UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Soliciting Material under §240.14a-12 |
UNDER ARMOUR, INC.
(Name of registrant as specified in its charter)
(Name of person(s) filing proxy statement, if other than the registrant)
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UNDER ARMOUR, INC.
NOTICE OF 20162017 ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 28, 2016May 31, 2017
Notice is hereby given that the Annual Meeting of Stockholders of Under Armour, Inc. will be held on Thursday, April 28, 2016Wednesday, May 31, 2017 at 10:00 a.m., Eastern Time, at the company’s office located at 2601 Port Covington Drive, Baltimore, Maryland 21230 forto consider and vote on the following purposes:matters:
1. | To elect ten directors nominated by the Board of Directors to serve until the next Annual Meeting of Stockholders and until their respective successors are elected and qualified; |
2. | To approve, on an advisory basis, our executive compensation; |
3. | To approve, on an advisory basis, the frequency of future advisory votes on our executive compensation; and |
To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, |
We will also transact any other business that may properly come before the meeting or any adjournment or postponement thereof.
Our Board of Directors recommends that you vote “FOR” the election of the ten nominees listed in the accompanying proxy statement to the Board of Directors, “FOR” the approval of our executive compensation, for “ONE YEAR” as the frequency of future advisory votes on our executive compensation and “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm.
Only stockholdersholders of record atof Class A Common Stock or Class B Common Stock as of the close of business on February 26, 2016March 17, 2017 are entitled to notice of, andor to vote at, the Annual Meeting and any adjournment or postponement thereof. Holders of Class C Common Stock have no voting power as to any items of business that may properly be brought before the Annual Meeting. In accordance with our charter,Bylaws, for ten days prior to the Annual Meeting, a list of those stockholders entitled to vote at the Annual Meeting will be available for inspection at the office of the Secretary, Under Armour, Inc., 1020 Hull Street,2601 Port Covington Drive, Baltimore, Maryland.Maryland 21230. This list also will be available at the Annual Meeting.
All stockholders are invited to attend the Annual Meeting. Please let us know if you plan to attend the meeting by indicating so on the proxy card or other voting instruction form that you have received. If you are a stockholder of record as of February 26, 2016,the March 17, 2017 record date, you will be admitted to the meeting if you present a form of photo identification. If you own stock beneficially, such as through a bank or broker, you will be admitted to the meeting if you present a form of photo identification and proof of ownership or a valid proxy signed by the record holder. A recent brokerage statement or a letter from a bank or broker are examples of proof of ownership.
Whether or not you intend to be present in person at the Annual Meeting, please vote your shares promptly by following the voting instructions that you have received.
By Order of the Board of Directors |
John Stanton |
Senior Vice President, General Counsel and Secretary |
Baltimore, Maryland
March 11, 2016April 13, 2017
UNDER ARMOUR, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
Thursday, April 28, 2016Wednesday, May 31, 2017
This Proxy Statement is being provided to solicit proxies on behalf of the Board of Directors of Under Armour, Inc. for use at the Annual Meeting of Stockholders and at any adjournment or postponement thereof. The meeting is to be held on Thursday, April 28, 2016,Wednesday, May 31, 2017, at 10:00 a.m., Eastern Time, at the company’s office located at 2601 Port Covington Drive, Baltimore, Maryland 21230. We expect to first send or give to stockholders this Proxy Statement, together with our 20152016 Annual Report to Stockholders, on approximately March 16, 2016.April 18, 2017.
Our principal offices are located at 1020 Hull Street, Baltimore, Maryland 21230. In this Proxy Statement we refer to Under Armour, Inc. as Under Armour, we, us, our or the company.
Internet Availability of Proxy Materials
Pursuant to rules of the Securities and Exchange Commission, or SEC, we are making our proxy materials available to our stockholders electronically over the Internet rather than mailing the proxy materials. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials to our stockholders.holders of Class A Common Stock and Class B Common Stock. All stockholders will have the ability to access the proxy materials, including this Proxy Statement and our 20152016 Annual Report to Stockholders, on the website referred to in the notice or to request a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found on the notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.
The SEC rules require us to notify all stockholders, including those stockholders to whom we have mailed proxy materials, of the availability of our proxy materials over the Internet.
Important Notice Regarding the Availability of Proxy Materials
for the ShareholderStockholder Meeting to be held on April 28, 2016May 31, 2017
Our Proxy Statement and 20152016 Annual Report to Stockholders are available at
http://investor.underarmour.com/annuals.cfm
Who May Vote
Only holders of record of our Class A Common Stock, which we refer to as Class A Stock, and holders of record of our Class B Convertible Common Stock, which we refer to as Class B Stock, at the close of business on February 26, 2016,March 17, 2017, or the Record Date, will be entitled to notice of, and to vote at, the Annual Meeting. On the Record Date, 183,001,283184,667,304 shares of Class A Stock and 34,450,000 shares of Class B Stock were issued and outstanding. Each share of Class A Stock is entitledentitles the holder to cast one vote on each matter to be considered at the Annual Meeting and each share of Class B Stock is entitledentitles the holder to cast ten votes on each matter to be considered at the Annual Meeting. Holders of Class A Stock and holders of Class B Stock will vote together as a single class on all matters. Stockholders are not allowed to cumulate their votes in the election of the directors. Holders of our Class C Common Stock, which we refer to as Class C Stock, have no voting power as to any items of business that will be voted on at the Annual Meeting.
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What Constitutes a Quorum
Stockholders may not take action at a meeting unless there is a quorum present at the meeting. StockholdersHolders of Class A Stock and Class B Stock entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting, represented in person or by proxy, constitute a quorum for the transaction of business at the Annual Meeting.
Vote Required
The election of each director requires a plurality of the votes cast at the Annual Meeting. The approval of our executive compensation and the ratification of the appointment of our independent registered public accounting firm each requires the affirmative vote of a majority of the votes cast at the Annual Meeting.
With respect to the vote on the frequency of future advisory votes on our executive compensation, you are not voting to approve or disapprove the proposal. Rather, you are voting to indicate your preference as to the frequency of future advisory votes on our executive compensation. The option of one year, two years or three years that receives a majority of all the votes cast on this proposal will be the frequency for the advisory vote on executive compensation that has been recommended by stockholders. In the event that no option receives a majority of the votes cast, we will consider the option that receives the most votes to be the option selected by stockholders. The board will take into consideration the outcome of the vote in setting a policy with respect to the frequency of future advisory votes on our executive compensation.
Voting Process
Shares that are properly voted at the Annual Meeting or for which proxies are properly executed and returned will be voted at the Annual Meeting in accordance with the directions given or, in the absence of directions, will be voted “FOR” the election of the ten nominees to the Board of Directors named in this Proxy Statement, “FOR” the advisory approval of our executive compensation, for “ONE YEAR” as the advisory vote on the frequency of future advisory votes on our executive compensation and “FOR” the ratification of the appointment of our independent registered public accounting firm. It is not expected that any other matters will be brought before the Annual Meeting. If, however, other matters are properly presented, the persons named as proxies in the proxy card will vote in accordance with their discretion with respect to such matters.
The manner in which your shares may be voted depends on how your shares are held. If you are the record holder of your shares, meaning you appear as the stockholder of your shares on the records of our stock transfer agent, you vote your shares directly through one of the methods described below. If you own shares in street name, meaning you are a beneficial owner with your shares held through a bank or brokerage firm, you instruct your bank or brokerage firm how to vote your shares through the methods described on the voting instruction form provided by your bank or brokerage firm.
How to Vote
YouHolders of our Class A Stock and Class B Stock as of the Record Date may vote yourtheir shares by one of the following methods.
Internet
To vote your shares by Internet, please visit the website listed on your Notice of Internet Availability of Proxy Materials, or the enclosed proxy card or voting instruction form, and follow the
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on-screen instructions. You will need the control number included on your Notice of Internet Availability of Proxy Materials, proxy card or voting instruction form. If you vote by Internet, you do not need to mail your proxy card or voting instruction form.
Telephone
If you received a paper proxy card or voting instruction form and would like to vote your shares by telephone, please follow the instructions on the proxy card or voting instruction form. If you vote by telephone, you do not need to mail your proxy card or voting instruction form.
If you received a paper proxy card or voting instruction form and would like to vote your shares by mail, please follow the instructions on the proxy card or voting instruction form. Please be sure to sign and date your proxy card.If you do not sign your proxy card, your votes cannot be counted. Mail your proxy card or voting instruction form in thepre-addressed, postage-paid envelope.
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In Person
You may also attend the Annual Meeting and vote in person. If you own your stock in street name and wish to vote your shares at the Annual Meeting, you must obtain a “legal proxy” from the bank or brokerage firm that holds your shares. You should contact your bank or brokerage account representative to obtain a legal proxy. However, to ensure your shares are represented, we ask that you vote your shares by Internet, telephone or mail, even if you plan to attend the meeting.
Attendance at the Annual Meeting
Holders of our Class A Stock, Class B Stock and Class C Stock may attend the Annual Meeting in person, although holders of Class C Stock will not be entitled to vote on any matter to be considered at the Annual Meeting. If you are the record holder of your shares, you will be required to present a form of photo identification for admission to the Annual Meeting. If you own your stock in street name, you may attend the Annual Meeting in person provided that you present a form of photo identification and proof of ownership, such as a recent brokerage statement or a letter from a bank or broker. Directions to the Annual Meeting are available at http://investor.underarmour.com/annuals.cfm.
Revocation
If you are the record holder of your shares, you may revoke or cancel a previously granted proxy at any time before the Annual Meeting by delivering to the Secretary of Under Armour at 1020 Hull Street,2601 Port Covington Drive, Baltimore, Maryland 21230, a written notice of revocation or a duly executed proxy bearing a later date, or by attending the Annual Meeting and voting in person. Any stockholder owning shares in street name may change or revoke previously given voting instructions by contacting the bank or brokerage firm holding the shares or by obtaining a legal proxy from the bank or brokerage firm and voting in person at the Annual Meeting. Your personal attendance at the meeting does not revoke your proxy. Your last vote, prior to or at the Annual Meeting, is the vote that will be counted.
Abstentions and BrokerNon-Votes
Shares held by stockholders present at the Annual Meeting in person or by proxy who do not vote on a matter and ballots or proxies marked “abstain” or “withheld” on a matter will be counted as present at the meeting for quorum purposes, but will not be considered votes cast on the matter.
If your shares are held in street name through a bank or broker and you do not provide voting instructions before the Annual Meeting, your bank or broker may vote your shares under certain circumstances in accordance with NYSE rules that govern banks and brokers. These circumstances
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include “routine matters,” such as the ratification of the appointment of our independent registered public accounting firm described in this Proxy Statement. Thus, if you do not vote your shares with respect to these matters, your bank or broker may vote your shares on your behalf or leave your shares unvoted.
The election of directors, and the advisory approval of our executive compensation and the advisory vote on the frequency of future advisory votes on our executive compensation are not considered “routine matters.” Thus, if you do not vote your shares with respect to any of these matters, your bank or broker may not vote the shares, and your shares will be left unvoted on the matter.
“Brokernon-votes” (which are shares represented by proxies, received from a bank or broker, that are not voted on a matter because the bank or broker did not receive voting instructions from you)the beneficial owner) will be treated the same as abstentions, which means they will be present at the Annual Meeting and counted toward the quorum, but they will not be counted as votes cast.cast on the matter. Abstentions and brokernon-votes will not have an effect on any of the proposals at this meeting because they will not be counted as votes cast.
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Householding
The SEC permits us to send a single set of proxy materials to any household at which two or more stockholders reside, unless contrary instructions have been received, but only if we provide advance notice and follow certain procedures. This process, referred to as householding, reduces the volume of duplicate information and reduces printing and mailing expenses. We have not instituted householding for stockholders of record. Certain brokerage firms may have instituted householding for beneficial owners of our common stock held through brokerage firms. If your family has multiple accounts holding our shares, you may have already received a householding notice from your broker. Please contact your broker directly if you have any questions or require additional copies of the proxy materials. The broker will arrange for delivery of a separate copy of this Proxy Statement or our Annual Report promptly upon your written or oral request. You may decide at any time to revoke your decision to household and begin receiving multiple copies.
Solicitation of Proxies
We pay the cost of soliciting proxies for the Annual Meeting. We solicit by mail and arrangements are made with brokerage houses and other custodians, nominees and fiduciaries to send proxy materials to beneficial owners. Upon request, we will reimburse them for their reasonable expenses. In addition, our directors, officers and employees may solicit proxies, either personally or by telephone, facsimile or written or electronic mail. Stockholders are requested to return their proxies without delay.
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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS OF SHARES
The following table sets forth certain information known to us regarding the beneficial ownership of shares of our Class A and Class B Stockcommon stock by:
Except as otherwise set forth in the footnotes below, the address of each beneficial owner is c/o Under Armour, Inc., 1020 Hull Street, Baltimore, Maryland 21230, and to our knowledge, each person has sole voting and investment power over the shares shown as beneficially owned. Unless otherwise noted, the information is stated as of February 26, 2016,March 17, 2017, the Record Date for the Annual Meeting of Stockholders. No shares in this table held by our directors or executive officers are pledged as security. The table below does not include restricted stock unit, or RSU, awards with shares issuable more than 60 days from February 26, 2016,March 17, 2017, stock options exercisable more than 60 days from March 17, 2017, or any RSUs or stock options with performance based vesting conditions that have not yet been satisfied. With respect to our 5% stockholders, the table below does not present their ownership of our Class C Stock due to itsnon-voting status.
Beneficial Owner | Shares Owned(1) | Options Exercisable within 60 Days | Beneficially Owned Shares | Percentage of Outstanding(2) | Percentage of Voting Shares(3) | |||||||||||||||
Kevin A. Plank (4) | 34,585,020 | 0 | 34,585,020 | 15.9% | 65.3% | |||||||||||||||
Byron K. Adams, Jr. (5) | 38,146 | 0 | 38,146 | * | * | |||||||||||||||
George W. Bodenheimer (5) | 3,000 | 0 | 3,000 | * | * | |||||||||||||||
Douglas E. Coltharp (5)(6) | 82,000 | 27,456 | 109,456 | * | * | |||||||||||||||
Anthony W. Deering (5) | 10,000 | 19,076 | 29,076 | * | * | |||||||||||||||
Karen W. Katz (5)(7) | 2,000 | 0 | 2,000 | * | * | |||||||||||||||
A.B. Krongard (5) | 50,140 | 35,856 | 85,996 | * | * | |||||||||||||||
William R. McDermott (5) | 0 | 27,456 | 27,456 | * | * | |||||||||||||||
Eric T. Olson (5) | 0 | 0 | 0 | * | * | |||||||||||||||
Harvey L. Sanders (5) | 174,000 | 35,856 | 209,856 | * | * | |||||||||||||||
Kerry D. Chandler (8) | 0 | 0 | 0 | * | * | |||||||||||||||
Brad Dickerson | 0 | 92,000 | 92,000 | * | * | |||||||||||||||
Karl-Heinz Maurath (9) | 49,632 | 0 | 49,632 | * | * | |||||||||||||||
Robin Thurston (10) | 30,924 | 0 | 30,924 | * | * | |||||||||||||||
All Executive Officers and Directors as a Group (5)(11) | 35,315,199 | 738,700 | 36,053,899 | 16.5% | 65.5% | |||||||||||||||
5% Stockholders | ||||||||||||||||||||
BlackRock, Inc. (12) | 9,842,429 | 9,842,429 | 4.5% | 1.9% | ||||||||||||||||
Fidelity Management & Research Company (13) | 14,377,234 | 14,377,234 | 6.6% | 2.7% | ||||||||||||||||
Prudential Financial, Inc. and related parties (14) | 13,268,022 | 13,268,022 | 6.1% | 2.5% | ||||||||||||||||
The Vanguard Group (15) | 15,075,831 | 15,075,831 | 6.9% | 2.9% |
Class A and Class B Stock | Class C Stock | |||||||||||||||||||
Beneficial Owner | Beneficially Owned Shares(1) | Percentage of Shares of Class Outstanding(2) | Beneficially Owned Shares(1) | Percentage of Shares of Class Outstanding | Percentage of Voting Power(3) | |||||||||||||||
Kevin A. Plank (4) | 34,651,491 | 15.8% | 33,839,992 | 15.3% | 65.1% | |||||||||||||||
Byron K. Adams, Jr. (5) | 3,420 | * | 3,444 | * | * | |||||||||||||||
George W. Bodenheimer (5) | 3,000 | * | 3,021 | * | * | |||||||||||||||
Douglas E. Coltharp (5)(6) | 102,808 | * | 103,534 | * | * | |||||||||||||||
Anthony W. Deering (5)(7) | 29,076 | * | 29,280 | * | * | |||||||||||||||
Jerri L. DeVard | 0 | * | 0 | * | * | |||||||||||||||
Karen W. Katz (5)(8) | 2,000 | * | 2,014 | * | * | |||||||||||||||
A.B. Krongard (5)(9) | 77,596 | * | 78,144 | * | * | |||||||||||||||
William R. McDermott (5)(9) | 27,456 | * | 27,649 | * | * | |||||||||||||||
Eric T. Olson (5) | 0 | * | 0 | * | * | |||||||||||||||
Harvey L. Sanders (5)(9) | 201,456 | * | 202,884 | * | * | |||||||||||||||
Colin Browne (10) | 0 | * | 0 | * | * | |||||||||||||||
Michael Lee (11) | 380,141 | * | 382,839 | * | * | |||||||||||||||
Karl-Heinz Maurath (12) | 15,153 | * | 15,294 | * | * | |||||||||||||||
Lawrence Molloy | 8,927 | * | 8,978 | * | * | |||||||||||||||
Brad Dickerson | 0 | * | 0 | * | * | |||||||||||||||
All Executive Officers and Directors as a Group (5)(13) | 36,047,978 | 16.4% | 35,248,138 | 15.9% | 65.3% | |||||||||||||||
5% Stockholders | ||||||||||||||||||||
Baillie Gifford & Co (14) | 17,535,907 | 8.0% | 3.3% | |||||||||||||||||
BlackRock, Inc. (15) | 10,520,022 | 4.8% | 2.0% | |||||||||||||||||
The Vanguard Group (16) | 16,916,213 | 7.7% | 3.2% |
* | Less than 1% of the shares. |
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(1) | Includes any stock options exercisable within 60 days of March 17, 2017 or shares issuable within 60 days of March 17, 2017 upon the vesting of RSUs. |
(2) | The percentage of outstanding figure takes into account the 34,450,000 shares of outstanding Class B Stock held, directly or indirectly, by Kevin A. Plank. These shares of Class B Stock may be converted under certain circumstances, including at the option of Mr. Plank, into shares of Class A Stock. If the shares of Class B Stock are not counted, the percentage of outstanding Class A Stock owned is as follows: Kevin A. Plank, less than one percent, all executive officers and directors as a group, less than one percent, Baillie Gifford & Co., 9.5%, BlackRock, Inc., |
(3) | Each share of Class A Stock has one vote and each share of Class B Stock has ten votes. The percentage of voting |
(4) | Includes |
(5) | Does not include deferred stock units, or DSUs, for shares of either Class A Stock or Class C Stock, or RSUs for shares of Class A Stock or Class C Stock held bynon-management directors. The RSUs will be converted |
Name | DSUs | RSUs | Class A DSUs | Class A RSUs | Class C DSUs | Class C RSUs | ||||||||||||||||||
Byron K. Adams, Jr. | 41,068 | 1,584 | 42,873 | 0 | 44,965 | 3,005 | ||||||||||||||||||
George W. Bodenheimer | 2,609 | 2,560 | 4,902 | 488 | 6,723 | 3,496 | ||||||||||||||||||
Douglas E. Coltharp | 53,015 | 1,584 | 54,820 | 0 | 56,997 | 3,005 | ||||||||||||||||||
Anthony W. Deering | 55,075 | 1,584 | 56,881 | 0 | 59,071 | 3,005 | ||||||||||||||||||
Karen W. Katz | 2,284 | 2,616 | 4,605 | 516 | 6,425 | 3,524 | ||||||||||||||||||
A.B. Krongard | 64,233 | 1,584 | 66,157 | 0 | 69,367 | 3,005 | ||||||||||||||||||
William R. McDermott | 57,822 | 1,584 | 59,657 | 0 | 62,106 | 3,005 | ||||||||||||||||||
Eric T. Olson | 11,953 | 1,584 | 13,758 | 0 | 15,643 | 3,005 | ||||||||||||||||||
Harvey L. Sanders | 59,583 | 1,584 | 61,426 | 0 | 63,947 | 3,005 |
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(6) | Includes 6,000 shares of Class A Stock owned by Mr. Coltharp individually, 75,000 shares owned by his wife and 1,000 shares of Class A Stock held by two Uniform Transfer to Minors Act accounts and 6,042 shares of Class C Stock owned by Mr. Coltharp individually, 75,532 shares owned by his wife and 1,006 shares of Class C Stock held by two Uniform Transfer to Minors Act accounts. Also includes 20,808 stock options for Class A Stock that are currently exercisable and 20,954 stock options for Class C Stock that are currently exercisable. |
(7) | Includes 19,076 stock options for Class A Stock that are currently exercisable and 19,210 stock options for Class C Stock that are currently exercisable. |
(8) | Shares of Class A Stock and Class C Stock are held in trust. |
Includes 27,456 stock options for Class A Stock that are currently exercisable and 27,649 stock options for Class C Stock that are currently exercisable. |
(10) | Does not include RSUs for |
Does not include RSUs for |
Includes shares shown as beneficially owned by the directors and executive officers as a group |
According to their report on Schedule 13G, as of December 31, |
(15) | According to their report on Schedule 13G, as of December 31, 2016, BlackRock, Inc., or BlackRock, and certain affiliates of BlackRock, were deemed to beneficially own in the aggregate |
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According to their report on Schedule 13G, as of December 31, |
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(PROPOSAL 1)
Nominees for Election at the Annual Meeting
There are ten nominees for election to the Board of Directors at the Annual Meeting. Each nomineeNine of ten nominees currently servesserve as a director. Ms. DeVard is being nominated as a director for the first time. Biographical information for each nominee for director is set forth below. In addition, information about the experience, qualifications, attributes and skills considered by our Corporate Governance Committee and Board in determining that the nominee should serve as a director is set forth below. For additional information about how we identify and evaluate nominees for director, see “Corporate Governance and Related Matters—Identifying and Evaluating Director Candidates” below.
