{"id":39889,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/executive-long-term-cash-award-performance-plan-the-gap-inc.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"executive-long-term-cash-award-performance-plan-the-gap-inc","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/executive-long-term-cash-award-performance-plan-the-gap-inc.html","title":{"rendered":"Executive Long-Term Cash Award Performance Plan &#8211; The Gap Inc."},"content":{"rendered":"<pre>\n                                 THE GAP, INC.\n                EXECUTIVE LONG-TERM CASH AWARD PERFORMANCE PLAN\n\n            (January 26, 1999 Restatement, as amended March 28, 2000)\n1.   Purpose of the Plan\n     -------------------\n\n     The purpose of the Executive Long-Term Cash Award Performance Plan is to\nprovide financial incentives for certain of the Company's officers to meet and\nexceed the Company's multi-year financial goals. The Plan is intended to qualify\nas 'performance-based compensation' under Code Section 162(m).\n\n2.   Definitions\n     -----------\n\n     2.1 'Affiliated Company' means any company controlling, controlled by or\nunder common control with the Company.\n\n     2.2 'Award' means a cash award pursuant to the provisions of the Plan.\n\n     2.3 'Capital Control' means adherence to the capital budget approved by the\nCompany's Board of Directors as part of the annual budgeting process. Such\nbudget shall be inclusive of the costs of new, enlarged, and relocated stores,\nremodels, lease rights, divisional capital, and other associated costs.\n\n     2.4 'Code' means the Internal Revenue Code of 1986, as amended. Reference\nto a specific section of the Code shall include such section, any valid\nregulation promulgated thereunder, and any comparable provision of any further\nlegislation or regulation amending, supplementing or superseding such section or\nregulation.\n\n     2.5 'Committee' means the Compensation and Stock Option Committee of the\nCompany's Board of Directors, or any other Committee appointed by the Board\npursuant to Section 3 of the Plan.\n\n     2.6 'Company' means The Gap, Inc., a Delaware corporation.\n\n     2.7 'Comparable Store Sales' means the Company's or a division's same store\nnet sales growth for the Fiscal Year in excess of the prior year.\n\n     2.8 'Determination Date' means as to a Performance Cycle, the latest date\npossible that will not jeopardize the Plan's qualification as 'performance-based\ncompensation' under Code section 162(m).\n\n     2.9 'Earnings' means either (a) operating income of the Company or one of\nits divisions for a given Performance Cycle less certain allocated expenses\n(e.g., headquarters, distribution centers, etc.), or (b) income before interest\nand taxes of the Company or one of its divisions; determined in accordance with\nGenerally Accepted Accounting Principles, provided that prior to the\nDetermination Date the Committee shall determine (1) whether Earnings will be\nmeasured under clause (a) or (b), and (2) whether \n \nany significant adjustments should be made to the calculation (e.g., exclusions\nfor non-recurring items or unusual costs, etc.).\n\n     2.10 'Economic Value Added' means the Company's or a division's Net\nOperating Profit After Tax (NOPAT) for a specific performance period less\ncharges for use of capital assets (Capital Charges). NOPAT for a division\nincludes not only the division-specific revenues and directly controllable\nexpenses, but also may include shared costs for applicable Information\nTechnology, Distribution, and other Headquarters-related expenses, as determined\nby the Committee (prior to the Determination Date). Prior to applying taxes,\noperating profits are adjusted for interest expense on the present value of\noperating leases. Capital Charges means the Company's or a Division's Average\nCapital Balances multiplied by the Weighted Average Cost of Capital. Divisional\nAverage Capital Balances is defined as an average of both directly controllable\nassets (Inventory, Property Plant and Equipment, Net Lease Rights, and the\npresent value of operating leases), but also can include shared assets for\napplicable Information Technology, Distribution, other Headquarters-related\ncapital balances, and a working capital allocation, as determined by the\nCommittee (prior to the Determination Date). Total Company Average Capital\nBalances includes all assets except cash in excess of that attributable to day-\nto-day operations, and tax-related net assets, plus the present value of\noperating leases less all non-interest bearing liabilities.\n\n     2.11 'Fiscal Year' means the 1999 fiscal year of the Company and each\nsucceeding fiscal year of the Company.