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
Filed by the Registrant ☑ Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☑ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | 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)
Payment of Filing Fee (Check the appropriate box):
☑ | No fee required | |||
☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 | |||
(1) | Title of each class of securities to which the transaction applies:
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(2) | Aggregate number of securities to which the transaction applies:
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(3) | Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4) | Proposed maximum aggregate value of the transaction:
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(5) | Total fee paid:
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☐ | Fee paid previously with preliminary materials. | |||
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
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(4) | Date Filed:
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UNDER ARMOUR, INC.
NOTICE OF 20192020 ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 9, 201927, 2020
Notice is hereby given that the Annual Meeting of Stockholders of Under Armour, Inc. will be held on Thursday,Wednesday, May 9, 201927, 2020 at 10:00 a.m., Eastern Time, to be held online at the company’s office located at 2601 Port Covington Drive, Baltimore, Maryland 21230www.virtualshareholdermeeting.com/UAA2020 to consider and vote on the following matters:
1. | To elect |
2. | To approve, on an advisory basis, our executive compensation; |
3. | To approve an amendment to our |
4. | 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 tennine nominees to the Board of Directors listed in the accompanying proxy statement, to the Board of Directors, “FOR” the approval of our executive compensation, “FOR” the approval of our Third Amended and Restated 2005 Omnibus Long-Term Incentive Planamendment to our Charter that would permit our Board of Directors to provide stockholders with the right to amend our Bylaws to the extent permitted in the Bylaws and “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm.
Only holders of record of Class A Common Stock or Class B Common Stock as of the close of business on February 22, 2019March 6, 2020 are entitled to notice of, or 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 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., 2601 Port Covington Drive, Baltimore, Maryland 21230. This list also will be available at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting, which will be conducted online only via a live webcast due to concerns regarding the coronavirus outbreak (COVID-19). We believe that this virtual format prioritizes the health and well-being of our stockholders, directors and employees in the midst of recent public health concerns related to COVID-19. During this virtual meeting, holders of our Class A Common Stock and Class B Common Stock may ask questions and will have the opportunity to vote to the same extent as they would at an in-person meeting of stockholders. Holders of our Class C Common Stock may attend the virtual Annual Meeting in a view-only format and will not be able to submit questions during the meeting or vote on any matter to be considered at the Annual Meeting. However, in advance of the meeting, holders of our Class C Common Stock may submit questions by contacting Investor Relations through the Under Armour website. We will respond to as many inquiries at the Annual Meeting as time allows.
If you plan to attend the Annual Meeting, you will need the 16-digit control number included in your Notice, on your proxy card or on the instructions that accompany your proxy materials. If you are a stockholderholder of record asClass C Common Stock, you may attend the Annual Meeting without a 16-digit control number by following the instructions in your Notice of Internet Availability of Proxy Materials, on your proxy card or on the February 22, 2019 record date,instructions that accompany your proxy materials. The Annual Meeting will begin promptly at 10:00 a.m., Eastern Time. Online check-in will begin at 9:45 a.m., Eastern Time, and you will be admitted toshould allow ample time for 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.online check-in procedures.
Whether or not you intend to be present in person atattend the virtual 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 |
General Counsel and Secretary |
Baltimore, Maryland
March 27, 2019April 14, 2020
UNDER ARMOUR, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
Thursday,Wednesday, May 9, 201927, 2020
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,Wednesday, May 9, 2019,27, 2020, at 10:00 a.m., Eastern Time, to be held online at the company’s office located at 2601 Port Covington Drive, Baltimore, Maryland 21230.www.virtualshareholdermeeting.com/UAA2020. We expect to first send or give to stockholders this Proxy Statement, together with our 20182019 Annual Report to Stockholders, on approximately March 28, 2019.April 16, 2020.
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 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 20182019 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 Stockholder Meeting to be held on May 9, 201927, 2020
Our Proxy Statement and 20182019 Annual Report to Stockholders are available at
https://about.underarmour.com/investor-relations/news-events-presentations/#module-6
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 22, 2019,March 6, 2020, or the Record Date, will be entitled to notice of, and to vote at, the
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Annual Meeting. On the Record Date, 187,901,930188,400,989 shares of Class A Stock and 34,450,000 shares of Class B Stock were issued and outstanding. Each share of Class A Stock entitles the holder to cast one vote on each matter to be considered at the Annual Meeting and each share of Class B Stock entitles 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. Holders 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 (virtually) 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 the approval of our Third Amended and Restated Omnibus Long-Term Incentive Plan, which we refer to as the Amended 2005 Plan, 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. The approval of the Charter Amendment requires the affirmative vote of the holders of not less thantwo-thirds of the voting power of the Class A Stock and Class B Stock outstanding as of the Record Date and entitled to vote thereon, voting together as a single class.
