Corporate Social Responsibility

Report 2008
P H I L L I P S - VA N H E U S E N C O R P O R AT I O N

Corporate Social Responsibility Report 2008

P H I L L I P S - VA N H E U S E N C O R P O R AT I O N

Contents
03 04 Message from our CEO Introduction

05 06 06 07 09 11
12

About this Report Business Profile Governance and Ethics Stakeholder Engagement Corporate Responsibility In Summary
Workplace

13 15 18 19 20 20
22

Associate Engagement and Retention Benefits, Compensation and Associate Wellness Diversity and Inclusion Development and Training Workplace Safety Challenges and Goals
Community

23 24 26 27 29
30

Community Investment Associate Driven Activities Cause Related Brand Marketing Partnerships Challenges and Goals
Human Rights

31 32 34 35 42 43 45
46

Global Human Rights and Social Responsibility Program The PVH Supply Chain Integrating A Shared Commitment Code of Conduct Sustainable Compliance Capacity Building and Education Collaboration Challenges and Goals
Environment

47 50 53 55
58

Facilities Products and Packaging Supply Chain Environmental Impact Challenges and Goals
GRI Index

Emanuel Chirico Chairman and Chief Executive Officer

Message from our CEO

Dear Stakeholders:

The culture at Phillips-Van Heusen Corporation (PVH) has always embraced the concept that our performance as a company must be measured by more than just our bottom line. At the same time, as a public company, we recognize that producing appropriate returns for our stockholders must be our first priority and that strong financial results give us the resources to be a solid corporate citizen. There are compelling incentives to invest in being a good corporate citizen. Genuine commitment to corporate responsibility builds goodwill in the communities where we live and operate. It strengthens our connection with our associates and makes PVH a more attractive place to work. It reduces our impact on the environment, leading to a more efficient, safe and sustainable operation. And it makes our brands and products more appealing to our customers. All of this builds stockholder value. At PVH, we value: Strong corporate governance and high standards of ethics and integrity Transparency and accountability with respect to our financial results, as well as our business policies and practices A productive, diverse and satisfied workforce Responsibility to the communities where we live and conduct business Respect for human rights and fair labor conditions for the people who produce our products around the world Conscientious environmental practices to promote a sustainable, efficient operation We believe that our long-term success is dependent upon our ability to remain true to our principles and ethics in good times as well as in the most challenging times. Our decision in 2008 to produce our first Corporate Social Responsibility (CSR) Report in the face of a significantly deteriorating macroeconomic environment clearly demonstrates our commitment to our core values. We recognize that transparency is essential in order to make progress on the challenges facing our company, our industry and the world. Issuing this report moves PVH to the next level in our CSR efforts by publicly committing to key goals, as well as allowing us to communicate our vision, standards, accomplishments and challenges. We welcome stakeholders to become more engaged, to share ideas and to express concerns. Foremost among the stakeholders we serve are the more than 10,000 PVH associates around the world. We realize that CSR issues are important to them and appreciate their desire to be better informed about their companys efforts and their desire to become more engaged in order to make a difference. In the current difficult economic environment, it is critical that our standards are never compromised and that we do not lose sight of what makes PVH a good corporate citizen. On the contrary, it is in these volatile and uncertain times that our values must be reinforced. With that in mind, we respectfully present our first annual CSR Report. We look forward to receiving your feedback and we will continue to use this process to identify issues and refine our CSR policies and practices.

Emanuel Chirico Chairman and Chief Executive Officer

MESSAGE FROM OUR CEO

03

Introduction

We are proud to introduce PVHs initial CSR Report and we are pleased to have taken this important step to increase transparency. This report will serve as the foundation of our CSR communications and we look forward to building upon this effort and refining our report process in the coming years.

About this Report

To guide the development of this report, PVH formed a global, cross-functional task force of key associates that identified and prioritized the CSR topics that are most relevant to our business. To learn from the best practices of other companies reporting efforts, we engaged Business for Social Responsibility (BSR), a non-profit global business network and consultancy focused on sustainability, to work with us on the development of this report. For the past 14 years, PVH has been an active member of BSR. Materiality We began our 2008 reporting process by conducting an assessment of the economic, social and environmental issues that impact our business. We considered the following information: PVHs business objectives and strategies External industry benchmarking Internal and external stakeholder dialogue and feedback PVHs current CSR disclosures After reviewing these sources, we compiled a list of issues and prioritized them based on the importance to PVH and our stakeholders. The areas most material to PVH fall into four categories: Workplace Community Human Rights Environment

Scope This report covers all operations performed by PVH, as well as all operations under our direction. The information in this report covers the calendar year 2008, except where noted. Since this is our first report, we have also included relevant historical information on some of our key activities. Data and Metrics This report contains metrics illustrating certain baselines, quantitative goals and key performance indicators (KPIs). However, it is clear to us that there is a need for improved data collection systems so that we can better measure current performance and track our progress. PVH has taken steps to address this issue and we expect our future CSR Reports will contain more comprehensive quantifiable data. The reporting process also shed light on the need for better coordination of CSR efforts throughout the company and for improved performance evaluation systems.

In this report, we discuss forward-looking targets and goals. We believe that goal-setting is important and it is part of how we manage our business. However, targets and goals are based on our current business environment and are subject to uncertainties of the market. There is no assurance that all goals will be achieved. Our reporting was influenced by the Global Reporting Initiatives (GRI) G3 Guidelines in determining relevant content and performance metrics to include. Please see the GRI index at the end of this report.

INTRODUCTION

05

Business Profile
PVH is one of the largest apparel companies in the world, with a history dating back more than 125 years.

Our portfolio of brands includes our owned brands Calvin Klein, Van Heusen, IZOD, ARROW, G.H. Bass & Co. and Eagle. We also produce products under licensed brands Timberland, Geoffrey Beene, BCBG Max Azria, CHAPS, Sean John, Donald J. Trump Signature Collection, Joseph Abboud, Kenneth Cole New York, Michael Kors Collection, DKNY, Tommy Hilfiger, Nautica, Ted Baker, Ike Behar, Jones New York and J. Garcia, among others. At PVH, our various branded businesses are organized by business unit Dress Furnishings, Sportswear, Retail and Calvin Klein which takes advantage of operational and product synergies. Further, we leverage our corporate infrastructure across all of our business units to gain the greatest efficiency and operating effectiveness. For our fiscal year 2008 (year ended February 1, 2009), our total revenues were approximately $2.4 billion. Headquartered in New York City, PVH currently employs approximately 10,400 domestic associates, as well as over 600 associates spread throughout the Far East and Europe. The company operates approximately 650 stores under the Van Heusen, IZOD, Bass and Calvin Klein names. The majority of our stores are located in outlet malls throughout the United States.

Governance and Ethics

Board of Directors At PVH, good corporate governance starts with our Board of Directors. We aim to build a board with individuals whose characteristics strengthen our companys direction-setting with diversity of input, perspectives and leadership. Our Board includes three women and two members of minority groups. Only independent directors may serve on our board committees: Audit, Compensation, Performance Evaluation, Corporate Social Responsibility and Nominating & Governance. Nine of our 10 directors are independent. With public reporting comes a need for greater accountability and oversight. Moreover, our Board of Directors shares managements concern for transparency and corporate responsibility. Consequently, in January 2009, our Board established a new CSR Committee whose purpose is to oversee the reporting process and review future CSR reports, as well as to monitor and evaluate managements progress with respect to policies and strategies that affect PVHs role as a socially responsible organization. Code of Business Conduct and Ethics Based on our belief that strong governance and ethics are instrumental to a successful business, we recognize that we have inherent responsibilities to our stockholders, associates, business partners and the general public. These responsibilities go beyond the mere reporting of operating results and include high standards of corporate ethics and integrity. To ensure these standards, our Board of Directors has adopted a Code of Business Conduct and Ethics, which is based on the following general principles of conduct:
PVH will:

Maintain high moral and ethical standards that reflect honesty, integrity and reliability in every situation Respect the dignity and rights of all persons, regardless of race, color or creed Properly balance the interests of all groups in the conduct of its business

06

INTRODUCTION

PVHs Code of Business Conduct and Ethics covers a wide range of business practices and procedures. All of our associates, officers and directors must conduct themselves in accordance with its requirements and seek to avoid even the appearance of improper behavior. This Code is also provided to and followed by our agents and representatives. It does not cover every issue that may arise, but it sets out basic principles to guide all of our constituencies.

Associates are introduced to the Code of Business Conduct and Ethics at our new-hire orientation PVHs Brand New Start program. When hired, every associate signs an acknowledgement that he or she has read and will abide by this Code. This Code is distributed annually and the acknowledgement is recertified every two years by all associates.

Stakeholder Engagement
PVH interacts with its many constituent groups in different ways. We consider our associates, investors,

customers and business partners (such as suppliers, contractors, licensors and licensees), as well as the non-governmental organizations (NGOs) and the communities in which we operate, to be our primary stakeholders. We engage these groups to ensure that we hear and incorporate their concerns and are able to be transparent with them about our efforts and progress.

We applaud PVH for taking an important step by publishing its first Corporate Social Responsibility Report. The company has been a leader in promoting and monitoring human rights compliance in its supply chain. Innovative initiatives, like the Critical Engagement and Impact Program, have helped to build the capacity of factories to improve the lives of workers, contributing to the sustainability of their communities. Moving forward, we expect the company to continue its commitment to CSR strategies even in tough economic times.
Rev. David M. Schilling, Program Director for Human Rights, Interfaith Center on Corporate Responsibility

INTRODUCTION

07

Ongoing Collaboration We understand that important progress in confronting various business challenges is often realized through collaboration with other organizations. Over the years, we have worked with NGOs, business partners and industry associations to achieve significant improvements in the supply chain that could not have been accomplished working alone. The current economic crisis has heightened the need for such collaboration, as human and financial resources are increasingly limited while universal challenges are mounting. Our Global Human Rights team regularly conducts outreach on key business issues to NGOs concerned with human rights such as the Fair Labor Association (FLA), the Interfaith Center on Corporate Responsibility (ICCR) and regional NGOs from around the world. We have engaged BSR and Great Forest on environmental topics. For workplace diversity issues, we partner with organizations like the Black Retail Action Group (BRAG) and INROADS . Similarly, for community engagement, we have partnered with organizations like the United Way, Safe Horizon and EarthShare, and engaged Changing Our World in helping us further develop our community investment strategy.

This Report In order to cover CSR issues that are important to our key stakeholders, we gathered input from various constituency groups during the reporting process. This included meetings with ICCR, FLA and Great Forest. Our associates are a critical stakeholder group. We conducted an associate focus group to discuss CSR matters in September 2008, drawing participants from across functions in our U.S. operations. This group provided recommendations that contributed to our overall CSR strategy and communications. One consistent piece of associate feedback was the need for clear, upfront and ongoing communication of PVHs global CSR activities. We also surveyed our PVH interns on CSR issues. The results overwhelmingly demonstrated that a companys commitment to social and environmental responsibility is an important consideration for the next generation when choosing an employer. We appreciate that all of the stakeholders consulted gave honest and valuable input on the issues selected for inclusion in this report.

08

INTRODUCTION

Corporate Responsibility
We are guided by the principle that success in business is dependent on putting people first. Indeed, we know that our company would not have grown as it has if we were not committed to making a genuine contribution to improving the quality of life and upholding the basic rights of our associates, their families and the communities in which we operate. Workplace Our long-term success depends on our capable and enthusiastic workforce. Over the years, PVH has enjoyed relatively low associate turnover rates and a long-tenured workforce. To build on our successes in associate engagement and retention, we are focused on promoting diversity, work/life balance, career development and training, and workplace safety. PVH provides associates with a competitive compensation package and a comprehensive benefits program. In addition to standard health insurance and retirement plans, some examples of company benefits are an employee assistance program, tuition reimbursement and college scholarship programs, adoption benefits and assistance with personal health concerns such as weight-loss and smoking cessation. Community Community stewardship is an important aspect of PVHs corporate identity and culture. Our efforts to involve ourselves with our communities occur on many fronts and at all levels. Associates, from senior management to hourly workers, are active with local, national and foreign organizations that support hundreds of worthy causes, offering time, enthusiasm and energy, as well as personal and company resources. Our community engagement activities include company-wide initiatives, direct community involvement by business units and grass-roots participation by individual associates. Although these efforts can be effective, we see a need for a more cohesive corporate focus and message with regard to our community and philanthropic activities. We are currently working to concentrate our community stewardship efforts in order to have a more significant impact on issues that are important to our associates and the communities in which we operate.

