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Under Armour sets sights overseas

As Baltimore-based Under Armour Inc. continues to position itself for growth, the company is looking to expand internationally.

Running back Bernard Pierce (left), the Ravens’ third-round draft choice out of Temple University, greets Under Armour CEO Kevin Plank at the company’s annual meeting Tuesday.

“A large piece of the foundation that we just put in place was with the hiring of a gentleman named Charlie Maurath,” CEO and founder Kevin Plank said Tuesday at the company’s annual shareholder meeting. “He’s going to take over our international business, which today is less than 10 percent of what we do.”

Under Armour announced in April that Karl-Heinz “Charlie” Maurath would join the company in September to lead the brand’s international division. Maurath comes to Under Armour with more than 20 years of experience in executive positions, including several with German athletic apparel maker adidas.

Growing internationally “just takes time,” Plank said, recalling how the company entered the Japanese market in late 1998. Nine years later, Under Armour was only doing $35 million in business in Japan, he said.

“Then all of the sudden, something happened, the tipping point occurred, Plank said. “And so in year nine, all the sudden $35 [million] turned to $72 million.”

In 2011, Under Armour had nearly $150 million in sales in Japan, he said.

The company also opened its first store in China last year and has two more locations opening this week. In a call last month with investors, Plank said Under Armour does business in 61 countries.

“We’ve planted a lot of seeds around the world … you’ll continue to see those things come to be,” he said.

Plank also emphasized women’s apparel as a key growth area for the company, touting the launch of the $58 Armour Bra last spring.

“We don’t believe anyone, frankly, had done it right,” Plank said, recalling how the company consulted doctors, athletes and scientists to build “the world’s greatest sports bra.”

“It is growing, it is pushing, it is several hundred million dollars,” Plank said of the company’s women’s apparel business, which makes up 28 percent of apparel sales. “It’s something that we are very, very proud of.”

Shareholders also approved the pay scale for executives.

Plank’s total compensation dipped 14 percent in 2011 because the company did not meet its operating income percentage goal. The majority of Plank’s compensation is tied to an incentive plan based on company performance.

Though Plank’s salary stayed the same in 2011, at $26,000 — the amount he earned when he launched the company, according to Under Armour’s proxy statement, his total compensation decreased to $1.1 million from $1.3 million in 2010. Plank was named to Forbes’ list of billionaires for the first time this year, with a net worth of $1.1 billion.

Under Armour sales were $1.5 billion last year, a 38 percent increase over the previous year and above the company’s target of $1.2 billion. In 2010, the company topped $1 billion in sales for the first time.

Operating income increased 45 percent from 2010, to reach $163 million last year, also bypassing the year’s $160 million target.

But because operating income percentage for 2011 failed to meet the company’s target — though it did increase to 11.1 percent from 10.6 percent in 2010 — annual incentive awards for executives were paid out at 55 percent of their maximum amount.

Chief Financial Officer Brad Dickerson’s salary rose to $400,000 from $350,000 in 2010, but total compensation fell 2 percent to $573,111 from $585,111 in the previous year.

Kip J. Fulks, who has been with the company since 1997, took the position of COO in September. His total compensation in 2011 was $2.8 million, nearly $2 million of which was driven by option awards.

On another front, even though the Baltimore City Council in March approved development plans for the Under Armour complex in South Baltimore, Plank said there are “no imminent plans” for starting the expansion. For now, the company is making landscaping and cosmetic improvements, such as changing fences.

One building, the Tide Building, will be demolished under the plan and replaced with a 250,000-square-foot office building and parking garage, according to the plans. Another 80,000-square-foot office space with underground parking is also being planned.

In addition, Under Armour formally applied for tax increment financing, or a TIF, from the city for further improvements at the headquarters site located off Key Highway.

“I think a lot of people thought we were jumping right on buildings and things like that,” Plank said. “Right now, we just want to be sure we have the room and the footprint to grow our company.

“We’re trying to finalize our master plan, and then figure out when we can have the funds to continue to push it, and of course that has to do with the growth,” he said. “We’ve got a nice little company right now and we don’t want to be saddled with a big lease or anything else, so, we’ll be thoughtful about it.”

Plank saved a surprise for shareholders until the end of the meeting, when new Baltimore Ravens running back Bernard Pierce, who has signed a multi-year deal with Under Armour, stopped by for a question-and-answer session with Plank.

“I still can’t believe I’m a Raven,” said Pierce, who joins the team from Temple University and was drafted in the third round.