<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
VF Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[VF CORPORATION LOGO]
VF CORPORATION
March 23, 2000
Dear Shareholder:
The Annual Meeting of Shareholders of VF Corporation will be held on
Tuesday, April 25, 2000, at the Grandover Resort & Conference Center, Carlisle
Ballroom, One Thousand Club Road, Greensboro, North Carolina, commencing at
10:30 a.m. Your Board of Directors and management look forward to greeting
personally those shareholders able to attend.
At the meeting, shareholders will be asked to (i) elect four directors, and
(ii) consider such other matters as may properly come before the meeting.
Your Board of Directors recommends a vote FOR the election of the persons
nominated to serve as directors. Regardless of the number of shares you own or
whether you plan to attend, it is important that your shares be represented and
voted at the meeting.
This year, to make it more convenient for shareholders to vote, you may
vote your shares via the Internet or via a toll-free telephone number as
explained on page 1 of the attached proxy statement. Also, as in years past,
shareholders may vote in person at the Annual Meeting or by signing, dating and
mailing the enclosed proxy card in the postage-paid envelope provided.
Your interest and participation in the affairs of VF are most appreciated.
Sincerely,
/s/ Mackey J. McDonald
Mackey J. McDonald
Chairman, President and
Chief Executive Officer
<PAGE> 3
[VF CORPORATION LOGO]
VF CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 25, 2000
March 23, 2000
To the Shareholders of VF CORPORATION:
The Annual Meeting of Shareholders of VF Corporation will be held at the
Grandover Resort & Conference Center, Carlisle Ballroom, One Thousand Club Road,
Greensboro, North Carolina, on Tuesday, April 25, 2000, at 10:30 a.m., for the
following purposes:
(1) to elect four directors to hold office until the 2003 Annual Meeting of
Shareholders; and
(2) to transact such other business as may properly come before the meeting
and at any adjournments thereof.
A copy of VF's Annual Report for 1999 is enclosed for your information.
Only shareholders of record as of the close of business on March 7, 2000
are entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
Candace S. Cummings
Vice President-Administration,
General Counsel and Secretary
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO VOTE YOUR SHARES VIA THE INTERNET,
OUR TOLL-FREE TELEPHONE NUMBER OR BY SIGNING, DATING AND
PROMPTLY RETURNING YOUR PROXY IN THE ENCLOSED ENVELOPE.
<PAGE> 4
PROXY STATEMENT
FOR THE 2000 ANNUAL MEETING OF SHAREHOLDERS OF VF CORPORATION
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of VF Corporation to be voted at the Annual
Meeting of Shareholders of the Corporation on April 25, 2000 and at any
adjournment or adjournments of the meeting (the "Meeting") for the purposes
described in the foregoing notice of the Meeting. Proxies validly delivered by
shareholders (by Internet, telephone or mail as described below) and received by
VF prior to the Meeting will be voted in accordance with the instructions
contained therein. If no instructions are given, a proxy will be voted for the
election of the four nominees proposed for election as directors.
The securities entitled to vote at the Meeting consist of shares of VF
Common Stock and Series B ESOP Convertible Preferred Stock ("Series B Stock").
At the close of business on March 7, 2000, there were 116,783,939 outstanding
shares consisting of 115,114,495 shares of Common Stock and 1,669,444 shares of
Series B Stock. Each share of Common Stock is entitled to one vote and each
share of Series B Stock is entitled to two votes. Only holders of record at the
close of business on March 7, 2000 will be entitled to notice of and to vote at
the Meeting. Shareholders entitled to cast at least a majority of the votes that
all shareholders are entitled to cast must be present at the Meeting in person
or by proxy to constitute a quorum for the transaction of business. A plurality
of the votes cast at the Meeting is required for the election of directors.
Withheld votes, abstentions and broker non-votes will not be taken into account
in determining the outcome of the election of directors. For this purpose,
shares of Common Stock and shares of Series B Stock will vote together as a
single class. Shareholders of record may vote in person at the Annual Meeting or
by proxy.
There are three ways to vote by proxy:
1) BY INTERNET: Visit the web site http://www.eproxyvote.com/vfc. To
vote your shares, you must use the control number printed on your
proxy/voting instruction card. The web site is available 24 hours a day, 7
days a week, and will be accessible UNTIL 11:59 p.m., Eastern Daylight
Time, on April 24, 2000;
2) BY TELEPHONE: Call toll-free 1-877-PRXVOTE (1-877-779-8683). To
vote your shares, you must use the control number printed on your
proxy/voting instruction card. Telephone voting is accessible 24 hours a
day, 7 days a week, UNTIL 11:59 p.m., Eastern Daylight Time, on April 24,
2000; or
3) BY MAIL: Mark your proxy/voting instruction card, date and sign
it, and return it in the postage-paid envelope provided. If the envelope is
missing, please address your completed proxy/voting instruction card to VF
Corporation, c/o First Chicago Trust Company, a division of EquiServe, P.O.
Box 8923, Edison, New Jersey 08818-8923.
IF YOU VOTE YOUR PROXY BY INTERNET OR TELEPHONE, YOU
NEED NOT RETURN YOUR PROXY/VOTING INSTRUCTION CARD.
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A copy of VF's Annual Report for the fiscal year ended January 1, 2000
accompanies this proxy statement. No material contained in the Annual Report is
to be considered a part of the proxy solicitation material.
VF's mailing address is P.O. Box 21488, Greensboro, North Carolina 27420.
This proxy statement and the form of proxy/voting instruction card were first
mailed or given to security holders on approximately March 23, 2000.
ELECTION OF DIRECTORS
VF's Board of Directors has nominated the four persons named below to serve
as directors until the 2003 Annual Meeting. In accordance with VF's tenure
policy, L. Dudley Walker will not be standing for reelection. VF acknowledges
the outstanding service rendered by Mr. Walker since his election as a director
in 1984.
The persons named in the accompanying form of proxy/voting instruction card
intend to vote such proxy for the election as directors of the following
nominees. If any nominee is unable to serve or will not serve as a director, the
proxies solicited hereby will be voted for such other person or persons as may
be nominated by the Board of Directors. Vacancies in the Board of Directors may
be filled by the Board of Directors, and any director chosen to fill a vacancy
would hold office until the next election of the class for which such director
had been chosen. VF's historic practice has been to require that a majority of
its Board consists of directors who have never served as employees of VF or its
subsidiaries, currently nine of eleven directors. None of the nominees for
election as directors at the 2000 Annual Meeting have ever served as employees
of VF or its subsidiaries.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
YEAR IN WHICH
SERVICE AS A
NAME PRINCIPAL OCCUPATION DIRECTOR BEGAN
- ------------------------------------------------------------------------------------------
<S> <C> <C>
To Serve Until the
2003 Annual Meeting
Erskine B. Bowles, 54.............. General Partner,
Forstmann Little & Co.
and Managing Director,
Carousel Capital Company, LLC....... 1999
Robert J. Hurst, 54................ Vice Chairman,
The Goldman Sachs Group, Inc. ...... 1994
W. Alan McCollough, 50............. President and Chief Operating
Officer,
Circuit City Stores, Inc. .......... --
M. Rust Sharp, 59.................. Of Counsel to Heckscher, Teillon,
Terrill & Sager (Attorneys)......... 1984
- ------------------------------------------------------------------------------------------
</TABLE>
Mr. Bowles is a general partner of Forstmann Little & Co., a New York
private equity firm, and a managing director of Carousel Capital Company, LLC, a
North Carolina merchant bank. From November 1996 to November 1998, Mr. Bowles
served as White House Chief of Staff to the President of the United States. Mr.
Bowles was Assistant to the President and Deputy Chief of Staff from October
1994 through December 1995. Before serving in the White House, Mr. Bowles was
Administrator of the U.S. Small Business Administration. Prior to his government
service, he served as Chairman and CEO of Bowles Hollowell
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Conner & Co., an investment banking firm he founded in 1975. Mr. Bowles is a
director of First Union Corporation and McLeodUSA Incorporated, a
telecommunications company. He is a member of the Audit Committee.
Mr. Hurst is Vice Chairman and member of the Board of Directors and
Management Committee of The Goldman Sachs Group, Inc., an international
investment banking and securities firm. VF maintains investment banking
relations with Goldman Sachs. Mr. Hurst also serves as a director of IDBH
Corporation, a multi-industry corporation based in Israel. He is a member of the
Finance and Nominating Committees of the Board of Directors.
