Shares of Gap fell 10 percent on Tuesday after the San Francisco retailer confirmed there has been no change to its dividend payment policy, following special payouts by other companies.

"There has been no change in the company's position as it relates to returning cash to shareholders," spokeswoman Edie Kissko told Reuters.

Gap's founders, the Fisher family, own about 37 percent of the company, through personal holdings and the Fisher Core Holdings, according to Reuters Data.

Several companies, including Wal-Mart and Oracle (ORCL), have declared one-time cash payouts recently or moved their payout dates to this year instead of January 2013, ahead of a likely rise in the dividend tax rate due to the so-called fiscal cliff.

In some cases, insiders have been the biggest beneficiaries of the special payouts, as well as of shifts of regular dividends into 2012 from 2013.

The fiscal cliff could come with a combination of tax increases and spending cuts due to kick in at the beginning of 2013 if Congress and the White House are not able to agree on a plan to reduce the federal budget deficit.

Gap, however, has not paid a special dividend before, and sticks to share buybacks and regular dividend payments. Last month, it announced a quarterly dividend of 12.5 cents per share payable on or after Jan. 30 to shareholders of record at the close of business on Jan. 2.


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Shares of Gap started falling earlier in the day as market rumors swirled that the company would not pay a special dividend as some believed it would. Gap shares closed on Tuesday down 10.3 percent at $30.94 on the New York Stock Exchange.

Overall option volume on Gap was 6.9 times the daily average with 44,000 puts and 17,000 calls traded so far on Tuesday afternoon. Investors often turn to equity puts, contracts that give the right to sell the stock at a fixed price by a certain date, to speculate on potential share price weakness or protect a long position in the shares.

"In the options market, we have seen some aggressive buyers in Gap puts through January expiration, indicating that many think there is additional downside in the stock," TD Ameritrade chief derivatives strategist J.J. Kinahan said.

Gap has turned sales at its stores around successfully following a major change in its management lineup. However, as the company heads into the new year, it will be up against tougher comparisons.

"Gap shares were a little overvalued. We'd consider it a sell at around $35 which is right around where they would have been," Morningstar analyst Peter Wahlstrom said. "They are starting to lap some of the comparable sales from three, four quarters ago so the road becomes incrementally more difficult."