Shareholder Activism and Corporate Governance at V.F. Corporation: Assessing Investment Risks in the Wake of the Berger Montague Lawsuit

The ongoing class-action lawsuit against V.F. Corporation (NYSE: VFC), initiated by Berger Montague PC, has thrust the company into the spotlight as a case study in corporate governance failures and shareholder activism. The lawsuit alleges that V.F. misled investors by concealing material restructuring efforts for its Vans brand, which contributed to a 20% revenue decline in the fourth quarter of fiscal 2025 and a subsequent 15.8% stock price drop, according to a Gross Law Firm notice. This episode underscores broader risks for investors, particularly in how corporate transparency-or its absence-can amplify financial and reputational vulnerabilities.

Corporate Governance Shortcomings and Investor Trust

At the heart of the lawsuit is a failure to disclose strategic decisions that directly impacted financial performance. According to Berger Montague's investigation, V.F. executives allegedly overstated the effectiveness of Vans' turnaround plan while downplaying the need for "reset actions" to address declining sales. This opacity created a disconnect between public statements and reality, eroding investor trust. For instance, V.F. attributed the Vans revenue decline to "deliberate actions to reduce revenue from unprofitable segments," but the lawsuit argues that even without these measures, the brand would have faced a "high single-digit" decline, according to a PR Newswire investor notice. Such discrepancies highlight a lack of accountability in executive decision-making and disclosure practices.

The case also raises questions about board oversight. While V.F. has implemented recent governance changes-such as the resignation of W. Rodney McMullen and the reassignment of Benno Dorer to the Governance Committee-these adjustments predate the lawsuit and appear unrelated to the alleged misconduct, according to a MarketScreener report. This suggests that the board's existing oversight mechanisms failed to detect or address the misrepresentations, leaving investors exposed to significant downside risk.

Shareholder Activism and Proxy Contest Dynamics

The lawsuit itself represents a form of shareholder activism, leveraging legal action to pressure V.F. into improving transparency. However, broader proxy contest trends in 2025 indicate that institutional investors have largely supported management, with the "Big Three" (Vanguard, BlackRock, and State Street) reinforcing management's control, according to a Harvard Law School analysis. This dynamic complicates efforts to enact governance reforms through traditional activist campaigns, as seen in cases like Mantle Ridge's success at Air Products or Elliott Management's campaign at Phillips 66. For V.F., the absence of a proxy contest following the lawsuit suggests that shareholders may prioritize stability over disruptive change, at least in the short term.

That said, the lawsuit could catalyze indirect reforms. The Harvard Law School analysis also notes that "withhold" campaigns and class-action lawsuits increasingly serve as tools for signaling dissatisfaction. If V.F. faces sustained legal and reputational pressure, it may adopt stricter disclosure protocols or enhance board independence to mitigate future risks.

Investment Implications: Balancing Risk and Resilience

For investors, the V.F. case illustrates the dual risks of governance lapses and market volatility. The 15.8% stock price drop in May 2025-a direct consequence of the revenue disclosure-was highlighted in the Gross Law Firm notice. Moreover, the pending lawsuit could result in financial penalties, legal costs, or reputational damage that further depress valuation metrics.

However, V.F.'s broader business transformation efforts-such as reducing $1.8 billion in debt and improving gross margins-suggest underlying operational resilience, as noted in the company's DEF 14A filing. If the company successfully navigates the legal challenges and implements governance reforms, it may regain investor confidence. Yet, the absence of concrete post-lawsuit reforms as of October 2025 raises concerns about management's commitment to long-term transparency, according to a Sahm Capital analysis.

Conclusion: A Test of Corporate Resilience

The Berger Montague lawsuit against V.F. Corporation is more than a legal dispute; it is a litmus test for corporate governance in an era of heightened shareholder scrutiny. While the company's recent governance changes and debt reduction efforts are positive, the lawsuit underscores systemic risks tied to opaque decision-making. For investors, the key will be monitoring whether V.F. adopts structural reforms-such as enhanced board independence, clearer disclosure policies, or stronger internal audits-to prevent recurrence. Until then, the stock remains a high-risk proposition, with its trajectory hinging on the resolution of legal and governance challenges.