Note I — Stock-based Compensation

During the first nine months of 2012, VF granted options to purchase 870,195 shares of Common Stock at a weighted average exercise price of $145.64, equal to the fair market value of VF Common Stock on the option grant date. Employee stock options vest in equal annual installments over three years and options granted to VF’s Board of Directors become exercisable one year from the date of grant. The grant date fair value of all options was estimated using a lattice option-pricing valuation model, with the following assumptions: expected volatility ranging from 27% to 31%, with a weighted average of 30%; expected term of 5.6 to 7.5 years; expected dividend yield of 2.5%; and a risk-free interest rate ranging from 0.1% at six months to 2.1% at 10 years. The resulting weighted average fair value of these options at the grant date was $33.44 per option.

Also during the first nine months of 2012, VF granted 195,290 performance-based restricted stock units to employees that enable them to receive shares of Common Stock at the end of a three year period. The actual number of shares that will be earned can range from 0-200% of the target award, based on achievement of a three year baseline profitability goal and annually established performance goals set by the Compensation Committee of the Board of Directors. The actual number of shares earned may also be adjusted upward or downward by 25% of the targets award, based on how VF’s total shareholder return (“TSR”) over the three year period compares to the TSR for companies included in the Standard & Poor’s 500 index. The weighted average fair value of VF’s Common Stock on the date the units were granted was $145.47.

VF granted 4,345 nonperformance-based restricted stock units to members of the Board of Directors during the first nine months of 2012. These units vest upon grant and will be settled in shares of Common Stock one year from the date of grant. The fair market value of Common Stock at the date the units were granted was $145.58 per share.

VF granted 6,000 nonperformance-based restricted stock units to employees during the first nine months of 2012. These units vest in four years and will be settled in shares of Common Stock at the end of the vesting period. The fair market value of Common Stock at the date the units were granted was $139.57 per share.

VF granted to employees, during the first nine months of 2012, 12,500 shares of restricted Common Stock with a weighted average grant date fair value of $140.54 per share. These shares will vest over periods ranging from three to four years, assuming the grantees remain employed through the vesting date.