Voting Process
Shares 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 tennine nominees to the Board of Directors named in this Proxy Statement, “FOR” the advisory approval of our executive compensation, “FOR” the approval of our Third Amended and Restated Omnibus Long-Term Incentive Plan,Charter Amendment, 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
Holders of our Class A Stock and Class B Stock as of the Record Date may vote their 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.
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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.
In Person
You may also attend the Annual Meeting and vote in person.person, electronically. If you own your stock in street name and wish to vote your shares electronically 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.
AttendanceParticipation in the Annual Meeting
Due to concerns regarding the coronavirus outbreak (COVID-19) and to assist in protecting the health and well-being of our stockholders, directors and employees, this year’s Annual Meeting will be in an online format. You can access the virtual annual meeting at the Annual Meetingmeeting time atwww.virtualshareholdermeeting.com/UAA2020. The virtual meeting has been designed to provide the same rights to participate as you would have at an in-person meeting.
Holders of our Class A Stock, Class B Stock and Class C Stock may attend the virtual Annual Meeting, in person, although holders of Class C Stock may only attend the virtual Annual Meeting in a view-only format and will not be entitled to vote on any matter to be considered at the Annual Meeting. The Annual Meeting will begin promptly at 10:00 a.m., Eastern Time. Online check-in will begin at 9:45 a.m., Eastern Time, and you should allow ample time for the online check-in procedures. If you plan to attend the Annual Meeting, you will need the 16-digit control number included in your Notice of Internet Availability of Proxy Materials, on your proxy card or on the instructions that accompany your proxy materials. If you are the recorda 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,Class C Stock, you may attend the Annual Meeting without a 16-digit control number by following the instructions in person providedyour Notice of Internet Availability of Proxy Materials, on your proxy card or on the instructions 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 https://about.underarmour.com/investor-relations/news-events-presentations/#module-6.accompany your proxy materials.
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 2601 Port Covington Drive,1020 Hull Street, 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.person electronically. 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 electronically 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.
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Abstentions and BrokerNon-Votes
Shares held by stockholders present at the Annual Meeting in person (virtually) 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 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, the advisory approval of our executive compensation and the amendment and restatement of our 2005 PlanCharter Amendment 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.
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“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 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 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. Because approval of the Charter Amendment requires the affirmative vote (other than the Charter Amendment) of the shares of Class A Stock and Class B Stock outstanding as of the Record Date and entitled to vote thereon, voting together as a single class, abstentions and brokernon-votes will have the effect of a vote against the proposal.
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 common stock by:
each current director and nominee for director;
our Chief Executive Officer and the othernamed executive officers namedincluded in the 20182019 Summary Compensation Table;
all of our directors and executive officers as a group; and
by each person, or group of affiliated persons, known to us to beneficially own more than 5% of any class of our outstanding shares of Class A Stock.
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 22, 2019,March 6, 2020, 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 22, 2019,March 6, 2020, stock options exercisable more than 60 days from February 22, 2019,March 6, 2020, 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.
