DEF 14A 1 gpsproxy2021.htm DEF 14A Document
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. )
þ Filed by the Registrant
o Filed by a Party other than the Registrant
CHECK THE APPROPRIATE BOX:
oPreliminary Proxy Statement
oConfidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þDefinitive Proxy Statement
oDefinitive Additional Materials
oSoliciting Material Under Rule 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 THE APPROPRIATE BOX):
þNo fee required.
oFee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
oFee paid previously with preliminary materials.
oCheck box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
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4) Date Filed:




NOTICE OF ANNUAL MEETING OF GAP INC. SHAREHOLDERS
PROXY STATEMENT
May 11, 2021
Via the Internet
www.virtualshareholdermeeting.com/GAP2021


























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NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
DATE AND TIME
Tuesday, May 11, 2021
10:00 a.m., San Francisco Time
ITEMS OF BUSINESS
Elect as directors the thirteen director nominees named in this Proxy Statement;
Ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending January 29, 2022;
Hold an advisory vote to approve the compensation of our named executive officers;
Approve the amendment and restatement of The Gap, Inc. Employee Stock Purchase Plan;
Approve the amendment and restatement of The Gap, Inc. 2016 Long-Term Incentive Plan; and
Transact such other business as may properly come before the 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 2020 Annual Report to Shareholders are available at: www.gapinc.com (follow the Investors, Annual Reports & Proxy links).
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.
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/GAP2021 on May 11, 2021 at 10:00 a.m., San Francisco 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 in to 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. We recommend that you log in a few minutes before the Annual Meeting to ensure you are logged in when the Annual Meeting starts.

Given the ongoing COVID-19 pandemic, we have decided to use a virtual meeting format for our Annual Meeting, which allows us to continue to proceed with the Annual Meeting while mitigating the health and safety risks to participants. 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. This technology will allow us to expand access to the Annual Meeting, improve communications and lower the cost to us, our shareholders and the environment. We expect to return to in-person annual meetings, when it becomes safe to do so.
By Order of the Board of Directors,
PLACE
Via the Internet at www.virtualshareholdermeeting.com/GAP2021
RECORD DATE
You must have been a shareholder of record at the close of business on March 15, 2021 to vote at the Annual Meeting.
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Julie Gruber
Corporate Secretary
March 30, 2021



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/GAP2021 on May 11, 2021, at 10:00 a.m., San Francisco Time, and any adjournment or postponement thereof (the “2021 Annual Meeting”). You will be able to attend the 2021 Annual Meeting online, vote your shares electronically and submit questions online during the 2021 Annual Meeting by logging in to 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 2021 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 2021 Annual Meeting to ensure you are logged in when the 2021 Annual Meeting starts.
On or about March 30, 2021, we commenced distribution of this Proxy Statement and the form of proxy to our shareholders entitled to vote at the Annual Meeting.
AGENDA
VOTING SHARES
Items of BusinessManagement
Recommendation
Page No.
The holders of common stock at the close of business on March 15, 2021 (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 374,911,323 shares of common stock outstanding.
The Board recommends you vote “FOR” each of the thirteen nominees.
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You may vote your shares by:
The Board recommends you vote “FOR” the selection of the independent registered public accounting firm.
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By Internet prior to the
2021 Annual Meeting:

www.proxyvote.com

By Internet during the
2021 Annual Meeting:

www.virtualshareholdermeeting.com/GAP2021

The Board recommends you vote “FOR” the approval of the overall compensation of the Company’s named executive officers.
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The Board recommends you vote “FOR” the approval of the amendment and restatement of The Gap, Inc. Employee Stock Purchase Plan.
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By Mail

Sign and return a proxy card (for shareholders of record) or voting instruction card (for beneficial owners of shares)
The Board recommends you vote “FOR” the approval of the amendment and restatement of The Gap, Inc. 2016 Long-Term Incentive Plan.
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By Phone

1-800-690-6903

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, in hand when you access the voting website or call to vote by phone. And 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.



TABLE OF CONTENTS
Compensation Discussion and Analysis



PROPOSALS REQUIRING
YOUR VOTE
PROPOSAL NO. 1 — ELECTION OF DIRECTORS
Nominees for Election as Directors
ELECTION PROCESS
Directors will be elected at the Annual Meeting to serve until the next Annual Meeting and until their successors are elected. The Governance and Sustainability Committee of the Board of Directors has nominated the persons whose names are set forth below, all of whom are current directors.
DIRECTOR NOMINATIONS
The Board of Directors has no reason to believe that any of the nominees will be unable to serve. However, if any nominee should for any reason be unavailable to serve, the Board of Directors may reduce the number of directors fixed 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 of Directors 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” THE ELECTION OF EACH OF THE FOLLOWING NOMINEES.


John J. Fisher
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Age: 59
Director since 2018
Committee Membership: None
Executive Vice Chairman of Pisces, Inc., an investment group, since 2016. President of Pisces, Inc. from 1992 to 2016.
Mr. Fisher brings extensive financial acumen, as well as executive leadership and risk management experience. In addition, he possesses deep retail industry and consumer product expertise having managed investments in a vast array of consumer goods and services companies.

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Robert J. Fisher
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Age: 66
Director since 1990
Committee Membership: Governance & Sustainability (Chair)
Managing Director, 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. Chairman 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. Former director of Sun Microsystems, Inc. from 1995 to 2006.
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 Gap Inc. positions. His previous leadership and oversight roles at Gap Inc. provide him with a deep understanding and unique insight into our organizational and operational structure. Mr. Fisher brings strong leadership to the Board based on perspective gained from his management roles and experience as a key member of the founding family and significant shareholder.
William S. Fisher
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Age: 63
Director since 2009
Committee Membership: None
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.
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 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.
Tracy Gardner
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Age: 57
Director since 2015
Committee Membership: Compensation & Management Development (Chair); Governance & Sustainability
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 December 2014. Former executive of J. Crew Group, Inc. from 2004 to 2010. Various positions with Gap Inc. from 1999 to 2004. Former director of Lands' End from 2014 to 2015.
With over 30 years of experience, Ms. Gardner is a retail 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 experience as a former senior executive within Gap Inc. and as a prior advisor to Gap brand provides Ms. Gardner with an in-depth understanding of Gap Inc.'s global business structure and operations.
Isabella D. Goren
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Age: 60
Director since 2011
Committee Membership: Audit & Finance (Chair)
Chief Financial Officer of AMR Corporation and American Airlines, Inc. from 2010 to 2013. AMR Corporation and American Airlines, Inc. successfully completed a reorganization under Chapter 11 in 2013, for which a voluntary petition was filed in 2011. Senior Vice President of Customer Relationship Marketing of American Airlines from 2006 to 2010. Various positions with AMR Corporation and American Airlines, Inc. from 1986 to 2006, including President of AMR Services, previously a subsidiary of AMR, from 1996 to 1998. Director of LyondellBasell Industries N.V. and MassMutual Financial Group.
Ms. Goren has broad experience in a number of key corporate functions, including finance, marketing, human resources and international operations. She brings extensive expertise in leadership of complex business functions, customer loyalty programs and online marketing, talent development, financial functions, and global operations and strategies.

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Bob L. Martin
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Age: 72
Director since 2002
Committee Membership: None
Executive Chairman, an employee role, Gap, Inc., since March 2020; Lead Independent Director of Gap Inc. from 2003 to 2015 and November 2019 to March 2020. Operating Partner of Stephens Group, Inc., a private equity group, since 2003. Principal (part-time) of Mcon Management Services, Ltd., a consulting company, since March 2020. Chief Executive Officer (part-time) of Mcon Management Services, Ltd. from 2002 to March 2020. Director of Conn’s Inc. since 2003. Independent Consultant from 1999 to 2002. President and Chief Executive Officer of Wal-Mart International, a division of Wal-Mart Stores, Inc., from 1984 to 1999. Former director of Dillard’s, Inc. from 2003 to 2004, Edgewater Technology, Inc. from 1999 to 2005, Furniture Brands International, Inc. from 2003 to 2010, Guitar Center from 2004 to 2007, Sabre Holdings Corporation from 1997 to 2007, and SolarWinds, Inc. from 2009 to 2010.
Mr. Martin is a retail industry veteran with over 40 years of work experience. As the former chief executive officer of Wal-Mart International, during which he ran operations in 12 countries across four continents, Mr. Martin brings extensive global governance and executive management experience, as well as a vast knowledge of international consumer brands and markets. As the former executive vice president and chief information officer for Wal-Mart Stores, Inc., Mr. Martin also has extensive insight into the areas of information technology and supply chain capabilities and strategies specific to a global retail company.
Amy Miles
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Age: 54
Director since 2020
Committee Membership: Audit and Finance
Former Chairman and Chief Executive Officer of Regal Entertainment Group, a leading theater chain, from 2015 to 2018. Chief Executive Officer, Regal Entertainment Group from 2009 to 2015. Executive Vice President, Chief Financial Officer and Treasurer, Regal Entertainment Group from 2002 to 2009. Director of Norfolk Southern Corporation.
 
As a former Chairman, Chief Executive Officer and Chief Financial Officer, Ms. Miles has extensive finance, accounting, and management experience. In addition, she brings expertise in information technology, marketing, and strategic planning.
Jorge P. Montoya
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Age: 74
Director since 2004
Committee Membership: Compensation & Management Development
President, Global Snacks & Beverages, and President, Latin America, of The Proctor & Gamble Company, a consumer products company, from 1999 to 2004. Director of The Kroger Co. Former director of Rohm & Haas Company from 1996 to 2007.
With over 30 years of leadership at large consumer products companies, including The Proctor & Gamble Company, Mr. Montoya possesses a deep knowledge of Hispanic markets, as well as extensive experience in management, international growth, consumer products, and marketing.
Chris O'Neill
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Age: 48
Director since 2018
Committee Membership: Compensation & Management Development
Partner, Portag3 Ventures, the venture capital arm of Sagard Holdings, since February 2020. Chairman, President and Chief Executive Officer of Evernote Corporation, a global cloud-based technology company, from 2016 to 2018. President and Chief Executive Officer, Evernote Corporation from 2015 to 2016. Various positions 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.

Mr. O’Neill's experience as a venture investor, as the Chief Executive Officer of Evernote, and his decade-long experience at Google provides him with extensive expertise in leading high-growth, innovative companies and understanding the strategic role technology plays in business.

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Mayo A. Shattuck III
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Age: 66
Director since 2002
Committee Membership: Audit & Finance; Governance & Sustainability
Non-Executive Chairman of Exelon Corporation, an energy company, since 2013. Executive Chairman of Exelon Corporation from 2012 to 2013. Chairman, Chief Executive Officer, and President of Constellation Energy Group from 2002 to 2012. Chief Executive Officer and President of Constellation Energy Group from 2001 to 2002. Director of Capital One Financial Corporation and Alarm.com Holdings, Inc. (Mr. Shattuck is not standing for reelection to the board of Alarm.com Holdings, Inc. at their annual meeting in 2021.)
With his experience on the boards of directors of two other public companies, as the former chief executive officer of an investment bank and Constellation Energy Group, and as non-executive Chairman of Exelon Corporation, Mr. Shattuck brings extensive expertise in risk oversight, financial literacy and reporting, corporate governance, and compliance, as well as leadership experience.
Elizabeth A. Smith
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Age: 57
Director since 2020
Committee Membership: Compensation & Management Development
Former Chairman and Chief Executive Officer of Bloomin' Brands, Inc., a casual dining restaurant company from 2012 to 2019 and Chairman through March 2020. Former President and Chief Executive Officer Bloomin’ Brands, Inc. from 2009 to 2012. Former executive of Avon Products, Inc. from 2005 to 2009. Various positions with Kraft Foods, Inc. from 1990 to 2004. Director of Bloomin’ Brands, Inc. and Hilton Worldwide Holdings Inc. Former director of Carter’s, Inc. from 2004 to 2008 and Staples, Inc. from 2008 to 2014.
 
As a former Chairman and Chief Executive Officer, Ms. Smith brings extensive global and customer-facing retail experience. She possesses deep experience in strategy, brands, marketing and sales, as well as corporate finance and financial reporting.
Salaam Coleman Smith
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Age: 51
Director since 2021
Committee Membership: None
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 helping Nickelodeon’s global expansion in Europe, Asia, and Latin America. Director of Pinterest since 2020.

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

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Sonia Syngal
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Age: 51
Director since 2020
Committee Membership: None
Chief Executive Officer of Gap Inc. since March 2020. President and Chief Executive Officer, Old Navy from April 2016 to March 2020. Executive Vice President, Global Supply Chain and Product Operations of Gap Inc. from February 2015 to April 2016. Executive Vice President, Global Supply Chain of Gap Inc. from November 2013 to January 2015. Since joining Gap Inc. in 2004, Ms. Syngal has served in key leadership and general management roles including Managing Director for Gap Inc.'s Europe business, Senior Vice President for Gap Inc.'s International division and Senior Vice President for Gap Inc.'s International Outlet division. Prior to joining Gap Inc., Ms. Syngal had a long career in Fortune 500 product companies, including Sun Microsystems where she led manufacturing operations, logistics and supply chain management, and at Ford Motor Company where she held roles in product design, quality and manufacturing engineering.

As a result of her service as President and Chief Executive Officer of Old Navy, as well as her service in other senior positions at Gap Inc., Ms. Syngal has extensive experience as a leader in the global retail industry, including specific expertise in management, talent development, supply chain and global operations.
John J. Fisher, Robert J. Fisher, and William S. Fisher are brothers. Information concerning our executive officers who are not also directors is set forth in our Annual Report on Form 10-K for the fiscal year ended January 30, 2021.

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DIRECTOR INDEPENDENCE
The Board has determined that the directors noted as "Independent" in the table below are independent under the New York Stock Exchange (“NYSE”) rules and have no direct or indirect material relationships with the Company.
In particular, the Board has determined that none of these directors has 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 John, Robert and William Fisher, the Board considered the following factors: (i) with the exception of Robert Fisher’s brief periods of service during 2007 and 2019 to 2020 as Interim President and Chief Executive Officer (“CEO”) of the Company during CEO transitions, neither John, Robert nor William Fisher has served as an officer of the Company in over 20 years; and (ii) NYSE guidance indicates that ownership of even a significant amount of stock does not preclude a finding of independence. After consideration of these factors, the Board concluded that there is no material relationship between the Company and John, Robert and William Fisher that would impact their independence under NYSE rules.
Committee Membership
Name
Occupation
AgeDirector
Since
IndependentOther Public
Boards
ACCCGC
John J. Fisher
Executive Vice Chairman of Pisces, Inc.
592018Yes
Robert J. Fisher
Managing Director, Pisces, Inc.
661990YesC
William S. Fisher
Founder and CEO, Manzanita Capital Limited
632009Yes
Tracy Gardner
Principal of Tracy Gardner Consultancy
572015YesCM
Isabella D. Goren
Former CFO, American Airlines, Inc.
602011Yes1C
F
Bob L. Martin
Executive Chairman, an employee role, and Director
722002No1
Amy Miles
Former Chairman and CEO, Regal Entertainment Group
542020Yes2M
F
Jorge P. Montoya
Former President, Global Snacks & Beverages, The Proctor & Gamble Company
742004YesM
Chris O'Neill
Partner, Portag3 Ventures
482018YesM
Mayo A. Shattuck III
Non-Executive Chairman, Exelon Corporation
662002Yes3M
F
M
Elizabeth Smith
Former Chairman and CEO, Bloomin' Brands, Inc.
572020Yes2M
Salaam Coleman Smith
Former Executive Vice President, Disney ABC Television Group
512021Yes1
Sonia Syngal
CEO and Director, Gap Inc.
512020No
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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KEY DIRECTOR ATTRIBUTES

The Board believes that varying tenures and diverse backgrounds 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.

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KEY DIRECTOR ATTRIBUTE MATRIX

All director nominees must possess certain core competencies, some of which include experience in retail, consumer products, real estate, store operations, logistics, product design, merchandising, international business/markets, marketing, general operations, strategy, human resources, technology, media or public relations, finance or accounting, or experience as a CEO or CFO.

In addition to having one or more of these core competencies, director nominees are identified and considered based on their knowledge, experience, integrity, leadership, reputation, background, viewpoint, qualifications, gender, race/ethnicity, personal characteristics and ability to understand the Company’s business, as well as their integrity, inclination to engage and intellectual approach. Accordingly, diversity is a factor that is considered in the identification and recommendation of potential director candidates. In this regard, of the thirteen director nominees, six are women and three are ethnically diverse. In addition, all director nominees are pre-screened to ensure that each candidate has qualifications and experience that complement the overall core competencies of the Board. The screening process also includes conducting a background evaluation and an independence determination. The Board believes that its criteria for selecting Board nominees are effective in promoting overall diversity.
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Corporate Governance
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 reporting concerns to the Board.
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Our Corporate Governance Guidelines are available at www.gapinc.com (follow the Investors, Governance, Corporate Governance Guidelines links).

ADDITIONAL CORPORATE GOVERNANCE INFORMATION
If you would like further information regarding our corporate governance practices, please visit the Governance and Corporate Compliance sections of www.gapinc.com (follow the Investors link). Those sections include:
Our Corporate Governance Guidelines (available in print on request to our Corporate Secretary);
Our Code of Business Conduct (available in print on request to our Corporate Secretary);
Our Committee Charters;
Our Certificate of Incorporation;
Our Bylaws;
A method for interested parties to send direct communications to our Board of Directors (through our Chairman and Corporate Secretary) by email to board@gap.com; and
Methods for employees and others to report suspected violations of our Code of Business Conduct (“COBC”), including accounting or auditing concerns, directly to our Global Integrity team by confidential email to global_integrity@gap.com, through our COBC Hotline (866) GAP-CODE or online at speakup.gapinc.com. Callers from outside North America must dial their country’s AT&T Direct Access Code, which can be found at speakup.gapinc.com. COBC Hotline calls are answered by a live operator 24 hours a day/7 days a week by an outside company, and are free and confidential and may be made anonymously. Accounting, auditing, and other significant concerns are escalated by the Global Integrity team, as appropriate, including to the Audit and Finance Committee, as required.
RISK OVERSIGHT
BOARD OVERSIGHT OF RISK

The Board has an active role in overseeing the management of the Company’s risks. Annually, the Company’s Internal Audit department performs a comprehensive enterprise risk assessment encompassing a number of significant areas of risk identified using a risk framework, including strategic, operational, compliance, financial, sustainability, reputational risks, and the economic impact of climate change. The Company has established a Risk Committee, which includes the heads of Finance, Legal, Digital/Strategy, Human Resources, Operations &
Supply Chain, and Internal Audit, as well as a brand president. The Risk Committee is responsible for overseeing the assessment process designed to gather data regarding key enterprise risks and key third party dependencies
that could impact the Company’s ability to achieve its objectives and execute its strategies. Primary assessment methods include interviews and surveys with employees, key executives and Board members, review of critical Company strategies and initiatives, regulatory changes and monitoring of emerging industry trends and issues. The 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 oversight. The Risk Committee meets periodically to monitor key enterprise risks and review and adjust the risk mitigation plans accordingly. 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 the potential risks.
While the Board of Directors has the ultimate oversight responsibility for the risk management process, various committees of the Board also have responsibility for risk management. In particular, the Audit and Finance Committee focuses on financial and compliance risks, and oversees the data privacy and cybersecurity programs,
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and the Compensation and Management Development Committee sets employee incentives with the goal of encouraging an appropriate level of risk-taking, consistent with the Company’s business strategies.
COVID-19 PANDEMIC RESPONSE

The Board together with management has overseen our ongoing efforts to mitigate financial and human capital management risk exposures associated with the COVID-19 pandemic. We are committed to protecting the health and safety of our employees and their families, as well as the health and safety of our customers. In connection with the COVID-19 pandemic, we implemented measures such as temporary store closures, increased sanitization efforts at our stores, distribution centers and headquarters offices, physical distancing, temperature checks, a mandatory mask policy for all customers and employees, and remote work arrangements for certain employees. We are committed to following strict safety protocols based on the standards of the Center for Disease Control and Prevention and the World Health Organization, as well as local government mandates. Please see “Executive Compensation and Related Information—Compensation Discussion and Analysis—Executive Summary” for more information regarding some of the measures that we took in fiscal 2020 to mitigate against the impact of the COVID-19 pandemic.

