statement for the 2015 Annual Meeting of
Shareholders. The Committee continually monitors external compensation practices that meet high governance standards and will consider their implementation as appropriate. In this regard, our Committee receives regular reports on such practices from
its independent compensation consultant, reviews the analyses of our compensation program by the leading proxy voting advisory firms, and receives feedback from our shareholders through our investor relations department.
Compensation Consultant
The Committee retained
Frederic W. Cook & Co., Inc. (Frederic Cook) as its independent compensation consultant to assist the Committee in accomplishing its objectives for 2015. Frederic Cook is independent of VF, having no relationship with VF other
than providing advisory services to the Committee. In reviewing Frederic Cooks independence, the Committee has considered the six factor test prescribed under New York Stock Exchange Rules. The Committee has sole authority to retain or
terminate the service of its compensation consultant and to establish the fees to be paid to the consultant. At the Committees request, a representative of Frederic Cook attended all meetings and executive sessions of the Committee in 2015.
The Committee instructs Frederic Cook annually to independently prepare an analysis of compensation data relating to the Chairman and Chief Executive Officer and report to the Committee on the compensation data provided by management regarding the
other named executive officers. Additionally, Frederic Cook periodically reviews the industry group of publicly traded apparel/retail and consumer products companies, specified below, whose compensation data is used by the Compensation Committee in
its process of establishing compensation targets (collectively, the Industry Group). Frederic Cook also advises the Committee on current executive compensation practices that meet high governance standards, as well as current market
trends, regulatory issues and developments related to executive compensation and director compensation.
Managements Role in the
Compensation Setting Process
As requested by the Committee, management is responsible for providing Frederic Cook with information to facilitate its role
in advising the Committee and preparing information for each Committee meeting. The Vice President, Chief Human Resources Officer and the Chairman and Chief Executive Officer generally attend Committee meetings, except the executive sessions that
are held as part of each meeting. These executives also work with the Committee Chairman to prepare the agenda for each meeting, provide information on VFs strategic objectives to the Committee and make recommendations to the Committee
regarding business performance targets and objectives for all senior executives including the Chairman and Chief Executive Officer.
Based on managements
knowledge of the publicly traded companies with which VF is most likely to compete for top executives, management also, in consultation with Frederic Cook, recommends for the Committees consideration the Industry Group whose compensation data
is used by the Compensation Committee. In addition, the Chairman and Chief Executive Officer makes recommendations to the Committee regarding compensation for executives reporting directly to him.
20
In establishing the elements of executive
compensation, the Committee, in consultation with Frederic Cook, assesses whether the Programs terms promote unnecessary risk-taking. In performing this assessment, the Committee reviews with Frederic Cook such compensation design elements as
pay mix, performance metrics, performance goals and payout curves, payment timing and adjustments, equity incentives, stock ownership requirements and VFs trading policies. After performing this analysis, the Committee has concluded that the
Program does not promote excessive or unnecessary risk-taking.
Competitive Compensation Targets
In 2015, Frederic Cook and management each independently utilized data from the Towers Watson (Towers) executive compensation database, which includes
executive compensation data for over 700 U.S.-based companies (the Comparison Data), to assist in establishing compensation targets for 2015. The Comparison Data was provided by Towers on an aggregated basis. The Comparison Data reported
actual salary levels and target levels of performance-based compensation and were adjusted to January 2015 using a three percent annual update factor. Due to significant variance in size among the companies in the Comparison Data, Towers used
regression analysis to size-adjust the compensation data to VFs approximate annual revenue range. Neither the Committee nor management receives or uses information on any subset of the Towers database and the Committee and management are not
aware of the identities of the individual companies in the database. Frederic Cook utilized that data to recommend compensation targets for the Chairman and Chief Executive Officer, and the Chairman and Chief Executive Officer utilized the data to
recommend compensation targets for the other named executive officers. In addition, the Committee evaluated compensation data regarding the Industry Group to assure that the compensation targets were reasonable as compared to other similarly
situated apparel/retail and consumer products companies most likely to compete with VF for executive talent. The companies that comprised VFs Industry Group in 2015 (unchanged from 2014) were as follows:
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Adidas AG
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L Brands, Inc.
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Coach, Inc.
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Levi Strauss & Co.
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Colgate-Palmolive Company
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Macys, Inc.
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Estee Lauder Companies Inc.
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NIKE Inc.
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Gap Inc.
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PVH Corp.
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General Mills, Inc.
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Ralph Lauren Corporation
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Kimberly-Clark Corporation
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Under Armour, Inc.
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Kohls Corporation
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The Compensation Committee sets total direct compensation (base salary, target annual cash incentive awards and target annual long-term
equity incentive award values) for senior executives generally between the 50th and 75th percentile of the Comparison Data (subject to the fluctuation of foreign exchange rates for executives paid in currency other than the U.S. dollar). The
Committee considers the scope of the executives duties, the executives experience in his or her role and individual performance relative to his or her peers to establish the appropriate point within that range of percentiles, or outside
the range under circumstances that justify a deviation. For 2015, the target total direct compensation was generally within this range for each NEO other than Mr. Roe who is new to his position. Generally, the Committee believes that it should
set total direct compensation targets for VFs senior executives within this range to appropriately motivate and reward strong performance and retain top talent at a reasonable cost to VF as indicated by the available data. The Committee
targets total direct compensation for each VF executive officer to be competitive with compensation paid to executives in comparable positions according to the Comparison Data based on targeted performance goals established by the Committee. Thus,
the Committee balances the elements of total direct compensation salary, annual cash incentives and long-term equity incentives in this process. Benefits are set at levels intended to be competitive but are not included in the
Committees evaluation of total direct compensation. The Committee may also provide retention awards, but these are not considered in VFs total direct compensation for purposes of setting target levels of NEO compensation.
22
Total Compensation
Review
The Compensation Committee has established a practice of annually reviewing tally sheets summarizing all components of VFs top
executives compensation and the Committee performed this review in 2015. The Committee reviewed the dollar amounts affixed to all components of the executives 2015 compensation, including current cash compensation (base salary and annual
cash incentive awards) and assumed value of long-term equity incentive compensation (performance-based RSUs and stock options). The Committee also reviewed the dollar value to the executive and the cost to VF of all perquisites and other personal
benefits, payout obligations under VFs Pension Plan and VFs Supplemental Executive Retirement Plan, aggregate balances under VFs deferred compensation plans, and projected payout levels under several termination-of-employment
scenarios, including termination with and without cause and termination after a change in control of VF. The purpose of the annual review is to enable the Committee to understand the amounts of all elements of the executives compensation.
C
OMPONENTS
OF
T
OTAL
D
IRECT
C
OMPENSATION
Base Salary
Base salary of the named executive
officers is designed to compensate executives for their level of responsibility, skills, experience and sustained individual contribution. Base salary is intended to be competitive as compared to salary levels for equivalent executive positions at
companies in the Comparison Data and the Industry Group. The Committee believes that a competitive base salary provides the foundation for the total compensation package required to attract, retain and motivate executives in alignment with VFs
business strategies.
Target salary ranges and individual salaries for the named executive officers are reviewed by the Committee annually, as well as at the time
of a promotion or other change in responsibilities. Each named executive officer is evaluated annually based on several components: key job responsibilities, key accomplishments and annual goals and objectives. The resulting performance evaluations
are presented to the Committee to be used in assessing each component of total compensation for each NEO.
