oversight of the Company.

Director Overboarding Policy

 

As described in our Corporate Governance Guidelines, directors who are full-time employees of other companies should not serve on more than three public company Boards (including the Company’s), and directors who are retired from full-time employment should not serve on more than four public company Boards (including the Company’s).

Annual Self-Assessment

 

Annually, the Board conducts a formal review process to assess the composition and performance of the Board, each standing committee of the Board, and each individual director.

Annual Board Independence Assessment

 

Annually, we review the independence status of our directors. We require directors to inform us of changes in circumstances that could affect their independence status.

Director Onboarding and Education

 

Directors are expected to complete a formal onboarding program within six months of joining the Board. Directors are encouraged to periodically attend continuing education programs at the Company's expense.

 

COMPENSATION PRACTICES

Compensation Consultant Independence Policy

 

We require our compensation consultant to be independent under NYSE rules, and we review its independence status annually.

Director and Executive Stock Ownership Guidelines

 

We have director and executive stock ownership guidelines. All directors and covered executives either meet the requirements or are on track to meet them within the required timeframe as of the date of this Proxy Statement.

Anti-Hedging and Pledging Policies

 

Directors and covered executives are prohibited from hedging Company stock or pledging Company stock as collateral.

No Single-Trigger Change in Control Arrangements

 

We do not have arrangements that provide for single-trigger change in control benefits.

Executive Compensation Recoupment Policy

 

The Company’s Executive Compensation Recoupment Policy was last updated in August 2023 to comply with recently adopted NYSE rules. The policy requires the Company to recover incentive-based compensation in the event of a financial restatement, without regard to individual fault or Board discretion. In addition, the policy permits the Company to recover incentive-based compensation in the event of a non-restatement related miscalculation or management misconduct or negligence resulting in material financial, reputational or other harm to the Company, in each case, subject to Board discretion.

 

 

 

 

 

 

 

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Corporate Governance Guidelines

We have adopted Corporate Governance Guidelines that outline, among other matters, the role and functions of the Board, the responsibilities of the various Board committees, and the procedures for shareholders to communicate with and report concerns to the Board. We review our Corporate Governance Guidelines annually to align with new requirements and developing best practices.

 

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Our Corporate Governance Guidelines are available at www.gapinc.com (follow the Investors, Governance links).

 

Additional Corporate Governance Information

If you would like further information regarding our corporate governance practices, please visit the Governance and Corporate Compliance sections at www.gapinc.com (follow the Investors, Governance and Investors, Corporate Compliance links). Those sections include:

Our Corporate Governance Guidelines;
Our Code of Business Conduct;
Our Committee Charters;
Our Certificate of Incorporation;
Our Bylaws;
Our Executive Stock Ownership Policy;
Our Executive Compensation Recoupment Policy;
Our Political Engagement Policy;
How interested parties may communicate with our Board and with our Corporate Secretary; and
How employees and others may report suspected violations of our Code of Business Conduct, including accounting or auditing concerns, directly to our Global Integrity team. Accounting, auditing, and other significant concerns are escalated by the Global Integrity team, as appropriate, including to the Audit and Finance Committee, as required.

 

 

 

 

 

 

 

 

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Risk Oversight

 

 

 

 

 

Board of Directors

The Board is responsible for oversight of the business, affairs and integrity of the Company, the Company’s mission, long-term strategy and objectives, and the Company’s risks while evaluating and directing implementation of controls and procedures.

 

 

 

 

 

 

 

 

 

 

 

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Board Committees

While the Board has ultimate oversight responsibility for the risk management process, risk management is also facilitated through the work of the Board committees, which are composed entirely of independent directors and provide regular reports to the Board regarding the matters they review. The committees also meet with our Chief Financial Officer, Chief Audit Executive, Chief Legal and Compliance Officer, and other key executives regarding our risk management processes and controls. The key risk management areas for our Board committees are described below.

 

 

 

 

 

 

 

 

 

Audit and

Finance

 

Compensation and

Management Development

 

Governance and

Sustainability

 

 

Our financial statements

Our internal controls

Our independent auditors

The Internal Audit function

Enterprise risk management

Our Corporate Compliance program

Our Data Privacy and Cybersecurity programs

Legal, regulatory and finance matters

 

Our compensation program and policies

Senior management development, retention, and succession planning

Human capital management

 

Board and committee composition

Corporate governance matters

Certain environmental, social, community and sustainability matters

 

 

 

 

 

 

 

 

 

 

 

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Enterprise Risk Management

Annually, the Company’s Internal Audit department facilitates a comprehensive enterprise risk management ("ERM") assessment encompassing a number of significant risk areas identified using a risk framework, including strategic, operational, compliance, financial, sustainability, reputational, and climate risks. The ERM assessment is designed to gather information regarding key enterprise risks, emerging risks, critical risk events, and key third-party dependencies that could impact the Company’s ability to achieve its objectives and execute its strategies. Risks are categorized based on the Company's potential exposure and the maturity of mitigation strategies. The Company's Risk Committee, which currently includes the entire Senior Leadership Team, is responsible for overseeing the ERM assessment process. Primary assessment methods include interviews and surveys with employees, key executives and Board members, reviews of critical Company strategies and initiatives, and monitoring of regulatory changes as well as emerging industry trends and issues.

 

The ERM assessment results are reviewed by the CEO and the Risk Committee and are presented to the Board to facilitate discussion of high-risk areas. The results provide the foundation for the annual Internal Audit plan, management’s monitoring and risk mitigation efforts, and ongoing Board-level oversight. The Risk Committee meets quarterly throughout the year to review ERM mitigation plans and progress, as well as selected risks, third-party dependencies and critical risk events. The Company also has a Risk Steering Committee, which currently includes a subset of the Senior Leadership Team, that meets monthly and sets the agendas for the Risk Committee meetings. On a quarterly basis, our Chief Audit Executive updates the Audit and Finance Committee on the Internal Audit plan and any changes to the Company’s enterprise risk profile. Our Chief Legal and Compliance Officer meets quarterly in a private session with the Audit and Finance Committee in part to update the Committee on legal, regulatory and compliance risks. In addition, on a regular basis, management communicates with the Board, both formally and informally, about key initiatives, strategies and industry developments, in part to assess and manage potential risks. We also facilitate cross-functional training exercises to help the Company better prepare for critical risk events.