Ten directors will be elected at the 20162017 Annual Meeting to hold office until their successors are elected and qualified. Unless otherwise specified, the proxies received will be voted for the election of the following persons:
Director since our founding Age: | Kevin A. Plank Chairman of the Board and Chief Executive Officer of Under Armour, Inc.
Kevin A. Plank is the founder of Under Armour and has served as our Chairman of the Board of Directors and Chief Executive Officer since 1996. Mr. Plank also serves on the Board of Directors of the National Football Foundation and College Hall of Fame, Inc. and is a member of the Board of Trustees of the University of Maryland College Park Foundation.
As our founder, leader and controlling stockholder since our inception in 1996 and as the driving force behind our innovative products and our brand, Mr. Plank is uniquely qualified to serve on and lead our Board. | |
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Director since August 2014 Age:
Independent | George W. Bodenheimer Former President of ESPN, Inc. and ABC Sports
Mr. Bodenheimer served as Executive Chairman of ESPN, Inc., a multimedia, multinational sports entertainment company from January 2012 to June 2014. Prior thereto, he served asCo-Chairman of Disney Media Networks from April 2004 to January 2012, President of ABC Sports from March 2003 to January 2012 and President of ESPN from November 1998 to January 2012. With ESPN since 1981, Mr. Bodenheimer served in a variety of senior sales and marketing positions prior to his appointment as President. Mr. Bodenheimer serves on the Board of Directors of Sirius XM Holdings, Inc. and is a member of its compensation committee.
Mr. Bodenheimer’s qualifications to serve on our Board include his past leadership experience in building and leading a global sports media brand during his time at ESPN. |
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Director since December 2004 Age:
Independent | Douglas E. Coltharp Executive Vice President and Chief Financial Officer, HealthSouth Corporation
Since May 2010, Mr. Coltharp has served as Executive Vice President and Chief Financial Officer of HealthSouth Corporation. Prior thereto, Mr. Coltharp served as a partner at Arlington Capital Advisors and Arlington Investment Partners, a Birmingham, Alabama based financial advisory and private equity business from May 2007 to April 2010 and as Executive Vice President and Chief Financial Officer of Saks Incorporated and its predecessor organization from 1996 to May 2007.
Mr. Coltharp’s qualifications to serve on our Board include his past leadership experience in the consumer retail sector, including 11 years as Chief Financial Officer of Saks Incorporated, a leading publicly-traded consumer retailer, and his more recent leadership experience as Executive Vice President and Chief Financial Officer of a large publicly-traded company, HealthSouth Corporation. |
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Director since August 2008 Age:
Independent | Anthony W. Deering Former Chief Executive Officer and Chairman, The Rouse Company
Since 2005, Mr. Deering has served as Chairman of Exeter Capital, LLC, a private investment firm. Prior thereto, Mr. Deering served as Chairman of the Board and Chief Executive Officer of The Rouse Company, a large publicly-traded national real estate company, from 1997 to 2004. With The Rouse Company since 1972, Mr. Deering previously had served as Vice President and Treasurer, Senior Vice President and Chief Financial Officer and President and Chief Operating Officer. Mr. Deering serves on the Board of Directors of Brixmor Property Group, Inc., and is a member of its Audit Committee. Mr. Deering also serves as Lead Independent Director on the Boards of the T. Rowe Price Mutual Funds (which includes
Mr. Deering’s qualifications to serve on our Board include his past leadership experience with a large publicly-traded company, The Rouse Company, including as Chief Financial Officer, Chief Operating Officer and for seven years as Chief Executive Officer and Chairman of the Board. |
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Nominee Age: 58 Independent | Jerri L. DeVard Former Chief Marketing Officer of The ADT Corporation and Principal of the DeVard Marketing Group Ms. DeVard served as Senior Vice President and Chief Marketing Officer of The ADT Corporation, a leading provider of home and business security services, from March 2014 through May 2016. From July 2012 to March 2014, she was Principal of DeVard Marketing Group, a firm specializing in advertising, branding, communications and traditional/digital/multicultural marketing strategies, and prior thereto served as Executive Vice President of Marketing for Nokia. Ms. DeVard served in a number of senior marketing roles throughout her career, including as Senior Vice President of Marketing and Senior Vice President, Marketing Communications and Brand Management of Verizon Communications, Inc., Chief Marketing Officer of thee-Consumer business at Citibank N.A. and other senior marketing positions at Revlon Inc., Harrah’s Entertainment, the NFL’s Minnesota Vikings and the Pillsbury Company. Ms. DeVard currently serves on the Board of Directors of ServiceMaster Global Holdings, Inc. and is a member of its audit committee. Within the past five years, Ms. DeVard served on the Board of Directors of Belk, Inc. Ms. DeVard’s qualifications to serve on our Board include her broad-based and significant marketing experience and leadership with a number of large global brands. | |
Director since October 2014 Age:
Independent | Karen W. Katz President and Chief Executive Officer, Neiman Marcus Group LTD LLC
Ms. Katz has served as President and CEO and a member of the Board of Directors of Neiman Marcus Group LTD LLC since 2010. Neiman Marcus Group is an international multi-brand
Ms. Katz qualifications to serve on our Board include her leadership experience in the consumer retail sector with Neiman Marcus Group, including her current position as President and Chief Executive Officer. |
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Director since July 2005 Age:
Independent
Lead Director | A.B. Krongard Former Chief Executive Officer and Chairman, Alex.Brown, Incorporated
Mr. Krongard served as Executive Director of the Central Intelligence Agency from 2001 to 2004 and as counselor to the Director of the Central Intelligence Agency from 1998 to 2001. Mr. Krongard previously served in various capacities at Alex.Brown, Incorporated, including as Chief Executive Officer and Chairman of the Board. Upon the merger of Alex.Brown with Bankers Trust Corporation in September 1997, Mr. Krongard became Vice Chairman of the Board of Bankers Trust and served in such capacity until joining the Central Intelligence Agency in 2001. Mr. Krongard serves on the Board of Directors of Iridium Communications, Inc. and is a member of its compensation committee and Chairman of its nominating and corporate governance committee,
Mr. Krongard’s qualifications to serve on our Board include his past leadership experience with a large publicly-traded investment banking firm Alex.Brown, Incorporated, including as Chief Executive Officer and Chairman of the Board, and his past leadership experience with the Central Intelligence Agency, including serving as Executive Director responsible for overall operations of the agency. | |
Director since August 2005 Age:
Independent | William R. McDermott Chief Executive Officer and Executive Board Member, SAP SE
Mr. McDermott has served as Chief Executive Officer of SAP SE since May 2014 and Executive Board Member of SAP SE since 2010. Mr. McDermott served asCo-Chief Executive Officer of SAP SE from February 2010 to May 2014 and prior thereto as President of Global Field Operations and Chief Executive Officer of SAP Americas & Asia Pacific Japan. SAP is a business software company that provides collaborative business solutions to companies of all sizes. Prior to joining SAP in 2002, Mr. McDermott served as Executive Vice President of Worldwide Sales Operations at Siebel Systems from 2001 to 2002, and President of Gartner, Inc. from 2000 to 2001. Mr. McDermott rose through the ranks at Xerox from 1983 to 2000. In his last leadership position at Xerox, Mr. McDermott served as a division President and Corporate Officer from 1997 to 2000. Mr. McDermott
Mr. McDermott’s qualifications to serve on our Board include his leadership experience with a leading global business SAP SE, as Chief Executive Officer and Executive Board Member. |
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Director since July 2012 Age:
Independent | Eric T. Olson Admiral U.S. Navy (Retired) and former Commander, U.S. Special Operations Command
Admiral Olson retired from the United States Navy in 2011 as a full Admiral after 38 years of military service. He served in special operations units throughout his career, during which he earned a Master’s Degree in National Security Affairs and was awarded several decorations for leadership and valor including the Defense Distinguished Service Medal and the Silver Star. Admiral Olson was the first Navy SEAL officer to be promoted to three- and four-star ranks. Admiral Olson’s career culminated as the head of the United States Special Operations Command from July 2007 to August 2011, where he was responsible for the mission readiness of all Army, Navy, Air Force, and Marine Corps special operations forces. In this capacity, he led over 60,000 people and managed an annual budget in excess of ten billion dollars. As President and Managing Member of ETO Group, LLC since September 2011, Admiral Olson is now an independent national security consultant who supports a wide range of private and public sector organizations. Admiral Olson serves on the Board of Directors of Iridium Communications, Inc. and is a member of its nominating and corporate governance committee and also serves as a Director of thenon-profit Special Operations Warrior Foundation.
Admiral Olson’s qualifications to serve on our Board include his past leadership experience as Admiral in the United States Navy, including his leadership and management of a large and complex organization as head of the United States Special Operations Command. | |
Director since November 2004 Age:
Independent | Harvey L. Sanders Former Chief Executive Officer and Chairman, Nautica Enterprises, Inc.
Mr. Sanders is the former Chairman of the Board of Directors, Chief Executive Officer and President of Nautica Enterprises, Inc. He served as Chairman from 1993 to 2003 and as Chief Executive Officer and President from 1977 to 2003, until VF Corporation acquired Nautica Enterprises, Inc. in 2003. Mr. Sanders currently serves as a member of the Board of Directors for the Boomer Esiason Foundation for Cystic Fibrosis and the
Mr. Sanders’ qualifications to serve on our Board include his past leadership experience in the consumer retail sector, including over 25 years as President and Chief Executive Officer and 10 years as Chairman of the Board of Nautica Enterprises, Inc., a former leading publicly-traded apparel brand and retailer. |
The election of each director requires a plurality of the votes cast at the Annual Meeting.
The Board of Directors recommends that you vote “FOR” the election of the ten nominees for director.
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Byron K. Adams, Jr., our longest serving director other than Mr. Plank, is not standing for reelection at the Annual Meeting. The Board thanks Mr. Adams for his many years of service to our company.
Director since September 2003 Age: 62 | Byron K. Adams, Jr. Former Managing Director and Founder of Rosewood Capital, LLC Mr. Adams served as Senior Advisor to our Chairman from October 2013 to November 2014 and as Chief Performance Officer of Under Armour from October 2011 to September 2013, with primary responsibility for the development of company-wide business strategy, human resources and organizational alignment and processes. Prior to joining our Company, Mr. Adams founded and was a managing director of Rosewood Capital, LLC from 1985 to September 2011. Rosewood Capital is a private equity firm focused on consumer brands that, through its affiliates, was the institutional investor in our company prior to our initial public offering. At Rosewood Capital, Mr. Adams was primarily responsible for assisting management teams in the development of their business strategies and organizations. Currently, Mr. Adams serves as Advisor to Anthos Capital, L.P. and Morgan Stanley Ventures, venture funds specializing in growth capital investments. Mr. Adams’ qualifications to serve on our Board include his 26 years of experience with the private equity firm Rosewood Capital which invested in and advised consumer growth companies, and his most recent experience as a senior executive at our company with significant leadership responsibility, including developing company-wide business strategy. |
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CORPORATE GOVERNANCE AND RELATED MATTERS
Board of Directors and Board Leadership Structure
Our Board of Directors currently has ten directors. NineOf the current directors, nine arenon-management directors, with 80% being independent directors. If Ms. DeVard is elected to our Board of Directors, 90% of our directors will be independent.
Kevin Plank currently serves as Chief Executive Officer and Chairman of the Board for our company. We believe combining the roles of chairman and chief executive officer is currently the appropriate leadership model for our company as it provides for clear accountability and efficient and effective leadership of our business. As our founder and our largest stockholder, with beneficial ownership of approximately 16% of our outstanding stock and majority voting control of our company, we believe Mr. Plank is the appropriate person to lead both our Board and the management of our business.
During 2016, we implemented a series of changes to our stock and corporate governance that resulted in the creation of our Class C Stock. On April 7, 2016, stockholders of record of our Class A Stock and Class B Stock received shares of Class C Stock on aone-for-one basis. Among other things, these changes permit us to issue Class C Stock instead of Class A Stock through our equity incentive plans without further diluting the voting control of Mr. Plank, thereby prolonging our current governance structure, which we believe is important to our long-term growth and success.
Lead Director
To further strengthen our corporate governance structure and provide independent oversight of our company, the Board has appointed Mr. Krongard as our lead independent director. As Lead Director, Mr. Krongard acts as a liaison between thenon-management directors of the Board and Mr. Plank and the other members of our management team, chairs regular executive sessions of the Board without Mr. Plank present and performs other functions as requested by thenon-management directors.
Communication with Directors
If stockholders or other interested parties wish to communicate withnon-management directors, they should write to Under Armour, Inc., Attention: Corporate Secretary, 1020 Hull Street,2601 Port Covington Drive, Baltimore, Maryland 21230. Further information concerning contacting our Board is available through our investor relations website at www.uabiz.com, under “Investors-Governance.”
Stockholders Meeting Attendance
Directors are encouraged to attend annual meetings of stockholders, but we have no specific policy requiring attendance by directors at such meetings. Nine outAll of tenour directors attended our 20152016 Annual Meeting of Stockholders.
Availability of Corporate Governance Information
For additional information on our corporate governance, including Board committee charters, our corporate governance guidelines and our code of business conduct and ethics, visit our investor relations website at www.uabiz.com, under “Investors-Governance.”
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Role of Board in Risk Oversight
Our Board of Directors is responsible for the oversight of risk management. The Board delegates much of this responsibility to the Audit Committee. Under its charter, the committee’s responsibilities include to inquire of management, our Vice President of Global Risk Management and our independent
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registered public accounting firm about significant financial risks or exposures, the company’s processes and policies for risk assessment and the steps management has taken to mitigate these risks to the company. The committee receives periodic reports from our Vice President of Global Risk Management on our enterprise risk management program and our risk mitigation efforts. The committee also oversees our legal and regulatory compliance programs and our internal audit function. The Compensation Committee has the responsibility to review the risks of our compensation policies and practices. Our full Board periodically reviews our financial and strategic plans and objectives, including the risks that may affect the achievement of these plans and objectives.
Stock Ownership Guidelines
Our Board of Directors has adopted stock ownership guidelines to further align the financial interests of the company’s executives andnon-management directors with the interests of our stockholders. The guidelines provide that executive officers should own company stock with a value at least equal to ten times annual base salary for the Chief Executive Officer, three times annual base salary for Executive Vice Presidents and one time annual base salary for all other executive officers. The guidelines provide thatnon-management directors should own company stock with a value at least equal to three times the amount of the annual retainer paid to directors. Executive officers are expected to achieve the stock ownership levels under these guidelines within five years of their hire or promotion to executive officer andnon-management directors within three years.years of joining our Board. The company’s stock ownership guidelines can be found on our website at www.uabiz.com, under “Investors-Governance.”
All executive officers andnon-management directors are in compliance with the guidelines with the exception of persons new to their roles within the last few years. We anticipate these persons will be in compliance with the guidelines within the required time frame.
Kevin Plank, the company’s Chief Executive Officer and Chairman of the Board, and our founder, currently has a base salary of $26,000, which was his approximate salary when he founded the company. He owns 34,585,020164,617 shares of Class A stock, 34,450,000 shares of Class B Stock and 33,802,857 shares of Class C Stock, valued at more than $2.8$1.27 billion as of the February 26, 2016 record dateMarch 17, 2017 Record Date for the Annual Meeting of Stockholders, far above the multiple of ten times salary minimum ownership requirement, even assuming a significantly higher salary amount more typical for a Chief Executive Officer at a company of our size.
Independence of Directors
The Board has determined that the following eight directors are independent under the corporate governance listing standards of the New York Stock Exchange, or NYSE: George W. Bodenheimer, Douglas E. Coltharp, Anthony W. Deering, Karen W. Katz, A.B. Krongard, William R. McDermott, Eric T. Olson and Harvey L. Sanders. The Board has also determined that Jerri L. DeVard, the nominee to the Board, is independent under the NYSE standards.
When determining the independence of the directors under NYSE standards, the Board considered certain company relationships.
