Under Armour Settles Lawsuit With Shareholders

Kevin Plank
Under Armour CEO Kevin Plank
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Under Armour Inc. has reached an agreement with shareholders who sued the firm over its plans, announced in mid-June, to create a new class of stock.

When the firm’s founder, chairman and CEO Kevin Plank announced the creation of the stock, shareholders were immediately hung up on the shares’ exception — they would not come with voting rights. Under the new structure, Plank would essentially retain a strong influence over the Baltimore-based company for much of the foreseeable future.

But, in a filing with the U.S. Securities and Exchange Commission Wednesday, Under Armour said it has agreed to issue additional compensation to the holders of Class C stock in the form of a dividend with a value of $59 million. The settlement, still subject to additional approval by the Baltimore Circuit Court, gives additional “consideration” to stockholders while still allowing Under Armour to move forward with its stock split.

“[The] adjustment payment is intended to serve as consideration to the company’s Class C stockholders with respect to any potential discount in the trading price of the Class C stock, relative to the trading price of the company’s Class A common stock,” Under Armour said in the SEC filing.

The dividend will be payable in the form of the company’s Class A stock, Class C stock, cash or some combination to be determined at the sole discretion of the company’s board of directors, Under Armour said.

Under Armour has been on an earnings and branding winning spree in recent months and Plank, in a letter to shareholders explaining the stock split in June, had used the firm’s success as evidence of a need to hold on to the company’s “founder-led approach.”

“I love Under Armour, and I would like stockholders to know that I am very committed to our company,” Plank wrote in the letter. “Through my ownership of my founder’s shares, I have benefited, along with all of Under Armour’s stockholders, from the incredible growth we have realized in the value of Under Armour’s stock over the years.”

At press time, Under Armour’s share price was up 0.58 percent, or 57 cents, to $99.63.