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)(5) | 34,742,229 | 15.6% | 34,198,117 | 15.3% | 64.7% | |||||||||||||||
George W. Bodenheimer (6) | 3,000 | * | 3,021 | * | * | |||||||||||||||
Douglas E. Coltharp (6)(7) | 98,914 | * | 99,279 | * | * | |||||||||||||||
Jerri L. DeVard (6) | 1,200 | * | 0 | * | * | |||||||||||||||
Mohamed A.El-Erian (6) | 11,650 | * | 3,675 | * | ||||||||||||||||
Karen W. Katz (6)(8) | 2,000 | * | 2,014 | * | * | |||||||||||||||
A.B. Krongard (6)(9) | 68,693 | * | 68,917 | * | * | |||||||||||||||
William R. McDermott (6)(9) | 12,244 | * | 12,330 | * | * | |||||||||||||||
Eric T. Olson (6) | 0 | * | 0 | * | * | |||||||||||||||
Harvey L. Sanders (6)(9) | 186,244 | * | 187,565 | * | * | |||||||||||||||
David Bergman (10) | 26,835 | * | 64,856 | * | * | |||||||||||||||
Kevin Eskridge (11) | 18,890 | * | 78,525 | * | * | |||||||||||||||
Paul Fipps (12) | 11,015 | * | 76,862 | * | * | |||||||||||||||
Patrik Frisk (13) | 14,000 | * | 120,076 | * | * | |||||||||||||||
All Executive Officers and Directors as a Group (6)(14) | 35,281,490 | 15.9% | 35,125,823 | 15.7% | 64.8% | |||||||||||||||
5% Stockholders | ||||||||||||||||||||
Adage Capital Partners, L.P. (15) | 11,424,973 | 5.1% | 2.1% | |||||||||||||||||
Baillie Gifford & Co (16) | 17,590,526 | 7.9% | 3.3% | |||||||||||||||||
BlackRock, Inc. (17) | 12,307,017 | 5.5% | 2.3% | |||||||||||||||||
The Vanguard Group (18) | 19,220,813 | 8.6% | 3.6% | |||||||||||||||||
Wellington Management Group LLP (19) | 24,080,579 | 10.8% | 4.5% |
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)(5) | 34,742,229 | 15.6% | 34,461,506 | 14.9% | 64.7% | |||||||||||||||
Patrik Frisk (6) | 14,000 | * | 235,450 | * | * | |||||||||||||||
George W. Bodenheimer (7) | 3,000 | * | 3,021 | * | * | |||||||||||||||
Douglas E. Coltharp (7)(8) | 98,914 | * | 99,279 | * | * | |||||||||||||||
Jerri L. DeVard (7) | 1,200 | * | 0 | * | * | |||||||||||||||
Mohamed A.El-Erian (7) | 11,650 | * | 3,675 | * | * | |||||||||||||||
Karen W. Katz (7)(9) | 2,000 | * | 2,014 | * | * | |||||||||||||||
A.B. Krongard (7) | 66,972 | * | 67,012 | * | * | |||||||||||||||
Eric T. Olson (7) | 0 | * | 0 | * | * | |||||||||||||||
Harvey L. Sanders (7) | 184,480 | * | 185,640 | * | * | |||||||||||||||
David Bergman (10) | 26,835 | * | 103,184 | * | * | |||||||||||||||
Colin Browne (11) | 0 | * | 115,105 | * | * | |||||||||||||||
Tchernavia Rocker (12) | 0 | * | 10,050 | * | * | |||||||||||||||
All Executive Officers and Directors as a Group (7)(13) | 35,258,130 | 15.8% | 34,959,786 | 15.5% | 64.8% | |||||||||||||||
5% Stockholders | ||||||||||||||||||||
Adage Capital Partners, L.P. (14) | 10,765,400 | 4.8% | 2.0% | |||||||||||||||||
BlackRock, Inc. (15) | 12,563,020 | 5.6% | 2.4% | |||||||||||||||||
Lone Pine Capital LLC (16) | 12,734,634 | 5.7% | 2.4% | |||||||||||||||||
The Vanguard Group (17) | 21,416,008 | 9.6% | 4.0% | |||||||||||||||||
Wellington Management Group LLP (18) | 25,803,993 | 11.6% | 4.8% |
* | Less than 1% of the shares. |
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(1) | Includes any stock options exercisable within 60 days of |
(2) | The percentage of outstanding figure takes into account the 34,450,000 shares of outstanding Class B Stock held, directly or indirectly, by Mr. 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: Mr. Plank, less than one percent, all executive officers and directors as a group, less than one percent, Adage Capital Partners, L.P. |
(3) | Each share of Class A Stock has one vote and each share of Class B Stock has ten votes. The percentage of voting power reflects the combined effects of both Class A Stock and Class B Stock. Our Class C Stock isnon-voting. |
(4) | Includes 16,991 shares of Class A Stock directly owned by Mr. Plank, 164,617 shares beneficially owned, and 110,621 stock options for Class A Stock that are currently exercisable. In addition, Mr. Plank beneficially owns 34,450,000 shares of Class B Stock indirectly and has sole voting and investment power over 32,646,600 of these shares. With respect to the remaining 1,803,400 of these shares of Class B Stock, the shares are held by two limited liability companies controlled by Mr. Plank. Mr. Plank has appointed Thomas J. Sippel, a former director of the |