\n\n     2.12 'Officer' means an officer (whether or not a member of the Company's\nBoard of Directors) employed by the Company or any Affiliated Company.\n\n     2.13 'Participant' means as to any Performance Cycle, an Officer who has\nbeen selected by the Committee for participation in the Plan for such\nPerformance Cycle.\n\n     2.14 'Performance Cycle' means any fiscal period of not less than two\nconsecutive Fiscal Years nor more than five consecutive Fiscal Years, as\ndetermined by the Committee in its sole discretion.\n\n     2.15 'Performance Goals' means the goal(s) (or combined goals(s))\ndetermined by the Committee (in its sole discretion) to be applicable to a\nParticipant for a Performance Cycle. As determined by the Committee, the\nPerformance Goals applicable to each Participant shall provide for a targeted\nlevel or levels of achievement using one or more of the following measures: (a)\nCapital Control, (b) Comparable Store Sales; (c) Earnings; (d) Economic Value\nAdded, (d) Return on Equity; (e) Return on Invested Capital; (f) Return on Net\nAssets; (g) Sales Volume; (h) Spread, and (i) Total Sales. As determined in the\ndiscretion of the Committee, the Performance Goals for any Performance Cycle\nmay: (a) differ among Participants, (b) relate to performance on a Company-wide\nor divisional basis, and\/or (c) provide for a comparison of actual performance\nby the Company or a division to actual performance by a group of competitors\ndetermined in the discretion of the Committee. For each Performance Cycle, the\nPerformance Goals applicable to each Participant shall be set forth in writing\non or prior to the Determination Date.\n \n     2.16 'Plan' means the Executive Long-Term Cash Award Performance Plan, as\nset forth in this document and as hereafter amended from time to time.\n\n     2.17 'Return on Equity' means the Company's or a division's Earnings for\nthe Performance Cycle, expressed as a percentage of the Company's or a\ndivision's average shareholders' equity over the Performance Cycle.\n\n     2.18 'Return on Invested Capital' (or 'ROIC') means the Company's or a\ndivision's Net Operating Profit After Tax (NOPAT) divided by their respective\nAverage Capital Balances over the same period of time. For a division, NOPAT\nincludes not only the division-specific revenues and directly controllable\nexpenses, but also may include shared costs for applicable Information\nTechnology, Distribution, and other Headquarters-related expenses. Prior to\napplying taxes, operating profits are adjusted for interest expense on the\npresent value of operating leases. Divisional Average Capital Balances is\ndefined as an average of both directly controlled assets (Inventory, Property\nPlant and Equipment, Net Lease Rights and the present value of operating leases)\nas well as any applicable shared assets for related Information Technology,\nDistribution, other Headquarters-related capital balances, and a working capital\nallocation. For the Company, NOPAT means after tax earnings, adjusted for\ninterest on the present value of operating leases but excluding interest expense\nor income on debt and cash. Total Company Average Capital Balances includes all\nassets except cash in excess of that attributable to day-to-day operations, and\ntax-related net assets, plus the present value of operating leases less non-\ninterest bearing liabilities.\n\n     2.19 'Return on Net Assets' means the Company's or division's Earnings for\nthe Performance Cycle, expressed as a percentage of the Company's or a\ndivision's average assets for Performance Cycle.\n\n     2.20 'Sales Volume' means the total sales volume per store of the Company\nor one of its divisions for the Performance Cycle.\n\n     2.21 'Spread' means the difference between the Company's or a division's\nROIC for a Performance Cycle and the Weighted Average Cost of Capital. In\npractice, it can be used as an alternative method of calculating Economic Value\nAdded, by simply multiplying the calculated spread by the Average Capital\nfigures.\n\n     2.22 'Termination of Employment' means the time when the employee-employer\nrelationship between the Participant and the Company and its Affiliated\nCompanies is terminated for any reason, including, but not limited to, a\ntermination by resignation, discharge, death, permanent disability, retirement,\nor the disaffiliation of an Affiliated Company, but excluding any such\ntermination where there is a simultaneous reemployment by either the Company or\none of its Affiliated Companies.\n\n     2.23 'Total Sales' means the Company's or a division's net sales for the\nPerformance Cycle.