CYBERSECURITY RISK OVERSIGHT

Securing the information we receive and store about our customers, employees, vendors, and other third parties is a priority. We have systems in place to safely receive and store that information and to detect, contain, and respond to data security incidents. While everyone at the Company plays a part in managing these risks, oversight responsibility is shared by the Board, its Audit and Finance Committee, and management. The Board oversees the Company’s information security program. To respond to the threat of security breaches and cyberattacks, the Company maintains a program, overseen by the Company’s Chief Information Security Officer that is designed to protect and preserve the confidentiality, integrity and continued availability of all information owned by, or in the care of, the Company. This program also includes a cyber incident response plan that provides controls and procedures for timely and accurate reporting of any material cybersecurity incident. The Audit and Finance Committee, which is tasked with oversight of certain risk issues, including cybersecurity, receives quarterly reports from the Chief Information Security Officer and the Chief Information Officer. The Audit and Finance Committee regularly briefs the Board on these matters, and the Board also receives periodic briefings on cyber threats to augment our directors’ literacy on cyber security issues.
COMPENSATION RISK ASSESSMENT
On an annual basis, management conducts a comprehensive overall review of 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 with respect to financial restatements is in place.
Management’s assessment was also presented to the Company’s Chief Compliance Officer and the Chair of the Board’s 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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COMMUNICATION WITH DIRECTORS
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Interested parties can send direct communications to our Board of Directors (through our Chairman and Corporate Secretary) by email to: board@gap.com.

CODE OF BUSINESS CONDUCT
Our Code of Business Conduct is designed to promote a responsible and ethical work environment for all Gap Inc. employees and directors. The Code contains guidelines on conflicts of interest, legal compliance, Company information and assets, and political contributions and activities.
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Our Code of Business Conduct is available at www.gapinc.com (follow the Investors, Corporate Compliance, Code of Business Conduct 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 transactions with the Company involving management and/or members of the Board of Directors that are not otherwise subject to the approval of the Compensation and Management Development Committee and would require disclosure 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.
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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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", above, for a description of the Company's policies and procedures for the review and approval of Related Party Transactions.
BOARD LEADERSHIP STRUCTURE AND SUCCESSION
Bob Martin was appointed Executive Chairman of the Board, an employee role, in March 2020. At the Board's request, Mr. Martin serves as an advisor to our CEO and as a member of management. As a result of his service to the Company as an employee, Mr. Martin is no longer considered an independent director. Robert Fisher, an independent director (other than while he served as our interim CEO), served as our Chairman of the Board from February 2015 to March 2020.
We believe in the importance of independent oversight. We ensure that this oversight is truly independent and effective through a variety of means, including:
Other than during the period from November 2019 to March 2020 when Mr. Robert Fisher served as interim CEO, we have separated the positions of CEO and Chairman of the Board. We believe this provides the most
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appropriate leadership structure at this time. Our CEO is responsible for day-to-day leadership and for setting the strategic direction of the Company, while the Chairman of the Board presides over Board meetings, including non-management and independent director sessions, and shareholder meetings.
Our Corporate Governance Guidelines provide that at least two-thirds of our directors should be independent. Currently, all of our directors other than Mr. Martin and Ms. Syngal are independent.
Our Corporate Governance Guidelines provide that in the event that the Chairman of the Board is not an independent director and the Board determines it is appropriate, the independent directors shall designate, from time to time, an independent director to lead the executive sessions of the independent directors. Currently, an independent director is designated to lead each executive session and no lead independent director has been designated.
At each regularly scheduled Board meeting, all non-management directors are typically scheduled to meet in an executive session without the presence of any management directors.
At least annually, the independent directors meet in executive session.
The charters for each of our standing committees of the Board described below (Governance and Sustainability, Audit and Finance, and Compensation and Management Development) require that all of the members of those committees be independent.
GOVERNANCE AND SUSTAINABILITY COMMITTEE
The Board’s Governance and Sustainability Committee is composed solely of independent directors.
This Committee assists the Board of Directors in fulfilling its oversight responsibilities relating to the Company’s corporate governance matters, including the development of corporate governance guidelines, annual evaluation of the Board, its committees and individual directors, identification and selection of director nominees, oversight of the Company’s programs, policies and practices relating to environmental, social and community, and governance issues and impacts and strategies, and such other duties as directed by the Board of Directors.
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The Committee’s charter is available at www.gapinc.com (follow the Investors, Governance, Governance and Sustainability Committee Charter links).
NOMINATION OF DIRECTORS
The Governance and Sustainability Committee has the responsibility to identify, evaluate, and recommend qualified candidates to the Board. The Chairman, CEO, 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 Chairman, CEO, or chair of the Committee.

The Committee identifies desired attributes and experience—classifying those that are prioritized and mandatory versus those that are ideal but not mandatory—and engages third-party search firms as independent consultants to identify potential director nominees based on these criteria and a needs assessment. The Committee, in collaboration with the consultant, may develop targeted search specifications. 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. Ms. Coleman Smith was identified as a potential candidate by a third-party search firm.
The Committee will also consider director nominees recommended by shareholders. Our Bylaws provide that a shareholder may propose director nominations at the meeting of shareholders in 2022 by giving written notice to our Corporate Secretary by no later than the close of business (San Francisco Time) on February 10, 2022, and no earlier than January 11, 2022 (i.e., not less than 90 days nor more than 120 days prior to the first anniversary of the date of our 2021 Annual Meeting). The notice must contain information required by our Bylaws about the identity and background of each nominee and the shareholder making the nomination, including interests in derivative securities or arrangements with persons holding derivative securities, relationships or arrangements between the nominee and the shareholder making the nomination, and information that would enable the Board to determine a nominee’s eligibility to serve as an independent director. The notice also must contain other information that must be disclosed in proxy solicitations for election of directors under the proxy rules of the SEC (including information regarding the director nominee’s experience, qualifications, attributes and/or skills), the nominee’s consent to the nomination and to serve if elected, and certain other information required by our Bylaws. If a shareholder fails to
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submit the notice by February 10, 2022, then the proposed nominee(s) of the shareholder will not be considered at our Annual Meeting in 2022 in accordance with our Bylaws. Notifications must be addressed to our Corporate Secretary at Gap Inc., Two Folsom Street, San Francisco, California 94105.
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A copy of the full text of the Bylaw provisions relating to our advance notice procedure may be obtained at www.gapinc.com (follow the Investors, Governance links) or by any shareholder on request by writing to our Corporate Secretary at the above address.
EVALUATION OF DIRECTORS
The Governance and Sustainability Committee is responsible for overseeing a formal evaluation process to assess the composition and performance of the Board, each committee, and each individual director on an annual basis. The assessment is conducted to identify opportunities for improvement and skill set needs, as well as to ensure that the Board, committees, and individual members have the appropriate blend of diverse experiences and backgrounds, and are effective and productive. As part of the process, each member completes a survey, or participates in an interview or other method the Committee utilizes to seek feedback. While results are aggregated and summarized for discussion purposes, individual responses are not attributed to any individual and are kept confidential to ensure honest and candid feedback is received. The Committee discusses opportunities and makes recommendations for improvement as appropriate to the full Board, which implements agreed upon improvements. The Committee Chair also meets privately with individual Board members to provide feedback specific to each director received during the evaluation process. A director will not be nominated for reelection unless it is affirmatively determined that he or she is substantially contributing to the overall effectiveness of the Board.
SUSTAINABILITY
The Governance and Sustainability Committee is also responsible for reviewing and evaluating Company programs, policies and practices relating to environmental, social and community, and governance issues and impact, and strategies to support the sustainable growth of the Company’s businesses. The Committee regularly discusses social and environmental issues at its meetings, and oversees the Company’s development of industry-leading programs and initiatives.
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For more information regarding our commitment to sustainability, please see our website and most recent Sustainability Report available at www.gapinc.com (follow the Sustainability link).

AUDIT AND FINANCE COMMITTEE
The Board’s Audit and Finance Committee is composed solely of independent directors.
This Committee assists the Board of Directors in fulfilling its oversight responsibilities relating to the integrity of our financial statements, adequacy of internal controls, compliance with legal and regulatory requirements, the qualifications and independence of the registered public accounting firm and the performance of its audits, the performance of the Internal Audit function, the effectiveness of the corporate compliance program, finance matters, oversight of our data privacy and cybersecurity programs and such other duties as directed by the Board of Directors. In addition, the Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm.
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The Committee’s charter is available at www.gapinc.com (follow the Investors, Governance, Audit and Finance Committee Charter links).
AUDIT COMMITTEE FINANCIAL EXPERT
Our Board of Directors has determined that the Audit and Finance Committee has three members who are “audit committee financial experts” as determined under Regulation S-K Item 407(d)(5) of the Securities Exchange Act of 1934: Mr. Shattuck, Ms. Goren and Ms. Miles, all of whom are independent directors. See Mr. Shattuck’s, Ms. Goren’s, and Ms. Miles' biographies in "Nominees for Election as Directors" for information regarding their relevant experience.
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COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
The Board’s Compensation and Management Development Committee is composed solely of independent directors.
This Committee assists the Board of Directors in fulfilling its oversight responsibilities relating to executive officer and director compensation, succession planning for senior management, development and retention of senior management, and such other duties as directed by the Board of Directors.
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The Committee’s charter is available at www.gapinc.com (follow the Investors, Governance, Compensation and Management Development Committee Charter links).
The 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 Committee approves grants of stock units and stock options to employees at the Vice President level or above, and has delegated authority, within defined parameters, to the CEO or, in the CEO’s absence, the Committee Chair to approve grants of stock units to employees below the Vice President level (see “Executive Compensation and Related Information—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. The 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 the compensation program structure and specific individual compensation arrangements (see “Executive Compensation and Related Information—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 2020, Ms. Gardner, Mr. Martin, Mr. Montoya, Mr. O’Neill, and Ms. Smith served on the Compensation and Management Development Committee of the Board of Directors. Mr. Martin stepped down from the Compensation and Management Development Committee in March 2020 in connection with his service as Executive Chairman, an employee role, at the Company. 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 2020 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 2020, 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.
BOARD MEETINGS
The Board met 9 times during fiscal 2020. The following table lists the current members of each of the committees and the number of committee meetings held during fiscal 2020:
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NameAudit &
Finance
Compensation &
Management
Development
Governance &
Sustainability
John J. Fisher
Robert J. Fisher(1)
Chair
William S. Fisher
Tracy Gardner(2)
Chair
Isabella D. GorenChair
Amy Miles
Bob L. Martin(3)
Jorge P. Montoya
Chris O'Neill
Mayo A. Shattuck III
Elizabeth Smith
Salaam Coleman Smith
Sonia Syngal
Number of Meetings598

(1)Mr. Fisher stepped down from his position as a member and Chair of the Governance & Sustainability Committee while serving as Interim President and CEO of the Company from November 2019 to March 2020.
(2)Ms. Gardner served on the Audit & Finance Committee until March 2020. Also in March 2020, Ms. Gardner was appointed to the Compensation & Management Development Committee and to serve as its Chair.
(3)Mr. Martin served as the Chair of both the Compensation & Management Development Committee and the Governance & Sustainability Committee until he stepped down from each committee in March 2020 in connection with his service as Executive Chairman, an employee role.
Other than Ms. Coleman Smith who was appointed to the Board effective March 22, 2021, each director nominee attended at least 75% of the meetings of the Board and committees on which he or she served. In addition, individual Board members often work together and with management outside of formal meetings.
The non-management directors are typically scheduled to meet without the presence of management during each regularly scheduled Board meeting. As no Lead Independent Director has currently been designated, the independent directors designate at each meeting an independent director responsible for organizing, managing and presiding over non-management and independent director sessions of the Board, and reporting on outcomes of such sessions to the CEO, as appropriate.
ATTENDANCE OF DIRECTORS AT ANNUAL MEETINGS OF SHAREHOLDERS

Our policy regarding attendance by directors at our Annual Meeting of Shareholders states that our Chairman 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 of our current director nominees, except for Ms. Coleman Smith who was not a director at the time and Ms. Bohutinsky, attended our 2020 Annual Meeting via the Internet.
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 of Directors, 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 "Executive Compensation and Related Information—Compensation Discussion and Analysis—Stock Ownership Requirements for Executive Officers / Hedging and Pledging Prohibitions". All directors are in compliance with our stock ownership guidelines as of the date of this proxy statement.
Our Securities Law Compliance Manual, which is applicable to all Company insiders, including our directors, prohibits speculation in the Company’s stock, including short sales, hedging or publicly-traded option transactions.
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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 directors are also prohibited from holding the Company’s 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
RETAINER AND MEETING FEES

The table below shows the annual retainer, attendance fees, and committee chair retainer we paid to our non-employee directors in fiscal 2020 as well as the amounts payable for fiscal 2021. In March 2020, in connection with the COVID-19 pandemic, the Company announced that the Board would take a temporary reduction in its cash compensation, which reduction remained in effect until our business stabilized in fiscal 2020. The amounts below reflect the full-year cash compensation of our directors. The Board approved an adjustment to the annual retainer amounts for 2021 in order to remain competitive with the Company's peers.
FISCAL YEAR 2020 AND 2021 DIRECTOR CASH COMPENSATION(1)
20202021
Annual Retainer$80,000 $90,000 
Annual Retainer for Committee Members
Audit and Finance Committee16,000 16,000 
Compensation and Management Development Committee12,000 12,000 
Governance and Sustainability Committee10,000 10,000 
Additional Annual Retainer for Committee Chairs
Audit and Finance Committee25,000 25,000 
Compensation and Management Development Committee20,000 20,000 
Governance and Sustainability Committee15,000 15,000 
Additional Annual Retainer for Chairman of the Board(2)
200,000 200,000 
Additional Annual Retainer for Lead Independent Director(3)
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.
(2)Applicable to Mr. Fisher's service during fiscal 2020 when he served as Chairman of the Board (Mr. Fisher did not receive any additional compensation for his service as Interim President and CEO from November 2019 to March 2020). Mr. Martin receives compensation for his role as Chairman of the Board and as an advisor to our CEO as set forth below.
(3)Applicable to Mr. Martin's service during fiscal 2020 when he served as Lead Independent Director.
Employee directors (including Mr. Martin and Ms. Syngal) are not eligible for the annual retainer fees and are not eligible to serve on committees.
CHAIRMAN ROLE AND ADVISOR COMPENSATION

Beginning in March 2020 in connection with Mr. Martin's service as Executive Chairman of the Board and as an advisor to our CEO, an employee role, Mr. Martin was eligible to earn an annual base salary of $750,000 and an annual target bonus of 100% of base salary, based on the same metrics as our CEO, prorated to his start date with a payout that can range from 0% to 200%. (For more information on the bonus program, see "Executive Compensation and Related Information—Compensation Discussion and Analysis—Elements of Compensation—Annual Cash Incentive Bonus”.) Mr. Martin also received a grant of time-based restricted stock units with a grant value of approximately $1,000,000, which vested one year following the date of grant. Mr. Martin has agreed to hold and not sell or transfer any shares issued to him following the vesting of such restricted stock units for two years following the vesting date, except in the event he no longer provides services to the Company in any capacity (whether as an employee, director or consultant). The time-based vesting condition will accelerate if Mr. Martin is involuntarily terminated by the Company for reasons other than cause, death or disability. Mr. Martin is not entitled to any compensation under our non-employee director compensation program while he serves as an advisor to our CEO.
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EQUITY COMPENSATION
Non-employee directors received the following under our 2016 Long-Term Incentive Plan:
Each new non-employee director automatically received stock units with an initial value of $160,000 based on the then-current fair market value of the Company’s common stock; and
Each continuing non-employee director automatically received, on an annual basis, stock units with an initial value of $160,000 at the then-current fair market value of the Company’s common stock.

Beginning in fiscal 2021, 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.
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 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 also 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.
Directors and their spouses are eligible to receive discounts on our merchandise on terms similar to the Gap Inc. corporate employee merchandise discount policy.
We established The Gap, Inc. Deferred Compensation Plan (“DCP”) whereby 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 and meeting fees. 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 available to all employees, under which we match contributions to eligible nonprofit organizations, up to certain annual limits. In calendar year 2020, the annual limit for non-employee directors was $15,000 under the Gift Match Program. Our CEO has an annual matching limit of $100,000.
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DIRECTOR COMPENSATION SUMMARY
The following table sets forth certain information regarding the compensation of our directors who served in fiscal 2020, which ended January 30, 2021.
Name(1)
Fees
Earned
or Paid
in Cash
($)(2)
Stock
Awards
($)(3)
Option
Awards
($)(4)
Change in
Pension Value and
Nonqualified
Deferred
Compensation
Earnings
($)
All Other
Compensation
($)(5)
Total
($)
Amy Bohutinsky(6)
36,000 159,996 — — — 195,996 
John J. Fisher60,000 159,996 — — — 219,996 
William S. Fisher60,000 159,996 — — 15,000 234,996 
Tracy Gardner89,302 159,996 — — — 249,298 
Isabella D. Goren84,500 159,996 — — 15,000 259,496 
Bob L. Martin(7)
24,313 961,458 — — 1,159,837 2,145,608 
Amy Miles55,033 199,446 — — — 254,479 
Jorge P. Montoya71,000 159,996 — — 15,000 245,996 
Christopher O’Neill69,000 159,996 — — — 228,996 
Lexi Reese(8)
23,000 — — — — 23,000 
Mayo A. Shattuck III85,750 159,996 — — 15,000 260,746 
Elizabeth Smith53,033 199,446 — — — 252,479 
(1)Under applicable SEC rules, we have omitted Robert Fisher and Ms. Syngal, who served as directors in fiscal 2020. Mr. Robert Fisher was compensated as our Chairman and a non-employee director, but did not receive any additional compensation for services provided as our Interim President and CEO. However, pursuant to SEC requirements, Mr. Fisher’s compensation for his services as a director is reported in the 2020 Summary Compensation Table and related executive compensation tables. Ms. Syngal was compensated as our Chief Executive Officer and received no additional compensation as a director. Ms. Syngal’s compensation is reported in the 2020 Summary Compensation Table and related executive compensation tables.
(2)In March 2020, in connection with the COVID-19 pandemic, the Company announced that its Board would take a temporary reduction in its cash compensation. The amounts in this column reflect the actual cash compensation received by our directors in fiscal 2020.
(3)For each of our non-employee directors, this column reflects the grant date fair value of fully-vested stock units granted in 2020 that are subject to a three-year deferral period, computed in accordance with 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. Mr. Martin received 159,235 stock unit awards in fiscal 2020 in connection with his role as Chairman and an advisor to our CEO, all of which were outstanding at year end. Amounts for Mr. Martin reflect the aggregate grant date fair value for stock unit awards during fiscal 2020, computed in accordance with FASB ASC 718. Please refer to Note 10, “Share-Based Compensation,” in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed on March 16, 2021 for the relevant assumptions used to determine the valuation of our stock awards. For more information on Mr. Martin's stock unit awards, see the description above in "Chairman Role and Advisor Compensation"
(4)No stock option awards were granted to our directors in fiscal 2020. None of our non-employee directors had outstanding option awards as of fiscal 2020 year-end.
(5)Amounts in this column primarily consist of Company matching contributions under the Company’s Gift Match Program (see “Expense Reimbursement and Other Benefits,” above). For Mr. Martin, this amount also includes cash compensation received as Chairman and an advisor to our CEO since March 2020, including a bonus earned for fiscal year 2020 of $542,674. For more information on the bonus program, see "Executive Compensation and Related Information—Compensation Discussion and Analysis—Elements of Compensation—Annual Cash Incentive Bonus".
(6)Ms. Bohutinsky resigned from the Board effective September 14, 2020.
(7)Mr. Martin received retainer and meeting fees until he became Chairman and an advisor to our CEO in March 2020. Following his appointment to these roles, Mr. Martin received cash compensation and stock unit awards as described above in "Chairman Role and Advisor Compensation".
(8)Ms. Reese did not stand for reelection on May 19, 2020.

