[VF CORPORATION LOGO]
VF CORPORATION
March 17, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
VF Corporation, which will be held on Tuesday, April 20, 1999, at the Joseph S.
Koury Convention Center, Guilford Ballroom, Holiday Inn Four Seasons, 3121 High
Point Road at Interstate 40, 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 three directors,
(ii) re-approve certain material terms of the Corporation's Executive Incentive
Compensation Plan to preserve the full deductibility for Federal income tax
purposes of payments made under the Plan (the "EIC Plan Proposal"), (iii)
approve amendments to the Corporation's 1996 Stock Compensation Plan to increase
the maximum number of shares of restricted stock or restricted stock units that
may be awarded to any individual in any calendar year and increase the number of
shares of Common Stock authorized for issuance under the Plan by 2.9 million
shares and re-approve certain other material terms of the Plan (the "Stock
Compensation Plan Proposal") and (iv) 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, FOR the EIC Plan Proposal and FOR the Stock
Compensation Plan Proposal. 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. You are requested to sign, date and mail the enclosed
proxy promptly.
Your interest and participation in the affairs of the Corporation are most
appreciated.
Sincerely,
/s/ M.J. McDonald
M.J. McDonald
Chairman, President and
Chief Executive Officer
[VF CORPORATION LOGO]
VF CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 20, 1999
March 17, 1999
To the Shareholders of VF CORPORATION:
The Annual Meeting of Shareholders of VF Corporation will be held at the
Joseph S. Koury Convention Center, Guilford Ballroom, Holiday Inn Four Seasons,
3121 High Point Road at Interstate 40, Greensboro, North Carolina, on Tuesday,
April 20, 1999, at 10:30 a.m., for the following purposes:
(1) to elect three directors to hold office until the 2002 Annual Meeting
of Shareholders;
(2) to re-approve certain material terms of the Corporation's Executive
Incentive Compensation Plan so that compensation paid in accordance
with the Plan will continue to be fully deductible by the Corporation
for Federal income tax purposes;
(3) to approve amendments to the Corporation's 1996 Stock Compensation Plan
to increase the maximum number of shares of restricted stock or
restricted stock units that may be awarded annually to any participant
to 50,000 and increase the number of shares of Common Stock available
for future grants by 2.9 million shares and to re-approve certain other
material terms of the Plan relating to eligibility and performance
goals; and
(4) to transact such other business as may properly come before the meeting
and at any adjournments thereof.
A copy of the Annual Report for 1998 is enclosed for your information.
Only shareholders of record as of the close of business on March 2, 1999
will be 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 SIGN, DATE AND PROMPTLY
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
PROXY STATEMENT
FOR THE 1999 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 20, 1999 and at any
adjournment or adjournments of the meeting (the "Meeting") for the purposes
described in the foregoing notice of the Meeting. Proxies validly executed by
shareholders and received by the Corporation prior to the Meeting will be voted
in accordance with the instructions contained thereon. If no instructions are
given, a proxy will be voted (1) for the election of the three nominees proposed
for election as directors, (2) for re-approval of certain material terms of the
Corporation's Executive Incentive Compensation Plan (the "EIC Plan Proposal"),
and (3) for approval of amendments to the Corporation's 1996 Stock Compensation
Plan to increase the maximum number of shares of restricted stock or restricted
stock units that may be awarded annually to any participant to 50,000 and
increase the number of shares of Common Stock available for future grants by 2.9
million shares, and re-approval of certain other material terms of the Plan
relating to eligibility and performance goals (the "Stock Compensation Plan
Proposal").
The securities entitled to vote at the Meeting consist of shares of Common
Stock and Series B ESOP Convertible Preferred Stock ("Series B Stock") of the
Corporation. At the close of business on March 2, 1999, there were 121,512,225
outstanding shares consisting of 119,752,106 shares of Common Stock and
1,760,119 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 2, 1999 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. The affirmative vote of a majority of the votes cast at
the Meeting is required to approve the EIC Plan Proposal and the Stock
Compensation Plan Proposal. Withheld votes, abstentions and broker non-votes
will not be taken into account in determining the outcome of the election of
directors, the EIC Plan Proposal or the Stock Compensation Plan Proposal.
All share amounts in this proxy statement reflect the two-for-one split of
the Corporation's Common Stock that was effective November 24, 1997.
A copy of the Corporation's Annual Report for the fiscal year ended January
2, 1999 accompanies this proxy statement. No material contained in the Annual
Report is to be considered a part of the proxy solicitation material.
The mailing address of the Corporation's executive office is P.O. Box
21488, Greensboro, North Carolina 27420. The approximate date on which this
proxy statement and the form of proxy were first mailed or given to security
holders was March 17, 1999.
1
ELECTION OF DIRECTORS
The three persons listed below have been nominated by the Board of
Directors to serve as directors until the 2002 Annual Meeting. In accordance
with the Corporation's tenure policy, William E. Pike will not be standing for
reelection. Also, in October 1998 Lawrence R. Pugh resigned his position as a
director and as Chairman of the Board of Directors. The Corporation acknowledges
the outstanding service rendered by Mr. Pike since his election as a director in
1972 and by Mr. Pugh as its Chief Executive Officer from 1982 to 1996 and as its
Chairman of the Board of Directors until October 1998.
It is the intention of the persons named in the accompanying form of proxy
to vote such proxy for the election as directors of the following nominees. In
the event that any nominee is unable to serve or will not serve as a director,
it is intended that 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.
- ------------------------------------------------------------------------------------------
YEAR IN WHICH
SERVICE AS A
NAME PRINCIPAL OCCUPATION DIRECTOR BEGAN
- ------------------------------------------------------------------------------------------
To Serve Until the
2002 Annual Meeting
Ursula F. Fairbairn, 56............ Executive Vice President -- Human
Resources & Quality,
American Express Company............ 1994
Barbara S. Feigin, 61.............. Consultant to
Grey Advertising Inc................ 1987
Mackey J. McDonald, 52............. Chairman of the Board, President,
and Chief Executive Officer
of the Corporation.................. 1993
- ------------------------------------------------------------------------------------------
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 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 to Grey Advertising Inc. where she served as
Executive Vice President and Worldwide Director of Strategic Services from 1983
to 1999. Mrs. Feigin also serves as a director of Circuit City Stores, Inc. She
is a member of the Audit, Nominating and Organization and Compensation
Committees of the Board of Directors.
Mr. McDonald joined the Corporation's Lee subsidiary in 1983. He served in
various managerial positions with the Corporation's subsidiaries until 1991 when
he was named a Group Vice President of the Corporation. In 1993, Mr. McDonald
was elected President and a director of the Corporation. Effective January 1,
1996, Mr. McDonald also assumed the position of Chief Executive Officer. He was
elected Chairman of the Board of Directors effective October 1, 1998. He is a
director of First Union Corporation and Hershey Foods
2
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.
- ------------------------------------------------------------------------------------------
YEAR IN WHICH
SERVICE AS A
NAME PRINCIPAL OCCUPATION DIRECTOR BEGAN
- ------------------------------------------------------------------------------------------
Directors Whose Terms
Expire at the 2001
Annual Meeting
Robert D. Buzzell, 65.............. Distinguished Visiting Professor,
Georgetown University,
and Professor Emeritus,
Harvard Business School............. 1983
Edward E. Crutchfield, 57.......... Chairman and Chief Executive
Officer, First Union Corporation.... 1992
George Fellows, 56................. President and Chief Executive
Officer, Revlon, Inc................ 1997
- ------------------------------------------------------------------------------------------
Dr. Buzzell has served as Distinguished Visiting Professor at Georgetown
University since June 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 September 1993 to June
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 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. The Corporation 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 Audit
and Finance Committees of the Board of Directors.
Mr. Fellows is the President and Chief Executive Officer of Revlon, Inc.
and of Revlon Consumer Products Corporation, positions he has held since January
1997. He was President and Chief Operating Officer of Revlon, Inc. and Revlon
Consumer Products Corporation from November 1995 until January 1997 and has been
a director of Revlon, Inc. since November 1995 and a Director of Revlon Consumer
Products Corporation since 1994. Mr. Fellows was Senior Executive Vice President
of Revlon, Inc. and of Revlon Consumer Products Corporation and President and
Chief Operating Officer of Revlon, Inc.'s Consumer Group from February 1993
until November 1995. He is a member of the Audit and Organization and
Compensation Committees of the Board of Directors.
3
- ------------------------------------------------------------------------------------------
YEAR IN WHICH
SERVICE AS A
NAME PRINCIPAL OCCUPATION DIRECTOR BEGAN
- ------------------------------------------------------------------------------------------
Directors Whose Terms
Expire at the 2000
Annual Meeting
Robert J. Hurst, 53................ Vice Chairman,
Goldman, Sachs & Co................. 1994
M. Rust Sharp, 58.................. Of Counsel,
Pepper Hamilton LLP (Attorneys)..... 1984
L. Dudley Walker, 68............... Chairman of the Board,
VF Knitwear, Inc.................... 1984
- ------------------------------------------------------------------------------------------
Mr. Hurst is Vice Chairman and member of the Board of Directors and
Management Committee of Goldman, Sachs & Co. (an international investment
banking and securities firm). The Corporation 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. Sharp has been Of Counsel to Pepper Hamilton LLP, a national law firm
headquartered in Philadelphia, Pennsylvania, since December 1996. He was
previously a partner with the law firm of Clark, Ladner, Fortenbaugh & Young, a
Philadelphia, Pennsylvania law firm. Pepper Hamilton LLP provides legal services
to the Corporation. Mr. Sharp is a director of Pennock Company, a national
wholesale florist. 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.)
Mr. Walker served as President and Chief Executive Officer of
Bassett-Walker, Inc., a wholly-owned subsidiary of the Corporation, from 1960 to
1987; he has been a director of Bassett-Walker since 1952 and Chairman of its
Board since 1978. As of January 3, 1998, Bassett-Walker was renamed VF Knitwear,
Inc. Mr. Walker also serves as a director of Hooker Furniture Corp. He is a
member of the Pension Advisory Committee of the Board of Directors.
DIRECTORS' COMPENSATION
Each director other than Mr. McDonald is paid 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 the Corporation, does not receive
any compensation in addition
4
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 the Corporation's Common Stock under the VF
Deferred Savings Plan for Non-Employee Directors. All Common Stock equivalent
units receive dividend equivalents. Deferred sums are payable to the participant
upon termination of service or such later date specified in advance by the
participant. Five directors elected to defer compensation in 1998.
Under the Corporation's 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). Stock
options are granted to directors annually. On February 10, 1998, each director
other than Mr. McDonald was granted a non-qualified option for 4,800 shares at
an exercise price of $43.30 per share. Such options 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 the Corporation
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 the Corporation's matching gift
program for institutions of higher learning and National Public Television and
Radio up to an aggregate of $10,000 per year.
The Corporation has never provided pension, medical or life insurance
benefits to its non-employee directors.
BOARD MEETINGS AND COMMITTEES
During 1998, there were six 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.
Consistent with what it perceives to be good principles of corporate
governance, the Corporation's historic practice has been to require that the
majority of its Board consists of directors who have never served as employees
of the Corporation, currently seven of nine directors. 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 has primary responsibility to review
accounting procedures and methods employed in connection with audit programs and
related management policies. Its duties include (1) selecting the independent
auditors for the Corporation, (2) reviewing the scope of the audit to be
conducted by them, (3) meeting with the independent auditors concerning the
results of their audit and (4) overseeing the scope and adequacy of the
Corporation's system of internal accounting controls. The Audit Committee is the
principal liaison between the Board of Directors and the independent auditors
for the Corporation. The members of the committee are Messrs. Fellows
(Chairman), Crutchfield and Mrs. Feigin. The committee held two meetings during
1998.
5
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. The Corporation'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 at a
meeting is received by the Secretary of the Corporation (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 the Corporation's shareholders, which should be
submitted to the Secretary of the Corporation. 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. Hurst and Pike.
The committee held three meetings during 1998.
ORGANIZATION AND COMPENSATION COMMITTEE: It is the responsibility of this
committee to make a continuing review of the Corporation'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
the Corporation's Chief Executive Officer and other executive officers and (2)
reviewing and recommending to the Board incentive compensation programs and
setting performance goals. The members of the committee are Messrs. Pike
(Chairman), Buzzell, Fellows and Mrs. Fairbairn and Mrs. Feigin. The committee
held five meetings during 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
As indicated above, Mr. Crutchfield is Chairman and Chief Executive Officer
of First Union Corporation. Mr. McDonald is also a director of First Union
Corporation. Mr. Crutchfield served on the Organization and Compensation
Committee through February 1998. He is no longer a member of that Committee.
ORGANIZATION AND COMPENSATION COMMITTEE REPORT
PRINCIPLES OF EXECUTIVE COMPENSATION PROGRAM
The goal of the Corporation's Executive Compensation Program (the
"Program") is to attract, retain and motivate the Corporation'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 compa-
6
nies with which the Corporation may compete for executive talent. Second, the
Program aims to provide 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 mid-term and long-term
incentives tied to stock value which will align interests among the shareholders
and executives. The Corporation balances each of the Program's objectives by
establishing target compensation levels for executive pay which are achieved
through a combination of base salary, annual incentive pay, and stock options
and, beginning in 1999, restricted stock units. (See Proposal 2 -- Amendments to
the 1996 Stock Compensation Plan.)
It is the philosophy of the Corporation that a significant portion of each
executive's total compensation should be at-risk based on the financial
performance of the Corporation. The at-risk components of total compensation are
progressively greater for higher level positions. For 1998, the at-risk
components of the targeted cash compensation packages for executive officers
named in this proxy statement ranged from 65% to 70%.
COMPETITIVE COMPENSATION TARGETS
Total compensation targets, consisting of base salary and 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 (the "Corporation's Peer Group") as well as companies
within the S&P Textile (Apparel Manufacturers) Index together with analysis of
published survey materials and relevant proxy statements were utilized by the
Organization and Compensation Committee (the "Committee") to establish
compensation targets in 1998.
In general, commensurate with each position's responsibility and impact on
results, total compensation for each of the Corporation's executive officers is
targeted to be at the 75th percentile of compensation paid to executives in
comparable positions within the Corporation's Peer Group only if targeted
performance goals established by the Compensation Committee are met.