Annual base salary increases for each named executive
officer are based on (i) an assessment of the individuals performance, (ii) the competitive market salary range for the individuals position, and (iii) VFs overall merit increase budget for salaries of senior
employees. In addition, the Committee considers substantial increases in an executives responsibilities in setting base salary increases. Base salaries of the named executive officers are approved by the Committee members and all other
independent members of the Board of Directors. Mr. Rendle was promoted to President and Chief Operating Officer in June 2015, and Mr. Roe was promoted to Vice President and Chief Financial Officer in April 2015. Each of these executives
received an increase in his base salary commensurate with his increase in responsibilities. Annual base salary rates and percentage increases from 2014 to 2015 for the executive officers named in this proxy statement (except for Mr. Shearer who
retired effective April 1, 2015) were as follows:
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Executive
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2014 Base
Salary
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2015 Base
Salary
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Percentage Increase
From 2014
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Mr. Wiseman
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$
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1,300,000
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$
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1,350,000
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3.8%
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Mr. Rendle
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725,000
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750,000
900,000
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*
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3.4%
24.1%*
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Mr. Roe
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383,000
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394,490
600,000
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*
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3.0%
56.7%*
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Mr. Salzburger
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675,000
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700,000
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3.7%
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Mr. Baxter
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|
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620,000
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|
|
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640,000
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|
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3.2%
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*
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The increase in Mr. Rendles base salary from $750,000 to $900,000 was effective June 19, 2015 in connection with his promotion to President and Chief Operating Officer. The increase in
Mr. Roes base salary from $394,490 to $600,000 was effective April 1, 2015 in connection with his promotion to Vice President and Chief Financial Officer.
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24
Annual Cash Incentives
VF has a cash incentive plan for the named executive officers, the VF Executive Incentive Compensation Plan (EIC Plan). The EIC Plan focuses
executive attention on annual VF performance as measured by pre-established goals. The incentives are designed to motivate VFs executives by providing payments for achieving and exceeding goals related to VFs annual business plan.
Under the EIC Plan, performance goals are set each year by the Committee. The Committee used the competitive external Comparison Data to assist it in establishing
targeted dollar amounts to award each named executive under the EIC Plan. The Committee establishes each named executives targeted annual incentive opportunity under the EIC Plan after consideration of compensation data and the recommendations
of the Chairman and Chief Executive Officer and Frederic Cook. The Committee also makes a general assessment as to the relative amounts of annual incentives for the NEOs to make sure they are, in the Committees judgment, fair and reasonable,
but the Committee does not perform any formal internal pay equity calculation for any elements of executive compensation.
The Committee established for 2015 a
pre-set goal under the EIC Plan of diluted earnings per share from continuing operations in the amount of $0.63, adjusted to exclude the effects of impairment charges, pension curtailment or settlement charges, restructuring charges and
other extraordinary items or non-recurring items, and required changes in accounting policies (adjusted EPS is a non-GAAP performance metric). Accordingly, no award for 2015 could be paid to the designated executive officers under the EIC Plan
unless the pre-set goal was achieved for fiscal 2015 and up to 200% of the target awards could be paid to the designated executive officers provided that the pre-set goal was achieved. By requiring achievement of the pre-set goal, the Committee
intends to preserve the tax deductibility to VF, under Internal Revenue Code Section 162(m), of the award payouts up to the 200% level. The maximum potential individual award is $6,000,000 plus the amount of the participants accumulated
unused annual limit as of the close of the prior year. In determining the actual EIC Plan payouts, the Committee used its discretion to set award payouts below the maximum potential award for each of the named executives. The Committee established
stretch target performance goals as described below to determine the actual payouts to the executives. We submit the material terms of the EIC Plan to shareholders for approval every five years, most recently in 2013.
While it is the policy of the Committee to provide opportunities for annual incentive compensation for achievement of pre-established performance goals based primarily
on financial measures, the Committee also retains discretion to pay bonuses apart from the EIC Plan reflecting its subjective assessment of the value of accomplishments of VFs executive officers which, in the Committees view, cannot
always be anticipated in advance or reflected in such pre-established goals.
25
Stretch Performance Goals.
The Committee
believes the following key drivers of total shareholder return should be the foundation for annual bonus payouts for its named executive officers:
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Objective*
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Rationale
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Earnings per share
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Indicates the health of the overall company, and its sustained performance and profitability.
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Gross margin percentage
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Indicates the underlying profitability of the company.
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Cash flow
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Indicates the financial strength of the company and allows it to pursue opportunities that enhance shareholder value.
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Net revenues, excluding
revenues of acquired
businesses
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Key measure of top line growth that indicates sustainability of the company over the long term and its ability to generate profits.
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Net revenues of acquired businesses
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Indicates the success of the inorganic growth strategy of the company.
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Profit before tax
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Profitability measure that can be compared year-to-year at the business level.
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*
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Each metric (1) excludes the effects of adjustments related to impairment charges, pension curtailment or settlement charges, restructuring charges, other extraordinary items or non-recurring items, and required
changes in accounting policies, (2) is calculated based on continuing operations, (3) excludes any difference between actual foreign exchange rates and the foreign exchange rates used in VFs 2015 financial plan at the time the
Committee set the targets and (4) as indicated, apportions revenues between existing businesses and recently acquired businesses.
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The choice of
which objectives are used and the relative weightings given to each objective varies (i) among named executive officers depending upon the business for which each named executive officer is responsible and (ii) from time to time based on
VFs strategic business goals. In February 2015, stretch target performance goals for the named executive officers were set by the Committee after considering criteria and weighting recommended by management as well as advice from the
Committees independent compensation consultant.
The stretch performance targets were set consistent with VFs strategy to deliver consistent profitable
growth that provides sustainable, long-term returns for VF shareholders. In setting objectives for 2015, the Committee expected strong operational performance for each of the business Groups and VF Corporate, while also anticipating the adverse
effects of a strong U.S. dollar on the International Group reported results and, to a lesser extent, the Corporate reported results. VF operates and reports using a 52/53-week fiscal year ending on the Saturday closest to December 31 of each
year and, for 2015, the objectives reflected a 52-week operating year as compared to a 53-week operating year in 2014. Further, cash flow was impacted by a $250 million contribution in the first quarter of 2015 to fully fund VFs U.S. pension
plan. Accordingly, the performance goals were set at levels deemed to be operationally challenging, but recognizing that foreign exchange rates, the length of the operational year and the pension contribution are not related to the operational
execution by management.
The stretch target performance goals for Messrs. Wiseman, Roe and Shearer, and for Mr. Rendle effective upon his promotion to
President and Chief Operating Officer, were based 100% on the performance of VF (the VF Performance Targets) based on diluted earnings per share, gross margin, cash flow, net revenues, excluding net revenues of recent acquisitions, and
net revenues of recent acquisitions for the portion that occurred during 2015 of the 12-month period following the acquisition (referred to below as net revenues of acquired businesses).
26
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2015 VF Performance Targets
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Weighting
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Objective
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Messrs. Wiseman, Roe and Shearer,
and Mr. Rendle effective June 2015
VF Corporate
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50%
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Earnings per share
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0.7% above 2014 earnings per share
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10%
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Gross margin percentage
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25 basis points above the 2014 level
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15%
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Cash flow
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23.5% decrease from 2014 cash flow
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15%
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Net revenues, excluding revenues of
acquired businesses
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1.4% above 2014 revenues
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10%
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Net revenues of acquired businesses
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$245.6 million
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For the remaining NEOs, and for Mr. Rendle until June 2015, the stretch target performance goals were based 40% on the VF Corporate
performance objectives set forth above and 60% on the performance of the businesses for which they are responsible (the Group Performance Targets). During 2015, Mr. Rendles Group Performance Targets were based on the
performance of the Americas Group until his promotion to President and Chief Operating Officer in June 2015, after which his performance goals were based solely on the VF Performance Targets set forth above for Messrs. Wiseman, Roe and Shearer. The
Group Performance Targets were based on operating profit less cost of capital charge (referred to below as profit before taxes), gross margin, cash flow and revenue; revenue for Americas and International is further divided into net
revenues from ongoing businesses and net revenues of acquired businesses.
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2015 Group Performance Targets
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Weighting
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Objective
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Mr. Baxter,
Jeanswear Americas,
Imagewear and South
America Group
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Mr. Rendle
Americas Group*
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Mr. Salzburger,
International Group
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50%
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Profit before
taxes
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7.1% above the 2014 level
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11.9% above the 2014 level
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4.4% below the 2014 level
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10%
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Gross margin percentage
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22 basis points above the 2014 level
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53 basis points above the 2014 level
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43 basis points above the 2014 level
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15%
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Cash flow
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2.3% above the 2014 level
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5.5% above the 2014 level
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6.1% below the 2014 level
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15%
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Net revenues, excluding revenues of acquired businesses
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Net revenues 3.5% above the 2014 level (this component was weighted 25% because there was no acquired business component)
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5.0% above the 2014 level
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3.5% below the 2014 level
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10%
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Net revenues of acquired businesses
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$245.6 million in the aggregate for VF
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$245.6 million in the aggregate for VF
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*
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Effective June 2015, Mr. Rendles performance goals for the remainder of 2015 were based 100% on VF Performance Targets.