(5) | Includes 16,738 shares of Class C Stock directly owned by Mr. Plank, as well as |
(6) | Includes 14,000 shares of Class A Stock and 14,000 shares of Class C held in Trust by Mr. Frisk. Does not include RSUs for 752,119 shares of Class C Stock. |
(7) | 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 C Stock held bynon-management directors. The RSUs will be converted into DSUs for Class C Stock on aone-for-one basis upon vesting. The DSUs 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. As of the Record Date, thenon-management directors held the following amounts of DSUs and RSUs: |
Name | Class A DSUs | Class C DSUs | Class C RSUs | Class A DSUs | Class C DSUs | Class C RSUs | ||||||||||||||||||
George W. Bodenheimer | 5,390 | 27,491 | 9,085 | 5,390 | 40,437 | 7,649 | ||||||||||||||||||
Douglas E. Coltharp | 54,820 | 78,453 | 9,085 | 54,820 | 92,171 | 7,649 | ||||||||||||||||||
Jerri L. DeVard | 0 | 18,118 | 12,824 | 0 | 32,933 | 9,519 | ||||||||||||||||||
Mohamed A.El-Erian | 0 | 1,140 | 9,695 | 0 | 11,248 | 11,096 | ||||||||||||||||||
Karen W. Katz | 5,121 | 27,220 | 9,085 | 5,121 | 40,166 | 7,649 | ||||||||||||||||||
A.B. Krongard | 66,157 | 94,366 | 9,085 | 66,157 | 112,202 | 7,649 | ||||||||||||||||||
William R. McDermott | 59,657 | 83,562 | 9,085 | |||||||||||||||||||||
Eric T. Olson | 13,758 | 35,918 | 9,085 | 13,758 | 48,864 | 7,649 | ||||||||||||||||||
Harvey L. Sanders | 61,426 | 85,699 | 9,085 | 61,426 | 99,545 | 7,649 |
Includes 22,914 shares of Class A Stock owned by Mr. Coltharp individually, 75,000 shares owned by his wife and 1,000 shares held by two Uniform Transfer to Minors Act accounts and 22,741 |
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shares of Class C Stock owned by Mr. Coltharp individually, 75,532 shares owned by his wife and 1,006 shares held by two Uniform Transfer to Minors Act accounts. |
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Shares of Class A Stock and Class C Stock are held in trust. |
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(10) | Does not include RSUs for |
(11) | Does not include RSUs for |
(12) | Does not include RSUs for |
(13) |
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Includes shares shown as beneficially owned by the directors and executive officers as a group (18 persons). Does not include RSUs for |
According to their report on Schedule 13G, as of December 31, |
According to their report on Schedule 13G, as of December 31, |
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According to their report on Schedule 13G, as of January 13, 2020, Lone Pine Capital LLC and certain affiliates of Lone Pine Capital LLC, were deemed to beneficially own in the aggregate 12,734,634 shares of our Class A Stock. According to the Schedule 13G, the reporting persons had shared power to vote and dispose of all of these shares. The principal business address of Lone Pine Capital LLC is Two Greenwich Plaza, Greenwich, Connecticut 06830. |
(17) | According to their report on Schedule 13G, as of December 31, |
According to their report on Schedule 13G, as of |
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(PROPOSAL 1)
Nominees for Election at the Annual Meeting
There are tennine nominees for election to the Board of Directors at the Annual Meeting. 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.
TenNine directors will be elected at the 20192020 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: Founder, Executive | Kevin A. Plank Executive Chairman
Mr. Plank
As our founder, | |
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, and served as Acting Chairman of ESPN from December 2017 to March 2018. 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
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, Encompass Health Corporation
Since May 2010, Mr. Coltharp has served as Executive Vice President and Chief Financial Officer of Encompass Health Corporation (formerly 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 November 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, Encompass Health Corporation. | |
Director since May 2017 Age:
Independent | Jerri L. DeVard Former Executive Vice President, Chief Customer Officer of Office Depot, Inc.