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PROPOSAL NO. 2 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit and Finance Committee of the Board of Directors has selected Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending January 29, 2022. Deloitte & Touche LLP (or its predecessor firm) has been retained as our independent registered public accounting firm 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 auditing firm 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 THAT SHAREHOLDERS VOTE “FOR” THE SELECTION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
Representatives of Deloitte & Touche LLP are expected to be present, available to make statements, and available to respond to appropriate shareholder questions at the 2021 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 February 1, 2020 and January 30, 2021 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 YEAR 2019 AND 2020 ACCOUNTING FEES
Fees (in thousands) (see notes below)Fiscal Year
2019
Fiscal Year
2020
Audit Fees$5,212 $5,110 
Audit-Related Fees2,065 370 
Tax Fees526 1,644 
All Other Fees577 1,178 
Total$8,380 $8,302 
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. In fiscal year 2019, includes approximately $1.8 million of fees related to the separation of Old Navy, which, in January 2020, we announced we would no longer pursue.

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. In fiscal year 2020, includes additional compliance and non-recurring services.

All Other Fees” consists of Deloitte subscription fees and fees for non-audit services related to product sourcing consulting. In fiscal year 2020, includes $1.1 million for independent project consulting services.

The Audit and Finance Committee approves the terms, including compensation, of the engagement of our independent registered public accounting firm 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 Committee pre-approved all services performed by the Company’s independent registered public accounting firm for fiscal years 2019 and 2020.
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 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 registered public accounting firm. At this time, the Audit and Finance Committee and the Board believe that the continued retention of Deloitte & Touche to serve as our independent registered public accounting firm is in the best interests of the Company and our shareholders.
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Report of the Audit and Finance Committee
The Audit and Finance Committee assists the Board of Directors in fulfilling its oversight responsibilities relating to the integrity of the Company’s financial statements, the adequacy of internal controls, compliance with legal and regulatory requirements, the qualifications and independence of the independent registered public accounting firm and the performance of its audits, the performance of the Internal Audit function, the effectiveness of the corporate compliance program, finance matters, and such other duties as directed by the Board of Directors. The Committee operates under a written charter (available at www.gapinc.com, follow the Investors, Governance, Audit and Finance Committee Charter links) adopted by the Board of Directors. 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 January 30, 2021 with the Company’s management. In addition, the Committee has discussed with Deloitte & Touche LLP, the Company’s independent registered public accounting firm, the matters required to be discussed by the applicable Public Company Accounting Oversight Board and Securities and Exchange Commission requirements.
The Committee also has 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 of Directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2021 for filing with the Securities and Exchange Commission.

Isabella D. Goren (Chair)
Amy Miles
Mayo A. Shattuck III
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 GAP, INC.’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 2021 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 under the section entitled “Compensation Discussion and Analysis,” 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 received approximately 98% of all votes cast in support of the overall compensation of our executives at our 2020 Annual Meeting of Shareholders, consistent with favorable advisory votes by our shareholders on executive compensation prior to 2019.
In response to concerns expressed by our shareholders in 2019 regarding our long-term incentive plan, management and the Compensation and Management Development Committee spent time during 2020 considering modifications to the plan, including the performance metrics used. As a result, we aligned on certain changes, which are further described below in "Executive Compensation and Related Information—Compensation Discussion and Analysis—Elements of Compensation—Long-Term Incentives”. We believe these changes will further tie executive pay to Company performance. As in prior years, we continue to set rigorous goals and align pay delivery with performance. 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 2022 Annual Meeting.

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THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE, ON AN ADVISORY BASIS, THE OVERALL COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS BY VOTING “FOR” THIS RESOLUTION.

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PROPOSAL NO. 4 — APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE GAP, INC. EMPLOYEE STOCK PURCHASE PLAN
Purpose of the Amendment and Restatement
Our shareholders are being asked to vote on a proposal to approve the amendment and restatement of our Employee Stock Purchase Plan (the “ESPP”). Our ESPP provides our eligible employees and those of our participating subsidiaries with the opportunity to designate in advance of specified purchase periods a percentage of compensation to be withheld from their pay and applied toward the purchase of discounted shares of our common stock. As such, the ESPP serves as a valuable means for our Company to attract and retain talented employees. In addition, our Board of Directors believes that it is in our best interests to provide our employees with the opportunity to acquire an ownership interest in our Company through their participation in the ESPP, and thereby more closely align their interests with those of the shareholders.

The principal purpose of the amendment and restatement of the ESPP is to approve a 12,000,000 share increase to the number of shares of common stock available for issuance under the ESPP. As of March 1, 2021, the Company had approximately 3,769,000 shares of its common stock remaining available for issuance under the ESPP. Based upon the usage rate under the ESPP over the last 5 years, the Company believes it may deplete the remaining share reserve on or after May 2022, depending upon such factors as share price volatility and employee participation rates.
The Board of Directors has determined that the number of shares issuable under the ESPP should be increased by 12,000,000 shares, subject to approval of our shareholders at the 2021 Annual Meeting. Based on the ESPP’s past participation rate, the Company believes that the 12,000,000 additional authorized shares will be sufficient to operate the ESPP for approximately ten additional years.

The ESPP, was also amended and restated, to clarify that the plan administrator has the authority to determine the terms of future offerings, including but not limited to, the eligibility of participants, the time or times when, and the number of shares for which, purchase rights shall be granted, the purchase price of purchase rights and the number of purchase dates in an offering, and the applicable definition of compensation, and to make a number of other non-substantive updates and clarifications to the plan.
Our Board approved the amended and restated ESPP on March 2, 2021, subject to shareholder approval at the Annual Meeting.

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THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE PROPOSAL TO APPROVE THE AMENDMENT AND RESTATEMENT OF THE GAP, INC. EMPLOYEE STOCK PURCHASE PLAN.

Summary Description of the Amended and Restated ESPP
The principal terms and provisions of the ESPP are summarized below. The summary, however, is not intended to be a complete description of all the terms of the ESPP and is qualified in its entirety by reference to the complete text of the plan document, a copy of which is attached as Appendix A to this Proxy Statement and incorporated herein by reference.
PURPOSE

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The purpose of the ESPP is to provide our eligible employees with the opportunity to purchase discounted shares of our common stock through payroll deductions. The Purchase Plan is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code (the “Code”). The ESPP was originally established effective as of December 1, 1994. It was amended and restated effective as of January 29, 2002, was further amended and restated, effective December 1, 2006, and was further amended, effective as of June 2, 2008. The ESPP was most recently amended and restated by our shareholders at our 2017 Annual Meeting on May 17, 2017.
SECURITIES SUBJECT TO THE ESPP
The number of shares of our common stock reserved for issuance under the ESPP will be limited to 52,500,000 shares, assuming shareholder approval of this Proposal 4. The ESPP does not contain an evergreen provision, pursuant to which the share pool would be automatically increased each year based upon a specified formula. As of March 1, 2021, 23,877,074 shares had been issued under the ESPP, and, assuming shareholder approval of this Proposal 4, 15,769,272 shares remain available for future issuance under the ESPP. The shares issuable under the ESPP may consist of authorized but unissued shares of our common stock or treasury shares. On March 1, 2021, the closing price of our common stock was $25.59.
Should any change be made to our outstanding common stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction or other change affecting the outstanding common stock as a class without our receipt of consideration, or should the value of the outstanding shares of our common stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation or other reorganization, then equitable adjustments will be made by the plan administrator to (i) the maximum number and/or class of securities issuable under the ESPP, (ii) the maximum number and/or class of securities purchasable per participant on any one purchase date or in any calendar year, and (iii) the number and class of securities and the purchase price per share in effect under each outstanding purchase right. The adjustments will be made in such manner as the plan administrator deems appropriate and such adjustments shall be final, binding and conclusive.

PLAN ADMINISTRATION

The Board, the Compensation and Management Development Committee, or a duly authorized officer of the Company may serve as the plan administrator of the ESPP; provided however, none of the foregoing may have any authority and powers under the ESPP, which would jeopardize the ESPP’s qualification under Section 423(b) of the Code for employees in the United States and/or are not permitted under other applicable laws, rules and regulations. The plan administrator has all powers and discretion necessary or appropriate to supervise the administration of the ESPP and to control its operation in accordance with its terms, including, but not limited to determining the terms of future offerings, including but not limited to, the eligibility of participants, the time or times when, and the number of shares for which, purchase rights shall be granted, the purchase price of purchase rights and the number of purchase dates in an offering, and the applicable definition of compensation.
OFFERING PERIODS
Shares of our common stock will be offered for purchase under the ESPP through a series of successive quarterly purchase periods, commencing on the first business day in June, September, December and March. From time to time, the Company may change the length or commencement date of the purchase periods (but in no event may any purchase period exceed 27 months).
The terms and conditions of each purchase period may vary, and two or more periods may run concurrently under the ESPP, each with its own terms and conditions.
The ESPP administrator may authorize one or more offerings under the ESPP that are not designed to comply with the requirements of Section 423 of the Code, but with the requirements of the foreign jurisdictions in which those offerings are conducted.

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ELIGIBILITY TO PARTICIPATE

In general, any individual who is in the employ of any of our participating parent or subsidiary corporations is eligible to participate in the ESPP. However, any employee whose customary employment is for not more than five months in any calendar year or who would own stock and/or hold outstanding options to purchase stock representing five percent or more of our voting stock or the voting stock of any of our subsidiaries is not eligible to participate in the ESPP. In addition, subject to the requirements of Section 423 of the Code, the plan administrator has the right to exclude (i) any “highly compensated employees” (within the meaning of Section 414(q) of the Code), (ii) any employees who are not scheduled to work at least 20 hours per week, and/or (iii) any employees, who have not been employed for such continuous period preceding such enrollment date as the ESPP administrator may require (but in no event will the required period of continuous employment be equal to or greater than two years) from participation in the ESPP. As of March 1, 2021, approximately 95,686 employees, including 10 executive officers, were eligible to participate in the ESPP.
Participation in the ESPP terminates when a participating employee’s employment with the Company ceases for any reason, the employee withdraws from the ESPP, or the ESPP is terminated or amended such that the employee no longer is eligible to participate. Any payroll deductions which the participating employee may have made for the purchase period in which such cessation of employment or loss of eligibility occurs will be refunded and will not be applied to the purchase of our common stock.
ENROLLMENT AND CONTRIBUTIONS
Eligible employees voluntarily elect whether or not to enroll in the ESPP prior to the commencement of the applicable purchase period. Employees who have enrolled in the ESPP in previous purchase periods will continue to participate in future purchase periods. However, an employee may cancel his or her participation at any time (subject to certain administrative requirements).
Employees contribute to the ESPP through after-tax payroll deductions. Participating employees generally may contribute up to 15% of their eligible compensation to the ESPP. For purposes of the ESPP, eligible compensation means a participant’s gross salary, wages and overtime pay, but does not include bonuses or commissions. From time to time, the Company may establish a lower maximum permitted contribution percentage.
After the purchase period begins, employees may not change their current contribution percentage, and any requested change will be effective for the next purchase period. An employee, however, may withdraw from the ESPP at any time.
PURCHASE OF SHARES/SPECIAL LIMITATIONS
On the last business day of each quarterly purchase period, each participating employee’s payroll deductions are used to purchase shares of our common stock on the employee’s behalf. The purchase price of the shares will be equal to 85% the fair market value of our common stock on the last day of the applicable purchase period. The fair market value of our stock, for purposes of the ESPP, is the closing price of our common stock on the New York Stock Exchange Composite Transactions Index on the day in question.
No employee may purchase under the ESPP more than 25,000 shares of our common stock in any one calendar year or more than 6,250 shares of our common stock on any one quarterly purchase date. In addition, no employee may purchase more than $25,000 worth of our common stock (based on the fair market value on the start date of the applicable purchase period in which the shares are purchased) in any one calendar year.
No participating employee will have any stockholder rights with respect to the shares covered by his or her purchase rights until the shares are actually purchased on his or her behalf and the participating employee has become a holder of record of the purchased shares. No adjustment will be made for dividends, distributions or other rights for which the record date is prior to the date of such purchase. No purchase rights will be assignable or transferable by a participating employee, and the purchase rights will be exercisable only by the participating employee.

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NEW PLAN BENEFITS

The ESPP does not provide for set benefits or amounts of awards and we have not approved any awards that are conditioned on stockholder approval of the ESPP. Because benefits under the ESPP will depend on employees’ elections to participate and the fair market value of our common stock at various future dates, it is not possible to determine the benefits that will be received by executive officers and other employees if the ESPP is approved by our stockholders.
PLAN BENEFITS
The following table sets forth, for each of the individuals and groups indicated, the total number of shares of our common stock that were purchased under the ESPP during the period beginning in June 2008 and ending on February 28, 2021.


Name
Number of shares)(1)
Named executive officers
Sonia Syngal10,517
Katrina O'Connell
Mark Breitbard
Nancy Green
Julie Gruber13,527
Robert Fisher
Teri List
All current executive officers as a group45,641
All current directors who are not executive officers as a group
Each associate of any director or executive officer
Each other person who received or is to receive 5% of purchase rights granted under the ESPP
All employees, including all current officers who are not executive officers, as a group15,261,738
(1)Reflects shares purchased under the ESPP to date based on our available records.

Please also refer to Equity Compensation Plan Information for further information about Shares, which may be issued upon the exercise of options, warrants and rights granted to employees, consultants or members of our Board of Directors under all of our equity compensation plans as of January 30, 2021, including the 2016 Long-Term Incentive Plan.

ADMINISTRATION, AMENDMENT AND TERMINATION

Subject to the terms of the ESPP, the Company has all discretion and authority necessary to supervise and control the operation and administration of the ESPP, including the power to interpret and determine any question arising in connection with the ESPP. The Company may delegate one or more of its duties in the administration of the ESPP to any one of its employees or to any other person. The Board of Directors, in its sole discretion, may amend or terminate the ESPP at any time and for any reason, by action of the plan administrator. In no event, however, may our Board of Directors effect any of the following amendments or revisions to the ESPP without the approval of our stockholders: (i) increase the number of shares of our common stock issuable under the ESPP, except for permissible adjustments described above in the event of certain changes in our capitalization or (ii) modify the eligibility requirements for participation in the ESPP. If the ESPP is terminated, the Board of Directors, in its discretion, may elect to terminate all outstanding purchase rights either immediately or upon completion of the purchase of shares on the next purchase date, which in the Board’s sole discretion, may occur on an earlier date than originally scheduled.

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FEDERAL INCOME TAX CONSEQUENCES

The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended. The U.S. federal income tax consequences of the purchase of shares of common stock under a plan which so qualifies are as follows:

An employee will have no taxable income when the shares of common stock are purchased for him or her under the ESPP. The employee generally will be taxed when he or she sells or otherwise disposes of the stock (such sales or dispositions are collectively referred to below as sales).

The employee’s income tax treatment depends on whether shares are sold within 24 months after the first day of the three-month purchase period in which the shares were purchased (the “24-month holding period”).

For a sale after the 24-month holding period, an employee will have ordinary income equal to the lesser of: (i) 15% of the fair market value of the shares on the first day of the purchase period; or (ii) the amount by which the fair market value of the stock at the time of sale exceeds the purchase price. Any additional gain from a sale after the 24-month holding period will be taxed as a long-term capital gain. Any loss will be taxed as a long-term capital loss.

If shares are sold before the end of the 24-month holding period, the entire amount of the discount received from the stock’s market price when the shares were purchased will be taxed as ordinary income. Any additional gain or any loss, measured by the difference between the sales proceeds and the fair market value of the stock when the shares were purchased, will be taxed as a long-term or short-term capital gain or loss, depending on whether the employee has held the shares for more than one year at the time of sale. The holding period for determining whether the gain or loss is short-term or long-term begins on the day after the stock is purchased through the ESPP.

We will be entitled to deduct, for U.S. federal income tax purposes, an amount equal to the ordinary income that an employee recognizes when he or she sells stock purchased under the ESPP within the 24-month holding period. We will not be entitled to such a deduction with respect to any shares that are sold after the 24-month holding period.

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PROPOSAL NO. 5 — APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE GAP, INC. 2016 LONG-TERM INCENTIVE PLAN
We are requesting that shareholders approve the amendment and restatement of our 2016 Long-Term Incentive Plan (the “2016 Plan,” and the 2016 Plan, as amended and restated, the “Amended 2016 Plan”).
The Company is asking shareholders to approve the amendment and restatement of the 2016 Plan primarily in order to increase the number of shares authorized for issuance under the 2016 Plan.
The amendment and restatement of the 2016 Plan was adopted by the Board of Directors on March 2, 2021, subject to shareholder approval. Approval of the Amended 2016 Plan requires the affirmative vote of a majority of the shares of our common stock that are present in person or by proxy at the Annual Meeting and entitled to vote on this matter. If the shareholders approve the Amended 2016 Plan, it will replace the current version of the 2016 Plan.

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THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE PROPOSAL TO APPROVE THE AMENDMENT AND RESTATEMENT OF THE GAP, INC. 2016 LONG-TERM INCENTIVE PLAN.