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The objectives have different ranges of achievement. Each component of the objectives then
(1) excludes the effects of adjustments related to impairment charges, pension curtailment or settlement charges, restructuring charges, other extraordinary items or
non-recurring items, and required changes in accounting policies,
(2) is calculated based on continuing operations,
(3) using the Companys long-standing currency neutral methodology, excludes any difference between actual foreign exchange rates and the foreign exchange rates
used in VFs 2015 financial plan at the time the Committee set the targets, and
(4) as indicated, apportions revenues between existing businesses and recently
acquired businesses.
27
In February 2015 the Compensation Committee set
individual target award amounts for the named executive officers for the fiscal year 2015. These target award amounts are set forth on the Grants of Plan-Based Awards table on page 35.
Based on VFs actual performance in 2015, in February 2016 the Committee determined that the pre-set goal for the EIC Plan had been achieved. The Committee further
determined that the stretch target performance goals had been achieved as follows: for Messrs. Wiseman, Roe and Shearer, 92%, for Mr. Rendle, 74% (blended based on the period before and after his promotion to President), for Mr. Salzburger
83%, and for Mr. Baxter, 75%. The payments made to the named executive officers under the EIC Plan are set forth in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table on page 34. Amounts may vary slightly
due to rounding.
For the years 2013, 2014 and 2015, actual levels of achievement of the targeted incentive opportunity under the EIC Plan were 123%, 159% and 92%,
respectively, of the VF Performance Targets.
Performance-Based Restricted Stock Units
Under VFs Mid-Term Incentive Plan (MTIP), executives are awarded performance-based RSUs that give them the opportunity to earn shares of VF Common
Stock for performance achieved over three-year cycles. Performance-based RSUs provide long-term incentive compensation for executives with the objectives of providing a focus on long-term value and increasing stock ownership. Performance-based RSUs
are designed to align the interests of VFs executives with those of shareholders by encouraging the executives to enhance the value of VF Common Stock. In addition, through three-year performance periods, this component of the Program is
designed to create an incentive for individual executives to remain with VF. MTIP awards are forfeitable upon an executives termination of employment, except
(i)
|
a pro rata portion of the award will be deemed earned in the event of death or disability,
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(ii)
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awards continue to accrue in full to the benefit of individuals who retire, provided that the individual was employed by VF for the first fiscal year of the cycle,
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(iii)
|
a pro rata portion of the award will be deemed earned in the event of a termination of the executives employment by VF without cause prior to a change in control, with pro-ration based on the part of the
performance period in which the executive remained employed plus any period during which severance payments will be made, provided the individual was an active participant for at least twelve months during the performance cycle, and
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(iv)
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the full award at the higher of target performance or actual performance achieved through the date of termination will be deemed earned in the event of a termination by VF without cause or by the executive for good
reason after a change in control of VF.
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Dividend equivalents are paid on the shares actually paid out under the MTIP (no dividend equivalents are
paid on any portion of the MTIP award not earned); at the payout date, the cash value of dividend equivalents is converted into additional shares.
For 2015, the
Committee established performance goals for the MTIP based on VFs financial performance metrics as well as a relative performance metric to further align executive compensation with shareholder value creation. The first component will be
determined by multiplying the participants target number of RSUs by the average level of achievement of the stretch VF Performance Target goals established annually by the Committee under the EIC Plan during the three years of the performance
period (between 0% and 200% of the participants target award), plus an additional number of shares equal to the dollar value of the dividends that would have accrued (without compounding) on the shares subject to the payout. The second
component, a relative performance metric, will be based on VFs total shareholder return (TSR), as compared to the TSR generated by the S&P 500 companies during the applicable three-year period. At the end of the three-year
performance period, the payout for each participant will
28
(i)
|
remain unchanged if VFs TSR is between the 75
th
and 25
th
percentile of TSR of the S&P 500 companies
over the period,
|
(ii)
|
increase in the amount of 25% of the participants target award if VFs TSR is greater than or equal to the 75
th
percentile of TSR of the S&P 500
companies over the period, or
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(iii)
|
decrease in the amount of 25% of the participants target award if VFs TSR is equal to or below the 25
th
percentile of TSR of the S&P 500 companies
over the period.
|
As a result of including this relative performance metric actual payouts may range from 0% to 225% of the targeted award. The MTIP
performance goals and related terms for the 2013-2015 performance period and the 2014-2016 performance period are substantially the same as described for the 2015-2017 performance period.
Deductibility to VF for federal income tax purposes of the value of the awards should be maintained so long as the pre-set goal of positive aggregate earnings per share
from continuing operations is achieved for the three-year performance period. This goal was achieved for the 2013-2015 performance period. The Committee retains discretion with respect to the actual payouts provided that the pre-set goal is met. To
preserve tax deductibility, we submit the material terms of the Stock Plan to shareholders for approval at least every five years and did so in 2015.
In February
2016, the Committee determined that the achievement of the EIC Plan stretch goals for VF for 2015 of the three-year MTIP performance period was 92%. Therefore, the Committee determined that the level of achievement of the financial performance
metric of the MTIP goal for the three-year period 2013 through 2015 was 125%, determined by averaging the achievement of the VF Performance Target goals under the EIC Plan for 2013 (123%), 2014 (159%) and 2015 (92%). In addition, the Committee
determined that VFs TSR for the 2013-2015 performance period was at the 75th percentile of the S&P 500 companies during the period and, therefore, in accordance with the TSR performance metric for the performance period, payouts for the
performance period would include an additional 25% of participants target awards. As a result, the total achievement for the 2013-2015 performance period was 150%.
The performance-based RSU payout made in February 2016 for the 2013-2015 performance period is set forth on the Option Exercises and Stock Vested table on page 38. The
performance-based RSU target awards to the named executive officers made in February 2015 for the 2015-2017 performance period are set forth in the Grants of Plan-Based Awards table on page 35. The grant-date fair value of RSU target awards for the
three-year performance period beginning in each of 2013, 2014 and 2015 is reflected in the Stock Awards column of the Summary Compensation Table on page 34.
Stock Options
Stock options awarded under the Stock Plan are intended to align executives and shareholders interests and
focus executives on attainment of VFs long-term goals. Stock options provide executives with the opportunity to acquire an equity interest in VF and to share in the appreciation of the value of the stock. They also provide a long-term
incentive for the executive to remain with VF and promote shareholder returns. The Committee determines a value of options awarded to named executive officers as a component of the target total direct compensation.
Non-qualified stock options have a term of not greater than ten years and become exercisable not less than one year after the date of grant. Options are exercisable
only so long as the option holder remains an employee of VF or its subsidiaries, except that, subject to earlier expiration of the option term, and to the specific terms and definitions contained in the Stock Plan, options generally remain
exercisable for the period severance payments are made (if any) in the case of involuntary termination of employment, and for 36 months after death, retirement or termination of employment due to disability, provided that such continued vesting
after retirement requires that the employee was employed by VF on December 31 of the
29
year in which the option was granted. In
addition, in accordance with the executives Change-in-Control Agreements described on page 42, upon an executives qualifying termination of employment following a change in control of VF, vesting of the options is accelerated and all of
the options become exercisable by the executives.
Stock option awards made to the named executive officers during 2015 are listed on the Grants of Plan-Based
Awards table on page 35.
Retention and Special Awards
Retention awards of restricted stock or restricted stock units are made by the Committee from time to time to attract or retain key executives and are designed to reward
long-term employment with VF. Awards of restricted stock or restricted stock units for retention purposes under the Stock Plan are not part of regular annual compensation, and are not treated as part of total direct compensation as discussed above.
