This excerpt taken from the GPS DEF 14A filed Mar 28, 2005.
Background and Reasons for Amendment
We are amending the Executive MICAP in order to, among other things, provide for greater flexibility in establishing the objective goals against which an executives performance will be measured and to offer tax deductible performance-based compensation payable in stock-based compensation and stock denominated units. The substantive changes to the Executive MICAP include:
The adoption of these amendments must be approved by our shareholders in order for awards granted under the Executive MICAP to qualify for tax deductibility pursuant to Section 162(m) of the Internal Revenue Code (Section 162(m)). Under Section 162(m), the federal income tax deductibility
of compensation paid to our CEO and to each of our next four most highly compensated executive officers may be limited to the extent that it exceeds $1,000,000 in any one year. We can only deduct compensation in excess of that amount if it qualifies as performance-based compensation under Section 162(m). The Executive MICAP is intended to permit us to pay incentive compensation that qualifies as performance-based compensation, thereby permitting us to receive a federal income tax deduction for the payment of such incentive compensation.