Reasons to Approve the Amended 2016 Plan
SHARE RESERVE INCREASE

Approval of the Amended 2016 Plan will increase the number of shares authorized for issuance under the 2016 Plan by 35 million shares (the “Share Increase”). As of the end of fiscal 2020, which ended on January 30, 2021, a total of 25,637,562 shares remained available for future grants under the 2016 Plan. We believe that the current share reserve amount is insufficient to meet our future needs with respect to attracting, motivating and retaining key executives and employees in a competitive market for talent. We consider the 2016 Plan to be a vital element of our employee compensation program and believe that the continued ability to grant stock awards at competitive levels is in the best interest of the Company and our shareholders. We believe the Share Increase will be sufficient to enable us to grant stock awards under the Amended 2016 Plan for approximately the next three years, based on historical grant and forfeiture levels, the recent market prices of our common stock, and our anticipated use of equity awards as an incentive and retention tool.
The table below shows the stock awards, including stock units, restricted stock units, performance awards and stock options that were outstanding under the Amended 2016 Plan as of the end of fiscal 2020, which ended on January 30, 2021. As of January 30, 2021, the closing price of our shares as reported on the NYSE was $20.25 per share.

Shares underlying
outstanding stock
options (#)
Weighted avg.
exercise price
of per share
Weighted avg.
remaining term
Shares underlying
outstanding
time-based full
value awards(1)
Shares underlying
outstanding
performance-based
full value awards(2)
Shares
available
for future
grant
12,391,932 $20.277.55 9,733,591 2,394,308 25,637,562 
(1)Consists of 300,389 shares subject to stock unit grants granted to our non-employee directors and the accrued deferred dividend equivalent rights 9,264,449 shares subject to restricted stock unit grants and 168,753 shares subject to performance awards earned, but not vested as of the end of fiscal 2020.
(2)Consists of 2,394,308 outstanding performance awards, for which performance has not yet been earned. The number of shares underlying such awards assumes target performance.
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The table below shows net annual dilution and other metrics relating to equity grants under the Amended 2016 Plan for the last three fiscal years.

Metric202020192018Average
Annual Dilution(1)
2.14 %1.19 %2.20 %1.13 %
Annual Burn Rate(2)
3.83 %2.23 %2.98 %1.74 %
Year-End Overhang(3)
14.83 %18.71 %10.01 %9.57 %

(1)Calculated by dividing (a) the number of shares underlying stock awards granted to all recipients during the year, minus stock awards cancelled or forfeited during the year, by (b) the number of shares outstanding at year-end.
(2)Calculated by dividing (a) the number of shares underlying stock awards granted to all recipients during the year, by (b) the number of shares outstanding at year-end.
(3)Calculated by dividing (a) the number of shares underlying outstanding stock awards and (b) shares available for future stock awards, by (c) the number of shares outstanding, in each case at year-end.


Note Regarding Forecasts and Forward-Looking Statements
We do not as a matter of course make public forecasts as to our total shares outstanding and utilization of various equity awards due to the unpredictability of the underlying assumptions and estimates. In particular, the forecasts set forth in this Proposal 4 include embedded assumptions which are highly dependent on the public trading price of our shares and other factors, which we do not control and, as a result, we do not as a matter of practice provide forecasts. These forecasts reflect various assumptions regarding our future operations. The inclusion of the forecasts set forth above should not be regarded as an indication that these forecasts will be predictive of actual future outcomes, and the forecasts should not be relied upon as such.

OTHER CHANGES
The 2016 Plan has also been amended and restated by the Board of Directors to

eliminate references to the performance-based compensation exemption under Section 162(m) of the Code since the exemption is no longer available under the tax rules, while retaining material 162(m) requirements to ensure good governance;
explicitly prohibit the transfer of awards to third-party institutions for value;
provide the plan administrator with broad discretion to determine the value of shares withheld to pay taxes; and
clarify that stock awards granted under the 2016 Plan are subject to any vesting or transferability policies adopted by the plan administrator.
The Amended 2016 Plan Combines Compensation and Corporate Governance Best Practices
The Amended 2016 Plan includes provisions that are designed to protect our shareholders’ interests and reflect corporate governance best practices.

●    Repricing Not Allowed. The Amended 2016 Plan generally prohibits the adoption of an exchange program pursuant to which stock options and stock appreciation rights (“SARs”) are cashed out, repriced, or exchanged for other awards without shareholder approval.
●    Shareholder Approval Required for Additional Shares. The Amended 2016 Plan does not contain an annual “evergreen” provision. The Amended 2016 Plan authorizes a fixed number of shares, so that shareholder approval is required to issue any additional shares.
●    Limit on Full Value Awards. The Amended 2016 Plan limits the number of shares available for full value awards (awards other than stock options or SARs) by providing that each share issued pursuant to a full value award reduces the number of shares available for grant under the Amended 2016 Plan by two shares.
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●    No Liberal Share Counting or Recycling. If fewer shares are issued in settlement of a stock award than were covered by such stock award for reasons other than the failure to satisfy vesting conditions, or other than as a result of termination or forfeiture (for example to satisfy the exercise price or tax withholding obligation of such award), then the unissued shares will generally not become available again for issuance under the Amended 2016 Plan.
●    No Liberal Change in Control Provisions. No change in control related vesting acceleration and other benefits may occur without an actual corporate transaction occurring.
●    No Discounted Stock Options or SARs. All stock options and SARs granted under the Amended 2016 Plan must have an exercise or strike price equal to or greater than the fair market value of our shares on the date the stock option or SAR is granted.
●    No Dividends and Dividend Equivalents on Unvested Awards. Dividends and dividend equivalents will not be paid or settled with respect to any award granted under the Amended 2016 Plan until the underlying shares or units vest.
●    Limit on Non-Employee Director Compensation. Stock awards granted during a single fiscal year under the Amended 2016 Plan, taken together with any cash compensation paid during such fiscal year for services on the Board of Directors, will not exceed $700,000 in total value for any non-employee director serving as the chairman and $500,000 in total value for any other non-employee director.
●    Awards Subject to Clawback. Awards granted under the Amended 2016 Plan are subject to recoupment in accordance with any applicable law and any recoupment policy, arrangement or agreement adopted by the Company from time to time. The Company’s clawback policy for executive officers currently allows for the recoupment of cash and equity incentive compensation when the executive officer is terminated for cause, or in certain circumstances involving a restatement.
●    Includes Best Practice Performance-Based Stock Award Provisions. While the enactment of the 2017 Tax Cuts and Jobs Act eliminated the performance-based compensation exception under Section 162(m) of the Code, the Amended 2016 Plan includes many best practice performance-based stock award provisions.
●    Limits on Transfer. The Amended 2016 Plan provides for limited transfer rights, and in no event may any stock award be transferred for consideration to a third-party financial institution.
Material Features of the Amended 2016 Plan
The following is a summary of the material features of the Amended 2016 Plan and its operation. This summary does not purport to be a complete description of all the provisions of the Amended 2016 Plan and is qualified in its entirety by reference to the Amended 2016 Plan, a copy of which is attached as Appendix B to this Proxy Statement and is incorporated herein by reference.
PURPOSE
The purpose of the Amended 2016 Plan is to permit grants of stock options, SARs, restricted stock, unrestricted stock, performance units, performance shares, stock units and dividend equivalents (collectively, “Awards”) to eligible participants. The Amended 2016 Plan is intended to provide incentives to further the growth and profitability of the Company and to encourage stock ownership on the part of (1) employees of the Company and its affiliates, (2) consultants and others who provide significant services to the Company and its affiliates (“consultants”), and (3) directors of the Company who are employees of neither the Company nor any of its affiliates (“non-employee directors”). The Amended 2016 Plan also is intended to permit the grant of performance-based equity awards.
ELIGIBLE PARTICIPANTS
Employees, consultants and non-employee directors are eligible to be selected to receive one or more different types of Awards. However, incentive stock options (which are entitled to favorable U.S. federal tax treatment) may be granted only to employees of the Company or any subsidiary of the Company at the time of grant. The actual number of individuals who will receive Awards cannot be determined in advance because the Committee retains the discretion to select the participants. As of the end of fiscal 2020, we had 10 non-employee directors and approximately 117,000 employees. In addition, in fiscal 2020, we engaged approximately 2,300 consultants, none of whom received Awards under the 2016 Plan in fiscal 2020. Approximately 1,600 individuals (comprised of our non-employee directors and a subset of our employees) received Awards under the 2016 Plan in fiscal 2020.
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ADMINISTRATION

The Amended 2016 Plan is administered by the Compensation and Management Development Committee of the Board of Directors (the “Committee”). The Committee will consist of two or more directors who qualify as “non-employee directors” under Rule 16b-3 under the Securities Exchange Act of 1934, and as “outside directors” under Section 162(m) (for purposes of administering compensation that is intended to qualify as “grandfathered” performance-based compensation).
Subject to the terms of the Amended 2016 Plan, the Committee has the discretion to select the employees, consultants and non-employee directors who will be granted Awards, determine the terms and conditions of Awards (for example, the exercise price and vesting schedule), and to construe and interpret the provisions of the Amended 2016 Plan and outstanding Awards. Notwithstanding the foregoing, Awards granted to non-employee directors will be subject to Board approval if so required by the Committee Charter. In addition, the Committee may not reprice Awards or exchange Awards for other Awards, cash or a combination thereof, without the approval of the shareholders. The Committee may delegate all or any part of its authority to one or more directors or officers of the Company in accordance with applicable law, but only the Committee itself can make Awards to participants who are executive officers of the Company.
SHARE RESERVE

Following the Share Increase, the total number of shares available for grant under the Plan will not exceed the sum of (a) 193,341,342 and (b) the number of shares (not to exceed 40,225,653) that remain available for grant under the Company’s 2002 Stock Option Plan as of the date of obtaining shareholder approval of the amended and restated Plan on May 9, 2006, (c) any shares (not to exceed 28,019,786) that otherwise would have been returned to the 2002 Stock Option Plan after May 9, 2006 on account of the expiration, cancellation, or forfeiture of Awards granted thereunder, and (d) 25,000,000 shares. In addition, effective with respect to Awards granted on or after the May 17, 2011, each Award other than a stock option or SAR will reduce the number of shares available for Awards under the Amended 2016 Plan by 2 shares for each share covered by the Award in lieu of the 3-to-1 share counting rule that applied under the Amended 2016 Plan prior to such date. With respect to SARs and options, the number of shares which will cease to be available under the Amended 2016 Plan will equal the total number of shares covered by each SAR or stock option, as evidenced in the applicable award agreement. To the extent an Award under the Amended 2016 Plan (other than a SAR or stock option) is paid out in cash rather than shares, such cash payment will not result in reducing the number of shares available for issuance under the Amended 2016 Plan (and in the case of stock options or SARs will reduce the number of shares available for issuance under the Amended 2016 Plan by the number of shares having a fair market value equal to the cash delivered). The maximum number of shares that may be issued upon the exercise of incentive stock options will equal the aggregate number of shares reserved under the Amended 2016 Plan number plus, to the extent allowable under Section 422 of the Code, any shares that become available for issuance under the Amended 2016 Plan. Shares granted under the Amended 2016 Plan may be either authorized but unissued shares or treasury shares.
If an Award expires or is canceled, forfeited or repurchased by the Company for any reason, the unvested or cancelled number of shares that were subject to the Award (plus the number of additional shares, if any, that counted against the shares pool using the share counting rule in effect at the time the Award was granted) generally will be returned to the available pool of shares reserved for issuance under the Amended 2016 Plan. Except for shares of restricted stock that are forfeited (rather than vesting), shares actually issued under the Amended 2016 Plan or withheld to pay the exercise price of an Award or to satisfy tax withholding obligations with respect to an Award will not be returned to the Amended 2016 Plan and will not be available for future issuance under the Amended 2016 Plan. Shares purchased by the Company with the proceeds of stock option exercises will not again be available for issuance under the Amended 2016 Plan.
Substitute awards made under the Amended 2016 Plan to persons who become our employees as a result of an acquisition transaction will not reduce the shares available for issuance under the Amended 2016 Plan or be added back to the shares available for issuance under the Amended 2016 Plan. In accordance with the rules of the applicable stock exchange on which the shares are listed, shares under a pre-existing plan sponsored by a company acquired by us (as adjusted, to the extent appropriate, to reflect the transaction) may be used for awards under the Amended 2016 Plan without reducing the shares available for issuance under the Amended 2016 Plan, and shares subject to such awards will not be added back to the shares available for awards under the Amended 2016 Plan.
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Lastly, if the Company experiences a dividend or other distribution, merger, reorganization, consolidation, recapitalization, separation, liquidation, stock split, reverse stock split, split-up, spin-off, share combination, repurchase, or exchange of shares or other securities of the Company, other significant corporate transaction or other significant change affecting the shares, the Committee will, as it deems appropriate, equitably adjust the number, kind and class of securities reserved for issuance under the Amended 2016 Plan, the number, kind, class, and price of securities subject to outstanding Awards and the per-person numerical limits on Awards to reflect the stock dividend or other change.
DIRECTOR COMPENSATION LIMIT
Other than the Chairman of the Board, no non-employee director will be granted Awards in any fiscal year of the Company, taken together with any cash retainers or other similar cash-based payments paid during such fiscal year for services on the Board, having an aggregate value in excess of $500,000. In addition, the non-employee Chairman of the Board will not be granted Awards in any fiscal year of the Company, taken together with any cash retainers or other similar cash-based payments paid during such fiscal year for services on the Board, having an aggregate value in excess of $700,000. For this purpose, restricted stock, unrestricted stock, performance units, performance shares and stock units will be valued based on the fair market value on the grant date of the maximum number of shares covered thereby (or the maximum dollar value thereof with respect to Awards denominated in dollars) and stock options and SARs will be valued using a Black-Scholes or other accepted valuation model, using reasonable assumptions.
PERFORMANCE GOALS

Awards under the Amended 2016 Plan may be made subject to performance conditions as well as time-vesting conditions. Such performance conditions may be based on a formula or standard utilizing one or more of the following objectively defined and non-discretionary factors which will be established by the Committee when the achievement of the applicable performance goal(s) associated with the applicable performance period remains substantially uncertain: (1) comparable store sales growth, (2) earnings, (3) earnings per share, (4) return on equity, (5) return on net assets, (6) return on invested capital, (7) gross sales, (8) net sales, (9) net earnings, (10) free cash flow, (11) total shareholder return, (12) stock price, (13) gross margin, (14) operating margin, (15) market share, (16) inventory levels, (17) expense reduction, and/or (18) employee turnover as well as any financial and non-financial criteria (including, without limitation, subjective criteria and individual performance), as established by the Committee in its sole discretion.

As determined by the Committee, the Performance Goals may, (a) differ from participant to participant and from award to award, (b) be based on the performance of the Company as a whole or the performance of a specific participant or one or more subsidiaries, divisions, departments, regions, stores, segments, products, functions or business units of the Company, (c) be measured on a per share, per capita, per unit, per square foot, per employee, per store basis, and/or other objective basis (d) be measured on a pre-tax or after-tax basis, (e) be measured on an absolute basis or in relative terms (including, but not limited to, the passage of time and/or against other companies, financial metrics and/or an index) and (f) take into account other factors (including subjective factors).

The impact of one or more items (including, but not limited to, one or more of the following ) may be taken into account in any manner established by the Committee when determining whether a Performance Goal has been attained, provided such items are established when the achievement of the applicable performance goal(s) associated with the applicable performance period remains substantially uncertain: (1) changes in generally accepted accounting principles (“GAAP”); (2) nonrecurring items, if any, that may be defined in an objective and non-discretionary manner under U.S. GAAP accounting standards or other applicable accounting standards in effect from time to time; (3) the sale of investments or non-core assets; (4) discontinued operations, categories or segments; (5) legal claims and/ or litigation and insurance recoveries relating thereto; (6) amortization, depreciation or impairment of tangible or intangible assets; (7) reductions in force, early retirement programs or severance expense; (8) investments, acquisitions or dispositions; (9) political, legal and other business interruptions (such as due to war, insurrection, riot, terrorism, confiscation, expropriation, nationalization, deprivation, seizure, and regulatory requirements); (10) natural catastrophes; (11) currency fluctuations; (12) stock-based compensation expense; (13) early retirement of debt; (14) conversion of convertible debt securities; and (15) termination of real estate leases. Each of the adjustments described above may relate to the Company as a whole or any part of the Company’s business or operations.

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STOCK OPTION AWARDS
A stock option is the right to acquire shares at a fixed exercise price for a fixed period of time. Under the Amended 2016 Plan, the Committee may grant nonqualified stock options and/or incentive stock options. The number of shares covered by each option will be determined by the Committee, but during any fiscal year of the Company, no participant may be granted options covering more than 18,000,000 shares. The exercise price of the shares subject to each option is set by the Committee but cannot be less than 100% of the fair market value (on the date of grant) of the shares covered by the option. The exercise price of incentive stock options will not be less than 110% of fair market value if the participant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its subsidiaries. The total fair market value of the shares (determined on the grant date) covered by incentive stock options that first become exercisable by any participant during any calendar year also may not exceed $100,000.
Options become exercisable and terminate at the times and on the terms established by the Committee, but options generally may not expire later than ten years after the date of grant (such term to be limited to five years in the case of an incentive stock option granted to a participant who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its subsidiaries). If the participant terminates service before his or her option’s normal expiration date, the option may terminate sooner than its normal expiration date, depending upon the reason for the termination.
The exercise price of each option must be paid in full at the time of exercise. The Committee also may permit payment through the tender of shares that are already owned by the participant, by cashless or “net” exercise, or by any other means that the Committee determines to provide legal consideration for the shares and is consistent with the Amended 2016 Plan’s purpose. Any taxes required to be withheld must be paid by the participant at the time of exercise.
STOCK APPRECIATION RIGHT AWARDS
Stock Appreciation Right (SARs) are Awards that give a participant the right to receive payment from the Company in an amount equal to: (1) the excess of the fair market value of a shares on the date of exercise over the exercise price, multiplied by (2) the number of shares with respect to which the SAR is exercised. SARs may be granted as a separate Award or together with an option. Proceeds from SAR exercises may be paid in cash or shares, as determined by the Committee. The number of shares covered by each SAR will be determined by the Committee, but during any fiscal year of the Company, no participant may be granted SARs for more than 18,000,000 shares.
Awards of SARs may be granted in connection with all or any part of an option or may be granted independently of options. The Committee determines the terms and conditions of each SAR. However, the exercise price of a SAR may not be less than 100% of the fair market value of a share on the grant date. SARs expire at the times established by the Committee, but subject to the same maximum time limits as are applicable to options granted under the Amended 2016 Plan.
RESTRICTED AND UNRESTRICTED STOCK AWARDS
Restricted stock awards are shares, which vest in accordance with terms established by the Committee in its discretion. Unrestricted stock awards are shares that have no restrictions such as vesting terms. The number of shares of restricted and unrestricted stock granted to any employee or consultant will be determined by the Committee, but during any fiscal year of the Company, no participant may be granted more than 2,000,000 shares.
In determining the vesting schedule for any Award of restricted stock, the Committee may impose whatever conditions to vesting it determines to be appropriate. For example, the Committee may (but is not required to) provide that restricted stock will vest only if one or more performance objectives are satisfied and/or only if the participant remains employed with the Company for a specified period of time.
Participants holding unvested shares of restricted stock will not be entitled to any dividends and other distributions paid or distributed by the Company on the equivalent number of vested shares. Notwithstanding the foregoing, at the Committee’s discretion, the holder of unvested shares may be credited with such dividends and other distributions provided that such dividends and other distributions will be paid or distributed to the participant only if,
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when and to the extent such shares vest. The value of dividends and other distributions payable or distributable with respect to any shares that do not vest will be forfeited.
STOCK UNIT, PERFORMANCE UNIT, AND PERFORMANCE SHARE AWARDS
Stock units, performance units, and performance shares are Awards in which amounts are credited to a bookkeeping account established for the participant. A stock or performance unit has an initial value that is established by the Committee at the time of its grant. A performance share has an initial value equal to the fair market value of a share on the date of grant. The number of stock units, performance units or performance shares granted to any employee or consultant will be determined by the Committee, but during any fiscal year of the Company, no participant may be granted stock units, performance units or performance shares having, in the aggregate, a grant date value (assuming maximum payout) greater than $20 million or covering more than 2,000,000 shares (assuming maximum payout), whichever is greater.
Whether a stock unit, performance unit or performance share Award actually will result in a payment to a participant will depend upon the extent to which the performance objectives, if any, established by the Committee are satisfied and the vesting criteria, if any, are met. The applicable performance objectives, vesting criteria and all other terms and conditions of the Award will be determined at the discretion of the Committee and may be based upon the achievement of Company-wide, business unit or individual goals, which may include continued employment or service, or any other basis determined by the Committee.
After a stock unit, performance unit or performance share Award has vested (that is, after any applicable performance objective(s) have been achieved and/or any applicable vesting criteria satisfied), the participant will be entitled to a payment of cash and/or shares, as determined by the Committee. However, upon grant of an Award of performance shares, performance units or stock units, the Committee may set terms and conditions for deferral of payment of an Award of performance shares, performance units or stock units. The deferral period will be fixed by the Committee on the date of grant and any Award may provide for the earlier termination of such period in the event of a change in control of the Company or other similar transaction or event.
DIVIDEND EQUIVALENTS
Dividend Equivalents refer to a participant’s right to receive cash or shares for each share represented by an Award held by such participant in an amount equal to the ordinary dividends paid on an equivalent number of shares. Any dividend equivalents credited with respect to an Award will be settled in cash or shares only if, when and to the extent the Award vests, provided that settlement of earned Dividend Equivalents may be deferred as described in the Amended 2016 Plan. The value of amounts payable with respect to any Award or portion of any Award that does not vest will be forfeited.
NONTRANSFERABILITY OF AWARDS

