Gap (GPS)

Performance Goals

In order for Awards to qualify as “performance-based” compensation under Section 162(m) of the Code (see “U.S. Federal Tax Aspects” below), the Committee, in its discretion, must make one or more of the following performance goals applicable to a participant with respect to an Award: (1) comparable store sales growth, (2) earnings, (3) economic profit, (4) MICAP free cash flow, (5) return on equity, (6) return on net assets, (7) sales volume, (8) total sales, (9) total shareholder return, (10) the attainment of a share of the Company’s common stock of a specified fair market value for a specified period of time, (11) gross margin, (12) operating margin, (13) market share, (14) inventory performance, (15) cost reduction measures based on specified goals, (16) customer satisfaction based on specified goals that measure customer survey results, customer acquisition, customer loyalty, conversion or customer traffic, and (17) goals related to the attraction, retention and satisfaction of employees (each, a “Performance Goal”). These Performance Goals are defined in the Plan.

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, and/or per store basis, (d) be measured on a pre-tax or after-tax basis, and (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).