Gap CEO forced out

January 23, 2007|By New York Times News Service

For the last two weeks, the son of Gap's founders and the board's chairman, Robert J. Fisher, conducted a series of secret conference calls with fellow directors.

The topic: whether to fire Gap's embattled chief executive, Paul S. Pressler.

On Friday, Fisher delivered the board's decision to Pressler: He was out. The 50-year-old former Disney executive did not put up much of a fight, according to a person briefed on the matter.

Yesterday, Pressler stepped down after Gap's third dismal holiday shopping season, in what the company described as a "mutual" decision. The move was widely expected on Wall Street, where investors began calling for his ouster more than a year ago. He is eligible for a severance package worth $14.5 million, the company said.

During the holiday season, in what was widely regarded as Pressler's last chance to save his job, Gap returned to the simple fashions, such as T-shirts and hooded sweaters, that fueled the chain's meteoric rise in the 1990s. But sales at stores open at least a year fell 8 percent.

Soon after, the board hired the investment bank Goldman, Sachs to investigate the potential sale of the company, according to people briefed on the matter, which would be one of the largest buyouts ever in the retail industry. Gap's market value is more than $16 billion, and analysts expect that the company would bring more than $18 billion.

With Gap's board weighing the sale of the troubled company, Pressler's departure clears the way for potential buyers to install their own chief executive.

Several private equity groups have approached Millard S. Drexler, the former Gap chief executive who was ousted to make way for Pressler, about running the company after a sale, according to a person briefed on the matter.

But Drexler, whose runaway success at J. Crew has haunted Gap's board, has told the investment firms that he has no interest in returning to Gap, this person said.

Gap said it was searching for a new chief with "deep" retail experience - an apparent jab at Pressler, who had little. For now, Fisher will fill the post.

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