Under the Corporation's Executive Incentive Compensation Plan ("EIC Plan"),
a performance goal based on the Corporation's primary (basic) earnings per
share, excluding the effects of extraordinary and non-recurring items, is set
each year by the Compensation Committee. Depending upon the level of achievement
of the performance goal, annual cash awards may range from 0 to 150% of the
target award 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.
The purpose of the Discretionary Executive Bonus Plan ("DEB Plan") is to
enable the Compensation Committee to establish performance goals for senior
members of management based on financial measurements that may include but are
not limited to the earnings per share measurement provided for in the EIC Plan.
Under the DEB Plan, the Board retains the discretion to increase or decrease
awards based on its evaluation of individual performance and other factors it
deems relevant.
7
Stock options are typically granted annually under the Corporation's Stock
Compensation Plan to provide executive officers and other employees with a
long-term incentive opportunity. The size of each grant generally increases with
the level of responsibility of the executive officer. The grant to each
executive officer named in this proxy statement also depends upon the
Compensation 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
1998 MERIT INCREASES
At its October 1997 meeting, the Compensation Committee approved merit
increase budgets for the Corporation and its subsidiaries based on competitive
data presented to the Committee on projected 1998 merit increase budgets for
comparable United States companies. The Corporation's overall 1998 merit
increase budget was 4%. At its February 1998 meeting, the Committee approved
salary increases to be effective as of January 1, 1998. The salary increase for
each executive officer was based on the Committee's assessment of the
individual's performance and the individual's salary within his or her salary
grade as well as salary practices of comparable companies.
BONUS AWARDS
At its February 1998 meeting, the Compensation Committee fixed the EIC Plan
and DEB Plan performance targets for the Corporation and the targeted bonuses
for each participating executive. The dollar amount of each targeted bonus was
based upon a percentage of the midpoint of the salary range for the executive's
position. At its February 1999 meeting, the Committee granted EIC Plan and DEB
Plan awards to the named executive officers based on the Corporation having
exceeded the EIC Plan and DEB Plan performance targets for 1998 and a review and
assessment by the Committee of the performance of the named executive officers.
In setting the EIC Plan and DEB Plan awards, the Committee gave primary weight
to the level of achievement of the respective performance targets.
STOCK OPTION AWARDS
At its February 1998 meeting, the Compensation Committee reviewed the
Corporation's philosophy with respect to stock option grants. In order to
instill an entrepreneurial spirit among its employees, it is the Corporation's
practice to grant options to a significant number of management-level employees.
In 1998, stock options were granted to 608 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 the Corporation
and the executive's performance.
RESTRICTED STOCK AWARDS
Also at its February 1998 meeting, the Compensation Committee fixed the
1998 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.
8
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's salary and bonus awards, stock option grant
and restricted stock award follow the policies described above.
Mr. McDonald's salary increase for 1998 was 4% and he was granted a stock
option for 150,000 shares of the Corporation's Common Stock. Mr. McDonald's
salary increase and stock option grant were based on salary data provided by the
Corporation's independent compensation consultants, together with the projection
of total targeted compensation within the guidelines described above.
Mr. McDonald's incentive compensation and restricted stock award for 1998
were based primarily upon the financial performance of the Corporation under Mr.
McDonald's leadership.
The Corporation achieved record sales and earnings for the fiscal year. Net
income for 1998 increased 11% to a record $388.3 million or $3.17 per share from
$350.9 million or $2.76 per share in 1997. Sales in 1998 reached $5,479 million,
up from $5,222 million in 1997.
The Compensation Committee concluded that during 1998 Mr. McDonald led the
Corporation to a number of significant achievements. Strategic acquisitions were
evaluated and completed in Brazil, Chile, Japan and Turkey, laying the
foundation for future growth in those markets. Further progress was made in
balancing manufacturing between off-shore and domestic locations, resulting in
greater efficiency and flexibility in operations. The Corporation made
significant progress in its common systems initiative, which is expected to
bring new state-of-the-art technology to all of the Corporation's divisions and
greatly enhance the Corporation's product development, inventory management and
manufacturing capabilities. The Committee also noted that, under Mr. McDonald's
leadership, the Corporation continued to maintain its strong financial condition
while achieving record sales and profits.
The Compensation Committee awarded Mr. McDonald a total of $1,536,700 under
the EIC Plan and DEB Plan based on the Plans' performance targets being
exceeded.
The Compensation Committee awarded Mr. McDonald 10,000 shares of restricted
Common Stock pursuant to the Stock Compensation Plan based on achievement of the
1998 performance objective, which was a targeted level of growth in earnings per
share. The shares will not vest unless Mr. McDonald remains an employee of the
Corporation until December 31, 2005.
TAX DEDUCTIBILITY CONSIDERATIONS
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
deductibility of compensation in excess of $1 million paid to the executive
officers named in this proxy statement, unless certain requirements are met.
Stock options and certain performance based awards under the Stock Compensation
Plan are designed to meet these requirements as are annual bonuses under the
Corporation's EIC Plan. It is the present intention of the Compensation
Committee to preserve the deductibility of compensation under Section 162(m) to
the extent the Committee believes that to do so is consistent with the best
interests of shareholders. Tax deductibility is only one consideration in
determining
9
the type and amount of compensation. In connection with the DEB Plan, the Board
of Directors maintains discretion to increase as well as decrease awards based
on the Board's assessment of individual performance and other factors deemed
relevant. Accordingly, the DEB Plan does not meet the requirements of Section
162(m). In granting awards, the Board will nevertheless take into consideration
any potential loss of deductibility. For compensation received in respect of
1998 performance, Mr. McDonald has elected to defer receipt of an amount of
compensation sufficient to eliminate any potential loss of deductibility.
William E. Pike, Chairman
Robert D. Buzzell George Fellows
Ursula F. Fairbairn Barbara S. Feigin
10
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid or
accrued for the years 1996 through 1998 by the Corporation to or for the benefit
of the named executive officers.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-----------------------------------------------------------------------------------------------------------------
RESTRICTED STOCK
STOCK OPTIONS/ ALL OTHER
NAME AND AWARD(S) SARS(1) COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) (#) SATION($)(2)
-----------------------------------------------------------------------------------------------------------------
M.J. McDonald 1998 760,000 1,536,700 432,000(3) 150,000 87,000
Chairman, President and 1997 728,000 1,536,700 433,125 -- 10,000
Chief Executive Officer 1996 700,000 1,536,600 341,250 150,000 10,000
-----------------------------------------------------------------------------------------------------------------
J.P. Schamberger 1998 436,000 633,000 172,800(3) 44,000 342,000
Vice President and 1997 416,000 610,000 173,250 -- 10,000
Chairman - Jeanswear Coalition 1996 400,000 590,000 136,500 44,000 10,000
-----------------------------------------------------------------------------------------------------------------
D.G. MacFarlan 1998 410,000 633,000 172,800(3) 40,000 127,000
Vice President and 1997 375,000 550,000 173,250 -- 10,000
Chairman - Knitwear, Playwear and Intimate 1996 350,000 520,000 136,500 34,000 10,000
Apparel Coalitions
-----------------------------------------------------------------------------------------------------------------
T.A. Lambeth 1998 354,000 376,000 0 30,000 10,000
Vice President and 1997 340,000 466,000 0 -- 127,500
President - European & 1996 324,000 375,000 0 28,000 10,000
Asian Operators
-----------------------------------------------------------------------------------------------------------------
R.K. Shearer 1998 236,000 425,000 0 13,000 58,000
Vice President - 1997 204,000 239,000 0 -- 10,000
Finance and Chief 1996 196,000 243,000 0 6,500 10,000
Financial Officer(4)
(1) 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.
(2) The amount in this column for 1998 represents the $10,000 matching
contribution of the Corporation under the Executive Deferred Savings Plan,
expenses associated with the relocation of the Corporation's executive
offices to Greensboro, North Carolina as follows: Mr. McDonald -- $54,000;
Mr. Schamberger -- $320,200; Mr. MacFarlan -- $103,200; and Mr.
Shearer -- $45,300; and payment of certain state taxes on behalf of the
executives as follows: Mr. McDonald -- $23,000; Mr. Schamberger -- $11,500;
Mr. MacFarlan -- $13,900 and Mr. Shearer -- $2,800.
(3) Restricted stock awards, valued at $43.20 per share, were made on February
9, 1999, as follows: Mr. McDonald -- 10,000 shares; Mr. Schamberger -- 4,000
shares; and Mr. MacFarlan -- 4,000 shares. Dividends paid on restricted
stock are reinvested in additional restricted shares. At fiscal year-end,
Mr. McDonald held 31,418 restricted shares, having an aggregate value of
$1,472,719, and Messrs. Schamberger and MacFarlan each held 8,207 restricted
shares, having an aggregate value of $384,703, based on the closing price of
the Corporation's Common Stock on December 31, 1998.
(4) Mr. Shearer was elected Vice President - Finance and Chief Financial Officer
on July 1, 1998. He was previously Vice President - Controller.
11
STOCK OPTIONS
The following table sets forth for the executive officers named in this
proxy statement information regarding the grant of stock options by the
Corporation in the 1998 fiscal year and their potential realizable values. No
stock appreciation rights have been granted to employees other than limited
stock appreciation rights which become exercisable only upon a Change in
Control.
OPTIONS GRANTED IN THE 1998 FISCAL YEAR
- --------------------------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
INDIVIDUAL GRANTS(1) TERM
- -------------------------------------------------------------------------------------------------------------------
NO. OF % OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION 5% (PRICE 10% (PRICE
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE = $70.53) = $112.31)
- -------------------------------------------------------------------------------------------------------------------
All shareholders N/A N/A $43.30 N/A $3.3 billion(2) $8.3 billion(2)
- -------------------------------------------------------------------------------------------------------------------
M.J. McDonald 150,000 8.0% $43.30 2/2008 $4,084,500 $10,351,500
J.P. Schamberger 44,000 2.3% 43.30 2/2008 1,198,120 3,036,440
D.G. MacFarlan 40,000 2.1% 43.30 2/2008 1,089,200 2,760,400
T.A. Lambeth 30,000 1.6% 43.30 2/2008 816,900 2,070,300
R.K. Shearer 13,000 0.7% 43.30 2/2008 353,990 897,130
(1) All of the options were non-qualified stock options granted in February
1998, 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; until
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 121.3 million outstanding shares of
Common Stock of the Corporation on February 10, 1998, at the price of
$43.30, was approximately $5.3 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 $8.6 billion,
an increase of $3.3 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 $13.6 billion, an
increase of $8.3 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 1998
fiscal year, together with the number and value of stock options held at 1998
fiscal year end, each on an aggregate basis.
12
- --------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN THE 1998 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
- --------------------------------------------------------------------------------------------------
M.J. McDonald 110,000 $3,770,000 546,000/150,000 $10,378,150/536,250
J.P. Schamberger 60,000 1,134,000 120,000/ 44,000 2,196,600/157,300
D.G. MacFarlan 29,000 612,000 92,000/ 40,000 1,680,700/143,000
T.A. Lambeth -0- -0- 176,000/ 30,000 3,474,800/107,250
R.K. Shearer 24,000 460,000 37,000/ 13,000 684,425/ 46,475
- --------------------------------------------------------------------------------------------------
(1) Market value of underlying shares at fiscal year-end based on the
year-end market price of $46.875 per share, minus the exercise
price.
FUTURE REMUNERATION
PENSION PLAN
The Corporation maintains and contributes to the VF Corporation Pension
Plan (the "Pension Plan"), a defined benefit plan which covers all of the
Corporation'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.
- -----------------------------------------------------------------------
ASSUMED AVERAGE
ANNUAL COMPENSATION ESTIMATED ANNUAL BENEFITS BASED ON SERVICE OF:
- -----------------------------------------------------------------------
10 YEARS 15 YEARS 20 YEARS 25 YEARS OR MORE
- -----------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
13
Benefits which are not payable under the Pension Plan because of certain
Code and/or ERISA limitations are provided pursuant to the Corporation'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 -- 16 years; Mr. Schamberger -- 26
years; Mr. MacFarlan -- 20 years; Mr. Lambeth -- 30 years; and Mr. Shearer -- 12
years.
The Pension Plan provides that if it is "Overfunded" upon the occurrence of
a "Change in Control" of the Corporation (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 the Corporation's 1998
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 -- $440,000; Mr.
Schamberger -- $212,000; Mr. MacFarlan -- $162,000; Mr. Lambeth -- $226,000; and
Mr. Shearer -- $77,000.
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 the Corporation'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 the Corporation 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 the Corporation's 1998 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
14
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. Shearer'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 and (b) without regard to
his participation in the Deferred Compensation Plan or the Executive Deferred
Savings Plan.
SERP benefits will become funded upon a "Change in Control" of the
Corporation, as defined in the Change in Control Agreements described below. In
this regard, the Corporation has established a trust with UMB Bank, N.A., as
Trustee (the "SERP Trust"). The SERP Trust may be funded by the Corporation at
any time to secure payment of certain SERP benefits not otherwise paid by the
Corporation. Upon a Change in Control, the Corporation is required to fund the
SERP Trust, which becomes irrevocable.
Had there been a Change in Control as of March 2, 1999, 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 -- $976,000; Mr. Schamberger -- $188,000; Mr. MacFarlan -- $146,000;
Mr. Lambeth -- $200,000; and Mr. Shearer -- $51,000.
CHANGE IN CONTROL ARRANGEMENTS
CHANGE IN CONTROL AGREEMENTS
The Corporation has entered into Change in Control Agreements with certain
executives of the Corporation (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 the
Corporation, 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 the Corporation upon notice to the executive and are
automatically terminated if the executive's employment with the Corporation
ceases. The Corporation 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 the Corporation 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 in-
15
creased 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, the Corporation has
established a Trust with UMB Bank, N.A., as Trustee (the "CIC Trust"). Upon a
Change in Control, the Corporation 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 the Corporation. (Also see Future Remuneration
- -Supplemental Executive Retirement Plan.)
Had there been a Change in Control as of March 2, 1999, 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 -- $5,606,000; Mr.
Schamberger -- $2,852,000; Mr. MacFarlan -- $2,443,000; Mr.