The retention awards and the amount of any particular retention award are determined in consultation with the Committees compensation consultant for the Chairman and Chief Executive Officer and in consultation with the Chairman and Chief
Executive Officer for the other named executive officers. On February 9, 2015, Mr. Roe was granted a retention award of 14,500 shares of restricted stock that will vest in 2019 as long as Mr. Roe remains in the employment of VF until
the vesting date, except that a pro rata portion of the restricted stock would vest if his employment termination is due to his death or disability and the full amount of such awards would vest upon a termination of his employment, within 24 months
after a change in control of VF, either by VF not for cause or by the executive for good reason.
Policy for the Recovery of Awards or
Payments in the Event of Financial Restatement
The Board of Directors has adopted a policy for the recovery of performance-based compensation from
executives (these are generally referred to as recoupment or clawback policies). The policy provides that the Board may require an executive to forfeit a performance-based award or repay performance-based compensation if VF
is required to prepare an accounting restatement as a result of misconduct, if such executive knowingly caused or failed to prevent such misconduct. The award agreements for stock options and RSUs under the Stock Plan include provisions respecting
such recovery, as does the EIC Plan.
Policy Regarding Hedging or Pledging in VF Common Stock
The Board of Directors has adopted a policy prohibiting VFs directors, executive officers named in this proxy statement and certain other executives from engaging
in transactions in derivative securities (including puts, calls, collars, forward contracts, equity swaps, exchange funds and the like) relating to VF securities, transactions hedging the risk of ownership of VF securities and short
sales of VF securities. In addition, VFs directors, executive officers named in this proxy statement and certain other executives are prohibited from holding VF securities in margin accounts or pledging VF securities as collateral for loans.
R
ETIREMENT
AND
O
THER
B
ENEFITS
The Committee believes that retirement and other benefits are important components of competitive compensation packages necessary to attract and retain qualified senior
executives. The Committee reviews the amounts of the benefits annually along with other compensation components. However, the benefits do not affect the decisions the Committee makes regarding other compensation components, which are generally
structured to achieve VFs short-term and long-term financial objectives. Mr. Salzburger, who is not a U.S. resident, does not participate in VFs Pension Plan, Supplemental Executive Retirement Plan, Retirement Contribution Feature
or Executive Deferred Savings Plan described below. His benefits are described in footnote 6 to the Pension Benefits Table on page 40.
30
Pension Benefits
VF sponsors and maintains the VF Corporation Pension Plan (the Pension Plan), a tax-qualified defined benefit plan that covers most of
VFs U.S.-based employees who were employed by VF on or before December 31, 2004, including Messrs. Wiseman, Rendle, Roe and Shearer. The purpose of the Pension Plan is to provide retirement benefits for those employees who qualify for
such benefits under the provisions of the Pension Plan. The Pension Plan is discussed in further detail under the caption Pension Benefits on page 39. The Pension Plan was closed to new participants at the end of 2004.
Supplemental Executive Retirement Plan
Messrs.
Wiseman, Rendle, Roe and Shearer participate in a Supplemental Executive Retirement Plan (SERP). The SERP is an unfunded, nonqualified plan for eligible participants primarily designed to restore benefits lost under the Pension Plan due
to the maximum legal limit of pension benefits imposed under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code (the Code). The SERP was closed to new participants at the end of 2004.
401k Plan
In 2015 U.S.-based named executive
officers were permitted to participate in the VF Retirement Savings Plan (the 401k Plan). The 401k Plan is a broad-based tax-qualified defined contribution plan available to most U.S.-based employees of VF. The 401k Plan is described in
further detail under the caption Nonqualified Deferred Compensation on page 41.
VF executives, including Mr. Baxter, who joined VF after the
Pension Plan and SERP were closed to new participants, until January 2015 participated in a retirement contribution feature pursuant to which VF contributed a percentage of their earnings (between 2% and 5%) based on their years of continuous
service, to the 401k Plan and the Executive Deferred Savings Plan.
Nonqualified Deferred Compensation
VFs U.S.-based senior executives, including the U.S.-based named executive officers, are permitted to defer compensation and receive a limited amount of matching
credits under the VF Corporation Executive Deferred Savings Plan. This plan enables executives to save for retirement on a tax-deferred basis. Nonqualified deferred compensation is discussed in further detail under the caption Nonqualified
Deferred Compensation on page 41.
Employee Benefits
VF provides a number of benefit plans to all eligible employees, including the named executive officers. These benefits include programs such as medical, dental, life
insurance and short- and long-term disability coverage and a merchandise discount on most VF products. The named executive officers are also eligible for financial counseling and an annual executive physical.
Change-in-Control Agreements
VF has entered
into Change-in-Control Agreements (the Agreements) with certain VF senior executives, including the named executive officers, that provide the executives with certain severance benefits in the event their employment with VF is terminated
by VF or by the executive for good reason, as defined in the Agreements, subsequent to a change in control of VF. The Agreements are designed to reinforce and encourage the continued attention and dedication of such executives to their assigned
duties without distraction in the face of the potentially disturbing circumstances arising from the possibility of a change in control of VF. VF believes that change-in-control arrangements are an important component of a competitive compensation
package necessary to attract and retain qualified senior executives. The Agreements are described and quantified below in the Potential Payments Upon Change in Control, Retirement or Termination of Employment section on page 42.
31
Total payments to be made to an executive in
the event of termination of employment upon a change in control of VF may constitute excess parachute payments (as that term is defined in the Code). Messrs. Wiseman and Baxter will receive additional payments under the Agreements to
reimburse them for any excise taxes, as well as other increased taxes, penalties and interest resulting from any payments under the Agreements by reason of such payments being treated as excess parachute payments. However, if the parachute payments
exceed the maximum amount that could be paid to the executive without giving rise to an excise tax, but are less than 105% of such amount, then no gross-up will be paid and the parachute payments will be reduced to just below such amount. During
2011, the Committee eliminated the gross up feature for any new or materially enhanced change-in-control agreements.
Under the terms of the Agreements, the
executives would also be entitled to supplemental benefits, such as accelerated rights to exercise stock options, accelerated lapse of restrictions on restricted stock and RSUs, lump sum payments under the VF SERP, and continued life and medical
insurance for specified periods after termination. Upon a change in control of VF, VF also will pay all reasonable legal fees and related expenses incurred by the executive as a result of the termination of his or her employment or in obtaining or
enforcing any right or benefit provided by the Agreements.
Payments Upon Separation
The named executive officers, other than Mr. Salzburger, have no contractual right to receive separation payments if they terminate their employment or are
terminated with or without cause prior to a change in control of VF. Mr. Salzburger, who is based in Switzerland, has an employment agreement, which is typical in Switzerland. Under his agreement, Mr. Salzburger is entitled to receive one
year of base salary and a pro rata amount of the annual incentive bonus he would have earned for the year of termination if his employment is terminated without cause.
P
RESERVATION
OF
D
EDUCTIBILITY
OF
C
OMPENSATION
Section 162(m) of the Code limits the deductibility by VF for Federal income tax purposes of annual compensation in excess of $1 million paid to certain officers,
unless certain requirements are met. Stock options, certain performance-based awards and retention awards under the 1996 Stock Compensation Plan are designed to meet these requirements as are annual incentive payments under VFs EIC Plan. It is
the present intention of the Compensation Committee to preserve the deductibility of compensation under Section 162(m) to the extent the Committee believes that to do so is consistent with the best interest of shareholders; however, tax
deductibility is only one consideration in determining the type and amount of compensation. The Board of Directors maintains discretion to set salaries and grant awards based on the Boards assessment of individual performance and other
relevant factors. Such salaries and awards may not meet the requirements for full deductibility of Section 162(m). In making compensation decisions the Committee takes into consideration any potential loss of deductibility. To maintain
flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Committee has not adopted a policy requiring all compensation to be deductible.
E
XECUTIVE
S
TOCK
O
WNERSHIP
G
UIDELINES
It is VFs policy to strongly encourage stock ownership by VF senior management. This policy closely aligns the interests of management with those of shareholders.
