Plank & the B-Stock: UA’s dual stock option for shareholders

Late last week, Under Armour proposed a Class C stock option, in addition to its Class A and B stocks, which won’t be in effect until after a board meeting in August.

“These non-voting shares will give us a new form of currency for corporate uses, including equity-based employee compensation and stock-based acquisitions,” Plank wrote in a letter to shareholders.

“The change will also allow me the flexibility of selling these non-voting shares of Under Armour over time while maintaining our founder-led approach. One thing to keep in mind is that immediately after the Class C dividend, all stockholders, including me, will retain the same voting interests they hold prior to the dividend. The dividend is designed to maintain our governance structure over the long-term, not result in any immediate changes to any stockholder’s voting power.”

The news made headlines after documents detailed Plank’s noncompete agreement — disallowing the Under Armour founder and CEO from leaving his post in lieu of leverage to work for the competition.

Since 2012, Under Armour has split its stock twice.

Both occurrences created additional stock dividends for both Class A and B stocks.

While a 2-for-1 stock option is rare, Google and Comcast have utilized this method to limit advertiser control. By adopting a Class C stock, Under Armour’s Kevin Plank will continue to oversee the company’s direction.

When Google instituted a Class C stock, however, prices dipped between three and six percent after investing in a non-voting stock.

If Under Armour doesn’t capitalize in a third stock, Plank’s ownership in Under Armour would fall below a needed 15 percent to obtain ownership. But since his newfound passions in real estate – and converting a hotel in Fells Point under his real estate firm – his grip on his first child, Under Armour, might slip and change hands.

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