Lambeth -- $1,974,000; and Mr. Shearer -- $1,349,000.
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 Corporation's 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, the Corporation 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
The Corporation 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 the
Corporation 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. The Corporation matches 50% of
the first $20,000 deferred annually by each participant. Upon a Change in
Control of the Corporation, matching contributions become fully vested and the
Corporation is required to fully fund the amount accrued for each employee.
The named executive officers participate in the leveraged Employee Stock
Ownership Plan ("ESOP") feature of the Corporation's Tax-Advantaged Savings Plan
for Salaried Employees ("TAS Plan"). The TAS Plan provides that upon a Change in
Control of the Corporation, the Corporation 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, 1998, 660,644 shares were
unallocated under the ESOP.
16
PERFORMANCE GRAPH
The following graph compares the Corporation'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, 1998.
VFC S&P 500 S&P TEXTILE
--- ------- -----------
1993 100 100 100
1994 108 101 98
1995 121 139 110
1996 158 171 151
1997 222 229 163
1998 228 294 141
OVER A FIVE-YEAR PERIOD, THE CORPORATION'S TOTAL RETURN OF 128% COMPARES WITH
194% AND 41% FOR THE S&P 500 AND S&P TEXTILE (APPAREL MANUFACTURERS) INDICES,
RESPECTIVELY.
17
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS
Shown below are persons known by the Corporation 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 2, 1999, except as
otherwise indicated in the footnotes below.
- ------------------------------------------------------------------------------------------------
BENEFICIAL OWNER AMOUNT OF PERCENT
AND NATURE OF OWNERSHIP BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------------------------------------------------------------------------------------
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 11.6%
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 7.5%
-----------------
Total........................................ 22,923,288 shares 19.1%
Sanford C. Bernstein & Co., Inc. 767 Fifth Avenue New York,
NY 10153(5)................................................. 9,734,719 shares 8.1%
AMVESCAP PLC 11 Devonshire Square London EC2M 4YR
England(6).................................................. 6,156,177 shares 5.1%
Series B ESOP Convertible Preferred Stock
UMB Bank, N.A. P.O. Box 419226, Kansas City, MO 64179, as
Trustee of the Corporation's Tax-Advantaged Savings Plan for
Salaried Employees.......................................... 1,760,119 shares 100%
- ------------------------------------------------------------------------------------------------
(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 the Corporation.
(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 23,051,288 shares (19.2%) of the class outstanding of the
Corporation's Common Stock in various trust and agency accounts on December
31, 1998. As to all such shares, the Bank and its affiliates had sole voting
power over 120,102 shares, shared voting power over 22,931,186 shares, sole
dispositive power over 33,730 shares and shared dispositive power over
22,973,822 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
5, 1999. At December 31, 1998, Sanford C. Bernstein & Co., Inc. had sole
voting power over 5,464,047 shares, shared voting power over 1,076,962
shares and sole dispositive power over 9,734,719 shares.
(6) The information in the above table concerning AMVESCAP PLC, a parent holding
company, and its affiliated companies was obtained from a Schedule 13G filed
with the Securities and Exchange Commission on February 10, 1999. At
December 31, 1998, AMVESCAP PLC and its affiliates had shared dispositive
power and shared voting power over 6,156,177 shares.
18
COMMON STOCK OWNERSHIP OF MANAGEMENT
The following table reflects, as of March 2, 1999, the total beneficial
ownership of Common Stock of the Corporation by each director and named
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 18).
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP TOTAL
---------------------------- SHARES
SHARES OPTION SHARES BENEFICIALLY
NAME OWNED(1) EXERCISABLE(2) OWNED(3)
- -----------------------------------------------------------------------------------------
Robert D. Buzzell.......................... 1,600 13,800 15,400
Edward E. Crutchfield...................... 25,434 4,800 30,234
Ursula F. Fairbairn........................ 22,926,791 17,400 22,944,191
Barbara S. Feigin.......................... 5,930(4) 25,200 31,130
George Fellows............................. 1,000 4,800 5,800
Robert J. Hurst............................ 9,092 17,400 26,492
Mackey J. McDonald......................... 76,776(5) 696,000 772,776
William E. Pike............................ 6,931 28,200 35,131
M. Rust Sharp.............................. 22,926,085 17,400 22,943,485
L. Dudley Walker........................... 55,000 4,800 59,800
John P. Schamberger........................ 27,293(6) 164,000 191,293
Daniel G. MacFarlan........................ 27,601(6) 132,000 159,601
Timothy A. Lambeth......................... 26,506 206,000 232,506
Robert K. Shearer.......................... 12,134 50,000 62,134
All Directors and Executive Officers as a
Group (18 persons)....................... 23,213,646 1,603,500 24,817,146
- -----------------------------------------------------------------------------------------
(1) Shares owned include shares held in trusts as of December 31, 1998 in
connection with employee benefit plans, as to which the following
participants share voting power but have no present dispositive power: Mr.
McDonald -- 16,811 shares; Mr. MacFarlan -- 9,203 shares; and all executive
officers as a group -- 34,302 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 -- 212 shares; Mr. Schamberger -- 324 shares; Mr. MacFarlan -- 282
shares; Mr. Lambeth -- 310 shares; Mr. Shearer -- 359 shares; and all
executive officers as a group -- 2,035 shares. Shares owned also include
shares held as of December 31, 1998 in a trust in connection with an
employee benefit plan, as to which the following participants have
dispositive power and shared voting power: Mr. McDonald -- 1,055 shares; Mr.
Shearer -- 334 shares; and all executive officers as a group -- 3,484
shares. Shares owned also include shares held as of December 31, 1998 in a
trust in connection with an employee benefit plan, as to which the following
participants have dispositive power but no voting power: Mr. McDonald -- 56
shares; and Mr. MacFarlan -- 6,191 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: Mrs. Fairbairn -- 1,772
shares; Mrs. Feigin -- 1,730 shares; Mr. Hurst -- 4,292 shares; Mr.
Pike -- 1,731 shares; and Mr. Sharp -- 797 shares.
(2 )All shares in the column "Option Shares Exercisable" are subject to options
under the 1982 Stock Option Plan, the 1991 Stock Option Plan and/or the
Stock Compensation Plan.
(3 )Other than Mrs. Fairbairn and Mr. Sharp, who are deemed to beneficially own
19.1% 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 20.7% of the Common Stock outstanding.
(4 )Includes 400 shares as to which Mrs. Feigin shares voting and dispositive
power.
(5 )Includes 41,418 shares of restricted stock over which Mr. McDonald holds
voting power but not dispositive power.
(6 )Includes 12,207 shares of restricted stock over which the officer holds
voting power but not dispositive power.
19
PROPOSAL 1
RE-APPROVAL OF CERTAIN MATERIAL TERMS OF THE
EXECUTIVE INCENTIVE COMPENSATION PLAN
Shareholder re-approval of the Executive Incentive Compensation Plan ("EIC
Plan") is being sought this year to preserve the Corporation's tax deduction for
all awards earned and paid under the EIC Plan without limitation under Section
162(m) of the Internal Revenue Code ("Code Section 162(m)").
GENERAL. In 1994, the Board of Directors adopted, and the shareholders of
the Corporation approved, the EIC Plan. The EIC Plan provides the opportunity to
the most senior members of the Corporation's management team to earn annual
incentive awards. Plan participants are those individuals designated by the
Board of Directors from time to time as "executive officers" pursuant to Rule
16a-1(f) of the Securities Exchange Act of 1934, currently nine persons. Other
management employees of the Corporation have the opportunity for annual
incentive awards under the Management Incentive Compensation Plan which is
similar to the EIC Plan.
DESCRIPTION OF THE EIC PLAN. The EIC Plan combines annually established
goals related to earnings per share, excluding the effects of certain
extraordinary and non-recurring items ("Performance"), with executive incentive
awards. Each year, the relationship between Performance and the amount
potentially payable as annual incentive awards is established by the
Organization and Compensation Committee of the Board prior to March 31. Based
upon Performance, actual awards earned can range from 0% to 150% of the target
award established for each eligible participant. The Organization and
Compensation Committee of the Board may exercise negative discretion to reduce
earned awards based upon additional factors. The maximum individual award for
Performance in any year is $1.5 million. For the preceding five years, the
highest award under the EIC Plan paid to any of the executive officers named in
the Summary Compensation Table other than the Chief Executive Officer was
$510,000 and the range of awards paid to the Chief Executive Officer was
$350,000 to $1.2 million.
DISCUSSION OF CODE SECTION 162(M). Under the provisions of Code Section
162(m), the allowable deduction for compensation paid or accrued with respect to
the executive officers named in the Summary Compensation Table, defined as
"covered employees" is limited to $1 million per year (the "deductibility
limitation"). However, certain types of compensation are exempted from the
deductibility limitation, including performance-based compensation.
"Performance-based compensation" is compensation paid (1) upon the attainment of
an objective performance goal or goals; (2) upon approval by the compensation
committee of the Board or its equivalent, which committee must be composed of
outside directors; and (3) pursuant to a plan as to which shareholders have
approved certain material terms, specifically the eligibility, per-person
limits, and the business criteria upon which the performance goals are based.
The Corporation intends that awards under the EIC Plan qualify as
"performance-based compensation" so that these awards will not be subject to the
$1 million deductibility limitation.
20
Under Code Section 162(m), the material terms of the EIC Plan must be
submitted to shareholders for approval every five years because the Organization
and Compensation Committee has discretion under the Plan to fix performance
goals annually. Shareholders last approved the EIC Plan at the 1994 Annual
Meeting; accordingly, re-approval of the material terms of the Plan relating to
eligibility, annual per-person limits, and business criteria used in performance
goals, as described in this Proposal 1, is being sought to preserve full
deductibility of awards under the Plan going forward. In the event shareholders
disapprove this Proposal, awards will not be granted or paid out under the EIC
Plan to the extent required under Treasury Regulation 1.162-27(e)(4) to meet the
shareholder re-approval requirements of that Regulation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR RE-APPROVAL OF THE EIC PLAN.
PROPOSAL 2
AMENDMENTS TO THE 1996 STOCK COMPENSATION PLAN
AND RE-APPROVAL OF CERTAIN MATERIAL TERMS
INTRODUCTION. The Corporation's 1996 Stock Compensation Plan (the "1996
Plan"), which was approved by shareholders at the 1997 Annual Meeting, provides
for the grant of stock options, limited stock appreciation rights ("LSARs"),
restricted stock and restricted stock units (together "Restricted Awards") as
awards to employees and directors. The Plan is administered by the Organization
and Compensation Committee of the Board of Directors (the "Committee"). The
Committee consists entirely of independent directors. At its December 1998
meeting, the Board adopted a Mid-Term Incentive Plan (the "Mid-Term Subplan")
under the 1996 Plan which specifies the terms under which employees designated
by the Committee may be awarded performance-based restricted stock units ("Stock
Units") with performance measured over a three-year period based on the average
annual total shareholder return of the Common Stock of the Corporation as
compared to the average annual total shareholder return of a group of apparel
companies (the "Comparison Group") specified by the Committee. The purpose of
the Mid-Term Subplan is to link a portion of executives' compensation
opportunity to measures of the Corporation's performance extending over more
than one year, thereby providing an incentive for successful long-term strategic
management of the Corporation, and otherwise to further the purposes of the 1996
Plan. It is the intention of the Committee that, except in unusual
circumstances, which are not currently anticipated, participants in the Mid-Term
Subplan will not receive annual awards under the Corporation's Discretionary
Executive Bonus Plan. (See Organization and Compensation Committee
Report -- Competitive Compensation Targets.)
At its February 1999 meeting, the Board of Directors adopted and
recommended for approval by the shareholders an amendment to the 1996 Plan (1)
to increase the maximum number of shares that may be awarded as Restricted
Awards in any year to any individual to 50,000, and (2) to increase the maximum
number of shares available for future grants of all types of awards under the
1996 Plan by 2.9 million shares (2.4% of the outstanding shares on March 2,
1999) (subject to adjustment in each case). In addition, re-approval is being
sought with respect to certain material terms of the 1996 Plan, in order that
certain
21
performance-based awards may qualify for full deductibility by the Corporation
under Code Section 162(m) for a period of five years from the time of such
re-approval.
INCREASE IN MAXIMUM ANNUAL RESTRICTED AWARDS. The 1996 Plan currently
provides that awards granted to any employee may not exceed in the aggregate
during any calendar year (a) 250,000 stock options and (b) 10,000 shares subject
to Restricted Awards (including Stock Units). These limitations are included in
the 1996 Plan so that certain awards under the Plan may qualify as
performance-based compensation not subject to the deductibility limitation in
Code Section 162(m) discussed under Proposal 1 above provided all other
conditions of Code Section 162(m) are met.
In order to initiate the Mid-Term Subplan, the Committee, at its February
1999 meeting, awarded Stock Units to 30 senior management employees covering
three performance cycles -- the first measuring performance over the years 1997
through 1999, the second measuring performance over the years 1998 through 2000
and the third measuring performance over the years 1999 through 2001. As
discussed below, awards under the Mid-Term Subplan to three executive officers
are wholly or partially subject to shareholder approval of the increase in the
1996 Plan's limit on the number of shares subject to Restricted Awards granted
to a participant in any one year to 50,000. It is anticipated that a three-year
performance cycle will begin on January 1, 2000 and each January 1 thereafter
until the Plan is otherwise amended or the Committee determines that additional
awards under the Plan should not be made.