Mr. McCollough has been President and Chief Operating Officer of Circuit
City Stores, Inc. since 1997 and has been named President and Chief Executive
Officer effective June 2000. From 1995 to 1997, he served as Senior Vice
President of Merchandising for Circuit City. He is a member of the Board of
Directors of Circuit City Stores, Inc.
Mr. Sharp has been Of Counsel to Heckscher, Teillon, Terrill & Sager, a law
firm located in West Conshohocken, Pennsylvania, since May 1999. He was Of
Counsel to Pepper Hamilton LLP, a national law firm headquartered in
Philadelphia, Pennsylvania, from December 1996 until May 1999. Pepper Hamilton
provides legal services to VF. Mr. Sharp was previously a partner with the law
firm of Clark, Ladner, Fortenbaugh & Young, a Philadelphia, Pennsylvania law
firm. Mr. Sharp is a member of the Executive and Finance Committees of the Board
of Directors. (Also see Security Ownership of Certain Beneficial Owners and
Management.)
<TABLE>
<CAPTION>
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YEAR IN WHICH
SERVICE AS A
NAME PRINCIPAL OCCUPATION DIRECTOR BEGAN
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Directors Whose Terms
Expire at the 2002
Annual Meeting
Ursula F. Fairbairn, 57............ Executive Vice President -- Human
Resources & Quality,
American Express Company............ 1994
Barbara S. Feigin, 62.............. Consultant.......................... 1987
Mackey J. McDonald, 53............. Chairman of the Board, President,
and Chief Executive Officer
of VF............................... 1993
- ------------------------------------------------------------------------------------------
</TABLE>
Mrs. Fairbairn joined American Express, a financial services company, as
Executive Vice President -- Human Resources & Quality in December 1996. From
1990 until joining American Express, she served as Senior Vice President of
Human Resources of Union Pacific Corporation. Mrs. Fairbairn also serves as a
director of Air Products and Chemicals, Inc. She is a member of the Executive,
Organization and Compensation, and Pension Advisory Committees of the Board of
Directors. (Also see Security Ownership of Certain Beneficial Owners and
Management.)
Mrs. Feigin is a Consultant specializing in strategic marketing and
branding. She served as Executive Vice President and Worldwide Director of
Strategic Services of Grey Advertising Inc. from 1983 until her retirement in
1999. Mrs. Feigin also serves as a director of Circuit
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<PAGE> 7
City Stores, Inc. and VitaminShoppe.com. She is a member of the Audit,
Nominating, and Organization and Compensation Committees of the Board of
Directors.
Mr. McDonald joined VF's Lee subsidiary in 1983. He served in various
managerial positions with VF's subsidiaries until 1991 when he was named a VF
Group Vice President. In 1993, Mr. McDonald was elected President and a director
of VF. In 1996, Mr. McDonald also assumed the position of Chief Executive
Officer. He was elected Chairman of the Board of Directors in 1998. He is a
director of First Union Corporation and Hershey Foods Corporation. Mr. McDonald
is Chairman of the Executive Committee and serves as an ex officio member of all
other committees of the Board, except the Audit, Nominating, and Organization
and Compensation Committees.
<TABLE>
<CAPTION>
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YEAR IN WHICH
SERVICE AS A
NAME PRINCIPAL OCCUPATION DIRECTOR BEGAN
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Directors Whose Terms
Expire at the 2001
Annual Meeting
Robert D. Buzzell, 66.............. Distinguished Visiting Professor,
Georgetown University,
and Professor Emeritus,
Harvard Business School............. 1983
Edward E. Crutchfield, 58.......... Chairman and Chief Executive
Officer, First Union Corporation.... 1992
George Fellows, 57................. Former President and Chief Executive
Officer, Revlon, Inc. .............. 1997
Daniel R. Hesse, 46................ President and Chief Executive
Officer,
TeraBeam Corporation................ 1999
- ------------------------------------------------------------------------------------------
</TABLE>
Dr. Buzzell has served as Distinguished Visiting Professor at Georgetown
University since 1998 and Professor Emeritus of Harvard Business School since
1993. Dr. Buzzell served as a Distinguished Professor at the School of Business
Administration of George Mason University from 1993 to 1998. He served on the
faculty of the Harvard Graduate School of Business Administration from 1961 to
1993. Dr. Buzzell also serves as a director of Harleysville Group, Inc. He is a
member of the Finance, Organization and Compensation and Pension Advisory
Committees of the Board of Directors.
Mr. Crutchfield is the Chairman and Chief Executive Officer of First Union
Corporation, a banking and financial services company, a position that he has
held since 1985. VF maintains banking relationships with First Union. Mr.
Crutchfield serves as a director of First Union Corporation, The Liberty
Corporation and Bernhardt Industries, Inc. He is a member of the Executive and
Finance Committees of the Board of Directors.
Mr. Fellows is the former President and Chief Executive Officer of Revlon,
Inc. and of Revlon Consumer Products Corporation, positions he held from 1997
through 1999. He was President and Chief Operating Officer of Revlon, Inc. and
Revlon Consumer Products Corporation from 1995 until 1997. He is a member of the
Audit, Nominating, and Organization and Compensation Committees of the Board of
Directors.
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<PAGE> 8
Mr. Hesse is the President and Chief Executive Officer of TeraBeam
Corporation, a telecommunications company. From May 1997 until March 2000, Mr.
Hesse was President and Chief Executive Officer of AT&T Wireless Services. He
also served as an Executive Vice President of AT&T. Prior to this appointment in
May 1997, Mr. Hesse was Vice President and General Manager of the AT&T Online
Services Group. From 1991 to 1995, Mr. Hesse was President and Chief Executive
Officer of AT&T Network Systems International.
DIRECTORS' COMPENSATION
Each director other than Mr. McDonald receives an annual stipend of
$28,000, payable in equal monthly installments, plus a fee of $1,200 for each
Board meeting attended. Each such director who serves on a committee is paid
$1,000 for each meeting attended that is held on a day when a meeting of the
Board is not convened and $500 for each meeting attended that is held on a day
when a meeting of the Board is convened. Each such director serving as a
chairman of a committee receives an additional stipend of $200 for each
committee meeting attended that is held on a day when a meeting of the Board is
not convened and $100 for each committee meeting attended held on a day when a
meeting of the Board is convened. Each such director is also paid $1,000 per day
for special assignments in connection with Board or Committee activity as
designated by the Chairman of the Board. Travel and lodging expenses are
reimbursed. Mr. McDonald, the only director who is also an employee of VF, does
not receive any compensation in addition to his regular salary for attendance at
meetings of the Board or any of its committees. Each director may elect to defer
all or part of his or her stipend and fees into equivalent units of VF Common
Stock under the VF Deferred Savings Plan for Non-Employee Directors. All Common
Stock equivalent units receive dividend equivalents. Deferred sums, including
Common Stock equivalent units, are payable in cash to the participant upon
termination of service or such later date specified in advance by the
participant. Six directors elected to defer compensation in 1999.
Under the VF Stock Compensation Plan, each director is eligible to receive
grants of non-qualified stock options to purchase shares of Common Stock and
restricted awards (restricted stock or restricted stock units). Currently, stock
options are granted to non-employee directors at a rate of 4,800 per year. Such
options have an exercise price equal to fair market value at the date of grant,
have a stated term of 10 years and become exercisable one year after the date of
grant. Options are exercisable only so long as the optionee remains a director
of VF except that, subject to earlier expiration of the option term, options
remain exercisable for 36 months after the director's disability or retirement
or 12 months after the director's death.
Each director is eligible to participate in VF's matching gift program for
institutions of higher learning and National Public Television and Radio up to
an aggregate of $10,000 per year.
VF has never provided pension, medical or life insurance benefits to its
non-employee directors.
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<PAGE> 9
BOARD MEETINGS AND COMMITTEES
During 1999, there were eight meetings of the Board of Directors. All
members of the Board attended at least 75% of the total number of meetings of
the Board and all committees on which they served.
The Board has Audit, Executive, Finance, Nominating, Organization and
Compensation, and Pension Advisory Committees. The following committees of the
Board have primary responsibility for audit, nomination or compensation matters
and consist solely of non-employee directors.