Ms. DeVard
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. |
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Director since October 2018 Age:
Independent | Mohamed A.El-Erian Former Chief Executive Officer andCo-Chief Investment Officer of PIMCO
Dr. El-Erian served as CEO andCo-Chief Investment Officer of PIMCO, one of the world’s premier investment management firms, from December 2007 to March 2014. He currently serves as Chief Economic Advisor of Allianz, the corporate parent of PIMCO, a role he has held since March 2014 and is
Dr. El-Erian’s qualifications to serve on our Board include his significant international, macroeconomic and financial expertise and leadership experience gained through his past roles, including as CEO andCo-Chief Investment Officer of PIMCO. | |
Director since January 2020 Age: 57 Executive | Patrik Frisk Chief Executive Officer of Under Armour, Inc. Mr. Frisk was appointed Chief Executive Officer and President of Under Armour and a member of its Board of Directors in January 2020, after serving as President and Chief Operating Officer since July 2017 when he joined the company. Mr. Frisk has more than 30 years of experience in the apparel, footwear and retail industry. Prior to Under Armour, he was Chief Executive Officer of The ALDO Group, a global footwear and accessories company. Previous to that, he spent more than a decade with VF Corporation where he held numerous leadership positions including Coalition President of Outdoor Americas (The North Face® and Timberland®), President of the Timberland® brand, President of Outdoor & Action Sports (EMEA), and Vice President and General Manager of The North Face®. Before joining VF Corporation, Mr. Frisk ran his own retail business in Scandinavia and held senior positions with Peak Performance and W.L. Gore & Associates. Mr. Frisk’s qualifications to serve on our Board include his extensive leadership experience in the apparel, footwear and retail industry and being our current CEO. |
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Director since October 2014 Age:
Independent | Karen W. Katz Former President and Chief Executive Officer, Neiman Marcus Group LTD LLC
Ms. Katz served as President and CEO of Neiman Marcus Group LTD LLC, one of the world’s leading luxury and fashion retailers, from 2010 to February 2018.
Ms. Katz qualifications to serve on our Board include her leadership experience in the consumer retail sector with Neiman Marcus Group, including as President and Chief Executive Officer. |
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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 an 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’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 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 Chairman 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. |
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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 enCourageKids Foundation and as a member of the Board of Trustees of the University of Maryland College Park Foundation.
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 tennine nominees for director.
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CORPORATE GOVERNANCE AND RELATED MATTERS
Board of Directors and Board Leadership Structure
Our Board of DirectorsA.B. Krongard, who has ten directors, nine of which (90%) are independentnon-management directors.
Kevin Plank currently servesserved 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 15.3% of our outstanding stock and majority voting controllead director of our company we believesince 2006, is not standing for reelection at the Annual Meeting. The Board thanks Mr. Plank is the appropriate personKrongard for his many years of leadership and service to lead both our Board and the management of our business.company.
Director since July 2005 Age: 83 Independent Lead Director |
Mr. Krongard’s qualifications to
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CORPORATE GOVERNANCE AND RELATED MATTERS
Board of Directors and Board Leadership Structure
Our Board of Directors currently has ten directors, eight of which (80%) are independentnon-management directors.
Effective January 1, 2020, the roles of chairman and chief executive officer have been separated. Kevin Plank serves as Executive Chairman and Brand Chief, and Patrik Frisk serves as our Chief Executive Officer and President and a member of the Board. Prior to that time, the roles of Chairman and Chief Executive Officer were combined and held by Mr. Plank. We believe that separating the roles of Chairman and Chief Executive Officer is appropriate given the strategic and operational priorities of the company. This allows the Chief Executive Officer to focus on the business, operations and strategy of our company, while continuing to leverage the Chairman’s experience, perspective and vision.
To further strengthen our corporate governance structure and provide independent oversight of our company, on an annual basis the Board has appointed an independent director to serve as lead director. The lead independent director acts as a liaison betweenthe non-management directors of the Board and Mr. Plank, Mr. Frisk and the other members of our management team, chairs regular executive sessions of the Board without Mr. Plank and Mr. Frisk present and performs other functions as requested bythe non-management directors. Mr. Krongard (who is not standing for reelection) has served as lead independent director since 2006. The Board expects to appoint a new lead independent director after Mr. Krongard’s term as a Board member has ended.
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, Baltimore, Maryland 21230. Further information concerning contacting our Board is available through our investor relations website at https://about.underarmour.com/investor-relations/governance, under “Investors-Corporate 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. All of our directors attended our 2019 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 https://about.underarmour.com/investor-relations/governance, under “Investors-Corporate Governance.”
Role of Board in Risk Oversight
Our Board of Directors is responsible for overseeing our management team’s overall approach to risk management. The Board delegates much of this responsibility to the Audit Committee. Under its
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charter, the committee’s responsibilities include to inquire of management and our independent 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 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, and receives regular reports regarding our cybersecurity risks. The Compensation Committee has the responsibility to review the risks of our compensation policies and practices, including the review of our annual compensation risk assessment. Our Finance and Capital Planning Committee oversees certain financial matters and risks relating to our capital structure and liquidity, hedging and foreign currency transactions, acquisitions and divestitures and capital projects. Our full Board regularly reviews our financial and strategic plans and objectives, including the risks that may affect the achievement of these plans and objectives, and receives regular reports from our Chief Executive Officer, Chief Financial Officer, General Counsel and other key executive officers regarding various enterprise risk matters. In accordance with our corporate governance guidelines, ournon-management directors also meet periodically in executive session with our Chief Executive Officer to review succession planning for our Chief Executive Officer and other senior executive positions.