Senior executives are subject to share ownership guidelines that require them to accumulate, over a five-year period, and then retain, shares of VF Common Stock having a market value ranging from one to six times annual base salary, depending upon
the position. The Chief Executive Officer and the other named executive officers are required to accumulate VF Common Stock having market values as follows:
|
|
|
Stock Ownership Guidelines
|
Officer
|
|
VF Common Stock having a market value of
|
Chief Executive Officer
|
|
Six times annual base salary
|
President, Senior Vice Presidents and Group Presidents
|
|
Three times annual base salary
|
Vice Presidents
|
|
Two times annual base salary
|
32
|
include $4,650,742, the fair market value of 60,000 shares of restricted stock units, plus 2,780 shares of restricted stock units resulting from accumulated dividend equivalents on the restricted stock units, at the
time of vesting in February 2015. For Mr. Baxter, the amounts in these columns also include $4,807,644, the fair market value of 60,000 shares of restricted stock, plus 4,898 shares of restricted stock resulting from accumulated dividends on
the restricted stock, at the time of vesting in February 2015. No amounts reported in these columns were deferred.
|
P
ENSION
B
ENEFITS
VF sponsors and maintains the VF Corporation Pension Plan (the Pension Plan), a tax-qualified defined benefit plan that covers most of VFs U.S.-based
employees who were employed by VF on or before December 31, 2004, including all the named executive officers other than Mr. Baxter who joined VF after the Pension Plan was closed to new participants and Mr. Salzburger who has pension
benefits under the VF International SAGL pension fund in Switzerland (the Swiss Pension Plan) that covers virtually all Swiss-based employees of VF International SAGL over 25 years of age. Benefits under the Pension Plan are calculated
by reference to the employees average annual compensation, which is his or her average annual salary and annual incentive compensation from January 1, 2014, with no less than five years immediately preceding retirement
included in the average. If an employee does not have five years of compensation from January 1, 2014, such employees compensation for a sufficient number of years immediately prior to 2014 is included to produce a minimum five
compensation years.
There are two formulas for computing benefits under the Pension Plan. The normal retirement formula is used for employees who
qualify for early retirement under the Pension Plan upon termination, by being credited with at least ten years of service with VF and having attained age 55. The second formula, less favorable to the employee, is used for employees who
have not satisfied both conditions for early retirement upon termination. For employees who commence benefits under the Pension Plan prior to age 65, the benefit is reduced to account for the longer period of time over which the benefit
is expected to be paid. The formula in effect for a specific employee is dependent upon the employees age and the number of years of service he has accrued as of the date of termination. Both formulas are based on years of service with VF,
average annual compensation, and the covered compensation amount in effect for the employee relative to his birth year. Payments under the Pension Plan are made in monthly payments over the life of the participant and, in some circumstances, for a
period thereafter to the participants beneficiary. All of the named executive officers who participate in the Pension Plan are eligible for nonforfeitable benefits under the Pension Plan and the VF Supplemental Executive Retirement Plan
(SERP).
The SERP is an unfunded, nonqualified plan for eligible employees primarily designed to restore benefits lost under the Pension Plan due to the
maximum legal limit of pension benefits imposed under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (the Code). The combined retirement income from the Pension Plan and the SERP for
each of the eligible named executive officers, upon retirement at age 65, would be an amount equal to his or her Pension Plan benefit calculated (i) without regard to any limitation imposed by the Code or ERISA, (ii) without regard to his
participation in the Deferred Compensation Plan or the Executive Deferred Savings Plan, (iii) on the basis of the average of the highest three years of his salary and annual incentive compensation during the ten-year period immediately
preceding retirement, and (iv) without deduction or offset of Social Security benefits. For purposes of the table below, the normal retirement formula has been used for determining the SERP benefits of all of the named executive
officers who participate in the Pension Plan, regardless of whether they otherwise qualify for early retirement under the Pension Plan. Payments under the SERP with respect to the period prior to December 31, 2004 are payable in
monthly payments or in a lump sum, and payments with respect to the period after December 31, 2004 are payable in a lump sum.
At the end of December 2014 the
Pension Plan and SERP were modified such that for certain executives, including the named executive officers, benefits would be frozen in the Pension Plan and would instead accrue in the SERP, and therefore accrued benefits under the SERP will
increase at a higher rate for service and earnings after December 31, 2014.
39
N
ONQUALIFIED
D
EFERRED
C
OMPENSATION
VF senior executives, including the named executive officers other than Mr. Salzburger, who is not based in the U.S., are permitted to defer compensation under the
VF Corporation Executive Deferred Savings Plan (the EDSP).
In 2015, the terms of the EDSP were amended to permit an eligible executive to defer into a
hypothetical account, on a pre-tax basis, annual compensation in excess of the IRS annual compensation limit for 401k contributions ($265,000 for 2015) (but not more than 50% of the executives annual salary and 75% of the
executives annual cash incentive payment). A participating executives account was also credited with matching credits equal to 100% on the first 6% of annual compensation deferred by the executive for the year. Earnings below the IRS
annual compensation limit are eligible for contributions to the 401k Plan. The 401k Plan is a broad-based tax-qualified defined contribution plan for most U.S. employees of VF. A participant is credited with matching credits equal to 100% on the
first 6% of the annual compensation contributed by the participant, up to the IRS annual compensation limit of $265,000.
Accounts deferred after January 1,
2005 are payable in either a lump sum or in up to ten annual installments following termination of employment, as elected by the executive at the time of deferral. With respect to accounts prior to January 1, 2005 an executive may request,
subject to VF approval, distribution in a lump sum or in up to ten annual installments following termination of employment. Prior to termination of employment, an executive may receive a distribution of the executives deferred account upon an
unexpected financial hardship.
Accounts under the EDSP are credited with earnings and losses based on certain hypothetical investments selected by the executive.
The hypothetical investment alternatives available to executives include various mutual funds as well as a VF Common Stock fund. Executives may change such hypothetical investment elections on a daily basis (although executive officers of VF are
generally restricted in changing their hypothetical investment elections with respect to the VF Common Stock fund).
2015 N
ONQUALIFIED
D
EFERRED
C
OMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in 2015
($)
(1)
|
|
|
VF
Contributions
in 2015
($)
(2)
|
|
|
Aggregate
Earnings in
2015
($)
(3)
|
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
|
Aggregate
Balance at
January 2,
2016
($)
(4)
|
|
Eric C. Wiseman
|
|
$
|
583,298
|
|
|
$
|
270,119
|
|
|
$
|
(375,292
|
)
|
|
|
$-0-
|
|
|
$
|
9,732,415
|
|
Steven E. Rendle
|
|
|
74,348
|
|
|
|
74,348
|
|
|
|
(35,237
|
)
|
|
|
-0-
|
|
|
|
1,523,670
|
|
Scott A. Roe
|
|
|
39,391
|
|
|
|
39,391
|
|
|
|
(30,204
|
)
|
|
|
-0-
|
|
|
|
1,010,696
|
|
Karl Heinz Salzburger
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
Scott H. Baxter
|
|
|
165,678
|
|
|
|
46,655
|
|
|
|
(53,606
|
)
|
|
|
-0-
|
|
|
|
2,571,656
|
|
Robert K. Shearer
|
|
|
58,011
|
|
|
|
58,011
|
|
|
|
32,038
|
|
|
|
5,643,732
|
|
|
|
61,227
|
|
1
|
Amounts reported in this column are included as salary and non-equity incentive compensation in the Summary Compensation Table on page 34. The type of compensation permitted to be deferred is cash compensation.
|
2
|
Amounts reported in this column are included as All Other Compensation in the Summary Compensation Table on page 34. The matching contribution for qualified executives is 100% on the first 6% of compensation deferred by
the named executive officer under EDSP (for compensation in excess of the 401k contribution limit, which was $265,000 in 2015). In addition, Mr. Baxter, who joined VF after VFs defined benefit plans were closed to new employees,
participated until January 2015 in the retirement contribution feature for senior executives who joined VF after 2005, and this amount includes $3,338 in retirement contributions that VF contributed to his account in the EDSP.
|
3
|
This column includes earnings and (losses) on deferred compensation balances. Such amounts are not above-market or preferential and therefore are not reported as compensation in the Summary
Compensation Table on page 34.
|
4
|
This column reflects the aggregate of salary and non-equity incentive awards deferred by each named executive officer during his career with VF plus the aggregate amount of contributions by VF and the investment
earnings thereon. Amounts deferred each year by the named executive officers have been reported in the Summary Compensation Tables in VFs proxy statements in the year earned to the extent the executive was a named executive officer for
purposes of proxy statement disclosure.
|
41
P
OTENTIAL
P
AYMENTS
U
PON
C
HANGE
IN
C
ONTROL
, R
ETIREMENT
OR
T
ERMINATION
OF
E
MPLOYMENT
The following section describes payments that would be made to each of the named executive officers and related benefits as a result of (i) a termination of service
in the event of a change in control of VF, (ii) the executives retirement, (iii) the executives termination by VF without cause, (iv) the executives termination by VF with cause, or
(v) the executives resignation, assuming these events occurred on January 2, 2016.
