Falling into the Gap…

It’s no secret that Gap (GPS), whose brands also include Old Navy and Banana Republic, has been treading water for quite some time. Just take a look at the 10 year chart. And just last week, the company reported an 18% drop in same store sales.

Late yesterday, Gap filed its latest proxy and while much of the attention was focused on CEO Glenn Murphy’s compensation, especially in light of the company’s problems, I found some other interesting things in the proxy.

First, was the severance for Dawn Robertson, the former Old Navy executive, who joined in late 2006 and “left immediately” on Feb. 19, and not even for the oft-abused personal reasons. For that 16-month stint, Robertson was paid $958K in severance, equivalent to a year’s salary. The filing also disclosed that Gap spent over $150K to pay for Robertson’s move to the Bay Area. Oddly enough, Robertson’s actual severance agreement with the company is still MIA and it’s not even clear to me why this was disclosed on the proxy since Robertson left after the end of the fiscal year.

The other interesting thing in Gap’s filing was how little work Fisher Development, a construction company run by the brother of Gap founder Donald Fisher, now does for Gap. In 2007, Fisher Development was paid a measly $300K. Compare that to $416 million — that’s not a typo — in construction that the company received just six years earlier, which we footnoted here, and you start to get a sense of how much things have changed at the Gap.

And yet, the company still clearly faces challenges convincing shoppers. Last week, I happened to stop in a nearby Old Navy store and even though it seemed like the whole store was on sale — t-shirts were as cheap as $2 — it was still hard to find something worth the cost of a subway fare.