Mr. McDermott is the Chief Executive Officer and Executive Board member of SAP SE. The company has standard industry license agreements for SAP software
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and uses SAP for related support services. In 2015, the company also entered into an agreement with SAP to engage SAP to assist in an ongoing initiative that includes the implementation of SAP’s Fashion Management software and enhancements to global business processes to help support the company’s growth. In 2015,2016, between these two arrangements, we paid approximately $49.3$69.4 million to SAP, or less than one-halfapproximatelyone-tenth of one percent of SAP’s 20152016 worldwide revenues of approximately€20.822 billion. The Board has determined that this relationship is not a material relationship and has no impact on Mr. McDermott’s independence.
Kevin Plank is not independent because he is our Chairman of the Board and Chief Executive Officer. Byron K. Adams, Jr., former Senior Advisor to the Chairman advising primarily on our digital
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business, is not independent because he served as an executive of the company within the last three years. Mr. Adams left his position as Senior Advisor in November 2014 followingis not standing forre-election at the completion of his work.Annual Meeting.
In addition, at a Special Meeting of Stockholders held on August 26, 2015, our shareholders approved certain amendments to ourOur charter that would imposeincludes additional factors for the Board to consider when determining whether a director will be considered “independent” under the NYSE standards. Although this charter amendment has not yet become effective and will only become effective if we determine to issue any shares of our new Class C nonvoting common stock,Specifically, the Board considered it prudent tomust consider these factors in its independence analysis this year. Therefore the Board also considered whether any of the independent directors have any material financial or service relationship with Mr. Plank or any of his family members,members. The Board has considered these factors and determined that neither the current independent directors do not. If the charter amendment becomes effective, anor Ms. DeVard have any such relationships. A copy of the updatedour charter that includes these requirements will beis available through our website at www.uabiz.com, under “Investors-Governance”.
Board Meetings and Committees
Our Board meets regularly throughout the year. During 2015,2016, there were thirteenfourteen meetings of the Board. In 2015,2016, all directors attended at least 75% of the aggregate meetings of the Board and the committees of which they were members.
The Board has the following threefour standing committees: an Audit Committee, a Compensation Committee and a Corporate Governance Committee and a Finance and Capital Planning Committee. The table below provides current membership and meeting information for 20152016 for each of these committees.
Name | Audit Committee | Compensation Committee | Corporate Governance Committee | Audit Committee | Compensation Committee | Corporate Governance Committee | Finance and Capital Planning Committee | |||||||||||||||||||||
Byron K. Adams, Jr. | X | |||||||||||||||||||||||||||
George W. Bodenheimer | X | X | ||||||||||||||||||||||||||
Douglas E. Coltharp | X | X | *X | |||||||||||||||||||||||||
Anthony W. Deering | X | X | X | X | X | |||||||||||||||||||||||
Karen W. Katz | X | X | X | |||||||||||||||||||||||||
A.B. Krongard | *X | *X | ||||||||||||||||||||||||||
William R. McDermott | *X | *X | ||||||||||||||||||||||||||
Eric T. Olson | X | X | ||||||||||||||||||||||||||
Harvey L. Sanders | *X | *X | ||||||||||||||||||||||||||
Total Meetings in 2015 | 7 | 7 | 4 | |||||||||||||||||||||||||
Total Meetings in 2016 | 10 | 15 | 4 | 2 |
* | Committee Chair |
The functions performed by these standing committees are summarized below, and are set forth in more detail in their charters. The complete text of the charters for each standing committee can be found on our website at www.uabiz.com, under “Investors-Governance.” The Board has determined that each member of thesethe Audit, Compensation and Governance committees is independent as required under NYSE listing standards.standards and our charter.
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Audit Committee
Mr. Krongard serves as the chairman of the Audit Committee. This committee assists the Board of Directors with oversight of matters relating to accounting, internal control, auditing, financial reporting, risk and legal and regulatory compliance. The committee oversees the audit and other services provided by our independent registered public accounting firm and is directly responsible for the appointment, independence, qualifications, compensation and oversight of the independent registered public accounting firm, which reports directly to the committee. The committee also oversees the
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internal audit function for Under Armour and is responsible for the appointment of the Director of Internal Audit, who reports directly to the committee. The Audit Committee Report for 20152016 is included in this Proxy Statement under “Audit Committee Report.”
The Board has determined that all the committee members are independent, financially literate and qualify as “audit committee financial experts” under SEC rules and NYSE listing standards.
Compensation Committee
Mr. Sanders serves as the chairman of the Compensation Committee. This committee approves the compensation of our Chief Executive Officer, or CEO, and our other executive officers, administers our executive benefit plans, including the granting of stock options, restricted stock units and other awards under our equity incentive plans, and advises the Board on director compensation. Pursuant to its charter, the committee may delegate any of its responsibilities to a subcommittee comprised of one or more members of the committee. However, the committee has not delegated any such responsibilities.
Our CEO and other senior executives evaluate the performance of our executive officers and make recommendations to the Compensation Committee concerning their compensation. The committee considers these evaluations and recommendations, and its evaluation of the CEO in determining the compensation of our CEO and our other executive officers.
Pursuant to its charter, the Compensation Committee has the authority to obtain advice and assistance from advisors, including compensation consultants. In 2015,2016, the committee engaged the services of an independent compensation consultant, Willis Towers Watson, or WTW, to provide executive compensation consulting services to the committee. This independent consultant reports directly to the committee and the committee retains sole authority to retain and terminate the consulting relationship. In carrying out its responsibilities, the independent consultant collaborates with management to obtain data, provide background on compensation programs and practices, and clarify pertinent information. The committee obtained from the independent consultant competitive market data on compensation for executives to assess generally the competitiveness of our executive compensation and the general design of our annual cash incentive plan. The competitive market data was based on a peer group and Towers Watson’sWTW’s published industry survey data. The committee has not relied on the independent consultant to determine or recommend the amount or form of executive compensation.
In 2016, management separately engaged WTW for consulting services related to design of the company’s compensation for equity-eligible employees (excluding our executive officers). This engagement was reviewed andpre-approved by the Compensation Committee, and the committee did not consider this engagement to compromise the independence of WTW. The total compensation paid to WTW for these management consulting services in 2016 was $129,542.
Additional information concerning the processes and procedures for the consideration and determination of executive officer compensation is included in the “Compensation Discussion and Analysis” section of this Proxy Statement. The Compensation Committee Report for 20152016 is included under the “Compensation Committee Report” section of this Proxy Statement.
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A description of the compensation program for ournon-management directors, including updates to the program for 2017, is included below under the “—Compensation of Directors” section of this Proxy Statement. In late 2016, at the request of the Compensation Committee Chairman, management researched director compensation practices of competitor companies and reviewed the data with the committee. The committee also reviewed a summary of published third party surveys on public company director compensation practices of similarly sized companies and director compensation of industry peers.
In early 2016,2017, the Compensation Committee reviewed the risks of our compensation policies and practices. The company’s Vice President of Global Risk Management conducted a risk assessment of our compensation policies and practices for all employees and this assessment was reviewed by the committee. The risk assessment included a review of our material compensation programs, the structure and nature of these programs, the short-term and long-term performance incentive targets used in these programs and how they relate to our business plans and creating stockholder value, corporate governance policies with respect to our compensation programs, and other aspects of our compensation programs. Based on this review and assessment, we concluded that the risks related to our compensation policies and practices are not reasonably likely to have a material adverse effect on our company.
Corporate Governance Committee
Mr. McDermott serves as the chairman of the Corporate Governance Committee. This committee identifies individuals qualified to become members of our Board of Directors, recommends candidates
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for election or reelection to our Board, oversees the evaluation of our Board, and advises our Board regarding committee composition and structure and other corporate governance matters. The committee also periodically reviews succession planning for our Chief Executive Officer and other senior executive positions.
Finance and Capital Planning Committee
Mr. Coltharp serves as the chairman of the Finance and Capital Planning Committee. This committee assists our Board in overseeing the financial and capital investment policies, planning and activities of the company in support of our long-range goals.
Identifying and Evaluating Director Candidates
The Corporate Governance Committee recommends to the Board candidates to fill vacancies or for election or reelection to the Board. The Board then appoints new Board members to fill vacancies or nominates candidates each year for election or reelection by stockholders. The committee does not have a specific written policy or process regarding the nominations of directors, nor does it maintain minimum standards for director nominees other than as set forth in the committee’s charter as described below.
The Corporate Governance Committee’s charter requires the committee to establish criteria for selecting new directors, which reflects at a minimum a candidate’s strength of character, judgment, business experience, specific areas of expertise, factors relating to the composition of the Board, including its size and structure, and principles of diversity, including gender and ethnicity. The committee also considers the statutory requirements applicable to the composition of the Board and its committees, including the independence requirements of the NYSE.
For a discussion of the specific experience, qualifications, attributes or skills of the nominees for election to the Board, see the “Election of Directors” section of this Proxy Statement. The Board has
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not established term limits for directors because of the concern that term limits may deprive the company and its shareholders of the contribution of directors who have been able to develop valuable insights into the company and its operations over time. Our corporate governance guidelines do provide that a director is expected not to stand for reelection after the age of 75. The Corporate Governance Committee recommended the Board nominate Mr. Krongard, age 79,80, for reelection to the Board based on his continued strong leadership and service on the Board both as Audit Committee Chairman and Lead Director, and the Board agreed with this recommendation.
The Corporate Governance Committee does not have a formal policy with regard to the consideration of diversity, including gender and ethnicity, in identifying director nominees. Consistent with the committee’s charter, when identifying director nominees, the committee considers general principles of diversity, and does so in the broadest sense, considering diversity in terms of business leadership, experience, industry background and geography, as well as gender and ethnicity. The committee strives for directors who represent a mix of backgrounds and experiences that will enhance the quality of the board’s deliberations and oversight of our business, and as our business expands we hope to attract directors with a broader range of backgrounds and experiences.
The Corporate Governance Committee has authorized the chairman of the committee,periodically considers criteria for identifying possible new director candidates as needed, in consultation with the CEO and Chairman of the Board and other members of the Board and management, to develop criteria for selecting new director candidates and to considerworks with management and recruit new candidates as needed. The chairmanother members of the committee reports periodically to the full committee on these efforts.Board in recruiting new candidates. Candidates identified through this process are considered by the full committee for possible recommendation to the Board. From time to time the committee uses the services of a third party search firm to assist it in identifying and screening candidates. A third party search firm identified and recommended Ms. DeVard as a potential candidate.
In addition, the Corporate Governance Committee will consider director candidates suggested by stockholders. Any stockholder who wishes to recommend a director candidate for consideration by the committee may do so by submitting the name and qualifications of the candidate to the chairman of the committee. See “Communications with Directors” above for how to communicate with the chairman of the committee. Our bylaws include requirements for direct nominations by a stockholder of persons for election to our Board. These requirements are described under “Stockholder Proposals” at the end of this Proxy Statement.
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Compensation of Directors
Retainers
The compensation arrangement fornon-management directors during 20152016 was as follows:
Annual Retainer for each Director | $ | 75,000 | $ | 75,000 | ||||
Annual Retainer for Committee Chairs | ||||||||
Audit Committee | $ | 15,000 | $ | 15,000 | ||||
Compensation Committee | $ | 12,500 | $ | 12,500 | ||||
Corporate Governance Committee | $ | 10,000 | $ | 10,000 | ||||
Finance Committee | $ | 10,000 | * | |||||
Annual Retainer for Lead Director | $ | 25,000 | $ | 25,000 |
* | Represents the annual retainer for the finance committee chair. The finance committee was first constituted during the second quarter of 2016, and the total fee for 2016 was prorated to $6,028. |
The cash retainers are payable in quarterly installments and directors have the option to defer the cash retainers into deferred stock units pursuant to theNon-Employee Directors Deferred Stock Unit Plan. Beginning with the second quarter of 2016, we began issuing deferred stock units for shares of
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our Class C Stock rather than our Class A Stock. Deferred stock units will be settled in shares of our Class A Stock or Class C Stock (as applicable) on aone-for-one basis six months after the director leaves the Board, or sooner upon death or disability. We do not pay meeting fees for any Board or standing committee meetings.
Equity Awards
Non-management directors also receive the following equity awards:
Update to Equity Awards for 2017
The current arrangements for our Board compensation have been in place since 2015. The Compensation Committee reviewed director compensation in late 2016 and again in early 2017. For further discussion of this review, see “—Board Meeting and Committees—Compensation Committee” above. After this review, the committee and the Board believed that our director compensation was below competitive levels and that changes were appropriate to bring our director compensation more in line with director compensation in our industry. The committee recommended and the Board approved for 2017 an increase in the annual award of restricted stock units from $125,000 to $150,000.
The restricted stock units vest earlier than the scheduled vesting termin full upon the director’s death or disability or upon a change in control of Under Armour. The restricted stock units are forfeited if the director leaves the Board for any other reason prior to the scheduled vesting term. Upon vesting of the restricted stock units, the restricted stock units are converted into deferred stock units with the shares delivered six months after the director leaves the Board, or sooner upon death or disability.
The table set below sets forth information concerning the compensation of ournon-management directors for 2015.2016.
Director Compensation for 20152016
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | Total ($) | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | Total ($) | ||||||||||||||||||
Byron K. Adams, Jr. | 75,000 | 125,000 | 200,000 | 75,000 | 125,000 | 200,000 | ||||||||||||||||||
George W. Bodenheimer | 75,000 | 125,000 | 200,000 | 75,000 | 125,000 | 200,000 | ||||||||||||||||||
Douglas E. Coltharp | 90,000 | 125,000 | 215,000 | 81,078 | 125,000 | 206,078 | ||||||||||||||||||
Anthony W. Deering | 90,000 | 125,000 | 215,000 | 75,000 | 125,000 | 200,000 | ||||||||||||||||||
Karen W. Katz | 75,000 | 125,000 | 200,000 | 75,000 | 125,000 | 200,000 | ||||||||||||||||||
A.B. Krongard | 130,000 | 125,000 | 255,000 | 115,000 | 125,000 | 240,000 | ||||||||||||||||||
William R. McDermott | 85,000 | 125,000 | 210,000 | 85,000 | 125,000 | 210,000 | ||||||||||||||||||
Eric T. Olson | 75,000 | 125,000 | 200,000 | 75,000 | 125,000 | 200,000 | ||||||||||||||||||
Harvey L. Sanders | 87,500 | 125,000 | 212,500 | 87,500 | 125,000 | 212,500 | ||||||||||||||||||
Thomas J. Sippel (4) | 24,792 | 0 | 24,792 |
(1) | Non-management directors may elect to defer cash retainers into deferred stock units pursuant to theNon-Employee Directors Deferred Stock Unit Plan as described above. The table below sets forth the amount of cash deferred and the number of deferred stock units received for those directors who made this election. |
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Name | 2015 Cash Deferred ($) | Deferred Stock Units | 2016 Cash Deferred ($) | Deferred Stock Units (Class A) | Deferred Stock Units (Class C) | |||||||||||||||
Byron K. Adams, Jr. | 75,000 | 886 | 75,000 | 221 | 1,788 | |||||||||||||||
George W. Bodenheimer | 75,000 | 886 | 75,000 | 221 | 1,788 | |||||||||||||||
Douglas E. Coltharp | 75,000 | 886 | 75,000 | 221 | 1,788 | |||||||||||||||
Anthony W. Deering | 75,000 | 886 | 75,000 | 221 | 1,788 | |||||||||||||||
Karen K. Katz | 75,000 | 886 | 75,000 | 221 | 1,788 | |||||||||||||||
A.B. Krongard | 115,000 | 1,358 | 115,000 | 339 | 2,781 | |||||||||||||||
William R. McDermott | 85,000 | 1,004 | 85,000 | 251 | 2,026 | |||||||||||||||
Eric T. Olson | 75,000 | 886 | 75,000 | 221 | 1,788 | |||||||||||||||
Harvey L. Sanders | 87,500 | 1,033 | 87,500 | 258 | 1,788 |
The amounts above do not include any adjustments to outstanding Class C Deferred Stock Units made in connection with our June 29, 2016 stock dividend to Class C stockholders in connection with a litigation settlement. All equity awards outstanding as of the record date for this stock dividend, including any Class C Deferred Stock Units, were adjusted in accordance with the distribution ratio for the dividend.
(2) | The amount in this column reflects the aggregate grant date fair value in accordance with applicable accounting guidance of the |
(3) | We have disclosed the assumptions made in the valuation of the stock awards in “Stock-Based Compensation” under Note |
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Compensation Discussion and Analysis
The following is a discussion and analysis of our compensation policies and decisions regarding the 20152016 compensation for our executive officers named in the compensation tables in this Proxy Statement.
Executive Summary and Highlights for 20152016
For 20152016 nearly 100% of the annual compensation potential for our Chief Executive Officer, or CEO, Kevin Plank and a substantial portion of the annual compensation potential for our other executive officers was directly tied to the financial performance of our company, primarily through:
Our financial performance in 2016 continuing our long-standing practice of making our annualresulted in a significant reduction to incentive awards and to performance based equity awards performance based.
Our performance for 2015 was strong across the measures consideredrealized by our executive officers. While we achieved our net revenue target under our annual cash incentive plan:
The performance targets for the performance based equity awards granted in 20152016 were adjusted operating income targets set at levels that management and the Compensation Committee believed would ensure that the awards vest only followingdesigned to require meaningful operating income growth in 20152016 and 2017. As discussed in more detail below, given changes to our business plans following the grant of these 2016 awards, we no longer expect these 2016 awards to ultimately vest in future years, therefore delivering no value to our executives. See “—Equity Awards—Performance Based Equity Awards for 2016.”
In addition to the substantial portion of compensation tied to performance, other elements of our compensation for our executive officers that we believe are aligned with best practices and contribute to a reasonable compensation program include:
• | “clawback” provisions in our annual cash incentive plan (beginning in 2013) and in our long-term incentive plan (beginning for performance based equity awards in 2015) requiring our company to seek to recover awards under these plans for improper conduct as required under applicable law; |
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Advisory Vote to Approve Executive Compensation
At our 20152016 Annual Meeting of Stockholders we held an advisory vote to approve executive compensation, commonly referred to as “say on pay.” The Compensation Committee values the opinions expressed by stockholders in these votes. While these votes are advisory andnon-binding, the Compensation Committee and the Board reviewsreview the voting results and seeksseek to determine the cause or causes of any significant negative voting result. Voting results provide little detail by themselves, and we may consult directly with stockholders to better understand issues and concerns not previously presented.
Our stockholders overwhelmingly approved our “say on pay” proposal at our 20152016 Annual Meeting of Stockholders, with more than 99% of the votes cast voting to approve our executive compensation. The Compensation Committee reviewed the voting results and, given the strong level of support, did not make any changes to our executive compensation program or principles in response to the vote. The Compensation Committee will continue to consider results from the annual “say on pay” advisory vote, including the results from the upcoming 20162017 Annual Meeting of Stockholders, as well as other stockholder input, when reviewing executive compensation programs, principles and policies.
Objectives of our Compensation Program
The overall objectives of our compensation program for our executive officers are to attract and retain highly qualified executives committed to our brand and our mission, to motivate our executives to build and grow our business profitably, and to align the interests of our executives with the interests of our stockholders. Our compensation program is designed to reward our executives for growth in our net revenues and operating income, primarily through our annual cash incentive plan and our performance based equity awards. In addition, our equity awards incentivize our executive officers to generate positive returns for our stockholders.
Our compensation consists primarily of:
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We do not offer pension or other retirement plans for executives, other than a 401(k) plan that is offered to our employees generally. We have a deferred compensation plan pursuant to which executives may defer certain compensation; however we did not make any company contributions to this plan in 20152016 for any executive officers.
