Gap also will pay Kunz's premiums on her medical insurance for the next year and pay for outplacement counseling for her, the company said in a filing with the
Securities and Exchange Commission
released on Tuesday.
Kunz had a $550,000 base salary when she joined the Gap in July 1999, according to the company's SEC filings. A company representative declined to say if Kunz's salary had changed since then.
The bonus represents a sizable increase from that required by Kunz's original employment agreement. Kunz's target bonus at that time was 40% of her salary per year.
Kunz had her own obligations under her severance package. The company asked her to pay back a $2 million no-interest loan it made to her when she joined the company. Kunz has until Feb. 1, 2005, to repay the loan.
Additionally, Kunz signed a confidentiality agreement and an agreement not to recruit Gap employees to her next employer.
San Francisco-based Gap announced last month that it was replacing Kunz with former Disney executive Byron Pollitt. Pollitt worked with Paul Pressler, Gap's chief executive officer, at Disney.