AUDIT COMMITTEE: This committee's primary responsibility is to review
accounting procedures and methods employed in connection with audit programs and
related management policies. Its duties include (1) selecting and recommending
to the Board of Directors the independent auditors for VF, (2) reviewing the
scope of the audit to be conducted by the independent auditors, (3) meeting with
the independent auditors concerning the results of their audit and (4)
overseeing the scope and adequacy of VF's system of internal accounting
controls. The Audit Committee is the principal liaison between the Board of
Directors and the independent auditors for VF. The members of the committee are
Messrs. Fellows (Chairman), Bowles and Mrs. Feigin. The committee held two
meetings during 1999.
NOMINATING COMMITTEE: The responsibilities of this committee include the
screening of potential candidates for director and the recommendation of
candidates to the Board of Directors. VF's By-Laws provide that a shareholder
may nominate a person for election as a director if written notice of the
shareholder's intent to nominate a person for election as a director is received
by the Secretary of VF (1) in the case of an Annual Meeting, not less than 150
days prior to the date of the Annual Meeting or (2) in the case of a special
meeting at which directors are to be elected, not later than seven days
following the day on which notice of the meeting was first mailed to
shareholders. The notice must contain specified information about the
shareholder and the nominee, including such information as would be required to
be included in a proxy statement pursuant to the rules and regulations
established by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended (the "1934 Act"). The committee will consider
suggestions from VF shareholders, which should be submitted to the Secretary of
VF. The committee may refuse to take action on such recommendation, in which
case the shareholder proposing the nominee would have to follow the formal
procedures set forth in the By-Laws. The members of the committee are Mrs.
Feigin (Chairman), and Messrs. Fellows and Hurst. The committee held seven
meetings during 1999.
ORGANIZATION AND COMPENSATION COMMITTEE: It is the responsibility of this
committee to make a continuing review of VF's compensation and benefit programs,
to consider its organizational structure, including management development and
succession, and to make recommendations to the Board regarding such programs and
structure. This committee also has responsibility for (1) reviewing and
recommending to the Board salary and incentive compensation for VF's Chief
Executive Officer and other executive officers and (2) reviewing and
recommending to the Board incentive compensation programs and setting
performance
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<PAGE> 10
goals. The members of the committee are Mrs. Fairbairn (Chairman), Messrs.
Buzzell and Fellows and Mrs. Feigin. The committee held two meetings during
1999.
ORGANIZATION AND COMPENSATION COMMITTEE REPORT
PRINCIPLES OF EXECUTIVE COMPENSATION PROGRAM
The goal of VF's Executive Compensation Program (the "Program") is to
attract, retain and motivate VF's management team to produce above average
returns for shareholders.
The Program incorporates three compensation objectives. First, the Program
seeks to offer total compensation at levels that are competitive with other
large U.S.-based companies with which VF may compete for executive talent.
Second, the Program aims to provide annual incentives to executives based on
corporate and individual performance and to reward superior performance with
superior levels of compensation. Third, the Program seeks to encourage
maximization of long-term total shareholder return by providing executives with
incentives tied to stock value which align similar interests among the
shareholders and executives. VF balances each of the Program's objectives by
establishing target compensation levels for executive pay that are achieved
through a combination of base salary, annual incentive pay and long-term
incentives consisting of performance-contingent Common Stock units and stock
options.
It is the philosophy of VF that a significant portion of each executive's
total compensation should be at-risk based on the financial performance of VF.
The at-risk components of total compensation are progressively greater for
higher level positions. For 1999, the at-risk components of the targeted cash
compensation and performance-contingent Common Stock unit packages for executive
officers named in this proxy statement ranged from 60% to 70%.
COMPETITIVE COMPENSATION TARGETS
Total compensation targets, consisting of base salary, annual incentive
awards and long-term incentive awards, are set annually for all management
positions. The Towers Perrin executive compensation database, which includes
executive compensation data for over 500 large U.S. based companies, fairly
represents this group ("VF's Peer Group"). Information provided by VF's
independent compensation consultant regarding VF's Peer Group as well as
companies within the S&P Textile (Apparel Manufacturers) Index were utilized by
the Organization and Compensation Committee (the "Committee") to establish
compensation targets for 1999.
In general, commensurate with each position's responsibility and impact on
results, total compensation for each VF executive officer is targeted to be at
the 75th percentile of compensation paid to executives in comparable positions
within VF's Peer Group based on targeted performance goals established by the
Committee.
Base Salary: Base salaries are set annually by the Committee based on
guidance provided by VF's independent compensation consultants.
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<PAGE> 11
Annual Incentives: Under the VF Executive Incentive Compensation Plan ("EIC
Plan"), a performance goal based on VF's basic earnings per share, excluding the
effects of extraordinary and non-recurring items, is set each year by the
Committee. The Committee establishes a fixed percentage of the mid-point of each
executive's salary grade as the executive's targeted annual incentive
opportunity under the EIC Plan. Depending upon the level of achievement of the
performance goal, annual cash awards may range from 0% to 150% of the targeted
incentive opportunity for each EIC Plan participant. The maximum individual
award in any year is $1,500,000. The Committee may exercise discretion to reduce
awards generally or for any individual participant.
Long-term Incentives: Long-term incentives consist of
performance-contingent Common Stock units and stock options.
In 1999, the Committee initiated a Mid-Term Incentive Plan (drawn from the
VF Stock Compensation Plan) under which performance-contingent Common Stock
units are awarded. Performance-contingent Common Stock units are earned if VF's
average total shareholder return (Common Stock price change plus dividend yield)
for a three-year performance period compares favorably to that of a performance
peer group, or alternatively, if a specified increase in earnings per share is
achieved in the last year of the performance period. For the three-year
performance period ended December 31, 1999, the performance peer group consisted
of 22 companies significantly engaged in the apparel industry. Depending on the
level of achievement of the performance goal, each participant may earn from 0%
to 200% of the number of performance-contingent Common Stock units, plus
dividend equivalents, targeted by the Committee. Awards are paid in shares of VF
Common Stock. At the election of a participant, receipt of awards may be
deferred until retirement or until dates specified by the participant.
Stock options are typically granted annually under the VF Stock
Compensation Plan. Non-qualified stock options have a stated term of 10 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 Compensation
Plan, options generally remain exercisable for 36 months after death or
retirement under the VF Pension Plan and 12 months after termination of
employment due to disability.
The size of individual grants of performance-contingent Common Stock units
and options generally increase with the level of responsibility of the executive
officer. The grants to each executive officer named in this proxy statement also
depend upon the Committee's assessment of the individual's performance. The
Committee does not assign specific weighting to these factors.
SUMMARY OF ACTIONS TAKEN BY THE ORGANIZATION AND COMPENSATION COMMITTEE
1999 BASE SALARY INCREASES
At its February 1999 meeting, the Committee approved salary increases to be
effective as of January 1, 1999. The base salary increase for each executive
officer was based on the Committee's assessment of the individual's performance
and the individual's salary within
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his or her salary grade as well as salary practices of comparable companies and
VF's overall merit increase budget for 1999 of approximately 4% of total
compensation.
ANNUAL INCENTIVE AWARDS
At its February 1999 meeting, the Committee fixed the EIC Plan performance
target and the targeted annual incentive awards for each participating
executive. The dollar amount of each targeted award was based upon a percentage
of the mid-point of the salary range for the executive's position. At its
February 2000 meeting, the Committee granted EIC Plan awards to the named
executive officers based on the achievement of 90% of the EIC performance target
for 1999 resulting in a potential pay-out of approximately 60% of the targeted
awards and a review and assessment by the Committee of the performance of the
named executive officers. In setting the EIC Plan awards, the Committee gave
primary weight to the level of achievement of the performance target.
LONG-TERM INCENTIVE AWARDS
At its February 1999 meeting, the Committee awarded performance-contingent
Common Stock units under the Mid-Term Incentive Plan to be earned only if
non-discretionary targeted performance levels set by the Plan were met for the
specified performance periods. The targeted award for each participant was based
on the level of responsibility of the participant. At its February 2000 meeting,
the Committee determined the number of shares of Common Stock that each
participant had earned based on VF's average annual total shareholder return
being in the 66th percentile of the performance peer group for the three-year
performance period ended December 31, 1999, resulting in a pay-out of 132% of
the targeted award for each participant. For the three-year performance period
ended December 31, 1999, there were 30 participants in the Mid-Term Incentive
Plan.