INTRODUCTION

09

Human Rights By the early 1990s, PVH, along with virtually the entire apparel industry, was transitioning from a North American manufacturing operation to a global sourcing platform a change that tested our commitment to fair labor practices and human rights. At the time, the prevailing attitude in the industry was that factory owners were responsible for any human and labor rights violations related to their workforce. Early in this period, PVH took some of the first steps to ensure the protection of human rights and fair working conditions in our supply chain. We took these steps because they were in line with the companys principles and because it was important to protect brand reputation. Our initial human rights code of conduct for suppliers, contractors and business partners was developed in 1991.

During the 1990s, PVH operated several companyowned manufacturing facilities in Central America. The company faced significant criticism from various activists and interest groups about the conditions at these factories. We listened to our critics and did our best to integrate their suggestions into our developing Global Human Rights program. Our experience with these facilities was an important factor in formulating and shaping our approach to workers rights issues. We continue to operate under the belief that treating people fairly and with respect is paramount in creating and maintaining a successful business and, as a result, our Global Human Rights program has become an integral component of all sourcing and manufacturing decisions.

Environment PVH is also committed to the execution of a responsible environmental strategy. Although there have been programs put into practice by our individual business units to confront environmental issues, it has only been over approximately the last year that we have begun to address these concerns with company-wide efforts. PVH established an environmental task force in 2007, inviting interested associates throughout the company to get involved. This task forces recommendations resulted in the following initiatives:

We partnered with the environmental consulting firm Great Forest to conduct a detailed environmental assessment of our three largest U.S. corporate/administrative offices We established working groups at each office to review and implement the recommendations arising from the assessment We held meetings with landlords, product and service vendors, and other groups to establish initiatives and collect data

10

INTRODUCTION

Management of CSR at PVH PVHs commitment to CSR can be seen throughout the company, starting at the top. The internal management of CSR has direct ties to our CEO, ensuring that CSR efforts are linked to all parts of our business. The Global Human Rights & Social Responsibility Department is responsible for protection of human rights and fair labor conditions in our supply chain. Responsibility for environmental issues is divided into three functional areas: facilities are managed by Human Resources and Office Services; transportation and distribution are managed by Logistics; and supply chain environmental issues are managed by the Global Human Rights & Social Responsibility Department. Workplace issues are managed by Human Resources and community engagement is managed by the PVH Foundation for contributions and across business units for associaterelated activities. The CSR Task Force will continue to manage the annual CSR report process and will monitor progress and performance related to PVHs CSR efforts.

In Summary
PVH has spent considerable time and utilized the

efforts of multiple internal and external stakeholders to ensure that we continue to strive to maintain the principles of good corporate citizenship. As a company, we are moving towards a centralized, more cohesive strategic approach to CSR. We see this report as a major step toward increasing transparency and accountability to the public so that we may share our successes and open the door for our internal and external stakeholders to offer new ideas and constructive criticism.

The years ahead will be uniquely challenging as businesses and governments struggle to overcome the effects of the current global economic crisis. We recognize that in a world of increasingly constrained resources (both financial and natural) there are limits to what can be accomplished by one corporation. More than ever, there is a need for organizations to collaborate to find solutions to our shared challenges. We pledge to not only pursue our business in a responsible fashion, but also to engage our associates, NGOs, customers, investors, vendors and other stakeholders around the world as part of that commitment. We welcome all questions, comments and concerns. Please contact us at csrreport@pvh.com .

INTRODUCTION

11

Workplace
At PVH, we recognize that talented and dedicated associates are most important to the strength and stability of the company. We believe in a healthy work /life balance for our associates. We also value diversity in our workforce, respect the uniqueness of each associate and encourage openness of ideas and communication.

Associate Engagement and Retention

Associate engagement and retention are two key metrics for gauging our workplace performance and PVH has a strong record in both of these areas providing a stable foundation for continued growth of the organization. Historically, PVH has had relatively low turnover rates and a long-tenured workforce, with the average associate staying for seven years of service, excluding retail and warehouse associates. Though rates differ at our various locations worldwide, our average annual turnover rates as compared to industry measures are as follows:

LOCATION

PVH TURNOVER

BENCHMARK TURNOVER

Corporate offices, Warehouses and Far East Operations Retail Stores (Full-time Positions) Retail Stores (Part-time Positions)
1 2

18.4%

30.6% 1

42.8% 122.3%

60% 2 110% 2

United States Department of Labor, Bureau of Labor Statistics, 2008 Turnover Date for Wholesale Trade sector Mercer/National Retail Federation, 2008 Compensation and Benefits Survey for Retail Companies

In 2008, as we closed stores, we were able to retain a number of full-time retail associates by transferring them to our remaining stores. The turnover rate for part-time positions in our retail stores was higher in 2008 (98% in 2007) due to the store closings and related reduction in payroll hours. Part-time retail positions generally tend to have higher turnover rates because they are more seasonally affected and are often filled by a more transient population. Our traditionally low turnover and high tenure rates are indicative of the many positive factors that contribute to associate engagement at PVH. These factors were identified in our first company-wide associate survey, conducted in October 2006 by the National Business Research Institute. The survey had an 85% response rate, which is well above average for associate surveys. PVH scored in the 71st percentile in overall associate engagement, 21 percentiles above the national average for our industry. Among the highest-rated associate engagement categories were: Job satisfaction Management style and vision Company image Compensation and benefits programs Associates also identified opportunities for organizational improvement. In particular, two areas emerged: Communication Associates indicated a desire to be better informed about current developments in the company and requested more communications related to goals and plans at both the organizational and the supervisory levels. Career development Associates also indicated the need for more information about career development issues, advancement and promotions.

WORKPLACE

13

As a result of the survey, we formed associate action teams, with representatives from across the organization, to review the results and make recommendations to senior management. Based on those recommendations, we have taken the following key actions:

TOPIC

ACTIONS

Communication

State of the Business meetings: Our senior management team, led by Chairman and CEO Manny Chirico, conducts a series of annual meetings with associates to inform them of business performance, updated brand information, and the companys strategic plans. The meetings include question-and-answer periods. DVDs are provided to associate groups that are not able to attend. Enhancements to The Thread (company intranet site): Initially, we expanded our intranet site to include new content like quarterly earnings reports and associated audio content. In late 2008/early 2009, we conducted a major site redesign to promote engaging, real time communication and collaboration. The update also included new features like an enhanced associate directory, brand news updates, real time news feeds and a functional search feature. Additional ongoing enhancements are planned to maximize communications on The Thread. Communications seminars: We created and implemented associate and manager versions of various communication skills seminars.
PVH Career Center: To improve associates knowledge about career paths and opportunities within PVH, we launched an online Career Center that includes career path charts for major business functions, job descriptions, self-assessment tools, and suggested development plans. We will expand and update this site to include additional departments not currently included and to reflect updated career paths.

Career Development Awareness

Open position emails: In addition to posting all open positions on The Thread, we regularly email Career Center updates to our associates about the most recent job postings available. Career development workshops: Our newly designed and implemented seminars for managers and associates have become part of the companys regular curriculum.

In addition to improvements at the corporate level, each PVH business unit or department developed and implemented action plans to address their own survey results. These plans included initiating periodic business unit meetings so associates could hear about the latest business developments, assessing and improving the physical work space of associates, and other actions that address individual business unit needs.
PVH plans to conduct another company-wide

Other plans for associate engagement and retention in 2009 include developing more consistent turnover reporting across business units and creating a more comprehensive exit interview and reporting process to identify retention issues. In addition, we will continue to provide a high level of human resources support to managers and associates to maintain strong associate relations and ensure effective associate problem resolution, as well as continue to provide the high quality of life that PVH associates enjoy.

associate survey in 2009. Given the business climate and economic conditions that challenge our business, we are interested in getting feedback from associates about their current issues and concerns so that we may be responsive to their needs and take appropriate actions.

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WORKPLACE

Benefits, Compensation and Associate Wellness

Our success is dependent upon hardworking associates who dedicate their time and talents to making our company strong. That is why we provide competitive salaries and one of the most comprehensive benefit programs in the retail and apparel industries.

At PVH , we benchmark our total compensation program, including salary ranges, against survey data in our industry to ensure that we remain competitive. Additionally, we provide certain levels of associates with the ability to participate in bonus and equity programs so that they may share in the growth and success of the company. In the United States, PVH provides both a 401(k) plan (with a company match) and the security of a defined benefit pension plan, funded by PVH, for associates who work more than 20 hours per week. In addition, for those who work more than 32 hours per week, PVH provides a comprehensive health care program, including medical and dental coverage, life insurance and disability income benefits. PVH health care benefits are available to all full-time associates and their families, including domestic partners, of same or opposite sex.

For 2009, we will be adding the Health Advocate service to our suite of benefits to assist associates in locating qualified healthcare providers, scheduling appointments, resolving insurance claims and billing issues, and getting access to other related services. To help our associates balance work and family, we offer a child care/elder care resource and referral service, an employee assistance program, adoption benefits and several education-related benefits, including a college scholarship program for associates children, college coaching services and tuition assistance for associates. In our corporate and administrative offices, we offer flextime and a summer hours program. Over the past two years, we also have worked to provide our associates with the tools to make health a priority through our state-of-the-art wellness program, HealthMatters. The PVH HealthMatters program offers rewards and incentives for walking and exercising, staying or becoming tobacco-free and making other healthy choices. In addition, associates have access to a personal health coach who can develop an exercise program, put together a customized diet plan and work with them to quit smoking. According to our associates, the program has been a great success.

WORKPLACE

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HealthMatters Testimonial
Frank DeCicco, Deductions Analyst Bridgewater, New Jersey

Because of the PVH HealthMatters program made available to each of us through the thoughtfulness of PVH, I am much more health-conscious than I have ever been before. One morning in February of 2007, I woke up disgusted with my weight so I joined WeightWatchers here at work and decided to get involved with the walking program. I received my PVH pedometer and began walking at least 10,000 steps per day. At first, 10,000 steps every day seemed like sooooo many steps but once I started doing it consistently, it became easy. Now there are days that, in addition to walking the 10,000 steps, I get on my bicycle and ride. I am able to make time to walk because it has become a priority in my life. Using a combination of WeightWatchers and the walking program, I lost over 30 pounds through the spring of 2008 All of this was inspired by the PVH HealthMatters program.

Associate Support Our commitment to supporting our associates includes lending a helping hand in times of need. There are many examples of volunteer activities and financial assistance for co-workers that demonstrate the generous and caring spirit of PVH associates, a shared responsibility that is at the heart of our companys culture of caring.

In natural disasters, house fires, medical crises and other emergencies, affected associates have been appreciative of the speed and ease with which we are able to respond and give moral and financial support. This support for our associates reinforces the bonds that make our PVH corporate family strong.

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WORKPLACE

At PVH, we are committed to helping our own team of associates when their individual lives are impacted by crises. Here is one example, told by:
Diane Nagy, Customer Service Manager, Retail Bridgewater, New Jersey

It was one of those days that I will always remember. After just getting out of a staff meeting, the call from my husband was, you need to come home now the house is on fire. I made it home to find the fire department making their last walk through the house. What I had worn to work that day, and a few leftover articles of clothing in the dryer, was all that I had left of any clothing or personal items. The wonderful thing no one was hurt or harmed by the fire. Even the cat made it out safely. The very next morning, one of our PVH executives was on the phone asking me how PVH could help and what we needed. Later that day, I received another phone call, this time from my supervisor who told me to visit our stores in one of our centers and get what we needed. Aside from PVH managements help, my co-workers also took up a collection to help us with our unexpected expenses, on top of taking care of business while I was out of the office. The Van Heusen Retail division did an equally amazing thing that helped to bring some normalcy back into my familys life. Upon my return to work, I was told that twice a week they would be providing me with a home cooked meal. At that point we had been eating fast food and running all over the place, so a nice home cooked meal in our temporary living trailer was so wonderful! This went on for an amazing two months and was so very touching and much appreciated. The generosity and thoughtfulness of all my PVH co-workers in my time of need was overwhelming and very emotional. My family and I are truly blessed to know and be associated with these wonderful people who really made a difference and helped us through our difficult time.