 

The Company's Disclosure Committee is a cross-functional team that reviews financial and business disclosures in part to ensure that required disclosures regarding risks are accurate. The Company's legal and financial reporting teams seek input and advice from internal subject matter experts and external advisors in drafting specific disclosures, and that input and advice is communicated to the Disclosure Committee as appropriate.

 

 

 

 

 

 

 

 

 

 

 

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CYBERSECURITY RISK OVERSIGHT

Our Board understands the importance of maintaining a robust and effective cybersecurity program. The Audit and Finance Committee of the Board oversees the Company’s cybersecurity program as well as risk exposures and steps taken by management to monitor and mitigate cybersecurity risks. The Company's Chief Information Security Officer and/or Chief Digital and Technology Officer provide a quarterly update on the cybersecurity program, on an alternating basis to the Audit and Finance Committee or the full Board. Additionally, on a quarterly basis, our Chief Audit Executive updates the Audit and Finance Committee on the Internal Audit plan and any changes to the Company’s enterprise risk profile, including identified cybersecurity risks. In the last three years, the expenses (including any penalties and settlements) we have incurred from cybersecurity breach incidents were immaterial.

 

Additional information about the Company's cybersecurity program can be found in our Annual Report on Form 10-K filed on March , 2024.

COMPENSATION RISK ASSESSMENT

One of the goals of the Company’s compensation programs is to encourage an appropriate level of risk-taking, consistent with the Company’s business strategies.

On an annual basis, management reviews each of the Company’s compensation policies and practices for the purpose of determining whether any risks arising from those policies and practices are reasonably likely to have a material adverse effect on the Company. As a part of this review, each of the Company’s compensation policies and practices were compared to a number of specific factors that could potentially increase risk, including the specific factors that the SEC has identified as potentially triggering disclosure. The Company balanced these factors against a variety of mitigating factors. Examples of some of the mitigating factors are:

Compensation policies and practices are structured similarly across business units;
The risk of declines in performance in our largest business units is well understood and managed;
Incentive compensation expense is not a significant percentage of any unit’s revenues;
For executives, a significant portion of variable pay is delivered through long-term incentives, which carry vesting schedules over multiple years;
A mix of compensation vehicles and performance measures is used;
Stock ownership requirements for executives are in place;
Payouts of material cash and equity incentive plans are capped at all levels;
Threshold levels of performance must be achieved for the bulk of variable pay opportunities; and
A clawback policy is in place requiring recoupment of incentive compensation in the event of a financial restatement, and allowing for recoupment of incentive compensation in the event of a non-restatement related miscalculation or management misconduct or negligence resulting in material financial, reputational or other harm to the Company.

Management’s assessment was also presented to the Company’s Chief Legal and Compliance Officer and the Chair of the Compensation and Management Development Committee. As a result of management’s review, the Company determined that any risks arising from its compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

 

 

 

 

 

 

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Environmental, Social, and Governance (ESG) Oversight

 

The Board and its committees are actively involved in oversight of our environmental, social and governance ("ESG") programs and policies, given the importance that the Company believes ESG strategies have in achieving its long-term growth objectives. Each Board committee plays an important role in overseeing aspects of our ESG program, and provides regular updates to the full Board on its areas of ESG oversight responsibility. The Board, taking into account these reports, monitors ESG-related risks and opportunities as part of its overarching risk management and strategy responsibilities.

 

 

 

 

 

 

 

 

 

Board of Directors

 

 

Receives regular reports from the Board committees on their areas of ESG oversight responsibility and monitors ESG-related risks and opportunities.

 

 

 

 

 

 

 

 

 

 

 

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Governance and

Sustainability

 

Compensation and

Management Development

 

Audit and

Finance

 

 

Oversees strategies to support the sustainable growth of the Company’s business, including the Company’s environmental stewardship practices, social and community issues involving supply chain, and the Company’s philanthropy and community giving activities.

 

Oversees the Company’s human capital management and talent development functions, including, among others, programs and strategies related to opportunity hiring, pay equity, and workforce diversity, equity and inclusion.

 

 

Oversees the Company’s corporate compliance function, the Internal Audit function and enterprise risk management, and Company programs related to data privacy and cybersecurity.

 

 

 

 

 

 

 

 

 

 

 

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Chief Supply Chain and Transformation Officer, Chief People Officer, Chief Legal and Compliance Officer, and Other Senior Leaders

 

 

Report regularly to the Board and its committees on ESG topics and developments.

 

 

 

 

 

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ESG Functions

 

 

Teams across the Company, including Global Sustainability, Product, Marketing, Equality & Belonging, Human Resources, Supply Chain Strategy, Government Affairs, Legal, and Gap Foundation engage on ESG topics.

 

 

 

 

 

 

 

 

 

ESG RISK MANAGEMENT

As described above, our Internal Audit department facilitates an annual ERM assessment that encompasses, among others, risks related to human rights and labor, environmental impacts and other sustainability issues. The ERM assessment is presented to the Board, and it informs the annual Internal Audit plan and ongoing Board-level oversight of ESG risks. In addition, our Business Continuity team analyzes, prioritizes, and helps mitigate risks resulting from extreme weather, natural hazards, and other external events, to help protect our owned and operated facilities and stores.