Not later than 90 days after the beginning of a performance cycle (or, in
the case of the first two cycles, within 90 days after the Mid-Term Subplan was
adopted), the Committee will fix a target number of Stock Units for each
employee selected by the Committee to participate in the Mid-Term Subplan. For
each performance cycle, the participant may earn that number of shares of Common
Stock equal to the number of Stock Units targeted for the participant at the
beginning of the performance cycle, multiplied by a percentage factor based on
the degree to which the performance objective was met. The number of shares of
Common Stock earned by each participant for a performance cycle may range from 0
to 200% of the targeted Stock Units plus additional Stock Units resulting from
dividend equivalents during the performance cycle. For example, if, for a
performance cycle, the Corporation's three-year average total shareholder return
ranks at the 50th percentile of the Comparison Group, the participant will
receive that number of shares of Common Stock equal to 100% of the number of
targeted Stock Units, plus a number of shares of Common Stock equal to 100% of
the Stock Units resulting from dividend equivalents on the targeted Stock Units
during the performance cycle. If the Corporation's three-year average total
shareholder return ranks at the 90th percentile or higher versus the Comparison
Group, the participant will receive that number of shares of Common Stock equal
to 200% of the number of targeted Stock Units, plus a number of shares equal to
200% of the Stock Units resulting from dividend equivalents on the target award
during the performance cycle. If over the three-year performance cycle, the
Corporation's three-year average total shareholder return is below the 40th
percentile versus the Comparison Group, the participant will not receive any
shares for that performance cycle unless the percentage increase in the
Corporation's earnings per share in the third year of the cycle as compared to
the second year of the cycle exceeds the target set by the Committee at the
beginning of the cycle, in
22
which case the participant will receive that number of shares of Common Stock
equal to 50% of the targeted Stock Units, plus that number of shares of Common
Stock resulting from dividend equivalents on 50% of the targeted award during
the performance period. The targeted number of Stock Units awarded to each of
the officers named in this proxy statement for each of the first three cycles
and for the 30 executives who currently participate in the Mid-Term Subplan were
as follows: Mr. McDonald -- 4,930; Mr. MacFarlan -- 1,958; Mr.
Schamberger -- 1,958; Mr. Lambeth -- 1,621; and Mr. Shearer -- 1,621; and the
aggregate for all 30 participants -- 32,830.
For each of Messrs. McDonald, Schamberger and MacFarlan, who also receive
annual grants of performance-based restricted stock that vest if they remain in
the employ of the Corporation until December 31, 2005, the maximum number of
Restricted Awards awarded in 1999 to any individual (assuming that performance
over each of the three initial performance cycles would result in an award
equivalent to 200% of the target award) would exceed the 10,000 share limit.
Accordingly, in order that awards under the Plan may be deducted by the
Corporation for Federal income tax purposes as performance-based compensation
not subject to the deductibility limitations of Code Section 162(m), the Board
of Directors recommends that shareholders approve the amendment to the 1996 Plan
so that the maximum number of shares subject to Restricted Awards (including
Stock Units) that may be awarded in any calendar year to any individual is
50,000.
INCREASE IN NUMBER OF SHARES AVAILABLE FOR FUTURE GRANTS. In order to
instill an entrepreneurial spirit among its employees, it is the Corporation's
practice to grant stock options to a significant number of management-level
employees. In 1999, options for a total of 1,927,400 shares were granted to 576
management-level employees. After giving effect to the 1999 stock option grants
to management-level employees and to directors as discussed under "Election of
Directors -- Directors' Compensation" above, and the award of Stock Units under
the Mid-Term Subplan discussed above, approximately 1.4 million shares remain
available for future grants. Increasing the number of shares authorized for
issuance under the 1996 Plan is necessary in order that the Committee may
continue to use stock-based awards and stock ownership as an incentive for
officers and key employees of the Corporation.
RE-APPROVAL OF CERTAIN MATERIAL TERMS. This Proposal also includes
re-approval of certain other material terms of performance-based awards, so that
awards can qualify as "performance-based" compensation fully deductible by the
Corporation under Code Section 162(m) for a period of five years after
re-approval by shareholders. The material terms to be re-approved, in addition
to the annual per-person limit, are eligibility and the business criteria which
may be used by the Committee in setting performance objectives for
performance-based Restricted Awards. These terms are described below under the
caption "Description of the 1996 Plan -- Eligibility and Performance Awards."
This re-approval does not relate to stock options or LSARs.
DESCRIPTION OF THE 1996 PLAN. The following is a brief description of the
material features of the 1996 Plan. Such description is qualified in its
entirety by reference to the full text of the 1996 Plan, as proposed to be
amended, a copy of which is attached as Exhibit A to this proxy statement.
23
ADMINISTRATION. The 1996 Plan generally is administered by the Committee.
The Board may, however, itself perform the functions of the committee or may
appoint a different committee to administer the 1996 Plan (references to the
"Committee" in the following discussion mean the committee then serving or the
Board if it is then performing committee functions). Only directors who are not
employees of the Corporation or its subsidiaries may serve on the Committee. If
any member of the Committee does not qualify as a "Non-Employee Director" under
Rule 16b-3 of the 1934 Act ("Rule 16b-3") or an "outside director" under Code
Section 162(m), the Committee may function through a subcommittee composed
solely of two or more qualifying members, or the nonqualifying member of the
Committee may abstain or recuse himself or herself from actions that would be
affected by his or her nonqualifying status.
Subject to the terms and conditions of the 1996 Plan, the Committee has
discretionary authority to determine the employees and directors to whom, and
the times at which, awards may be granted, the number of shares to be subject to
each award and the terms, conditions and limitations of each award. This
includes, among other things, authority to determine the times at which options
will be exercisable, the time Restricted Awards will vest and become
nonforfeitable and the performance conditions, if any, that will attach to
Restricted Awards. Committee members shall not be personally liable in
connection with any action, determination or interpretation taken or made in
good faith under the 1996 Plan.
Under the 1996 Plan, the Board is authorized to grant options, LSARs or
Restricted Awards to non-employee directors in its discretion. The Board
generally determines the type, timing and amount of such awards to non-employee
directors as part of the overall policies for compensating non-employee
directors which may from time to time be adopted by the Board.
SHARES SUBJECT TO THE 1996 PLAN AND PER-PERSON LIMITATIONS. If the
proposed amendment to the 1996 Plan is approved, the total number of shares of
the Corporation's Common Stock that will be available for issuance pursuant to
outstanding awards and awards that may be granted in the future will be
11,943,900 (subject to adjustment), constituting approximately 9.97% of the
outstanding class. The number of such shares that may be subject to Restricted
Awards granted either as service awards or performance awards may not exceed
1,200,000 (subject to adjustment). Shares subject to an award (or to an award
outstanding under the 1991 or 1995 Plans) that is canceled, forfeited, or
expires or terminates without delivery of shares will also be available for
awards under the 1996 Plan, except that shares to which an LSAR relates will be
counted against the 1996 Plan limits when an LSAR is settled in cash, and shares
issued as Restricted Awards will be counted against the 1996 Plan limits when
there is no remaining risk of forfeiture. Shares issued under the 1996 Plan may
be either authorized and unissued shares or shares controlled by the
Corporation. On March 2, 1999, the reported closing price of Common Stock in New
York Stock Exchange Composite Transactions was $48.25 per share.
As discussed above, the 1996 Plan imposes "per-person" limitations on the
annual amount of awards to employees, in order to comply with Code Section
162(m). Under the Plan, no single participant may be granted during any calendar
year options to purchase more than 250,000 shares (less any nontandem LSARs) or,
if the amendment is approved,
24
Restricted Awards relating to more than 50,000 shares (in each case subject to
adjustment, as described below).
ADJUSTMENTS AND EXTRAORDINARY CORPORATE EVENTS. The Committee is
authorized to adjust the number and kind of shares subject to the aggregate
share limitations and annual per-person limitations under the 1996 Plan and
subject to outstanding awards and make other appropriate adjustments in the
event that shares of Common Stock are increased, decreased, or exchanged for a
different number or kind of securities, or if additional, new or different
securities are distributed with respect to outstanding Common Stock as a result
of certain extraordinary corporate transactions, in order to preserve the
intended benefits or potential benefits to participants. In the event of a
merger, consolidation, or reorganization of the Corporation in which the
interests of shareholders do not continue in a surviving corporation
substantially unchanged, a dissolution or liquidation or sale of substantially
all assets of the Corporation, or a change in control (as defined in Section 2.4
of the 1996 Plan) of the Corporation, the Committee serving before the event may
accelerate the exercisability of, lapse of restrictions on, or settlement date
of awards, grant LSARs to option holders, pay cash to participants in settlement
of outstanding options or Restricted Awards, grant new awards or make other
adjustments or amendments, including providing for substitution of new awards by
a successor employer. (See Other Terms of Awards.)
ELIGIBILITY. Employees of the Corporation and its subsidiaries and
non-employee directors of the Corporation are eligible to be granted awards
under the 1996 Plan. Participation in the 1996 Plan is broad. At December 31,
1998, approximately 600 employees had been granted awards.
STOCK OPTIONS. The Committee is authorized to grant stock options,
including both Incentive Stock Options (ISOs) which can result in potentially
favorable tax treatment to participants and nonqualified stock options (i.e.,
options not qualifying as ISOs). The exercise price per share subject to an
option will in each case be not less than 100% of the fair market value of a
share on the date of grant. The maximum term of each option, the times at which
each option will be exercisable and provisions requiring forfeiture of
unexercised options at or following termination of employment generally will be
fixed by the Committee, except no ISO may have a term exceeding ten years.
Options may be exercised by payment of the exercise price in cash or shares
having a fair market value equal to the exercise price, as the Committee may
determine from time to time, and the Committee may establish procedures for
broker-assisted cashless exercises. ISOs are subject to certain additional
limitations in order to qualify for favorable tax treatment.
LSARS. The Committee or the Board is authorized to grant LSARs. An LSAR is
a limited stock appreciation right, payable in cash and exercisable only upon
the occurrence of a change in control (as defined), which entitles the
participant to receive for each LSAR the excess of a defined "market price" of a
share over the exercise price per share of a stock option to which the LSAR
relates. The term "market price" means the greater of (i) the highest price per
share paid in connection with the change in control and (ii) the highest trading
price per share during the 60 days before the change in control. LSARs may or
may not be in tandem with the related stock option; if in tandem, the exercise
of the LSAR will result in the cancellation of the stock option; if not in
tandem, the related stock option will remain outstanding even though the LSAR
has been exercised. The term of each LSAR and
25
related forfeiture provisions will be the same as the option to which the LSAR
relates; the exercise or cancellation of an option will result in the
cancellation of any unexercised LSAR to which the option relates.
RESTRICTED AWARDS. The Committee is authorized to grant Restricted Awards,
which includes restricted stock and restricted stock units. An award of
restricted stock is a grant of shares which may not be sold or disposed of and
which may be forfeited in the event of certain kinds of termination of
employment or service to the Corporation prior to the end of the restricted
period specified by the Committee. Except for these restrictions, a participant
granted restricted stock generally has all of the rights of a shareholder of the
Corporation, including the right to vote the shares and to receive dividends and
distributions, except that dividends and distributions are automatically deemed
reinvested in additional shares of restricted stock. An award of restricted
stock units represents an obligation of the Corporation to issue shares at a
specified future date, which award is non-transferable and subject to a risk of
forfeiture in the event of certain kinds of termination of employment or service
to the Corporation prior to the end of the restricted period specified by the
Committee. The restricted period may end before the delivery date for the
shares, in which case the award represents a non-forfeitable right to deferred
delivery of shares (i.e., stock units). A participant granted restricted stock
units has no shareholder rights until shares are issued and delivered, although,
for each stock unit (whether or not restricted), amounts equal to the dividends
on a share of Common Stock ("dividend equivalents") are credited and
automatically deemed reinvested in additional stock units.
The restricted period for restricted stock and the period during which
restricted stock units are subject to a risk of forfeiture may not be less than
one year, except in the event of accelerated lapse of restrictions upon a change
in control or other extraordinary corporate events or in connection with certain
types of termination of employment.
PERFORMANCE AWARDS. The Committee may impose a condition upon the grant or
settlement of a Restricted Award based on the attainment of performance
objectives over a performance period specified by the Committee. In such case,
not later than 90 days after the beginning of performance period, the Committee
shall establish a performance award target for that performance period and
specify the performance objective which will be a condition to the grant of the
performance award. The performance objective will relate to one or more
corporate, business group or divisional levels of performance during the
performance period relating to the following business criteria, as specified by
the Committee: earnings per share, net earnings, pretax earnings, operating
income, net sales, market share, balance sheet measurements, cash return on
assets, book value, shareholder return or return on average common equity. In
establishing required performance levels, the Committee or Board may disregard
or offset the effect of extraordinary or nonrecurring accounting items and
changes in required accounting standards. Performance awards may also be
authorized as to which the grant is subject to performance based on any of the
business criteria specified above as compared to comparable performance of
specified peer companies. Awards under the Mid-Term Subplan are performance
awards having a performance objective based on the Corporation's shareholder
return as compared to peer companies. The Committee retains the discretion to
reduce the amount of a performance
26
award that is granted and to impose service requirements which must be met in
addition to any required performance objectives.
OTHER TERMS OF AWARDS. The Committee may permit participants to defer
payments relating to awards, including deferrals intended to defer taxation. In
addition, the Committee may permit participants to convert restricted stock into
stock units at or before the time restrictions on the restricted stock would
otherwise lapse. A stock unit is a right to receive a share at a future date,
representing in effect a restricted stock unit as to which the risk of
forfeiture has lapsed. Settlement of any stock unit (including a restricted
stock unit) will be in shares, except that the Committee is authorized to settle
such awards in cash. Payments under the 1996 Plan are subject to deduction to
satisfy withholding taxes, and participants may be required to separately pay
withholding taxes relating to receipt of shares under the 1996 Plan. The
Committee may permit participants to direct the Corporation to withhold shares
from any award or to deliver previously acquired shares to satisfy withholding
obligations. Awards granted under the 1996 Plan generally are nontransferable
except pursuant to the laws of descent and distribution, except that the
Committee may permit transfers of nonqualified stock options for estate planning
purposes. Awards under the 1996 Plan are generally granted without a requirement
that the participant pay consideration in the form of cash or property for the
grant (as distinguished from the exercise).
AMENDMENT AND TERMINATION OF THE 1996 PLAN. The Board may amend, suspend
or terminate the 1996 Plan at any time, but may not, without shareholder
approval, amend the 1996 Plan to increase the number of shares reserved under
the 1996 Plan or reduce the exercise price for options that may be granted under
the 1996 Plan. Thus, the 1996 Plan may be amended in ways which increase the
cost to the Corporation without further shareholder approval. The 1996 Plan does
not otherwise specify a termination date, although ISOs cannot be granted after
the applicable ten year expiration date under Section 422 of the Code.