Awards granted under the Amended 2016 Plan may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the applicable laws of descent and distribution. If permitted by the Committee (at its discretion), a participant may designate one or more beneficiaries to receive any vested but unpaid Awards following his or her death. Notwithstanding the foregoing, a Participant may, if the Committee (in its discretion) so permits, transfer an Award to an individual or entity other than the Company. Any such transfer will be made in accordance with such procedures as the Committee may specify from time to time; provided, however, that in no event may any Award be transferred for consideration to a third-party financial institution.
CHANGE IN CONTROL
The Amended 2016 Plan provides that, except as set forth in an applicable award agreement, in the event of a change in control, the acquiror may, without the consent of any participant, either assume or continue awards under the Amended 2016 Plan or substitute for outstanding awards substantially equivalent awards covering the acquiror’s stock. Except as set forth in an applicable award agreement, outstanding awards which are neither assumed, continued or substituted by the acquiror in connection with the change in control will, contingent on the change in control, become fully vested and, if applicable, exercisable immediately prior to the change in control.
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AWARDS SUBJECT TO CLAWBACK
Awards granted under the Amended 2016 Plan are subject to recoupment in accordance with any applicable law and any recoupment policy, arrangement or agreement adopted by the Company from time to time. The Company’s clawback policy for executive officers currently allows for the recoupment of cash and equity incentive compensation when the executive officer is terminated for cause, or where all of the following factors are present: (a) the award was predicated upon the achievement of certain financial results that were subsequently the subject of a restatement, (b) in the Board’s view, the executive officer engaged in fraud or intentional misconduct that was a substantial contributing cause to the need for the restatement, and (c) a lower award would have been made to the executive officer based upon the restated financial results. In each such instance, the Company will seek to recover the individual executive officer’s entire annual bonus or award for the relevant period, plus a reasonable rate of interest.
“Cause” for this purpose, means a good faith determination by the Company that the executive officer’s employment should be terminated for any of the following reasons: (1) indictment, conviction or admission of any crimes involving theft, fraud or moral turpitude; (2) engaging in gross neglect of duties, including willfully failing or refusing to implement or follow direction of the Company; (3) breaching the Company’s policies and procedures, including but not limited to the Code of Business Conduct; or (4) any action that results in financial, reputational or other harm to the Company and its affiliates and subsidiaries.

OTHER POLICIES

Awards granted under the Amended 2016 Plan may be subject to the terms and conditions of any policy (and any amendments thereto) adopted by the Company from time to time, which may include any policy related to the vesting or transfer of awards, provided that in no event will such policy permit that an award be transferred for consideration to a third-party financial institution. Whether any such policy will apply to a particular award may depend, among other things, on when the award was granted, whom the award was granted to, and the type of award.
Amendment and Termination
The Board generally may amend or terminate the Amended 2016 Plan at any time and for any reason. However, no amendment, suspension or termination may materially and adversely impair the rights of any participant in the Amended 2016 Plan without his or her consent. Amendments will be contingent on shareholder approval if required by applicable law.
New Plan Benefits
The Amended 2016 Plan does not provide for set benefits or amounts of awards and we have not approved any awards that are conditioned on shareholder approval of the Amended 2016 Plan. However, as discussed in further detail in “Proposal No. 1 — Election of Directors — Compensation of Directors” above, each of our current non-employee directors, will be entitled to receive a grant of stock units under the Amended 2016 Plan on June 30, 2021 with a grant date fair value of $170,000. The following table summarizes the stock unit grants that our current non-employee directors as a group will receive if they remain a director following the 2021 Annual Meeting and highlights the fact that none of our executive officers (including our named executive officers) or employees will receive any set benefits or awards that are conditioned upon shareholder approval of the Amended 2016 Plan. All other future awards to non-employee directors, executive officers, employees and consultants of the Company under the Amended 2016 Plan are discretionary and cannot be determined at this time.

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Name and positionDollar value
Number of shares(1)
Sonia Syngal— — 
  CEO
Katrina O’Connell— — 
  EVP and CFO
Mark Breitbard— — 
  President and CEO, Gap Brand
Nancy Green
— — 
  President and CEO, Old Navy
Julie Gruber— — 
  EVP, Chief Legal and Compliance Officer, Gap Inc.
All current executive officers as a group (10 persons)— — 
All current directors who are not executive officers as a group (11 persons)$1,870,000 — 
All employees, including all current officers who are not executive officers, as a group— — 

(1)The number of shares subject to each non-employee director’s stock unit grant will not be determinable until the grant date. See the section entitled “Compensation of the Named Executive Officers and Directors—Compensation of Directors” for more information.
Historical Plan Benefits
The 2016 Plan was originally adopted and became effective in 1996 and was named The Gap, Inc. 1996 Stock Option and Award Plan, and was subsequently amended and restated and renamed a number of times. The following table sets forth, for each of the individuals and groups indicated, the total number of shares subject to stock awards that have been granted (even if not currently outstanding) under the 2016 Plan since the plan originally became effective through January 30, 2021, the last day of our fiscal year 2020.

Name and position
Number of shares
subject to stock
awards(1)
Sonia Syngal(2)
3,601,008 
  CEO
Katrina O’Connell928,369 
  EVP and CFO
Mark Breitbard2,715,104 
  President and CEO, Gap Brand
Nancy Green 1,719,986 
  President and CEO, Old Navy
Julie Gruber1,121,619 
   EVP, Chief Legal, Compliance, and Sustainability Officer and Corporate Secretary
All current executive officers as a group (10 persons)12,512,014 
All current directors who are not executive officers as a group (11 persons)(3)
3,099,294 
All employees, including all current officers who are not executive officers, as a group329,203,003 

(1)Other than grants made to John J. Fisher, Robert J. Fisher and William S. Fisher as directors, and in the case of Robert J. Fisher and William S. Fisher as former employees of the Company, no awards have been granted under the 2016 Plan to any associate of any of our directors (including nominees) or executive officers, and no person received 5% or more of the total awards granted under the 2016 Plan since its inception.
(2)Ms. Syngal is also a nominee for election as a director.
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(3)This group includes all the nominees for election as a director other than Ms. Syngal. The total number of shares that they were granted on an individual basis are as follows: John J. Fisher: 24,423 shares; Robert J. Fisher: 1,119,363 shares; William S. Fisher: 847,398 shares; Tracy Gardner: 413,046 shares; Isabella D. Goren: 62,395 shares; Bob L. Martin: 281,542 shares; Amy Miles: 30,290 shares; Jorge P. Montoya: 118,921 shares; Christopher O’Neill: 28,541 shares; Mayo A. Shattuck III: 143,085 shares; and Elizabeth Smith: 30,290 shares.


Please also refer to Equity Compensation Plan Information for further information about shares, which may be issued upon the exercise of options, warrants and rights granted to employees, consultants or members of our Board of Directors under all of our equity compensation plans as of January 30, 2021, including the 2016 Long-Term Incentive Plan and the Employee Stock Purchase Plan.
U.S. Federal Income Tax Consequences
The following is a general summary of the federal income tax consequences to U.S. taxpayers and the Company of Awards under the 2016 Plan. Tax consequences for any particular individual may be different. Participants should consult with their own tax advisors for more detailed information on how Awards will be taxed in their particular circumstances.
NONQUALIFIED STOCK OPTIONS AND SARs
No amount is included in the taxable income of a participant when a nonqualified stock option or SAR is awarded or vests. Upon exercise of a nonqualified stock option, a participant will recognize ordinary income equal to the difference between the fair market value of the shares received and the exercise price. Upon exercise of a SAR, a participant will recognize ordinary income equal to the amount of cash received and the fair market value of any shares received from the Company (before tax withholding). Any additional gain or loss recognized upon a later sale or other disposition of the acquired shares is generally taxed as capital gain or loss.
INCENTIVE STOCK OPTIONS
No amount is included in the taxable income of a participant when an incentive stock option is granted or exercised. However, the participant may be subject to the alternative minimum tax in the year of exercise because the difference between the fair market value of the shares received and the exercise price is included in the amount of the participant’s alternative minimum taxable income for that year. If the participant exercises the option and then sells the acquired shares more than two years after the grant date and more than one year after the exercise date, the difference between the sale price and the exercise price will be taxed as long-term capital gain or loss. If the participant exercises the option and sells the acquired shares before the end of the two- or one-year holding periods, however, the difference between the fair market value of the stock on the date of the option exercise and the exercise price is taxed as ordinary income. If the value of the shares has decreased following the option exercise, the participant’s ordinary income is limited to the difference between the sale price and the exercise price. If the value of the shares has increased following the option exercise, the difference between the fair market value of the shares at the time of exercise and the sale price is taxed as capital gain.
RESTRICTED STOCK, UNRESTRICTED STOCK, STOCK UNITS, PERFORMANCE UNITS AND PERFORMANCE SHARES
No amount is included in the taxable income of a participant upon receipt of restricted stock, stock units, performance units, or performance shares if such Awards are subject to vesting requirements. The participant will generally recognize ordinary income upon vesting of restricted stock, and payout of stock units, performance units or performance shares. In the case of stock units, performance units, or performance shares, if the Committee has set terms and conditions for the deferral of payment of the Award following the time of vesting, the participant will recognize ordinary income at the time of such payment. Alternatively, with respect to restricted stock, a participant may elect under Code Section 83(b) to be taxed at the time of the Award. An election under Section 83(b) must be filed with the Internal Revenue Service (with a copy to the Company) within 30 days after the date of the Award. A participant receiving unrestricted stock will recognize income at the time of the Award. With respect to restricted stock and unrestricted stock, the amount of ordinary income recognized by the participant will be equal to the fair market value of the shares at the time income is recognized minus any amount paid for the shares. With respect to stock units, performance units or performance shares, the amount of ordinary income will be equal to the amount of
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cash and/or the fair market value of shares (at the time income is recognized) that the participant receives from the Company (before tax withholding) minus any amount paid for the shares. In general, any gain or loss recognized upon sale of the Shares thereafter will be taxed as a capital gain or loss.
Tax Effect on the Company
We generally will be entitled to a tax deduction in connection with the vesting, settlement or exercise of an award under the Amended Incentive Plan in an amount equal to the ordinary income realized by a participant at the time the participant recognizes such income, such as when a participant exercises a nonqualified stock option.
Section 162(m) of the Code (“Section 162(m)”) places a limit of $1 million on the amount of compensation that we may deduct as a business expense in any year with respect to certain of our most highly paid executive officers. Historically there has been an exemption from this $1 million deduction limit for compensation payments that qualified as “performance-based” under Section 162(m). Generally, in the past we have designed our executive compensation program to permit the Committee to award compensation intended to be eligible for deductibility to the extent permitted by Section 162(m) and the relevant IRS regulations.
With the enactment of the 2017 Tax Cuts and Jobs Act, however, the performance-based compensation exemption has been eliminated, except with respect to certain grandfathered arrangements. While the Committee considers the deductibility of compensation as one factor in determining executive compensation, the Committee believes that it is in the best interests of our shareholders to maintain flexibility in our approach to executive compensation and to structure a program that we consider to be the most effective in attracting, motivating and retaining key employees.
The foregoing is only a summary of the effect of federal income taxation upon participants and the Company with respect to the grant and exercise of awards under the 2016 Plan. It does not purport to be complete, and does not discuss the tax consequences of a service provider’s death or the provisions of the income tax laws of any municipality, state or foreign country in which the service provider may reside.
Recommendation
We are requesting that shareholders approve the Amended 2016 Plan. We believe that employees with an ownership stake in our business become highly motivated to achieve our corporate goals and increase long-term shareholder value.
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EXECUTIVE COMPENSATION
AND RELATED INFORMATION
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 (“Executives”). The Compensation and Management Development Committee of our Board of Directors (the “Committee”) oversees these programs and determines compensation for our Executives.
INTRODUCTION
In this Compensation Discussion and Analysis, we discuss the following:

Executive Summarypage 44
Compensation Objectivespage 50
Elements of Compensationpage 50
Compensation Analysis Frameworkpage 62
EXECUTIVE SUMMARY
2020 Leadership Changes and Key Events
In March 2020, Sonia Syngal, the President and CEO of Old Navy, became the Company’s CEO and Katrina O’Connell became the Company’s CFO. Teri List, the Company's CFO until March 2020, departed the Company.

In March 2020, the World Health Organization declared the novel coronavirus disease ("COVID-19") a global pandemic and recommended containment and mitigation measures worldwide. Throughout fiscal 2020, we faced a period of significant challenge and uncertainty regarding the impact of COVID-19 on both our customer demand and supply chain.
During this challenging economic environment, we took steps to strengthen our financial liquidity while leveraging the extensive experience of the leadership team to manage through the disruption brought on by COVID-19 and continuing building towards the future.
Actions to strengthen liquidity included: drawing down the entire $500 million on the Company’s revolving credit facility in March 2020; deferring the record and payment dates for the Company’s previously announced first quarter fiscal year 2020 dividend, and suspending the Company’s regular quarterly cash dividend for the remainder of fiscal year 2020; suspending share repurchases; reducing capital expenditures by approximately $300 million in fiscal 2020; reviewing operating expenses for opportunities to reduce spending in non-demand driving areas; and realigning inventory to expected sales trends.
In March 2020, we withdrew our fiscal 2020 guidance and announced the temporary closure of our North American stores and a significant number of our Asia and Europe stores to comply with governmental mandates and assist the global governmental efforts to slow the spread of COVID-19. Two weeks later, we announced that we would furlough the majority of our store teams in the United States and Canada, pausing pay but continuing to offer applicable benefits until stores were able to reopen.

Beginning in April 2020, as a result of COVID-19, we suspended rent payments for our temporarily closed stores. We are continuing to work through negotiations with our landlords relating to those leases, and there was a rent abatement benefit of approximately $80 million recognized on the Consolidated Statement of
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Operations in fiscal 2020. In addition, as a part of our ongoing specialty fleet rationalization efforts, we began performing strategic reviews of our brand portfolio to create a healthier business while prioritizing asset-light growth through licensing and franchise partnerships in international markets.
In May 2020, we completed the issuance of $2.25 billion of senior secured notes and entered into an asset-based revolving credit facility with an initial aggregate principal amount of $1.8675 billion. A portion of the proceeds of the notes was used to redeem the previously issued $1.25 billion unsecured notes due April 2021. We also repaid the outstanding $500 million borrowed under our prior revolving credit facility. This new capital structure provided sufficient liquidity to navigate the COVID-10 crisis. Also, in solidarity with shareholders and employees, Ms. Syngal’s salary was reduced by 25% and the salaries of Mr. Breitbard, Ms. Green, Ms. Gruber, and Ms. O’Connell were reduced by 20% from May 3, 2020 through August 1, 2020. The August reversion to full salaries was based on the fact that nearly all of our continuing stores had reopened.

Beginning in May 2020, Gap Inc. began to safely reopen our temporarily closed stores with industry-leading safety measures for customers and employees and continued to monitor regional mandates for additional temporary store closures as they arose. Approximately 90% of the global fleet was open as of August 1, 2020, in time to meet increased demand during the back-to-school season.
In October 2020, we appointed Nancy Green as President & CEO, Old Navy after an interim period of leading the brand.

In October 2020, we hosted a virtual Investor Meeting where we unveiled our Power Plan 2023 strategy. We will strive to grow our purpose-led, lifestyle brands by leveraging our omni platform and scaled operations, extending customer reach across every age, body, and occasion through the power of the portfolio, and applying an engineered approach to cost and growth. Key initiatives include growing Old Navy and Athleta, repositioning and transforming Gap and Banana Republic, growing our online business, expanding into new categories, transforming cost through re-engineered capabilities, and scaled strategic partnerships to amplify our reach.

Consistent with our Power Plan 2023 strategy, we also shared our plans to close approximately 350 Gap and Banana Republic stores in North America between the beginning of fiscal 2020 and the end of fiscal 2023. In addition, we shared plans to initiate a strategic review of our European business, with the objective of creating a healthier business through asset-light growth.