WORKPLACE

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Diversity and Inclusion

At PVH, we recognize and respect the uniqueness of each individual and we believe that a diverse workforce is essential in responding to consumers needs and to the competitive demands of the global marketplace. PVH has a growing international presence and we strive to maintain a global perspective and an appreciation of world cultures. We also value the diversity of ideas and encourage open communication that leads to more effective and innovative business strategies and problem solving. We are committed to recruiting, training and providing career advancement opportunities to all associates without regard to race, gender, religion, age, national origin, citizenship status, disability, qualified veteran status, marital status or sexual orientation. PVH is an affirmative-action employer and we support the hiring and promotion of women and minorities in the workforce.

2008 WORKFORCE GENDER

2008 WORKFORCE ETHNICITY Other 1% Asian 5% Black/African American 10% White 65% Hispanic 19%

Male 31%

Female 69%
GENDER NUMBER % RACE/ETHNICITY NUMBER

Female Male

7730 3471

69 31

White Hispanic Black/African American Asian Other

7275 2163 1116 584 63

65.0 19.3 10.0 5.2 0.5

PVH maintains longstanding partnerships with organizations like the Black Retail Action Group (BRAG) and INROADS, organizations that help place racially and ethnically diverse interns with North American corporations,

to promote the hiring and career development of minority candidates through PVH internships and regular employment. Common Threads was the theme of the 38th Annual Scholarship and Awards Gala for BRAG. In the picture on the left on page 19 are PVH staff and various BRAG interns from this past year and from previous years, some of whom have joined PVH in regular full-time positions. In 2009, we plan to improve communication of our diversity initiatives, including our ongoing partnerships and work with minority and women-owned businesses. We also plan to improve internal reporting to senior management to better highlight both successes and opportunities to maximize diversity throughout the organization. Additionally, we will continue to offer diversity training programs as part of our basic training curriculum.

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WORKPLACE

Development and Training

Continuous education and development of the PVH workforce is critically important to the growth and success of our organization. While training varies across our locations based on specific needs, we offer a wide variety of associate training and development opportunities that help associates perform more effectively in their current roles and prepare them for taking on additional responsibilities in the future. These opportunities include:

General business skills seminars focusing on financial, communications and other managerial skills New-hire orientation programs Management training programs Retail skills and operations training Warehouse and distribution skills training Computer training classes covering the latest software technology Diversity and legal compliance training programs to support the values of our respectful workplace Customized classes to meet the needs of individual department teams Lunch and Learn programs on personal life issues like Taking Care of Elderly Parents, How to Create a Living Will, and Identity Theft

In 2008, we made a major investment in an online talent management system to help with succession planning, performance management and salary planning. This system offers features such as:

Associate career profiles (with resume-like data) to capture basic associate career information including work history, education, certifications, and more Salary planning that includes merit planning worksheets, individual compensation statements and other tools Succession planning tools to identify and manage bench strength

Over the next two years, PVH will continue to roll out additional elements of the talent management system, including tools to support performance management and productivity, such as online goal setting and tracking, and individual development planning. We will also implement leadership assessment and succession planning programs to ensure development of future leaders of PVH. In addition to internal training and development opportunities, we also provide a generous college tuition assistance program to associates who want to earn an undergraduate or graduate college degree in a related field.

WORKPLACE

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Workplace Safety
At PVH, we take associate safety seriously. We have developed custom safety programs tailored to each of our warehouse and factory locations. At our retail stores, we have implemented strong safety policies and procedures, mandatory safety training and store self-inspections. The Risk Management Department helps develop these programs and provides guidance and resources with services such as inspections, ergonomic analysis and proper lifting technique training. To motivate our managers to promote safety, we allocate workers compensation losses and associated costs to each business units budget. We support business unit heads by providing quarterly loss information, so that they can direct their efforts to issues in a timely manner. While we realize that it would be unrealistic to expect a perfect safety record with no incidents, we continuously strive to provide the safest possible working environment for all our associates.

Challenges and Goals

This past year has presented our company, our industry and our country with many significant challenges. We believe that the global economy will continue to be difficult throughout 2009. It was necessary for us to respond aggressively to these challenges and, accordingly, during 2008 a number of restructuring activities were initiated, including the closing of our Geoffrey Beene outlet retail store division, the shutdown of domestic production of machine-made neckwear a realignment of our global sourcing organization, and reductions in warehousing capacity, as well as other initiatives to reduce travel, payroll, marketing and administrative expenses. With these actions came a number of very difficult decisions that resulted in staff reductions throughout the organization. Approximately 250 salaried positions, representing over 10% of the companys salaried workforce, and approximately 150 hourly neckwear manufacturing positions have been eliminated. The Geoffrey Beene store closings resulted in the elimination of approximately 450 full-time and part-time retail positions. PVH attempted to treat all impacted associates with the highest level of dignity and respect. We provided these associates with generous severance packages, family medical benefits and outplacement services to support them in securing new employment.

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During these difficult economic times, communication with associates is increasingly important. We will make a greater effort in 2009 to maintain timely and ongoing communications with associates, including more frequent communications from our CEO and senior management team, in a variety of formats to reach associates in all parts of our decentralized organization. Additionally, we will establish a new position, Director of Global Communications, to improve communications throughout the company. This position will be responsible for ensuring that all PVH associates have timely access to information about current developments at PVH through a variety of approaches. Methods will include creating and maintaining engaging content on the companys intranet site, publishing associate communications on brand strategies and initiatives, and implementing a year-round communications program using various electronic, media and meeting formats. Below are some of our goals for continuous improvement of workplace issues in 2009:

Engagement and Retention

Conduct the 2009 associate engagement survey to assess organizational effectiveness and develop company-level and department-level action plans to address any identified areas of opportunity Achieve more consistent tracking and reporting of associate engagement measures such as turnover and exit interviews across all business units. Publish periodic reports highlighting any identified issues Expand communication and awareness of company diversity strategies and initiatives Expand reporting of diversity statistics for review by senior management and identify opportunities for improvement Implement leadership assessment and development programs to develop leadership talent Expand the online PVH Talent Management System to provide managers and associates with enhanced tools for succession planning and career development, performance management and salary planning Implement a new Change Management seminar as part of our expanding management and leadership development training curriculum to help managers lead more effectively in light of the rapidly changing business environment Create an ongoing communications plan to keep associates informed and maintain effective two-way communication Incorporate reporting of CSR activities into the PVH performance review process for senior executives to encourage goal setting and performance evaluation on social responsibility issues

Diversity

Development and Training

Associate Communications Corporate Social Responsibility Objectives

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At PVH, our commitment to community service is an integral aspect of our corporate identity and culture. We believe that we have an obligation to support the local communities in which we live and operate, as well as the larger global community. At the heart of our community engagement initiatives are our associates.

Community

Whether in our retail stores, warehouses or office facilities, our various business units dedicate themselves to specific causes and organizations where associates participate as a team on focused activities and events. Individual associates from senior executives to hourly associates serve personally on not-for-profit boards, fundraising committees and in a variety of other volunteer capacities for a broad range of worthy causes. Our community stewardship is done in a number of ways and through numerous channels. These include:

Associate volunteerism In-kind donations of PVH branded products Cash contributions made at the corporate and local level Associate contributions and PVH matching gift programs Associate fundraising activities and events Cause related brand marketing programs Encouraging consumer giving in our retail stores

Community Investment
COMMUNITY INVESTMENTS Dollar amounts in thousands1
2007 $434 $409 $461 $568 2008

$500

Total $9,812

$6,648
$1,370

Total $10,578

$6,363

$1,821 PVH Product Contributions Retail Customer Contributions

1 PVH

$1,816 PVH Cash Contributions PVH Cares Cause Related Marketing

Product Contributions represent retail value.

Product Contributions We contribute a variety of products to organizations that assist individuals and families in need. Clothing and accessories, such as coats, shirts, pants, shoes and handbags, are given to relief organizations during natural disasters, as well as to organizations that aid homeless or low-income families, women and children who must flee their homes because of domestic abuse, homeless veterans and many others. Donated items come from our product samples, out of season items and other sources from our wholesale and retail businesses. PVH made in-kind product contributions of more than $6 million both in 2007 and in 2008.

Product contributions can make a big difference in times of need. Through the work of PVH associates who organize our product donation efforts and the contributions of our branded products, we have touched countless lives by providing some of lifes basic necessities when individuals and families needed them the most. Cash Contributions PVH contributes to a wide variety of global, national and local organizations in the communities around the world where we do business. Community investment includes funding to support disadvantaged women and children, education, the environment, disaster relief and a number of other causes.
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23

Associate Driven Activities

PVH Cares Campaign PVH associates in the United States contribute to a wide range of causes through our PVH Cares campaign.

We encourage and support our associates efforts to make a difference in their communities. Whether the focus is health, education, children and family issues, the environment or other spotlight issues, PVH associates give generously through the PVH Cares campaign and the company matches 50 cents on every dollar contributed by associates. We work with the United Way to conduct an annual fundraising campaign through which associates contribute by cash contribution or through payroll deduction directly to the United Way and its member agencies or to designated charities of their choice. As part of the PVH Cares campaign, PVH associates also plan and conduct fundraising events in our various locations to raise additional funds for selected charities. Popular events include ice cream sales, golf outings, craft sales by special education schools, sample sales to benefit charity and many others. Year after year, our associates inspire and amaze us with how enthusiastically they take advantage of these programs to support their communities. The chart below shows the amounts raised through the PVH Cares campaign for the past two years:

DOLLAR AMOUNTS IN THOUSANDS

2007 Associate Pledges PVH Match Fundraising Events Total $203 115 116 $434

2008 $209 114 138 $461

Jonesville Team Rallies Support for Associate Larry Kincaid and ALS

Larry Kincaid, an associate in our Jonesville, North Carolina warehouse, was diagnosed with ALS (Lou Gehrigs disease) in 2007. Following his diagnosis, Larry made the courageous act of inviting his fellow associates at PVH to join the effort to cure ALS. When the PVH Foundation presented a $10,000 contribution to the ALS Association in Larrys honor, he asked his Jonesville co-workers to match it. Larrys actions unified the Jonesville team in an inspiring fundraising campaign. Through bake sales, golf tournaments, yard sales, raffles and other events, 62 associates from the Jonesville team, along with friends and family, almost tripled their goal and raised $29,145. They also raised money for a gala event and many people volunteered their time to prepare for and stage the event. Associate contributions were presented in a moving ceremony at the event, which raised more than $225,000 overall for ALS research. Last year, the Western District of North Carolina selected Larry as the years Honoree of Hope, and he gave an emotional speech at a banquet for ALS research. Larry embodies the PVH spirit of voluntarism, a profile in community service at PVH in action.

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COMMUNITY

Associate Volunteering PVH associates give of their time and talent to support the communities where they live and work. Below are a few examples of associate volunteer initiatives across our U.S. business units:

The Dress Furnishings Group ran a drive to gather goods for earthquake relief in El Salvador. The Calvin Klein team supported Woodycrest House in the Bronx, New York, giving toys to children of 40 families affected by HIV/AIDS. Our Bridgewater, New Jersey office associates provided support to the Community Food Bank of New Jersey by collecting, sorting and distributing food and childrens clothing to local organizations and families.

In addition to company promoted fundraising drives and community events, PVH associates get involved directly in numerous volunteer service opportunities around the world. Additionally, associates in our corporate and administrative offices are encouraged to perform volunteer service through our Paid Time Off Volunteer Policy. This program allows associates to spend up to 48 hours per year performing community service during working hours while continuing to be paid by the company. Established many years ago to promote community involvement, this program has led to thousands of hours of volunteer service by our associates.

