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Under Armour has been interested in redevelopment opportunities in the Port Covington area since before the 2008 financial crisis. (The Daily Record / Maximilian Franz)

Shareholder lawsuit challenges Under Armour stock split

Three days after Under Armour announced a proposed change in its stock structure, a shareholders’ lawsuit was filed seeking to prevent the plan from proceeding.

The potential class-action lawsuit, filed Thursday in Baltimore City Circuit Court, alleges the change will “entrench” founder and CEO Kevin A. Plank even if “his performance in office begins to deteriorate.”

The company’s board of directors approved a plan that would give current shareholders a new, non-voting Class C share for each Class A or Class B share they currently own. The change needs to be approved by shareholders in an Aug. 26 meeting to go into effect.

Plank holds more than 90 percent of the Class B stocks, which have 10 times the voting power of Class A shares, giving him two-thirds of the voting shares despite just holding less than 17 percent of the overall stock.

Adding a third class would allow Plank to continue to sell shares while exceeding the 15 percent cutoff — permitting him to maintain control over the company’s future while Under Armour continues to expand.

The lawsuit alleges the board of directors “did not obtain meaningful safeguards in exchange for the extraordinarily valuable benefit that is being bestowed upon Plank at the expense of public shareholders.”

Plank, in a letter to shareholders on Monday, said maintaining Under Armour’s “founder-led approach” is in the best interests for the company and shareholders.

The lawsuit was brought by a Connecticut shareholder by lawyers with Brower Piven P.C., a Baltimore County law firm which specializes in such shareholders’ lawsuits.

Under Armour’s stock split and its creation of the new class of shares is similar to a plan executed by Google founders and top executives several years ago.

The case is Pedro Ramirez Jr. v. Kevin A. Plank, et al., 24C15003240.

Daily Record Business Writer Zach Kram contributed to this story.