At its February 1999 meeting, the Committee reviewed VF's philosophy with
respect to stock option grants. In order to instill an entrepreneurial spirit
among its employees, it is VF's practice to grant options to a significant
number of management-level employees. In 1999, stock options were granted to 576
management-level employees. The stock options awarded to the executive officers
named in this proxy statement were based on the Committee's assessment of the
individual's total compensation from a competitive perspective within the
guidelines established by VF, and the executive's performance.
RESTRICTED STOCK AWARDS
At its February 1999 meeting, the Compensation Committee fixed the 1999
performance objectives under the Stock Compensation Plan for grants of
restricted stock to Messrs. McDonald, Schamberger and MacFarlan. These
restricted stock awards are intended to be a long-term retention incentive and
are not a component of targeted total compensation.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's base salary, annual incentive awards,
long-term incentive awards and restricted stock awards follow the policies
described above.
Mr. McDonald's salary increase for 1999 was 4% and he was granted a stock
option for 150,000 shares of VF Common Stock. Mr. McDonald's salary increase and
stock option
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<PAGE> 13
grant were based on salary data provided by VF's independent compensation
consultants, together with the projection of total targeted compensation within
the guidelines described above.
Mr. McDonald's incentive compensation and Mid-Term Incentive Plan awards
for 1999 were based primarily upon the financial performance of VF under Mr.
McDonald's leadership.
VF achieved record sales of $5,552 million, compared with $5,479 million in
1998. Net income was $366.2 million or $3.04 per share versus $3.17 per share in
1998.
The Compensation Committee concluded that, while VF did not fully achieve
all of its financial goals for 1999, under Mr. McDonald's leadership VF's sales
reached an all-time high, margins were at healthy levels and VF continued to
maintain its strong financial position. Four Workwear acquisitions were
completed, laying the foundation for future growth in that segment of VF's
business. VF continued to make significant progress in its common systems
initiative, which is expected to bring state-of-the-art technology to all VF
divisions and greatly enhance VF's product development, inventory management and
manufacturing capabilities. VF also successfully navigated through several
difficult operational and marketing issues.
The Compensation Committee awarded Mr. McDonald $555,000 under the EIC Plan
and 6,667 shares of Common Stock under the Mid-term Incentive Plan, based on the
level of achievement of the Plans' performance targets.
Mr. McDonald did not receive an award of restricted Common Stock pursuant
to the Stock Compensation Plan because the 1999 performance objective was not
achieved.
TAX DEDUCTIBILITY CONSIDERATIONS
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
deductibility of compensation in excess of $1 million paid to the executive
officers named in this proxy statement, unless certain requirements are met.
Stock options and certain performance-based awards under the Stock Compensation
Plan are designed to meet these requirements as are annual bonuses under VF's
EIC Plan. It is the present intention of the Compensation Committee to preserve
the deductibility of compensation under Section 162(m) to the extent the
Committee believes that to do so is consistent with the best interests of
shareholders. Tax deductibility is only one consideration in determining the
type and amount of compensation. The Board of Directors maintains discretion to
grant awards based on the Board's assessment of individual performance and other
factors deemed relevant. Such discretionary awards may not meet the requirements
of Section 162(m). In granting any such awards, the Board will nevertheless take
into consideration any potential loss of deductibility.
Ursula F. Fairbairn, Chairman
Robert D. Buzzell George Fellows
Barbara S. Feigin
10
<PAGE> 14
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid or
accrued for the years 1997 through 1999 by VF to or for the benefit of the named
executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-----------------------------------------------------------------------------------------------------------------
RESTRICTED STOCK
STOCK OPTIONS/ LTIP ALL OTHER
NAME AND AWARD(S)(1) SARS(2) PAYOUTS COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) (#) ($) SATION($)(3)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
M.J. McDonald 1999 800,000 555,000 --(4) 150,000 200,000 10,000
Chairman, President and 1998 760,000 1,536,700 432,000 150,000 -- 87,000
Chief Executive Officer 1997 728,000 1,536,700 433,125 -- -- 10,000
-----------------------------------------------------------------------------------------------------------------
J.P. Schamberger 1999 455,000 220,000 --(4) 44,000 79,000 10,000
Vice President and Chairman - 1998 436,000 633,000 172,800 44,000 -- 342,000
North & South America 1997 416,000 610,000 173,250 -- -- 10,000
Jeanswear & Workwear Coalitions
-----------------------------------------------------------------------------------------------------------------
D.G. MacFarlan 1999 455,000 220,000 --(4) 44,000 79,000 36,000
Vice President and Chairman - 1998 410,000 633,000 172,800 40,000 -- 127,000
Knitwear, Playwear & Intimate 1997 375,000 550,000 173,250 -- -- 10,000
Apparel Coalitions
-----------------------------------------------------------------------------------------------------------------
T.A. Lambeth(5) 1999 360,000 170,000 -- 34,000 66,000 10,000
Vice President - Global 1998 354,000 376,000 -- 30,000 -- 10,000
Processes 1997 340,000 466,000 -- -- -- 127,500
-----------------------------------------------------------------------------------------------------------------
T.L. Lay(6) 1999 375,000 180,000 -- 26,000 66,000 10,000
Vice President and Chairman - 1998 -- -- -- -- -- --
International Coalition 1997 -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The target number and aggregate value of performance-contingent Common Stock
units earnable by the named executive officers at December 31, 1999 were as
follows: Mr. McDonald -- 9,860, $295,800; Mr. Schamberger -- 3,916,
$117,480; Mr. MacFarlan -- 3,916, $117,480; Mr. Lambeth -- 3,242, $97,260;
Mr. Lay -- 3,242, $97,260.
(2) In 1997, the Organization and Compensation Committee changed the schedule
for granting options from December to February so that the Committee could
consider all elements of executive compensation at the same meeting.
Accordingly, no stock options were granted in fiscal 1997.
(3) The amount in this column for 1999 represents the $10,000 matching
contribution of VF under the Executive Deferred Savings Plan and expenses
associated with relocation as follows: Mr. MacFarlan -- $26,000.
(4) At fiscal year-end, Mr. McDonald held 42,389 shares of restricted stock,
having an aggregate value of $1,271,670, and Messrs. Schamberger and
MacFarlan each held 12,489 restricted shares, having an aggregate value of
$374,670, based on the closing price of VF Common Stock on December 31,
1999.
(5) Mr. Lambeth was elected Vice President - Global Processes in March 1999.
Previously, he was Vice President - European and Asian Operations.
(6) Mr. Lay was elected Vice President and Chairman - International Coalition in
March 1999. He was previously President of the Lee Division of VF Jeanswear.
11
<PAGE> 15
LONG-TERM INCENTIVE AWARDS
STOCK OPTIONS
This table sets forth for the executive officers named in this proxy
statement information regarding the grant of stock options by VF in the 1999
fiscal year and their potential realizable values. No stock appreciation rights
have been granted to employees other than limited stock appreciation rights
which become exercisable only upon a Change in Control.
<TABLE>
<CAPTION>
OPTIONS GRANTED IN THE 1999 FISCAL YEAR
- -------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS(1) OPTION TERM
- -------------------------------------------------------------------------------------------------------------------
NO. OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION 5% (PRICE 10% (PRICE
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE = $70.37) = $112.05)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
All shareholders N/A N/A $43.20 N/A $3.2 billion(2) $8.2 billion(2)
- -------------------------------------------------------------------------------------------------------------------
M.J. McDonald 150,000 7.5% $43.20 2/2009 $4,075,500 $10,327,500
J.P. Schamberger 44,000 2.2% $43.20 2/2009 1,195,500 3,029,400
D.G. MacFarlan 44,000 2.2% $43.20 2/2009 1,195,500 3,029,400
T.A. Lambeth 34,000 1.7% $43.20 2/2009 923,800 2,340,900
T.L. Lay 26,000 1.3% $43.20 2/2009 706,400 1,790,100
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All of the options were non-qualified stock options granted in February
1999, and generally became exercisable on the first anniversary of the date
of grant. In the event of certain terminations of the optionee's employment,
the option will expire on an accelerated basis, as follows: 36 months after
retirement or death; 12 months after termination due to disability; at the
end of the period severance payments are made (if any) in the case of
involuntary termination; and at the time of any voluntary termination.