 

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Our most recent Annual ESG Report and other ESG resources are available at www.gapinc.com (follow the Values, Sustainability and Values, Equality & Belonging links).

 

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Gap Inc. is committed to respecting the dignity of all people and communities. Our Human Rights Policy and other sustainability policies, including our Code of Vendor Conduct, are available at www.gapinc.com (follow the Values, Sustainability, ESG Resources links).

 

 

 

 

 

 

 

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Shareholder Engagement

WHY WE ENGAGE

Our Board and management are committed to driving long-term shareholder value through strong corporate governance, which includes ongoing dialogue with our shareholders to enable us to understand and respond to their concerns. We have a robust shareholder outreach program, aimed at providing visibility and transparency into compensation, governance, and ESG practices, and assessing those issues to better inform our decision-making, enhance our disclosures, and help shape our go-forward practices. Our shareholder outreach program is a recurring year-round effort led by a cross-functional team that includes members of our Legal, Total Rewards, and Global Sustainability teams, with participation from additional leaders when requested by shareholders or appropriate.

 

WHEN WE ENGAGE

 

 

 

 

 

 

 

 

 

 

 

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Spring

 

Summer

 

Fall

 

Winter

 

 

 

Ahead of annual meeting, engage with shareholders to update and gather feedback on compensation, governance and ESG developments, and discuss any concerns on annual meeting agenda items.

 

 

Review feedback and results from annual meeting and identify any areas of concern.

 

 

Off-season engagement with shareholders primarily focused on ESG and corporate governance developments.

 

 

Review feedback and consider changes to compensation, governance and ESG practices and disclosures.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023 OUTREACH

In the spring of 2023, we invited our top 25 shareholders (not including members of the Fisher family), representing approximately 47% of our outstanding ownership at that time, to engage in discussion with us and provide an update on our ESG, executive compensation, and corporate governance practices, and in the fall of 2023, we invited our top 25 shareholders (not including members of the Fisher family), representing approximately 49% of our outstanding ownership at the time, to engage in discussion with us and provide an update on our ESG and corporate governance practices. We engaged with shareholders representing approximately 18% of our outstanding shares in the spring of 2023 and with shareholders representing approximately 8% of our outstanding shares in the fall of 2023. We received overall positive feedback on our ESG, executive compensation and corporate governance practices.

 

 

 

 

 

 

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Communication with Directors

Shareholders and other interested parties can send direct communications to our Board (through our Board Chair and Corporate Secretary) by email to: [email protected]. Matters may be referred to the entire Board, Board committees, individual directors and other departments within the Company, as appropriate.

 

Code of Business Conduct

Our Code of Business Conduct is designed to promote a responsible and ethical work environment and applies to all Gap Inc. employees and directors. The Code contains our policies and expectations on a number of topics, including workplace standards, conflicts of interest, legal compliance, Company information and assets, and political contributions and activities. All employees worldwide receive access to the Code when they join the Company, agree in writing to comply with it, and are required to complete an overview training course.

In addition, the Audit and Finance Committee oversees the Company’s Corporate Compliance program, which includes procedures for the (i) receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, and (ii) confidential, anonymous submission by employees and others of concerns regarding questionable accounting or auditing matters and other matters under the Company’s Code of Business Conduct.

 

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Our Code of Business Conduct is available at www.gapinc.com (follow the Investors, Corporate Compliance links).

 

Political Engagement Policy

The Company believes that it is important to participate in the political and regulatory processes on issues that affect our business and community interests. We have adopted a Political Engagement Policy that covers, among other things, the use of corporate funds to make political contributions. The Government Affairs team manages and oversees the Company’s political activities. Corporate contributions are reviewed annually by the Board. The Board and the Governance and Sustainability Committee also receive periodic updates regarding the Company’s political activities.

 

The Company also provides eligible employees with the opportunity to contribute to the Gap Inc. Political Action Committee (“Gap PAC”). Gap PAC has its own oversight council and is funded solely from voluntary contributions made by eligible employees, directors, shareholders, and their families. The Head of Government Affairs manages and oversees all Gap PAC contributions after consultation and approval by the internal PAC council.

 

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Our Political Engagement Policy, as well as information about our political contributions and trade associations we support, is available at www.gapinc.com (follow the Investors, Governance links).

 

Policies and Procedures with Respect to Related Party Transactions

The Board is committed to upholding the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest. The Compensation and Management Development Committee’s charter requires that the members of that Committee, all of whom are independent directors, approve all of the Company’s executive compensation policies and programs and all compensation awarded to executive officers. The Audit and Finance Committee’s charter requires that the members of the Audit and Finance Committee, all of whom are independent directors, review and approve all related party transactions that are required to be disclosed under SEC rules. In the event a transaction involves a committee member, that member will recuse him or herself from the approval of the transaction.

We have determined there are no transactions required to be disclosed pursuant to Item 404(a) of Regulation S-K.

See "Policies and Procedures with Respect to Related Party Transactions" for a description of the Company's policies and procedures for the review and approval of Related Party Transactions.

 

 

 

 

 

 

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Board Leadership Structure and Independent Oversight

Our current Board Chair, Bob Martin, is not standing for reelection to the Board as he has reached the mandatory retirement age indicated in the Company's Corporate Governance Guidelines. Upon Mr. Martin's retirement, effective as of the date of the Annual Meeting, we expect that Mayo Shattuck will assume the role of independent Board Chair.