The descriptions below do not include the following amounts that
the executives also would have received in all termination scenarios:
(a) retirement benefits, the present value of which is disclosed in the
Pension Benefits Table on page 40,
(b) the aggregate balance disclosed in the Nonqualified Deferred Compensation table above,
(c) the executives EIC Plan payment for the year ended January 2, 2016, as disclosed in the
Non-Equity
Incentive Plan Compensation column of the Summary Compensation Table on page 34, or
(d) the value of the executives vested
in-the-money unexercised stock options; the executive would be able to realize such value by exercise of the options prior to any termination, or the executive could retain the options after termination in all termination scenarios
except termination by VF without cause with no severance, resignation not qualifying as a retirement or termination by VF with cause.
The
named executive officers, other than Mr. Salzburger, do not have employment contracts with VF; all of their potential payments outlined below are defined in benefit plan documents described in this proxy statement. Under
Mr. Salzburgers 2005 employment agreement, he would receive one year of base salary and a pro rata amount of his annual incentive bonus which would have been earned for the year of termination in the event of his termination without
cause.
Potential Payments upon a Change in Control of VF
VF has entered into Change-in-Control Agreements with the named executive officers. These Agreements provide severance benefits to the executives only if their
employment is terminated by VF without cause or for good reason by the executive within the 24-month period after a change in control of VF. Good reason for this purpose means a material reduction in the executives authority or
duties, budget or compensation; a requirement that the executive relocate anywhere not mutually acceptable to the executive and VF; or a breach by VF of the Agreement. The Agreements have a term of three years with automatic annual extensions. The
Agreements may be terminated by VF, unless VF has knowledge that a third party intends to effect a change in control of VF and, if a change in control has occurred, the agreements may not be terminated until two years after the change in control.
Generally, severance benefits payable to the named executive officers include a lump-sum payment of an amount equal to 2.99 times the sum of the executives
current annual salary plus the highest amount of annual incentive awarded to the executive during the three fiscal years prior to the date on which the executives employment is terminated following a change in control of VF (but not less than
the target annual incentive for the year of termination). Under the terms of the Agreements or the Stock Plan, upon a qualifying termination, the executives would also be entitled to supplemental benefits, such as payment of a pro rata portion of
non-equity incentive compensation, accelerated vesting of stock options, accelerated lapse of restrictions on restricted stock units and restricted stock, lump-sum payments under the VF SERP for U.S.-based executives, continued life and medical
insurance for specified periods after termination, entitlements under retirement plans and a lump-sum payment upon attaining retirement age. In the case of RSUs under the MTIP, the RSUs would be deemed earned based on the actual performance achieved
through the date of termination projected for the entire performance cycle (except if performance in completed years is below-target the uncompleted years are projected at target), and such RSUs would vest in full (without proration).
42
Except as described below, the total payments
to be made to an executive in the event of termination of employment upon a change in control of VF potentially could exceed the level of parachute payments (as that term is defined in the Code) that would trigger the golden
parachute excise tax, which could result in imposition of excise taxes on the executive and loss of tax deductibility for VF. Messrs. Wiseman and Baxter would receive additional payments under their Agreements to reimburse them for any such
excise taxes and other increased taxes, penalties and interest resulting from any payments under the Agreements by reason of such payments being treated as excess parachute payments. However, if the parachute payments exceed the maximum amount that
could be paid to the executive without giving rise to an excise tax, but are less than 105% of such amount, then no gross-up will be paid and the parachute payments will be reduced to just below such amount. In the case of Messrs. Rendle and Roe, if
the excise tax would apply each would receive the full payments (without gross-up) or the payments would be reduced to an amount just below the level triggering excise tax, whichever alternative results in the greater after-tax value to the
recipient.
A change in control under the Agreements would include any of the following events, subject to certain exceptions described in the
Agreements:
(A) an outside party acquires 20% of VFs voting securities;
(B) members of the VF Board of Directors on the date of the Agreement, together with new members approved to join the Board by 75% of the Incumbent
Board as defined in the Agreements, no longer constitute a majority of the Board; or
(C) consummation of a plan or agreement providing for a
merger or consolidation of VF if VFs shareholders before the transaction no longer hold 65% or more of the voting power after the transaction.
Potential Payments Upon Termination of Employment Following a Change in Control and Related Benefits
(1,2)
If the named executives employment had been terminated by VF without cause or by the executives for good reason (as defined above) following a change in control of
VF, assuming the triggering event occurred on January 2, 2016, the executives would be entitled to receive the following estimated amounts.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Severance
Amount
(3)
|
|
|
Stock
Awards
(4)
|
|
|
Unvested
Stock
Options
(5)
|
|
|
Estimated
Value of
Benefit
Continuation
(6)
|
|
|
Lump-Sum
SERP
Benefit
(7)
|
|
|
Excise Tax
Gross-up
on Change
in Control
|
|
|
Total
|
|
Mr. Wiseman
|
|
$
|
14,253,285
|
|
|
$
|
9,978,163
|
|
|
$
|
-0-
|
|
|
$
|
87,233
|
|
|
$
|
2,366,912
|
|
|
$
|
-0-
|
|
|
$
|
26,685,593
|
|
Mr. Rendle
|
|
|
4,711,259
|
|
|
|
6,249,716
|
|
|
|
-0-
|
|
|
|
58,745
|
|
|
|
878,275
|
|
|
|
-0-
|
|
|
|
11,897,995
|
|
Mr. Roe
|
|
|
2,913,321
|
|
|
|
1,710,136
|
|
|
|
292,169
|
|
|
|
49,851
|
|
|
|
212,242
|
|
|
|
-0-
|
|
|
|
5,177,719
|
|
Mr. Salzburger (8)
|
|
|
4,062,797
|
|
|
|
5,839,203
|
|
|
|
-0-
|
|
|
|
38,469
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
9,940,469
|
|
Mr. Baxter
|
|
|
3,574,695
|
|
|
|
7,325,256
|
|
|
|
660,448
|
|
|
|
51,210
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
11,611,609
|
|
Mr. Shearer (9)
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
1
|
These disclosed amounts are estimates only and do not necessarily reflect the actual amounts that would be paid to the named executive officers, which would only be known at the time that they become eligible for
payment and would only be payable if a change in control were to occur and the executives employment were terminated by VF without cause or by the executive with good reason. The table reflects the amount that could be payable under the
various arrangements assuming that the change in control had occurred at January 2, 2016, and the executives employment had been terminated on that date, including a gross-up for certain taxes in the event that any payments made in
connection with a change in control of VF would be subject to the excise tax imposed by Section 4999 of the Code.
|
2
|
Valuations of equity awards in this table reflect a price per share of VF Common Stock of $62.25, the closing price of VFs Common Stock at January 2, 2016.
|
3
|
The amounts in this column represent 2.99 multiplied by the sum of the executives current base salary plus the highest actual annual incentive paid to the executive in the past three years.
|
4
|
The amount in this column represents the estimated value of RSU awards under the MTIP for incomplete cycles that would be paid upon a qualifying termination
following a change in control. Incomplete cycles as of January 2, 2016, are the 2014-2016 and 2015-2017 RSU award cycles, estimated at approximately 126% (the average EIC Plan performance for 2014 and 2015)
|
43
ITEM NO. 3
R
ATIFICATION
OF
THE
S
ELECTION
OF
I
NDEPENDENT
R
EGISTERED
P
UBLIC
A
CCOUNTING
F
IRM
Selection of Independent Registered Public Accounting Firm.