\n\n     2.24 'Weighted Average Cost of Capital' (or 'WACC') means the weighted\naverage of the Company's cost of debt and cost of capital. The weighting is\ndetermined by comparing the balance of the Company's debt (acquired debt plus\ncapitalized leases)\n \nto the balance of the Company's equity based upon market value (rather than book\nvalue).\n\n3.   Administration of the Plan\n     --------------------------\n\n     3.1 The Plan shall be administered by the Committee, which shall consist of\nno fewer than two members of the Company's Board of Directors, who shall be\nappointed and serve at the pleasure of the Company's Board of Directors. No\nmember of the Company's Board of Directors who is not an 'outside director'\nunder Code section 162(m) shall serve on the Committee.\n\n     3.2 Subject to the provisions of the Plan, the Committee shall have\nexclusive authority to select the Participants, and to determine the target\nAward levels, the times when Awards will be granted, and the Performance Goals\nwhich must be achieved prior to payment of any Awards. For each Performance\nCycle, all actions by the Committee shall be taken by the Determination Date.\n\n     3.3 The Committee shall have all discretion and authority necessary or\nappropriate to administer the Plan, including, but not limited to, the power to\ninterpret the Plan, to prescribe, amend and rescind rules and regulations\nrelating to it, and to make all other determinations necessary or advisable in\nthe administration of the Plan, and all such determinations shall be final and\nbinding upon all persons having and interest in the Plan.\n\n     3.4 A majority of the Committee shall constitute a quorum, and the acts of\na majority of the members present at a meeting at which the quorum is present or\nany action taken without a meeting by a writing executed by a majority of the\nCommittee shall constitute the act of the Committee.\n\n     3.5 All expenses and liabilities incurred by the Committee in the\nadministration of the Plan shall be borne by the Company. The Committee may\nemploy attorneys, consultants, accountants, or other persons. The Committee, the\nCompany and its officers and directors shall be entitled to rely upon the\nadvice, opinion, or valuations of any such persons. No member of the Committee\nshall be personally liable for any action, determination, or interpretation\ntaken or made with respect to the Plan, unless such action, determination, or\ninterpretation constitutes criminal misconduct, willful negligence or\ndemonstrates bad faith and all members of the Committee shall be fully protected\nby the Company in respect to any such action, determination or interpretation.\n\n4.   Eligibility and Participation\n     -----------------------------\n\n     The Plan is designed for Officers whose responsibilities significantly\ninfluence Company results. Participants shall be selected by the Committee prior\nto or on the Determination Date. Participation in the Plan is on a Performance\nCycle basis and in the sole discretion of the Committee. Thus, an Officer who is\nselected for participation in a given Performance Cycle is in no way guaranteed\nto be selected for participation in any subsequent Performance Cycle or\nPerformance Cycles.\n \n5.   Determination of Awards\n     -----------------------\n\n     5.1 Prior to or on the Determination Date, the Committee, in its sole\ndiscretion shall assign each Participant a target Award expressed as a\npercentage of the Participant's average annual base salary during the\nPerformance Cycle.\n\n     5.2 On or prior to the Determination Date, the Committee, in its sole\ndiscretion, shall establish a formula for purposes of determining the actual\nAward (if any) payable to each Participant. Each formula shall: (a) be in\nwriting; (b) be based on a comparison of actual performance to the Performance\nGoals; (c) provide for the payment of a Participant's target Award if the\nPerformance Goals for the Performance Cycle are achieved; and (d) provide for an\n                                                          ---                   \nactual Award greater than or less than the Participant's target Award, depending\nupon the extent to which actual performance exceeds or falls below the\nPerformance Goals.\n\n     5.3 After the end of the each Performance Cycle, the Committee shall\ncertify in writing the extent to which the Performance Goals applicable to each\nParticipant for the Performance Cycle were achieved or exceeded. The actual\nAward for each Participant shall be determined by applying the formula\nestablished pursuant to Section 5.2 of the Plan to the level of actual\nperformance that has been certified by the Committee. However, each\nParticipant's actual Award (if any) shall be subject to the maximum provided in\nSection 6.