We believe in the importance of independent oversight. We ensure that this oversight is truly independent and effective through a variety of means, including:

Since 2015, other than during periods of CEO transitions, we have separated the positions of CEO and Board Chair. We believe that separating these positions provides the most appropriate leadership structure. Our CEO is typically responsible for day-to-day leadership and for setting the strategic direction of the Company, while the Board Chair oversees the functioning of the Board and its oversight responsibilities.
Our Corporate Governance Guidelines provide that at least two-thirds of our directors should be independent. Our Board has determined that each director nominee, other than Mr. Dickson, is independent.
Our Corporate Governance Guidelines provide that if the Board Chair is not an independent director and the Board determines it is appropriate, the independent directors will designate an independent director to serve as Lead Independent Director. Most recently, Mr. Shattuck has served as Lead Independent Director since 2022. The Lead Independent Director serves as a liaison between the independent directors and management and provides independent leadership to the Board.
At each regularly scheduled quarterly Board meeting, the independent directors are scheduled to meet in an executive session without the presence of non-independent directors.
Each standing Board committee (Governance and Sustainability, Audit and Finance, and Compensation and Management Development) is required to be composed solely of independent directors.

Board Committees

 

 

 

 

 

AUDIT and finance committee

 

 

 

 

 

 

 

 

 

 

 

 

Members:

 

Amy Miles (Chair)

Kathryn A. Hall

Chris O’Neill

Mayo A. Shattuck III
Tariq Shaukat

 

The Board’s Audit and Finance Committee is composed solely of independent directors.

This Committee assists the Board in fulfilling its oversight responsibilities relating to:

The integrity of our financial statements.

The adequacy of our internal controls.

Compliance with legal and regulatory requirements.

The qualifications and independence of the independent accountant and the performance of its audits.

The performance of the Internal Audit function and enterprise risk management.

Oversight of our Corporate Compliance program.

Finance matters.

Oversight of our Data Privacy and Cybersecurity programs.

Such other duties as directed by the Board.

In addition, the Audit and Finance Committee is directly responsible for the appointment, compensation, retention and oversight of the independent accountant.

 

 

 

 

 

 

 

 

 

 

 

 

AUDIT COMMITTEE FINANCIAL EXPERT

Our Board has determined that the Audit and Finance Committee has four current members who are “audit committee financial experts” as determined under Regulation S-K Item 407(d)(5) of the Securities Exchange Act of 1934: Ms. Hall, Ms. Miles, Mr. Shattuck and Mr. Shaukat, each of whom is an independent director. See Ms. Hall’s, Ms. Miles’, Mr. Shattuck’s and Mr. Shaukat's biographies in "Nominees for Election as Directors" for information regarding their relevant experience.

 

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The Audit and Finance Committee’s charter is available at www.gapinc.com (follow the Investors, Governance links).

 

 

 

 

 

 

 

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compensation and management development

 

 

 

 

 

 

 

 

 

 

 

 

Members:

 

Tracy Gardner (Chair)
Elisabeth B. Donohue

Salaam Coleman Smith

 

* Mr. Dickson served on the Compensation and Management Development Committee in 2023 prior to accepting his appointment as the Company's President and CEO.

 

The Board’s Compensation and Management Development Committee is composed solely of independent directors.

This Committee assists the Board in fulfilling its oversight responsibilities relating to:

Executive officer and director compensation.

Succession planning for senior management.

Development and retention of senior management.

Human capital management.

Such other duties as directed by the Board.

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPENSATION OVERSIGHT

The Compensation and Management Development Committee approves all of the Company’s executive compensation policies and programs and all compensation awarded to executive officers. Our CEO evaluates each executive officer and discusses with the Committee his or her assessment and recommendations for compensation. The CEO is not present during the Committee’s deliberations about his or her own compensation. The Committee also oversees senior management development, retention, and succession plans.

The Compensation and Management Development Committee approves grants of equity awards to employees at the Vice President level or above, and has delegated authority, within defined parameters, to the Company's Chief People Officer or, in her absence, the Chief Executive Officer, to approve grants of restricted stock units to employees below the Vice President level (see “Compensation Discussion and Analysis—Elements of Compensation—Long-Term Incentives” for more details). The Committee has also delegated authority, within defined parameters, to the Company’s Human Resources personnel to make certain non-material changes to the Company’s employee benefit plans.

INDEPENDENT COMPENSATION CONSULTANT

The Compensation and Management Development Committee has engaged Frederic W. Cook & Co. as its independent executive compensation consultant. The consultant provides advice to the Committee from time to time on our executive compensation program structure and specific individual compensation arrangements (see “Compensation Discussion and Analysis—Role of the CEO and Compensation Consultant” for more details). In addition, under NYSE rules, the Committee can only retain a compensation advisor after considering six independence factors: (a) whether the advisor’s firm provides other services to the Company, (b) the fees received by the advisor’s firm from the Company as a percentage of the firm’s overall revenue, (c) the policies and procedures of the advisor’s firm designed to prevent conflicts of interest, (d) any business or personal relationship between the advisor and a member of the Committee, (e) any stock of the Company owned by the advisor, and (f) any business or personal relationship of the advisor or advisor’s firm with an executive officer of the Company. Based on a review of the Committee’s relationship with its compensation consultant and an assessment considering these six independence factors, the Committee has identified no conflicts of interest and confirmed the independence of Frederic W. Cook & Co.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During fiscal 2023, Mr. Dickson, Ms. Donohue, Ms. Gardner, and Ms. Coleman Smith served on the Compensation and Management Development Committee of the Board. Ms. Gardner was previously an officer of the Company from 1999 to 2004. No member of the Committee, while serving on the Committee, was at any time during fiscal 2023 an officer or employee of the Company, and no member of the Committee had any relationship requiring disclosure under Item 404 of Regulation S-K. During fiscal 2023, none of our executive officers served on the board of directors or compensation committee of any company where one of that company’s executive officers served as one of our directors.

 

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The Compensation and Management Development Committee’s charter is available at www.gapinc.com (follow the Investors, Governance links).

 

 

 

 

 

 

 

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Corporate Governance

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Governance and Sustainability Committee

 

 

 

 

 

 

 

 

 

 

 

 

Members:

 

Robert J. Fisher (Chair)

Amy Miles

Mayo A. Shattuck III

 

 

 

The Board’s Governance and Sustainability Committee is composed solely of independent directors.