(2) The aggregate value of the approximately 119.7 million outstanding shares of
Common Stock of VF on February 9, 1999, at the price of $43.20, was
approximately $5.2 billion. If the Common Stock appreciates at a compound
rate of 5% per year over ten years (the length of the option term), the
aggregate value of all such shares would be approximately $8.4 billion, an
increase of $3.2 billion for all shareholders. Similarly, if the Common
Stock appreciates at a compound rate of 10% per year over ten years, the
aggregate value of all such shares would be approximately $13.4 billion, an
increase of $8.2 billion for all shareholders. This information is provided
to indicate the total potential shareholder gain over the term of the
options compared to the potential gain shown for the options.
The following table sets forth for each of the named executive officers
information regarding stock options exercised by such officers during the 1999
fiscal year, together with the number and value of stock options held at 1999
fiscal year end, each on an aggregate basis.
12
<PAGE> 16
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN THE 1999 FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
- ----------------------------------------------------------------------------------------------------
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END(1)
------------------ -------------------
NUMBER OF (#) ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
M.J. McDonald -- -- 696,000/150,000 $1,839,400/--
J.P. Schamberger -- -- 164,000/ 44,000 369,600/--
D.G. MacFarlan -- -- 132,000/ 44,000 281,200/--
T.A. Lambeth 38,000 $1,041,200 168,000/ 34,000 349,600/--
T.L. Lay -- -- 114,000/ 26,000 258,950/--
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Market value of underlying shares at fiscal year-end based on the
year-end market price of $30.00 per share, minus the exercise price.
PERFORMANCE-CONTINGENT COMMON STOCK UNITS
This table gives information concerning the participation of the executive
officers named in this proxy statement in the Mid-Term Incentive Plan, a subplan
under the VF Stock Compensation Plan. Under this plan, the executives were
awarded performance-contingent Common Stock units which gave them the
opportunity to earn shares of VF Common Stock. Actual payout of these shares is
determined by a non-discretionary formula that compares VF's average total
shareholder return (change in Common Stock price plus reinvestment of dividends)
over the performance period to that of a peer group of companies significantly
engaged in the apparel industry. If VF's performance compares favorably to the
performance of the peer group, a varying amount of shares up to the maximum may
be awarded.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
ESTIMATED FUTURE PAYOUT UNDER
NON-STOCK PRICE-BASED PLANS(1)
- -------------------------------------------------------------------------------------------------
PERFORMANCE
NAME THRESHOLD(2)(#) TARGET(#) MAXIMUM(#) PERIOD(3)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
M.J. McDonald 2,465 4,930 9,860 1997 - 1999
2,465 4,930 9,860 1998 - 2000
2,465 4,930 9,860 1999 - 2001
J.P. Schamberger 979 1,958 3,916 1997 - 1999
979 1,958 3,916 1998 - 2000
979 1,958 3,916 1999 - 2001
D.G. MacFarlan 979 1,958 3,916 1997 - 1999
979 1,958 3,916 1998 - 2000
979 1,958 3,916 1999 - 2001
T.A. Lambeth 810 1,621 3,242 1997 - 1999
810 1,621 3,242 1998 - 2000
810 1,621 3,242 1999 - 2001
T.L. Lay 810 1,621 3,242 1997 - 1999
810 1,621 3,242 1998 - 2000
810 1,621 3,242 1999 - 2001
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) The actual number of shares, if any, that will be paid out at the
end of the applicable period cannot be determined because the shares
earned by the named executive officers will be based on VF's future
performance compared to the future performance of the peer group.
(2) If VF's performance is below the 40th percentile of the range
relative to the performance peer group, then no shares will be
earned unless VF's earnings per share in the last year of the
performance period
13
<PAGE> 17
increase by a targeted percentage, in which event the "Threshold"
number of shares may be earned. To the extent that VF's performance
exceeds the 40th percentile of the performance range of the
performance peer group, the minimum shares that will be earned is
shown in the "Threshold" column. The "Target" number of shares shown
will be earned if VF's performance equals the 50th percentile of the
performance range of the peer group, and the "Maximum" number of
shares shown will be earned if VF's performance equals the 90th
percentile of the performance range of the peer group. Varying
amounts between the threshold and target and between target and
maximum may be earned for performance at levels between the 40th and
50th or between the 50th and 90th percentiles.
(3) The Company initiated the Mid-Term Incentive Plan in 1999, with
three overlapping three-year performance periods specified. Awards
were entirely at risk based on performance during the portion of the
performance period remaining after grant. Awards generally are
intended to provide a reward and incentive for long-term
performance, as measured by total shareholder return.
FUTURE REMUNERATION
PENSION PLAN
VF maintains and contributes to the VF Corporation Pension Plan (the
"Pension Plan"), a defined benefit plan which covers all of VF's domestic
employees, including the named executive officers.
The following table reflects estimated annual benefits which would be
payable, without regard to any limitation imposed by the Internal Revenue Code
or the Employee Retirement Income Security Act of 1974 ("ERISA"), under the
Pension Plan upon retirement of individuals in the specified remuneration and
years of service classifications. Benefits under the Pension Plan are determined
based on average salary and bonus compensation from January 1, 1999, with no
less than five years immediately preceding retirement included in the average.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
ASSUMED AVERAGE
ANNUAL COMPENSATION ESTIMATED ANNUAL BENEFITS BASED ON SERVICE OF:
- -----------------------------------------------------------------------
10 YEARS 15 YEARS 20 YEARS 25 YEARS OR MORE
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
$600,000....... $106,000 $159,000 $212,000 $ 265,000
800,000....... 142,000 213,000 284,000 355,000
1,100,000..... 196,000 294,000 392,000 490,000
1,250,000..... 223,000 334,000 446,000 557,000
1,500,000..... 268,000 402,000 536,000 670,000
2,000,000..... 358,000 537,000 716,000 895,000
2,250,000..... 403,000 605,000 806,000 1,007,000
2,500,000..... 448,000 672,000 896,000 1,120,000
2,750,000..... 493,000 739,000 986,000 1,232,000
</TABLE>
- --------------------------------------------------------------------------------
Benefits which are not payable under the Pension Plan because of certain
Code and/or ERISA limitations are provided pursuant to VF's Supplemental
Executive Retirement Plan (see below). The amounts in the table have been
computed on a straight life annuity basis and include entitlements from the
Pension Plan and the Supplemental Executive Retirement Plan, as applicable.
Each of the named executive officers has credited years of service under
the Pension Plan as follows: Mr. McDonald -- 17 years; Mr. Schamberger -- 27
years; Mr. MacFarlan --
14
<PAGE> 18
21 years; Mr. Lambeth -- 31 years; and Mr. Lay -- 29 years. The Pension Plan
provides that if it is "Overfunded" upon the occurrence of a "Change in Control"
of VF (as those terms are defined in the Pension Plan), certain Pension Plan
assets in excess of those needed to meet expected benefit entitlements are to be
used fully and irrevocably to vest each participant's accrued benefit and
provide increases in accrued benefits for active participants, retired
participants, surviving spouses and beneficiaries and terminated vested
participants. The Pension Plan is considered "Overfunded" to the extent that the
fair market value of Pension Plan assets exceeds Pension Plan liabilities
(primarily the actuarial present value of Pension Plan benefit entitlements).
Had there been a Change in Control as of the end of VF's 1999 fiscal year,
the named executive officers would have estimated annual benefits vested
(excluding any allocation of excess pension assets to participants) under the
Pension Plan (without regard to Code and/or ERISA limitations) in approximately
the following amounts: Mr. McDonald -- $474,000; Mr. Schamberger -- $225,000;
Mr. MacFarlan -- $186,000; Mr. Lambeth -- $222,000; and Mr. Lay -- $179,000.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Supplemental Executive Retirement Plan (the "SERP") is an unfunded,
non-qualified plan for eligible participants designed (i) to restore benefits
lost under the Pension Plan due to (a) the maximum legal limit of pension
benefits imposed under ERISA and the Code and (b) an election to defer
compensation under VF's Deferred Compensation Plan and/or Executive Deferred
Savings Plan and (ii) to supplement the Pension Plan benefits of those senior
executives whose tenure may be relatively short by virtue of having joined VF in
mid-career or who lost pension benefits with former employers as a result of an
early separation from service.