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 currently provide that executive officers should own company stock with a value at least equal to six times annual base salary for the Chief Executive Officer, three times annual base salary for Executive Vice Presidents and one times annual base salary for all other executive officers, in each case based on the average closing price of our stock for the prior calendar year. 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 of joining our Board. The company’s stock ownership guidelines can be found on our website at https://about.underarmour.com/investor-relations/governance, under “Investors-Corporate Governance.”
All executive officers andnon-management directors are in compliance with the guidelines as of the last measuring date, with the exception of persons new to their roles within the last few years. We anticipate our remaining executive officers andnon-management directors will be in compliance with the guidelines within the required time frame.
The Board has determined that the following seven directors standing for election at our 2020 Annual Stockholders Meeting are independent under the corporate governance listing standards of the New York Stock Exchange, or NYSE: George W. Bodenheimer, Douglas E. Coltharp, Jerri L. DeVard, Mohamed A.El-Erian, Karen W. Katz, Eric T. Olson and Harvey L. Sanders. Mr. Plank and Mr. Frisk are not independent because they are our Executive Chairman and Brand Chief and Chief Executive Officer, respectively.
Our charter includes additional factors for the Board to consider when determining whether a director will be “independent” under the NYSE standards. Specifically, the Board must consider whether any of the independent directors have any material financial or service relationship with
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Mr. Plank or any of his family members. The Board has considered these factors and determined that none of the independent directors have any such relationships. A copy of our charter that includes these requirements is available through our website at https://about.underarmour.com/investor-relations/governance, under “Investors-Corporate Governance”.
Our Board meets regularly throughout the year. During 2019, there were ten meetings of the Board. In 2019, 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 four standing committees: an Audit Committee, a Compensation Committee, a Corporate Governance Committee and a Finance and Capital Planning Committee. The table below provides current membership and meeting information for 2019 for each of these committees.
Name | Audit Committee | Compensation Committee | Corporate Governance Committee | Finance and Capital Planning Committee | ||||||||||||
George W. Bodenheimer (1) | X | |||||||||||||||
Douglas E. Coltharp | X | Chair | ||||||||||||||
Jerri L. DeVard | X | |||||||||||||||
Mohamed A.El-Erian | X | X | ||||||||||||||
Karen W. Katz | X | X | ||||||||||||||
A.B. Krongard (2) | Chair | |||||||||||||||
Eric T. Olson | Chair | |||||||||||||||
Harvey L. Sanders | Chair | |||||||||||||||
Total Meetings in 2019 | 8 | 6 | 4 | 4 |
(1) | Mr. Bodenheimer became a member of the Corporate Governance Committee on December 31, 2019, upon the resignation of William R. McDermott from our Board, who served as a member of that committee throughout 2019. |
(2) | Mr. Krongard is not standing for reelection at the Annual Meeting. |
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 https://about.underarmour.com/investor-relations/governance, under “Investors-Corporate Governance.” The Board has determined that each member of the Audit, Compensation and Governance Committees is independent as required under NYSE listing standards and our charter. Each member of our Finance and Capital Planning Committee is also independent.
Audit Committee
Mr. Krongard currently 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 internal audit function for Under Armour and the chief audit executive, who report directly to the committee. The Audit Committee Report for 20182019 is included in this Proxy Statement under “Audit Committee Report.”
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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 currently 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 2018,2019, 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. The competitive market data was based on a peer group and WTW’s published industry survey data. The committee generally has not relied on the independent consultant to determine or recommend the amount or form of executive compensation.
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 20182019 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 2019, is included below under the “—Compensation of Directors” section of this Proxy Statement. In late 2018, 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, and these materials were shared with and reviewed by WTW, the committee’s independent consultant.
In early 2019,2020, the Compensation Committee reviewed, with the assistance of management, the risks of our compensation policies and practices. 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. McDermottOlson currently serves as the chairman of the Corporate Governance Committee. This committee identifies individuals qualified to become members of our Board of Directors, recommends candidates 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.
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Finance and Capital Planning Committee
Mr. Coltharp currently 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.company, including matters relating to our capital structure and liquidity, hedging and foreign currency transactions, acquisitions and divestitures and capital projects.