Company leaders have also reiterated our commitment to our Environmental, Social and Governance (“ESG”) goals. Major environmental goals include the commitment to be carbon-neutral and net water positive by 2050 and to eliminate single-use plastics by 2030. We made important changes to our social goals in 2020, including establishing nine new commitments to foster racial justice and taking steps to increase transparency. Since 2007, we have publicly reported our global employee gender data and overall U.S. race and ethnicity data. Beginning this year, we will regularly share additional data on how our employees identify their race and ethnicity at both stores and headquarters. We will publish a dedicated Equality & Belonging report in 2021 to talk openly about our progress and the lessons we have learned along the way. With Nancy Green’s appointment as President & CEO of Old Navy, four of five (4 of 5) named executive officers for fiscal 2020 are women.
In November 2020, we announced that Asheesh Saksena joined the Company as Chief Growth Officer, a newly created position that will focus on executing the Company’s strategic agenda, as well as leading growth initiatives for the future. In addition, we announced that Sandra Stangl joined the Company as the new President and CEO of Banana Republic, as the brand strives to redefine affordable luxury.
Business Performance and Executive Pay
During fiscal 2020, the COVID-19 pandemic negatively impacted net sales and operating income during the year. Performance in the second half of the year improved versus the first half, including a return to profitability. Stronger performance in online sales, which grew 54% for the year, partially offset lower store sales impacted by the pandemic. Online sales made up 45% of company sales in fiscal 2020, which demonstrated progress towards the Company’s goal to reach 50% of net sales from online by the end of 2023.
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For leadership team members appointed in March 2020, in accordance with their offer packages, we awarded long-term incentive grants on the effective date of their appointment, March 23, 2020. Both the effective date and the value of long-term incentives are outlined in their offer letters.
Goals are typically set for the Company’s annual incentive bonus and performance share plans at the beginning of the fiscal year, which was when the unprecedented and uncertain nature of the pandemic began to unfold in 2020. Recognizing the challenge of setting meaningful goals at that time, the Committee decided to delay setting the fiscal 2020 goals. In August 2020, once the business began to stabilize, the Committee approved the goals.
In August, the Committee established two equally weighted six-month performance periods covering the first half and second half of fiscal 2020 for the 2020 Bonus Plan and the outstanding Long-Term Growth Plan (“LGP”) awards that were granted prior to fiscal 2020, which are earned based on the average attainment of separate earnings goals that are established each fiscal year over three years (the "Prior Year Grants"). Half of each participant’s fiscal 2020 target bonus opportunity and half of each participant’s target number of LGP shares that would be earned based on fiscal year 2020 performance were allocated to each equally weighted period.
Business financial performance was below expectations in the first half of fiscal 2020 and, therefore, the Committee determined that there would be no payout relating to the first half of the fiscal year for both the 2020 Bonus Plan and the Prior Year LGP Grants after considering the Company’s performance during this period. The Committee set goals for the second half of fiscal 2020 that were aligned with the outlook for the Company given the unprecedented impact and continued business disruption from, and uncertain duration of, the COVID-19 pandemic and provided a meaningful incentive for the Company’s leadership team that aligns leadership rewards with shareholder interests.
For fiscal 2020 Performance Restricted Stock Unit (“PRSU”) awards that replaced the LGP starting in fiscal 2020 and which had been previously granted in March 2020 as a part of the leadership team’s offer packages, the Committee established a cumulative earnings goal and total shareholder return modifier. In each case, performance would be measured over a 2.5-year performance period beginning on August 2, 2020 and ending on the last day of fiscal 2022. The total shareholder return modifier is based on relative performance of the Company to the S&P Retail Select index. The Committee believed these goals were aligned with the outlook for the Company given the unprecedented impact and uncertain duration of the COVID-19 pandemic, and provided a meaningful incentive for the Company’s leadership team that aligns leadership rewards with shareholder interests.

NAMED EXECUTIVE OFFICERS AND ROLES IN FISCAL 2020
image_01.jpg
image_11.jpg
image_21.jpg
image_31.jpg
image_41.jpg
Sonia Syngal,
Chief Executive Officer,
Gap Inc.
Katrina O’Connell,
Executive Vice President & Chief Financial Officer, Gap Inc.
Mark Breitbard,
President & Chief Executive Officer, Gap Brand
Nancy Green,
President & Chief Executive Officer, Old Navy
Julie Gruber,
Executive Vice President,
Chief Legal, Compliance and Sustainability Officer,
Gap Inc.

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LISTENING TO OUR SHAREHOLDERS

Say On Pay–
98% APPROVAL
At the 2020 Annual Meeting, shareholders were very supportive of the structure and philosophy of our pay program during fiscal 2019. We continued to set rigorous goals and align pay delivery with performance.
Our Committee is comprised solely of experienced independent directors and has established effective means for communicating with shareholders. The Committee is very interested in the ideas and concerns of our shareholders regarding executive compensation and considers the Say-on-Pay vote when assessing our compensation practices. An advisory vote on executive compensation was presented to our shareholders at our 2020 Annual Meeting (“Say on Pay vote”) and approved by 98% of shareholder votes, consistent with favorable advisory votes by our shareholders on executive compensation prior to 2019. In addition, on an annual basis, we engage directly with some of our largest shareholders as another means to hear their ideas and concerns.
In response to concerns expressed by our shareholders in 2019 regarding our long-term incentive plan, management and the Committee spent time during 2020 considering modifications to the plan, including the performance metrics used. As a result, we aligned on certain changes, which are further described below in "Elements of Compensation—Long-Term Incentives”. We believe these changes will further tie executive pay to Company performance. As in prior years, we continue to set rigorous goals and align pay delivery with performance. We also continue to put executive compensation to an annual advisory shareholder vote.
CEO COMPENSATION SUMMARY
In March 2020, we appointed Sonia Syngal as our CEO. Ms. Syngal succeeded Robert Fisher, who served as our Interim CEO from November 2019 to March 2020 while the Board conducted a search for a successor to Art Peck, our CEO until November 2019. Mr. Fisher, who at the time of his appointment as Interim CEO was our Chairman and a director, continued to receive his regular director compensation as Chairman and a non-employee member of our Board of Directors. He did not receive compensation for his additional responsibilities as Interim CEO.
In connection with the appointment of Ms. Syngal as our CEO, effective March 23, 2020, we established a compensation package that is structurally like that of our other Executives. The package is intended to reward her for sustained improvement of the Company’s financial performance and returns to shareholders while helping to promote alignment of interests across the executive team. The Committee used the same factors outlined under “Compensation Analysis Framework” below, as well as its judgment, to determine the structure and value of the package. 60% of the target long-term incentive compensation is in the form of performance shares and 75% of the total compensation opportunity requires achievement of performance goals or share price appreciation. Ms. Syngal receives essentially the same benefits and limited perquisites provided to our other Executives, except that she is provided limited personal use of a Company airplane. The Committee received advice from its independent compensation consultant on the compensation structure, as described more fully below.
Base salary was established at $1,300,000 when Ms. Syngal was appointed to CEO to position her appropriately relative to our other internal and external benchmarks as well as other factors outlined in the Compensation Analysis Framework as detailed on page 62.

Annual bonus target was established at 175% of base salary when Ms. Syngal was appointed as CEO. Due to the unprecedented market conditions in March 2020, goal setting was delayed. In August 2020, the Committee divided fiscal 2020 into two halves, each representing 50% of her bonus target opportunity. The first half of fiscal 2020 was deemed to have no payout given business performance. The Committee established goals for the second half of fiscal 2020 based on the weighted average of brand attainments - 50% on EBIT and 50% on net sales, in each case, subject to certain adjustments. With a 50% weight for the back-half of fiscal 2020, the payout percentages for threshold, target and maximum were effectively reduced; performance at max would earn up to a target bonus for the year. For fiscal 2020, annual bonus was earned at 84% based on a combination of no payout in the first half of fiscal 2020 and financial performance against goals in the second half of fiscal 2020.
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In March 2020, we granted Ms. Syngal long-term incentives with a value of $9,000,000 as outlined in her offer letter for the role of CEO. The long-term incentive value was divided into 60% Performance Restricted Stock Units (PRSUs), 20% options and 20% restricted stock units at the time of grant in March 2020.

We granted long-term incentive equity awards to Ms. Syngal under the PRSU program with a target value of $5,400,000 in March pursuant to her offer letter. However, due to the unprecedented and uncertain nature of the COVID-19 pandemic and the challenge of setting meaningful goals, her PRSU goals were not set until August 2020, and therefore, the target long-term incentive value of her awards at the time of grant in March differs from the Summary Compensation Table (SCT) value. This is because the PRSU value in the SCT represents the grant date fair value at the time PRSU goals were set in August as determined under certain accounting rules when our stock price was significantly higher than in March, which resulted in the grant date fair value being higher than the target value. The table below shows the original target long-term incentive value at time of grant in March and the subsequent Summary Compensation Table value in August.
We granted stock options to Ms. Syngal in March, with an exercise price of $6.28 covering 767,522 shares, which will vest over a four-year period subject to continued service.
We also granted 286,624 shares of restricted stock units (“RSUs"), which will vest over a four-year period subject to continued service, to Ms. Syngal.

LTIGrant DateTarget LTI Value at Grant in March 2020 (%)Shares Granted
Share Price / Option Fair Value at Grant in March 2020(1)
Offer Letter Target LTI Value at Grant in March 2020 ($)
SCT GDFV(2)
SCT Value
PRSU3/23/202060%859,872$6.28$5,399,996$16.23$13,955,723
RSU3/23/202020%286,624$6.28$1,799,999$6.22$1,782,691
Options3/23/202020 %767,522 $2.35$1,799,999$2.01$1,539,879
(1)Stock price and option fair value at grant in March 2020.
(2)Grant Date Fair Value of RSUs and options at the time of grant and PRSUs when goals were set in August 2020.



FISCAL 2020 CEO COMPENSATION

5%8%86%1 %
SalaryBonusLong-Term IncentivesAll Other Compensation
This chart reflects Reported Pay derived from the 2020 Summary Compensation Table for Ms. Syngal.


COMPENSATION GOVERNANCE
Overall, we believe that our fiscal 2020 executive compensation program met each of our compensation objectives and continues to demonstrate our strong commitment to pay for performance. The table below highlights key compensation practices – both the practices we believe support strong governance principles and the practices we have not implemented because we do not believe they would serve our shareholders’ long-term interests.

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What we do
What we don’t do
ü
Pay for Performance
We tie pay to performance. Our ongoing compensation programs are heavily weighted toward performance with limited perquisites.
û
No Long-Term Employment Agreements with Guarantees
We do not have employment contracts of defined length with our Executives or multi-year guarantees for base salary increases, bonuses or equity compensation.

ü
Total Shareholder Return
We implemented relative total shareholder return as a metric in our Performance Restricted Stock Units (PRSU) to align Executives to shareholders.


û
No Golden Parachute Tax Gross-Ups
None of our Executives are entitled to tax gross-up payments other than for relocation and international assignment-related payments or services that are business-related and also generally available to other employees.
ü
Regular Compensation Review
We regularly review Executive compensation and peer group data.

û
No Repricing or Cash-out of Underwater Options
We have not repriced or cashed-out underwater stock options nor are we able to do so without shareholder approval.

ü
Recoupment Policy
We enhanced our incentive compensation recoupment (“clawback”) policy covering our Executives, which includes when management misconduct or gross negligence results in financial, reputational or other harm to the Company.

û
No SERP or Executive Pension Plan
We do not have a supplemental executive retirement plan (“SERP”) or executive pension plan.
ü
Culture of Ownership
We have executive stock ownership requirements that we review on a regular basis and revise as needed.

û
No Change in Control Severance Arrangements or Single Trigger
We do not have severance arrangements specific to a change in control or that provide for single trigger vesting.

ü
Annual Risk Assessment
We conduct an annual risk assessment to determine whether we have incentive compensation arrangements for Executives that create potential material risk for the Company.
û
No Material Compensation Risk
We do not have incentive compensation arrangements for Executives that create potential material risk for the Company, based on a risk assessment conducted by the Company.

ü
Independent Compensation Consultant
The Committee has engaged an independent compensation consulting firm, Frederic W. Cook & Co., Inc. The firm does not provide any other services to the Company.

û
No Dividends on Unearned Performance Awards
We do not pay dividends on unearned performance awards.
ü
Maximum Award Amounts
The Committee establishes caps on incentive payouts with an appropriate balance between long-term and short-term objectives.

û
No Hedging
We prohibit Company employees at the level of vice president and above, as well as other insiders, from engaging in any hedging or publicly-traded derivative transactions in Company stock.
û
No Pledging
We prohibit Executives from pledging Company stock as collateral for a loan or for any other purpose.
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COMPENSATION OBJECTIVES
Our fiscal 2020 compensation program is intended to align total compensation for executives with the short- and long-term performance of the Company, while enabling us to attract and retain executive talent. Specifically, the program is designed to:

Support a performance-oriented culture;
Support our business strategy by motivating and rewarding achievement of short and long-term objectives, as well as individual contributions;
Attract and retain executive talent;
Link executive rewards to shareholder returns; and
Promote a culture of executive stock ownership.
Our program rewards executives for the achievement of corporate and divisional financial and non-financial objectives, for their individual contributions to these results as well as strategic initiatives, and for optimizing long-term returns to shareholders. The majority of each executive’s total compensation opportunity is weighted toward incentive compensation tied to the financial performance of the Company and aligned to the long-term return to our shareholders. When we do not achieve targeted performance levels and/or our stock price does not appreciate, the compensation that can be realized by our executives is substantially reduced. When we exceed targeted performance levels and/or our stock price appreciates, the compensation that can be realized by our executives is substantially increased. We believe that this is the most effective means of aligning executive pay with our shareholders’ interests.
ELEMENTS OF COMPENSATION
The main elements of our fiscal 2020 executive compensation program were:

Base salary;

Annual cash incentive bonus;

Long-term incentives; and

Benefits and limited perquisites.

We chose these elements because we believe each element supports achievement of one or more of our compensation objectives, and that together have been and will continue to be effective in this regard. The use and weight of each compensation element is based on the judgment of the Committee regarding the importance of each compensation objective in supporting our business and talent strategies, as well as the structure of these elements for executives at other companies. Base salary, benefits and perquisites represent less than 20% of each Executive’s potential compensation at target performance levels, to emphasize the importance of compensation that is performance-based and/or at risk.
BASE SALARY
Base salaries are set at a level that the Committee believes will effectively attract and retain top talent, considering the factors described below under “Compensation Analysis Framework”. In addition, the Committee considers the impact of base salary changes on other compensation components where applicable. The Committee reviews base salaries for Executives in the first fiscal quarter, and as needed in connection with promotions or other changes in responsibilities.

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In November 2019, our CEO, Mr. Peck, was terminated and Robert J. Fisher, the Company's then Chairman of the Board, began serving as the Company's President and CEO on an interim basis. Mr. Fisher did not receive any additional compensation for services provided as our Interim President and CEO. Mr. Breitbard, Ms. Gruber and Ms. List, each took on additional responsibilities, resulting in a streamlined leadership structure.

Mr. Breitbard assumed interim leadership for all brands, excluding Old Navy and the customer teams, while we conducted a search for the successor to Mr. Peck. During the duration of this interim assignment, given his broadened scope of responsibility, Mr. Breitbard received a salary supplement of $25,000 per month starting in November 2019 and ending in March 2020, which was paid quarterly.

Ms. Gruber continued to lead Legal, Compliance, Government Affairs and Corporate Administration and assumed interim leadership for Human Resources, Communications, Loss Prevention, Foundation and Sustainability. During the duration of this interim assignment, given her broadened scope of responsibility, Ms. Gruber received a salary supplement of $20,000 per month starting in November 2019 and ending in March 2020, which was paid quarterly.

Ms. List continued to lead Finance, IT and Real Estate and assumed interim leadership for the Separation Project Management Office and Global Supply Chain. Given her broadened scope of responsibility, Ms. List received a salary supplement of $20,000 per month starting in November 2019 and ending in March 2020, which was paid quarterly.

Prior to her appointment, Ms. Green assumed interim leadership of Old Navy and received a salary supplement of $25,000 per month starting in March 2020 until her appointment.
In fiscal 2020, we faced a period of significant challenge and uncertainty regarding the impact of COVID-19. Considering business performance and as a part of cost savings due to COVID-19, Ms. Syngal’s salary was reduced by 25% and Mr. Breitbard, Ms. Green, Ms. Gruber, and Ms. O’Connell’s salaries were reduced by 20% from May 3, 2020 through August 1, 2020. The August reversion to full salary rates came as nearly all stores had reopened and business trends were accelerating for the back-to-school season. In alignment with the leadership team pay reduction, cash retainers and committee fees for our non-employee directors were suspended for the same timeframe. See "Proposal No. 1 — Election of Directors—Compensation of Directors" for more information.

The table below summarizes base salaries during fiscal 2020, and changes that occurred during the year, excluding any salary supplement starting in November 2019 and ending in March 2020.



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Name
Base Salary on 2/2/2020
Reduced Salary 5/3/2020 to 8/1/2020
Base Salary on 1/30/2021
Comments
Sonia Syngal
$ 1,100,000 $975,000 $1,300,000 Salary was increased when Ms. Syngal was appointed CEO in March 2020. Ms. Syngal’s 2/2/2020 salary reflects her previous role as President & CEO, Old Navy.
Katrina O’Connell
$675,000 $600,000 $750,000 
Salary was increased when Ms. O’Connell was appointed CFO in March 2020. Ms. O’Connell’s 2/2/2020 salary reflects her previous role as CFO, Old Navy.
Mark Breitbard
$950,000 $880,000 $1,100,000 
Salary was increased when Mr. Breitbard was appointed President & CEO, Specialty Brands on March 2020. In September 2020, Mr. Breitbard was appointed to lead Gap brand, Intermix, Janie and Jack, and Gap Inc.’s Franchise, Strategic Alliances and Licensing business.
Nancy Green
$925,000 $740,000 $1,100,000 Salary was increased when Ms. Green was appointed President & CEO, Old Navy in October. Ms. Green’s 2/2/2020 salary reflects her previous role as Chief Product Officer, Old Navy.
Julie Gruber

$700,000 $600,000 $750,000 Salary was increased to improve competitiveness as well as to position Ms. Gruber appropriately relative to internal and external benchmarks.
Former Executives
Robert Fisher
$N/AN/AN/A
Mr. Fisher served as Interim CEO until Ms. Syngal was appointed CEO in March and did not receive compensation for this interim role. Mr. Fisher’s compensation as a Board member is further described in "Compensation of Directors". Cash board retainers and committee fees were suspended for Q2 2020 in light of business performance and as a result of cost savings due to COVID-19.
Teri List$925,000 N/AN/A
Ms. List was terminated without cause in June 2020 and did not receive a pay increase during fiscal 2020.


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ANNUAL CASH INCENTIVE BONUS
Fiscal 2020 Annual Bonus
In setting the fiscal 2020 annual bonus structure, the Committee considered our business and talent priorities, as well as the factors described below under “Compensation Analysis Framework”. Towards the beginning of the fiscal year, when goals are typically set for the Company’s annual bonus and PRSU plans, the unprecedented and uncertain nature of the pandemic began to unfold. To better address the business uncertainty created by COVID-19, we delayed goal setting until August and divided the bonus into the first and second half of the fiscal year. For the first half of fiscal 2020, business financial performance was below expectations and therefore, there was no bonus earned for the first half. We determined that there was a need to incent the delivery of our financial commitments to successfully position the Company in this business environment as well as for long-term success. To support this goal, the Committee approved goals for the second half of fiscal 2020 that reflected a return to fiscal 2019 levels of sales and an earnings before interest and taxes (“EBIT”) target that accounted for increased costs associated with store closures and health and safety measures related to COVID-19. The annual cash incentive structure emphasizes financial results for the fiscal year and comprised 100% of the total opportunity. 50% of the total opportunity was based on EBIT, given the importance of accountability for operating results, and the remaining 50% was based on net sales to drive top-line focus. To incent the focus on and the success of our brands, financial performance for Executives, other than Ms. Green, was based on the weighted average of the brands: 50% Old Navy, 25% Athleta, and 25% a simple average of Banana Republic, Gap, Intermix, Janie & Jack, and Asia Retail (“weighted brand average”). Financial performance for Ms. Green was based on Old Navy.
The table below describes the target annual bonus and potential payout range for each Executive. Mr. Fisher did not participate in the bonus program and did not receive a payout. Ms. List, who was terminated without cause from the Company in June 2020, received a prorated bonus as part of her severance, pursuant to her pre-existing severance benefits agreement, which is further described "2020 Potential Payments Upon Termination". Both Mr. Fisher and Ms. List are excluded from the bonus tables below.

