Exhibit 10.2

February 16, 2007

Marka Hansen

Dear Marka,

Congratulations on your new position with the company!

This letter is to confirm your compensation arrangements as President, Gap North
America Division. In this position you will report to Robert Fisher, Chief
Executive Officer and Chairman of the Board, Gap Inc.

Salary. Your annual salary will be $900,000, payable every two weeks. You are
scheduled to receive a performance and a compensation review in March 2008.

Start Date. Your first day in your new position was February 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 operational goals. 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.

For fiscal year 2007 only, for the financial component of the bonus (weighted at
75% of the target bonus), you will receive the higher of: (1) the amount you
would receive at your new salary ($900,000) based on Gap North America’s
financial results; or (2) the amount you would have received had you remained in
your position as President, Banana Republic at your former salary ($750,000),
based on fiscal 2007 Banana Republic financial results. Performance against the
Operational Objectives component (weighted at 25% of the target bonus) will be
based on CEO assessment of performance against operational objectives
established for you by the CEO. For fiscal year 2006, your bonus will be
determined assuming your base salary remained at $750,000 through the end of the
fiscal year.

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Marka Hansen

February16, 2007

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Long-Term Incentive Awards. You have been granted a long-term incentive award,
which gives you the opportunity to share in the company’s success over time.

Stock Award. The Compensation and Management Development Committee of the Board
of Directors approved a stock award grant to you on February 1, 2007 (“date of
grant”) covering 200,000 shares of Gap Inc. common stock, subject to the
provisions of the Company’s stock plan. Stock awards are in the form of units
that are paid in Gap Inc. stock upon vesting. The award will vest as shown in
the schedule below, provided you are employed with Gap Inc. on the vesting date.

Stock Award of 100,000 shares vesting two years from date of grant

Stock Award of 100,000 shares vesting three years from date of grant

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. For Fiscal 2007 only, you will receive a stock award that is
the higher of: (1) the amount you would receive at your new salary ($900,000)
based on Gap North America’s financial results; or (2) the amount you would have
received had you remained in your position as President, Banana Republic at your
former salary ($750,000), based on fiscal 2007 Banana Republic financial
results. For fiscal year 2006, your award will be determined assuming your base
salary remained at $750,000 through the end of the fiscal year. 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.

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.

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Marka Hansen

February 16, 2007

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(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, pursuant to the following schedule: (a) if
you are terminated for reasons other than For Cause from February 13, 2007 to
August 12, 2007, the stock options and stock awards that would have vested from
the date of termination up to and including February 12, 2009; and (b) if you
are terminated for reasons other than For Cause from August 13, 2007 up to and
including February 12, 2009, the stock options and stock awards that would have
vested 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 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.

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Marka Hansen

February 16, 2007

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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. 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, and comply with Section 16 of the Securities Exchange
Act of 1934, as amended. If you do not already have a copy of the compliance
manual, or have questions about it, you should contact 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.

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

 

Yours sincerely,

/s/ Robert J. Fisher

Robert J. Fisher CEO and Chairman of the Board, Gap Inc. Confirmed this 20th day
of February, 2007

/s/ Marka Hansen

Marka Hansen

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CONFIDENTIALITY & NON-SOLICITATION AGREEMENT

I, Marka Hansen, acknowledge that the services I will perform for Gap Inc. are
unique and extraordinary and that I will be in a relationship of confidence and
trust with Gap Inc. As a result, before or during my employment with Gap Inc., I
will acquire “Confidential Information” that is (1) owned or controlled by Gap
Inc., (2) in the possession of Gap Inc. and belonging to third parties, and/or
(3) conceived, originated, discovered or developed in whole or in part by me.
Confidential Information includes trade secrets and other confidential or
proprietary business, technical, strategic, marketing, legal, personnel or
financial information, whether or not my work product, in written, graphic, oral
or other tangible or intangible forms, including, but not limited to: strategic
plans; unannounced product information, specifications or designs; sales and
pricing practices; computer programs; drawings, diagrams, models; vendor or
customer names; employee lists or organizational charts; company telephone
directories; individual employee compensation and benefits information; business
or marketing plans; studies, analyses, projections and reports; communication
with attorneys; and software systems and processes. Any information that is not
readily available to the public shall be considered to be a trade secret and
confidential and proprietary.

I agree that I will keep the Confidential Information in strictest confidence
and trust, and will not, without the prior written consent of Gap Inc.’s General
Counsel, directly or indirectly use or disclose to any person or entity any
Confidential Information, before, during or after my employment, except as is
necessary in the ordinary course of performing my duties while employed by Gap
Inc.

I agree that in the event my employment is terminated for any reason, I will
immediately deliver to Gap Inc. all company property, including all documents,
materials or property of any description, or any reproduction of such materials,
containing or pertaining to any Confidential Information.

In order to protect the Confidential Information, I agree that so long as I am
employed by Gap Inc., and for a period of one year thereafter, I will not,
directly or indirectly, on behalf of me, any other person or entity, solicit,
call upon, recruit, or attempt to solicit any of Gap Inc.’s employees,
consultants, or vendors. I further agree that I will not directly or indirectly,
on behalf of me, any other person or entity, interfere or attempt to interfere
with Gap Inc.’s relationship with any person who at any time was an employee,
consultant, customer or vendor or otherwise has or had a business relationship
with Gap Inc.

I agree now, and after my employment with the Company terminates not to,
directly or indirectly, disparage the Company in any way or to make negative,
derogatory or untrue statements about the Company, its business activities, or
any of its directors, managers, officers, employees, affiliates, agents or
representatives to any person or entity.

ACKNOWLEDGED AND AGREED TO THIS 20th DAY OF FEBRUARY, 2007.

 

/s/ Marka Hansen     

  Marka Hansen