AWARDS SUBJECT TO SHAREHOLDER APPROVAL OF AMENDMENT. Certain awards
granted under the Mid-Term Subplan are subject to shareholder approval of the
amendment to the 1996 Plan to increase the annual per-person limitation on
Restricted Awards. Specifically, Mr. McDonald's Restricted Awards for the
initial three performance cycles, ending in 1999, 2000 and 2001, and the portion
of the awards to Messrs. Schamberger and MacFarlan in excess of 2,000 shares for
each of those performance cycles, are subject to shareholder approval of the
1996 Plan amendment. The terms of the Mid-Term Subplan and initial awards
thereunder are described above under the caption "Increase in Maximum Annual
Restricted Awards." The following table sets forth information regarding the
initial Mid-Term Subplan awards or parts thereof that are subject to shareholder
approval of the 1996 Plan amendment:
27
NEW PLAN BENEFITS
1996 STOCK COMPENSATION PLAN
(ONLY AWARDS SUBJECT TO SHAREHOLDER APPROVAL SHOWN)
- -------------------------------------------------------------------------------------------------
NUMBER OF RESTRICTED STOCK
UNITS THAT MAY BE EARNED*
- -------------------------------------------------------------------------------------------------
TARGET FOR MAXIMUM AGGREGATE AGGREGATE
EACH OF THE FOR EACH OF TARGETS FOR MAXIMUM FOR
NAME AND POSITION INITIAL CYCLES INITIAL CYCLES THREE CYCLES THREE CYCLES
- -------------------------------------------------------------------------------------------------
M.J. McDonald................ 4,930 9,860 14,790 29,580
Chairman, President and Chief
Executive Officer
J.P. Schamberger............. -- 1,916 -- 5,748
Vice President and
Chairman -- Jeanswear
Coalition
D.G. MacFarlan............... -- 1,916 -- 5,748
Vice President and
Chairman -- Knitwear,
Playwear & Intimate Apparel
Coalitions
All Executive Officers as a
Group (8 in number)........ 4,930 13,692 14,790 41,076
All Non-Executive Directors
as a Group (8 in number)... N/A N/A N/A N/A
Non-Executive Officer
Employee Group (including
current officers who are
not executive officers).... -0- -0- -0- -0-
- -------------------------------------------------------------------------------------------------
* Excludes additional Stock Units resulting from dividend equivalents on the
number of Stock Units earned; the number of additional Stock Units that may be
earned cannot be determined at this time.
The foregoing table does not include information regarding Mid-Term Subplan
awards that are not subject to shareholder approval of the 1996 Plan amendment,
covering up to 51,968 restricted stock units per cycle, 155,904 in the
aggregate, that may be earned based on performance during the remainder of the
initial three performance cycles ending in 1999, 2000 and 2001. In addition,
because 1996 Plan awards are in the discretion of the Committee, the type,
number, recipients and other terms of future awards under the 1996 Plan cannot
be determined at this time. Certain information regarding awards under the 1996
Plan is presented in the "Summary Compensation Table" and the table entitled
"Options Granted in the 1998 Fiscal Year" above, and in Note L to the
Corporation's financial statements for the year ended January 2, 1999, in the
Annual Report which accompanies this proxy statement. In the event shareholders
disapprove this Proposal, performance-based awards that would otherwise have
qualified under Code Section 162(m) will not be granted to the extent required
under Treasury Regulation 1.162-27(e)(4) so that shareholder approval would have
met the requirements of that Regulation.
28
FEDERAL INCOME TAX IMPLICATIONS OF THE 1996 PLAN. The following is a brief
description of the Federal income tax consequences generally arising with
respect to awards under the 1996 Plan.
The grant of an option or LSAR will create no tax consequences for the
participant or the Corporation. A participant will not have taxable income upon
exercising an option that is an ISO, except that the alternative minimum tax may
apply. Upon exercise of an option other than an ISO, the participant generally
must recognize ordinary income equal to the fair market value of the shares
acquired on the date of exercise minus the exercise price. Upon exercise of an
LSAR, the participant generally must recognize ordinary income equal to the cash
received.
Upon a disposition of shares acquired upon exercise of an ISO before the
end of the applicable ISO holding periods, the participant must generally
recognize ordinary income equal to the lesser of (i) the fair market value of
the shares at the date of exercise of the ISO minus the exercise price or (ii)
the amount realized upon the disposition of the ISO shares minus the exercise
price. Otherwise, a participant's disposition of shares acquired upon the
exercise of an option or LSAR generally will result in short-term or long-term
capital gain or loss measured by the difference between the sale price and the
participant's tax basis in such shares (the tax basis being, generally, the
exercise price plus any amount previously recognized as ordinary income in
connection with the exercise of the option or LSAR).
The Corporation generally will be entitled to a tax deduction equal to the
amount recognized as ordinary income by the participant in connection with an
option or LSAR. The Corporation generally is not entitled to a tax deduction
relating to amounts that represent a capital gain to a participant. Accordingly,
the Corporation will not be entitled to any tax deduction with respect to an ISO
if the participant holds the shares for the ISO holding periods prior to
disposition of the shares.
A participant granted restricted stock under the 1996 Plan, during the
period it is restricted as to transferability and subject to a substantial risk
of forfeiture, generally will not be subject to taxation at grant or for the
duration of such restrictions. If shares have been delivered to the participant,
he or she generally must recognize ordinary income equal to the fair market
value of the shares at the time the restricted stock becomes transferable or not
subject to a substantial risk of forfeiture. Generally, taxation is deferred
with respect to restricted stock units and stock units that are unrestricted
until stock is delivered to the participant in settlement of the award. In any
case, the Corporation generally will be entitled to a deduction in an amount
equal to the ordinary income recognized by the participant (except as limited
under Code Section 162(m), discussed below), in the year in which the
participant recognizes such income.
Code Section 162(m) generally disallows a public company's tax deduction
for compensation to certain executive officers, defined as "covered employees,"
in excess of $1 million in any tax year. Compensation that qualifies as
"performance-based compensation" is excluded from the $1 million deductibility
cap, and therefore remains fully deductible even if it exceeds $1 million. As
discussed above, the Corporation intends that options granted and
performance-based Restricted Awards granted under the 1996 Plan qualify as such
29
"performance-based compensation," so that such awards will not be subject to the
$1 million deductibility cap of Code Section 162(m). A number of requirements
must be met in order for particular compensation to so qualify, however, so
there can be no assurance that such compensation under the 1996 Plan will be
fully deductible under all circumstances. In addition, other awards under the
1996 Plan, including Restricted Awards not subject to performance conditions
(and possibly LSARs), will not so qualify, so that compensation paid to persons
who are covered employees in connection with such awards, to the extent such
compensation and other compensation subject to Code Section 162(m)'s
deductibility cap in a given year exceeds $1 million, will be subject to Code
Section 162(m)'s deductibility cap. (See Organization and Compensation Committee
Report.)
The foregoing general discussion is intended for the information of
shareholders considering their vote with respect to the 1996 Plan amendment and
not as tax guidance to participants in the 1996 Plan. This discussion does not
address the effects of other Federal taxes (including possible "golden
parachute" excise taxes) or taxes imposed under state, local, or foreign tax
laws.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
APPROVAL OF THE FOREGOING AMENDMENTS TO THE 1996 STOCK COMPENSATION PLAN
AND RE-APPROVAL OF CERTAIN MATERIAL TERMS OF THE PLAN.
INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP has been selected by the Audit
Committee of the Board of Directors to serve as independent accountants for the
Corporation 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, 1999, the Corporation 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 the Corporation in writing prior to the Meeting or by
personal notification at the Meeting prior to the voting.
30
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires directors and certain officers of
the Corporation, as well as persons who own more than 10% of a registered class
of the Corporation'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. The Corporation believes
that during the preceding year all Reporting Persons timely complied with all
filing requirements applicable to them, except that Mr. McDonald inadvertently
omitted reports of four gifts of shares to charitable organizations from his
otherwise timely filed Form 5, which was subsequently amended.
EXPENSES OF SOLICITATION
The cost of this proxy solicitation will be borne by the Corporation. In
addition to the use of mail, proxies may be solicited in person or by telephone
by employees of the Corporation without additional compensation. The Corporation
has engaged D. F. King & Co., Inc. to solicit proxies in connection with the
proxy statement, and employees of that company are expected to solicit proxies
in person, by telephone and by mail. The anticipated cost to the Corporation of
such solicitation is approximately $10,000. The Corporation 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.
2000 SHAREHOLDER PROPOSALS
In order for shareholder proposals for the 2000 Annual Meeting of
Shareholders to be eligible for inclusion in the Corporation's proxy statement,
they must be received by the Corporation at its principal office in Greensboro,
North Carolina on or before November 14, 1999. In order for shareholder
proposals that are not intended to be included in the Corporation's proxy
statement but which are to be presented at the 2000 Annual Meeting of
Shareholders to be timely, notice of such proposal must be received by the
Corporation at its principal office in Greensboro, North Carolina on or before
February 1, 2000.
By Order of the Board of Directors
Candace S. Cummings
Vice President - Administration,
General Counsel and Secretary
Dated: March 17, 1999
31
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EXHIBIT 'A'
V.F. CORPORATION
1996 STOCK COMPENSATION PLAN,
AS AMENDED
ARTICLE I
PURPOSE
1.1 PURPOSE. The purpose of the V.F. Corporation 1996 Stock Compensation
Plan (this "Plan") is to strengthen the ability of V.F. Corporation (the
"Company") to attract, motivate, and retain employees and directors of superior
ability and to more closely align the interests of such employees and directors
with those of the Company's shareholders by relating compensation to increases
in shareholder value.
ARTICLE II
GENERAL DEFINITIONS
2.1 "AGREEMENT" The written instrument evidencing the grant to a
Participant of an Award. Each Participant may be issued one or more Agreements
from time to time, evidencing one or more Awards.
2.2 "AWARD" Any award granted under this Plan.
2.3 "BOARD" The Board of Directors of the Company.
2.4 "CHANGE IN CONTROL" A change in control of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of regulation
14A, as in effect on the Effective Date hereof, promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided that, without
limitation, such a Change in Control shall be deemed to have occurred if (i) any
"Person" (as such term is used in sec.13(d) and sec.14(d) of the Exchange Act),
except for (A) those certain trustees under Deeds of Trust dated August 21, 1951
and under the Will of John E. Barbey, deceased (a "Trust" or the "Trustee"), and
(B) any employee benefit plan of the Company or any Subsidiary, or any entity
holding voting securities of the Company for or pursuant to the terms of any
such plan (a "Benefit Plan" or the "Benefit Plans"), is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities; (ii) there occurs a contested proxy solicitation of the
Company's shareholders that results in the contesting party obtaining the
ability to vote securities representing 30% or more of the combined voting power
of the Company's then outstanding securities; (iii) there occurs a sale,
exchange, transfer or other disposition of substantially all of the assets of
the Company to another entity, except to an entity controlled directly or
indirectly by the Company, or a merger, consolidation or other reorganization of
the Company in which the Company is not the surviving entity, or a plan of
liquidation or dissolution of the Company other than pursuant to bankruptcy or
insolvency laws is adopted; or (iv) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board cease for
any reason to constitute at least a
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majority thereof unless the election, or the nomination for election by the
Company's shareholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
have occurred for purposes of this Plan (x) in the event of a sale, exchange,
transfer or other disposition of substantially all of the assets of the Company
to, or a merger, consolidation or other reorganization involving the Company and
officers of the Company, or any entity in which such officers have, directly or
indirectly, at least a 5% equity or ownership interest or (y) in a transaction
otherwise commonly referred to as a "management leveraged buyout".
Clause (i) above to the contrary notwithstanding, a Change in Control shall
not be deemed to have occurred if a Person becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding securities solely as
the result of an acquisition by the Company or any Subsidiary of voting
securities of the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
to 20% or more of the combined voting power of the Company's then outstanding
securities; provided, however, that if a Person becomes the beneficial owner of
20% or more of the combined voting power of the Company's then outstanding
securities by reason of share purchases by the Company or any Subsidiary and
shall, after such share purchases by the Company or a Subsidiary, become the
beneficial owner, directly or indirectly, of any additional voting securities of
the Company, then a Change in Control of the Company shall be deemed to have
occurred with respect to such Person under clause (i). Notwithstanding the
foregoing, in no event shall a Change in Control of the Company be deemed to
occur under clause (i) with respect to any Trust or Benefit Plan.
Clauses (i) and (ii) to the contrary notwithstanding, the Board may, by
resolution adopted by at least two-thirds of the directors who were in office at
the date a Change in Control occurred, declare that a Change in Control
described in clause (i) or (ii) has become ineffective for purposes of this Plan
if the following conditions then exist: (x) the declaration is made within 120
days of the Change in Control; and (y) no person, except for (A) the Trusts, and
(B) the Benefit Plans, either is the beneficial owner, directly or indirectly,
of securities of the Company representing 10% or more of the combined voting
power of the Company's outstanding securities or has the ability or power to
vote securities representing 10% or more of the combined voting power of the
Company's then outstanding securities. If such a declaration shall be properly
made, the Change in Control shall be ineffective ab initio.
2.5 "CODE" The Internal Revenue Code of 1986, as amended, and applicable
regulations and rulings issued thereunder.
2.6 "COMMITTEE" The Committee, appointed by the Board, to administer the
Plan in accordance with the provisions in Article IV.
2.7 "COMMON STOCK" The common stock of the Company as described in the
Company's Articles of Incorporation, or such other stock as shall be substituted
therefor.
2.8 "COMPANY" V.F. Corporation, or any successor to the Company.
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2.9 "DATE OF GRANT" The date on which the granting of an Award is
authorized by the Committee, unless another date is specified by the Committee
or by a provision in this Plan applicable to the Award.
2.10 "DIRECTOR" A member of the Board who is not an Employee.
2.11 "DISPOSITION" Any sale, transfer, encumbrance, gift, donation,
assignment, pledge, hypothecation, or other disposition, whether similar or
dissimilar to those previously enumerated, whether voluntary or involuntary, and
whether during the Participant's lifetime or upon or after his or her death,
including, but not limited to, any disposition by operation of law, by court
order, by judicial process, or by foreclosure, levy, or attachment.
2.12 "EMPLOYEE" Any employee of the Company or a Subsidiary.