The Audit Committee has retained PricewaterhouseCoopers LLP as
VFs independent registered public accounting firm for the 2016 fiscal year. PricewaterhouseCoopers LLP served as VFs independent registered public accounting firm for the 2015 fiscal year. In connection with its decision to retain
PricewaterhouseCoopers LLP as VFs independent registered public accounting firm, the Audit Committee considered whether the provision of non-audit services by PricewaterhouseCoopers LLP was compatible with maintaining PricewaterhouseCoopers
LLPs independence and concluded that it was. A representative of PricewaterhouseCoopers LLP will be present at the Meeting. The representative will be given an opportunity to make a statement if he or she desires to do so and to respond to
appropriate questions. Although we are not required to do so, we believe it is appropriate to ask shareholders to ratify the appointment of PricewaterhouseCoopers LLP as VFs independent registered public accounting firm. If shareholders do not
ratify the selection of PricewaterhouseCoopers LLP, the Audit Committee will reconsider the selection of an independent registered public accounting firm. Even if shareholders do ratify the selection, the Audit Committee retains its discretion to
reconsider its appointment if it believes such a change would be in the best interest of VF and its shareholders.
The VF Board of Directors
recommends a vote
FOR
ratification
of the selection of PricewaterhouseCoopers LLP.
Professional Fees of PricewaterhouseCoopers LLP.
The following chart summarizes the estimated fees of PricewaterhouseCoopers LLP for services rendered to VF
during the 2014 and 2015 fiscal years.
|
|
|
|
|
|
|
|
|
|
|
Type of Fees
|
|
2015
|
|
|
2014
|
|
|
Description of Fees
|
Audit Fees
|
|
$
|
6,421,000
|
|
|
$
|
5,451,000
|
|
|
Audit Fees are fees that VF paid to PricewaterhouseCoopers LLP for the audit of VFs consolidated financial statements included in VFs Annual Report on Form 10-K and review of financial statements included
in the Quarterly Reports on Form 10-Q, and for services that are normally provided by the auditor in connection with statutory and regulatory filings and engagements; and for the audit of the effectiveness of VFs internal control over
financial reporting.
|
Audit Related Fees
|
|
|
180,000
|
|
|
|
167,000
|
|
|
Audit Related Fees are fees billed for assurance and related services that are reasonably related to the performance of the audit or review of VFs financial statements and are not reported above under the
caption Audit Fees. Audit Related Fees in 2014 and 2015 consisted primarily of social security audits, sales certificates and other assurance services.
|
Tax Fees
|
|
|
2,523,000
|
|
|
|
2,258,000
|
|
|
Tax Fees are fees billed for professional services for tax compliance, tax advice, and tax planning. Tax Fees in 2014 and in 2015 consisted primarily of tax advisory and tax compliance services, transfer
pricing and VAT assistance.
|
All Other Fees
|
|
|
1,225,000
|
|
|
|
40,000
|
|
|
All Other Fees are fees billed for services other than services reported under Audit Fees, Audit-Related Fees and Tax Fees. The All Other Fees in 2014 and 2015 consisted
of audit services related to VFs nonfinancial sustainability data, and in 2015 consisted of services related to business continuity management and an ecommerce project.
|
Total
|
|
$
|
10,349,000
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$
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7,916,000
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VFs process is that all audit related services and all other permissible non-audit services provided by PricewaterhouseCoopers LLP
are to be pre-approved by the Audit Committee. The pre-approval policies adopted by the Audit Committee provide that annual, recurring services that will be provided by VFs independent registered public accounting firm and related fees are
presented to the Audit Committee for its
51
R
ATIFICATION
OF
THE
S
ELECTION
OF
I
NDEPENDENT
R
EGISTERED
P
UBLIC
A
CCOUNTING
F
IRM
consideration and advance approval. Criteria
are established by the Audit Committee for its advance approval of specified categories of services and payment of fees to VFs independent registered public accounting firm for changes in scope of recurring services or additional nonrecurring
services during the current year. On a quarterly basis, the Audit Committee is informed of each previously approved service performed by VFs independent registered public accounting firm and the related fees. During the year, circumstances may
arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories. In those instances, the Audit Committee requires specific pre-approval
before engaging the independent registered public accounting firm. The percentage of non-audit services provided by VFs independent registered public accounting firm pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X during 2015 was less than
two percent.
Report of the Audit Committee.
The Audit Committee reports as follows with respect to the audit of VFs
consolidated financial statements for the fiscal year ended January 2, 2016 (the 2015 Financial Statements). At meetings of the Audit Committee held in February 2016, the Audit Committee (i) reviewed and discussed with
management the 2015 Financial Statements and audit of internal control over financial reporting; (ii) discussed with PricewaterhouseCoopers LLP the matters required to be discussed by the Statement of Auditing Standards No. 61
(Communication with Audit Committees), as amended by the AICPA professional standards, vol. 1 AU section 380, as adopted by the Public Company Oversight Board in Rule 3200T, as subsequently superseded by Auditing Standard No. 16 (Communications
with Audit Committees), which include, among other items, matters related to the conduct of the audit of the 2015 Financial Statements; and (iii) received the written disclosures and the letter from PricewaterhouseCoopers LLP required by
applicable requirements of the Public Company Accounting Oversight Board regarding their communications with the Audit Committee concerning independence and discussed with PricewaterhouseCoopers LLP their independence from VF. Based on the foregoing
review and discussions, the Audit Committee recommended to the Board of Directors that the 2015 Financial Statements as audited by PricewaterhouseCoopers LLP be included in VFs Annual Report on Form 10-K for the fiscal year ended
January 2, 2016 to be filed with the Securities and Exchange Commission.
Juan Ernesto de Bedout, Chairman
Richard T. Carucci
Mark S. Hoplamazian
W. Rodney McMullen
Clarence Otis, Jr.
O
THER
I
NFORMATION
Other Matters
The Board of Directors does not
know of any other matter that is intended to be brought before the Meeting, but if any other matter is presented, the persons named in the enclosed proxy will be authorized to vote on behalf of the shareholders in their discretion and intend to vote
the same according to their best judgment. As of February 3, 2016, VF had not received notice of any matter to be presented at the Meeting other than as described in this proxy statement.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires directors and certain officers of VF, as well as persons who own more than 10% of a registered class
of VFs equity securities (Reporting Persons), to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission and the New York Stock Exchange. Based solely on its review of the
Forms filed with the Securities and Exchange Commission and representations received from directors and officers, VF believes that during the preceding year all Reporting Persons timely complied with all filing requirements applicable to them.
52
Expenses of Solicitation
VF will bear the cost of this proxy solicitation. In addition to the use of mail, proxies may be solicited in person or by telephone by VF employees without additional
compensation. VF has engaged D.F. King & Co., Inc. to solicit proxies in connection with this proxy statement, and employees of that company are expected to solicit proxies in person, by telephone and by mail. The anticipated cost to VF of
such solicitation is approximately $16,500, plus expenses. VF will reimburse brokers and other persons holding stock in their names or in the names of nominees for their expenses incurred in sending proxy material to principals and obtaining their
proxies.
Shareholder Proposals and Nominations for the 2017 Annual Meeting of Shareholders
Shareholders may nominate director candidates and make proposals to be considered at the 2017 Annual Meeting of Shareholders. In accordance with VFs By-Laws, any
shareholder nominations of candidates for election as directors at the 2017 Annual Meeting or any other proposal for consideration at the 2017 Annual Meeting must be received by VF, together with certain information specified in VFs By-Laws,
no later than November 24, 2016. In order to have a shareholder proposal included in the proxy statement and form of proxy, the proposal must be delivered to VF at VFs mailing address, P.O. Box 21488, Greensboro, North Carolina 27420, not
later than November 24, 2016, and the shareholder must otherwise comply with applicable SEC requirements and our By-Laws.
The form of proxy issued with
VFs 2017 proxy statement will confer discretionary authority to vote for or against any proposal made by a shareholder at VFs 2017 Annual Meeting of Shareholders and which is not included in VFs proxy statement. However, such
discretionary authority may not be exercised if the shareholder proponent has given to VFs Secretary notice of such proposal at the address set forth in the preceding paragraph not later than November 24, 2016, and certain other
conditions provided for in the SECs rules have been satisfied.