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. The committee considers each candidate’s skills, knowledge and experience relative to what skills and experiences can best contribute to the effective operation of the Board, particularly in light of the evolving needs and long-term strategy of our company. We believe each Board member contributes a wide range of skills, knowledge and experience as illustrated in their individual biographies. 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.
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The Board has not established term limits for directors because of the concern that term limits may deprive the company and its shareholdersstockholders of the contribution of directors who have been able to develop valuable insights into the company and its operations over time. The tenure of our directors ranges from onetwo to fifteen years. We have added four new independent directors sincemid-2014. We believe the tenure of our Board members provides an appropriate balance of expertise, experience, continuity and perspective that serves the best interests of our shareholders.stockholders. The average tenure of thenon-management members of our Board is 8.68.1 years. 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 82, 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. However, the committee and the Board believe that considering gender and ethnic diversity is consistent with the goal of creating a Board that best serves the needs of our company and the interests of our shareholders,stockholders, and they are important factors considered when identifying individuals for Board membership. 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 continue to attract directors with a broader range of backgrounds and experiences.
The Corporate Governance 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, and works with management and other members of the
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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 partythird-party search firm to assist it in identifying and screening candidates. Dr. El-Erian was elected to the Board in October 2018. Mr. Plank, our CEO and Chairman and largest stockholder, recommended Dr. El-Erian to our Corporate Governance Committee for consideration, who unanimously recommended him for nomination.
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 bylawsBylaws 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.
Indemnification of Directors in Derivative Actions
Under the Maryland General Corporation Law (the “MGCL”), we are required to report to stockholders in this Proxy Statement certain information regarding the indemnification or advancement of expenses to members of our Board. As disclosed in our 2018 201910-K, certain of our directors and officers have been named as defendants in certain derivative actions brought against the company (the “derivative actions”). Under our bylawsBylaws and the MGCL, our directors and officers may be entitled to indemnification and advancement of legal expenses in certain circumstances in connection with these derivative actions. As the legal representation of our directors other than Mr. Plank and Mr. Frisk is currently combined with the legal representation of our company, we have not advanced or reimbursed expenses of any of our individual directors other than Mr. Plank to date. During 2018,2019, we advanced approximately $65,000$84,000 of legal expenses for Mr. Plank. Mr. Frisk joined our Board on January 1, 2020, and we may advance legal expenses for him during 2020.
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Retainers
The compensation arrangement fornon-management directors during 20182019 was as follows:
Annual Retainer for each Director | $ | 75,000 | ||
Annual Retainer for Committee Chairs | ||||
Audit Committee | $ | 15,000 | ||
Compensation Committee | $ | 12,500 | ||
Corporate Governance Committee | $ | 10,000 | ||
Finance Committee | $ | 10,000 | ||
Annual Retainer for Lead Director | $ | 25,000 |
Annual Retainer for each Director | $ | 75,000 | ||
Annual Retainer for Committee Chairs | ||||
Audit Committee | $ | 20,000 | ||
Compensation Committee | $ | 17,500 | ||
Corporate Governance Committee | $ | 15,000 | ||
Finance Committee | $ | 15,000 | ||
Annual Retainer for Committee Members | $ | 10,000 | ||
Annual Retainer for Lead Director | $ | 75,000 |
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 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. During 2018,2019, we did not pay separate fees for attendance at any Board or standing committee meetings.
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Equity Awards
Non-management directors also receive the following equity awards:
Upon initial election to the Board, an award of restricted stock units for shares of Class C Stock valued (on the grant date) at $100,000 with the units vesting in three equal annual installments; and
An annual award of restricted stock units for shares of Class C Stock valued (on the grant date) at $150,000 following each Annual Meeting of Stockholders, with the units vesting in full at the next year’s Annual Meeting of Stockholders.
The restricted stock units vest in full upon the director’s death or disability or upon a change in control of Under Armour. The restricted stock units are forfeited if the director leaves the Board for any other reason prior to the scheduled vesting term. Upon vesting of the restricted stock units, the restricted stock units are converted into deferred stock units with the shares delivered six months after the director leaves the Board, or sooner upon death or disability.
The table below sets forth information concerning the compensation of ournon-management directors for 2018.2019.
