Gap Gives New CEO Discounted Options

Gap Inc., which last week tapped the head of Walt Disney Co.’s theme parks to become its chief executive, awarded its new boss options to buy 2 million shares of stock at a below-market price.

Paul Pressler, 46, was awarded options to purchase the shares at $5.92 each, about half the stock’s average price of $11.83 a share on Sept. 25, the day they were awarded, according to papers filed with the Securities and Exchange Commission.

Although compensation experts say the practice of awarding options at a discounted price generally is frowned on, they also say Gap may have offered the shares to Pressler at the lower price to compensate him for benefits left behind at Disney.

“That was the compensation package the board thought was appropriate,” spokesman Alan Marks said, declining to comment further.

Pressler also was granted options to purchase 1.5 million shares at $11.83 each and an additional 1.5 million options at $14.79 to $20.70 a share.

The options vest over the next seven years.

His compensation package also included an annual salary of $1.5 million, a starting bonus of $885,000 and a guaranteed minimum bonus of almost $1.9 million in 2003.

San Francisco-based Gap’s stock hit a 52-week low Thursday before closing at $9.17, down 79 cents, in New York Stock Exchange trading.

The nation’s largest specialty retailer, which operates more than 4,200 Gap, Banana Republic and Old Navy stores worldwide, also said Thursday that Steven P. Jobs has resigned from its board of directors.

The 47-year-old chief executive of Cupertino, Calif.-based Apple Computer Inc. had served on Gap’s board since 1999.

“Now that their CEO transition is over, Steve thought it was time to focus on other priorities,” Apple spokeswoman Katie Cotton said. Both companies declined to comment further.

Gap also announced the appointment of former Coca-Cola Co. executive Penny Hughes, 43, to its board of directors.