Eligibility to receive a supplemental benefit under the SERP is
discretionary with the Board of Directors, and the form of benefit is to be
determined on an individual basis by the Compensation Committee of the Board of
Directors.
At the end of VF's 1999 fiscal year, the Supplemental Annual Benefit
Determinations approved by the Compensation Committee and the Board of Directors
provided for benefits to the named executive officers as follows:
(1) Mr. McDonald's combined retirement income from the Pension Plan and the
SERP will be an amount equal to his Pension Plan benefit calculated (a) as if he
had 25 credited years of service under the Pension Plan, (b) without regard to
any limitation imposed by the Code or ERISA, (c) without regard to his
participation in the Deferred Compensation Plan or the Executive Deferred
Savings Plan and (d) on the basis of the average of the highest three years of
his salary and bonus compensation during the five-year period immediately
preceding retirement.
(2) Each of Mr. Schamberger, Mr. MacFarlan, Mr. Lambeth and Mr. Lay's
combined retirement income from the Pension Plan and the SERP will be an amount
equal to his Pension Plan benefit calculated (a) without regard to the annual
compensation limitation imposed by the Code or ERISA, (b) without regard to his
participation in the Deferred Compensation Plan or the Executive Deferred
Savings Plan, and (c) on the basis of the
15
<PAGE> 19
average of the highest three years of his salary and bonus compensation during
the five-year period immediately preceding retirement.
SERP benefits will become funded upon a "Change in Control" of VF, as
defined in the Change in Control Agreements described below. In this regard, VF
has established a trust with UMB Bank, N.A., as Trustee (the "SERP Trust"). The
SERP Trust may be funded by VF at any time to secure payment of certain SERP
benefits not otherwise paid by VF. Upon a Change in Control, VF is required to
fund the SERP Trust, which becomes irrevocable.
Had there been a Change in Control as of March 7, 2000, the estimated
annual benefits vested under the SERP and payable beginning at age 65 for each
of the named executive officers would have been as follows: Mr.
McDonald -- $977,000; Mr. Schamberger -- $247,000; Mr. MacFarlan -- $205,000;
Mr. Lambeth -- $255,000; and Mr. Lay -- $207,000.
CHANGE IN CONTROL ARRANGEMENTS
CHANGE IN CONTROL AGREEMENTS
VF has entered into Change in Control Agreements with certain of its
executives (the "Agreements"). The Agreements provide severance benefits to the
designated executives in the event their employment is terminated within a
specified period after a "Change in Control" of VF, as such term is defined in
the Agreements.
The Agreements generally have a term of three years with automatic annual
extensions. The Agreements may be terminated, subject to the limitations
outlined below, by VF upon notice to the executive and are automatically
terminated if the executive's employment with VF ceases. VF may not terminate
the Agreements (a) if it has knowledge that any third person has taken steps or
has announced an intention to take steps reasonably calculated to effect a
Change in Control or (b) within a specified period of time after a Change in
Control occurs. Severance benefits payable to the executive officers named in
this proxy statement include the lump sum payment of an amount equal to 2.99
times the executive's average annual compensation for the five taxable years
ending prior to the date on which a Change in Control of VF occurred.
There are no limitations on the total payments to be made to an executive
in the event of termination of employment upon a Change in Control to prevent
such payments from constituting excess "parachute payments" (as that term is
defined in the Code). Executives also receive additional payments under the
Agreements to reimburse them for any increased taxes, penalties and interest
resulting from severance payments under the Agreements by reason of such
payments being treated as excess parachute payments.
In addition, the Agreements also provide for funding of the severance
benefits payable upon a Change in Control. In this regard, VF has established a
Trust with UMB Bank, N.A., as Trustee (the "CIC Trust"). Upon a Change in
Control, VF will fund the CIC Trust in an amount equal to the severance benefits
payable under the Agreements. The CIC Trust secures payment to the executives of
severance benefits payable under the Agreements to the extent not paid by VF.
(Also see Future Remuneration -- Supplemental Executive Retirement Plan.)
16
<PAGE> 20
Had there been a Change in Control as of March 7, 2000, approximate
payments under the Agreements upon severance of the named executive officers
would have been as follows (excluding applicable reimbursements for increased
taxes, penalties and interest, if any): Mr. McDonald -- $5,761,000; Mr.
Schamberger -- $2,969,000; Mr. MacFarlan -- $2,648,000; Mr.
Lambeth -- $2,038,000; and Mr. Lay -- $2,017,000.
Under the terms of the Agreements, the executives also would be entitled to
supplemental benefits, such as accelerated rights to exercise stock options,
accelerated lapse of restrictions on restricted stock and restricted stock
units, lump sum payments under the VF SERP, continued life and medical insurance
for specified periods after termination, entitlements under retirement plans and
a lump sum payment upon attaining retirement age. Upon a Change in Control, VF
also will pay all reasonable legal fees and related expenses incurred by the
executives as a result of the termination of their employment or in obtaining or
enforcing any right or benefit provided by the Agreements.
DEFERRED SAVINGS PLANS
VF maintains an Executive Deferred Savings Plan (the "EDS Plan"), which is
an unfunded, non-qualified deferred compensation arrangement for a select group
of management and highly compensated employees of VF and certain of its
subsidiaries.
The EDS Plan permits an eligible employee to defer the receipt of a
specified portion of his or her compensation until the date of retirement,
disability, death or termination of employment. VF matches 50% of the first
$20,000 deferred annually by each participant. Upon a Change in Control of VF,
matching contributions become fully vested and VF is required to fully fund the
amount accrued for each employee.
The named executive officers participate in the leveraged Employee Stock
Ownership Plan (the "ESOP") feature of the VF Tax-Advantaged Savings Plan for
Salaried Employees (the "TAS Plan"). The TAS Plan provides that upon a Change in
Control of VF, VF immediately will make a contribution to the TAS Plan in an
amount sufficient to repay the balance of all outstanding "Acquisition Loans"
used by the ESOP to purchase Series B Stock, and unallocated shares of Series B
Stock will be allocated to participants' accounts in proportion to their
compensation. At December 31, 1999, 462,052 shares were unallocated under the
ESOP.
17
<PAGE> 21
PERFORMANCE GRAPH
The following graph compares VF's performance, as measured by the change in
price of its Common Stock, plus reinvested dividends, with the Standard & Poor's
("S&P") 500 stock index and the S&P Textile (Apparel Manufacturers) stock index
for the five years ended December 31, 1999.
<TABLE>
<CAPTION>
VFC S&P 500 S&P TEXTILE
--- ------- -----------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 111.36 137.58 112.31
1996 145.97 169.17 154.30
1997 204.88 225.60 166.40
1998 210.16 290.08 144.00
1999 137.68 351.12 107.47
</TABLE>
OVER A FIVE-YEAR PERIOD, VF'S TOTAL RETURN OF 37.68% COMPARES WITH 251.12% AND
7.47% FOR THE S&P 500 AND S&P TEXTILE (APPAREL MANUFACTURERS) INDICES,
RESPECTIVELY.
18
<PAGE> 22
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
Shown below are persons known by VF to have voting power and/or dispositive
power over more than 5% of its Common Stock or Series B Stock, as well as
certain other information, all as of March 7, 2000, except as otherwise
indicated in the footnotes below.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
BENEFICIAL OWNER AMOUNT OF PERCENT
AND NATURE OF OWNERSHIP BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock
Ursula F. Fairbairn, M. Rust Sharp and PNC Bank, N.A., P.O.
Box 7648, Philadelphia, PA 19101, as Trustees under Deeds of
Trust dated August 21, 1951(2 3 4).......................... 13,945,336 shares 12.1%
Ursula F. Fairbairn, M. Rust Sharp and PNC Bank, N.A., P.O.