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Compensation Decision-Making Process
Compensation Committee review process
In early 2016,2017, in conjunction with the approval of the 20152016 annual cash incentive plan awards and 20162017 salaries and annual equity awards for executive officers, the Compensation Committee reviewed tally sheets relating to executive officer compensation that were prepared by management. The tally sheets included:
The Compensation Committee reviewed similar tally sheet data in early 20152016 in conjunction with the approval of 20152016 salaries and annual equity awards for executive officers.
In early 2015,2016, the Compensation Committee engaged the services of Willis Towers Watson, or WTW, to provide executive compensation consulting services to the committee. The committee obtained from Towers WatsonWTW competitive market data on compensation for executives to assess generally the competitiveness of our executive compensation, as well as an analysis of the general design of our annual cash incentive plan.plan, including the metrics used and performance and payout ranges. The competitive market data was based on a peer group and published industry survey data from Towers Watson’sWTW’s General Industry Executive Compensation and Retail/Wholesale Executive Compensation Database.Databases. The peer group was developed by management based on publicly traded companies within the apparel and footwear industries. Some of the companies within the peer group we may compete with for talent or compare our performance against from time to time. The following companies were included in the peer group: Abercrombie & Fitch Co., American Eagle Outfitters, Inc., Coach, Inc., Columbia Sportswear Company, Deckers Outdoor Corporation, lululemon athletica inc., Michael Kors Holdings Limited, Nike, Inc., Quiksilver, Inc., Ralph Lauren Corporation, Urban Outfitters, Inc., V.F. Corporation and Wolverine World Wide, Inc.
The Compensation Committee did not target compensation at or near any particular percentile ranking within the peer group or industry survey data, or otherwise use this competitive market data to determine the amount or form of executive compensation. Rather the committee used this data as a general assessment of the competitiveness of our executive compensation program (andand the design of our annual cash incentive plan).plan. Following thisa similar assessment in 2015, the committee determined it was appropriate to increase certain award levels under our annual cash incentive plan as described in greater detail below,two steps—once in 2015, and furtheragain in 2016. Following its review of updated information in early 2016, the committee determined it was appropriate to proceed with the planned 2016 increase. In addition, the committee determined that our executive compensation was reasonable when compared to the peer group and industry data. As discussed throughout this Compensation Discussion and Analysis section, the Committeecommittee considers many factors in the determination of executive compensation levels, including the executive’s prior experience, the position and level of responsibility with the company and company and individual performance.
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Management’s role in determining compensation
As discussed throughout this Compensation Discussion and Analysis section, our management makes recommendations to the Compensation Committee on salaries, annual incentive awards and other types of compensation for executive officers, other than our CEO, Kevin Plank. Mr. Plank, with
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input from other senior executives, has generally recommended the salaries, annual incentive awards and equity awards for our executive officers. The recommendations are based on an assessment of each executive’s performance, including the performance of the department or departments for which the executive officer has responsibility and contributions made to the overall success of our business. These executives, including our Chief Human Resources Officer, our Vice President of Total Rewards, our Chief Financial Officer and our General Counsel and Corporate Secretary, have also been involved in recommendations on the design and framework for our annual incentive plan and our equity awards, including the equity awards with vesting tied to our company’s performance. These executives also generally attend meetings of the Compensation Committee. The committee generally approves salaries and annual incentive awards for executive officers in executive sessions of the committee without the executive officers present.
Components of Our Compensation Program
SALARY
The Compensation Committee approves salaries for our executive officers at levels it deems appropriate based primarily on the executive’s level of responsibility.
In 2008, our CEO Mr. Plank voluntarily reduced his salary from $500,000 to $26,000, which was his approximate salary when he founded our company. As our largest stockholder, he believes he should be compensated for his services based primarily on our company’s performance through our annual incentive plan and annual performance based equity awards as discussed below.
Mr. Plank proposed and the Compensation Committee approved salary increases for 20152016 for certain executive officers based in part on the continued strong performance of the leadership team in 20142015 driving a 32%28% increase for the year in net revenues and a 34%15% increase for the year in operating income, and the team’s ongoing management of a more complex and expanding global business and challenging long term growth plans.income. The company had finished 20142015 with net revenues of $3.08$3.96 billion, and entered 20152016 with a net revenues goal of $3.76 billion, finishing the year at $3.96 billion or 28% over 2014.$4.95 billion.
The following table summarizes adjustments made tothe base salaries for our named executive officers from 2014 to 2015:approved by the Compensation Committee for 2016:
Named Executive | Title | 2015 Base Salary | Increase from 2014 | |||||
Kevin A. Plank | Chairman of the Board and Chief Executive Officer | $ 26,000 | 0% | |||||
Brad Dickerson | Chief Operating Officer and Chief Financial Officer | $675,000 | 17.4% | |||||
Kerry D. Chandler | Chief Human Resources Officer | $575,000 | * | |||||
Karl-Heinz Maurath | Chief Revenue Officer | $475,000 | 5.6% | |||||
Robin Thurston | Chief Digital Officer | $425,000 | * |
Named Executive | Title | 2016 Base Salary | ||||
Kevin A. Plank | Chairman of the Board and Chief Executive Officer | $ 26,000 | ||||
Lawrence Molloy | Chief Financial Officer | $675,000 | ||||
Colin Browne | President, Global Sourcing | $550,000 | ||||
Michael Lee | Chief Digital Officer | $500,000 | ||||
Karl-Heinz Maurath | Chief Revenue Officer | $475,000 | ||||
Brad Dickerson | Former Chief Operating Officer and Chief Financial Officer | $675,000 |
* Note that Ms. ChandlerMr. Plank continued to receive a $26,000 salary. Mr. Molloy and Mr. Browne joined our company in January 2015.2016. We negotiated their salaries with them prior to their joining our company based on their previous salaries and the level of responsibility for their positions. The percentageCompensation Committee approved a salary increase for Mr. Lee upon his appointment in May 2016 as Chief Digital Officer, increasing his salary from $325,000 to $500,000. Mr. Maurath did not receive a raise in 2016. With respect to Mr. Dickerson, in October 2015, we announced his plans to leave the company during the first quarter of Mr. Thurston’s salary is2016. He therefore did not presented given that he first becamereceive a named executive officer in 2015, and we are only required to present his 2015 compensation in this Proxy Statement.raise.
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ANNUAL CASH INCENTIVE AWARD
Plan Design and Performance Measures
We have an annual cash incentive plan for our executive officers. Under the plan, executives are eligible for a cash incentive award based primarily on company performance during the year. The primary
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baseline performance measuresmeasure considered for 2015 were2016 was net revenues, and profitability.with the Compensation Committee considering our profitability when determining the ultimate award amounts.
Net Revenues
For 2015,2016, company performance was assessed first on the level of net revenue growth. If the company achieved a certain minimum net revenue growth for 2015,2016, then executives would be eligible for annual incentive awards under the plan. Management and the Compensation Committee viewed net revenue growth as a fundamental indicator of our business strength.
ProfitabilityOperating Income
In addition, our 2015 plan included levels of operating income growth for 2015. Assuming the minimum net revenue growth was achieved, the Compensation Committee reserved its right to exercise its discretion to reduce or eliminate any annual incentive award amounts depending on our operating income growth for 2016. The Compensation Committee approved targets with the expectation that award amounts would ultimately vary based on our adjusted operating income for 2015,2016, which includes the impact of the incentive awards. TheWhile the company would be required to achieve the net revenue growth target in order for any award amount to be paid under the plan, also targeted that our adjustedthe operating income as a percentage of our net revenues for 2015, or our adjusted operating margin, equal at least 11.1%. These adjusted operating income measuresgrowth targets were included to ensure thatfurther incentivize management was operatingto operate the business in a profitable manner, while at the same time reflecting the dilutive effect of our Connected Fitness related acquisitions which were completed during the first quarter of 2015.
Other Performance Measuresmanner.
Our annual cash incentive plan for 2015executives for 2016 was based primarily on the overall company performance measures described above. For executives in charge of certain business units, generally 50% of their incentive award wasabove and, unlike past years, did not include any specific component tied to the performance of their respective business units based primarily on the net revenue growth and profitability of theparticular business units. For certainManagement and the Compensation Committee considered it important for 2016 to align executives such as Messrs. Plank and Dickerson, given their roles as Chief Executive Officer and Chief Operating Officer and Chief Financial Officer, generally their incentive awards were tied towith the overall company results rather than being weighted on business unit performance in order to drive alignment and accountability across the leadership team.
In March 2016, the Compensation Committee approved net revenue and operating income performance goals for the annual cash incentive plan based uponon our business plan at the performancetime. The committee approved a net revenue requirement of any particular business unit. These measures, when combined$4.8 billion, and set operating income growth targets for the year, specifically setting a threshold growth rate of 20%, a target growth rate of 24% and a stretch growth rate of 28%.
In May 2016 we announced that, in connection with the other business units, align withbankruptcy of one of our customers, our planned net revenues and operating income growth for 2016 would be lower than previously expected, and our operating income would be further impacted by the consolidated measures discussed above.
Belowbankruptcy, primarily by awrite-off of accounts receivable. Following these announcements, the Compensation Committee believed it appropriate to adjust the operating income growth targets to reflect the revised financial plan, which took these events into account. Accordingly, the committee approved reducing each of the threshold, target and stretch operating income growth targets by $56 million to account for the expected loss in revenue and related operating income impacts arising as a result of the customer’s bankruptcy. The following is a summary of the primary performance measures considered in our annual cash incentive plan for 2015:2016, reflecting the adjustments noted above:
2015 Annual Cash Incentive Plan Performance Measures* | ||||||||||||||||||
2015 Performance Measure
| As Compared to 2014
| |||||||||||||||||
Net Revenues | Required to reach $3.6 billion to be eligible for any award | 16.9% required growth from 2014 | ||||||||||||||||
Adjusted Operating Margin* | 11.1% | 11.5% for 2014** | ||||||||||||||||
Adjusted Operating Income* | Threshold | Target | Stretch | Threshold | Target | Stretch | ||||||||||||
$413 million | $420 million | $428 million | 17% | 19% | 21% |
2016 Annual Cash Incentive Plan Performance Measures | ||||||||||
Net Revenues | Required to reach $4.8 billion to be eligible for any award (21% required growth from 2015) | |||||||||
Threshold | Target | Stretch | ||||||||
Operating Income* | $434 million | $451 million | $467 million | |||||||
Growth over 2015 | < 6% | 10% | 14%+ |
* The higher adjusted operating income growth targets must include the funding for higherthe incentive award amounts. As a result, the company must otherwise increase adjusted operating income by approximately 8-9% to move from the threshold to target level, and another 8% to move from the target to stretch level, in order to fund higher incentive award amounts and achieve a higher operating income. Adjustedabove the threshold level, the company must have achieved operating income was defined as our reported income from operations, excluding the impact of non-capitalized deal costs and the amortization of intangible assets related to any acquisition completed in 2015. Adjusted operating margin is calculated using adjusted operating income. These measures constitute non-GAAP financial measures. See “Appendix A: Reconciliation of Non-GAAP Financial Measures.”growth levels even higher than those shown above.
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** At the time the 2015 adjusted operating margin target was set, the lower operating margin target as compared to 2014 operating margin reflected the anticipated dilutive effect of our Connected Fitness acquisitions, which were completed during the first quarter of 2015.
Our annual cash incentive plan for 2015 also considered our inventory position because of the continued significance of inventory management to our financial condition and our operating efficiency. We measured our inventory position based on our inventory days forward coverage at year-end. Inventory days forward coverage is a measure indicating the estimated number of days of future sales to cover the value of inventory at year-end. A lower number of days forward coverage is a general indicator of more efficient inventory management. Annual incentive award payouts could be adjusted down 0%-20% based on our failure to achieve 117 or fewer of days forward coverage.
Incentive Award Levels
After considering the market competitiveness of our annual cash incentive plan, the Compensation Committee determined it was appropriate to increase the target award levels under the plan and determined to do so in two steps—once in 2015, and again in 2016. For 2015,our executive officers, the committee increased the target amount under the plan for 2016 from 62.5% of annual salary to 75% of annual salary, and the stretch amount from 125% of annual salary to 150% of annual salary. The Compensation Committee did not increase the target or stretch amount under the plan for our CEO Mr. Plank, which remained at $2.0 million and $4.0 million, respectively, for 2016.
For 2016, the Compensation Committee set the following award target levels under our annual cash incentive plan for our named executive officers:officers based on our operating income growth:
Threshold | Target | Stretch | ||||||||
(Pays at 200% of Target) | ||||||||||
Chief Executive Officer | $ | $2.0 million | $4.0 million | |||||||
Other Named Executive Officers | 75% of annual salary |
Between the threshold amount and the target amount of operating income growth, and the target amount and stretch amount of operating income growth, the company utilizes a sliding scale to determine the payout based on the amount of funding generated by the incremental operating income growth.
The annual incentive amounts for all the named executive officers were set at the above levels in order to have a significant percentage of the executive officers’ total compensation tied primarily to corporate performance. We believe tying a significant percentage of executive officers’ total compensation to corporate performance supports our objective to motivate our executives to build and profitably grow our business.
After considering the market competitiveness of our annual cash incentive plan, the Compensation Committee determined it was appropriate to increase the award levels for 2015 from the award levels in 2014. For our executive officers, the committee increased the target amount under the incentive plan from 60% of annual salary to 62.5% of annual salary. In addition, the Compensation Committee increased the stretch amount under the incentive plan for our CEO Mr. Plank to $4.0 million for 2015 (and adjusted the threshold and target amounts accordingly) based on his significant leadership role and continued strong performance, and his importance to the long-term future success of our company. The stretch amount for Mr. Plank was set at $3.5 million for 2014 and $2.5 million for 2013. The committee also considered the continued low, nominal salary of $26,000 received by Mr. Plank for the past several years and the committee’s belief that his total compensation was well below the level appropriate for his leadership position and performance.
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20152016 Annual Cash Incentive Awards
Below is a summary of the primary performance measures considered in our annual cash incentive plan for 2015,2016, after the adjustments described above, as compared to our results for 20152016 and 2014:2015:
2014 Results* | 2015 Performance Measure | 2015 Results | 2015 v. 2014 Results* | |||||||||||
Net Revenue | ||||||||||||||
$3.08 billion | $3.6 billion | $3.96 billion | + 28% | |||||||||||
Adjusted Operating Margin | ||||||||||||||
11.5% | 11.1% | 10.6% | - 90 basis points | |||||||||||
Adjusted Operating Income | ||||||||||||||
Threshold | Target | Stretch | ||||||||||||
$354 million | $413 million | $420 million | $428 million | $421 million | + 19% |
* 2014 results refer to operating income as reported in our audited financial statements, rather than Adjusted Operating Income or Adjusted Operating Margin, which were first used as metrics for the 2015 performance measures. These measures constitute non-GAAP financial measures. Our reported operating income for 2015 totaled $408.5 million, and our operating margin was 10.3%. See “Appendix A: Reconciliation of Non-GAAP Financial Measures.”
2015 Results | 2016 Performance Measure | 2016 Results | 2016 v. 2015 Results | |||||||||||
Net Revenue | ||||||||||||||
$3.96 billion | $4.8 billion | $4.83 billion | + 22% | |||||||||||
Operating Income | ||||||||||||||
Threshold | Target | Stretch | ||||||||||||
$408.5 million | $434 million | $451 million | $467 million | $417.5 million | ||||||||||
Required Growth | < 6% | 10% | 14% | + 2% |
Management and the Compensation Committee believed that the minimum net revenue level of $3.6$4.8 billion necessary for executives to be eligible for an annual cash incentive award for 20152016 was set high enough to ensure that the minimum incentive award amounts would only be paid if we continued to demonstrate meaningful net revenue growth. The committee alsothen set adjusted operating income targets for 20152016 in order to appropriately incentivize our management to continue to drive meaningful operating income growth.growth, after taking into account the change to our financial plan discussed above. Our 20152016 net revenues of $3.96$4.83 billion well exceeded the minimum net revenue level required for executives to be eligible for awards under the annual cash incentive plan. With respect to the operating income targets, we achieved 10.6% adjusted operating margin, below the 11.1% target set by the Compensation Committee. At this adjusted operating margin level, we achieved $421
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$417.5 million of adjusted operating income, representing a 19%an approximately 2% increase over our 20142015 actual results, and at a level sufficient to fund incentive awards at generally 78% ofresults. This amount was below the targetthreshold level under the plan.
Our annual incentive plan challenged our executives to achieve an adjusted operating margin for 2015 at least equal to 11.1%, whileGiven that the company still delivering strong net revenue and operating income growth. While we achieved the net revenue and certain operating income growth targets set forth inrequired under the plan our adjusted operating margin fell below the target set by the Compensation Committee. We also did not achieve the target for inventory forward days coverage of 117, instead achieving approximately 127 days at the end of 2015.
Given that the company’s strong net revenue growth did not result in greater operating income growth or better operating income marginwith a 22% increase for the year, and the significant overall efforts of the leadership team in managing the business in a challenging North America retail environment, management recommended and the Compensation Committee approved reductions in themodest incentive awards for certain of our named executive officers of varyingofficers. The award amounts furtherwere well below the target level under the plan. The reductions varied depending on the business unit overseen by the officer. Mr. Thurston’s and Ms. Chandler’s awards were reduced to approximately 57% of the target levellevels under the plan. Management and the committee also recommended further reductionsconsidered the payment of a modest incentive award to the award amountsbe an important retention tool for key executives. Consistent with other executives, Messrs. PlankBrowne, Lee and Dickerson given their overall responsibility for the company’s performance in their roles as Chief Executive Officer and Chief Operating Officer and Chief Financial Officer, and given that their incentiveMaurath received awards are tied to overall company results, rather than being weighted based on the results of any particular business unit. The committee agreed and further lowered their awards to 20% or lessbetween20-25% of the target levelamount provided under the plan.
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Despite the general lowering ofannual cash incentive awards for our senior executives, our International business unit produced particularly strong results in 2015, with net revenues increasing 69% over 2014. Unlike other business units, given the importance we place on the growth of our International business to our long term success, for our International business unit, 75% of their incentive award was tied to the performance ofplan. Mr. Plank requested that business unit. As a result, management recommended and the Compensation Committee approved an annualhe not receive any incentive award for 2016. Since Mr. Maurath, who oversaw our International business, at approximately 117%Molloy was transitioning out of the target level undercompany in early 2017, the plan.committee did not consider him for an incentive award for 2016.
The annual cash incentive award for our executives is primarily determined based on the company and business unit financial performance measures discussed above. However, the Compensation Committee considers the overall performance of our CEO and the other executive officers, and mayreserved its discretion to further adjust up or down the annual incentive amounts based on individual performance during the year. Performance reviews are generally based on a qualitative assessment of performance and consider the executive’s performance and the performance of the department or departments for which the executive has responsibility, as well as the contributions the executive and department are making to the overall success of Under Armour. For 2015,2016, the committee did not make any further adjustments to the annual cash incentive awards for the named executive officers based on individual performance, beyond the adjustments discussed above.
For the annual cash incentive amounts paid to the named executive officers, see the “2015“2016 Summary Compensation Table” below.
