Actions in Response to COVID-19
The below message was distributed by CEO Steve Rendle to all VF associates on April 7, 2020.
I hope you and your loved ones are doing well and staying safe.
Today I write to provide another update on our actions in response to the COVID-19 pandemic. We’ve taken additional steps to protect the financial integrity of our business and support our associates and communities around the world during these challenging times.
Let me first say how proud I am of what we’ve been able to accomplish together over the past few weeks. I know things haven’t been easy as we’ve adjusted to our new “normal” of working remotely, while also balancing personal and family demands, and higher levels of stress and uncertainty.
I can’t thank you enough for your continued perseverance. I am highly confident that the hard work you’re putting in today will help VF emerge from this situation as an even stronger company. More than ever, we are committed to enabling The Power of AND – delivering long-term value for our shareholders, consumers and the broad set of stakeholders who place their trust in us. Most importantly, we’re committed to you and all 50,000 associates who comprise the global VF family. Our company is truly an amazing place, and I’m humbled to work alongside such an incredible group of people that make it that way.
Now, let’s cover the updates, which we also communicated via an external news release today.
- ELT and Board Compensation: Effective immediately and extending for the next four months, I will be temporarily reducing my base salary by 50 percent and VF’s Executive Leadership Team will see their salaries reduced by 25 percent. Also, during this same period VF’s Board of Directors will forgo their VF cash retainer as well. The money saved by these measures will be redirected to provide continued pay and benefits to our associates who work at the front end of our business. At the end of four months, we’ll assess our situation to determine if modifications to the executive pay decisions are appropriate.
- North America Retail: I’m pleased to report that the information we provided last week regarding pay and benefits for North America retail associates is being updated. All North America retail associates will now receive 100 percent of their pay and benefits through May 3. We will continue to evaluate our pay and benefits options for retail associates beyond this time frame.
- EMEA Pay Protection: In the EMEA Region, we are leveraging various government support programs to protect pay for all associates in the region. As part of these programs, VF has decided to temporarily reduce the working time for associates while keeping salaries at or above 95 percent of normal pay for office-based, wholesale and distribution center associates, while retail associates will still receive full pay during this time. These temporary measures will apply differently across countries. EMEA leadership has been and will continue communicating these details to our associates.
- Distribution Centers: In accordance with local government guidelines, we continue to operate our global network of distribution centers to serve our consumers and customers, which include medical professionals, first responders and other workers in the industrial and service sectors. In the U.S. and Canada, VF is providing up to 14 days of emergency leave pay to distribution center associates, which is available through the end of May, as well as additional emergency recognition pay for most locations. Outside of the U.S. and Canada, we will continue to provide full pay and benefits to distribution center associates in alignment with local laws. These details are being communicated to DC associates as appropriate by their leadership teams. Our DCs are also implementing strict social distancing protocols, temperature screenings, added protective equipment, reduced and rotating shifts, and high-frequency cleaning of common areas. I extend my deepest gratitude to all DC associates for enabling us to continue serving our global consumers and e-commerce business.
In addition to our people-first actions, we’re taking extra steps to advance our Enterprise Protection Strategy to preserve financial liquidity and maximize flexibility as we manage through this period.
- Revolving Credit Facility: As a proactive, precautionary measure, we will draw down the remaining $1 billion available under our revolving credit facility. Moreover, in an abundance of caution, we are exploring alternatives to further enhance financial liquidity and flexibility of our capital structure. Following this withdrawal, we currently have approximately $2.4 billion of cash on hand.
- Occupational Workwear Business: We are proceeding with the divestiture of our Occupational Workwear business as planned and are in active discussions with prospective buyers.
- Share Repurchase / Dividend: We are temporarily pausing our share repurchase program. And, subject to approval by our Board of Directors, we intend to continue to pay the regularly scheduled dividend to our shareholders and are not contemplating the suspension of our dividend program at this time.
In closing, I want to come back to the theme of the NOW and the NEXT, which I shared in my last video message.
The ELT and our Board of Directors have great confidence that we’ll continue to take the appropriate actions to ensure the health of our business and people. We have a bias for action and decisiveness to effectively manage what’s required NOW to get through this, while also keeping an eye toward the future so VF and our brands can set the standard in our industry for what’s NEXT.
As we often remind ourselves, VF is a 120-year old company that has weathered many storms. This storm, too, will pass. When it does, we’ll look back on this period with great pride knowing that our hard work and relentless drive to succeed enabled us to build on our legacy and write the next chapter of our remarkable story.
I recognize that what we’re asking of the organization and of each of you is unprecedented. I am so very grateful for the way you’re responding and answering the call. And, as we continue to help flatten the curve, I ask that you please continue to follow the guidance of our local governments so we can all get on the other side of this as soon as possible.
Until next time, take care and stay safe. Together, we got this.
Chairman, President & CEO