2.13 "EXCHANGE ACT" The Securities Exchange Act of 1934, as amended, and
applicable regulations and rulings issued thereunder.
2.14 "FAIR MARKET VALUE" The average of the reported high and low sales
price of the Common Stock (rounded up to the nearest one-tenth of a dollar) on
the date on which Fair Market Value is to be determined (or if there was no
reported sale on such date, the next preceding date on which any reported sale
occurred) on the principal exchange or in such other principal market on which
the Common Stock is trading.
2.15 "INCENTIVE STOCK OPTION" A Stock Option intended to satisfy the
requirements of Section 422(b) of the Code.
2.16 "LIMITED STOCK APPRECIATION RIGHT" OR "LIMITED RIGHT" The rights
specified in Article VIII.
2.17 "NON-QUALIFIED STOCK OPTION" A Stock Option other than an Incentive
Stock Option.
2.18 "PARTICIPANT" An Employee or Director selected by the Committee to
receive an Award.
2.19 "PERFORMANCE OBJECTIVE" A performance objective established pursuant
to Section 9.3 hereof.
2.20 "RESTRICTED STOCK" Common Stock which is subject to restrictions and
awarded to Participants under Article IX of this Plan and any Common Stock
purchased with or issued in respect of dividends and distributions on the
Restricted Stock.
2.21 "RESTRICTED STOCK UNITS" Stock Units which are subject to a risk of
forfeiture and other restrictions and awarded to Participants under Article IX
of this Plan, including Stock Units resulting from deemed reinvestment of
dividend equivalents on Restricted Stock Units.
2.22 "RETIREMENT" Employment separation and commencement of pension
benefits under the V.F. Corporation Pension Plan (or any successor plan thereto)
on account of early, normal or late retirement thereunder.
2.23 "RULE 16B-3" Rule 16b-3 under the Exchange Act or any successor
thereto.
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2.24 "SECURITIES ACT" The Securities Act of 1933, as amended, and
applicable regulations and rulings issued thereunder.
2.25 "STOCK OPTION" An award of a right to purchase Common Stock pursuant
to Article VII.
2.26 "STOCK UNITS" An unfunded obligation of the Company, the terms of
which are set forth in Section 9.6.
2.27 "SUBSIDIARY" A "subsidiary corporation" as defined in Section 424(f)
of the Code that is a subsidiary of the Company.
ARTICLE III
SHARES OF COMMON STOCK SUBJECT TO THE PLAN
3.1 COMMON STOCK AUTHORIZED. Subject to the provisions of this Article
and Article XI, the total aggregate number of shares of Common Stock that may be
issued, pursuant to Awards, shall not exceed 8,900,000 shares (plus additional
shares, if any, which, as of the effective date of this Plan or thereafter, are
available or become available for award under the Company's 1991 Stock Option
Plan and the 1995 Key Employee Restricted Stock Plan); provided, however, that
in no event shall the number of shares of Restricted Stock and Restricted Stock
Units to be awarded either as Service Awards or Performance Awards under this
Plan exceed 1,200,000.
3.2 LIMITATION OF SHARES. For purposes of the limitations specified in
Section 3.1, the following principles apply: (a) a decrease in the number of
shares which thereafter may be issued or transferred for purposes of Section 3.1
shall result from (i) the delivery of shares of Common Stock upon exercise of a
Stock Option or payment of cash in settlement of a Limited Stock Appreciation
Right in any manner, and (ii) the expiration of the risk of forfeiture on
Restricted Stock or Restricted Stock Units, including the conversion of
Restricted Stock to Stock Units under Section 9.6; (b) shares of Common Stock
with respect to which Stock Options and Limited Stock Appreciation Rights
expire, are canceled without being exercised, or are otherwise terminated may be
regranted under this Plan; and (c) if any shares of Common Stock related to an
Award are not issued or, for any reason, cease to be issuable or are forfeited,
such shares of Common Stock shall no longer be charged against the limitation
provided for in Section 3.1 and shall be available again for grant of Awards.
3.3 SHARES AVAILABLE. At the discretion of the Board or the Committee,
the shares of Common Stock to be delivered under this Plan shall be made
available either from authorized and unissued shares of Common Stock or shares
of Common Stock controlled by the Company, or both; provided, however, that
absent such determination by the Board or the Committee to the contrary, in
whole or in part, the shares shall consist of the Company's authorized but
unissued Common Stock.
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ARTICLE IV
ADMINISTRATION OF THE PLAN
4.1 COMMITTEE. The Plan generally shall be administered by the
Organization and Compensation Committee of the Board, or such other Board
committee as may be designated by the Board to administer the Plan, subject to
this Article IV. The Committee shall consist of two or more Directors. The
members of the Committee shall serve at the pleasure of the Board, which shall
have the power, at any time and from time to time, to remove members from the
Committee or to add members thereto. Vacancies on the Committee, however caused,
shall be filled by action of the Board. In appointing members of the Committee,
the Board may consider whether a member is or will qualify as a "Non-Employee
Director" within the meaning of Rule 16b-3(b)(3) under the Exchange Act and an
"outside director" within the meaning of Treasury Regulation 1.62-27(e)(3) under
Code Section 162(m), but such members are not required to so qualify at the time
of appointment or during their term of service on the Committee. At any time
that a member of the Committee does not so qualify, any action of the Committee
relating to an award granted or to be granted to a Participant who is then
subject to Section 16 of the Exchange Act in respect of the Company, or relating
to an award intended by the Committee to constitute "performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder, may be taken either (i) by a subcommittee, designated by the
Committee, composed solely of two or more Directors who so qualify as a
"Non-Employee Director" or "outside director" (whichever may apply), or (ii) by
the Committee but with each such member who does not so qualify as a
"Non-Employee Director" or "outside director" (whichever may apply) abstaining
or recusing himself or herself from such action, provided that at least two
Directors serving on the Committee remain qualified to act. Such action,
authorized by such a subcommittee or by the Committee upon the abstention or
recusal of such non-qualified member(s), shall be the action of the Committee
for purposes of the Plan. The foregoing notwithstanding, the Board may perform
any function of the Committee under the Plan, including transactions with
respect to Directors. In any case in which the Board is performing a function of
the Committee under the Plan, each reference to the Committee herein shall be
deemed to refer to the Board, except where the context otherwise requires.
4.2 POWERS. The Committee has discretionary authority to determine the
Employees and Directors to whom, and the time or times at which, Awards shall be
granted. The Committee also has authority to determine the amount of shares of
Common Stock that shall be subject to each Award and the terms, conditions, and
limitations of each Award, subject to the express provisions of this Plan. The
Committee shall have the discretion to interpret this Plan and to make all other
determinations necessary for Plan administration. The Committee has authority to
prescribe, amend and rescind any rules and regulations relating to this Plan,
subject to the express provisions of this Plan. All Committee interpretations,
determinations, and actions shall be in the sole discretion of the Committee and
shall be binding on all parties. The Committee may correct any defect or supply
any omission or reconcile any inconsistency in this Plan or in any Agreement in
the manner and to the extent it shall deem expedient to carry it into effect,
and it shall be the sole and final judge of such expediency.
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4.3 AGREEMENTS. Awards shall be evidenced by an Agreement and may include
any terms and conditions not inconsistent with this Plan, as the Committee may
determine.
4.4 NO LIABILITY. No member of the Board, the Committee or any of its
delegates shall be liable for any action or determination made in good faith
with respect to this Plan, any Award or any Agreement.
ARTICLE V
ELIGIBILITY
5.1 PARTICIPATION. Participants shall be selected by the Committee from
the Employees and Directors. Such designation may be by individual or by class.
5.2 INCENTIVE STOCK OPTION ELIGIBILITY. A Director shall not be eligible
for the grant of an Incentive Stock Option. In addition, no Employee shall be
eligible for the grant of an Incentive Stock Option who owns (within the meaning
of Section 422(b) of the Code), or would own immediately before the grant of
such Incentive Stock Option, directly or indirectly, stock possessing more than
10 percent of the total combined voting power of all classes of stock of the
Company or any Subsidiary.
5.3 LIMIT ON AWARDS. Awards granted to any Employee shall not exceed in
the aggregate during any calendar year (a) 250,000 Stock Options (with or
without tandem Limited Rights and inclusive of any Limited Rights granted
pursuant to Section 11.2) and (b) 50,000 shares of Restricted Stock or
Restricted Stock Units (subject in each case to adjustment as provided in
Article XI).
ARTICLE VI
FORMS OF AWARDS
6.1 AWARD ELIGIBILITY. The forms of Awards under this Plan are Stock
Options as described in Article VII, Limited Stock Appreciation Rights as
described in Article VIII, and Restricted Stock and Restricted Stock Units as
described in Article IX. The Committee may, in its discretion, permit holders of
Awards under this Plan to surrender outstanding Awards in order to exercise or
realize the rights under other Awards, or in exchange for the grant of new
Awards or require holders of Awards to surrender outstanding Awards as a
condition precedent to the grant of new Awards.
ARTICLE VII
STOCK OPTIONS
7.1 EXERCISE PRICE. The exercise price of Common Stock under each Stock
Option shall be not less than 100 percent of the Fair Market Value of the Common
Stock on the Date of Grant.
7.2 TERM. Stock Options may be exercised as determined by the Committee,
provided that Incentive Stock Options may in no event be exercised later than 10
years from the
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Date of Grant or granted later than 10 years after the applicable date under
Section 422(b)(2) of the Code. During the Participant's lifetime, only the
Participant may exercise an Incentive Stock Option. The Committee may amend the
terms of an Incentive Stock Option at any time to include provisions that have
the effect of changing such Incentive Stock Option to a Non-qualified Stock
Option, or vice versa (to the extent any such change is permitted by applicable
law).
7.3 METHOD OF EXERCISE. Upon the exercise of a Stock Option, the exercise
price shall be payable in full in cash or an equivalent acceptable to the
Committee. No fractional shares shall be issued pursuant to the exercise of a
Stock Option, and no payment shall be made in lieu of fractional shares. At the
discretion of the Committee and provided such payment can be effected without
causing the Participant to incur liability under Section 16(b) of the Exchange
Act, the exercise price may be paid by assigning and delivering to the Company
shares of Common Stock or a combination of cash and such shares equal in value
to the exercise price. Any shares so assigned and delivered to the Company in
payment or partial payment of the exercise price shall be valued at the closing
market price of the Common Stock on the principal exchange or in such other
principal market on which the Common Stock is trading on the exercise date. In
addition, at the request of the Participant and to the extent permitted by
applicable law, the Company in its discretion may selectively approve
arrangements with a brokerage firm under which such brokerage firm, on behalf of
the Participant, shall pay to the Company the exercise price of the Stock
Options being exercised, and the Company, pursuant to an irrevocable notice from
the Participant, shall promptly deliver the shares being purchased to such firm.
7.4 LIMITATION OF INCENTIVE STOCK OPTIONS. With respect to Incentive
Stock Options, the aggregate Fair Market Value (determined at the Date of Grant)
of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by a Participant during any calendar year (under
all stock option plans of the Company and its Subsidiaries) shall not exceed
$100,000, or such other amount as may be prescribed under the Code. If any Stock
Option intended to be an Incentive Stock Option fails to so qualify, including
under the requirement set forth in this Section 7.4, such Stock Option shall be
deemed to be a Non-qualified Stock Option and shall be exercisable in accordance
with the Plan and the Stock Option's terms.
ARTICLE VIII
LIMITED STOCK APPRECIATION RIGHTS
8.1 GRANT. The grant of Limited Stock Appreciation Rights under this Plan
shall be subject to the terms and conditions of this Article VIII and shall
contain such additional terms and conditions, not inconsistent with the express
provisions of this Plan, as the Committee shall deem desirable. A Limited Right
is a stock appreciation right which is effective only upon a Change in Control
(as defined in Section 2.4) and is payable only in cash. The amount of payment
to which any grantee of such a Limited Right shall be entitled upon exercise
shall be equal to the difference between the exercise price per share of any
Common Stock covered by a Stock Option in connection with, whether or not in
tandem, such Limited Right and the "Market Price" of a share of Common Stock.
For purposes of
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this Section 8.1, the term "Market Price" shall mean the greater of (i) the
highest price per share of Common Stock paid in connection with the Change in
Control and (ii) the highest price per share of Common Stock reflected in the
NYSE Transactions Report during the sixty day period prior to the Change in
Control. If the Limited Rights are exercised, the tandem Stock Options shall
cease to be exercisable to the extent of the Common Stock with respect to which
such Limited Rights are exercised.
ARTICLE IX
RESTRICTED STOCK
9.1 TYPES OF AWARD. The Committee, in its discretion, is authorized to
grant Awards of Restricted Stock and Restricted Stock Units (together,
"Restricted Awards") either as Service Awards or Performance Awards. As used
herein, the term "Service Award" refers to any Restricted Award described in
Section 9.2 and the term "Performance Award" refers to any Restricted Award
described in Section 9.3. Restricted Stock shall be nontransferable until such
time as all of the restrictions underlying the Award have been satisfied.
9.2 SERVICE AWARD. The Committee may grant shares of Restricted Stock or
Restricted Stock Units to a Participant subject to forfeiture upon an
interruption in the Participant's continuous service with the Company or a
Subsidiary within a specified period (which shall not be less than one year)
specified by the Committee. The period during which Restricted Stock Units are
subject to a risk of forfeiture may be shorter than the period during which
settlement of the Restricted Stock Units is deferred.