Our overseas associates also demonstrate the PVH spirit of community responsibility. Examples of volunteer service by associates in our foreign operations divisions include:

Our Bangladesh associates organized an Eye Camp to provide free eye examinations to local residents Our Hong Kong office associates staged an annual Dress Special Day to help donate apparel to families in need Donations of computers were made to schools, libraries and villages in Bangladesh, Indonesia and the Philippines Our Honduras office held a Christmas party for the children of El Refugio orphanage

Cyclone Disaster Relief

PVH associates set up fundraising campaigns in our Bangladesh and Hong Kong offices to assist families who lost their homes and were affected by the widespread flooding caused by the cyclone in Bangladesh. We used contributions collected from the Bangladesh office to buy and distribute blankets directly to the needy and we gave contributions from the Hong Kong office to World Vision Hong Kong, an organization that works to help children, families and communities living in poverty and strongly supports emergency relief efforts in affected countries.

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Customer Contributions We reach out to our retail customers every July through an annual all-store customer campaign. For the past three years, our retail outlet stores have solicited customer contributions to support Save the Children, an organization focused on creating lasting change in the lives of children through literacy, nutrition and physical activity programs. Associates in our retail outlet stores also conduct related in-store customer campaigns, such as food drives and toy drives. The table below shows the amounts raised for the past two years from customer generosity during our in-store campaigns:

DOLLAR AMOUNTS IN THOUSANDS

2007 Total $409

2008 $568

Cause Related Brand Marketing

PVH strategically engages in cause related brand marketing when we feel that the objective is in line with our corporate values.

stories and photos. The site also provides links for making contributions to the cause. The media investment to support the campaign was approximately $15 million and included television, cinema, in-flight, print and outdoor marketing. In addition, during 2007 and 2008, PVH contributed a total of $1 million to the Save Ellis Island campaign. Our initial $500,000 contribution helped to complete the restoration of the Ferry Building, which was reopened to the public on April 2, 2007. Friends of the High Line
2008 marked the 40th anniversary of the Calvin Klein

Save Ellis Island We were involved over the past two years, in the name of our ARROW brand, with the effort to raise awareness and funds for Save Ellis Island, a non-profit organization dedicated to the rescue and reuse of the deteriorated buildings on the south side of New Yorks Ellis Island, part of the Statue of Liberty National Monument. The ARROW brand strives to deliver a sense of the American spirit and lifestyle by reflecting the vitality and optimism that is the American experience. The long history and traditional American style of the brand is linked with our corporate commitment to preserving the unique and important part of American history represented by Ellis Island.
ARROW s Save Ellis Island

brand. To celebrate the occasion, we hosted an event to recognize the milestone and to contribute to the future operations of the High Line, the most eagerly anticipated public space to open in New York City in decades. Friends of the High Line (FHL) is a non-profit organization dedicated to the preservation and reuse of the High Line, a 1.45-mile-long historic elevated rail structure on the West Side of Manhattan. The space is being transformed into a one-of-a-kind, 6.7 acre public promenade that can be freely enjoyed by all. Founded in 1999 , FHL is supported by elected officials, numerous civic organizations and thousands of preservationists, open-space advocates, design professionals and civic-minded individuals and businesses from New York and across the U.S. We contributed $870,000 to FHL.

campaign features the stories of celebrities and everyday Americans who link their family history back through Ellis Island. The campaigns u s e r- g e n e r a t e d w e b s i t e w w w. w e a r e l l i s i s l a n d . o r g offers visitors the opportunity to read and watch these stories of hope and inspiration and to post their own family

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COMMUNITY

Partnerships
Along with our community investment activities and associate volunteer efforts, we have also engaged in strategic partnerships with several key organizations including Safe Horizon, the United Way, and EarthShare. These partnerships have fostered an exchange of learning, mutual support and guidance on the development of our community service strategies and initiatives. Safe Horizon Our corporate strategic partnerships can best be illustrated by our work with Safe Horizon, the nations leading victim assistance organization dealing with such issues as domestic violence and child abuse. Safe Horizon provides support for victims of crime and abuse, their families and communities and helps over 350,000 victims of crime and abuse annually.
PVH associates in particular in Human Resources

associates have continued to provide residents of the shelter with clothing, back-to-school supplies, computers and other necessities. Our associates also conduct fundraisers to benefit Safe Horizon. We also support shelter residents by hosting an annual Mothers Day luncheon (which includes educational programs) and a holiday party complete with gifts for the children and their mothers. The senior management of PVH also provides leadership support to Safe Horizon. Pam Hootkin, our Senior Vice President and Treasurer, joined the Safe Horizon board several years ago, and Manny Chirico, our Chairman and CEO , serves on its Chairmans Council. Manny is also a founding member of SafeWork 2010 , a program launched by Safe Horizon in 2007 that enlists Fortune 500 CEOs to address the impact of domestic violence in the workplace. PVH recognizes that domestic violence is not only an issue of employee safety but also a financial issue, as companies can experience a loss of productivity, an increase in absenteeism and a rise in medical costs when an associate becomes the victim of domestic violence.

and Retail Store Management receive training and education from Safe Horizon on the issues of domestic violence and child abuse, as well as guidance on awareness building strategies to help our associates understand how to report, respond and manage these difficult situations. PVH provides financial support and assistance to Safe Horizon through participation in the PVH Cares campaign, through corporate contributions and associate fundraising, and by holding awareness events. Our relationship with Safe Horizon began in 2001, when associates from our New York headquarters volunteered to help at one of the domestic violence shelters run by Safe Horizon. Since then, our

COMMUNITY

27

Safe Horizon helped PVH launch the SafeWork education awareness program for associates in the various PVH departments that may have to deal with domestic violence issues in the workplace, such as Human Resources, Security, Office Services and Retail Store Management. This initiative led to the launch of a company-wide Domestic Violence Awareness program across all of our domestic facilities. The program provides associates with access to life-saving resources for those who might be in need of such support services. EarthShare We have maintained a longstanding partnership with EarthShare, a national organization that allows working people to support hundreds of environmental groups through workplace payroll contribution campaigns, in connection with our PVH Cares Campaign. We have furthered our relationship by partnering with EarthShare, through its local organizations in New Jersey and New York, to obtain valuable input on our 2008 corporate office environmental initiatives, including recommendations on overall strategy, research on recommended

environmental practices and referrals to external resources. The education, advice and support we received from EarthShare has been invaluable as we continue to develop our long-term environmental strategy and related action plans. PVH has served as primary sponsor of several signature EarthShare events such as EarthShare Celebrates New Jersey, the Central Park Zoo Environmental Event and Operation Sail New York City.

United Way One of our most important community investment partnerships is our relationship with the United Way, a national network of more than 1,300 locally governed organizations that is recognized as a leader in advancing the common good by focusing on education, financial stability and health for individuals and families. We partnered with the Somerset County United Way (New Jersey), which was instrumental in developing the concept for the annual PVH Cares fundraising strategy. Through this partnership, associates contribute directly to the United Way and these funds are either provided to United Way member agencies or, alternatively, to individual charities of the associates choice. Either way, the donation process is simplified by the United Ways central processing of contributions.

28

COMMUNITY

The United Way has also provided expert advice and support to our company on a variety of community service issues over the years, serving as an excellent resource on issues affecting our workforce and the communities in which we operate. Our partnership with the United Way is an excellent example of how PVH works together with leading community organizations in ways that benefit our company, our associates and our communities.

Challenges and Goals

In 2008, we recognized that while PVH has very active philanthropic and community involvement programs in place, we could benefit from a more cohesive and comprehensive strategy that clearly defines our goals and makes them consistent with our corporate culture and our global business objectives. To accomplish this, PVH has enlisted an internal team of associates from various parts of the company to work with an outside consulting firm, Changing Our World, on a comprehensive assessment of our community stewardship and investment activities. Our aim is to develop a long-term strategy that maintains locally relevant community relations while maximizing the impact of our community efforts as a whole. We intend to bring this tighter focus and efficiency to the programmatic and operational aspects of our community activities by identifying, on a corporate basis, the core focus areas for our philanthropic support. Although this unified and focused approach will be established company-wide, we will seek to preserve as best as we can the grass-roots efforts developed over the years by our associates at our various facilities and business units. We pledge to maintain our strong commitment to community service despite the current difficult economy and we will work to ensure that our monetary contributions reflect economic realities and our fiscal responsibilities. It is our intention that our new community stewardship strategy will better enable us to help the communities where we live and work to weather these turbulent times.

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29

PVH has a long history of addressing human rights and

labor conditions with our suppliers, beginning in the early 1990s with our A Shared Commitment code of conduct for suppliers, contractors and business partners.

Human Rights

Global Human Rights and Social Responsibility Program

From the inception of our Global Human Rights and Social Responsibility program, we aligned our values with internationally recognized principles such as the United Nations Universal Declaration of Human Rights and the International Labor Organizations Core Conventions. Our compliance policy requires the pre-assessment and authorization of any factory intended for PVH production. Our Global Human Rights and Social Responsibility Department continuously works on improving practices with business partners throughout the supply chain. We have an in-house team dedicated to the development, implementation and management of all human rights and labor compliance issues, as well as related education programs. The Global Human Rights and Social Responsibility Department collaborates with our Global Sourcing Department, while operating independently of sourcing decision making. These close relationships contribute to our strong, integrated efforts in human rights protection and labor compliance. Our Global Human Rights and Social Responsibility Department is headquartered in New York and operates regional offices in Bangladesh, China, Honduras, Hong Kong and India. The department is currently composed of 21 full-time and 12 part-time associates. Department associates work to identify non-compliance issues at the factories we utilize to manufacture products under our owned and licensed brands and to engage factory management in root cause analysis, capacity building efforts and remediation. The department also proposes and runs pilot programs for endemic regional issues, such as excessive work hours in China.

Our Terminology Capacity building refers to assistance or training provided to factories which have a need to develop

certain skills or competencies, or for general upgrading of performance ability.

Corrective Action Plan (CAP) is the plan a factory develops to correct non-compliance issues. The plan

must address root causes and detail how and when the factory intends to correct issues.
CEIP is our Critical Engagement and Impact Program. CEIP is an innovative beyond monitoring approach

that focuses on bringing continuous, long-term improvements to a facility by addressing root causes and strengthening the social and environmental components of the internal control system. It is intended to ensure compliance with labor and environmental laws and human rights standards.
Root Cause Analysis (RCA) is a problem solving method aimed at identifying the underlying issues.
RCA is viewed as a tool of continuous improvement. By directing corrective measures at root causes,

the likelihood of problem recurrence will be minimized.

Remediation is a process during which PVH works with a factory to correct labor and human rights

problems and to prevent their recurrence.

Retrenchment is the downsizing or closure of a business due to bona fide economic, technological,

structural or similar reasons.

Zero tolerance issues are problems of a critical nature that would cause us to refuse to work with a

particular supplier or to terminate an existing relationship due to an egregious breach of our A Shared Commitment code of conduct. The use of child labor is an example of a zero tolerance issue.

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CHAIRMAN & CEO

PRESIDENT & COO

SENIOR EXECUTIVES GLOBAL HUMAN RIGHTS AND SOCIAL RESPONSIBILITY

REGIONAL LEADER United States and Canada

REGIONAL LEADER Caribbean, Central and South America

REGIONAL LEADER Middle East, Europe and Africa

REGIONAL LEADER India and Southeast Asia

REGIONAL LEADER China and Far East

MANAGER Licensees

FIELD STAFF

FIELD STAFF

FIELD STAFF

FIELD STAFF

FIELD STAFF

FIELD STAFF

HUMAN RIGHTS APPROVAL COMMITTEE Solely responsible for decision-making on the compliance status of every factory that has undergone evaluation In order to eliminate conflicts of interest, executive members decide on the status for factories outside of their core roles

TRAINING COMMITTEE Develops tools for the training and education of our human rights team, factory management, factory workers and vendors

DATABASE COMMITTEE Manages information integrity and ensures that our systems meet our needs

Working with Internal Partners The Global Human Rights and Social Responsibility Department holds meetings to educate PVHs sourcing associates on human rights policies, provide guidance relative to human rights and labor compliance on sourcing decisions and help create sustainable solutions for specific human and labor rights challenges in a given region. As part of this effort, our sourcing associates are informed of factory audit findings and the two teams discuss all non-compliance issues. This approach enables our sourcing executives to incorporate these concerns into their business decisions. Evaluating the Effectiveness of Our Global Human Rights and Social Responsibility Program We assess the effectiveness of our program by

measuring the impact it has on our corporate culture, as indicated by our associates awareness, the extent to which human and labor rights concerns are incorporated into business decisions and the timely communication of sourcing challenges to our human rights team. Furthermore, we evaluate the programs effectiveness by looking at our suppliers development of their own compliance systems, workers education on code requirements, non-compliance incidences, the undertaking of factory remediation by non-compliant facilities and the time it takes to bring factories into compliance. Finally, the Fair Labor Associations (FLA) annual evaluation process of our compliance program provides valuable insight into the Departments performance and highlights areas in need of improvement.

