GAP INCGAP
GAP INC Stock Compensation Disclosure
Share-Based Compensation
Share-based compensation expense is as follows:
| Fiscal Year | ||||||||||||||||||||
| ($ in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
Stock Units | $ | 158 | $ | 121 | $ | 74 | ||||||||||||||
| Stock options | 1 | 2 | 3 | |||||||||||||||||
| Employee stock purchase plan | 3 | 3 | 3 | |||||||||||||||||
| Share-based compensation expense | 162 | 126 | 80 | |||||||||||||||||
| Less: Income tax benefit | (26) | (22) | (14) | |||||||||||||||||
| Share-based compensation expense, net of tax | $ | 136 | $ | 104 | $ | 66 | ||||||||||||||
No material share-based compensation expense was capitalized in fiscal 2025, 2024, or 2023.
There were no material modifications made to our outstanding stock options and Stock Units in fiscal 2025, 2024, or 2023.
General Description of Stock Option and Stock Unit Plans
The 2016 Long-Term Incentive Plan (the "2016 Plan") was last amended and restated in July 2024. Under the 2016 Plan, nonqualified stock options and Stock Units are granted to officers, directors, eligible employees, and consultants at exercise prices or initial values equal to the fair market value of the Company’s common stock at the date of grant or as determined by the Compensation and Management Development Committee of the Board.
As of January 31, 2026, there were 311,586,781 shares that have been authorized for issuance under the 2016 Plan.
Stock Units
Under the 2016 Plan, Stock Units are granted to employees and members of the Board. Vesting generally occurs over a period of three to four years of continued service by the employee in equal annual installments for the majority of the Stock Units granted. Vesting is immediate in the case of members of the Board.
In some cases, Stock Unit vesting is also subject to the attainment of pre-determined performance metrics and the satisfaction of market conditions ("Performance Shares") over a three-year performance period. At the end of each reporting period, we evaluate the probability that the Performance Shares will vest. We record share-based compensation expense on an accelerated basis over a period of three to four years once granted, based on the grant-date fair value and the probability that the pre-determined performance metrics will be achieved. We use the Monte Carlo method to calculate the grant-date fair value of Performance Shares containing a market condition. The Monte Carlo method incorporates option-pricing model inputs to value the Performance Shares and estimate the total shareholder return ranking among our peer group.
A summary of Stock Unit activity under the 2016 Plan for fiscal 2025 is as follows:
| Shares | Weighted-Average Grant-Date Fair Value Per Share | |||||||||||||
| Balance as of February 1, 2025 | 17,848,050 | $ | 16.28 | |||||||||||
| Granted | 6,083,346 | $ | 19.21 | |||||||||||
| Granted, with vesting subject to performance and market conditions (1) | 2,258,207 | $ | 21.37 | |||||||||||
| Change due to performance and market conditions achievements (2) | (1,304,452) | $ | 12.42 | |||||||||||
| Vested | (5,472,197) | $ | 15.85 | |||||||||||
| Forfeited | (2,350,163) | $ | 17.50 | |||||||||||
| Balance as of January 31, 2026 | 17,062,791 | $ | 18.27 | |||||||||||
__________
(1)Based on the target level of performance and market conditions.
(2)Reflects change due to performance and market conditions that were certified during the period.
A summary of additional information about Stock Units is as follows:
| Fiscal Year | ||||||||||||||||||||
($ in millions except per share amounts) | 2025 | 2024 | 2023 | |||||||||||||||||
| Weighted-average fair value per share of Stock Units granted | $ | 19.79 | $ | 23.89 | $ | 9.41 | ||||||||||||||
| Fair value of Stock Units vested | $ | 87 | $ | 68 | $ | 82 | ||||||||||||||
The aggregate intrinsic value of unvested Stock Units as of January 31, 2026 was $477 million.
As of January 31, 2026, there was $200 million (before any related tax benefit) of unrecognized share-based compensation expense related to unvested Stock Units, which is expected to be recognized over a weighted-average period of 1.6 years. Total unrecognized share-based compensation expense may be adjusted for future forfeitures as they occur.
Stock Options
We have stock options outstanding under the 2016 Plan. Stock options generally expire the earlier of 10 years from the grant date, three months after employee termination, or one year after the date of an employee’s retirement or death. Vesting generally occurs over a period of years of continued service by the employee, with 25 percent vesting on each of the four anniversary dates.
There were no stock options issued to employees during fiscal 2025, 2024, or 2023.
A summary of stock option activity under the 2016 Plan for fiscal 2025 is as follows:
| Shares | Weighted- Average Exercise Price Per Share | |||||||||||||
| Balance as of February 1, 2025 | 3,144,247 | $ | 24.21 | |||||||||||
| Exercised | (374,575) | $ | 15.15 | |||||||||||
| Forfeited/Expired | (246,158) | $ | 32.92 | |||||||||||
| Balance as of January 31, 2026 | 2,523,514 | $ | 24.71 | |||||||||||
A summary of additional information about stock options is as follows:
| Fiscal Year | ||||||||||||||||||||
($ in millions except per share amounts) | 2025 | 2024 | 2023 | |||||||||||||||||
| Aggregate intrinsic value of stock options exercised | $ | 4 | $ | 17 | $ | 7 | ||||||||||||||
| Fair value of stock options vested | $ | 1 | $ | 3 | $ | 6 | ||||||||||||||
Information about stock options outstanding and exercisable as of January 31, 2026 is as follows:
| Intrinsic Value as of January 31, 2026 (in millions) | Number of Shares as of January 31, 2026 | Weighted- Average Remaining Contractual Life (in years) | Weighted- Average Exercise Price Per Share | |||||||||||||||||||||||
| Options Outstanding | $ | 12 | 2,523,514 | 2.8 | $ | 24.71 | ||||||||||||||||||||
| Options Exercisable | $ | 11 | 2,429,305 | 2.7 | $ | 25.13 | ||||||||||||||||||||
Employee Stock Purchase Plan
Under our Employee Stock Purchase Plan (“ESPP”), eligible U.S. and Canadian employees are able to purchase our common stock at 85 percent of the closing price on the New York Stock Exchange on the last day of the three-month purchase periods. Accordingly, compensation expense is recognized for an amount equal to the 15 percent discount. Employees pay for their stock purchases through payroll deductions at a rate equal to any whole percentage from 1 percent to 15 percent. There were 963,596, 935,816, and 1,945,332 shares issued under the ESPP in fiscal 2025, 2024 and 2023, respectively. As of January 31, 2026, there were 8,737,120 shares reserved for future issuances under the ESPP.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 17, 2026 | Showing above |
| 2025 | Mar 18, 2025 | |
| 2024 | Mar 19, 2024 | |
| 2023 | Mar 14, 2023 | |
| 2022 | Mar 15, 2022 | |
| 2021 | Mar 16, 2021 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.