Name
Target Percentage of
Base Salary
Potential Payout Range as a
Percentage of Target
Sonia Syngal125% / 175%0 – 200%
Katrina O’Connell50% / 100%0 – 200%
Mark Breitbard125% / 150%0 – 200%
Nancy Green125% / 150%0 – 200%
Julie Gruber80% / 100%0 – 200%
Bonus payments are generally made under the Executive Management Incentive Compensation Award Plan, which has been approved by our shareholders. For the second half of fiscal 2020, the Committee set a minimum performance goal that needed to be achieved before payment of any bonus. Satisfaction of this goal established the maximum bonus that could be paid to each Executive (equal to the maximum set forth in the table above), subject to downward adjustment by the Committee based on achievement of the financial and non-financial goals and other factors determined by the Committee in its sole discretion. This goal was positive net income subject to potential adjustment for certain pre-established items that are unusual in nature or infrequently occur, such as changes in accounting principles, acquisitions and dispositions, employee termination benefits, termination of real estate leases, legal claims, and certain business interruptions, as applicable. The Committee determined that this minimum performance goal had been achieved. The Committee then used negative discretion to determine the actual payout to each Executive based on performance against the financial goals as described below, as well as a qualitative assessment of individual performance.
Financial Performance
In light of uncertainty created by COVID-19, the Committee approved threshold, target and maximum financial performance funding goals for the second half of fiscal 2020 in August. Payouts would be made only if the minimum performance threshold were to be achieved.
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Bonuses for the second half of fiscal 2020 financial performance were weighted 50% on EBIT and 50% on net sales for each Executive. EBIT and net sales were used to measure a weighted brand average or division performance, depending on the Executive's scope of responsibility, in both cases subject to potential adjustment for certain pre-established items that are unusual in nature or infrequently occur. An EBIT measure was half of the weighting because the Committee believed that EBIT should continue to be a focus of Executives and is a good measure of actual operating performance within their control and accountability. The net sales measure was intended to drive top-line focus and to promote continued market share growth, which we believe provides an appropriate balance between cost management and top line performance.
For the first half of fiscal 2020, business financial performance was below expectations and therefore, the Committee determined that no bonus was earned for the first half.
The following table shows second half fiscal 2020 EBIT and net sales goals expressed as a percentage of second half fiscal 2019 actual results. Goals for second half fiscal 2020 were set at realistic levels given our expected performance at the time they were established and were intended to provide a meaningful incentive for Executives to improve performance. Also shown are the actual weighted percentages achieved expressed as a percentage of second half fiscal 2019 actual results, after adjustments to exclude any restructuring costs, legal settlements, lease/rent impacts and to normalize actuals against goals based on significant operating decisions, such as government-mandated store closures, notably in the EU, Canada and Mexico, and store/trademark impairments. No additional adjustments to the results were made other than the neutralization of foreign exchange rate fluctuations.


Division
2020 2nd Half EBIT / Net Sales Goals as a
Percentage of Fiscal 2019 2nd Half
Actual EBIT / Net Sales
Actual Fiscal 2020
2nd Half Percentage Achieved After Adjustments
ThresholdTargetMaximumEBITNet Sales
Old Navy89.0% / 101.0%95.1% / 103.8%103.0% / 107.4%110.3%110.9%
Athleta89.0% / 105.7%95.1% / 108.5%103.0% / 112.1%151.7%131.6%
Banana Republic21.6% / 88.9%30.2% / 91.7%41.0% / 95.3%N/A70.7%
Gap Brand29.6% / 84.1%55.6% / 86.9%100.6% / 90.5%91.8%88.0%
IntermixN/A / 85.2%N/A / 88.1%N/A / 91.7%N/A72.7%
Janie & JackN/A / 76.5%N/A / 79.3%N/A / 83.0%N/A93.0%
Asia RetailN/A / 95.0%N/A / 97.8%N/A / 101.5%N/A71.8%
(1)Percentages are not shown where the numerator or denominator was below zero, as the earnings growth calculation does not reflect a meaningful result.
(2)Gap Inc., which included Ms. Syngal, Ms. O’Connell, Mr. Breitbard, and Ms. Gruber, was based on the weighted average of the brands: 50% Old Navy, 25% Athleta and 25% a simple average of Banana Republic, Gap, Intermix, Janie & Jack, and Asia Retail (“weighted brand average”).
(3)Ms. Green’s bonus was 100% based on Old Navy.

Individual Performance Adjustment
Prior to determining the final bonus payout, if any, for each Executive, individual performance is assessed to determine if an adjustment is warranted. The CEO makes recommendations to the Committee for adjustments, if any, for Executives that report to her, and the Committee decides whether any adjustment is warranted for the CEO in a private session. In assessing each Executive’s individual performance, any additional initiatives outside those described above, challenges that the Executive faced over the course of the year, and financial performance are considered in determining final payouts.
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Actual Bonuses

For fiscal 2020, performance against EBIT and net sales goals applicable to each Executive was above our expectations in the second half of fiscal 2020, which combined with no bonus payout in the first half of fiscal 2020 resulted in either below target or target levels for the year. The May 3, 2020 through August 1, 2020 salary reductions, discussed above, did not impact the Executives’ salaries used for their bonus calculation. In its determination that the first half bonus would not be paid, the Committee effectively lowered the total bonus opportunity by half for the year. The 168% bonus payout for the second half would equate to an 84% bonus for the total year. Similarly, the maximum 200% bonus payout for the second half would equate to a 100% target bonus for the total year. Ms. List, who was terminated without cause from the Company in June 2020, received a prorated bonus as part of her severance pursuant to her pre-existing severance benefits agreement, which is further described in "2020 Potential Payments Upon Termination". Mr. Fisher did not participate in the bonus program and did not receive a payout.
The following table describes the calculation of bonuses being paid to each eligible Executive for Fiscal 2020 performance.
Name
Base
Salary(1)
x
Target
Percentage
of Base
Salary(2)
x(
Actual
Percentage
Achieved:
1st Half
Financial
Performance
xWeight+
Actual
Percentage
Achieved:
2nd Half
Financial
Performance
xWeight)=Funded
Bonus
+Individual Adjustment=Actual Bonus
Sonia Syngal
$1,272,526x125 / 175%x(0%x50%+200 / 168%x50%)=$1,834,983+$0=$1,834,983
Katrina O’Connell
$739,697x50 / 100%x(0%x50%+200 / 168%x50%)=$589,033+$0=$589,033
Mark Breitbard$1,079,394x125 / 150%x(0%x50%+168%x50%)=$1,330,702+$0=$1,330,702
Nancy Green
$980,288x125 / 150%x(0%x50%+200%x50%)=$1,312,242+$0=$1,312,242
Julie
Gruber
$743,131x80 / 100%x(0%x50%+168%x50%)=$607,195+$0=$607,195
(1) Base salaries are prorated based on any changes during the fiscal year.
(2) Bonus targets are prorated based on any changes during the fiscal year. The two target percentages listed reflect prior and current                             role bonus targets, respectively.

LONG-TERM INCENTIVES
Overview
Stock-based long-term incentives align executive compensation and shareholder returns. Unlike some of the members of our peer group, we do not have a pension plan, and we rely on long-term incentives to provide a substantial percentage of each Executive’s potential retirement savings. Long-term incentives have typically consisted of stock options, stock units or performance shares.
The fiscal 2019 LGP was based on the average attainment of separate annual EBIT goals that are established each year over three years and attainment of a three-year cumulative Company EBIT goal set at the beginning of the same three-year period.
In fiscal 2020, the Company made significant changes to the design of its long-term incentive plan by moving to a value-based approach with a set equity mix. The set equity mix chosen by the Committee consists of 60% PRSUs, 20% options and 20% time-based RSUs to balance performance focus and potential compensation-related risk. The mix also ensures that more than half of our regular annual grant value is in the form of performance shares for performance-based long-term pay delivery and shareholder value alignment. The table below summarizes each long-term incentive vehicle.

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LTI Incentives
MechanicsRationale
PRSUs
• 60% of the long-term incentive
   value.
• Grants are earned after a 3-year performance period with 50% of shares delivered after year 3 and 50% 1 year later.
• Measure: 3-year cumulative Gap Inc. EBIT (0
   – 250% of target).
• Modifier: Relative Total Shareholder Return
   (TSR) vs. S&P Select Retail Index (80 –
   120%).
• The change to longer-term EBIT goals in the
   PRSUs focuses on the importance of long-term operating performance within the Executive's control and accountability.
• TSR provides an external metric that aligns
   Executive pay to shareholder returns relative to a peer index.
• The goals and time horizon differ from the
   Corporate Bonus plan that focuses on brand
   EBIT and sales goals, and provide a focus on
   sustained achievement over a multi-year period.
Options
• 20% of the long-term incentive value
   value.
• Time-based.
• Vesting 25%/year over 4 years.
• Provides wealth-creation opportunity aligned to shareholder interests, as the value of such awards is only realized through share price appreciation and drive retention through four-year service period.
RSUs
• 20% of the long-term incentive value.
• Time-based,
• Vesting 25%/year over 4 years.
• Drive retention through four-year service period and shareholder alignment as value is tied to share price while reducing dilution and need for one-off special award grants.

It has been our practice to grant long-term incentives to Executives on an annual basis, usually in the first quarter of each fiscal year. This timing was selected because it follows the release of our annual financial results and completion of annual compensation reviews. We also grant long-term incentives on other dates to newly hired Executives and periodically in connection with promotions. Grants are typically approved by the Committee at a meeting and are effective on the meeting date. However, the effective grant date for new hires is no earlier than their first day of employment. Stock-based awards are granted under our 2016 Long-Term Incentive Plan, which was approved by our shareholders.
In determining the fiscal 2020 long-term incentive structure and award amounts, the Committee considered the factors described below under “Compensation Analysis Framework,” including a review of market data for comparable positions and each individual’s accumulated vested and unvested awards, current and potential realizable value over time using stock appreciation assumptions, vesting schedules, comparison of individual awards between Executives and in relation to other compensation elements, shareholder dilution and accounting expense.
Stock Options
In fiscal 2020, stock options comprise 20% of the annual long-term incentives for our Executives. We believe stock options focus Executives on managing the Company from the long-term perspective of an owner. Stock options provide value to the recipient only if the price of our stock increases. All stock options granted to Executives during fiscal 2020 had an exercise price equal to 100% of the closing price of our stock on the date of grant. The stock option grants received by our Executives are described in more detail in "2020 Grants of Plan-Based Awards".
Stock options typically vest based on continued service at a rate of 25% annually beginning one year from the grant date, which we have determined helps meet our retention objectives. Stock options are typically granted with a maximum term of ten years, and vested options are normally exercisable for three months following employment termination. Vesting is generally accelerated upon death, disability or retirement if the stock options are granted at least one year from the event.
Stock Units and Performance Shares
The remaining portion of fiscal 2020 long-term incentives is delivered in PRSUs and RSUs representing full-value shares of our stock to drive performance, promote retention and foster a long-term ownership perspective. Unlike stock options, full-value share awards, in combination with stock ownership requirements, subject Executives to the
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same downside risk experienced by shareholders but still encourage retention if our stock price does not appreciate, and help to focus Executives on sustaining the value of the Company. In general, we believe the grant or vesting of a significant percentage of full-value shares for Executives should be based on performance against long-term objectives and therefore granted 60% of the annual long-term incentive value in PRSUs. To balance our performance, retention, and ownership objectives, we have granted 20% of the long-term incentive value in RSUs that vest only for continued service with the Company. The stock unit grants received by our Executives are described in more detail in "2020 Grants of Plan-Based Awards".
PRSUs and RSUs granted to Executives are normally scheduled to vest over three or four years, although the schedule may differ based on critical retention or performance periods, or the vesting of compensation being forfeited at a prior employer for new hires. Executives generally must be employed on the vesting date or awards are forfeited. Vesting is generally accelerated upon death, disability or retirement if the awards are granted at least one year from the event and any performance conditions have been previously satisfied. Additional circumstances under which vesting of long-term incentives may be accelerated are described in "2020 Potential Payments Upon Termination".

PRSU (Performance Restricted Stock Unit Program)
For fiscal 2020, we made changes to the performance stock awards for Executives and introduced the new PRSU Plan, which replaced the LGP plan, to address concerns that both the bonus and performance stock were predicated on annual goals with the same metric. With the exception of Ms. Green, whose PRSU grant occurred when she was appointed in October 2020, PRSU grants occurred in March 2020 in accordance with the Executives’ offer letters and in alignment with our regular annual grant period, however, considering COVID-19 and to ensure meaningful goals were set, goal setting was delayed until August 2020, during which time our stock price had significantly increased. The values at grant in March 2020 differ from the Summary Compensation Table (SCT) values because the PRSU value in the SCT represents the grant date fair value at the time goals were set in August 2020 as required under SEC rules.

Executives were eligible to participate in the PRSU plan, which was intended to promote sustained improvement in financial performance and long-term value creation for shareholders. The key features of the PRSU plan are described below:
Each Executive was eligible to receive an annual award. In light of COVID-19 and to ensure meaningful goals were set, goal setting was delayed until August and 2.5-year goals were set for the second half of fiscal 2020 through the fiscal 2022 performance period. PRSUs give the Executive the right to receive shares of our stock based on achievement against performance goals during a specified 2.5-year performance period, subject to certain service requirements. Actual shares paid out, if any, will vary based on achievement of the performance goals.
The number of actual shares that an Executive may earn after the end of three years is based on two performance metrics: (i) attainment of a 2.5-year EBIT goal measured at the corporate level, and (ii) relative total shareholder return, which measures performance against the S&P Retail Select Index during the same 2.5-year period. The potential payout range as a percentage of the target award based on the 2.5-year EBIT attainment is 0% to 250%. The award will be modified up or down by up to 20% (for a maximum opportunity of 300% of target) based on the level of relative total shareholder return performance.
50% of the award is payable at the end of the 2.5-year performance period, generally subject to continued service with the Company through the date that the Committee determines the number of shares that are earned, if any, and the remaining 50% will vest on the one-year anniversary of such determination date based on continued service with the Company.
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The table below describes the potential payout range as a percentage of the target award for the second half fiscal 2020-fiscal 2022 performance period. The target number of shares was determined using our closing stock price on the date of grant and the target PRSU value, which is 60% of the target total long-term incentive value. The performance share grants represent only an opportunity to earn actual shares of our stock for achievement of performance goals over 2.5 years. The associated amount listed in the 2020 Summary Compensation Table under Stock Awards is the grant date fair value for accounting purposes, which is the required disclosure under SEC rules, not necessarily the compensation that will be actually realized by each Executive and also differs from the intended target value at grant in March due to the delay in goal setting as described above. All payments are made in shares at vesting and dividends are not paid or accrued on unvested shares. Ms. List was terminated from the Company in June 2020 and was not eligible to receive a grant in fiscal 2020. Mr. Fisher did not participate in the PRSU Program and has been excluded from the table below.
NameFiscal 2020 Award Potential Payout
Target
Value(1)(2)
Target
Number of
Performance Shares
Potential Payout
Range as
Percentage
of Target Shares
Sonia Syngal$5,400,000859,8720 – 300%
Katrina O’Connell$1,500,000238,8530 – 300%
Mark Breitbard$2,640,000420,3820 – 300%
Nancy Green$1,200,00060,5140 – 300%
Julie Gruber$1,440,000229,2990 – 300%
(1)Target values for Ms. Syngal, Ms. O’Connell, Mr. Breitbard and Ms. Gruber represent the approximate value of the target shares in March 2020. Long-term incentives to Executives are typically granted in March as part of our regular annual grant cycle. However, due to COVID-19 and to ensure meaningful goals were set, goal setting was delayed until August, during which time our stock price had significantly increased. The value at grant in March 2020 differs from the Summary Compensation Table (SCT) value because the PRSU value in the SCT represents the fair value for accounting purposes at the time goals were set in August 2020.
(2)Target value for Ms. Green represents the approximate value of the target shares in October 2020 when she was appointed to President & CEO, Old Navy.



The following table shows the annualized second half fiscal 2020 through fiscal 2022 EBIT goal expressed as a percentage of fiscal 2019 actual results. Although the 2.5 year EBIT goal is not assessed on an annual basis, the table below shows the 2.5 year EBIT goal relative to the most recently completed fiscal year in order to provide a meaningful comparison of the EBIT goal against prior performance. The goal for the second half fiscal 2020 through fiscal 2022 was set at realistic levels given our expected performance at the time they were established and were intended to provide a meaningful incentive for Executives to improve performance.
Company /
Division
Annualized FY2020 2nd Half – FY2022 EBIT Goal as a
Percentage of FY2019
Actual EBIT
ThresholdTargetMaximum
Gap Inc.82.4%92.8%109.4%


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Outstanding LGP Grants
After fiscal 2019, no new grants have been made under the LGP, and we transitioned to the new PRSU Program, described above, with new metrics for Executives starting in fiscal 2020.
Executives were eligible to participate in the LGP prior to fiscal 2020, which was intended to promote sustained improvement in financial performance and long-term value creation for shareholders, while recognizing the inherent difficulty in setting long-term performance goals in the volatile retail industry. The key features of the program are described below:
Each Executive was eligible to receive an annual performance share award. Performance shares give the Executive the right to receive a number of shares of our stock based on achievement against performance goals during a specified three-year performance period, subject to certain service requirements. Actual shares paid out, if any, will vary based on achievement of the performance goals.
The number of actual shares that an Executive may earn after the end of three years is based on two performance metrics: (i) average attainment of separate annual EBIT goals that are established each year over three years, measured at the division level for those with division responsibilities and the corporate level for those with Company-wide responsibilities, and (ii) attainment of a three-year cumulative Company EBIT goal set at the beginning of the same three-year period. The potential payout range as a percentage of the target award based on average annual EBIT attainment is 0% to 250%. The award is modified up or down by up to 20% (for a maximum opportunity of 300% of target) based on the level of attainment of the cumulative Company EBIT goal.
50% of the award is payable at the end of the three-year performance period, generally subject to continued service with the Company through the date that the Committee determines the number of shares that are earned, if any, and the remaining 50% will vest on the one-year anniversary of such determination date based on continued service with the Company.
To better address the business uncertainty created by COVID-19, we delayed goal setting for the fiscal 2020 annual goal until August and divided the fiscal 2020 annual goal into first and second half of the fiscal year. For the first half of fiscal 2020, business financial performance was below expectations and therefore, attainment for the first half was 0%. For the second half of fiscal 2020, performance was above the maximum goal, which resulted in a second half fiscal 2020 attainment of 250% and a full-year fiscal 2020 attainment of 125%, after excluding the same adjustments as outlined in the Annual Incentive Cash Bonus/Financial Performance section. There were no changes to the three-year cumulative Company EBIT goals used for the modifier.
The following table shows second half fiscal 2020 EBIT goal expressed as a percentage of second half fiscal 2019 actual results. The goal for the second half fiscal 2020 was set at realistic levels given our expected performance at the time they were established, and increased costs associated with restructuring, store closures and COVID-19 mitigation efforts, and were intended to provide a meaningful incentive for Executives to improve performance.
Company /
Division
FY2020 2nd Half EBIT Goals as a
Percentage of FY2019 2nd Half
Actual EBIT
Actual Fiscal 2020
2nd Half
Percentage Achieved
After Adjustments
ThresholdTargetMaximumActual
Gap Inc.27.2%43.8%71.1%71.5%
The following table describes the actual achievement levels and actual shares earned for the LGP awards for the completed fiscal 2018-2020 performance period for each eligible Executive who was granted a fiscal 2018 award. Ms. List, who was terminated from the Company in June 2020, was not eligible to receive a payout since she did not complete the performance period and, as a result, has been excluded from the table below. Ms. O’Connell and Ms.
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Green were not appointed to CFO and President & CEO, Old Navy, respectively, until 2020 and therefore were not granted a fiscal 2018 award. Mr. Fisher, who was not in role at the time of grant, did not participate in the LGP program and has been excluded from the table below.
NameFiscal 2018 Award Achievement
Target
Shares
Year 1, Year 2, & Year 3
(2018-2020)
Actual Percentage
Achieved(1)
Three
Year
Average
Actual
Cumulative
Company
EBIT
Goal
Modifier
Actual
Percentage
Achieved(2)
Actual
Shares(3)
Sonia Syngal93,8560%0%125%42%-20%33%31,285
Mark Breitbard81,05897%0%125%74%-20%59%48,043
Julie Gruber25,3180%0%125%42%-20%33%8,439
(1)Due to COVID-19, fiscal 2020 was divided into two halves, attainment was 0% for the first half and 250% for the second half.
(2)"Actual percentage achieved" is rounded for presentation and is the three-year average, decreased by the cumulative Company EBIT goal modifier.
(3)"Actual shares" is the product of the target shares and the actual percentage achieved.