9.3 PERFORMANCE AWARD. The Committee may grant Restricted Stock or
Restricted Stock Units to a Participant upon the attainment of a Performance
Objective as follows: Not later than the applicable deadline under Treasury
Regulation 1.162-27(e), the Committee, in its sole discretion, may establish (a)
a Performance Award for a Participant for a specified period during which
performance will be measured (the "Performance Period"), and (b) with respect to
such Participant one or more Performance Objectives to be satisfied prior to the
Participant's becoming entitled to settlement of such Performance Award for such
Performance Period. Any Performance Objective shall be comprised of specified
corporate, business group or divisional levels of performance, over the
Performance Period, relating to one or more of the following performance
criteria: earnings per share; net earnings; pretax earnings; operating income;
net sales; market share; balance sheet measurements; cash return on assets; book
value; shareholder return, or return on average common equity. In establishing
the level of Performance Objective to be attained, the Committee may disregard
or offset the effect of such factors as extraordinary and/or nonrecurring items
as determined by the Company's outside accountants in accordance with generally
accepted accounting principles and changes in accounting standards as may be
required by the Financial Accounting Standards Board. Performance Awards may
also be granted in the sole discretion of the Committee, if the Company's
performance during a specified Performance Period, as measured by one or more of
the criteria enumerated in this Section 9.3, as compared to comparable measures
of performance of peer companies, equals or exceeds Performance Objectives
established by the Committee not later than the applicable deadline under
Treasury Regulation 1.162-27(e). No Performance Award shall
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be settled or paid out to a Participant for a Performance Period prior to
written certification by the Committee of attainment of the Performance
Objective(s) applicable to such Participant. Notwithstanding attainment of the
applicable Performance Objective or any provisions of this Plan to the contrary,
the Committee shall have the power, in its sole discretion, to (a) exercise
negative discretion to reduce the Performance Award to a Participant for any
Performance Period to zero or such other amount as it shall determine; (b)
impose service requirements which must be fulfilled by the Participant during
the Performance Period or subsequent to the attainment of the Performance
Objective; and (c) provide for accelerated settlement or payment of a
Performance Award upon a Change in Control or specified terminations of
employment.
9.4 DELIVERY. If a Participant, with respect to a Service Award,
continuously remains in the employ of the Company or a Subsidiary for the period
specified by the Committee, or, with respect to a Performance Award, if and to
the extent that the Participant fulfills the requirements of the Performance
Objective and any service requirements as may be imposed by the Committee, the
shares awarded to such Participant as Restricted Stock shall be delivered to
such Participant without any restrictions promptly after the applicable event,
and the risk of forfeiture applicable to Restricted Stock Units shall end and
such Restricted Stock Units shall then and thereafter be settled in accordance
with the terms of such Restricted Stock Units (including any elective deferral
of settlement permitted by the Committee). The foregoing notwithstanding, the
Committee may determine that any restrictions and/or deferral period applicable
to a Restricted Award shall be deemed to end or have ended on an accelerated
basis at the time of the Participant's death while employed or serving as a
Director or upon the Participant's termination of employment or service due to
disability or following a Change in Control.
9.5 SHAREHOLDER RIGHTS. Except as otherwise provided in this Plan, each
Participant shall have, with respect to all shares of Restricted Stock, all the
rights of a shareholder of the Company, including the right to vote the
Restricted Stock; provided, however, that all distributions payable with respect
to the Restricted Stock shall be retained by the Company and reinvested in
additional shares of Common Stock to be issued in the name of the Participant.
Any shares of Common Stock acquired as a result of reinvestment of such
distributions shall also be Restricted Stock subject to the terms and conditions
of this Plan. A Participant shall have no rights of a shareholder relating to
Restricted Stock Units or Stock Units until such time as shares are issued or
delivered in settlement of such Restricted Stock Units or Stock Units.
9.6 DEFERRAL OF RECEIPT OF RESTRICTED STOCK. A Stock Unit, whether or not
restricted, shall represent the conditional right of the Participant to receive
delivery of one share of Common Stock at a specified future date, subject to the
terms of the Plan and the applicable Agreement. Until settled, a Stock Unit
shall represent an unfunded and unsecured obligation of the Company with respect
to which a Participant has rights no greater than those of a general creditor of
the Company. Unless otherwise specified by the Committee, each Stock Unit will
carry with it the right to crediting of an amount equal to dividends and
distributions paid on a share of Common Stock ("dividend equivalents"), which
amounts will be deemed reinvested in additional Stock Units, at the Fair Market
Value of Common Stock at the dividend payment date. Such additional Stock Units
will be subject to the same risk of
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forfeiture, other restrictions, and deferral of settlement as the original Stock
Units to which such additional Stock Units directly or indirectly relate. Unless
the Committee determines to settle Stock Units in cash, Stock Units shall be
settled solely by issuance or delivery of shares of Common Stock. The Committee
may, in its sole discretion, permit Participants to convert their Restricted
Stock into an equivalent number of stock units as of the date on which all
applicable restrictions pertaining to the Restricted Stock would either lapse or
be deemed satisfied (the "Vesting Date"). Any such request for conversion must
(a) be made by the Participant at least six months prior to the Vesting Date and
(b) specify a deferral date which is no earlier than the earlier of (i) the
Participant's termination of employment or (ii) the first anniversary of the
Vesting Date.
ARTICLE X
FORFEITURE AND EXPIRATION OF AWARDS
10.1 TERMINATION OF EMPLOYMENT OR SERVICE. Subject to the express
provisions of this Plan and the terms of any applicable Agreement, the
Committee, in its discretion, may provide for the forfeiture or continuation of
any Award for such period and upon such terms and conditions as are determined
by the Committee in the event that a Participant ceases to be an Employee or
Director. In the absence of Committee action or except as otherwise provided in
an Agreement, the following rules shall apply:
(a) with respect to Stock Options granted to Employees, in the event
of Retirement, the Stock Options shall continue to vest according to the
original schedule, but no Stock Options may be exercised after the
expiration of the earlier of the remaining term of such Stock Options or 36
months (12 months in the case of Incentive Stock Options) following the
date of Retirement; in the event of permanent and total disability, the
Stock Options shall continue to vest according to the original schedule,
but no Stock Options may be exercised after the expiration of the earlier
of the remaining term of such Stock Option or 12 months following the date
of permanent and total disability; in the event of death, Stock Options
held at the time of death by the Participant may be exercised by the estate
or beneficiary of such Participant until the expiration of the earlier of
the remaining term of such Stock Options or three years from the date of
death; in the event of the Participant's voluntary separation of
employment, the Stock Options shall terminate and be forfeited as of the
date of separation of employment; in the event of the Participant's
involuntary separation of employment, the Stock Option shall be exercisable
until the end of the period of the Participant's receipt of installments of
severance pay, if any, from the Company; in the event of an involuntary
separation of employment without severance pay or if severance pay is paid
in a lump sum, the Stock Options shall not be exercisable after the date of
separation of employment;
(b) with respect to Limited Rights granted to Employees, in the event
of Retirement or permanent and total disability, the Limited Rights shall
continue in effect for six months following separation of service, and such
Limited Rights may be exercised during such six month period; in the event
of the Participant's death or voluntary separation of service, the Limited
Rights shall terminate as of the date of separation from employment;
provided that Limited Rights pursuant to Section 8.1 may be
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exercised in accordance with their terms by the holder thereof who
separated from employment following a Change in Control, without respect to
the separation of employment of such holder; and
(c) with respect to Restricted Awards granted to Employees, in the
event of a Participant's voluntary or involuntary separation before the
expiration of the employment period specified by the Committee, with
respect to Service Awards, or before the fulfillment of the Performance
Objective and any other restriction imposed by the Committee, with respect
to Performance Awards, any shares of Restricted Stock shall be returned to
the Company and any Restricted Award shall be deemed to have been forfeited
by the Participant as of the date of such separation.
10.2 LEAVE OF ABSENCE. With respect to an Award, the Committee may, in
its sole discretion, determine that any Participant who is on leave of absence
for any reason shall be considered to still be in the employ of the Company,
provided that rights to such Award during a leave of absence shall be limited to
the extent to which such rights were earned or vested when such leave of absence
began.
ARTICLE XI
ADJUSTMENT PROVISIONS
11.1 SHARE ADJUSTMENTS. If the number of outstanding shares of Common
Stock is increased, decreased, or exchanged for a different number or kind of
shares or other securities, or if additional, new, or different shares or other
securities are distributed with respect to such shares of Common Stock or other
securities, through merger, consolidation, sale of all or substantially all of
the assets of the Company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, or other distribution with
respect to such shares of Common Stock or other securities, an appropriate
adjustment in order to preserve the benefits or potential benefits intended to
be made available to the Participants may be made, in the discretion of the
Committee, in all or any of the following (i) the maximum number and kind of
shares provided in Section 3.1 and the number of Awards that may be granted to
an Employee in the specified period under Section 5.3; (ii) the number and kind
of shares or other securities subject to then outstanding Awards; and (iii) the
price for each share or other unit of any other securities subject to then
outstanding Awards. The Committee may also make any other adjustments, or take
such action as the Committee, in its discretion, deems appropriate in order to
preserve the benefits or potential benefits intended to be made available to the
Participants. Any fractional share resulting from such adjustment may be
eliminated.
11.2 CORPORATE CHANGES. Subject to Article XIII, upon (i) the dissolution
or liquidation of the Company; (ii) a reorganization, merger, or consolidation
(other than a merger or consolidation effecting a reincorporation of the Company
in another state or any other merger or consolidation in which the shareholders
of the surviving Company and their proportionate interests therein immediately
after the merger or consolidation are substantially identical to the
shareholders of the Company and their proportionate interests therein
immediately prior to the merger or consolidation) of the Company with one or
more corporations, following which the Company is not the surviving Company (or
survives only
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as a subsidiary of another Company in a transaction in which the shareholders of
the parent of the Company and their proportionate interests therein immediately
after the transaction are not substantially identical to the shareholders of the
Company and their proportionate interests therein immediately prior to the
transaction); (iii) the sale of all or substantially all of the assets of the
Company; or (iv) the occurrence of a Change in Control, subject to the terms of
any applicable Agreement, the Committee serving prior to the date of the
applicable event may, to the extent permitted in Section 3.1 of this Plan, in
its discretion and without obtaining shareholder approval, take any one or more
of the following actions with respect to any Participant:
(a) accelerate the exercise dates of any or all outstanding Awards;
(b) grant Limited Rights to holders of outstanding Stock Options;
(c) eliminate any and all restrictions with respect to outstanding
Restricted Awards;
(d) pay cash to any or all holders of Stock Options in exchange for
the cancellation of their outstanding Stock Options and cash out all
outstanding stock units;
(e) grant new Awards to any Participants; or
(f) make any other adjustments or amendments to outstanding Awards or
determine that there shall be substitution of new Awards by such successor
employer Company or a parent or subsidiary company thereof, with
appropriate adjustments as to the number and kind of shares or units
subject to such awards and prices.
11.3 BINDING DETERMINATION. Adjustments under Sections 11.1 and 11.2
shall be made by the Committee, and its determination as to what adjustments
shall be made and the extent thereof shall be final, binding, and conclusive.
ARTICLE XII
GENERAL PROVISIONS
12.1 NO RIGHT TO EMPLOYMENT. Nothing in this Plan or in any instrument
executed pursuant to this Plan shall confer upon any Participant any right to
continue in the employ of the Company or a Subsidiary or affect the Company's or
a Subsidiary's right to terminate the employment of any Participant at any time
with or without cause or any right to continue to serve as a Director of the
Company or affect any party's right to remove such Participant as a Director.
12.2 SECURITIES REQUIREMENTS. The Company shall not be obligated to issue
or transfer shares of Common Stock pursuant to an Award unless all applicable
requirements imposed by federal and state laws, regulatory agencies, and
securities exchanges upon which the Common Stock may be listed have been fully
complied with. As a condition precedent to the issuance of shares pursuant to
the grant or exercise of an Award, the Company may require the Participant to
take any reasonable action to meet such requirements.
A-12
12.3 NO RIGHT TO STOCK. No Participant and no beneficiary or other person
claiming under or through such Participant shall have any right, title, or
interest in any shares of Common Stock allocated or reserved under this Plan or
subject to any Award except as to such shares of Common Stock, if any, that have
been issued or transferred to such Participant.
12.4 WITHHOLDING. The Company or a Subsidiary, as appropriate, shall have
the right to deduct from all Awards paid in cash any federal, state, or local
taxes as required by law to be withheld with respect to such cash payments. In
the case of Awards paid in Common Stock, the Participant or other person
receiving such Common Stock may be required to pay to the Company or a
Subsidiary, as appropriate, the amount of any such taxes which the Company or
Subsidiary is required to withhold with respect to such Common Stock. Also, at
the discretion of the Committee and provided such withholding can be effected
without causing the Participant to incur liability under Section 16(b) of the
Exchange Act, the Participant may (i) direct the Company or Subsidiary to
withhold from the shares of Common Stock to be issued or transferred to the
Participant the number of shares necessary to satisfy the Company's or
Subsidiary's obligation to withhold taxes, such determination to be based on the
shares' Fair Market Value as of the date on which tax withholding is to be made,
(ii) deliver sufficient shares of Common Stock (based upon the Fair Market Value
at the date of withholding) to satisfy the withholding obligations, or (iii)
deliver sufficient cash to satisfy the withholding obligations. Participants who
elect to use such a stock withholding feature must make the election at the time
and in the manner prescribed by the Committee.
12.5 NO DISPOSITION. No Award under this Plan may be the subject of any
Disposition (excluding shares of Common Stock with respect to which all
restrictions have lapsed), other than by will or the laws of descent or
distribution. Any attempted Disposition in violation of this provision shall be
void and ineffective for all purposes. Notwithstanding the foregoing, the
Committee may, in its sole discretion, permit a Participant to transfer a Non-
qualified Stock Option (and any related limited right) to (a) a member or
members of the Participant's immediate family, (b) a trust, the beneficiaries of
which consist exclusively of members of the Participant's immediate family, (c)
a partnership, the partners of which consist exclusively of members of the
Participant's immediate family, or (d) any similar entity created for exclusive
benefit of members of the Participant's immediate family.
12.6 SEVERABILITY; CONSTRUCTION. If any provision of this Plan is held to
be illegal or invalid for any reason, then the illegality or invalidity shall
not affect the remaining provisions hereof, but such provision shall be fully
severable and this Plan shall be construed and enforced as if the illegal or
invalid provision had never been included herein. Headings and subheadings are
for convenience only and not to be conclusive with respect to construction of
this Plan.
12.7 GOVERNING LAW. All questions arising with respect to the provisions
of this Plan shall be determined by application of the laws of the Commonwealth
of Pennsylvania, except as may be required by applicable federal law.