EQUITY AWARDS
Management and the Compensation Committee believe equity awards are an important component of executive compensation and serve to better align the interests of our executives with those of our stockholders.
The Compensation Committee approves equity awards under our Second Amended and Restated 2005 Omnibus Long-Term Incentive Plan.Plan, as amended. The purpose of the long-term incentive plan is to enhance our ability to attract and retain highly qualified executives and other persons and to motivate them to improve our business results and earnings for the long-term by providing them with equity holdings in Under Armour. Beginning in the second quarter of 2016, we began issuing equity awards for shares of our Class C Stock as equity compensation. While the Compensation Committee has the discretion under the terms of the plan to issue additional awards for shares of our Class A Stock, the Compensation Committee currently intends to utilize our Class C Stock for equity compensation going forward.
Vesting of 2015 Performance Based Equity Awards
In early 2015, the Compensation Committee approved the grant of annual performance based restricted stock unit award to our management. Vesting of the 2015 awards were tied to our achievement of combined adjusted operating income targets for 2015 and 2016. For the 2015 award, the committee set the growth targets to incentivize management to continue to drive strong operating income growth during the performance period, while at the same time reflecting the dilutive effect of our Connected Fitness related acquisitions which were completed during the first quarter of 2015. With respect to the 2015 award, 40% of the award would be earned if the threshold level was achieved,
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80% of the award would be earned if the target level was achieved, and all of the award would be earned if the stretch level was achieved.
Consistent with the adjustments to the operating income targets in our annual cash incentive plan discussed above, following the revision to our financial plan in May 2016, the Compensation Committee approved a $56 million reduction to the combined adjusted operating income targets for the 2015 award. The following chart summarizes the threshold, target and stretch levels for the 2015 award, as adjusted to reflect the revised financial plan, as well as our actual combined results. We achieved the target performance level, and as a result 80% of the performance shares were earned.
Performance Period | Two-Year Combined Adjusted Operating Income Requirements* | Approximate Required Compounded Annual Growth Rate from 2014 | Combined Results* | |||||||||||||||||||||||
Threshold
| Target
| Stretch
| Threshold
| Target
| Stretch
| |||||||||||||||||||||
2015-2016 | $ | 804 million | $ | 844 million | $ | 874 million | 9% | 12% | 15% | $ | 849 million |
* Our reported combined operating income for 2015-2016 totaled $826 million. Adjusted operating income was our reported income from operations, excluding the impact of acquisition relatednon-capitalized deal costs and the amortization of intangible assets related to the Connected Fitness acquisitions completed in the performance period. This measure constitutes anon-GAAP financial measures.See “Appendix A: Reconciliation ofNon-GAAP Financial Measures.”
With respect to the 2015 award, the earned shares vest in annualone-third increments in each of February 2017, February 2018 and February 2019.
Performance Based Equity Awards for 20152016
In February 2015,2016, management recommended and the Compensation Committee approved a performance based stock option awardsaward to certain of our executive officers,Mr. Plank, and performance based restricted stock unit awards to our other executive officers and other members of management. While in recent years primarily all of our executive officers have received performance based restricted stock units, the committee determined that for certain members of our executive team, including Messrs.Mr. Plank and Dickerson, it would further incentivize themhim to drive long-term shareholder value if theyhe were awarded performance based stock options, as the options would only have value to the extent our stock price increased over the grant date value.
For both the performance based stock options and restricted stock units, vesting of the award is tied to achievement by the company of a certain combined adjusted operating income target for 20152016 and 2016,2017, with 40% of the maximum amount earned if the threshold performance level is met, 80% earned if the target level is met and 100% earned if a higher stretch performance level is met. Upon achievement of the performance target, the shares or options earned under the award vest in three equal annual installments beginning in February 20172018, subject to the executive’s continued employment with the company, as an incentive for the executive to remain with the company. Management and the Compensation Committee believed at the time that the performance targets were set high enough to ensure that the award vests only following meaningful operating income growth. Management and the committee believed that adding performance conditions to the vesting was important to further incentivize our team to increase our profitability and drive long-term stockholder value. Similar to the adjustments made to the performance targets for the 2015 performance based stock option and restricted stock unit awards discussed above, the performance targets for these 2016 awards were adjusted by the Compensation Committee to reflect the May 2016 revision to our financial plan.
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The employees receiving this equity award were chosen based primarily on their position and responsibilities with the company, as well as their past performance. The total amount of this equity award to all employees was generally based on the total compensation expense amount related to
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equity awards as budgeted by management. The amount of the equity award to each employee, including executive officers, was based on a projected value of equity to be delivered over time and was generally tiered based on the employee’s level within the company. The threshold, target and maximum number of options or shares that can be earned by the named executive officers are included in the “Grants of Plan-Based Awards for 2015”2016” table below.
In January 2017, we announced our 2016 financial results and revised our business plan for 2017. Based on the changes in our business plan, we no longer expect any of the 2016 performance based stock options and restricted stock units to vest and be earned. The following table sets forth the total compensation for each of our named executive officers as described in our “2016 Summary Compensation Table”, adjusted for the loss of these 2016 awards (excluding Mr. Dickerson, who did not receive a 2016 award).
Name | Total 2016 Compensation | Loss of 2016 Performance Equity Award (Threshold Amount)* | Adjusted Total 2016 Compensation | |||||||||||||
Kevin A. Plank | $ | 2,033,575 | $ | (2,000,000 | ) | $ | 33,575 | |||||||||
Lawrence Molloy | $ | 6,723,583 | $ | (800,000 | ) | $ | 5,923,583 | (1) | ||||||||
Colin Browne | $ | 2,739,232 | $ | (300,000 | ) | $ | 2,439,232 | (2) | ||||||||
Michael Lee | $ | 11,313,042 | $ | (800,000 | ) | $ | 10,513,042 | (3) | ||||||||
Karl-Heinz Maurath | $ | 3,436,250 | $ | (1,000,000 | ) | $ | 2,436,250 |
* | In accordance with SEC disclosure requirements, only the grant date fair value, or the threshold amount of the award (or 40% of the total award), is included in the 2016 Summary Compensation Table. |
(1) | Mr. Molloy left the company in March 2017, and therefore forfeited time based restricted stock units with a grant date fair value of $4.0 million otherwise included in his 2016 total compensation. |
(2) | Includes a time based equity award Mr. Browne received upon joining our company in September 2016 with a grant date fair value of $2.0 million, vesting in equal annual installments over a four year period. |
(3) | Includes a time based equity award Mr. Lee received upon his promotion to Chief Digital Officer in May 2016 with a grant date fair value of $10.0 million, vesting in equal annual installments over a five year period. |
Vesting of Prior Years Performance Based2017 Retention Equity Awards and Equity Plan Design Changes
Following our determination that the vesting of the 2016 performance based equity awards was not probable, and the vesting of the 2015 performance based equity awards at the 80% target level rather than the 100% stretch level, management and the Compensation Committee considered whether it would be in the best interest of the company and its stockholders to grant additional retention awards to executives. The committee considered a number of factors when evaluating the retention awards, including:
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In February 2017, management recommended and the committee approved retention equity awards for certain executives (including but not limited to our named executive officers) in the form of time based restricted stock units, vesting in four equal annual installments. The following table presents the value of the retention awards received by our named executive officers, as compared to the target and stretch values of the 2016 performance based equity awards (Mr. Plank requested that he not be considered for a retention equity award):
Name | 2017 Retention Equity Award | Loss of 2016 Performance (Target Amount) | Loss of 2016 (Stretch Amount) | |||||||||||||
Kevin A. Plank | $ | 0 | $ | 4,000,000 | $ | 5,000,000 | ||||||||||
Lawrence Molloy | $ | 0 | $ | 1,600,000 | $ | 2,000,000 | ||||||||||
Colin Browne | $ | 800,000 | $ | 600,000 | $ | 750,000 | ||||||||||
Michael Lee | $ | 1,200,000 | $ | 1,600,000 | $ | 2,000,000 | ||||||||||
Karl-Heinz Maurath | $ | 1,200,000 | $ | 2,000,000 | $ | 2,500,000 |
Although these retention awards are 2017 compensation and are not reflected in the “2016 Summary Compensation Table” below, we believe they relate to, and are an important factor in understanding executive compensation for 2016.
Based on a review of competitive market data and practices, in early 2014,2017 management recommended and the Compensation Committee approved certain changes to the mix of our annual equity awards for our executive officers going forward. Beginning with annual equity awards in 2017, our executives will receive a combination of time based and performance based restricted stock unit award to our management. Vesting of the 2014 award was tied to a certain combined operating income for 2014 and 2015. For the 2014 award, the committee set the growth targets to incentivize management to continue to drive strong operating income growth during the performance period.
With respect to the award, 40% of the award would be earned if the threshold level was achieved, 80% of the award would be earned if the target level was achieved, and all of the award would be earned if the stretch level was achieved. The following chart summarizes the threshold, target and stretch requirements for the 2014 award, as well as our actual combined results. We achieved the stretch performance level, and as a result all of the performance shares were earned.
Performance Period | Two-Year Combined Operating Income Requirements | Approximate Required Compounded Annual | Actual Combined Results | |||||||||||||||||||||
Threshold
| Target
| Stretch
| Threshold
| Target
| Stretch
| |||||||||||||||||||
2014-2015 | $ | 660 million | $ | 700 million | $ | 730 million | 16% | 20% | 24% | $ | 762 million |
With respect to the 2014 award, the earned shares vest in annual one-third increments in each of February 2016, February 2017 and February 2018.equity awards.
Time Based Equity Awards
From time to time management recommends and the Compensation Committee approves time based restricted stock unit awards to certain of our executive officers, typically in connection with the officer joining our company or to ensure that the officer’s financial interests are sufficiently aligned with the interests of our stockholders. Ms. Chandler wasBoth Mr. Molloy and Mr. Browne were granted a time based awardawards upon joining us in early 2015. Mr. Thurston, who joined our company in late 2013, was also granted a time based award in early 2015 in order to further align his interests with stockholders and in connection with his promotion to Chief Digital Officer in December 2014.2016. In determining the amount of these awards, management and the committee considered primarily the executive’s position and level of responsibility within our company.company, as well as the retention and long-term incentive value of the award. Mr. Lee was also granted a time based award upon his appointment to Chief Digital Officer. In determining the amount of Mr. Lee’s award, management and the committee considered his leadership position, the fact that he had not received any prior equity awards since joining the company in early 2015 and the relative importance of equity compensation to executives in the technology and digital sector. Given the size of Mr. Lee’s award, management recommended and the committee agreed that the award should vest in annual installments over a five year period in order to provide the appropriate long-term incentive. These equity awards are included in the “Grants of Plan-Based Awards for 2015”2016” table below.
BENEFITS AND PERQUISITES
We have no defined benefit pension plan or any type of supplemental retirement plan for executives. We have a deferred compensation plan to provide senior management, including executive officers, with a way to save on a tax deferred basis for retirement and other needs. The plan allows for company contributions in certain limited cases. See “Nonqualified Deferred Compensation” for a description of this plan and the balances under the plan for the named executive officers. We did not make any company contributions to the plan in 20152016 for any named executive officer.
Executive officers are eligible to participate in our broad-based benefit plans available to employees generally, including a 401(k) plan and Employee Stock Purchase Plan.
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We pay the premiums for supplemental long-term disability insurance for our executive officers. The standard benefit offered to all employees provides long-term disability insurance equal to 60% of their salary; however, the benefit is capped at a maximum benefit of $10,000 per month. The cap results in a lower percentage of salary paid for executive officers under the standard benefit. The supplemental policy brings the total long-term disability insurance benefit for the executive officers closer to the 60% of salary level. For the named executive officers, the supplemental policy provides additional monthly disability benefits of approximately $20,000-$20,000-$30,000. To avoid reducing the expected benefit to the executive officers, we also provide a taxgross-up to them to cover the income taxes incurred as a result of our paying the premiums on these policies. At Mr. Plank’s request, we do not provide a taxgross-up to him.
Other Compensation Practices
Equity Grant Practices
During 2015,2016, equity awards were granted to executive officers at one of our regularly scheduled Compensation Committee meetings. Our practice is to grant stock options with an exercise price equal to the closing market price of our Class A Stockcommon stock on the grant date. We have not had any program, plan or practice to select stock option grant dates for executive officers in coordination with the release of materialnon-public information in order to create value for the executive when the stock price increases over the exercise price for the stock option.
Hedging and Pledging
Our Board has adopted, as part of our insider trading policy, prohibitions against any employee or director hedging ownership of Under Armour stock by engaging in short sales or purchasing and selling of derivative securities relating to Under Armour stock. No director or executive officer of the company has any shares pledged as security.
Change in Control Severance Agreements
We have a change in control severance agreement with all of our executives except for our CEO, Mr. Plank. The purpose of the agreement is to ensure that we are able to receive and rely upon the executive’s advice as to the best interest of the company and our stockholders in connection with a change in control without concern that the executive might be distracted, or his or her advice may be affected by the personal uncertainties and risks created by a change in control.
The agreements generally provide severance only following a change in control and only if the executive’s employment is terminated without cause or the executive leaves for good reason within one year after the change in control, generally referred to as a “double trigger.” The agreements do not provide for a taxgross-up.
The primary benefit offered under the agreements is severance in an amount equal to one year’s salary and annual incentive award plus apro-rata annual incentive award for the year in which the employment ends. The executive must agree to not compete against the company for one year in order to receive these benefits. The agreements have a fixedone-year term with no automatic renewal of the term. In earlylate 2016, the Compensation Committee and the Board reviewed the agreements and a summary prepared by our management on change in control severance benefits offered by other public companies in our line of business, and decided that the agreements were reasonable and should be extended through the end of 2016.2017.
Deductibility of Executive Compensation
Management and the Compensation Committee consider, as appropriate, the effect of limitations on deductibility for federal income tax purposes under Section 162(m) of the Internal Revenue Code of
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compensation in excess of $1,000,000. The limitation applies to such compensation paid in a given year to our CEO and the three other most highly compensated executive officers (excluding the chief financial officer) named in the summary compensation table provided that the executive officer is employed by us as an executive officer as of the end of that year.
We intend for awards paid by us pursuant to our annual incentive plan to qualify as performance-based compensation that will not be subject to the limitations on tax deductibility under Section 162(m). , although our Compensation Committee reserves the discretion to pay an award outside the plan if it determines that it is in the best interest of the company and our shareholders to do so.
The tax deductions related to vesting of performance based restricted stock unit awards and the exercise of stock options, also generally qualify as performance-based compensation and thus are not subject to these limitations on tax deductibility. AlthoughHowever, with respect to the 2015 performance based restricted stock unit awards, due to the reductions to the adjusted operating income targets described above, these awards are subject to the limitations on tax deductibility. In reviewing the changes to these awards, our Compensation Committee considered this impact on deductibility and determined it was in the best interest of the company to adjust the performance criteria. We expect the impact of this lost tax deduction to be fairly limited. However, given that the compensation expense for the 2015 performance based awards is recognized with the vesting of the awards in 2017 through 2019, we do not yet have visibility as to who will be named in the summary compensation table and thus subject to the limitation of deductibility for those years. Mr. Plank, our CEO, received performance based stock options and the tax deduction related to the exercise of stock options is not subject to the limitations on tax deductibility.
In addition, although we are able to record compensation expense for federal income tax purposes for other time based restricted stock awards in the year when the restricted stock award vests, the expense related to these outstanding restricted stock awards will be subject to these limitations on tax deductibility if the executive is subject to these limitations in the year of vesting.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section of this Proxy Statement with Under Armour’s management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our Proxy Statement and be incorporated by reference into our Annual Report on Form10-K for the year ended December 31, 2015,2016, as filed with the SEC.
Harvey L. Sanders, Chairman
George W. Bodenheimer
Anthony W. Deering
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20152016 Summary Compensation Table
The following table sets forth information concerning compensation paid or accrued in the applicable years to our Chief Executive Officer, our Chief Financial Officer and the other three most highly compensated executive officers in 2015.2016. Certain salary and annual incentive plan compensation amounts may be deferred under our deferred compensation plan as discussed under “Nonqualified Deferred Compensation for 2015”2016” below. For additional information regarding
As discussed above, we do not currently expect the performance based stockequity awards granted each year and how the awards are presented in 2016 (and discussed in Note (1) to the table please see Note (2)below) to vest. Please refer to the table.table presented above under “—Equity Awards—Performance Based Equity Awards for 2016” for each named executive officer’s total 2016 compensation without these awards included.
Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2)(3) | Option Awards ($)(2)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||||||||||
Kevin A. Plank Chairman of the Board and |
| 2015 2014 2013 |
|
| 26,000 26,000 26,000 |
|
| 0 0 0 |
|
| 0 1,600,000 784,226 |
|
| 2,000,000 0 0 |
|
| 400,000 1,921,500 2,375,000 |
|
| 8,209 8,690 3,262 |
|
| 2,434,209 3,556,190 3,188,488 |
| ||||||||
Brad Dickerson Chief Operating Officer and |
| 2015 2014 2013 |
|
| 675,000 575,000 500,000 |
|
| 0 0 0 |
|
| 0 600,000 392,113 |
|
| 800,000 0 0 |
|
| 50,000 315,675 475,000 |
|
| 28,487 24,102 15,662 |
|
| 1,553,487 1,514,777 1,382,775 |
| ||||||||
Kerry D. Chandler (6) Chief Human Resources Officer | 2015 | 552,884 | 250,000 | 1,600,000 | 0 | 200,000 | 128,481 | 2,731,365 | ||||||||||||||||||||||||
Karl-Heinz Maurath (7) Chief Revenue Officer |
| 2015 2014 2013 |
|
| 475,000 450,000 403,500 |
|
| 0 0 0 |
|
| 400,000 400,000 392,113 |
|
| 0 0 0 |
|
| 350,300 360,450 337,609 |
|
| 1,600,000 2,303,928 230,972 |
|
| 2,825,300 3,514,378 1,364,194 |
| ||||||||
Robin Thurston (8) Chief Digital Officer | 2015 | 425,000 | 0 | 2,400,000 | 0 | 150,000 | 11,390 | 2,986,390 |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1)(2) | Option Awards ($)(1)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | ||||||||||||||||||||||||
Kevin A. Plank Chairman of the Board and | | 2016 2015 2014 |
| | 26,000 26,000 26,000 |
| | 0 0 0 |
| | 0 0 1,600,000 |
| | 2,000,000 2,000,000 0 |
| | 0 400,000 1,921,500 |
| | 7,575 8,209 8,690 |
| | 2,033,575 2,434,209 3,556,190 |
| ||||||||
Lawrence Molloy (5) Chief Financial Officer | 2016 | 633,462 | 250,000 | 5,800,000 | 0 | 0 | 40,121 | 6,723,583 | ||||||||||||||||||||||||
Colin Browne (6) President of Global Sourcing | 2016 | 169,231 | 200,000 | 2,300,000 | 0 | 35,000 | 35,001 | 2,739,232 | ||||||||||||||||||||||||
Michael Lee (7) Chief Digital Officer | 2016 | 434,423 | 0 | 10,800,000 | 0 | 59,750 | 18,869 | 11,313,042 | ||||||||||||||||||||||||
Karl-Heinz Maurath (8) Chief Revenue Officer | | 2016 2015 2014 |
| | 475,000 475,000 450,000 |
| | 500,000 0 0 |
| | 1,000,000 400,000 400,000 |
| | 0 0 0 |
| | 71,250 350,300 360,450 |
| | 1,390,000 1,600,000 2,303,928 |
| | 3,436,250 2,825,300 3,514,378 |
| ||||||||
Brad Dickerson (9) | 2016 | 103,846 | 0 | 0 | 0 | 0 | 5,645 | 109,491 | ||||||||||||||||||||||||
Former Chief Operating Officer | | 2015 2014 |
| | 675,000 575,000 |
| | 0 0 |
| | 0 600,000 |
| | 800,000 0 |
| | 50,000 315,675 |
| | 28,487 24,102 |
| | 1,553,487 1,514,777 |
|
(1) |
Reflects the grant date fair value of all restricted stock unit awards, performance-based restricted stock unit awards and performance-based stock options with respect to fiscal years |
Below are the fair values of the 2013, 2014, 2015 and 20152016 performance based awards at grant date assuming achievement at the highest level or “stretch”“stretch” level of performance conditions for these performance awards.