\n\n     5.4 No Awards shall be paid to a Participant for a Performance Cycle unless\nthe minimum actual performance for the Performance Cycle specified by the\nCommittee pursuant to Section 5.2 of the Plan is achieved.\n\n     5.5 The Committee, in its sole discretion, may eliminate any Participant's\nAward, or reduce it below that which otherwise would be payable in accordance\nwith the Plan.\n\n6.   Maximum Award Payable\n     ---------------------\n\n     For any Performance Cycle, the maximum Award payable to any Participant\nunder the Plan shall be $8,000,000.\n\n7.   Payment of Award\n     ----------------\n\n     7.1 Except as provided in Section 7.2 of the Plan or as otherwise\ndetermined by the Committee, payment of Awards (if any) for a Performance Cycle\nwill be made in cash or its equivalent on or about the first April 1 following\nthe end of the Performance Cycle. If the Committee (in its discretion) so\ndetermines, payment of all or part of an Award to one or more Participants may\nbe deferred for a period not to exceed five years after the date when payment\notherwise would have been made. Any such deferral shall be subject to such rules\nand procedures as the Committee (in its discretion) shall determine. For example\n(but not by way of limitation), the Committee may determine that a deferred\nAward shall be forfeited unless the Participant remains an Officer through the\nscheduled payment date.\n \n     7.2 Unless otherwise specifically determined by the Committee, a\nParticipant actually will be entitled to payment of an Award only if the\nParticipant is an Officer on the date of payment (and except to the limited\nextent provided in the following sentence). If, after the completion of a\nPerformance Cycle, a Participant incurs a Termination of Employment due to death\nor permanent disability, the Participant still shall be entitled to the payment\nof any Award for such Performance Cycle otherwise payable to the Participant. In\nthe event an Award is payable to a Participant subsequent to the Participant's\ndeath, such payment shall be made to the Participant's estate.\n\n     7.3 The Company shall withhold all applicable income and other taxes from\nany Award payment to any Participant, including any federal, FICA, state and\nlocal taxes.\n\n     7.4 Each Award shall be payable solely from the general assets of the\nCompany. Each Participant's right to payment of an Award (if any) shall be\nsolely as an unsecured general creditor of the Company.\n\n8.   Employment Rights\n     -----------------\n\n     Nothing in the Plan shall confer upon any Participant the right to continue\nin the employ of the Company or its Affiliated Companies or shall interfere with\nor restrict in any way the rights of the Participant's employer to discharge or\nchange the terms of employment of any Participant at any time for any reason\nwhatsoever, with or without cause.\n\n9.   Effect on Other Plans\n     ---------------------\n\n     The adoption of the Plan shall not affect any other equity or other\ncompensation or incentive plan in effect for the Company or any Affiliated\nCompany, and the Plan shall not preclude the Company's Board of Directors from\nestablishing any other forms of incentive compensation for Officers.\n\n10.  Amendment or Termination of the Plan\n     ------------------------------------\n\n     The Board, in its sole discretion, may alter, amend, or terminate the Plan\nor any part thereof at any time and for any reason; provided, however, that to\nthe extent required to ensure the Plan's qualification under Code section 162(m)\nas 'performance-based compensation', any such amendment shall be subject to\nstockholder approval.\n\n11.  Effective Date\n     --------------\n\n     The Plan originally was effective as of January 23, 1996. This amended and\nrestated Plan is effective as of January 26, 1999, subject to the approval of\nthe Plan by a majority of the shares of the common stock of the Company that are\npresent in person or by proxy and entitled to vote at the 1999 Annual Meeting of\nStockholders.\n\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7600],"corporate_contracts_industries":[9494],"corporate_contracts_types":[9539,9546],"class_list":["post-39889","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-gap-inc","corporate_contracts_industries-retail__clothing","corporate_contracts_types-compensation","corporate_contracts_types-compensation__incentive"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/39889","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=39889"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=39889"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=39889"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=39889"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}