|6 Months Ended|
Jun. 30, 2012
Note I — Stock-based Compensation
During the first quarter of 2012, VF granted options to purchase 855,058 shares of Common Stock at an exercise price of $145.58, 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 $33.43 per option.
Also during the first quarter of 2012, VF granted 191,788 performance-based restricted stock units that enable the recipients to receive shares of VF 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 earned shares may be adjusted upward or downward by 25% of the target award (but not below a zero percentage payout), based on VF’s total shareholder return (“TSR”) over a three year period compared with the TSR for companies included in the Standard & Poor’s 500 index.
VF granted 4,345 nonperformance-based restricted stock units to members of the Board of Directors during the first quarter of 2012. These units vest upon grant and will be settled in shares of VF Common Stock one year from the date of grant. The fair market value of VF’s Common Stock at the date the units were granted was $145.58 per share.
VF also granted, during the first quarter of 2012, 5,500 shares of restricted VF Common Stock with a grant date fair value of $141.77 per share. These shares will vest in 2016, assuming the grantees remain employed through the vesting date.
During the quarter ended June 2012, VF did not grant any stock-based compensation awards.
The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.
Reference 1: http://www.xbrl.org/2003/role/presentationRef