The PVH Supply Chain

PVH Suppliers

We source and purchase substantially all of the products sold by our wholesale and retail businesses. Suppliers of these products must agree to our A Shared Commitment code of conduct requirements, disclose all factories intended for our production, undergo compliance assessments by our Global Human Rights and Social Responsibility Department and, most importantly, remediate all non-compliant conditions uncovered by the assessments.

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HUMAN RIGHTS

Licensee Suppliers We license our trademarks to third parties to produce goods under our brands that we choose not to sell directly. Our licensing agreements require that all licensees adhere to the same human rights and labor law requirements and protocols for the factories that produce goods for them under such license agreements as we require of the factories that we use. Compliance assessments for the licensees factories are performed by independent external monitors approved by us. There are additional challenges associated with monitoring our licensees factories, particularly since we do not have direct relationships with these factories. Our ongoing goal is to help establish and/or strengthen our licensees compliance efforts. We conducted global training during 2008 to improve procedures and reporting practices for licensees. This report does not cover our licensees compliance achievements or failures. We expect to include this information in our future reports. The chart below identifies the scope of the supply chain compliance program referred to above:

Type of Supplier Internal

Description
PVH is responsible for product, from design and raw materials selection through quality control

Approach to Code/Assessment Must meet PVH code of conduct requirements Compliance assessments completed by PVH Human Rights team Must meet PVH code of conduct requirements Compliance assessments completed by PVH Human Rights team Must meet PVH code of conduct requirements Compliance assessments completed by independent external monitors approved by PVH

Number of Factories 263 (representing approximately 80% of PVH sourced products)

Third Party

Third party is responsible for product design, manufacture, and quality control Licensees design, develop, manufacture, conduct quality control, and sell a specified product category in permitted geographical regions

138 (representing approximately 20% of PVH sourced products)

Licensee

670 under 139 license agreements

Textile/Raw Materials Our compliance program focuses on the factories that we engage to manufacture our finished products. We generally do not evaluate raw materials or trim suppliers because they are further upstream in the supply chain. However, if we become aware of a critical human rights or labor issue, we address the problem. For example, when we learned about widespread forced child labor in the cotton industry in Uzbekistan, we banned Uzbek cotton from our products. The countrys lack of progress in addressing this practice forced us to take action, as child and forced labor are zero tolerance issues for PVH. Moreover, we worked together with other stakeholders to strongly urge the Uzbek government to stop this practice and improve the overall conditions in their cotton industry. For more information on the cotton industry in Uzbekistan, please refer to www.iwpr.net/galleries/centasia/grabka/01.html

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PVH World Sourcing Map

Bulgaria Denmark France Germany Hungary Italy Netherlands Portugal Romania Switzerland Turkey United Kingdom Jordan Lebanon Syria

U.S.A. Canada

Korea Japan

Dominican Republic El Salvador Guatemala Honduras Mexico Nicaragua Panama Argentina Brazil Colombia Peru Uruguay Venezuela

China Hong Kong Macau Taiwan Cambodia Thailand Vietnam Philippines Indonesia Malaysia Australia

Total Countries = 56 Total Factories = 1071

Egypt Kenya

Morocco South Africa

Swaziland Tunisia

Zimbabwe

Madagascar Mauritius

Bangladesh India

Pakistan Sri Lanka

Integrating A Shared Commitment Code of Conduct

At PVH We have integrated our A Shared Commitment code of conduct into business practices by ensuring that our associates, suppliers, vendors and business partners observe and take ownership of our principles. We incorporate human and labor rights compliance into our supplier evaluation process, along with price, quality and logistics considerations. To do this, we implement documented procedures and maintain close communication between our sourcing and the human rights teams. We educate our sourcing associates on code requirements and the compliance process as part of their new-hire orientation and ongoing training. Additionally, we conduct periodic meetings with our business units and require them to participate in critical discussions with suppliers on failed compliance performance. With Our Business Partners To ensure external compliance with A Shared Commitment, our sourcing teams review our code requirements and compliance process with all prospective suppliers and business partners. These requirements are also outlined comprehensively in our Sourcing Guidelines, Evaluation Forms and Most Commonly Asked Questions guidelines, all of which contain important factory compliance information.

New vendors and factories must agree to abide by these standards prior to our agreement to work with them. All purchase orders include a paragraph reserving the right to reject production if the factory has been found to be in non-compliance. Finally, we have translated A Shared Commitment into 12 languages. We place posters in factories to inform workers of the requirements of the code of conduct. We also work with the suppliers to incorporate these obligations in their workers manuals.

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HUMAN RIGHTS

PVHs Code of Conduct

We created our code of conduct known as A Shared Commitment Requirements for Suppliers, Contractors and Business Partners in 1991 and revised it in 1998 to reflect the FLAs code language that was drawn from internationally recognized human and labor rights conventions and negotiated with unions, apparel and footwear companies and non-governmental and pro-labor organizations. Our A Shared Commitment code of conduct elements are: compliance with all legal requirements nondiscrimination no use of child labor no use of forced labor absence of harassment and abuse provision of a healthy and safe work environment payment of at least minimum wages and mandated benefits compliance with hours-of-work restrictions recognition of freedom of association compliance with all environmental requirements preference for vendors who share our commitment to communities

Sustainable Compliance
Philosophy Our goal is to bring about positive change and foster transparency and commitment to improve the working conditions at our suppliers manufacturing facilities. We seek to partner with suppliers who will share this goal. Our experience in creating one of the first human rights compliance programs in the apparel industry has influenced our commitment to utilize sustainable factories in our supply chain. We define a sustainable factory as a manufacturing facility that efficiently and effectively self-manages all elements of code compliance by developing, implementing and sustaining the social elements of their internal control system. The traditional monitoring approach, based solely on an auditing process, has resulted in general awareness of conditions and important improvements in areas like health and safety. However, this approach has not driven sustainable improvements in practices concerning wages, overtime, freedom of association, discrimination and other labor rights that business and civil society groups originally envisioned. We believe that to make progress, the industry must move towards sustainable compliance, where suppliers take ownership of human rights and fair labor practices within their organizations with the goal of identifying, correcting and preventing violations. We view our role at PVH as facilitators in promoting such action.

The progression from code compliance to sustainable supply chain management requires leaders in companies, civil society and government to work together in developing the right policies, tools and skills. Social responsibility concerns everyone, from the designer to the raw material supplier to the manufacturer and finally the consumer. Companies like PVH have been playing a leadership role in promoting labor standards in the global supply chain. Auret Van Heerden, President and CEO, Fair Labor Association

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Assessment, Engagement and Remediation Process We follow a procedure that involves assessment, engagement and remediation to ensure that our suppliers and business partners respect human rights and comply with labor law. Ultimately, this process results in the granting or denial of approval for production or termination of the relationship. We may place production in factories that have conditions that require remediation (but no zero tolerance issues), provided they agree to an aggressive timeline and Corrective Action Plan (CAP) and demonstrate transparency and commitment to improvement. In such cases, PVH will place production with an agreement to follow up on specific progress targets. Our Factory Assessment, Engagement and Remediation Process is outlined in the chart on page 37:

Factory Assessment Process What:

The assessment includes: Confidential interviews with factory workers without the participation of management Documentation review, including a review of payroll, time recording system, production records, financial documentation and permits Observation and factory walk-through Cross verification between interviews, observation, walk-through and documentation review
When:

We conduct factory audits every 12 to 18 months after initial factory approval.

How:

Focus on policies, procedures and systems at the factory level Key Performance Indicators (KPIs) are used to measure factory performance Exit meeting with factory management, includes full disclosure of all non-compliance issues,

unless there is a concern about the well-being of a given worker or workers Compliance letter formally communicated

2008 Factory Audits:

We conducted 382 factory evaluations for our internal and third party suppliers in 2008.
Rating system:

Our rating system measures frequency and severity of non-compliance flaws and classifies factories into four categories: in compliance, requires a follow up, in remediation and not in compliance. We also assess the factory managements transparency, commitment, communication and attitude. We do not establish a relationship with factories where zero tolerance issues are identified. We are in the process of revising our rating system to assess both overall performance and progress to better ascertain which factories are committed to continuous improvement and reaching total compliance.
Factory approval:

The Human Rights Approval Committee must approve a factory prior to the placement of business by individual business units. This committee currently consists of the EVP Foreign Operations, the SVP Global Human Rights and Social Responsibility and the SVP/Managing Director PVH Far East, Ltd.
Subcontracting Policy:

Factories are not allowed to subcontract.

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HUMAN RIGHTS

Activities Introduce code, expectations and assessment process Factory Disclosure and Evaluation Request

Participant Global Sourcing Global Human Rights Department Factory Factory Global Sourcing SVP Global Human Rights Global Human Rights Regional Team Human Rights Approval Committee (Eliminates conflicts of interest through geographical autonomy)

Outcome Factory understanding of process and expectations

Factory enters process

Factory Assessment

Factory audit findings Status recommendation Status decision

In Compliance No Flaws Identified

Status Decision

Not In Compliance Zero Tolerance Finding

In Remediation or Requires Follow Up

Factory Global Human Rights Regional Team

Engagement and Remediation Progress Approval

Corrective Action Plan and timeline approved by PVH KPIs and compliance targets Capacity building activities Factory standard operating procedures Secure grievance channels

Progress Assessment

Global Human Rights Regional Team Human Rights Approval Committee

Issue progress update Status recommendation Status decision

Significant Progress

Status Decision

Some Progress Shown

No Progress Shown

Red Flag Discussion (1x only)

Agreement to move forward

Factory Global Sourcing SVP Global Human Rights Global Human Rights Regional Team

Aggressive Correction Action Plan and timeline approved by PVH KPIs and compliance targets Final decision

No agreement

Production approved

Exit Relationship

Critical Engagement and Impact Program In 2002, we recognized the need to move beyond traditional monitoring, which is characterized by its focus on auditing and penalties for non-compliance, in order to achieve our vision of sustainable compliance. To that end, we developed our Critical Engagement and Impact Program (CEIP), focusing on a factorys transparency and continued improvements in compliance performance over time. The concept of a sustainable factory was conceived through this program, with the goal of strengthening policies,

procedures and systems at the factory level particularly those critical to labor relations, such as hiring, promotion and discipline, as well as establishing and maintaining effective communication channels between management and workers. Since our CEIP was introduced, the beyond monitoring movement has become a vehicle for engagement and collaboration among leading apparel companies and stakeholders.
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37

Based on our experience, traditional monitoring prompts a behavior of non-disclosure by management. Under CEIP, however, this transparency challenge is reduced significantly. Examples of non-disclosure and lack of transparency include coaching factory workers to misrepresent working conditions, double sets of payroll records, as well as falsifying production records to hide overtime hours and to avoid payment of legal wages. Prior to the inception of our CEIP, we found a non-transparency ratio as high as 90% in Asia regions but since its inception, this ratio was reduced to 33% for these regions. The following chart shows instances of non-transparency by geographical region in 2008. The overall ratio of non-transparency for 2008 was 29%. This ratio factors in incidences of non-disclosure of compliance issues that we identified in all regions during the year over total number of factory assessments conducted during the same period.