Name | 2013 ($) | 2014 ($) | 2015 ($) | 2014 ($) | 2015 ($) | 2016 ($) | ||||||||||||||||||
Kevin A. Plank | 1,960,565 | 4,000,000 | 5,000,000 | 4,000,000 | 5,000,000 | 5,000,000 | ||||||||||||||||||
Lawrence Molloy | 2,000,000 | |||||||||||||||||||||||
Colin Browne | 750,000 | |||||||||||||||||||||||
Michael Lee | 2,000,000 | |||||||||||||||||||||||
Karl-Heinz Maurath | 1,000,000 | 1,000,000 | 2,500,000 | |||||||||||||||||||||
Brad Dickerson | 980,282 | 1,500,000 | 2,000,000 | 1,500,000 | 2,000,000 | 0 | ||||||||||||||||||
Kerry D. Chandler | 1,000,000 | |||||||||||||||||||||||
Karl-Heinz Maurath | 980,282 | 1,000,000 | 1,000,000 | |||||||||||||||||||||
Robin Thurston | 1,000,000 |
We ultimately achieved the “stretch” level of performance for the 2013 and 2014 awards. With respect to the 2015 awards, we ultimately achieved the “target” level of performance, resulting in 80% of the highest or “stretch” level value being earned.
The performance period for the 20152016 awards continues through the end of 2016.2017. However, in the fourth quarter of 2016, we determined that the achievement of the threshold performance condition for these awards was not probable.As discussed above under “—Equity Awards—Performance Based Equity Awards for 2016”, we do not currently expect any of the 2016 performance awards to vest.
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The equity grants included in this table are further described under “Compensation Discussion and Analysis” above or in the “Grants of Plan-Based Awards for |
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of the stock and option awards in “Stock-Based Compensation” under Note |
Reflects the amounts earned under our annual cash incentive plan for the applicable year. For discussion of the |
All Other Compensation for |
Name | Insurance Premiums ($)(a) | Matching Contributions Under 401(k) Plan ($) | Other ($)(b) | Tax Reimbursements ($)(c) | Insurance Premiums ($)(a) | Matching Contributions Under 401(k) Plan ($) | Other ($)(b) | Tax Reimbursements ($)(c) | ||||||||||||||||||||||||
Kevin A. Plank | 7,129 | 1,080 | 0 | 0 | 6,535 | 1,040 | 0 | 0 | ||||||||||||||||||||||||
Lawrence Molloy | 4,298 | 10,600 | 16,454 | 8,769 | ||||||||||||||||||||||||||||
Colin Browne | 0 | 0 | 18,008 | 16,993 | ||||||||||||||||||||||||||||
Michael Lee | 8,444 | 0 | 0 | 10,425 | ||||||||||||||||||||||||||||
Karl-Heinz Maurath | 0 | 0 | 100,000 | 1,290,000 | ||||||||||||||||||||||||||||
Brad Dickerson | 9,042 | 10,600 | 0 | 8,845 | 754 | 4,154 | 0 | 737 | ||||||||||||||||||||||||
Kerry D. Chandler | 7,378 | 10,600 | 52,469 | 58,034 | ||||||||||||||||||||||||||||
Karl-Heinz Maurath | 0 | 0 | 100,000 | 1,500,000 | ||||||||||||||||||||||||||||
Robin Thurston | 2,285 | 7,454 | 0 | 1,651 |
(a) | The insurance premiums are for supplemental disability insurance for the named executive officers. This insurance provides approximately $20,000 to $30,000 per month, depending on the executive, in disability insurance until normal retirement age and supplements the disability insurance offered to employees generally, which provides a maximum of $10,000 per month. |
(b) | For |
(c) | The tax reimbursements include agross-up amount to cover taxes on disability insurance premiums reflected in the table for |
Mr. |
(7) | Since Mr. Lee first became a named executive officer in 2016, we are only required to provide his 2016 compensation. Upon his promotion to Chief Digital Officer in May 2016, his base salary was increased from $325,000 to $500,000. In addition, he was granted an equity award with time based vesting with a grant date fair value of $10,000,000 (in addition to the performance based award described in Note (1) to the table) vesting in five equal annual installments. |
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(8) | In the fourth quarter of 2016, Mr. Maurath was paid aone-time transition payment of $500,000 in connection with his transition from our offices in Panama to our global headquarters in Baltimore, Maryland, which is included in the “Bonus” column. Pursuant to the terms of this arrangement, if Mr. Maurath resigns or is terminated for cause prior to the second anniversary of the effective date of his relocation, he will be required to reimburse the Companypro-rata based on the number of days worked during such time period. |
(9) | Mr. Dickerson left the company in February 2016. |
Grants of Plan-Based Awards for 20152016
The following table contains information concerning: (1) possible payments to the named executive officers under our 20152016 annual cash incentive plan approved by the Compensation Committee in early 2015;2016; and (2) estimated equity award payouts to the named executive officers in 20152016 under our Second Amended and Restated 2005 Omnibus Long-Term Incentive Plan.Plan, as amended (the “2005 Plan”).
Given his resignation from the company in February 2016, Mr. Dickerson was not granted any plan-based awards for 2016 and is therefore excluded from the table below.
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | Exercise or Base Price of Option Award ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | All Other Stock Awards: Number of Shares of Stock or Units (#)(4) | Exercise or Base Price of Option Award ($/Sh)(5) | Grant Date Fair Value of Stock and Option Awards ($)(6) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Grant Date | Target ($) | Maximum ($) | Title of Underlying Security(2) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kevin A. Plank | 800,000 | 2,000,000 | 4,000,000 | 2,000,000 | 4,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/17/15 | 55,310 | 110,620 | 138,275 | 72.90 | 2,000,000 | 2/9/16 | Class A | 66,823 | 133,646 | 167,057 | 36.43 | 2,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brad Dickerson | 168,750 | 421,875 | 843,750 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/17/15 | 22,124 | 44,248 | 55,310 | 72.90 | 800,000 | 2/9/16 | Class C | 67,297 | 134,594 | 168,242 | 35.67 | (7) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kerry D. Chandler | 143,750 | 359,375 | 718,750 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lawrence Molloy | 475,097 | 905,193 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/9/16 | Class A | 69,109 | 5,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/9/16 | Class C | 69,599 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/9/16 | Class A | 11,058 | 22,115 | 27,644 | 800,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/9/16 | Class C | 11,136 | 22,272 | 27,840 | (7) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Colin Browne | 126,923 | 253,847 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11/1/16 | Class C | 78,401 | 2,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | 11,671 | 23,521 | 29,401 | 300,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael Lee | 325,817 | 651,635 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/17/15 | 16,461 | 1,200,000 | 8/2/16 | Class C | 290,783 | 10,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/17/15 | 5,487 | 10,974 | 13,718 | 400,000 | 8/2/16 | Class C | 23,263 | 46,526 | 58,157 | 800,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Karl-Heinz Maurath | 118,750 | 296,875 | 593,750 | 356,250 | 712,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/17/15 | 5,487 | 10,974 | 13,718 | 400,000 | 2/9/16 | Class A | 13,822 | 27,644 | 34,555 | 1,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robin Thurston | 106,250 | 265,625 | 531,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/17/15 | 27,435 | 2,000,000 | 2/9/16 | Class C | 13,920 | 27,840 | 34,800 | (7) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/17/15 | 5,487 | 10,974 | 13,718 | 400,000 |
(1) | As more fully described in “Compensation Discussion and Analysis” above, executives were eligible for a possible cash award for |
(2) | Equity awards granted in February 2016 were for shares of our Class A Stock. In April 2016, in connection with a recapitalization we paid a dividend to shareholders of record of one share of our Class C Stock for each share of Class A Stock and Class B Stock outstanding (the “Class C Dividend”) and any equity awards granted thereafter were for shares of our Class C Stock. In accordance with the terms of the 2005 Plan, awards outstanding under the Plan for shares of our Class A Stock in April 2016 were adjusted on aone-for-one basis to provide for the issuance of an equal number of shares of our Class C Stock. Following this adjustment, in June 2016 we paid a |
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dividend to holders of our Class C Stock in the form of additional shares of Class C Stock (the “Adjustment Payment Dividend”). Pursuant to the 2005 Plan, awards outstanding under the Plan for shares of our Class C Stock were adjusted in accordance with the distribution ratio for the dividend. Accordingly the equity awards granted in February 2016 included in the table above, which were originally for shares of Class A Stock, reflect these adjustments. |
(3) | These performance based restricted stock unit and performance based stock option awards vest based on our company achieving a certain combined adjusted operating income for |
The restricted stock unit award to |
The option exercise prices reflected in the table above have been adjusted to reflect the Class C Dividend and the Adjustment Payment Dividend described in Note (2) to this table. |
(6) | See Note |
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(7) | As discussed in Note (2) to this table, this award was initially granted in February 2016 for Class A Stock and was later adjusted to provide for the issuance of Class C Stock. The grant date fair value shown in this table is the grant date fair value of the award when originally issued in February 2016. |
Employment Agreement
WeNone of Messrs. Plank, Molloy, Browne or Dickerson had employment agreements as we generally do not have employment agreements with Messrs. Plank or Dickerson, or with Ms. Chandler.our executives. The terms of our employment agreements with Messrs. Maurath and ThurstonLee are summarized below.
Mr. Maurath
The company entered into an employment agreement (as required by local law) with Karl-Heinz Maurath in September 2012, with no set term, to serve as President of International. Mr. Maurath was promoted to Chief Revenue Officer in November 2015. The company maycould terminate the agreement upon two months’ prior notice or immediately for cause as defined in the agreement. The agreement provided that Mr. Maurath’s starting base salary would be $400,000. Pursuant to the agreement, Mr. Maurath’s base salary iswas subject to merit increases subject to the discretion of the Compensation Committee, and he participatesparticipated in our annual incentive compensation plan. Mr. Maurath’s agreement further provided for certain equity awards, including an award of time based restricted stock units,all of which the remaining 5,000 shares will vest in August 2016.have vested. He also receivesreceived an annual net living allowance of up to $100,000 intended primarily to cover living expenses in Panama, health insurance and a pension fund for him, and participatesparticipated in other standard benefit programs offered to
37
executives of the company. The agreement also providesprovided for an annual long-term incentive award at a level at least consistent with annual awards for Executive Vice Presidents at the company.
The agreement further providesprovided that he will receive certain severance payments and benefits upon a termination of employment. These payments and benefits are described under “Potential Payments Upon Termination of Employment or Change in Control” below. Under the agreement, he iswas subject to obligations regarding confidentiality of company information, protection of the company’s intellectual property andnon-solicitation.
Because Mr. Maurath’s employment agreement was entered into in order to satisfy local law requirements in our Panama office, in connection with Mr. Maurath’s transition to our global headquarters in Baltimore Maryland in early 2017, Mr. Maurath’s employment agreement was terminated. Similar to our other U.S.-based executives, we do not expect to have an employment agreement with Mr. Maurath going forward.
Mr. ThurstonLee
In connection with our acquisition of MapMyFitnessMyFitnessPal in December 2013,March 2015, the company entered into an employment agreement with Robin Thurston,Michael Lee in March 2015, with a three year term ending on December 31, 2018, to serve as Senior Vice President, Digital.North America Digital and Connected Fitness. Mr. Thurston’sLee’s employment during the three year term and any time period after is on anat-will basis. Mr. ThurstonLee was promoted to Chief Digital Officer in December 2014July 2016 and became an executive officer in April 2015.at that time. The agreement provided that Mr. Thurston’sLee’s starting base salary would be $350,000.$250,000. Pursuant to the agreement, Mr. Thurston’sLee’s base salary is subject to merit increases, subject to the discretion of the Compensation Committee, and he participates in our annual incentive compensation plan. The agreement provided for a grant of $750,000 of performance based restricted stock units consistent with performance based awards granted to other executives in 2014. Mr. Thurston’s employment agreement was also amended in February 2016 to provide for a time based restricted stock unit award for 22,169 shares, 14,780 of which vested in February 2016,plan and the remainder of which vest in two equal annual installments on February 2017 and February 2018. Mr. Thurston agreedis eligible to receive this award in lieu of a separate time based restricted stock unit award originally provided for in his employment agreement in December 2013.equity awards.
The agreement further provides that if Mr. Thurston’sLee’s employment is terminated under certain circumstances during the term of the agreement, he will receive certain severance payments and benefits. These payments and benefits are described under “Potential Payments Upon Termination of Employment or Change in Control” below. In connection with entering into his employment agreement, Mr. ThurstonLee also entered into a confidentiality, non-competitionan employee confidential information and non-solicitationinvention assignment agreement.
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Outstanding Equity Awards at 20152016 FiscalYear-End
The following table contains information concerning unexercised stock options and restricted stock units that were not vested for the named executive officers as of December 31, 2015.2016. Mr. Dickerson held no outstanding equity awards as of December 31, 2016 and is therefore excluded from the table.
The awards included in the table reflect adjustment, as applicable, for the Class C Dividend and the Adjustment Payment Dividend described in Note (2) to the “Grant of Plan-Based Awards for 2016” table above.
Option awards | Stock awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of securities underlying unexercised options exercisable (#) | Equity incentive plan awards: number of securities underlying unexercised unearned options (#)(1) | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($)(8) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)(8) | Title of Underlying Security | Number of securities underlying unexercised options exercisable (#)(1) | Number of securities underlying unexercised options unexercisable (#)(1) | Equity incentive plan awards: number of securities underlying unexercised unearned options (#)(2) | Option exercise price ($) | Option expiration date | Title of Underlying Security | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($)(9) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)(10) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)(9) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kevin A. Plank | 0 | 138,275 | 72.90 | 2/16/2025 | 60,000(2) | 4,836,600 | 0 | 0 | Class A | 0 | 0 | 167,057 | 36.43 | 2/6/26 | Class A | 26,840(3) | 779,702 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
53,678(3) | 4,326,984 | Class C | 0 | 0 | 168,242 | 35.67 | 2/6/26 | Class C | 27,030(3) | 680,345 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
74,530(4) | 6,007,863 | Class A | 0 | 110,621 | 0 | 36.71 | 2/14/25 | Class A | 49,686(4) | 1,443,378 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class C | 0 | 111,404 | 0 | 35.94 | 2/14/25 | Class C | 50,038(4) | 1,259,456 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brad Dickerson | 55,310 | 72.90 | 2/16/2025 | 30,000(2) | 2,418,300 | 0 | 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lawrence Molloy | 0 | 0 | 0 | Class A | 69,109(5) | 2,007,616 | 27,644 | 803,058 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
18,000 | 3.43 | 3/9/2019 | 26,838(3) | 2,163,411 | Class C | 69,599(5) | 1,751,807 | 27,840 | 700,733 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
168,000 | 7.10 | 3/8/2020 | 27,950(4) | 2,253,050 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Colin Browne | 0 | 0 | 0 | Class C | 78,401(6) | 1,973,353 | 29,401 | 740,023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kerry D. Chandler | 0 | 0 | 10,974(5) | 884,614 | 13,718(9) | 1,105,808 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael Lee | 0 | 0 | 0 | Class C | 290,783(7) | 7,319,008 | 58,157 | 1,463,812 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Karl-Heinz Maurath | 0 | 0 | 5,000(6) | 403,050 | 13,718(9) | 1,105,808 | 0 | 0 | 0 | Class A | 13,418(3) | 389,793 | 34,555 | 1,003,823 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
30,000(2) | 2,418,300 | Class C | 13,513(3) | 340,122 | 34,800 | 875,916 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
26,838(3) | 2,163,411 | Class A | 12,422(4) | 360,859 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
18,634(4) | 1,502,087 | Class C | 12,510(4) | 314,877 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Class A | 10,974(8) | 318,794 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robin Thurston | 0 | 0 | 27,435(7) | 2,211,535 | 13,718(9) | 1,105,808 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
13,976(4) | 1,126,605 | Class C | 11,052(8) | 278,179 |
(1) | These performance based stock option awards granted in 2015 were earned at the target level based on our company achieving a certain combined adjusted operating income for 2015 and 2016 and, subject to continued employment, the options become exercisable in three equal annual installments beginning in February 2017. All of the options become exercisable sooner upon death or disability or, in certain circumstances, upon termination of employment following a change in control of Under Armour. |
(2) | See footnote |
These shares vested in February |
(4) | These performance based restricted stock unit awards granted in 2014 were earned at the stretch level based on our company achieving a certain combined operating income for 2014 and 2015 and subject to continued employment, the award vests in |
(5) |
(6) | These shares will vest in four equal annual installments beginning in November 2017. |
(7) | These shares will vest in five equal annual installments beginning in August 2017. |
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(8) | These performance based restricted stock unit awards granted in 2015 were earned at the target level based on |
(9) | Based on the closing prices of our Class A Stock and Class C Stock on December 31, 2016, which were $29.05 and $25.17, respectively. |
(10) | See Note |
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Option Exercises and Stock Vested in 20152016
The table below sets forth information concerning the exercise of stock options and vesting of restricted stock for each named executive officer during 2015.2016.
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(2) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(4) | ||||||||||||||||||||||||
Kevin A. Plank | 0 | 0 | 113,504 | 8,372,055 | 0 | 0 | 111,682(1) | 8,520,220 | ||||||||||||||||||||||||
Lawrence Molloy | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
Colin Browne | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
Michael Lee | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
Karl-Heinz Maurath | 0 | 0 | 59,667(3) | 4,189,157 | ||||||||||||||||||||||||||||
Brad Dickerson | 20,000 | 1,896,975 | 63,420 | 4,677,859 | 186,000(1) | 13,942,092 | 52,736(1) | 4,023,229 | ||||||||||||||||||||||||
Kerry D. Chandler | 0 | 0 | 5,487 | 479,728 | ||||||||||||||||||||||||||||
Karl-Heinz Maurath | 0 | 0 | 68,420 | 5,708,909 | ||||||||||||||||||||||||||||
Robin Thurston | 0 | 0 | 0 | 0 |
(1) | Represents number of shares of Class A Stock exercised or vested in February 2016 prior to the Class C Dividend. |
(2) | Value realized represents market value at exercise less the exercise price. |
Includes 49,632 shares of Class A Stock vested in February 2016 prior to the Class C Dividend, and 5,000 shares of Class A Stock and 5,035 shares of Class C Stock vested in August 2016 following the Class C Dividend and Adjustment Dividend. |
(4) | Value realized is calculated by multiplying the number of shares vested by the closing price of our stock on the date of vesting. |
Nonqualified Deferred Compensation for 20152016
The table below sets forth information concerning our deferred compensation plan for each named executive officer during 2015.2016.
