Under Armour CEO Kevin Plank just took a big step in maintaining significant control of the company he founded back in 1996. The clothier announced that it would create a new class of publicly traded shares that would be distributed to existing shareholders. The new Under Armour Class C shares will carry all the rights and privileges of company ownership, with one notable exception…they will have no voting rights.
Under Armour's board of directors unanimously approved the measure to create this new non-voting class of stock, according to a company statement. Technically, the new shares will be distributed in the form of a stock dividend to existing holders of either the Class A or Class B shares. Effectively, the move acts like a 2-for-1 stock split.
The interesting part about the move involves the current voting structure of the shares.
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All holders of UA stock currently have voting rights, giving each some say in the future direction of the company. A Class A share carries the power of one vote, and each Class B share has the power of 10. As CEO and founder, Plank controls much of the Class B stock, giving him much more voting authority and influence over matters of corporate strategy.
There's a provision in Under Armour's corporate policy that says if Plank's ownership stake in the company drops below 15 percent of total Class A and B shares outstanding, the dual-class voting structure would come to an end, thus giving all shareholders the same voting rights.