Region United States and Canada

Number of instances 1 0 5 9 98 113

Number of assessments 10 38 7 108 219 382 Overall Ratio 29%

Caribbean, Central and South America Middle East, Europe and Africa India and Southeast Asia China and East Asia Total

The remediation process under CEIP incorporates root cause analysis to identify underlying problems and capacity building often critical to train management and workers. Our team functions as facilitators factory management maintains full responsibility for implementing improvements in a timely manner. This process facilitates management buy-in, enables skills building and fosters long term solutions. The following table provides examples of remediation carried out under CEIP:

Issue Identified Multiple health and safety problems

Remediation Action Implementation of a Health and Safety Committee comprised of factory management and workers; Procedures and training will be required Implementation of an effective secured grievance procedure; Training of factory management, supervisors and workers will be required

Multiple workers grievances

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Once we have engaged a factory in CEIP, we conduct periodic progress assessments to determine whether the CAP has been implemented. Unannounced progress visits to factories undergoing remediation are made at the discretion of our Global Human Rights regional team and usually occur in cases where there is a lack of progress in remediation and/or a lack of transparency from factory management. Factories that do not meet their CAP timelines, or that do not show significant progress, are given a final opportunity to put into place a CAP on terms acceptable to us. If an agreement to move forward with factory compliance is not achieved, the relationship is terminated. The following chart shows the compliance levels of the active factories, including those participating in CEIP, as of December 31, 2008:

In Compliance (1) Requires Follow Up (2) In Remediation (3) Not in Compliance (4) Red Flagged (5) 0

32 27 46

78

174 31 72 50 Active Factories 100 Active Factories In CEIP 150 200

Total active factories as of 12/31/08 = 401 Total CEIP factories as of 12/31/08 = 233

The classifications of factories in the table above have the following meanings: (1) In Compliance indicates the number of active factories that have reached compliance (2) Requires Follow Up indicates the number of factories pending verification of improvements (3) In Remediation indicates the number of factories in our sustainable compliance program. These factories have an approved CAP and timeline. In order to remain in this classification, a factory must meet progress targets. (4) Not In Compliance indicates the number of factories that have not displayed transparency and commitment necessary to enter our CEIP program. (5) Red Flagged indicates the number of factories where no progress has been achieved over time, or a severe non-compliance or zero tolerance condition, such as anti-union activity, subcontracting or child labor has occurred, or where there is an indicator of risk, such as financial instability or government sanctions. During 2008, we experienced an increase in the number of red flags, which we attribute to the global economic crisis and its trickle down price-pressure effect. We have discontinued or are discontinuing doing business with these factories.

Factory Improvement Performance Sustainable compliance requires significant time investment and innovation by the Global Human Rights regional teams in our Global Human Rights and Social Responsibility Department. In order to analyze the impact of our efforts on factory working conditions, we compared non-compliance findings from assessments conducted during January to March 2008 period in factories that were active as of December 31, 2008 with the non-compliance findings in subsequent follow-up audits at those facilities. The chart on the following page highlights the improvements achieved in each category at those factories. We were able to resolve an average of 82.4% of non-compliance in less than a year. We also recognized that some non-compliance issues, such as freedom of association, collective bargaining and non-discrimination require a longer time period to be resolved.

HUMAN RIGHTS

39

Health and Safety 82% Wages and Benefits 75% Hours of Work 87% Legal Requirements 88% Harassment and Abuse 93% Environmental Requirements 91% Transparency: Unreliable Records 83% Non-discrimination 78% Freedom of Association 57% Child Labor 100% Forced Labor 100% Commitment to Communities 0 100 200 NUMBER OF NON-COMPLIANCE ISSUES Universe = 60 factories audited January through March 2008 300 400 Issues Identified in Q1 Audits Issues Resolved by Close of 2008

Improvement Performance Average 82.4%

In 2008, we developed a second tier CEIP 2.0, which includes a deeper root cause analysis and encourages best practices such as workers committees. We plan to develop an even more progressive curriculum, CEIP 3.0, for our most advanced suppliers in 2009. This program will be geared to helping manufacturing facilities become sustainable factories.

Red Flag Reporting

In 1998, we issued a standard operating procedure for Red Flag Reporting, requiring all our associates to report on any significant non-compliance concern or event in a given factory, manufacturing location or country. Suspected red flags are reported to the Senior Vice President of Global Human Rights and Social Responsibility and the Executive Vice President of Foreign Operations. Incidents are immediately investigated and remediation takes place or the relationship terminated, as appropriate.

To provide information on factory status and to track remediation progress, we maintain an online database system that is regularly updated for all factories. The applicable Global Human Rights regional team tracks compliance through initial, progress and final factory audits, as well as through the CAP status reports. We are in the process of upgrading our database to improve accuracy and efficiency and will begin implementation of the new system in 2009.

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HUMAN RIGHTS

Secure Grievance Channels In order to promote effective communication and a collaborative environment between workers and management, we believe it is critically important to provide workers with a safe and effective grievance channel to raise issues and concerns. We believe that factory management should establish this channel directly and we encourage suppliers to do so. In 2007 , consistent with FLA requirements and recognizing that not all suppliers have provided safe grievance channels, our Global Human Rights regional leaders strengthened our own formal procedures to provide workers with an external

channel to voice their grievances directly to us. After receiving a complaint, we work closely with the factory to resolve the identified issues and focus on capacity building efforts to prevent reoccurrence. Whenever possible, we conduct these efforts without disclosing names in order to protect the workers involved. We work with factory management to respond to internal complaints in a proactive and systematic way. Our Global Human Rights regional teams have noted that such efforts reinforce for factory workers the option to articulate complaints in-house. We also work with civil society, international and regional NGOs to resolve issues identified through grievance channels.

In 2008, we collaborated with the Commission for the Verification of Codes of Conduct (COVERCO), an NGO concerned with labor rights, in order to ensure that legal severance payments were made to workers in a factory in Central America. PVH played a critical role in initiating the process that is resulting in the workers at this factory receiving their legal severance payments. Homero Fuentes, Director, COVERCO

In 2008, we used our Grievance Channel Guidelines to ensure that all regions maintain an official record of complaints with relevant documentation, summaries of follow-up activities, and how situations were resolved. Worker Complaints in 2008 We received 60 formal complaints from our suppliers workers in 2008. The following chart shows the categories into which these complaints fell. The applicable Global Human Rights regional team monitored the handling of the complaints. Our goal is to work with factory management to help them respond to internal complaints proactively and effectively.

Recruitment Fees (1) Transparency (2) Harassment (3) Total 60 Freedom of Association (4) Wrongful Termination (5) Mandatory Overtime (8) Benefits (8) Hours of work (11) Wages (18)

Number of complaints is shown in parentheses.

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Capacity Building and Education

Since the inception of CEIP, we have intensified our educational and training programs, ie., capacity building, that are designed to help factory managers understand and identify human rights and labor compliance issues and to assess and improve their own internal control systems and compliance efforts. Factory management often requires this support and guidance to effect change. Therefore, we develop tailored materials and tools to conduct factory management training programs. We act as a facilitator by providing information and education on requirements and best practices. At times, we recommend the engagement of consultants and/or specific groups who can provide expertise to assist on a given compliance issue. We also focus on problems facing a specific region.

Recent examples of our capacity building efforts include:

Assessment training: In the India and South Asia region, we hosted pre-assessment orientation sessions

focused on our A Shared Commitment code of conduct requirements and compliance process. During the assessments, we observed high levels of cooperation and transparency with participating factories. Health and safety program: We collaborated with management and workers at a factory in Honduras to create manuals on health and safety, including best practices. Licensee training: We provided training to our licensees on social responsibility operating guidelines and requirements. Consultancy projects: We initiated consultancy programs in several regions, where the applicable Global Human Rights Regional Leader matched expert consultants and/or NGOs with select factories to help them implement tailored, effective policies and procedures on endemic issues.

Many factories in China historically have played a passive role in social responsibility. We were one of them. However, we transformed our thinking gradually under the guidance of Phillips-Van Heusen and the Fair Labor Association. My most important learning as the CEO is the potential of the workers. Many competitors asked me how could I have had profits if I increased my costs by giving benefits to workers and improving their working environment? I explained that profits were more than my expectation. First, our workforce is very stable and second, our efficiency and the quality of our products is becoming more competitive each day. I believe the most important element of a company is its workforce. Only workers creativity can lead a company to success and profits.
Mr. Yin Gouxin, Chairman/CEO, Chenfeng Group Co, Ltd., an FLA participating supplier.

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Collaboration
Supply chains are fragmented and most factories are operating production lines for multiple companies. In many cases, it is extremely difficult for one company, acting alone, to make a significant impact. By combining our efforts with other companies, retailers, NGOs, labor organizations, government representatives and trade associations, we can have a much greater influence on industry-wide challenges. One of our most important and long standing collaborations is with the FLA.
PVH was a founding member of the Apparel Industry Partnership, which was formed in 1996 and evolved into

the FLA in 1999. The FLAs mission is to combine the efforts of industry, civil society organizations, colleges and universities to protect workers rights and improve working conditions worldwide by promoting adherence to international labor standards.

We joined this organization because we felt that a multi-stakeholder approach would yield the greatest impact and ability to promote change. We wanted to help shape the future of our industrys labor and human rights efforts. We agreed with the need to be held accountable for the treatment of workers by the factories we use and to share ideas on human rights and labor compliance with industry peers, NGOs and the academic community. Among the FLAs important initiatives are CAMP (Central America Project), the purpose of which is to eradicate discrimination and encourage best human resources practices in the region, and PREPARE (Promotion of Responsible Representation for Workers and Employers) in Bangladesh, which focuses on strengthening management and workers communication. PVH has participated in both initiatives. Moreover, FLA and PVH started a successful Workers Committee pilot program at a factory in China that is now a participating supplier in FLA.

As an FLA member, PVH has committed to a set of obligations and responsibilities. The FLA holds us accountable by reviewing our compliance program through ongoing assessments and providing recommendations which we incorporate each year. The FLA reviews our program and makes recommendations for improvements. Based on this independent review, PVH met all of its obligations and, therefore, our program was initially accredited in May 2005. We were reaccredited in June 2008. The chart on page 44 summarizes the FLA s Reaccreditation Report for PVH and PVH s 2009 Action Plan to improve on matters in the report commented on by the FLA.

HUMAN RIGHTS

43

FLA REACCREDITATION REPORT CARD

Obligations of FLA Participating Companies Adopt and communicate a code

PVH met requirement? Yes

FLA Comments or Recommendations

PVHs 2009 Action Plan

The company has fully integrated its code into its business practices This is an area of strength for PVH This is an area of strength for PVH This is an area of strength for PVH The company should continue to emphasize grievance procedures
PVH needs to focus on consistent implementation of internal monitoring Standard Operating Procedures (SOPs) across regions and with individuals doing assessments

Train Internal Compliance Team Provide employees with confidential reporting channels

Yes Yes

Focus on CEIP 2.0 and 3.0 capacity building and pilots

Conduct internal monitoring

Yes

Revision of all monitoring SOPs to adopt innovative approach Consistent training for all team members globally

Submit to independent extermal monitoring Collect and manage compliance information Remediate in a timely manner Take all steps necessary to prevent persistent forms of non-compliance Consult with civil society Meet procedural requirements

Yes Yes Yes Yes

PVHs database system needs improvement

Implementation of new database system

Yes Yes

This is an area of strength for PVH

PVH needs a review of the rating system and review of licensees controls to prevent instances where licensees place orders in unauthorized factories

Revision of rating system Strengthening of SOP for licensees Increasing capacity building Implementation of report card or licensees compliance performance and evaluation of contract renewal

To learn more about this organization, please refer to FLAs website: www.fairlabor.org

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Challenges and Goals

At PVH, we strongly believe that code of conduct compliance is a continuous journey, not an event. We work collaboratively with our suppliers, industry peers and other organizations to address human rights challenges. We have highlighted below our main challenges, as well as actions undertaken in 2008 and goals for 2009.