Name | Executive Contributions in 2015 ($) | Registrant Contributions in 2015 ($) | Aggregate Earnings in 2015 ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at 12/31/2015 ($) | Executive Contributions in 2016 ($) | Registrant Contributions in 2016 ($) | Aggregate Earnings in 2016 ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at 12/31/2016 ($) | ||||||||||||||||||||||||||||||
Kevin A. Plank | 0 | 0 | (7,365 | ) | 0 | 1,431,264 | 0 | 0 | 110,300 | 0 | 1,541,565 | |||||||||||||||||||||||||||||
Lawrence Molloy | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||
Colin Browne | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||
Michael Lee | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||
Karl-Heinz Maurath | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||
Brad Dickerson | 0 | 0 | (5,439 | ) | 0 | 119,783 | 0 | 0 | 8,617 | (128,400 | ) | 0 | ||||||||||||||||||||||||||||
Kerry D. Chandler | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||
Karl-Heinz Maurath | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||
Robin Thurston | 0 | 0 | 0 | 0 | 0 |
The Compensation Committee administers the plan. The plan allows a select group of management or highly compensated employees as approved by the committee to make annual base salary and annual incentive award deferrals.
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Participating employees may elect to defer from 10% to 75% of their annual base salary and 10% to 90% of their annual incentive award. They generally must make salary deferral elections for a given year by December 31st of the prior year, and incentive award deferral elections for a given year by June 30th of the year for which incentive awards are earned. For example, to defer any 20152016 incentive award that might be payable in early 2016,2017, employees must have made an election by June 30, 2015.2016. Deferral elections cannot be changed or revoked except in very limited hardship circumstances as permitted under applicable law. Employees immediately vest in all amounts credited to their accounts.
The plan includes a “make whole” feature for employees who, due to participation in the plan, receive a reduction in the matching contribution under our 401(k) plan. A reduction occurs under the 401(k) plan because of the rule that prohibits the 401(k) plan from recognizing deferrals to anon-qualified plan, such as our deferred compensation plan, in the 401(k) plan’s definition of compensation for matching contribution purposes. Under this plan feature, any amount that, because of these rules, cannot be contributed as a matching contribution to the 401(k) plan will be contributed instead to the deferred compensation plan for those participants employed on the last day of the year. We make no other contributions to the plan.
We credit the deferred compensation accounts with earnings or losses based on the performance of one or more money market or mutual funds selected by the employee from several investment options offered under the plan. Employees may change their investment elections daily. We contribute
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to a grantor trust in order to provide us with a source of funds for the benefits payable to participants under the plan. The assets in the trust are available to provide benefits under the plan unless Under Armour is bankrupt or insolvent.
The timing of distributions is based on elections made by the employees at the time of the initial deferral election. Employees can generally elect to receive a distribution from the plan at least three years after the year in which the deferral amount is actually deferred. Employees may elect to postpone the distribution date for a minimum of five years if they do so at least one year before the previously specified date. Employees may also elect to receive a distribution upon retirement in a lump sum or in annual installments over a period of two to ten years, as elected at the time of deferral. If an employee becomes disabled, we pay distributions in a lump sum or in annual installments over a period of two to ten years, as selected by the employee at the time of deferral. If an employee leaves the company, we pay distributions in a lump sum six months following termination of employment. If an employee dies, we pay distributions in a lump sum to the employee’s beneficiary. Employees may not otherwise withdraw amounts from the plan except in the case of an unforeseeable financial emergency as defined in the plan.
Retirement Plans
We have no defined benefit pension plans or supplemental retirement plans for executives.
Potential Payments Upon Termination of Employment or Change in Control
The table provides an estimate of the payments and benefits that would be paid to our named executive officers in connection with any termination of employment or upon a change in control of Under Armour. The payments are quantified assuming the termination of employment or change in control occurred on December 31, 2015. 2016. Mr. Dickerson resigned from the company in February 2016 and is therefore excluded from the table below.
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The definitions of “change in control,” “cause” and “good reason” and descriptions of the payments and benefits appear after the table. This table does not include amounts deferred under our deferred compensation plan. For a description of the distributions made under this plan upon termination of employment, see “Nonqualified Deferred Compensation for 2015”2016” above.
Name | Cash Severance ($) | Benefits ($) | Acceleration of Vesting of Equity Awards ($) | Total ($) | ||||||||||||
Kevin A. Plank | ||||||||||||||||
• Change in Control | 1,460,047 | 1,460,047 | ||||||||||||||
• Termination of employment without Cause or by Executive for Good Reason in connection with a Change in Control | 2,702,835 | 2,702,835 | ||||||||||||||
• Disability | 4,162,882 | 4,162,882 | ||||||||||||||
• Death | 4,162,882 | 4,162,882 | ||||||||||||||
Lawrence Molloy | ||||||||||||||||
• Termination of employment without Cause or by Executive for Good Reason in connection with a Change in Control | 1,656,347 | 10,908 | 4,962,450 | 6,629,705 | ||||||||||||
• Termination of employment for any other reason in connection with a Change in Control | 475,097 | 475,097 | ||||||||||||||
• Termination of employment for any reason with Under Armour enforcing anon-compete | 405,000 | 405,000 | ||||||||||||||
• Disability | 5,263,214 | 5,263,214 | ||||||||||||||
• Death | 5,263,214 | 5,263,214 | ||||||||||||||
Colin Browne | ||||||||||||||||
• Termination of employment without Cause or by Executive for Good Reason in connection with a Change in Control | 1,089,423 | 33,380 | 2,565,377 | 3,688,180 | ||||||||||||
• Termination of employment for any other reason in connection with a Change in Control | 126,923 | 126,923 | ||||||||||||||
• Termination of employment for any reason with Under Armour enforcing anon-compete | 330,000 | 330,000 | ||||||||||||||
• Disability | 2,713,376 | 2,713,376 | ||||||||||||||
• Death | 2,713,376 | 2,713,376 | ||||||||||||||
Michael Lee | ||||||||||||||||
• Termination of employment without Cause or by Executive for Good Reason in connection with a Change in Control | 1,200,817 | 15,586 | 8,490,068 | 9,706,471 | ||||||||||||
• Termination of employment for any other reason in connection with a Change in Control | 325,817 | 325,817 | ||||||||||||||
• Termination of employment without Cause or by Executive for Good Reason | 1,325,817 | 15,586 | 1,341,403 | |||||||||||||
• Disability | 8,782,820 | 8,782,820 | ||||||||||||||
• Death | 8,782,820 | 8,782,820 | ||||||||||||||
Karl-Heinz Maurath | ||||||||||||||||
• Change in Control | 729,915 | 729,915 | ||||||||||||||
• Termination of employment without Cause or by Executive for Good Reason in connection with a Change in Control | 1,187,500 | 5,914 | 2,657,110 | 3,850,524 | ||||||||||||
• Termination of employment for any other reason in connection with a Change in Control | 356,250 | 356,250 | ||||||||||||||
• Termination of employment without Cause | 831,250 | 831,250 | ||||||||||||||
• Disability | 3,882,363 | 3,882,363 | ||||||||||||||
• Death | 3,882,363 | 3,882,363 |
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Name | Cash Severance ($) | Benefits ($) | Acceleration of Vesting of Equity Awards ($) | Total ($) | ||||||||||||
Kevin A. Plank | ||||||||||||||||
• Change in Control | 9,163,584 | 9,163,584 | ||||||||||||||
• Termination of employment without Cause or by Executive for Good Reason in connection with a Change in Control | 6,860,744 | 6,860,744 | ||||||||||||||
• Termination of employment for any other reason in connection with a Change in Control | 0 | |||||||||||||||
• Disability | 16,237,547 | 16,237,547 | ||||||||||||||
• Death | 16,237,547 | 16,237,547 | ||||||||||||||
Brad Dickerson | ||||||||||||||||
• Change in Control | 4,581,711 | 4,581,711 | ||||||||||||||
• Termination of employment without Cause or by Executive for Good Reason in connection with a Change in Control | 2,362,500 | 15,586 | 2,594,202 | 4,972,288 | ||||||||||||
• Termination of employment for any other reason in connection with a Change in Control | 675,000 | 675,000 | ||||||||||||||
• Termination of employment for any reason with Under Armour enforcing a non-compete | 405,000 | 405,000 | ||||||||||||||
• Disability | 7,261,201 | 7,261,201 | ||||||||||||||
• Death | 7,261,201 | 7,261,201 | ||||||||||||||
Kerry Chandler | ||||||||||||||||
• Change in Control | 884,614 | 884,614 | ||||||||||||||
• Termination of employment without Cause or by Executive for Good Reason in connection with a Change in Control | 2,012,500 | 5,916 | 884,646 | 2,903,062 | ||||||||||||
• Termination of employment for any other reason in connection with a Change in Control | 575,000 | 575,000 | ||||||||||||||
• Termination of employment for any reason with Under Armour enforcing a non-compete | 345,000 | 345,000 | ||||||||||||||
• Disability | 1,990,422 | 1,990,422 | ||||||||||||||
• Death | 1,990,422 | 1,990,422 | ||||||||||||||
Karl-Heinz Maurath | ||||||||||||||||
• Change in Control | 4,984,761 | 4,984,761 | ||||||||||||||
• Termination of employment without Cause or by Executive for Good Reason in connection with a Change in Control | 1,662,500 | 6,074 | 2,386,733 | 4,055,307 | ||||||||||||
• Termination of employment for any other reason in connection with a Change in Control | 475,000 | 475,000 | ||||||||||||||
• Termination of employment without Cause | 950,000 | 950,000 | ||||||||||||||
• Disability | 7,592,656 | 7,592,656 | ||||||||||||||
• Death | 7,592,656 | 7,592,656 | ||||||||||||||
Robin Thurston | ||||||||||||||||
• Change in Control | 2,211,535 | 2,211,535 | ||||||||||||||
• Termination of employment without Cause or by Executive for Good Reason in connection with a Change in Control | 1,487,500 | 15,586 | 2,011,252 | 3,514,338 | ||||||||||||
• Termination of employment for any other reason in connection with a Change in Control | 425,000 | 425,000 | ||||||||||||||
• Termination of employment without Cause or by Executive for Good Reason | 637,500 | 637,500 | ||||||||||||||
• Termination of employment for any reason with Under Armour enforcing a non-compete | 255,000 | 255,000 | ||||||||||||||
• Disability | 4,443,949 | 4,443,949 | ||||||||||||||
• Death | 4,443,949 | 4,443,949 |
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Definitions
In the change in control severance agreements and for the equity awards, the term “change in control” is generally defined as:
In the change in control severance agreements and for the equity awards, the term “cause” is generally defined as:
In the change in control severance agreements and for the equity awards, the term “good reason” is generally defined as:
Benefits and Payments
Upon a Change in Control
For awards granted prior to 2014, restricted stock units and performance based restricted stock units vest upon a change in control. The amounts reflect the value of such restricted stock units and performance based restricted stock units on December 31, 2015.2016. See “Outstanding Equity Awards at 20152016 FiscalYear-End” table for the equity awards that vest upon a change in control.
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For awards granted beginning in 2014, all restricted stock units, performance based restricted stock units and performance based stock options require a double trigger for vesting in connection with a change of control. Double-trigger vesting requires both a change of control and a termination of the award holder’s employment without Cause or resignation by the executive for Good Reason in connection with that change of control for the vesting of unvested equity awards to accelerate. For any performance based restricted stock unit or performance based stock option awards for which the performance period is not complete, the number of shares or options at the target level of performance would be accelerated.
Upon termination of employment without Cause or by Executive for Good Reason in connection with a Change in Control
Under the change in control severance agreements, if the executive’s employment is terminated without Cause or by the executive for Good Reason in connection with a change in control, the executive would receive:
As a condition to the receipt of the lump sum payment and the continuation of benefits described above, the executive will be required to sign or reconfirm a confidentiality agreement and a one-year non-competitionone-yearnon-competition andnon-solicitation agreement and execute a general release of claims against Under Armour and its affiliates.
Upon termination of employment for any other reason in connection with a Change in Control
Under the change in control severance agreements, if the executive’s employment is terminated for any other reason, other than Cause or for Good Reason, the executive is entitled to:
Termination of employment without Cause
In the event the company terminates Mr. Maurath’s employment without causeCause he would receive his salary for one year and apro-rata bonus for the year he was terminated (assumed in this case to be the maximumtarget bonus).
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Termination of employment without Cause or by Executive for Good Reason
In the event the company terminated Mr. Thurston’sLee’s employment without cause or he resigned for good reason on December 31, 2015,2016, he would receive eighteen months oftwo times his base salary and apro-rata bonus for the year he was terminated (assumed in this case to be the maximumtarget bonus). Under the terms of Mr. Thurston’sLee’s employment agreement, in addition to the items described under the definition of “Cause” above, the term is further defined to include a material breach of any material provision of Mr. Thurston’sLee’s employment agreement or any other agreement to which he is a party with us, his willful failure to perform his duties under his employment agreement, his willful failure to follow a lawful directive of our Board of Directors and his material failure to comply with our material written policies or rules.
Termination of employment for any reason with Under Armour enforcing anon-compete
Executives generally may not compete for one year after termination of employment for any reason if we continue to pay 60% of their salary during this period. Mr. Maurath is not subject to this agreement due to limitations under local law. Mr. Lee is also not subject to this agreement due to limitations under state law.
Disability
All restricted stock units, performance based restricted stock units and stock options vest upon the executive’s disability.
The named executive officers are covered by a supplemental long-term disability insurance policy that provides an additional benefit beyond the standard benefit offered to employees generally (standard benefit is up to $10,000 monthly). If executives had become disabled, they would have received monthly supplemental disability insurance payments of $20,000 until age 65.65 (or $19,453 in the case of Mr. Lee). Mr. Maurath is covered by a separate disability insurance policy that pays monthly disability insurance payments of $30,000 until age 65. Monthly disability payments are not included in the above table because they are paid under a disability insurance policy and not by us. In addition, under his employment agreement, if Mr. Maurath becomes disabled he continues to receive his salary for one year.
Death
All restricted stock units, performance based restricted stock units and stock options vest upon the executive’s death.
4145
ADVISORY APPROVAL OF OUR EXECUTIVE COMPENSATION
(PROPOSAL 2)
We provide stockholders with the opportunity to cast an annual advisory vote on executive compensation (commonly referred to as a “say on pay” proposal). This vote is on whether to approve the compensation of the named executive officers as disclosed in the “Executive Compensation” section of this Proxy Statement, including the Compensation Discussion and Analysis, the compensation tables and the related narrative.
At our 20152016 Annual Meeting of Stockholders, 99% of the votes cast on the “say on pay” proposal voted in favor of our executive compensation. The Compensation Committee believes the results of the 20152016 “say on pay” vote demonstrated that stockholders generally agreed with our compensation program and policies and the compensation of our named executive officers.
While this advisory vote to approve executive compensation isnon-binding, the Board and the Compensation Committee will review the voting results and seek to determine the cause or causes of any significant negative voting result. Voting results provide little detail by themselves, and we may consult directly with stockholders to better understand issues and concerns not previously presented. The Board and management understand that it is useful and appropriate to seek the views of stockholders when considering the design and implementation of executive compensation programs.
The Board of Directors asks you to consider the following statement: Do you approve our executive compensation as described in the “Executive Compensation” section of this Proxy Statement, including the Compensation Discussion and Analysis, the compensation tables and other narrative executive compensation disclosures?
The approval of our executive compensation as described in the “Executive Compensation” section of this Proxy Statement, including the Compensation Discussion and Analysis, the compensation tables and other narrative executive compensation disclosures, requires the affirmative vote of a majority of the votes cast at the Annual Meeting.
The Board of Directors recommends that you vote “FOR” the approval of our executive compensation.
4246
ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON OUR EXECUTIVE COMPENSATION
(PROPOSAL 3)
As described in Proposal No. 2 above, the Company’s stockholders are being provided the opportunity to cast an advisory vote on our executive compensation program. The advisory vote on our executive compensation described in Proposal No. 2 above is referred to as a “say on pay vote.”
Section 14A of the Securities Exchange Act requires all publicly-traded companies to provide stockholders the opportunity to cast an advisory,non-binding vote on how often we should include a say on pay vote in our proxy materials for future annual shareholder meetings (or special shareholder meeting for which the company must include executive compensation information in the proxy statement for that meeting). Under this Proposal No. 3, stockholders may vote to have the say on pay vote every one year, every two years or every three years or abstain from voting.
We believe that say on pay votes should be conducted every year so that stockholders may annually express their views on our executive compensation program. The Compensation Committee, which administers our executive compensation program, values the opinions expressed by stockholders in these votes and will consider the outcome of these votes in making its decisions on our executive compensation.
The Board of Directors recommends that you vote to hold say on pay votes every ONE YEAR.
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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table sets forth information concerning our equity compensation plans that authorize the issuance of shares of Class A and Class C Stock. The information is provided as of December 31, 2015:2016:
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | Class of Common Stock | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||||||||||
Equity compensation plans approved by security holders | 6,762,094 | 14.52 | 20,782,233 | Class A | 5,385,553 | 4.92 | 9,930,954 | |||||||||||||||||
Equity compensation plans approved by security holders | Class C | 6,546,531 | 4.71 | 23,703,858 | ||||||||||||||||||||
Equity compensation plans not approved by security holders | 2,138,612 | 9.25 | — | Class A | 2,103,365 | 4.66 | — | |||||||||||||||||
Equity compensation plans not approved by security holders | Class C | 2,418,503 | 4.59 | — |
The number of securities to be issued upon exercise of outstanding options, warrants and rights issued under equity compensation plans approved by security holders includes 3,753,3833,342,309 million Class A and 4,966,677 million Class C restricted stock units and deferred stock units issued to employees,non-employees and directors of Under Armour; these restricted stock units and deferred stock units are not included in the weighted average exercise price calculation above.
The number of securities remaining available for future issuance as of December 31, 20152016 includes 18,054,8447,235,625 million shares of our Class A CommonStock and 21,962,642 million shares of our Class C Stock under our Second Amended and Restated 2005 Omnibus Long-Term Incentive Plan (“2005 Stock Plan”) and 2,727,3892,695,329 million shares of our Class A CommonStock and 1,741,216 million shares of our Class C Stock under our Employee Stock Purchase Plan. In addition to securities issued upon the exercise of stock options, warrants and rights, the 2005 Stock Plan authorizes the issuance of restricted and unrestricted shares of our Class A Commonand Class C Stock and other equity awards. Refer to Note 1211 to the Consolidated Financial Statements included in our Annual Report on Form10-K for the year-ended December 31, 20152016 (our 2015 201610-K).