 

This Committee assists the Board in fulfilling its oversight responsibilities relating to:

The Company’s corporate governance matters, including the annual review of our Corporate Governance Guidelines.

The annual self-assessment of the Board, its committees and individual directors.

The identification and selection of director nominees.

Oversight of the Company’s programs, policies and practices relating to certain environmental, social and community, and governance issues and impacts to support the sustainable growth of the Company’s business.

Such other duties as directed by the Board.

 

 

 

 

 

 

 

 

 

 

 

 

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The Governance and Sustainability Committee’s charter is available at www.gapinc.com (follow the Investors, Governance links).

Board and Committee Meetings in Fiscal 2023

The Board met 6 times during fiscal 2023. The following table lists the current members of each Board committee and the number of committee meetings held during fiscal 2023:

 

Name

 

Audit
&
Finance

 

Compensation
&
Management
Development

 

Governance
&
Sustainability

Richard Dickson

 

 

 

 

 

 

Elisabeth B. Donohue

 

 

 

 

 

Robert J. Fisher

 

 

 

 

 

Chair

William S. Fisher

 

 

 

 

 

 

Tracy Gardner

 

 

 

Chair

 

 

Kathryn A. Hall

 

 

 

 

 

Amy Miles

 

Chair

 

 

 

Bob L. Martin

 

 

 

 

 

 

Chris O'Neill

 

 

 

 

 

Mayo A. Shattuck III

 

 

 

 

Tariq Shaukat

 

 

 

 

 

Salaam Coleman Smith

 

 

 

 

 

Number of Meetings

 

9

 

10

 

4

 

Directors are expected to attend all meetings of the Board and committees on which they sit. Each director attended at least 75% of the meetings of the Board and committees on which he or she served (held during the time that he or she served) in fiscal 2023. In addition, individual Board members often work together and with management outside of formal meetings.

 

 

 

 

 

 

 

 

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Attendance of Directors at Annual Meeting of Shareholders

Our policy regarding attendance by directors at our Annual Meeting of Shareholders states that our Board Chair and committee chairs should attend and be available to answer questions at our Annual Meeting, if reasonably practicable. Our policy also encourages all other directors to attend. All 11 of our then current directors attended our 2023 Annual Meeting.

Stock Ownership Guidelines for Directors

We have adopted minimum stock ownership guidelines for our directors. Each non-management director should, within three years of joining the Board, hold stock (which includes deferred stock units) of the Company worth at least five times the annual base retainer then in effect. Management directors are required to own stock of the Company in accordance with our stock ownership requirements for executives, described in Compensation Discussion and Analysis—Stock Ownership Requirements for Executive Officers / Hedging and Pledging Prohibitions.” All directors are either in compliance with our stock ownership guidelines or had remaining time and were on track to do so as of the date of this Proxy Statement.

Insider Trading Policy and Restrictions on Hedging and Pledging

Our Code of Business Conduct prohibits all Company employees from trading in the Company’s stock while in possession of material non-public information and from tipping others with that information. Additionally, our Securities Law Compliance Manual prohibits trading in the Company’s stock by all Company insiders, including directors, during designated blackout periods (which may be extended or invoked during unscheduled periods). All Company insiders must confirm by email that a blackout period is not in effect prior to trading. Members of the Senior Leadership Team, Finance Department Vice Presidents and above, and Board members must also contact our Legal Department for trading pre-clearance.

Our Securities Law Compliance Manual, which is applicable to all Company insiders, including Board members, employees at the Vice President level or above, and others who have access to Company-wide financial or sensitive non-public information, prohibits speculation in the Company’s stock, including short sales, hedging, or publicly-traded option transactions. Hedging or monetization transactions can be accomplished through a number of possible mechanisms, including through the use of financial instruments such as prepaid variable forward contracts, equity swaps, collars, and exchange funds, all of which are prohibited. All Company officers subject to Rule 16a-1(f) of the Securities Exchange Act of 1934 and Board members are also prohibited from holding Company stock in a margin account as collateral for a margin loan or otherwise pledging Company stock as collateral.

 

 

 

 

 

 

 

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Compensation of Directors

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Compensation of Directors

Annual Retainers

The table below shows the annual retainers we paid to our non-employee directors in fiscal 2023 as well as the amounts payable for fiscal 2024 (which will remain the same).

FISCAL YEAR 2023 AND 2024 DIRECTOR CASH COMPENSATION(1)

 

 

2023

 

2024

Annual Retainer

 

$90,000

 

$90,000

Annual Retainer for Committee Members

 

 

 

 

Audit and Finance Committee

 

$16,000

 

$16,000

Compensation and Management Development Committee

 

$12,000

 

$12,000

Governance and Sustainability Committee

 

$10,000

 

$10,000

Additional Annual Retainer for Committee Chairs

 

 

 

 

Audit and Finance Committee

 

$25,000

 

$25,000

Compensation and Management Development Committee

 

$20,000

 

$20,000

Governance and Sustainability Committee

 

$15,000

 

$15,000

Additional Annual Retainer for Chair of the Board

 

$200,000

 

$200,000

Additional Annual Retainer for Lead Independent Director

 

$40,000

 

$40,000

 

(1)
Non-employee directors who reside primarily outside of North America receive an additional fee of $2,000 for each trip to the United States for Board and/or committee meetings.

Employee directors (which included Mr. Martin and Mr. Dickson in fiscal 2023) are not eligible to receive annual retainer fees while employed and are not eligible to serve on committees while employed and until they are determined to be independent. Mr. Martin’s and Mr. Dickson’s compensation for fiscal 2023 is set forth in the “2023 Summary Compensation Table” and related executive compensation tables.

