This excerpt taken from the GPS 8-K filed Jan 23, 2007.
Robert J. Fisher to serve as Interim Chief Executive Officer
SAN FRANCISCO, January 22, 2007 The board of directors of Gap Inc. (NYSE:GPS) and Paul Pressler announced today that they have mutually agreed that Mr. Pressler will step down from his position as president and chief executive officer of the company, as well as resign his seat on the companys board, effective immediately. Robert J. Fisher, the companys current non-executive chairman of the board of directors, will also serve as president and chief executive officer on an interim basis, effective immediately.
Robert J. Fisher, chairman of Gap Inc.s board of directors said, We want to thank Paul for the hard work and dedication that he has shown Gap Inc. over the past four years. Under his leadership, the company has meaningfully improved its operations, strengthened its balance sheet, greatly enhanced its on-line presence across the brand portfolio and improved its standing as a global corporate citizen. We appreciate all of his efforts and wish Paul every success in the future.
I have enjoyed the opportunity to lead this iconic company over the past four years. It has been a pleasure to work with the management team and such talented people throughout the organization, said Mr. Pressler, Gap Inc. is a company with tremendous potential and I wish all the employees much success in the years ahead.
The board will begin a search for a new chief executive officer. A search committee has been formed by the board and will be led by independent Gap Inc. director Adrian D. Bellamy, chairman of The Body Shop International plc. Additional directors serving on the committee include Donald G. Fisher, Gap Inc.s founder and Chairman Emeritus, Domenico De Sole, former president and chief executive officer, Gucci Group NV and Bob L. Martin, the companys lead independent director and former president and chief executive officer of Wal-Mart International. The search committees preference is to focus their efforts on recruiting a chief executive officer who has deep retailing and merchandising experience ideally in apparel, understands the creative process and can effectively execute strategies in large, complex environments while maintaining strong financial discipline.
I look forward to serving our employees, customers and shareholders as interim CEO, said Mr. Fisher. My personal ties and nearly thirty year professional history in operating roles at the company and as a board member have resulted in a deep appreciation for the creative process, gratitude to our customers who have supported us for the past 38 years and profound respect for the talented and passionate employees, past and present who have built this company. During this important transition period for our company, the board of directors and I are committed to working with our employees to enhance our focus on what has been at the heart of the companys past success, reinvigorating our brands and charting a new course for the future that will deliver strong returns for our shareholders.
During his nearly 30-year history at Gap Inc., Mr. Fisher started with the company as a store manager in 1980 and worked his way up through the companys merchandising ranks. He also held a variety of senior executive leadership positions at the company, including chief operating officer, chief financial officer, president of Banana Republic and president of Gap brand. Mr. Fisher has served on the companys board of directors since 1990.
Pursuant to Mr. Presslers employment agreement dated September 25, 2002, which was disclosed at the time of his hire, Mr. Pressler is eligible for severance benefits subject to certain conditions as described in more detail in his agreement:
In total, and subject to reduction if Mr. Pressler accepts other employment or compensation during the 24-month period, he is eligible for up to approximately $14 million associated with his severance with the company, assuming a company stock price of $20 per share. He is also eligible to receive nominal health benefits.
The company will release 2006 fourth quarter and full-year earnings on March 1, 2007 and continues to expect 2006 earnings per share of $0.83-$0.87 per share, 2006 full-year operating margins of about 7 percent and free cash flow to be about $650 million for the full year. The company also continues to expect the percent increase in inventory per square foot at the end of the fourth quarter of fiscal 2006 to be in the low-single-digits versus prior year. Please see the reconciliation of free cash flow, a non-GAAP financial measure, to the GAAP financial measure in the table at the end of our January 4, 2007 December sales press release, which is available on gapinc.com.