Box 7648, Philadelphia, PA 19101, as Trustees under the Will
of John E. Barbey, deceased(2 3 4).......................... 8,977,952 shares 7.8%
-----------------
Total........................................ 22,923,288 shares 19.9%
Sanford C. Bernstein & Co., Inc. 767 Fifth Avenue New York,
NY 10153(5)................................................. 13,417,743 shares 11.7%
Capital Group International, Inc. 11100 Santa Monica
Boulevard Los Angeles, CA 90025(6).......................... 9,646,060 shares 8.4%
Series B ESOP Convertible Preferred Stock
Fidelity Management Trust Company, 82 Devonshire Street,
H11D, Boston, MA 02109-3614, as Trustee of VF's
Tax-Advantaged Savings Plan for Salaried Employees.......... 1,669,444 shares 100%
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) None of the shares in this column is known to be a share with respect to
which any of the listed owners has the right to acquire beneficial
ownership, as specified in Rule 13d-3(d)(1) under the 1934 Act.
(2) Mrs. Fairbairn and Mr. Sharp are directors of VF.
(3) Present life tenants and remaindermen under the Will are various. All
present life tenants and all or most future life tenants and/or remaindermen
under the Deeds of Trust are, or will be, descendants of John E. Barbey. No
individual life tenant or remainderman may, within 60 days, attain
beneficial ownership, as specified in Rule 13d-3(d)(1) under the 1934 Act,
which exceeds 5% of the outstanding shares.
(4) Including shares in the above table, PNC Bank, N.A. and its affiliates held
a total of 23,091,694 shares (20.1%) of the class outstanding of the VF
Common Stock in various trust and agency accounts on December 31, 1999. As
to all such shares, the Bank and its affiliates had sole voting power over
159,722 shares, shared voting power over 22,931,022 shares, sole dispositive
power over 33,836 shares and shared dispositive power over 22,975,822
shares.
(5) The information in the above table concerning Sanford C. Bernstein & Co.,
Inc., a registered investment advisor/broker dealer, was obtained from a
Schedule 13G filed with the Securities and Exchange Commission on February
8, 2000. At December 31, 1999, Sanford C. Bernstein & Co., Inc. had sole
voting power over 6,676,373 shares, shared voting power over 1,488,199
shares and sole dispositive power over 13,417,743 shares.
(6) The information in the above table concerning Capital Group International,
Inc., the parent company of five investment management companies, was
obtained from a Schedule 13G filed with the Securities and Exchange
Commission on February 10, 2000. At December 31, 1999, Capital Group
International, Inc. had sole voting power over 8,975,960 shares and sole
dispositive power over 9,646,060 shares.
19
<PAGE> 23
COMMON STOCK OWNERSHIP OF MANAGEMENT
The following table reflects, as of March 7, 2000, the total beneficial
ownership of VF Common Stock by each director and nominee for director, and each
executive officer, and by all directors and executive officers as a group. Each
named individual and all members of the group exercise sole voting and
dispositive power, except as indicated in the footnotes. Share ownership of Mrs.
Fairbairn and Mr. Sharp includes 22,923,288 shares reported under Certain
Beneficial Owners, as to which they share voting and dispositive power with PNC
Bank, N.A., as Trustees (see page 19).
<TABLE>
<CAPTION>
TOTAL SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1 2 3 4)
- ------------------------------------------------------------------------------------------
<S> <C>
Directors & Nominee:
Erskine B. Bowles......................................... 5,206
Robert D. Buzzell......................................... 20,200
Edward E. Crutchfield..................................... 35,034
Ursula F. Fairbairn....................................... 22,950,104
Barbara S. Feigin......................................... 35,662
George Fellows............................................ 10,600
Daniel R. Hesse........................................... 78
Robert J. Hurst........................................... 32,551
W. Alan McCollough........................................ --
M. Rust Sharp............................................. 22,948,814
L. Dudley Walker.......................................... 64,600
Named Executive Officers:
Mackey J. McDonald........................................ 935,038(5)
John P. Schamberger....................................... 238,223(6)
Daniel G. MacFarlan....................................... 206,112(6)
Timothy A. Lambeth........................................ 230,698
Terry L. Lay.............................................. 144,497
All Directors and Executive Officers
as a Group (20 persons)................................... 25,224,961
- ------------------------------------------------------------------------------------------
</TABLE>
(1) Shares owned include shares held in trusts as of December 31, 1999 in
connection with employee benefit plans, as to which the following
participants share voting power but have no present dispositive power: Mr.
McDonald -- 23,509 shares; Mr. MacFarlan -- 9,494 shares; Mr. Lay -- 1,257;
and all directors and executive officers as a group -- 42,869 shares. Does
not include shares of Series B Stock held in trust in connection with an
employee benefit plan, as to which participants also share voting power but
have no present dispositive power (and no power to direct conversion into
Common Stock), as follows: Mr. McDonald -- 220 shares; Mr. Schamberger --
336 shares; Mr. MacFarlan -- 292 shares; Mr. Lambeth -- 322 shares; Mr.
Lay -- 312 shares; and all executive officers as a group -- 2,382 shares.
Shares owned also include shares held as of December 31, 1999 in trust in
connection with employee benefit plans, as to which the following
participants have no dispositive power and shared voting power: Mr.
McDonald -- 1,142 shares; Mr. Lay -- 1,048 shares; and Mr.
MacFarlan -- 6,419 shares; and all executive officers as a group -- 10,653
shares. Shares owned also include shares held in a trust in connection with
the VF Deferred Savings Plan for Non-Employee Directors as to which the
following directors have shared voting power but do not have dispositive
power: Mr. Bowles -- 206 shares; Mrs. Fairbairn -- 2,843 shares; Mrs.
Feigin -- 1,862 shares; Mr. Hesse -- 78 shares; Mr. Hurst -- 5,551 shares;
and Mr. Sharp -- 1,326 shares.
(2) Shares owned also include the following number of stock options that are
exercisable as of March 7, 2000, or within 60 days thereafter: Mr.
McDonald -- 846,000; Mr. Schamberger -- 208,000; Mr. MacFarlan -- 176,000;
Mr. Lambeth -- 202,000; Mr. Lay -- 140,000; Mr. Buzzell -- 18,600; Mr.
Crutchfield -- 9,600; Mrs. Fairbairn -- 22,200; Mrs. Feigin -- 30,000; Mr.
Fellows -- 9,600; Mr. Hurst -- 22,200; Mr. Sharp -- 22,200; and Mr.
Walker -- 9,600.
20
<PAGE> 24
(3) Other than Mrs. Fairbairn and Mr. Sharp, who are deemed to beneficially own
19.9% of the Common Stock outstanding, the percentage of shares owned
beneficially by each named person does not exceed 1% of the Common Stock
outstanding. The percentage of shares owned beneficially by all directors
and executive officers as a group was 22% of the Common Stock outstanding.
(4) Shares owned include units of VF Common Stock equivalents that are deferred
under the VF Stock Compensation Plan, as follows: Mr. McDonald -- 6,667; Mr.
Schamberger -- 2,648; Mr. Lambeth -- 2,192; and Mr. Lay -- 2,192. These
units are fully vested and will be paid out in shares of Common Stock upon
expiration of the deferral period, including upon certain types of
termination of service. Holders of these units do not have current voting or
dispositive power with respect to the shares deliverable in settlement of
these units.
(5) Mr. McDonald is also a Director. Shares owned include 42,389 shares of
restricted stock over which Mr. McDonald holds voting power but not
dispositive power.
(6) Includes 12,489 shares of restricted stock over which the officer holds
voting power but not dispositive power.
INDEPENDENT ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has
approved the selection of the firm of PricewaterhouseCoopers LLP to serve as
VF's independent accountants for the current fiscal year. One or more
representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting of Shareholders to make a statement if they desire to do so and to be
available to respond to appropriate questions.
OTHER INFORMATION
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 intend to vote the same according to their
best judgment. At February 1, 2000, VF had not received notice of any matter to
be presented at the Meeting other than as described in this proxy statement.
The enclosed proxy may be revoked by a later-dated proxy, by giving notice
to the Secretary of VF in writing prior to the Meeting, by personal notification
at the Meeting prior to the voting, or through Internet or telephone voting.
Your latest Internet or telephone vote is the one that is counted.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires directors and certain officers of
VF, as well as persons who own more than 10% of a registered class of VF's
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. VF believes that during the
preceding year all Reporting Persons timely complied with all filing
requirements applicable to them.
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 the proxy statement,
21
<PAGE> 25
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 $10,000, 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.