Equity Compensation

Non-employee directors receive the following under our 2016 Long-Term Incentive Plan:

Each new non-employee director automatically receives stock units with an initial value of $170,000 based on the then-current fair market value of the Company’s common stock; and
Each continuing non-employee director automatically receives, on an annual basis, stock units with an initial value of $170,000 at the then-current fair market value of the Company’s common stock; provided that newly-appointed non-employee directors who were appointed after the Company’s last annual shareholders meeting will receive their first annual stock unit grant on a prorated basis based on the number of days that the director has served between his or her appointment and the date of the first annual stock unit grant.

The annual stock units granted to continuing non-employee directors following the Company’s annual shareholders meeting, as well as the initial grant made to any non-employee director who is first elected to the Board at the Company’s annual shareholders meeting, are granted on June 30 of each year; provided, however, that if the Company’s annual shareholders meeting takes place after June 30, then the related stock unit grants will be granted on the first business day following that meeting. All initial stock units granted to new non-employee directors who are appointed other than at the annual shareholders meeting are granted on the date of appointment. The number of stock units is rounded down to the nearest whole share. These stock units are fully-vested but are subject to a three-year deferral period. During the deferral period, the stock units earn dividend equivalents which are reinvested in additional units annually. Following the deferral period, shares in an amount equal in value to the stock units, including units acquired through dividend equivalent reinvestment, will be issued to each non-employee director unless a further deferral election has been made; provided, however, that shares and accumulated dividend equivalents will be issued immediately upon ceasing to be a director of the Company.

Expense Reimbursement and Other Benefits

We pay for or reimburse directors for approved educational seminars and for travel expenses related to attending Board, committee, and approved Company business meetings. Additionally, we provide non-employee directors access to office space and administrative support for Company business from time to time.

 

 

 

 

 

 

 

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Directors and their spouses are eligible to receive discounts on our merchandise on terms similar to the Gap Inc. corporate employee merchandise discount policy. In addition, on an annual basis, non-employee directors may elect to receive gift cards for Gap Inc. merchandise, up to a maximum of $5,000.

 

Directors are eligible to participate in The Gap, Inc. Deferred Compensation Plan (“DCP”). Under the DCP, highly compensated employees, including executive officers, and non-employee directors may elect to defer receipt of certain eligible income. The DCP allows eligible employees to defer a percentage of their salary and bonus on a pre-tax basis, and allows non-employee directors to defer their retainers. The deferred amounts are indexed to reflect the performance of the participant’s choice of approved investment funds. Non-employee director deferrals are not matched, and above-market or preferential interest rate options are not available on deferred compensation.

 

Directors are eligible to participate in our Gift Match Program, which is available to all employees, under which we match contributions to eligible nonprofit organizations, up to certain annual limits. In calendar year 2023, the annual limit for directors was $15,000 under the Gift Match Program, except for Mr. Dickson and Mr. Martin who each had a $100,000 annual gift match limit.

 

 

 

 

 

 

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Compensation of Directors

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Director Compensation Summary

The following table sets forth certain information regarding the compensation of our non-employee directors who served in fiscal 2023, which ended February 3, 2024.

 

Name(1)

 

Fees
Earned
or Paid
in Cash
($)

 

Stock
Awards
($)(2)

 

Option
Awards
($)(3)

 

Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)

 

All Other
Compensation
($)(4)

 

Total
($)

Elisabeth B. Donohue

 

102,000

 

169,991

 

 

 

15,500

 

287,491

Robert J. Fisher

 

115,000

 

169,991

 

 

 

17,500

 

302,491

William S. Fisher

 

90,000

 

169,991

 

 

 

15,000

 

274,991

Tracy Gardner

 

122,000

 

169,991

 

 

 

2,000

 

293,991

Kathryn Hall

 

106,000

 

169,991

 

 

 

5,000

 

280,991

Amy Miles

 

141,000

 

169,991

 

 

 

5,000

 

315,991

Chris O'Neill

 

106,000

 

169,991

 

 

 

5,711

 

281,702

Mayo A. Shattuck III

 

156,000

 

169,991

 

 

 

35,000

 

360,991

Tariq Shaukat

 

76,879

 

169,991

 

 

 

1,500

 

248,370

Salaam Coleman Smith

 

102,000

 

169,991

 

 

 

15,500

 

287,491

 

(1)
Under applicable SEC rules, we have omitted Mr. Dickson and Mr. Martin, who each served as a director in fiscal 2023. Mr. Dickson's and Mr. Martin's fiscal 2023 compensation is reported in the “2023 Summary Compensation Table” and related executive compensation tables.
(2)
For each of our non-employee directors, this column reflects the grant date fair value of fully-vested stock units granted in fiscal 2023 that are subject to a three-year deferral period, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") 718. For the period during which the payment of these awards is deferred (see "Equity Compensation" above), they will earn dividend equivalents which are reinvested in additional units annually. Please refer to Note , “Share-Based Compensation,” in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed on March , 2024 for the relevant assumptions used to determine the valuation of our stock awards. None of our non-employee directors had outstanding unvested stock awards as of fiscal 2023 year-end.
(3)
No stock option awards were granted to our directors in fiscal 2023. None of our non-employee directors had outstanding stock option awards as of fiscal 2023 year-end.
(4)
Amounts in this column consist of Company matching contributions under the Company’s Gift Match Program and the value of Gap Inc. merchandise gift cards requested by non-employee directors during the calendar year (see “Expense Reimbursement and Other Benefits” above). For Ms. Donohue, includes $15,000 in matching contributions and $500 in gift cards. For Mr. Robert Fisher, includes $15,000 in matching contributions and $2,500 in gift cards. For Mr. William Fisher, includes $15,000 in matching contributions. For Ms. Gardner, includes $2,000 in gift cards. For Ms. Hall, includes $5,000 in gift cards. For Ms. Miles, includes $5,000 in gift cards. For Mr. O'Neill, includes $711 in matching contributions and $5,000 in gift cards. For Mr. Shattuck, includes $30,000 in matching contributions and $5,000 in gift cards. For Mr. Shaukat, includes $1,500 in gift cards. For Ms. Coleman Smith, includes $15,000 in matching contributions and $500 in gift cards. Due to a clerical error, Mr. Shattuck did not receive a gift match in calendar year 2022, so his calendar year 2023 gift match limit was increased to $30,000.