The number of securities issued upon exercise of outstanding options, warrants and rights issued under equity compensation plans not approved by security holders includes 1,920,000 million Class A and 1,933,628 million Class C fully vested andnon-forfeitable warrants granted in 2006 to NFL Properties LLC as partial consideration for footwear promotional rights, and 218,612183,365 thousand shares of our Class A CommonStock and 484,875 thousand shares of our Class C Stock to be issued in connection with the delivery of shares pursuant to deferred stock units granted to certain of our marketing partners. These deferred stock units are not included in the weighted average exercise price calculation above. See Note 1211 to the Consolidated Financial Statements included in our 2015 201610-K for a further discussion of the warrants. The deferred stock units are issued to certain of our marketing
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partners in connection with their entering into endorsement and other marketing services agreements with us. The terms of each agreement set forth the number of deferred stock units to be granted and the delivery dates for the shares, which range from a 1 to 10 year period, depending on the contract. The deferred stock units arenon-forfeitable.
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TRANSACTIONS WITH RELATED PERSONS
Certain immediate family members of our directors and executive officers are employees of Under Armour. The following immediate family members were employed by us in 2015. The list includes only those employees with annual compensation in 2015 exceeding $120,000. For purposes of this list, immediate family members include a spouse, parent, stepparent, child, stepchild, sibling, mother or father-in-law, son or daughter-in-law, and brother or sister-in-law: Koby Fulks, Director of Outdoor and brother to Kip Fulks, our Chief Marketing Officer, $141,103 (includes his 2015 salary and 2015 bonus paid in early 2016).
A company owned by Kevin Plank, ownsour Chairman and CEO, has personally invested in certain commercial revitalization efforts in Baltimore, Maryland, where our corporate headquarters is located. As a jet aircraft. Weresult, from time to time we have an operating lease agreemententered into related party transactions with him that were in the company to lease the aircraft when it is used by Kevin Plank or other persons for our business purposes. In 2015, we paid a fixed monthly lease payment of $166,667, or $2.0 million. We determined that the lease payment rates are at the fair market value lease rate for this aircraft based on a third party appraisal. The Audit Committee determined these lease terms were reasonable and that we would benefit by the use of the aircraft for company business.company’s interest.
Under Armour Corporate Offices
In addition, in 2014 we entered into a lease agreement with an entity controlled by KevinMr. Plank to lease office space in a building located near our principal officescorporate headquarters in Baltimore, in order to expand our corporate headquarters to accommodate our growth needs.Maryland. The lease hashad a 10 year term beginning in 2016. LeaseIn 2016, our total lease payments began in January 2016 at $1.1 million annually with an annual escalation of 2.0% thereafter forto Mr. Plank’s company were approximately 130,000 square feet.$0.7 million. Following a third party appraisal, we determined the lease payments were at or below fair market lease rates. We also determined that the location of the property as well as other favorable terms of the lease, such as renewal options and the right to occupy approximately 40,000 square feet ofcertain additional space without increased lease payments, provided us with overall terms that were both fair and reasonable to us and provided flexibility otherwise unavailable at alternative locations. This lease was terminated without penalty upon our acquisition of the underlying property as described below.
Following the entry into this lease agreement, we determined that we would realize greater benefits by acquiring the parcel that includes the office building as well as surrounding parcels in order to further expand our corporate headquarters to accommodate our growth needs. The location and size of the undeveloped parcels in close proximity to our current corporate headquarters provided us with a unique opportunity to develop a global headquarters suited to our needs and corporate culture. We engaged an independent third-party to appraise the fair market value of the parcels. In addition, the Audit Committee engaged its own independent appraisal firm to assess the parcels. In June 2016 we entered into a Purchase Agreement with entities controlled by Mr. Plank to acquire these parcels for a purchase price of $70.3 million. We determined that the purchase price for these parcels represented the fair market value of the parcels and approximated the cost to the seller to purchase and develop the parcels, including costs related to the termination of a lease encumbering the property. In connection with the purchase, in September 2016, the parties also entered into an agreement pursuant to which the parties will share the burden of any special taxes arising due to infrastructure projects in the surrounding area. The allocation to us is based on the expected benefits to our parcels from these projects. No obligations are currently owed by either party under this agreement.
The Audit Committee determined that the terms of the purchase were reasonable and fair and that we would realize significant benefits from the flexibility and certainty purchasing the parcels will provide us with respect to our ongoing campus growth needs.
In 2015 we also entered into a lease with an entity controlled by KevinMr. Plank to lease industrial space located near our principal officescorporate headquarters in Baltimore, which we plan to use as an innovation and manufacturing testing facility and for other business purposes. Given the location’s proximity to our headquarters in Baltimore City, the use of this space provided a unique opportunity for us to build astate-of-the-art facility able to accommodate our innovation needs. The lease covers 68,000 square feet and has a five year term, with payments beginning in MayApril 2016. The annual lease rate is currently $510,000, with the annual lease rate escalating 2.5% each year. For 2016, our total lease payments were approximately $0.4 million. Following an independent market rent appraisal, we determined that the lease payments were atbelow fair market lease rates. We also determined that the location of the property as well as other favorable terms of the lease, such as renewal options and flexibility regarding the design of the space, provide us with overall terms that were both fair and reasonable to us and provided flexibility otherwise unavailable at alternative locations.
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Aircraft
A company owned by Mr. Plank owns a jet aircraft. We have an operating lease agreement with the company to lease the aircraft when it is used by Mr. Plank or other persons for our business purposes. We pay a fixed monthly lease payment of $166,667 under the terms of the lease agreement. In addition, a company owned by Mr. Plank owns a helicopter aircraft. In June 2016 we entered into a lease agreement with the company to lease the helicopter when it is used by Mr. Plank or other persons for our business purposes. We pay an hourly lease rate of $6,500 under the terms of the lease agreement. Our total lease amounts for 2016 with respect to these aircrafts were $2.4 million.
With respect to each of these aircraft, we determined that the lease payment rates are at or below the fair market value lease rate for these aircraft based on third party appraisals. The Audit Committee determined these lease terms were reasonable and that we would benefit by the use of each of the aircraft for company business.
Hotel
In March 2017, entities controlled by Mr. Plank and his brother Scott Plank opened a hotel located in Baltimore, Maryland. The hotel is operated by a third party management company. We anticipate utilizing this hotel from time to time for Under Armour business purposes. We have negotiated corporate rate discounts for use of the hotel with the management company, consistent with rates otherwise available for comparable hotels in the area.
The Audit Committee approved the terms of each of these leasesthe foregoing transactions in accordance with our policy on transactions with related persons.
Policies and Procedures for Review and Approval of Transactions with Related Persons
Our Corporate Governance Guidelines require that any transaction involving Under Armour and a director or executive officer or entities controlled by a director or executive officer, be approved by our Board of Directors. The Board has delegated to the Audit Committee oversight and approval of these and other matters that may present conflicts of interest. The committee has adopted a formal written policy on transactions with related persons. Related persons are generally defined under SEC rules as our directors, executive officers, or stockholders owning at least five percent of our outstanding shares, or immediate family members of any of the foregoing. The policy provides that the committee shall review and approve or ratify transactions with related persons and any material changes to such transactions. The policy further provides that in determining whether to approve or ratify such a transaction, the committee may consider the following factors:
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To the extent our employment of an immediate family member of a director, executive officer or five percent stockholder is considered a transaction with a related person, the policy provides that the committee will not be required to ratify or approve such employment if the executive officer, director or five percent stockholder does not participate in decisions regarding the hiring, performance evaluation, or compensation of the family member.
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Employment of Related Parties
Certain immediate family members of our directors and executive officers are employees of Under Armour. For these purposes, an immediate family member includes any spouse, parent, stepparent, child, stepchild, sibling, mother orfather-in-law, son ordaughter-in-law, and brother orsister-in-law. Only one immediate family member was employed by us in 2016 with compensation exceeding $120,000. Albert Lee serves as our Vice President of Digital Product and is the brother of Michael Lee, our Chief Digital Officer. In 2016, Albert Lee received total cash compensation of $489,038 (including 2016 salary and bonus paid in early 2017), and also received restricted stock unit awards with a grant date fair value of $10.2 million, which were recommended by our CEO and approved by the Compensation Committee. Because Albert Lee reports directly to Michael Lee, the Audit Committee reviewed and approved Albert Lee’s compensation in accordance with our policy on transactions with related persons.
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The Audit Committee has selected PricewaterhouseCoopers LLP, or PwC, to continue as our independent registered public accounting firm for the year ending December 31, 2016.2017. Representatives of PwC are expected to attend the Annual Meeting. They will have an opportunity to make a statement if they so desire and they will respond to appropriate questions from stockholders.
Fees
The fees billed by PwC for 20152016 and 20142015 for services rendered to Under Armour were as follows:
2015 | 2014 | 2016 | 2015 | |||||||||||||
Audit Fees | $ | 2,018,113 | $ | 1,577,886 | $ | 2,180,806 | $ | 2,018,113 | ||||||||
Audit-Related Fees | 37,383 | 202,559 | 0 | 37,383 | ||||||||||||
Tax Fees | 205,728 | 157,891 | 249,500 | 205,728 | ||||||||||||
All Other Fees | 4,500 | 4,500 | 4,140 | 4,500 |
Audit Fees
Audit fees are for the audit of our annual consolidated financial statements and our internal control over financial reporting, for reviews of our quarterly financial statements and for services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements.
Audit-Related Fees
When paid, audit-related fees generally are for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not included under “Audit Fees” above. For 2014 and 2015, audit-related fees consisted of compliance services.
Tax Fees
When paid, tax fees generally are for tax planning and tax advice. For 20142015 and 2015,2016, tax fees primarily included assistance with tax credit reviews and consulting on customs valuations. In addition, for 2016 tax fees also included assistance with value-added tax consulting.
All Other Fees
All other fees relate to a subscription to an accounting research tool.
Pre-Approval Policies and Procedures
As set forth in the Audit Committee’s Charter, the Audit Committee approves in advance all services to be performed by our independent registered public accounting firm, including all audit and permissiblenon-audit services. The committee has adopted a written policy for such approvals. The policy provides that the committee must specificallypre-approve the terms of the annual audit services engagement and maypre-approve, for up to one year in advance, particular types of permissible audit-related, tax and othernon-audit services. The policy also provides that the services shall be described in sufficient detail as to the scope of services, fee and fee structure, and the impact on auditor independence. The policy states that, in exercising itspre-approval authority, the committee may consider whether the independent registered public accounting firm is best positioned to provide the most effective and efficient service, for reasons such as familiarity with our business, people, culture, accounting systems, risk profiles and other factors, and whether the service might enhance our ability
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to manage or control risk or improve audit quality. The policy also provides that the committee should be mindful of the relationship between fees for audit andnon-audit services. Under the policy, the committee may delegatepre-approval authority to one or more of its members and anypre-approval decisions will be reported to the full committee at its next scheduled meeting. The committee has delegated thispre-approval authority to the Chairman of the committee.
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The role of the Audit Committee is oversight of matters relating to accounting, internal control, auditing, financial reporting, risk and legal and regulatory compliance. The Audit Committee oversees the audit and other services of our independent registered public accounting firm and is directly responsible for the appointment, independence, qualifications, compensation and oversight of the independent registered public accounting firm, which reports directly to the Audit Committee. Our management is responsible for the financial reporting process and preparation of quarterly and annual consolidated financial statements. Our independent registered public accounting firm is responsible for conducting audits and reviews of our consolidated financial statements and audits of our internal control over financial reporting.
The Audit Committee has reviewed and discussed our 20152016 audited consolidated financial statements with management and with our independent registered public accounting firm. The Audit Committee also has discussed with the independent registered public accounting firm the matters required to be discussed by applicable auditing guidance.
The Audit Committee also has received the written disclosures and the letter from our independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm its independence.
Based on the review and discussions referred to above and subject to the limitations on its role and responsibilities, the Audit Committee recommended to the Board that the 20152016 audited consolidated financial statements be included in our Annual Report on Form10-K for the year ended December 31, 20152016 to be filed with the SEC. The Board of Directors approved this recommendation.
A.B. Krongard, Chairman
Douglas E. Coltharp
Anthony W. Deering
4755
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(PROPOSAL 3)4)
Under the rules and regulations of the SEC, the Audit Committee is directly responsible for the appointment of our independent registered public accounting firm. The Audit Committee has appointed PricewaterhouseCoopers LLP, or PwC, as our independent registered public accounting firm to audit our consolidated financial statements and our internal control over financial reporting for the year ending December 31, 2016.2017. PwC has served as our independent auditors since 2003. The services provided to us by PwC, along with the corresponding fees for 20152016 and 2014,2015, are described under the caption “Independent Auditors” in this Proxy Statement.
Stockholder ratification of the appointment of the independent registered public accounting firm is not required. We are asking stockholders to ratify the appointment because we believe it is a sound corporate governance practice. If our stockholders do not ratify the selection, the Audit Committee will consider whether or not to retain PwC, but may still retain them.
The ratification of the appointment of the independent registered public accounting firm requires the affirmative vote of a majority of the votes cast at the Annual Meeting.
The Board of Directors recommends that you vote “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016.2017.
4856
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers, directors and persons who own more than 10% of a registered class of our securities, to file initial reports of ownership of our stock and reports of changes in such ownership with the SEC. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations from our executive officers, directors and greater than 10% stockholders, all required filings pursuant to Section 16(a) were timely made during 2015.2016.
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Stockholder proposals to be included in our Proxy Statement pursuant to SEC rule14a-8 for our 20172018 Annual Meeting of Stockholders must be received by the Secretary of Under Armour on or before November 16, 2016.December 14, 2017.
Stockholders wishing to submit a proposal (including a nomination for election as a director) for consideration at the 20172018 Annual Meeting of Stockholders, but which will not be included in the Proxy Statement for such meeting, must do so in accordance with the terms of the advance notice provisions in our bylaws. These advance notice provisions require that, among other things, the stockholder give timely written notice to the Secretary of Under Armour not less than 90 days nor more than 150 days prior to the first anniversary of the date of the mailing of the notice of the previous year’s Annual Meeting of Stockholders. For the 20172018 Annual Meeting of Stockholders, a stockholder’s notice of a proposal will be considered timely if received no earlier than October 17, 2016November 19, 2017 and no later than December 16, 2016.January 18, 2018. However, if we delay or advance mailing notice of the 20162018 Annual Meeting of Stockholders by more than 30 days from the date of the first anniversary of the 20162017 notice mailing, then such stockholder notice of proposal must be delivered to the Secretary of Under Armour not less than 90 days nor more than 150 days prior to the date of mailing of the notice for the 20172018 Annual Meeting (or by the tenth day following the day on which we disclose the mailing date of notice for the 20172018 Annual Meeting, if that date is later).
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RECONCILIATION OFNON-GAAP FINANCIAL MEASURES
This Proxy Statement refers to 2015 “adjusted operating income” and “adjusted operating margin,income,” each of which areis considered anon-GAAP financial measures,measure, as defined by SEC Regulation G. We have provided below a reconciliation of these measuresthis measure to the most directly comparable financial measure calculated in accordance with GAAP. We believe these thisnon-GAAP financial measuresmeasure may be useful in evaluating our financial information and comparing year-over-year performance, and we have incorporated these measuresthis measure into certain of our executive compensation programs. However, theyit should not be considered in isolation and should be viewed in addition to, and not as an alternative for, our reported results prepared in accordance with GAAP. In addition, ournon-GAAP financial information may not be comparable to similarly titled measures reported by other companies.
For purposes of this Proxy Statement, we define adjusted operating income as our reported income from operations, excluding the impact ofnon-capitalized deal costs and the amortization of intangible assets related to any acquisition completed in 2015. Adjusted operating margin is calculated as adjusted operating income as a percentage of our GAAP reported net revenues.2015 or 2016.
The following table provides a numerical reconciliation of adjusted operating income and adjusted operating margin:income:
Income from �� | Adjustments— Acquisition
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Adjusted Operating | |||||||||||
Combined Fiscal Years Ended December 31, 2015 and 2016 | $ | 826.0 million | |||||||||
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UNDER ARMOUR, INC. ATTN: CORPORATE SECRETARY
| VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. | |||
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS | ||||
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | ||||
VOTE BY PHONE -1-800-690-6903 | ||||
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. | ||||
VOTE BY MAIL | ||||
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | KEEP THIS PORTION FOR YOUR RECORDS |
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | |||||||||||||||||||||||||||||||
The Board of Directors recommends you vote FOR the following:
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1. | Election of Directors | |||||||||||||||||||||||||||||||||
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01 | Kevin A. Plank 02 George W. Bodenheimer 03 Douglas E. Coltharp 04 Anthony W. Deering 05 Jerri L. DeVard | |||||||||||||||||||||||||||||||||
06 | Karen W. Katz 07 A.B. Krongard 08 William R. McDermott 09 Eric T. Olson 10 Harvey L. Sanders | |||||||||||||||||||||||||||||||||
The Board of Directors recommends you vote FOR the following proposal: | For | Against | Abstain | The Board of Directors recommends you vote FOR the following proposal: | For | Against | Abstain | |||||||||||||||||||||||||||
2. | To approve, by anon-binding advisory vote, the compensation of executives as disclosed in the “Executive Compensation” section of the proxy statement, including the Compensation Discussion and Analysis and tables. | ☐ | ☐ | ☐ | 4. | Ratification of Appointment of Independent Registered Public Accounting Firm. | ☐ | ☐ | ☐ | |||||||||||||||||||||||||
NOTE: Such other business as may properly come before the meeting or any adjourment thereof. | ||||||||||||||||||||||||||||||||||
The Board of Directors recommends you vote 1 YEAR on the following proposal: | 1 year | 2 years | 3 years | Abstain | ||||||||||||||||||||||||||||||
3. | To recommend, bynon-binding vote, the frequency of executive compensation votes. | ☐ | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||
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Please indicate if you plan to attend this meeting | ☐ | ☐ | ||||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Form10-K, Notice & Proxy Statement is available atwww.proxyvote.com
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UNDER ARMOUR, INC. Annual Meeting of Stockholders
This proxy is solicited by the Board of Directors
CLASS A COMMON STOCK
The undersigned hereby appoints Kevin A. Plank and John P. Stanton, and each or any of them, as proxies, with full powers of substitution, to represent and to vote all shares of the Class A Common Stock of Under Armour, Inc. which the undersigned is entitled to vote at the Annual Meeting of Stockholders of Under Armour to be held on
This proxy will be voted as directed. If no direction is made, this proxy will be voted “FOR” all Nominees under Proposal 1, “FOR” Proposal 2, “1 YEAR” for Proposal 3 and “FOR”
In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting.
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Continued and to be signed on reverse side
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UNDER ARMOUR, INC. ATTN: CORPORATE SECRETARY
| VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. | |||
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS | ||||
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | ||||
VOTE BY PHONE -1-800-690-6903 | ||||
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. | ||||
VOTE BY MAIL | ||||
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | KEEP THIS PORTION FOR YOUR RECORDS |
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Form10-K, Notice & Proxy Statement is available atwww.proxyvote.com.
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UNDER ARMOUR, INC. Annual Meeting of Stockholders
This proxy is solicited by the Board of Directors
CLASS B COMMON STOCK
The undersigned hereby appoints Kevin A. Plank and John P. Stanton, and each or any of them, as proxies, with full powers of substitution, to represent and to vote all shares of the Class B Common Stock of Under Armour, Inc. which the undersigned is entitled to vote at the Annual Meeting of Stockholders of Under Armour to be held on
This proxy will be voted as directed. If no direction is made, this proxy will be voted “FOR” all Nominees under Proposal 1, “FOR” Proposal 2, “1 YEAR” for Proposal 3 and “FOR”
In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting.
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Continued and to be signed on reverse side |