Challenges Inconsistent compliance approach and initiatives throughout the industry

2008 Actions

2009 Goals

Proposed the creation of FLAs Sustainable Compliance Leadership program charged with development of universal tools and methodology Participated in International Labor Organization (ILO) Better Factories programs, Levi s Brand Collaboration and selected joint assessments and remediation with like-minded companies Implemented PVHs collaboration protocols including antitrust considerations Conducted research and benchmarking on existing rating systems, methodologies and KPIs Conducted cross-functional discussions Identified key elements of a rating system for our program Conducted research and benchmarking on available CSR technology systems Documented our business requirements Selected technology platform and developed project scope Strengthened licensees procedures and reporting practices Created a Licensees Compliance Report Card Developed SOPs for the inclusion of compliance considerations to business continuity criteria Conducted training for licensees globally

Participate in FLAs Sustainable Compliance Leadership program Pilot universal tools and methodology; integration to CEIP programs Participate in ILOs Better Factories programs Increase collaboration with other companies, retailers and NGOs

PVH rating system does not measure progress in factorys compliance performance

Finalize and pilot new rating system Implement new rating system in key factories Incorporate KPIs to our assessment process

PVH database system does not capture necessary and timely information to drive informed business decisions

Invest in and implement new database system

Comprehensive licensing compliance program but limited controls on factory reporting and compliance efforts

Focus on strategic licensing partners Implement mechanisms for monitoring and assessing factory reporting practices and effectiveness of compliance efforts Implement licensee report card on compliance performance Provide input on factorys compliance performance to inform the factory reduction decisions of our sourcing business units Ensure that workers rights are observed in factories we exit Strengthen our retrenchment procedures Increase vigilance and remediation of workers grievances Work closely with remaining suppliers on sustainable compliance

One result of the global economic crisis is a significant consolidation of the supply chain. For PVH, the large number of factories currently utilized for internal sourcing presents significant difficulties in allocating resources to assist factories in a path toward sustainable compliance

Continued to assess our factory base and provided compliance performance information to sourcing units to inform their decisions on factory reductions

HUMAN RIGHTS

45

Environment
At PVH, we recognize the fundamental need to address global environmental challenges. We acknowledge that we depend on the earths limited natural resources for our business and that we need to operate in a manner that supports conservation.

Although there have been effective initiatives put into practice by some PVH business units to confront environmental issues, these efforts have been decentralized and ad hoc. Only in the last year have we begun a company-wide effort to identify environmental issues and develop strategies to address them.
PVH is focusing on minimizing our impact on the environment. As a global company, we have organized

our environmental efforts around three key areas: our facilities, products and packaging, and supply chain. In 2008, we began to establish systems to measure our environmental performance in the areas of energy and emissions, waste, water and chemicals. We will expand this effort throughout the company as we continue to collect and report on the environmental metrics. This data will help us to prioritize our efforts and set appropriate targets for reducing our environmental impact. PVH is actively engaging associates, suppliers, business partners, industry peers, environmental organizations and customers to create real, sustainable improvements. We see these steps as the beginning of a long term effort to achieve environmental leadership in our operations.

Facilities
We operated approximately 35 office locations around the world in 2008 including corporate, administrative, sales and sourcing offices and showrooms as well as eight distribution centers and approximately 650 retail stores. We are in the process of creating standard operating procedures to improve practices at all our facilities in order to reduce our impact on the environment. Corporate Offices PVH operates corporate and administrative offices around the world. Our largest offices are the PVH and Calvin Klein headquarters in New York City and administrative offices in New Jersey and Hong Kong. Our Office Services and Human Resources Departments have been working since 2007 with an environmental consulting firm, Great Forest, to assess our domestic corporate and administrative office facilities and recommend environmental improvements to their operations. In each of these locations, we have established local associate action teams to review our practices and develop recommendations on waste, energy, chemicals and water. These action teams meet with landlords, product and service vendors, and other groups to implement these initiatives and collect data for key metrics. As a result of Great Forests facilities assessment, we have implemented several initiatives to maintain environmentally friendly office practices. We now:

Promote stricter recycling practices through improved signage and access to recycling receptacles Reduce bottled water usage through the installation of filtered water coolers and distribution of reusable PVH water bottles to associates Employ recycling practices for all supplies containing hazardous materials, such as light bulbs, ballasts and batteries Install cost-effective energy-efficiency technologies, such as motion sensors to turn off lights when not in use Where possible, install plumbing fixtures that use water more efficiently Buy Green Seal-compliant or similar environmentally friendly office cleaning products Ensure external service providers, such as cleaning and waste disposal services, comply with environmental laws and PVH procedures

ENVIRONMENT

47

Additional environmentally conscious initiatives undertaken by PVH in 2008 include:

Renovating the 10th floor of our New York City corporate headquarters and applying for LEED certification, a nationally accepted benchmark for the design, construction and operation of high performance green buildings certification is pending for early 2009 Setting up a PVH Cares About the Environment e-mailbox for associates to send and receive environmental updates and recommendations Publishing a periodic newsletter to communicate progress on organizational and associate efforts Establishing regular meetings among our various domestic facilities to share success stories and develop a consistent and coordinated approach to environmental efforts

In 2008, we made progress in establishing strategies to collect data and measure progress at our office facilities. Among the accomplishments reflected in the chart below are the following:

Raised recycling rates dramatically from 29% of total waste being recycled to 76% now being recycled Made 30% recycled content paper the standard for printing and copying Achieved 100% recycling rate for all universal/hazardous waste Reduced energy usage and CO2 emissions Significantly increased the use of Green Seal chemicals for office cleaning and maintenance Reduced the purchase and use of plastic water bottles by nearly 50%

CORPORATE/ADMINISTRATIVE OFFICE METRICS1

Metric Recycling rates (% of total waste that is recycled) Use of recycled paper minimum 30% of content Recycling of hazardous waste Green Seal chemicals as a % of all chemicals used

2007 29%

2008 76%

Metric Energy usage (kWh) CO2 emissions (metric tons)2 Water bottle purchases (units)

2007 7,983,406

2008 7,732,660

Reduction (3.14%)

0%

100%

3,336

3,234

(3.06%)

Not measured 8%

100% 50%

9,897

5,008

(49.4%)

1 Data for Hong Kong is included for recycled paper only 2 Indirect emissions (Scope 2) from the generation of purchased

electricity consumed

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Distribution Centers Our distribution centers have focused on reducing energy use and managing waste. We reuse incoming corrugated cardboard in outgoing shipments where possible and we recycle the remainder. We have begun to tackle energy reduction primarily by replacing expired bulbs with more efficient lighting. We next plan to focus on recycling wooden pallets and implementing the applicable environmental standard operating procedures and guidelines from our corporate offices.

The chart below contains environmental metrics for our distribution centers for 2008 , the first year we started collecting this information. We achieved overall recycling rates of almost 84%, well above our target threshold of 70%. We will be aiming for reductions in the total energy usage and CO 2 emissions moving forward.

DISTRIBUTION CENTERS

Metric Total energy usage (kWh) CO2 emissions (metric tons)1 Recycling rates (% of total waste that is recycled)
1 Indirect

2008 14,377,448 10,441 83.81%

emissions (Scope 2) from the generation of purchased electricity consumed

Stores Our environmental efforts at our retail stores are focused on reducing energy use and waste. We have set guidelines and standards and taken other actions, as follows:

Established proper thermostat settings Established proper lighting procedures Converted to energy-efficient thermostats in more than 90% of the stores, with plans to convert the remaining 10% in the first quarter of 2009 Installed energy-efficient lighting in all new or renovated stores Installed timers on illuminated storefront signs Required the use of energy-efficient bulbs and LEDs in all stores

To reduce waste, we are:

Recycling paper products (primarily corrugated cardboard) in all malls where recycling is available Recycling light bulbs in all stores Putting all training, policy and product documents online, eliminating the use of printed manuals Using soy based inks and sustainable paper stock for all in-store signage.

Other environmental initiatives undertaken in 2008 included the use of green cleaning supplies for our stores and the replacement of water bottles with water filtration systems as contracts expire. In addition, in 2008, we began replacing all regional and district managers vehicles with hybrids as current leases expire. We will be completely converted to hybrid vehicles within two years.

ENVIRONMENT

49

PVH In-Store Signage

For all of our in-store signage and window displays we use Signmasters, Inc., a printing company with membership in the Forest Stewardship Council (FSC). Signmasters has won accolades from local government with regard to environmentally responsible wastewater disposal and is serious about protecting the environment. Below are some of the environmentally friendly initiatives and practices that go into sign production and recycling for PVH retail stores:

Only soy based ink is used for signage. This is more environmentally friendly than recycled inks, which may contain VOCs (volatile organic compounds) 100% of the paper, if not recycled, is produced from sustainable sources (trees grown to make paper and replenished) 100% of used sign kits are recycled 80% of all silk-screen production chemicals are recycled (used in smaller print runs) Signmasters converted to a digital make ready system, eliminating the need for hundreds of proof sheets previously required for each job All of our packaging is made with 20% to 100% recycled materials and secured for shipping without plastic pressure sensitive tape (allowing it to be more easily recycled)

Products and Packaging

As a provider of clothing, footwear and accessories, we must consider the environmental impacts of the substances used in making and packaging these products. We constantly balance this objective with providing high quality products that consumers will want to buy and wear. Materials We provide the designers of each of our brands with the freedom to select the best materials for their products, given cost, quality and style considerations. However, across all of our brands, we have focused on eliminating harmful substances that negatively effect the environment or product safety. Restricted Substance List Our Restricted Substance List (RSL) creates a minimum standard to ensure that our products do not include materials that are harmful to the environment or cause product safety concerns. PVH has always required its suppliers to adhere to U.S. laws for restricted substances and to the laws of the market in which the products are sold. We expanded these environmental and product safety efforts in 2008 by implementing a more stringent RSL with our apparel suppliers. This list, based on guidelines from the American Apparel and Footwear Association, is stricter than current U.S. regulations. In particular, our new RSL prohibits certain substances, such as formaldehyde, azo dyes and nickel, from use in any of our apparel products. We have organized worldwide vendor conferences to roll out the RSL initiative. We have also required that our suppliers send us a letter confirming that they understand their obligations with respect to these restricted substances. We plan to extend our RSL in 2009 to begin to cover all footwear and accessories. We also intend to develop a testing strategy and procedures, to ensure a compliance monitoring method that is both cost effective and time efficient.

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Timberland EarthKeepers

Under our license agreement with The Timberland Company, we produce a line of apparel called Timberland EarthKeepers that embodies both companies commitment to environmental stewardship and is developed with the idea that appealing, well made apparel can be created with materials that are better for the environment. These products use environmentally preferred materials and manufacturing processes. Through this line, we hope to create consumer awareness of environmental issues related to apparel manufacturing. Timberland EarthKeepers garments must meet The Timberland Companys strict requirements before they can bear the EarthKeepers brand:

Material content must include at least 50% recycled fiber from post-consumer products; at least 50% renewable fiber such as bamboo, hemp, linen, flax or other bast fibers; or at least 50% organic cotton grown without the use of chemical pesticides or fertilizers Products cannot contain any polyvinyl chloride (PVC), which has been linked to several health issues Apparel care instructions must recommend machine wash cold to reduce the use of heat energy for washing Dye must meet Global Organic Textile Standards requirement for all organic products

Packaging One of the largest and most visible areas of environmental impact for us is our product packaging. We sell an estimated 120 million pieces of apparel, 18 million ties and 5 million pairs of shoes annually, with varied packaging. We use approximately 100 million recyclable poly bags each year to protect and showcase these products. We are exploring the use of poly bags made from recycled materials but we have not yet found any that properly display our products. Currently, our Retail, Sportswear and Dress Furnishings Groups are using partial to 100% recycled paper for all paper trim. Our dress shirts are packaged with recycled paper and cardboard packaging and we have reduced the number of pins used as well. In addition to packaging, our products come with trim

such as paper hang tags and inserts. For all business units, paper trim averages approximately 45% recycled content. Bass footwear uses recycled cardboard and tissue paper for all shoe boxes and has removed plastic sticks and bags from most shoe packaging. However, some footwear (delicate materials) require plastic for protection. For these products, we have changed over to recyclable poly bags. We annually utilize approximately 23 million plastic shopping bags in our retail businesses, which are made of 10% recycled content and are also recyclable. We have committed to making all shopping bags biodegradable in 2009.

