NEW YORK — Donald G. Fisher, who launched Gap Inc. in 1969 because he found it difficult to buy jeans at department stores and had a vision for a simpler shopping alternative, will step down as chairman of the Gap board after the company’s annual meeting in May.
However, industry sources pointed out that Fisher and his family continue to control the board and remain the major shareholders, owning an estimated one-third of the stock. In addition, Fisher’s son, Robert, has been elevated to non-executive chairman, effective in May as well.
This story first appeared in the December 10, 2003 issue of WWD. Subscribe Today.
“Don is still calling all the shots,” said one source.
The San Francisco-based Gap said the 75-year-old Fisher will assume the role of chairman emeritus and will continue to perform his current responsibilities as an executive of the company. That means advising the ceo and the board on corporate strategy, governance and other matters, and working on special projects, a Gap spokesman explained. Fisher’s duties imply he will continue to play a strong role at the company without having the chairman’s title.
Although the news was released after the markets closed, Gap shares fell 16 cents, or 0.8 percent, closing at $20.78 on the New York Stock Exchange.
In his announcement, Fisher said he will seek reelection as a director next year, as well as advise his son, also a director. While the corporation’s guidelines suggests 72 as the appropriate age for retirement of non-management directors, it is not a mandatory retirement age, the spokesman said. In addition to Don Fisher and the 49-year-old Robert Fisher serving as directors, Don Fisher’s wife, Doris, is a director. Donald and Doris Fisher hold 19 percent, or 172.2 million shares, of Gap’s common stock, which was worth $3.58 billion as of Tuesday’s market close. For his own part, Robert Fisher owns 6 percent, or 52.4 million shares, worth $1.09 billion.
“Since we sold our first pair of jeans in 1969, our company has operated with the belief that to succeed, we always must be willing to change,” Don Fisher said in a statement. “We’ve changed a lot in the past year. We’ve hired a new ceo, strengthened our board and dramatically improved our performance. Paul Pressler has done a terrific job in his first year as ceo, and I’m more confident than ever about our company’s long-term prospects. I believe now is an appropriate time to make this transition as chairman.”
Sources said that elevating Robert Fisher to non-executive chairman, and keeping him off the payroll, doesn’t encroach much on Pressler’s role, though it enables Fisher to be more active in the company.
There has been some speculation that the chemistry between Robert Fisher and Millard “Mickey” Drexler, who left as Gap ceo last year, wasn’t the best, particularly when Fisher resigned in 1999 as president of Gap. “With Mickey having left the company, it paves the way for Bob to be involved again,” said a source.
Robert Fisher has worked in various operating roles at the company for 19 years, starting as a store manager. In 1999, he resigned as president of the Gap division and as a corporate executive vice president, and left the company to pursue personal interests. Prior to heading the Gap division, he held senior executive leadership positions, including chief operating officer, chief financial officer and president of Banana Republic. He has served as a director since 1990 and serves on the board of Sun Microsystems.
Gap was launched in August 1969 with a store in San Francisco, initially selling only music and jeans. During the next three decades, Gap evolved into one of the largest specialty apparel retailers in the world, with annual sales of about $15 billion and more than 3,000 store locations in North America, Europe and Japan under the Gap, Old Navy and Banana Republic brands.
The primary force behind the expansion, however, was Mickey Drexler, the former ceo, who also conceived Old Navy and is considered among the nation’s most inventive merchants. In the late Nineties and into the new millennium, the company foundered, hurt by fashion misfires, poor execution, overexpansion and increased competition. Some thought Drexler had lost his magic touch, but his turnaround efforts seemed to be paying off with much improved results being reported by the company this year.
The turnaround is ongoing, with questions remaining about whether the divisions are mature and whether there are still too many Gap and Banana Republic stores. There is also speculation that Old Navy units should be downsized and were built with too much space. Growth and better margins are being sought by attempting to make the stores more productive, but there are also rumors that the new regime is in the market for acquisitions to further growth.
In a statement, Pressler said, “For 34 years, Don has provided tremendous leadership to all of our employees worldwide. I know he will continue to challenge us with his entrepreneurial ideas and insight as we work to drive growth.”
Gap Inc. has maintained separate chairman and ceo roles since 1995, when Donald Fisher stepped down as ceo. The company currently has 13 directors, including Pressler. Nine of the 13 directors are independent, as defined by SEC and NYSE rules.
The board includes Howard Behar, director since 2003 and former Starbucks executive; Adrian D. P. Bellamy, director since 1995 and executive chairman of The Body Shop International; Glenda A. Hatchett, director since 1999 and judge on the syndicated television program, “Judge Hatchett;” Penelope L. Hughes, director since 2002 and former Coca-Cola executive; Bob L. Martin, former Wal-Mart Stores Inc. executive; Jim Schneider, director since 2003 and senior vice president and cfo of Dell; Charles R. Schwab, director since 1986 and chairman of The Charles Schwab Corp.; Mayo A. Shattuck 3rd, director since 2002 and chairman of Constellation Energy Group, and Meg Whitman, director since 2003 and ceo of eBay.
By stepping down as chairman of the board, Don Fisher will have more time to pursue his many interests. He rides horses, collects art, is a philanthropist and is active in local public education and trade issues. “He’s a very interested and engaged man,” said Hal Reiter, ceo of Herbert Mines Associates. “He wanted to stay on through the transition of Mickey Drexler.”
Reiter also characterized Robert Fisher as “an experienced director” who is thoroughly familiar with Gap, given his past experience in Gap operating positions, as well as his participation in the search committee for Pressler.
“I believe the combination of Bob as non-executive chairman and Paul Pressler as ceo is a winning combination,” said Gilbert Harrison, chairman of Financo Inc. “Both have a passion for the business, and I understand they work very well together and have the same strategic vision for the future.”