The table below describes, for each eligible Executive, the actual percentage achievement levels for the completed fiscal years under the LGP awards for the fiscal 2019-2021 performance period. These outstanding awards are still subject to the remaining performance period and the cumulative Company EBIT goal over the same three-year performance period. Ms. List, who was terminated from the Company in June 2020, was not eligible to receive a payout since she did not complete the performance period and has been excluded from the table below. Ms. O’Connell and Ms. Green were not appointed to CFO and President & CEO, Old Navy, respectively, until 2020 and therefore were not granted a fiscal 2019 award. Mr. Fisher, who was not in role at the time of grant, did not participate in the LGP program and has been excluded from the table below.

NameFiscal 2019 Award
Achievement
Target
Shares
Year 1
(2019)
Actual
Percentage
Achieved
Year 2
(2020)
Actual
Percentage
Achieved(1)
Sonia Syngal118,3480%125%
Mark Breitbard102,2100%125%
Julie Gruber31,9240%125%
(1)Due to COVID-19, fiscal 2020 was divided into two halves, attainment was 0% for the first half and 250% for the second half.

BENEFITS AND PERQUISITES
Executives generally are eligible for the same health and welfare plans as other full-time Gap Inc. employees, including medical, dental, life and disability insurance, and retirement plans. Although not a significant part of total
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compensation, we also provide limited additional benefits and perquisites to our Executives, which we believe are reasonable and consistent with our overall compensation objectives. These perquisites and benefits include financial planning services or an allowance to cover these services, as Executives typically have more complex financial planning requirements; participation in a deferred compensation plan that is offered to all highly compensated employees, as a means to help meet retirement savings goals; and matching charitable donations, up to certain annual limits, which are available to all employees given the value that we place on supporting communities. For Ms. Syngal only, we allowed limited personal use of a Company airplane at an amount not to exceed $150,000 per year based on the incremental cost to the Company in order to provide an efficient way for Ms. Syngal to manage travel and time commitments.
The value of the benefits and perquisites received by our Executives are described in more detail in the footnotes to the 2020 Summary Compensation Table.
STOCK OWNERSHIP REQUIREMENTS FOR EXECUTIVE OFFICERS / HEDGING AND PLEDGING PROHIBITIONS
We have minimum stock ownership requirements for certain executive positions to more closely link executive and shareholder interests, to balance potential rewards and risks, and to encourage a long-term perspective in managing the Company. Each executive has five years from the date of his or her appointment to reach the requirement.
As of January 30, 2021, all Executives had either met the shares requirement in the table below or had remaining time to do so.
Requirements
(shares)
CEO, Gap Inc.300,000
Brand President & CEO75,000
Corporate Executive Vice President40,000
Executives not meeting the requirement must retain 50% of their after-tax shares acquired through stock compensation programs until the requirement is reached.
For purposes of determining stock ownership levels, in addition to shares held directly, certain forms of equity interests in the Company count towards the stock ownership requirement, including non-performance-based stock units (vested or unvested). A complete description of the requirements, including a complete list of accepted forms of ownership, is located at www.gapinc.com (follow the Investors, Governance, Executive Stock Ownership links).
Our insider trading policy applicable to Company officers prohibits speculation in our stock, including short sales, hedging or publicly traded option transactions. We also prohibit executives from pledging Company stock as collateral for a loan or for any other purpose. Our hedging policy is described in more detail in "Proposal No. 1 — Election of Directors—Corporate Governance—Stock Ownership Guidelines for Directors".
TERMINATION PAYMENTS
Various agreements, as described in more detail in "2020 Potential Payments Upon Termination", provide for severance benefits in the event of a termination of employment. These benefits were selected considering competitive conditions and customary practices at the time of their implementation. We have no severance arrangements specific to a change in control. Ms. List was terminated without cause in June 2020 and, as a result, the severance benefits detailed in "2020 Potential Payments Upon Termination" were provided in accordance with her pre-existing severance benefits.
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COMPENSATION ANALYSIS FRAMEWORK
The Committee reviews executive compensation at least annually. The Committee approaches executive compensation as part of the overall strategic framework for total rewards at the Company. This framework applies to all employees at the Company and reflects our global rewards principles, which include sharing in the success of the company, rewarding for performance, and being fair and equitable. The Committee’s review includes base salary, annual incentives, long-term incentives and the value of benefits and perquisites. Each element is reviewed individually and in total summarizing all elements of total actual and potential compensation and wealth accumulation.
The Committee also uses a summary of compensation data covering other companies to support its analysis. The Committee selected a broad spectrum of retail companies recommended by Pay Governance LLC for purposes of comparing market compensation levels (the “peer group”) because we have both recruited from and lost executive talent to this industry in the past, and to ensure appropriate scope and complexity relative to the Company. Because the size of the Gap Inc. peer group companies varies considerably, regression analysis is used where appropriate to adjust the compensation data for differences in Gap Inc. and division revenues. The peer group is reviewed by the Committee each year. The peer group used in 2020 was comprised of the companies listed below.
Peer Group
Best Buy Co., Inc.McDonald’s CorporationStarbucks Corporation
Booking Holdings Inc.Nike, Inc.Target Corporation
Costco Wholesale CorporationNordstrom, Inc.The TJX Companies, Inc.
eBay Inc.PVH CorporationVF Corporation
L Brands, Inc.Qurate Retail, Inc.Wayfair, Inc.
Levi Strauss & Co.Ross Stores, Inc.
The Committee reviews compensation data based on an analysis of commercial surveys and proxy-reported data conducted by Pay Governance LLC. The analysis provides levels of base salary, annual incentives, and long-term incentive grant values in a summarized form, and we believe that this data provides a reasonable indicator of total compensation values for the peer group. This data is supplemented by information obtained through proxy statement disclosures and other public sources. The Committee uses the peer group data along with all elements of total and potential compensation as a frame of reference to inform compensation decisions, but compensation is not set to meet specific benchmarks or percentiles.
In conducting its analysis and determining compensation, the Committee also considers the following factors where relevant:
Business and talent strategies;
The nature of each Executive’s role;
Individual performance (based on specific financial and operating objectives for each Executive, as well as leadership behaviors);
Future potential contributions by the Executive;
Internal comparisons to other Executives;
Internal consistency with our broad-based practices and programs;
Comparisons of the value and nature of each compensation element to each other and in total; and
Retention risk.
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As described below, the Committee also considers management’s recommendations and advice from the Committee’s independent compensation consultant when appropriate. The Committee periodically reviews the accounting and tax implications of each compensation element, and shareholder dilution in the case of equity awards.
ROLE OF THE CEO AND COMPENSATION CONSULTANTS
The Committee has engaged Frederic W. Cook & Co. as its independent compensation consultant to advise the Committee on compensation program structure and individual compensation decisions, as directed by the Committee. The consultant was selected by the Committee and does not provide any other services to the Company. In addition, we have conducted a review of the Committee’s relationship with its compensation consultant, and have identified no conflicts of interest. The consultant reports directly to the Committee, although the consultant meets with management from time to time to obtain information necessary to advise the Committee.
Generally, the CEO evaluates each Executive using relevant factors described above under “Compensation Analysis Framework” and makes recommendations to the Committee about the structure of the compensation program and individual compensation arrangements. Management engages Pay Governance LLC to assist with these recommendations and to also provide peer group recommendations and market data, which are passed on to the Committee for its review and consideration. The CEO is generally present at Committee meetings when compensation, other than the CEO's own, is considered and approved. Approval of all executive compensation decisions rests solely with the Committee.
ACCOUNTING AND TAX CONSIDERATIONS
Accounting, tax and related financial implications to the Company and Executives are considered during the analysis of our compensation and benefits program and individual elements. Overall, the Committee seeks to balance attainment of our compensation objectives with the need to maximize current tax deductibility of compensation that may impact EBIT and other measures of importance to shareholders. The Committee determined that the accounting and tax impacts described below were reasonable in light of our objectives.
In general, base salary, annual cash incentive bonus payments, and the costs related to benefits and perquisites are generally recognized as compensation expense at the time they are earned or provided. Share-based compensation expense is recognized in our consolidated statements of income for stock options, stock units, and performance shares.
Subject to the exceptions and limits below, we generally deduct for federal income tax purposes all payments of compensation and other benefits to Executives. We do not deduct deferred compensation until the year that the deferred compensation is paid to an Executive.
Section 162(m) of the Internal Revenue Code (“Section 162(m)”) places a limit of $1 million on the amount of compensation that we may deduct as a business expense in any year with respect to certain of our most highly paid executive officers. Historically, there has been an exemption from this $1 million deduction limit for compensation payments that qualified as “performance-based” under Section 162(m). With the enactment of the 2017 Tax Cuts and Jobs Act, however, the performance-based compensation exemption has been eliminated, except with respect to certain grandfathered arrangements. While the Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee retains the discretion to award compensation that is not deductible as the Committee believes that it is in the best interests of our shareholders to maintain flexibility in our approach to executive compensation in order to structure a program that we consider to be the most effective in attracting, motivating and retaining key executives.
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Section 4999 and Section 280G of the Internal Revenue Code provide that executives could be subject to additional taxes if they receive payments or benefits that exceed certain limits in connection with a change in control of the Company and that the Company could lose an income tax deduction for such payments. We have not provided any Executive with tax gross-ups or other reimbursement for tax amounts the Executive might be required to pay under Section 4999.
RECOVERY AND ADJUSTMENTS TO AWARDS
In November 2020, the Company enhanced its clawback policy for executive officers, which currently allows for the recoupment of cash and equity incentive compensation when the executive officer is terminated for cause or where either (i) all of the following factors are present: (a) the award or vesting of the award was predicated upon the achievement of certain financial results that were subsequently the subject of a restatement, (b) in the Board’s view, the covered officer was grossly negligent or engaged in fraud or intentional misconduct that was a substantial contributing cause to the need for the restatement, and (expanded as of November 2020) (c) a lower award would have been made to the covered officer, or a lesser amount would have vested, based upon the restated financial results, or (ii) with respect to covered compensation awarded or vested after the applicable crime, neglect, breach or act or omission described below, the covered officer: (1) was indicted or convicted of, or admitted to, any crimes involving theft, fraud or moral turpitude; (2) engaged in gross neglect of duties, including willfully failing or refusing to implement or follow direction of the Company; (3) materially breached Gap Inc.’s policies and procedures, including but not limited to the Code of Business Conduct; or (4) acted or failed to act in a negligent or intentional manner that resulted in material financial, reputational or other harm to the Company and its affiliates and subsidiaries. The Board is monitoring this policy to ensure that it is consistent with applicable laws, including any requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Compensation Committee Report
The Compensation and Management Development Committee (the “Committee”) has reviewed and discussed this Compensation Discussion and Analysis with management. Based on the review and discussions, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our annual report on Form 10-K for the fiscal year ended January 30, 2021 and the Proxy Statement for the 2021 Annual Meeting of Shareholders.
Tracy Gardner (Chair)
Jorge P. Montoya
Chris O’Neill
Elizabeth Smith



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2020 Summary Compensation Table
The following table shows compensation information for fiscal 2020, which ended January 30, 2021, for each person who served as our principal executive or financial officer, the three other most highly compensated executive officers at fiscal year-end and one additional executive officer who would have been among the top three had he been an executive officer at fiscal year-end (the “named executive officers”). The table also shows compensation information for fiscal 2019 and fiscal 2018, which ended February 1, 2020 and February 2, 2019, respectively, for those named executive officers who were also named executive officers in either of those years.
Name and
Principal Position in 2020(1)
Fiscal
Year
Salary
($)(2)
Bonus
($)(3)
Stock
Awards
($)(4)(5)
Option
Awards
($)(5)(6)
Non-Equity
Incentive Plan
Compensation
($)(7)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings ($)(8)
All Other
Compensation
($)(9)
Total
($)
Sonia Syngal
CEO,
Gap Inc.

20201,191,827 — 17,170,778 1,539,879 1,834,983 — 168,054 21,905,521 
20191,100,000 — 2,036,465 1,556,932 — — 72,565 4,765,962 
20181,079,808 — 1,931,049 1,408,266 65,909 — 68,708 4,553,740 
Katrina O'Connell
EVP and CFO,
Gap Inc.
2020703,846 — 4,371,771 427,743 589,033 — 54,452 6,146,845 
Mark Breitbard
President and CEO,
Banana Republic
20201,024,808 — 8,931,389 752,830 1,330,702 — 72,333 12,112,062 
20191,025,000 500,000 1,775,905 1,583,042 — — 71,155 4,955,102 
2018950,000 500,000 1,221,947 1,408,266 655,639 — 68,688 4,804,540 
Nancy Green
President and CEO,
Old Navy
2020933,942 — 3,342,239 559,930 1,312,242 — 57,277 6,205,630 
Julie Gruber
EVP, Chief Legal, Compliance and Sustainability Officer, Gap Inc.
2020705,769 — 4,583,277 410,633 607,195 — 56,299 6,363,173 
2019744,231 — 1,583,106 318,577 — — 57,348 2,703,262 
Robert Fisher
Former Interim President and CEO,
Gap Inc.
2020102,788 — 159,996 — — — 15,000 277,784 
2019297,250 — 159,987 — — — 15,000 472,237 
Teri List
Former EVP and CFO,
Gap Inc.
2020807,596 — 788,373 — 287,755 — 104,040 1,987,764 
2019985,000 — 922,337 637,153 — — 68,490 2,612,980 
2018918,269 200,000 4,619,311 1,095,318 192,932 — 472,764 7,498,594 

(1)In March 2020, Ms. Syngal became our CEO and Mr. Fisher stepped down from his role as Interim President and CEO of the Company. Ms. O'Connell became our CFO in March 2020. Ms. Green became an executive officer of the Company in October 2020. Robert Fisher was compensated as our Chairman and as a non-employee director but did not receive any additional compensation for services provided as our Interim President and CEO. Ms. List departed the Company in March 2020.
(2)Base salary changes in fiscal 2020 are further described in "Compensation Discussion and Analysis—Elements of Compensation—Base Salary". The amounts in the column for Mr. Fisher reflect his director fees. The amounts in the column for Mr. Breitbard, Ms. Green, Ms. Gruber and Ms. List include their supplemental salary as further described in "Compensation Discussion and Analysis—Elements of Compensation—Base Salary".
(3)The amounts in this column for Mr. Breitbard and Ms. List reflect the earned portion of a sign-on bonus with repayment provisions that they received when they each joined the Company in May 2017 and January 2017, respectively.
(4)This column reflects the aggregate grant date fair value for awards of stock during fiscal 2020, 2019 and 2018, computed in accordance with FASB ASC 718. These amounts reflect the grant date fair value, and do not necessarily represent the actual value that may be realized by the named executive officers. For 2018, this column includes (a) the grant date fair value of the target number of shares that may be earned under the Company’s Long-Term Growth Program (LGP) with respect to year 3 of a three-year performance period beginning with
fiscal 2016 (“LGP 1”), (b) the grant date fair value of the target number of shares that may be earned under the LGP with respect to year 2 of a three-year performance period beginning with fiscal 2017 (“LGP 2”), and (c) the grant date fair value of the target number of shares that may be earned under the LGP with respect to year 1 of a three-year performance period beginning with fiscal 2018 (“LGP 3”). For 2019, this column includes (a) the grant date fair value of the target number of shares that may be earned under the LGP with respect to year 3 of LGP 2, (b) the grant date fair value of the target number of shares that may be earned under the LGP with respect to year 2 of LGP 3, and (c) the grant date fair value of the target number of shares that may be earned under the LGP with respect to year 1 of a three-year performance period beginning with fiscal 2019 (“LGP 4”). For 2020, this column, other than with respect to Mr. Fisher, includes (a) the grant date fair
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value of the target number of shares that may be earned under the LGP with respect to year 3 of LGP 3, (b) the grant date fair value of the target number of shares that may be earned under the LGP with respect to year 2 of LGP 4, and (c) the grant date fair value of the target number of shares that may be earned under the Company's Performance Restricted Stock Unit Program (PRSU) with respect to the two-and-a-half year performance period beginning with fiscal 2020 (“PRSU 1”). See "Compensation Discussion and Analysis—Elements of Compensation—Long-Term Incentives—Outstanding LGP Grants" for actual shares earned under LGP 3. Ms. List, Mr. Breitbard, Ms. Gruber and Ms. Syngal each received their first LGP grant under LGP 3 in 2017. Mr. Fisher did not participate in the LGP program. This column also includes the aggregate grant date fair value of any restricted stock units granted during fiscal 2020, 2019 and 2018. For 2019 and 2020, this column for Mr. Fisher reflects the grant date fair value of the fully vested stock units that he was granted as a director.
Details on the figures included in this column for 2020 are reflected in the following table. Details on the figures included in this column for 2019 and 2018 are included in our 2020 and 2019 Proxy Statements. Mr. Fisher did not participate in the LGP program and has been excluded from the table below.