12.8 OTHER DEFERRALS. The Committee may permit selected Participants to
elect to defer payment of Awards in accordance with procedures established by
the Committee
A-13
including, without limitation, procedures intended to defer taxation on such
deferrals until receipt (including procedures designed to avoid incurrence of
liability under Section 16(b) of the Exchange Act). Any deferred payment,
whether elected by the Participant or specified by an Agreement or by the
Committee, may require forfeiture in accordance with stated events, as
determined by the Committee.
ARTICLE XIII
AMENDMENT AND TERMINATION
13.1 AMENDMENTS; SUSPENSION; TERMINATION. The Board may at any time
amend, suspend (and if suspended, may reinstate) or terminate this Plan;
provided, however, that after the shareholders have approved this Plan in
accordance with Section 14.1, the Board may not, without approval of the
shareholders of the Company, amend this Plan so as to (a) increase the number of
shares of Common Stock subject to this Plan except as permitted in Article XI or
(b) reduce the exercise price for shares of Common Stock covered by Stock
Options granted hereunder below the applicable price specified in Article VII of
this Plan; and provided further, that the Board may not modify, impair or cancel
any outstanding Award in a manner that materially and adversely affects a
Participant without the consent of such Participant.
ARTICLE XIV
DATE OF PLAN ADOPTION
14.1 DATE OF PLAN ADOPTION. This Plan has been adopted by the Board
effective December 3, 1996, subject to shareholder approval. Options may be
granted under the Plan prior to such shareholder approval, but if the requisite
shareholder approval is not obtained, then the Plan shall become null and void
ab initio and of no further force or effect and such Awards shall be canceled.
This Plan shall continue in effect with respect to Awards granted before
termination of this Plan and until such Awards have been settled, terminated or
forfeited.
A-14
VF CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints M.J. McDonald and C.S. Cummings, and
each of them, proxies of the undersigned, with 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 undersigned on March 2,
1999, at the Annual Meeting of Shareholders of VF Corporation to be held on
April 20, 1999, and at any adjournments thereof, and, in their discretion, upon
such other matters not specified as may come before said meeting.
ELECTION OF DIRECTORS Change of Address and Comments
---------------------------------------
Nominees:
---------------------------------------
---------------------------------------
For a 3-year term: Ursula F. Fairbairn
Barbara S. Feigin
Mackey J. McDonald
---------------------------------------
(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 BOX, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS,
FOR RE-APPROVAL OF CERTAIN MATERIAL TERMS OF THE EXECUTIVE INCENTIVE
COMPENSATION PLAN, AND FOR APPROVAL OF AMENDMENTS TO THE 1996 STOCK COMPENSATION
PLAN AND RE-APPROVAL OF CERTAIN MATERIAL TERMS OF THE PLAN.
DIRECTORS RECOMMEND A VOTE FOR ALL NOMINEES, FOR PROPOSAL 1 AND FOR PROPOSAL 2
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of Directors. 2. PROPOSAL 1 --
Re-approval of Certain
Material Terms of the
Executive Incentive
FOR, except vote withheld from the following Compensation Plan
nominee(s):
3. PROPOSAL 2 --
____________________________________ Approval of Amendments
to the 1996 Stock
____________________________________ Compensation Plan and
Re-approval of Certain
Material Terms of the Plan
Change of Address/
Comments on Reverse Side
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
VOTING REQUEST
TO: VF CORPORATION PENSION PLAN COMMITTEE (THE "COMMITTEE"),
ADMINISTRATOR OF THE VF EXECUTIVE DEFERRED SAVINGS PLAN (THE "PLAN")
As a participant in the Plan with certain Basic and/or
Matching Deferrals being credited with gains and losses as if invested in the VF
Corporation 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:
Ursula F. Fairbairn, Barbara S. Feigin and Mackey J. McDonald
VOTE FOR all nominees listed VOTE WITHHELD
[ ] above, except vote withheld from [ ] from all nominees
individual nominees as follows:
--------------------------
--------------------------
PROPOSAL 1 - RE-APPROVAL OF CERTAIN MATERIAL TERMS OF THE EXECUTIVE INCENTIVE
COMPENSATION PLAN.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE
FOR RE-APPROVAL OF CERTAIN MATERIAL TERMS OF THE EXECUTIVE INCENTIVE
COMPENSATION PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PROPOSAL 2 - AMENDMENTS TO THE 1996 STOCK COMPENSATION PLAN AND RE-APPROVAL OF
CERTAIN MATERIAL TERMS OF THE PLAN.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE
FOR APPROVAL OF THE AMENDMENTS TO THE STOCK COMPENSATION PLAN AND RE-APPROVAL OF
CERTAIN MATERIAL TERMS OF THE PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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, FOR re-approval of certain material terms of the
Executive Incentive Compensation Plan, and FOR approval of the Amendments to the
Stock Compensation Plan and re-approval of certain material terms of the Plan. 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: __________________, 1999
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.
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 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:
Ursula F. Fairbairn, Barbara S. Feigin and Mackey J. McDonald
VOTE FOR all nominees listed VOTE WITHHELD
[ ] above, except vote withheld from [ ] from all nominees
individual nominees as follows:
--------------------------
--------------------------
PROPOSAL 1 - RE-APPROVAL OF CERTAIN MATERIAL TERMS OF THE EXECUTIVE INCENTIVE
COMPENSATION PLAN.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE
FOR RE-APPROVAL OF CERTAIN MATERIAL TERMS OF THE EXECUTIVE INCENTIVE
COMPENSATION PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PROPOSAL 2 - AMENDMENTS TO THE 1996 STOCK COMPENSATION PLAN AND RE-APPROVAL OF
CERTAIN MATERIAL TERMS OF THE PLAN.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE
FOR APPROVAL OF THE AMENDMENTS TO THE STOCK COMPENSATION PLAN AND RE-APPROVAL OF
CERTAIN MATERIAL TERMS OF THE PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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, FOR re-approval of certain material terms of the
Executive Incentive Compensation Plan, and FOR approval of the Amendments to the
Stock Compensation Plan and re-approval of certain material terms of the Plan. 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: __________________, 1999
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.
[FRONT]
VOTING INSTRUCTION CARD
VF CORPORATION
INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF VF CORPORATION FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO: UMB Bank, N.A.,
Trustee for the VF Corporation Tax-Advantaged Savings Plan for
Salaried Employees (the "Plan")
The undersigned hereby instructs the Trustee to vote, in
person or by proxy, the Common and/or Series B ESOP Convertible Preferred Stock
held by it and credited to my account under the Plan at the 1999 Annual Meeting
of Shareholders of VF Corporation to be held on April 20, 1999, and at any
adjournments thereof.
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE
FOR THE ELECTION OF DIRECTORS.
Nominees:
For a 3-year term: Ursula F. Fairbairn, Barbara S. Feigin and Mackey J.
McDonald
VOTE FOR all nominees listed VOTE WITHHELD from all
above, except vote withheld nominees.
from individual nominees as
follows (if any): [ ]
------------------------
------------------------
PROPOSAL 1 - RE-APPROVAL OF CERTAIN MATERIAL TERMS OF THE EXECUTIVE INCENTIVE
COMPENSATION PLAN.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE
FOR RE-APPROVAL OF CERTAIN MATERIAL TERMS OF THE EXECUTIVE INCENTIVE
COMPENSATION PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(Continued and to be signed on reverse)
(Continued from the other side)
PROPOSAL 2 - AMENDMENTS TO THE 1996 STOCK COMPENSATION PLAN AND RE-APPROVAL OF
CERTAIN MATERIAL TERMS OF THE PLAN.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE
FOR APPROVAL OF THE AMENDMENTS TO THE STOCK COMPENSATION PLAN AND RE-APPROVAL OF
CERTAIN MATERIAL TERMS OF THE PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
These instructions when properly executed and received timely by the
Trustee will be followed by the Trustee in voting the shares of Common and/or
Series B ESOP Convertible Preferred Stock held by it and credited to the account
of the undersigned participant. If you return this card properly signed but do
not otherwise specify your choices, shares will be voted FOR the election of
directors, FOR re-approval of the Executive Incentive Compensation Plan, and FOR
approval of the amendments to the Stock Compensation Plan and re-approval of
certain material terms of the Plan. If you do not return this card timely, your
shares will be voted by the Trustee in the same proportion as the shares with
respect to which such instructions are received from other participants in the
Plan.
Signature of Participant:
________________________________
Dated: _____________________, 1999
IMPORTANT: Please sign and date
these instructions exactly
as your name appears hereon.
PLEASE SIGN, DATE AND RETURN THESE
INSTRUCTIONS PROMPTLY IN THE
ENCLOSED ENVELOPE. NO POSTAGE
REQUIRED IF MAILED IN THE
UNITED STATES.
[FRONT]
VOTING INSTRUCTION CARD
VF CORPORATION
INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF VF CORPORATION FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO: UMB Bank, N.A.,
Trustee for the VF Corporation Tax-Advantaged Savings Plan for Hourly
Employees (the "Plan")
The undersigned hereby instructs the Trustee to vote, in
person or by proxy, the Common Stock held by it and credited to my account under
the Plan at the 1999 Annual Meeting of Shareholders of VF Corporation to be held
on April 20, 1999, and at any adjournments thereof.
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE
FOR THE ELECTION OF DIRECTORS.
Nominees:
For a 3-year term: Ursula F. Fairbairn, Barbara S. Feigin and Mackey J.
McDonald
VOTE FOR all nominees listed VOTE WITHHELD from all
above, except vote withheld nominees.
from individual nominees as
follows (if any):
------------------------
------------------------
PROPOSAL 1 - RE-APPROVAL OF CERTAIN MATERIAL TERMS OF THE EXECUTIVE INCENTIVE
COMPENSATION PLAN.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE
FOR RE-APPROVAL OF THE EXECUTIVE INCENTIVE COMPENSATION PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(Continued and to be signed on reverse)
(Continued from the other side)
PROPOSAL 2 - AMENDMENTS TO THE 1996 STOCK COMPENSATION PLAN AND RE-APPROVAL OF
CERTAIN MATERIAL TERMS OF THE PLAN.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE
FOR APPROVAL OF THE AMENDMENTS TO THE STOCK COMPENSATION PLAN AND RE-APPROVAL OF
CERTAIN MATERIAL TERMS OF THE PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
These instructions when properly executed and received timely by the
Trustee will be followed by the Trustee in voting the shares of Common Stock
held by it and credited to the account of the undersigned participant. If you
return this card properly signed but do not otherwise specify your choices,
shares will be voted FOR the election of directors, FOR re-approval of the
Executive Incentive Compensation Plan, and FOR approval of the amendments to the
Stock Compensation Plan and re-approval of certain material terms of the Plan.
If you do not return this card timely, your shares will be voted by the Trustee
in the same proportion as the shares with respect to which such instructions are
received from other participants in the Plan.
Signature of Participant:
________________________________
Dated: _____________________, 1999
IMPORTANT: Please sign and date
these instructions exactly
as your name appears hereon.
PLEASE SIGN, DATE AND RETURN THESE
INSTRUCTIONS PROMPTLY IN THE
ENCLOSED ENVELOPE. NO POSTAGE
REQUIRED IF MAILED IN THE
UNITED STATES.
March 17, 1999
To All Participants in the Tax-Advantaged Savings Plan for Salaried Employees:
The Annual Meeting of Shareholders of VF Corporation will be held in
Greensboro, North Carolina, on April 20, 1999. As a participant in the VF
Tax-Advantaged Savings Plan for Salaried Employees (the "Plan"), you have a
right to vote, through the Plan's Trustee, all shares standing to your credit in
the Trust on March 2, 1999, the record date for voting at this year's Annual
Meeting of Shareholders.
Enclosed with this letter is the 1998 Annual Report of VF Corporation;
the Proxy Statement, which describes the matters to be voted upon at the Annual
Meeting; a Voting Instruction Card, which will permit you to vote the shares
allocated to your account in the Plan; and a stamped, pre-addressed return
envelope. You may exercise your right to vote by specifying your choices on the
enclosed Voting Instruction Card and by signing and forwarding the Card to the
Trustee in the enclosed envelope. The return envelope needs no postage if mailed
in the United States. Your vote will be tabulated by UMB Bank, N.A., Trustee for
the Plan, and voted by the Trustee, thereby preserving the confidentiality of
your vote.
Any shares of VF Corporation stock held by you as a shareholder apart
from the Tax-Advantaged Savings Plan should be voted by execution of a proxy.
If your Voting Instruction Card is not returned timely to the Trustee,
the shares allocated to your account will be voted by the Trustee in the same
proportion as the shares with respect to which such instructions are received
from other participants in the Plan.
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 SIGN, DATE AND PROMPTLY
RETURN YOUR INSTRUCTIONS IN THE ENCLOSED ENVELOPE.
March 17, 1999
To All Participants in the Tax-Advantaged Savings Plan for Hourly Employees:
The Annual Meeting of Shareholders of VF Corporation will be held in
Greensboro, North Carolina, on April 20, 1999. As a participant in the VF
Tax-Advantaged Savings Plan for Hourly Employees (the "Plan"), you have a right
to vote, through the Plan's Trustee, all shares standing to your credit in the
Trust on March 2, 1999, the record date for voting at this year's Annual Meeting
of Shareholders.
Enclosed with this letter is the 1998 Annual Report of VF Corporation;
the Proxy Statement, which describes the matters to be voted upon at the Annual
Meeting; a Voting Instruction Card, which will permit you to vote the shares
allocated to your account in the Plan; and a stamped, pre-addressed return
envelope. You may exercise your right to vote by specifying your choices on the
enclosed Voting Instruction Card and by signing and forwarding the Card to the
Trustee in the enclosed envelope. The return envelope needs no postage if mailed
in the United States. Your vote will be tabulated by UMB Bank, N.A., Trustee for
the Plan, and voted by the Trustee, thereby preserving the confidentiality of
your vote.
Any shares of VF Corporation stock held by you as a shareholder apart
from the Tax-Advantaged Savings Plan should be voted by execution of a proxy.
If your Voting Instruction Card is not returned timely to the Trustee,
the shares allocated to your account will be voted by the Trustee in the same
proportion as the shares with respect to which such instructions are received
from other participants in the Plan.
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 SIGN, DATE AND PROMPTLY
RETURN YOUR INSTRUCTIONS IN THE ENCLOSED ENVELOPE.