Exhibit 10.4

October 11, 2007

John T. Wyatt

Dear Tom,

This letter is to confirm your appointment as Division President, Outlet. In
this position you will report to Glenn Murphy, Chairman and CEO, Gap Inc.

Salary. Effective on the Start Date, your annual salary was increased to
$700,000, payable every two weeks. You are scheduled to receive a performance
review in March 2008.

Start Date. Your first day in your new position was October 1, 2007.

Annual Bonus. Based on your position as Division President, you will continue to
be eligible for an annual bonus based on achievement of Gap Inc. and/or Division
financial objectives as well as individual performance. Under the current
program, your annual target bonus will be 75% of your base salary. Depending on
results, your actual bonus, if any, may be higher or lower and can reach a
maximum of 150%. Bonus payments will be prorated based on active time in
position, divisional or country assignment and changes in base salary or
incentive target that may occur during the fiscal year. Your annual bonus for
fiscal year 2007 is scheduled for payment in March 2008. You must be employed by
Gap Inc. on the payment date with a performance rating of “On Target” or above
to receive an award. Gap Inc. has the right to modify the program at any time.
Management discretion can be used to modify the final award amount. Bonus
payments are subject to supplemental income tax withholding.

Performance Stock Awards. Based on your position as Division President, you will
continue to be eligible for performance stock awards. Performance stock awards
reward achievement of Gap Inc. and/or Division financial objectives. Under the
current program, your annual target for this program is equal to 50% of your
base salary. Depending on results, your actual performance stock award, if any,
may be higher or lower and can reach a maximum of 100%. Performance stock awards
will be prorated based on active time in position, changes in base salary, or
changes to the performance stock award target that may occur during the fiscal
year. Awards are made in the form of performance units that are paid in Gap Inc.
stock upon vesting. For fiscal 2007, the award of your performance stock units
is scheduled to be made in March 2008 provided you are employed by Gap Inc. on
the date of the award with a performance rating of “On Target” or above. The
number of performance units will be determined in March 2008 by dividing the
value of the award as a percentage of base salary by the fair market value of
Gap Inc. common stock on the award date, rounded down to the nearest whole
performance unit. The award will vest 50% two years from the date of grant and
50% three years from the date of grant provided you are employed by Gap Inc. on
the vesting dates. Awards are subject to approval by the Committee and the
provisions of Gap Inc.’s stock plan. Gap Inc. has the right to modify the
program at any time. Management discretion can be used to modify the final award
amount. Awards are subject to income tax withholding upon vesting.

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John T. Wyatt

October 11, 2007

Page Two

 

You may be eligible for future Long-Term Incentive Awards as a participant in
the Focal Review process.

Termination/Severance. In the event that your employment is involuntarily
terminated by the Company for reasons other than For Cause (as defined below)
prior to February 13, 2009, the Company will provide you the following in
exchange for your release of any claims you may have against the Company and its
officers and directors:

(1) Your then current salary, at regular pay cycle intervals, for eighteen
months (the “severance period”). Payments will cease if you accept other
employment or professional relationship with a competitor of the Company
(defined as another company primarily engaged in the apparel design or apparel
retail business or any retailer with apparel sales in excess of $500 million
annually), or if you breach your remaining obligations to the Company (e.g.,
your duty to protect confidential information, agreement not to solicit Company
employees). Payments will be reduced by any compensation you receive during the
severance period from other employment or professional relationship with a
non-competitor.

(2) During the period in which you are receiving payments under paragraph
(1) above, if you elect COBRA coverage, the equivalent of the amount of the
Company’s then current contribution to the cost of health benefits for you and
your eligible dependents, if any.

(3) During the period in which you are receiving payments under paragraph
(1) above, reimbursement for your costs to maintain the financial counseling
program the Company provides to senior executives.

(4) The vesting of stock options and stock awards that otherwise would not have
vested as of your termination date from the date of termination up to and
including the date 18 months from your termination date. This provision is not
applicable to any stock options or stock awards that have performance-based
vesting.

The payments above are taxable income to you and are subject to tax withholding.
Payments will be made over the applicable time period following your termination
in accordance with section 409A of the Internal Revenue Code.

The term “For Cause” shall mean a good faith determination by the Company that
your employment be terminated for any of the following reasons: (1) indictment,
conviction or admission of any crimes involving theft, fraud or moral turpitude;
(2) engaging in gross neglect of duties, including willfully failing or refusing
to implement or follow direction of the Company; or (3) breaching Gap Inc.’s
policies and procedures, including but not limited to the Code of Business
Conduct.

At any time, if you voluntarily resign your employment from Gap Inc. or your
employment is terminated For Cause, you will receive no compensation, payment or
benefits after your last day of employment. If your employment terminates for
any reason, you will not be entitled to any payments, benefits or compensation
other than as provided in this letter.

Recoupment Policy. On February 14, 2007, the Board of Directors (“Board”)
adopted a recoupment policy as described in this paragraph. You hereby agree and
understand that subject to the discretion and approval of the Board, the Company
will, to the extent permitted by governing law, in all appropriate cases as
determined by the Board, require reimbursement and/or cancellation of any bonus
or other incentive compensation, including stock-based compensation, awarded to
an executive officer or other member of the Company’s executive leadership team
after April 1, 2007

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John T. Wyatt

October 11, 2007

Page Three

 

where all of the following factors are present: (a) the award was predicated
upon the achievement of certain financial results that were subsequently the
subject of a restatement, (b) in the Board’s view, the executive engaged in
fraud or intentional misconduct that was a substantial contributing cause to the
need for the restatement, and (c) a lower award would have been made to the
executive based upon the restated financial results. In each such instance, the
Company will seek to recover the individual executive’s entire annual bonus or
award for the relevant period, plus a reasonable rate of interest.

Abide by Company Policies. You agree to abide by all applicable Company policies
including, but not limited to, policies contained in the Code of Business
Conduct. As a Division President, you are now subject to Stock Ownership
Requirements for Gap Inc. Executives which can be found on Gapinc.com. You also
agree to abide by the attached Confidentiality and Non-Solicitation Agreement
during and after your employment with Gap Inc.

Insider Trading Policies. Based on the level of your position, you will be
subject to Gap Inc.’s Securities Law Compliance Manual, which among other things
places restrictions on your ability to buy and sell Gap Inc. stock and requires
you to pre-clear trades. If you do not already have a copy of the compliance
manual, or have questions about it, you should contact Ingrid Freire in Gap Inc.
Stock Administration, at (415) 427-4697.

Employment Status. You understand that your employment is still “at-will”. This
means that you do not have a contract of employment for any particular duration
or limiting the grounds for your termination in any way or precluding Gap Inc.
from revoking this offer of employment at any time. You are free to resign at
any time. Similarly, the Company is free to terminate your employment at any
time for any reason. The only way your at-will status can be changed is if you
enter into an express written contract with the Company that contains the words
“this is an express contract of employment” and is signed by an officer of the
Company. In the event that there is any dispute over the terms, enforcement or
obligations under this agreement, the prevailing party shall be entitled to
recover from the other party reasonable attorneys fees and costs incurred to
enforce the agreement.

Please review this agreement, sign one set of the enclosed originals and return
to Eva Sage-Gavin at Gap Inc. You may keep the other original for your personal
records.

Tom, congratulations on this latest achievement in your career at Gap Inc.

Yours sincerely,

        /s/ Glenn Murphy

Glenn Murphy

Chairman and CEO, Gap Inc.

Confirmed this 26th day of October, 2007

        /s/ John T. Wyatt John T. Wyatt