 

 

 

 

 

 

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Proposal No. 2 — Ratification of Selection of Independent Registered Public Accounting Firm

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Proposal No. 2 — Ratification of Selection of Independent Accountant

The Audit and Finance Committee of the Board has selected Deloitte & Touche LLP as our independent accountant for the fiscal year ending on February 1, 2025. Deloitte & Touche LLP (or its predecessor firm) has been retained as our independent accountant since 1976. If shareholders fail to ratify the selection of Deloitte & Touche LLP, the Audit and Finance Committee will reconsider the selection. If the selection of Deloitte & Touche LLP is approved, the Audit and Finance Committee, in its discretion, may still direct the appointment of a different independent accountant at any time and without shareholder approval if the Audit and Finance Committee believes that such a change would be in the best interests of the Company and our shareholders.

 

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The Board of Directors Recommends a Vote “FOR” the Selection of Deloitte & Touche LLP as Our Independent Accountant for Fiscal 2024.

 

Representatives of Deloitte & Touche LLP are expected to be present, available to make statements, and available to respond to appropriate shareholder questions at the 2024 Annual Meeting.

 

 

 

 

 

 

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Principal Accounting Firm Fees

The following table sets forth the aggregate fees paid and accrued by us for audit and other services for the fiscal years ended January 28, 2023 and February 3, 2024 that were provided by our principal accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu Limited, and their respective affiliates (collectively “Deloitte & Touche”).

FISCAL YEARS 2022 AND 2023 ACCOUNTING FEES

 

Fees (in thousands) (see notes below)

 

Fiscal Year
2022

 

Fiscal Year
2023

Audit Fees

 

$5,829

 

$5,876

Audit-Related Fees

 

$1,057

 

$2,106

Tax Fees

 

$1,404

 

$1,433

All Other Fees

 

$744

 

$5,544

Total

 

$9,034

 

$14,959

 

Audit Fees” consists of fees for professional services rendered in connection with the integrated audit of our consolidated annual financial statements and internal controls over financial reporting, the review of our interim condensed consolidated financial statements included in quarterly reports, and the audits in connection with statutory and regulatory filings or engagements.

Audit-Related Fees” consists primarily of fees for professional services rendered in connection with the audit of our employee benefit plans, audit procedures required by store leases and capital verification reports.

Tax Fees” consists of fees billed for professional services rendered for tax compliance and tax advice. These services include assistance regarding federal, state and international tax compliance, and competent authority proceedings.

All Other Fees” consists of Deloitte & Touche LLP subscription fees and fees for non-audit services. In fiscal years 2022 and 2023, includes approximately $700,000 and $5,500,000, respectively, for permissible project-related consulting fees.

The Audit and Finance Committee approves the terms, including compensation, of the engagement of our independent accountant on an annual basis, and has a policy requiring pre-approval of all services performed by the firm. This policy requires that all services performed by Deloitte & Touche, whether audit or non-audit services, must be pre-approved by the Audit and Finance Committee or a designated member of the Audit and Finance Committee, with any such services reported to the entire Audit and Finance Committee at the next scheduled meeting. The Audit and Finance Committee pre-approved all services performed by the Company’s independent accountant for fiscal years 2022 and 2023.

Rotation

The Audit and Finance Committee periodically reviews and evaluates the performance of Deloitte & Touche’s lead audit partner, oversees the required five-year rotation of the lead audit partner responsible for our audit, oversees the required seven-year rotation of other audit partners who are engaged on our audit and, through the Committee’s Chair as representative of the Audit and Finance Committee, reviews and considers the selection of the lead audit partner. In addition, the Audit and Finance Committee periodically considers whether there should be a rotation of the independent accountant. At this time, the Audit and Finance Committee and the Board believe that the continued retention of Deloitte & Touche to serve as our independent accountant is in the best interests of the Company and our shareholders.

 

 

 

 

 

 

 

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Report of the Audit and Finance Committee

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Report of the Audit and Finance Committee

The Audit and Finance Committee assists the Board in fulfilling its oversight responsibilities relating to the integrity of the Company’s financial statements, the adequacy of the Company’s internal controls, compliance with legal and regulatory requirements, the qualifications and independence of the independent accountant and the performance of its audits, the performance of the Internal Audit function, enterprise risk management, oversight of the Company’s Corporate Compliance program, oversight of the Company’s Data Privacy and Cybersecurity programs, finance matters, and such other duties as directed by the Board. The Committee operates under a written charter adopted by the Board. The Committee is composed exclusively of directors who are independent under New York Stock Exchange listing standards and Securities and Exchange Commission rules.

The Committee has reviewed and discussed the audited financial statements of the Company for the fiscal year ended February 3, 2024 with the Company’s management. In addition, the Committee has discussed with Deloitte & Touche LLP, the Company’s independent accountant, the matters required to be discussed by the applicable Public Company Accounting Oversight Board and Securities and Exchange Commission requirements.

The Committee has also received the communications, including written disclosures and the letter from Deloitte & Touche LLP, required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Committee concerning independence, and the Committee has discussed the independence of Deloitte & Touche LLP with that firm.

Based on the Committee’s review and discussions noted above, the Committee recommended to the Board that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024 for filing with the Securities and Exchange Commission.