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By Order of the Board of Directors
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Laura C. Meagher
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Vice President,
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General Counsel and Secretary
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Dated: March 24, 2016
53
A
PPENDIX
A
V.F. C
ORPORATION
I
NDEPENDENCE
S
TANDARDS
OF
THE
B
OARD
OF
D
IRECTORS
To be considered independent under the Listing Standards of the NYSE, the Board must determine that a director
does not have any direct or indirect (as a partner, shareholder or officer of an organization that has a relationship with VF) material relationship with VF by broadly considering all relevant facts and circumstances. Material relationships can
include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, among others. The Boards determination of each directors independence will be disclosed annually in VFs proxy statement.
The Board has established the following categorical standards to assist it in determining director independence in accordance with the NYSE rules:
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No director who is an employee, or whose immediate family member is an executive officer, of VF can be considered independent until three years after termination of such employment relationship.
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No director who is affiliated with or employed by, or whose immediate family member is affiliated with or employed in a professional capacity by, a present or former internal or external auditor of the company can be
considered independent until three years after the end of the affiliation or employment or auditing relationship.
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No director can be considered independent if he or she is employed, or if his or her immediate family member is employed, as an executive officer of another company where any of VFs present executives serve on the
other companys compensation committee until three years after the end of such service or employment relationship.
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No director can be considered independent if he or she receives, or his or her immediate family member receives, more than $100,000 per year in direct compensation from VF, other than director and committee fees and
pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service) until three years after he or she or his or her immediate family member ceases to receive more than
$100,000 per year in such compensation.
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No director can be considered independent if he or she is an executive officer or employee of another company not including a charitable organization (or an immediate family member of the director is an executive
officer of such company) that makes payments to, or receives payments from, VF for property or services in an amount which, in any single fiscal year, exceeds the greater of $1 million or 2% of such other companys consolidated gross revenues
until three years after falling below such threshold.
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VF will disclose, in its annual proxy statement, any charitable contributions made by VF to a charitable organization if the charitable organization is one in which a VF director serves as an executive officer and,
within the preceding three years, charitable contributions made by VF in any single fiscal year exceed the greater of $1 million or 2% of such charitable organizations consolidated gross revenues. This disclosure does not automatically result
in a determination against that directors independence; however, the Board will consider the materiality of this relationship in its overall affirmative determination of that directors independence status.
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The Board, as part of its self-evaluation will review all commercial, industrial, banking, consulting, legal, accounting, charitable, and familial relationships between VF and its directors.
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For relationships not qualifying within the above guidelines, the determination of whether the relationship is material, and therefore whether the director is independent, shall be made by the Board. The Company will
explain in the next proxy statement the basis for any Board determination that a relationship was immaterial despite the fact that it did not meet the categorical standards of immateriality set forth in the above guidelines.
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In addition, members of the Audit Committee of the Board are subject to heightened standards of independence under the NYSE rules and the SEC rules and
regulations.
A-1
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IMPORTANT ANNUAL MEETING INFORMATION
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Electronic Voting Instructions
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Available 24 hours a day, 7 days a week!
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Instead of mailing your proxy, you may choose one of the
voting methods outlined below to vote your proxy.
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VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE
BAR.
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Proxies submitted by the Internet or telephone must be
received by 11:59 p.m., Eastern Daylight Time, on April 25, 2016.
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Vote by Internet
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Go
to
www.envisionreports.com/vfc
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Or
scan the QR code with your smartphone
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Follow the steps outlined on the secure website
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Vote by telephone
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Call toll free 1-800-652-VOTE (8683) within the USA, US territories &
Canada on a touch tone telephone
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Using a
black ink
pen, mark your votes with an
X
as shown in this example. Please do not write outside the designated areas.
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x
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Follow the instructions provided by the recorded
message
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q
IF YOU HAVE NOT VOTED VIA
THE INTERNET
OR
TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
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A
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Proposals The Board of Directors recommends a vote
FOR
each of the nominees in Item No. 1 and
FOR
Items No. 2 and 3.
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1.
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Election of Directors:
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For
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Withhold
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For
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Withhold
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For
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Withhold
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+
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01 - Richard T. Carucci
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02 - Juliana L. Chugg
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03 - Juan Ernesto de Bedout
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04 - Mark S. Hoplamazian
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05 - Robert J. Hurst
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06 - Laura W. Lang
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07 - W. Alan McCollough
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08 - W. Rodney McMullen
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09 - Clarence Otis, Jr.
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¨
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10 - Steven E. Rendle
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11 - Matthew J. Shattock
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12 - Eric C. Wiseman
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For
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Against
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Abstain
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For
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Against
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Abstain
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2.
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Advisory vote to approve named executive officer compensation.
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¨
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¨
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3.
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Ratification of the selection of PricewaterhouseCoopers LLP as VFs independent registered public accounting firm for the 2016 fiscal year.
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¨
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Shares subject to this proxy/voting instruction card will be voted in the
manner indicated above, when the card is properly executed and returned. If no indication is made, such shares will be voted FOR the election of all nominees
as Directors,
FOR
the
approval of named executive officer compensation, and FOR ratification of the selection of the independent registered public accounting firm.
For participants in the VF Corporation
employee benefit plans:
This card will be treated as voting instructions to the plan trustees or administrator, as explained on the reverse side of this card.
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B
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Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
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Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
corporate officer, trustee, guardian, or custodian, please give full title.
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Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box.
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/
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IF VOTING BY MAIL, YOU
MUST
COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD.
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1 U P X
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02AQ9B
Voting Instructions for the VF 401k Savings Plan
for Employees (the Savings Plan):
This card constitutes voting instructions to Fidelity Management Trust Company, the Trustee for the Savings Plan, to vote in person or by proxy any shares of
Common Stock allocated to the participant as of March 1, 2016 under the Savings Plan, at the Annual Meeting of Shareholders of VF Corporation to be held on April 26, 2016, and at any adjournments thereof, and also constitutes voting instructions to
the Trustee for a proportionate number of shares of Common Stock in the Savings Plan for which no instruction card has been received from other participants. If you do not return this card, the Trustee will vote any shares allocated to you in the
same proportion as the shares for which instructions were received from other participants in the Savings Plan.
Voting Request for the
VF Executive Deferred Savings Plan and the VF Executive Deferred Savings Plan II (collectively, the EDSP):
This card constitutes a voting
request to the VF Corporation Pension Plan Committee (the Committee), Administrator of the EDSP, to vote any shares of Common Stock held by the trustee of the grantor trust relating to the EDSP and credited to the participants EDSP
account as of March 1, 2016, at the Annual Meeting of Shareholders of VF Corporation to be held on April 26, 2016, and at any adjournments thereof, with the understanding that the Committee, pursuant to its discretionary powers under the EDSP, may
reject this request and direct that the shares be voted in a contrary manner.
q
IF YOU HAVE NOT VOTED VIA THE INTERNET
OR
TELEPHONE,
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
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Proxy VF Corporation
PROXY SOLICITATION/VOTING INSTRUCTION CARD
Proxy
Solicited on Behalf of the Board of Directors for
Annual Meeting on April 26, 2016
The shareholder hereby appoints E.C. Wiseman and L.C. Meagher, and each of them acting individually, proxies of the shareholder, with full power of
substitution, to represent and vote, as directed on the reverse side of this card, all shares of Common Stock of VF Corporation held of record by the shareholder on March 1, 2016, at the Annual Meeting of Shareholders of VF Corporation to be held on
April 26, 2016, and at any adjournments thereof, and, in their discretion, upon such other matters not specified as may come before said meeting. The shareholder hereby revokes any prior proxies.
You are encouraged to specify your choice by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors recommendations.
UNLESS YOU VOTE BY TELEPHONE, INTERNET, OR BY SIGNING AND RETURNING THIS CARD,
THE PROXIES CANNOT VOTE YOUR SHARES.
PLEASE VOTE, DATE AND SIGN THIS PROXY ON THE OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
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Change of Address
Please print your new address below.
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Comments
Please print your comments below.
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Meeting Attendance
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Mark the box to the right if you plan to attend the Annual Meeting.
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¨
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¢
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IF VOTING BY MAIL, YOU
MUST
COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD.
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