11.3 Looking Forward: New Corporate Parent and New Corporate Social Responsibility Leader

On June 13, 2011, V. F. Corporation (http://www.vfc.com/about) announced the purchase of Timberland for over $2.2 billion. V. F. already owned and operated several well-known apparel brands such as the North Face, Wrangler, and Lee. In announcing the purchase V. F. CEO Eric Wiseman commented, “The Timberland brand is synonymous with high-quality outdoor footwear and apparel. We believe the unique rugged outdoor positioning of Timberland will perfectly complement the premium, technical positioning of The North Face brand. This acquisition will continue the transformation of VF’s portfolio, propelling VF’s outdoor and action sports businesses to 50% of total revenue.”

V. F. offered $43 for each Timberland share, a premium of 43 percent to Timberland’s closing price the day before the offer. On the announcement day, Timberland shares climbed $13.21, or 44 percent, to $43.20. Timberland stock had traded between $15.07 and $45.72 from June 10, 2010, to June 10, 2011, and was at $30 before the offer. The owners of about three quarters of Timberland’s stock, including Chairman Sidney Swartz and CEO Jeffrey Swartz, entered into a voting agreement and gave written consent for the deal on July 26.

V. F.’s shares rose by 10 percent after the deal was announced, which added about $1 billion to the V. F.’s market capitalization. This was atypical as shares in the buying company usually fall due to stockholders expectations that most acquisitions end up destroying value. V. F. says it intends to both grow Timberland’s sales and increase Timberland’s sales efficiency. In 2010, Timberland’s operating margin was 9 percent, which was considerably lower than V. F.’s operating margin of 20 percent.Marc Gunther, “Timberland’s Jeff Swartz: ‘This Is Hard,’” Marc Gunther (blog), June 14, 2011, http://www.marcgunther.com/2011/06/14/timberlands-jeff-swartz-this-is-hard.

V. F. has not been a recognized leader on corporate social responsibility (CSR) or sustainability. The company is at an early stage of addressing climate change and other issues related to climate change. According to the Climate Counts Company Scorecard on V. F. (http://www.climatecounts.org/scorecard_score.php?co=58), the corporation has started to measure its company-wide impact it has on global warming (i.e., its greenhouse gas emissions or climate footprint) and has made some efforts to reduce its impact on global warming (i.e., its greenhouse gas emissions or climate footprint) through the North Face. It has, however, shown minimal public information that it supports public policy that addresses climate change and provides limited information on its company-wide efforts to address climate change.

On June 28, 2011, after the announcement of V. F.’s purchase of Timberland, the company hired a new vice president for corporate social responsibility, former Dell executive Mark Newton. Newton is joining Timberland following eight years with Dell, most recently as executive director of global sustainability, where he was responsible for balancing the company’s growth strategy to minimize impacts on natural and human resources across the value chain. During his tenure with Dell, he directed global policy development, stakeholder engagements, and corporate strategies on environmental and social issues. Prior to joining Dell, Newton led environmental technology programs at Apple and Motorola. He sits on the advisory boards of Clean Production Action and Carbonfund.org.

Newton will lead the CSR global team.“Timberland Hires CSR Vice President,” Environmental Leader, http://www.environmentalleader.com/2011/06/28/timberland-creates-role-of-csr-vice-president. He will report to Timberland’s CFO Carrie Teffner and be responsible for the following:

• Overseeing Timberland’s effort to demonstrate environmental leadership and reduce the company’s environmental impact as a global brand
• Ensuring that the human rights standards set forth by the company’s code of conduct are adhered to and enforced by all Timberland vendors and suppliers worldwide
• Creating a global standard for community service through innovation, regional relevance, and employee engagement
• Executing against Timberland’s commitment to transparency and reporting by engaging a diverse set of stakeholders

Jeff Swartz’s last day as CEO of Timberland was September 13, 2011. In his final blog post he wrote the following:

Recently, I listened to the acquirer’s CEO addressing Timberland employees, in an open air town hall meeting (we take the 10 minutes of New England summer time seriously here, and so when we can meet outdoors, we do). It tore my guts out, to sit in the community gathering as a listener, watching my colleagues watching the new boss, wondering what changes are in store for our brand, our business, our community…an environmental activist in our ranks rose, way in the back, to ask the new guy, the Boss to Be, about sustainability.

“Tell us, please, why sustainability is important to you.”

And the man with whom I negotiated hard and long for the best possible deal for shareholders stood his ground, and answered, authentically and naturally. “The answer is simple—we believe that sustainability is good for the business and good for the world environmentally.”

He went on; the answer got more detailed and more concrete. But I had stopped listening.

For 30 years, we’ve been trying, fighting, struggling, to choreograph the intricate interaction between shareholder value, consumer demand, and social accountability. I have the scars, and the long list of failed efforts, incomplete outcomes, unrealized dreams and frustrated ambitions before my eyes all the time that reflect this passionate effort. And yet in this poignant moment of transition, from a business run by my family for three generations to a business to be run by relative strangers—here is the CEO of a 10B$ powerhouse, talking about sustainability simply and easily—good for business, good for the earth. And he means what he says. And it strikes me, hard, as I sit there—30 years later, a vitally important conversation has shifted. Maybe, there comes a time to say, “my job here is finished.”Jeff Swartz, “Endings and Beginnings,” The Bootmakers Blog, September 13, 2011, http://blog.timberland.com/jeff-swartz/endings-and-beginnings.