Amy Miles (Chair)

Kathryn A. Hall

Chris O’Neill

Mayo A. Shattuck III
Tariq Shaukat

 

March , 2024

Notwithstanding anything to the contrary in any of the Company’s previous or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate this Proxy Statement or future filings with the Securities and Exchange Commission, in whole or in part, this report shall not be deemed to be incorporated by reference into any such filing.

 

 

 

 

 

 

 

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Proposal No. 3 — Advisory Vote on the Overall Compensation of the Company’s Named Executive Officers

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Proposal No. 3 — Advisory Vote on the Overall Compensation of the Company's Named Executive Officers

Pursuant to Section 14A of the Securities Exchange Act, the Company is providing shareholders with an annual advisory (non-binding) vote on the overall compensation of our named executive officers. Accordingly, the following resolution will be submitted for a shareholder vote at the 2024 Annual Meeting:

“RESOLVED, that the shareholders of The Gap, Inc. (the “Company”) approve, on an advisory basis, the overall compensation of the Company’s named executive officers, as described in the “Compensation Discussion and Analysis” section, the accompanying compensation tables, and the related narrative disclosure pursuant to Item 402 of Regulation S-K, set forth in this Proxy Statement for this Annual Meeting”.

The Board and the Compensation and Management Development Committee, which is comprised entirely of independent directors, will consider the outcome of the shareholders’ non-binding advisory vote when making future executive compensation decisions.

As described in detail in the “Compensation Discussion and Analysis” section of this Proxy Statement, our executive compensation program is designed to provide the level of compensation necessary to attract and retain talented and experienced executives, and to motivate them to achieve short-term and long-term goals, thereby enhancing shareholder value and creating a successful company. We are committed to tie pay to performance and continue to believe our executive compensation program meets each of our compensation objectives. We also continue to put executive compensation to an annual advisory shareholder vote.

Shareholders are encouraged to read the “Compensation Discussion and Analysis” section of this Proxy Statement, the accompanying compensation tables, and the related narrative disclosures, which more thoroughly discuss how our compensation policies and procedures implement our compensation philosophy. It is expected that the next advisory vote on the compensation of our named executive officers will occur at the 2025 Annual Meeting.

 

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The Board of Directors Recommends a Vote “FOR” the Approval, on an Advisory Basis, of the Overall Compensation of the Company’s Named Executive Officers.

 

 

 

 

 

 

 

 

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Compensation Discussion and Analysis

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Compensation Discussion and Analysis

This Compensation Discussion and Analysis explains the key elements of our executive compensation program and compensation decisions for our named executive officers, who we refer to in this section as our Executives. The Compensation and Management Development Committee of our Board, which we refer to in this section as the Compensation Committee or the Committee, oversees these programs and determines compensation for our Executives.

Introduction

In this Compensation Discussion and Analysis, we discuss the following:

 

Executive Summary

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Compensation Objectives

Page 40

Elements of Compensation

Page 40

Compensation Analysis Framework

Page 51

 

Executive Summary

 

2023 STRATEGIC OVERVIEW

2023 was a year of driving financial and operational rigor across the Company. With those goals in mind, we made progress on several strategic initiatives, which included:

Strengthening our balance sheet. We ended the year with $1.9 billion in cash and cash equivalents and reduced year-end inventory by 16% year-over-year.
Reducing operating expenses. We reduced operating expenses by $213 million in fiscal 2023 compared to fiscal 2022 and continued to action cost savings during the year.
Improving operating margins and cash flows. We improved operating margins by 420 basis points year-over-year through gross margin improvements and cost discipline, and we generated $1.5 billion of cash flow from operations.

We believe that these achievements are a meaningful step on our path towards delivering profitable sales growth, and that our continuing focus on financial and operational rigor will allow us to continue elevating our performance, improving execution consistency and reinvigorating our brands.

 

As of the end of fiscal 2023, we completed our 350-store closure plan for the Gap and Banana Republic North America store fleet. Additionally, as part of our strategy to leverage partnerships in international markets, we completed the transition of our Gap China operations to a partnership model. We also closed the sale of a headquarters building in San Francisco in February 2023. We believe these actions will help to drive operational efficiency and reduce overhead costs.

 

2023 Business Performance

Net sales in fiscal 2023, which included 53 weeks, were $14.9 billion, compared to net sales of $15.6 billion in fiscal 2022, which included 52 weeks. Earnings before interest and taxes (“EBIT”) in fiscal 2023 were $560 million, compared to negative EBIT of $(69) million in fiscal 2022. The price of our common stock increased by approximately 50% over the course of fiscal 2023, driving positive total shareholder return ("TSR") on both a one-year and three-year basis. Our brands’ fiscal 2023 performance included:

Old Navy. Net sales of $8.2 billion were flat and comparable sales decreased 1% in fiscal 2023 compared to fiscal 2022. Old Navy performance inflected in the second half of fiscal 2023 as improved assortments and relevant marketing drove stronger performance.
Gap Brand. Net sales of $3.3 billion decreased 11% and comparable sales increased 1% in fiscal 2023 compared to fiscal 2022. Gap brand net sales in fiscal 2023 were negatively impacted by the transition of its China operations to a partnership model. We believe that Gap brand's positive comparable sales in fiscal 2023 show momentum in reigniting its brand dialogue.
Banana Republic. Net sales of $1.9 billion decreased 8% and comparable sales decreased 7% in fiscal 2023 compared to fiscal 2022. While the brand has been making progress elevating its aesthetic and the quality of its product offering, re-establishing Banana Republic will take time and there is work to be done to better execute many of the fundamentals.

 

 

 

 

 

 

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Athleta. Net sales of $1.4 billion decreased 8% and comparable sales decreased 12% in fiscal 2023 compared to fiscal 2022. While Athleta saw product acceptance issues in fiscal 2023, the brand has taken steps to reengage its core customer through better product and brand-right marketing.

 

2023 LEADERSHIP CHANGES