2001 SHAREHOLDER PROPOSALS
In order for shareholder proposals for the 2001 Annual Meeting of
Shareholders to be eligible for inclusion in VF's proxy statement, they must be
received by VF at its principal office in Greensboro, North Carolina on or
before November 23, 2000. In order for shareholder proposals that are not
intended to be included in VF's proxy statement but which are to be presented at
the 2001 Annual Meeting of Shareholders to be timely, VF must receive notice of
such at its principal office in Greensboro, North Carolina on or before February
7, 2001.
By Order of the Board of Directors
Candace S. Cummings
Vice President -- Administration,
General Counsel and Secretary
Dated: March 23, 2000
22
<PAGE> 26
PROXY SOLICITATION/VOTING INSTRUCTION CARD
VF CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING ON APRIL 25, 2000
The undersigned hereby appoints M.J. McDonald and C.S. Cummings, and each
P of them acting individually, proxies of the undersigned, with full power
R of substitution, to represent and vote, as directed on the reverse side of
O this card, all shares of Common Stock of VF Corporation held of record by
X the undersigned on March 7, 2000, at the Annual Meeting of Shareholders of
Y VF Corporation to be held on April 25, 2000, and at any adjournments
thereof, and, in their discretion, upon such other matters not specified
as may come before said meeting. The undersigned hereby revokes any prior
proxies.
ELECTION OF DIRECTORS Change of Address and Comments
Nominees: -------------------------------
For a 3-year term: 01 Erskine B. Bowles -------------------------------
02 Robert J. Hurst
03 W. Alan McCollough -------------------------------
04 M. Rust Sharp
-------------------------------
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)
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.
CONTINUED AND
TO BE SIGNED
ON REVERSE SIDE
- --------------------------------------------------------------------------------
[ ] FOLD AND DETACH [ ]
VOTING INSTRUCTIONS FOR THE VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN
FOR SALARIED EMPLOYEES (THE "SALARIED 401(K)"):
This card constitutes voting instructions to Fidelity Management Trust Company,
the Trustee for the Salaried 401(k), to vote in person or by proxy any shares of
Common Stock and Series B ESOP Convertible Preferred Stock allocated to the
undersigned as of March 7, 2000 under the Salaried 401(k), at the Annual Meeting
of Shareholders of VF Corporation to be held on April 25, 2000, and also
constitutes voting instructions to the Trustee for a proportionate number of
shares of Common Stock and Series B ESOP Convertible Preferred Stock in the
Salaried 401(k) 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 Salaried 401(k).
VOTING INSTRUCTIONS FOR THE VF CORPORATION TAX-ADVANTAGED SAVINGS PLAN FOR
HOURLY EMPLOYEES (THE "HOURLY 401(K)") AND/OR THE BLUE BELL SAVINGS, PROFIT
SHARING AND RETIREMENT PLAN (THE "BLUE BELL 401(K)"):
This card constitutes voting instructions to Fidelity Management Trust Company,
the Trustee for the Hourly 401(k) and for the Blue Bell 401(k), to vote in
person or by proxy any shares of Common Stock allocated to the undersigned as of
March 7, 2000 under the Hourly 401(k) and/or the Blue Bell 401(k), at the Annual
Meeting of Shareholders of VF Corporation to be held on April 25, 2000, and at
any adjournments thereof, and also constitutes voting instructions to the
Trustee for a proportionate number of shares of Common Stock in the Hourly
401(k) and/or the Blue Bell 401(k), as the case may be, 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 either plan in the same
proportion as the shares for which instructions were received from other
participants in such plan.
VOTING REQUEST FOR THE VF EXECUTIVE DEFERRED SAVINGS PLAN (THE "EDSP"):
This card constitutes a voting request to the VF Corporation Pension Plan
Committee (the "Committee"), Administrator of the EDSP to vote the VF
Corporation shares held by the trustee of the grantor trust relating to the EDSP
and credited to the participant's EDSP account as of March 7, 2000, at the
Annual Meeting of Shareholders to be held on April 25, 2000, 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.
SEE REVERSE
SIDE
<PAGE> 27
x Please mark your 0570
vote as in this
example.
SHARES SUBJECT TO THIS PROXY/VOTING INSTRUCTION CARD WILL BE VOTED IN THE MANNER
INDICATED BELOW, WHEN THE CARD IS PROPERLY EXECUTED AND RETURNED. IF NO
INDICATION IS MADE, SUCH SHARES WILL BE VOTED FOR ELECTION OF ALL NOMINEES AS
DIRECTORS. FOR PARTICIPANTS IN VF CORPORATION EMPLOYEE BENEFIT PLANS: THIS CARD
WILL BE TREATED AS VOTING INSTRUCTIONS TO THE PLAN TRUSTEES OR ADMINISTRATOR, AS
EXPLAINED ON THE DETACHABLE PORTION OF THE CARD.
Directors recommend a vote FOR all nominees.
FOR WITHHELD
1. Election of [ ] [ ] I will attend the meeting. [ ] Change of [ ]
Directors. address/
comments
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
Please sign, date and return your proxy promptly
in the enclosed envelope. No postage required if
mailed in the United States.
NOTE: Please sign name(s) exactly as printed
hereon. Joint owners should each sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give full title as
such.
--------------------------------------------------
--------------------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
[ ] FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY/ [ ]
VOTING INSTRUCTION CARD BY MAIL
[logo omitted]
Dear Shareholder:
VF Corporation encourages you to take advantage of one of the new and
convenient ways to vote your shares. You can vote shares 24 hours a day, 7 days
a week, using either a touch-tone telephone or through the Internet. To vote
your shares by telephone or the Internet, you must use the control number
printed in the box above, just below the perforation. The control number must be
used to access the system. YOUR INTERNET OR TELEPHONE VOTE MUST BE RECEIVED BY
11:59 P.M., EASTERN DAYLIGHT TIME, ON APRIL 24, 2000.
1. To vote on the Internet, go to the web site http://www.eproxyvote.com/vfc.
2. To vote over the telephone, dial 1-877-PRXVOTE (1-877-779-8683). Outside of
the U.S. and Canada, shareholders should call 1-201-536-8073.
Your telephone or Internet vote authorizes the proxies named on the above
proxy/voting instruction card in the same manner as if you had marked, signed,
dated, and returned the proxy/voting instruction card. IF YOU CHOOSE TO VOTE
TELEPHONICALLY OR THROUGH THE INTERNET, THERE IS NO NEED TO MAIL BACK YOUR
PROXY/VOTING INSTRUCTION CARD.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
<PAGE> 28
VOTING REQUEST
TO: VF CORPORATION PENSION PLAN COMMITTEE (THE "COMMITTEE")
ADMINISTRATOR OF THE VF DEFERRED SAVINGS PLAN FOR NON-EMPLOYEE
DIRECTORS (THE "PLAN")
As a participant in the Plan with certain Deferrals being credited with
gains and losses as if invested in the VF Corporation Common Stock Fund, and in
accordance with the Committee's procedures permitting each such participant the
right to request that the VF shares held by the trustee of the grantor trust
relating to the Plan and credited to the participant's Plan account at the
record date be voted in a specific manner, I hereby request that my VF shares so
credited be voted, in person or by proxy, in the manner shown below:
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE FOR THE
ELECTION OF DIRECTORS.
Nominees: For a 3-year term:
Erskine B. Bowles; W. Alan McCollough; Robert J.
Hurst; M. Rust Sharp
[ ] VOTE FOR all nominees listed above, [ ] VOTE WITHHELD
except vote withheld from individual from all nominees
nominees as follows:
______________________________
______________________________
I understand that if I return this form properly signed but do not otherwise
specify my choices, this will be deemed to be a request to vote FOR the Election
of Directors. I further understand that this Committee, pursuant to its
discretionary powers under the Plan, may reject this request and direct the
trustee to vote the shares in a contrary manner.
Signature of Participant:
_________________________
Dated: ____________, 2000
PLEASE SIGN, DATE AND RETURN
THESE INSTRUCTIONS PROMPTLY
IMPORTANT: Please sign and date IN THE ENCLOSED ENVELOPE. NO
these instructions exactly as your POSTAGE REQUIRED IF MAILED IN
name appears hereon. THE UNITED STATES.