ENVIRONMENT

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Below are 2008 packaging metrics, presenting the total weight of packaging materials utilized by PVH and illustrating our use of recycled, recyclable and biodegradable materials:

Packaging Type Plastic Paper/Cardboard Metal Shoe Boxes Shopping Bags

Volume Apparel (kg) 1,192,600 3,812,000 166,000 -

Volume Neckwear (kg) 21,500 43,400 -

Volume Footwear (kg) 14,000 112,800 94,000 -

Total Volume (kg) 1,228,100 3,968,200 166,000 94,000 424,500

Packaging Type Plastic Packaging Materials

Properties Recycled Recyclable Biodegradable Recycled Recyclable Biodegradable Recycled Recyclable Biodegradable Recycled Recyclable Recycled Recyclable Biodegradable Partial 100%

All Apparel Neckwear and Footwear

Plastic Shopping Bags

Paper/Cardboard

Metal Pins

Shoe Boxes

0%

Reducing Packaging at Bass

In 2007, our Bass outlet retail store division implemented new packaging requirements to eliminate plastic shoe forms, sticks, excess tissue, excess cardboard and foam dividers. Over a one year period, these efforts have saved more than:

1 million square feet of packing cardboard 4 million square feet of tissue paper 9 million cardboard shoe forms 7 million plastic sticks 4 million poly bags 4 million foam dividers

We also have reduced the packaging size for our shoe boxes by at least 12%.

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ENVIRONMENT

Supply Chain Environmental Impact

Our supply chain processes significantly impact the environment. Since we do not have direct control over our suppliers, our supply chain presents a challenge as well as an opportunity for us to expand our reach in addressing environmental issues. We believe our environmental strategy must expand beyond our facilities to include specific initiatives undertaken by our suppliers, so that we can jointly reduce the overall environmental impact of our businesses. Manufacturing Our A Shared Commitment Requirements for Suppliers, Contractors and other Business Partners code of conduct includes an Environmental Requirements section. Our efforts to monitor compliance by these business partners have addressed basic environmental issues such as waste water treatment, hazardous chemicals, air quality, recycling and compliance with local environmental laws. In 2008, we identified the need to develop a more comprehensive Environmental Management System (EMS) assessment procedure for the factories in our supply chain. Our research on best practices by leading companies in the industry prompted an important collaboration with one of our licensors, The Timberland Company. Timberlands Environmental Stewardship Team shared their methodology and tools and helped train our teams on effective implementation. Based on the information Timberland shared with us, we revised our assessment tools and metrics, trained our teams and piloted the new assessments and remediation processes in all regions. This upgraded EMS assessment procedure will become part of our factory assessment process during 2009.

New Environmental Assessment Areas for Factories

1. Asbestos 2. PCBs 3. Solid waste 4. Industrial/Process waste water, secondary- and tertiary-level treatment 5. Air emissions 6. Hazardous substances 7. Energy consumption and type, waste (non-hazardous and hazardous),

water consumption and discharge

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53

Transportation and Distribution Transporting our products to our stores and customers around the world has an impact on the environment through fuel consumption and greenhouse gas emissions. In 2008, we shipped our products approximately 38 million miles. The following chart shows our 2008 product shipment metrics by mode of transportation:

Mode Ocean Air Truck

Total Miles (millions) 20 13 5

Total Units (millions) 112.7 6.9 119.6

Miles per unit 0.18 1.88 0.04

Figures are approximate and do not account for sample shipments and domestic truck moves outside of our domestic hub network

We outsource the vast majority of our distribution to third party transportation providers. We have always worked to consolidate inbound and outbound shipments to reduce environmental impact and cost and to minimize our use of air shipments. Going beyond consolidation will require us to balance environmental considerations with cost and timing considerations. We also must attempt to influence the many providers we use, which is challenging due to the fragmented nature of the U.S. trucking and global ocean freight industries. Recognizing these challenges, we have chosen to collaborate with two larger groups focused on reducing the environmental impacts of the transportation and distribution industry: Clean Cargo Working Group (CCWG), a group of companies facilitated by BSR, and PierPASS.
CCWG is dedicated to integrating environmentally and socially responsible business principles into transportation management through the use of industry-related tools and methodologies. We became a CCWG member in 2009 and will begin to collaborate with industry leaders on transportation related environmental concerns and opportunities. By joining the CCWG, we are now able to leverage our existing relationships with ocean carriers to evaluate their emissions calculation methodologies, as well as

their existing environmental management policies, procedures and systems. We plan to encourage our carriers who are not currently participating in CCWG to do so in 2009. PierPASS is a non-profit organization created by marine terminal operators to reduce congestion and improve air quality in and around the ports of Los Angeles and Long Beach, California. We have worked with PierPASS since its inception in 2005. The program provides incentives to move cargo at night and on weekends in order to reduce truck traffic and pollution during peak daytime traffic hours and to alleviate port congestion. We take advantage of these incentives and encourage our transportation vendors to do the same in order to lessen our environmental impact.

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ENVIRONMENT

In addition to collaborating with these partners, we also work with several trucking companies that participate in the U.S. Environmental Protection Agencys SmartWay program. SmartWay is an innovative program that represents environmentally cleaner and more fuel-efficient transportation options. We will continue to support this program and encourage all of our transportation providers to consider membership. Many of our transportation providers who have not yet joined SmartWay have implemented several SmartWay recommendations to improve their environmental performance. When we renew our leases on PVH-operated tractors and trailers in 2009, they will be SmartWay certified. Along with participating in these programs, PVH added a statement to our requests for quotes from transportation providers. The statement explains that, while cost and service levels are of highest importance, we prefer Clean Cargo carriers and SmartWay truckers who are making investments to reduce their environmental impact. The following chart shows the percentage participation by our transportation providers in CCWG and SmartWay in 2008:

Metric % of PVH ocean carriers in CCWG % of PVH truck carriers in SmartWay

2008 Participation 75%

36%

Challenges and Goals

Although we face technical, tactical and strategic challenges, we see the opportunity to make significant progress in reducing our environmental impact. As stated earlier, our high level goals in environment are to: Reduce energy use Reduce waste Minimize water use Use fewer, less damaging chemicals Below is a summary of our specific environmental challenges and goals: Facilities To better understand our facilities environmental impacts, Great Forest will make warehouse and store site visits in 2009 to conduct an environmental assessment and make recommendations on additional environmentally friendly practices and procedures that can be implemented. We will report our conclusions and provide expanded metrics in our 2009 CSR report. Since we lease our offices, distribution facilities and stores, we must work with our landlords and facility managers continue to promote recycling where it is not in place and to ensure recyclable goods are separated in offices and stores where it is available. In addition, we will continue to look for ways to reduce energy use and waste in our facilities.
ENVIRONMENT

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Product and Packaging We are focusing on eliminating harmful substances from our product materials, though we have not yet thoroughly examined how to incorporate more sustainable materials into product design. Materially higher costs and limited supply make it difficult to use organic or recycled fibers without substantially increasing prices to consumers. We will continue to explore more sustainable options and to monitor costs, supply, and customer demand to identify options that are appropriate for our brands. We will extend our RSL to begin to cover footwear and accessories in 2009 and we are working to develop a testing strategy to ensure compliance. We will also

devote resources in 2009 to finding suitable substitutions for RSL materials in our packaging. Our first priority will be to eliminate PVC in favor of polyethylene terephthalate (PET). PVC is far less recyclable than other plastics. PET is non-toxic and easier to recycle. Our long term objective is to find ways to reduce the overall volume of packaging. Our shopping bags are currently made in part from recycled materials and are fully recyclable. In 2009, after exhaustion of current inventory, all new shopping bags used in our retail stores will also be biodegradable.

Supply Chain Our challenge in supply chain will be implementing assessments. Implementing this procedure will require awareness building, training and engagement with our suppliers, at both the factory worker and management levels. As new suppliers are brought on and existing suppliers are reevaluated, we will roll out the new environmental requirement procedures and aim to complete assessments for all factories during 2009. We also plan to create a standard approach and guidelines for factories to capture specific metrics in energy and emissions, waste, water and chemicals. We will ask our suppliers to self-report on these metrics so we can develop a better understanding of their performance in these areas and implement targeted improvements. Finally, we will continue to work with our transportation partners and industry collaborators to reduce the environmental impacts of transporting our products. In 2009, we plan to expand our bidding process to include questions about specific practices related to the environment. By highlighting our interest in these practices, we hope that our carriers will seek to improve their practices.

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In addition to our qualitative goals, we have set the following key quantitative goals for environmental performance:

METRIC

2009 GOAL

Offices, Distribution Centers and Stores Recycling rates (% of total waste that is recycled) Recycled paper use and content (%) Recycling hazardous waste Energy usage (kWh) CO2 emissions (metric tons) Green Seal chemicals as a % of all chemicals Plastic water bottle purchasing (units) Use of hybrid vehicles by retail district and regional managers % of new shopping bags to be biodegradable Number of stores that have replaced bottled water with water filtration system Product and Packaging Packaging containing RSL materials Targeted reduction in packaging volume % of recylable packaging materials Volume of packaging upgraded to contain recycled content Supply Chain % of PVH ocean carriers in CCWG % of PVH truck carriers in SmartWay % of factories undergoing EMS assessments Maintain 75% Maintain 36% (subject to the challenges of current economic conditions) 100% for all new factories and those factories to be reevaluated in 2009 Eliminate PVC from all sportswear packaging 5% Reduction Maintain 100% standard 5% Increase Continue to maintain recycling rates at or above the 70% threshold Maintain 100% use of paper with at least 30% recycled content Maintain 100% standard Identify long-term targets and initiatives based on 2009 assessment of distribution centers and stores Identify long-term targets and initiatives based on 2009 assessment of distribution centers and stores Maintain 50% or better 20% reduction As current leases expire, all vehicles will be replaced by hybrids (the conversion to hybrid vehicles will be completed within two years) 100% of new shopping bags Conversion to water filtration systems in 250 stores (Remaining stores to be converted by 2011 )

ENVIRONMENT

57

The Global Reporting Initiative (GRI) is the most common framework used worldwide for organizations to publicly communicate their economic, environmental and social performance. This index serves as a reference for GRIs G3 Guidelines.

GRI Index
Strategy and Analysis
Section 1.1 Disclosures Chairman and CEO statement Page 03

Organizational Profile
Section 2.1 2.2 2.3 2.4 Disclosures Company Name Primary brands, products, and/or services Operational structure Location of headquarters Page 03 06 06 06

Report Parameters
Section 3.1 3.4 3.5 3.7 Disclosures Reporting period Contact person Process for defining report content Scope or boundary of report Page 05 11 05 05

58

GRI INDEX

Governance, Commitments and Engagement

Section 4.2 4.3 4.8 4.13 4.14 Disclosures Indication of whether Chairman of the Board is also an executive officer Independent and/or non-executive directors of the Board Mission, values, codes of conduct, and principles Memberships in associations and/or national/international advocacy organizations List of stakeholders Page 03 06 06, 32, 34, 35, 53 08, 43, 44 07, 08

Management Approach and Performance Indicators

Economic
Section EC1 Disclosures Direct economic value generated and distributed Page 06

Environmental
Section EN3 EN5 EN6 EN7 Disclosures Direct energy use Energy use ratio (efficiency) Energy efficiency initiatives or renewable energy sources Energy use reduction initiatives Page 48, 49 48 48, 49 48, 49

Labor Practices and Decent Work Performance Indicators

Section LA2 LA3 Disclosures Turnover Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations. Education, training, counseling, prevention, and risk-control programs to assist associates, their families, or communities regarding serious diseases Programs for skills management and lifelong learning Diversity of governance bodies and workforce Page 13 15

LA8

15, 16

LA11 LA13

19 18

Human Rights
Section HR2 Disclosures Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken Page 36 - 41

GRI INDEX

59

P H I L L I P S - VA N H E U S E N C O R P O R AT I O N

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