Director Compensation for 20182019
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | Total ($) | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | Total ($) | ||||||||||||||||||
George W. Bodenheimer | 75,000 | 150,000 | 225,000 | 85,000 | 150,000 | 235,000 | ||||||||||||||||||
Douglas E. Coltharp | 85,000 | 150,000 | 235,000 | 100,000 | 150,000 | 250,000 | ||||||||||||||||||
Jerri L. DeVard | 75,000 | 150,000 | 225,000 | 85,000 | 150,000 | 235,000 | ||||||||||||||||||
Mohamed A.El-Erian | 18,750 | 187,500 | 206,250 | 95,000 | 150,000 | 245,000 | ||||||||||||||||||
Karen W. Katz | 75,000 | 150,000 | 225,000 | 95,000 | 150,000 | 245,000 | ||||||||||||||||||
A.B. Krongard | 115,000 | 150,000 | 265,000 | 170,000 | 150,000 | 320,000 | ||||||||||||||||||
William R. McDermott | 85,000 | 150,000 | 235,000 | 86,799 | 150,000 | 235,151 | ||||||||||||||||||
Eric T. Olson | 75,000 | 150,000 | 225,000 | 88,201 | 150,000 | 238,201 | ||||||||||||||||||
Harvey L. Sanders | 87,500 | 150,000 | 237,500 | 92,500 | 150,000 | 242,500 |
(1) | Non-management directors may elect to defer cash retainers into deferred stock units pursuant to theNon-Employee Directors Deferred Stock Unit Plan as described above. The table below sets forth the amount of cash deferred and the number of deferred stock units of Class C Stock received for those directors who made this election. |
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Name | 2018 Cash Deferred ($) | Deferred Stock Units (#) | 2019 Cash Deferred ($) | Deferred Stock Units (#) | ||||||||||||
George W. Bodenheimer | 75,000 | 4,336 | 75,000 | 3,860 | ||||||||||||
Douglas E. Coltharp | 85,000 | 4,914 | 90,000 | 4,633 | ||||||||||||
Jerri L. DeVard | 75,000 | 4,336 | 75,000 | 3,860 | ||||||||||||
Mohamed A.El-Erian | 18,750 | 1,140 | 75,000 | 3,860 | ||||||||||||
Karen K. Katz | 75,000 | 4,336 | 75,000 | 3,860 | ||||||||||||
A.B. Krongard | 115,000 | 6,649 | 170,000 | 8,750 | ||||||||||||
William R. McDermott | 85,000 | 4,914 | 80,398 | 4,134 | ||||||||||||
Eric T. Olson | 75,000 | 4,336 | 75,000 | 3,860 | ||||||||||||
Harvey L. Sanders | 87,500 | 5,059 | 92,500 | 4,761 |
(2) | The amount in this column reflects the aggregate grant date fair value in accordance with applicable accounting guidance of the Class C Stock awards granted in |
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restricted stock units awarded when he was appointed to the Board in October 2018. Ms. DeVard held restricted stock units for |
(3) | We have disclosed the assumptions made in the valuation of the stock awards in “Stock-Based Compensation” under Note |
Update to Retainer Fees for 2019
The current arrangements for our Board compensation have been in place since 2017. The Compensation Committee reviewed director compensation in late 2018 and again in early 2019. For further discussion of this review, see “—Board Meetings and Committees—Compensation Committee” above. After this review, the committee and the Board believed that certain elements of our director compensation were not in line with competitive practices and that changes were appropriate to bring our director compensation more in line with director compensation in our industry. They did not recommend any changes to the annual cash retainer or annual equity award for Board members. However, the committee recommended and the Board approved the following changes effective January 1, 2019:
An increase of $5,000 in the annual retainer for Committee Chairs to the amounts set forth below:
Audit Committee | $ | 20,000 | ||
Compensation Committee | $ | 17,500 | ||
Corporate Governance Committee | $ | 15,000 | ||
Finance Committee | $ | 15,000 |
A new annual retainer of $10,000 for each member of each of the Company’s four standing Committees (other than the Chair of each Committee). For several years we have not paid any separate compensation for service on a Committee other than for service as Committee Chair. Given the significant work performed by each of the committees, the Board determined it was appropriate to begin paying a retainer for service on a committee.
An increase in the annual retainer for Lead Director from $25,000 to $75,000 (the last increase was in 2013). The Board determined that this increase was appropriate given the ongoing significant responsibilities and work performed by the Lead Director in recent years.
(4) | As previously disclosed, Mr. McDermott resigned from our Board effective January 1, 2020, at which point the stock awards granted to him in 2019 were forfeited. The shares underlying Mr. McDermott’s deferred stock units will be delivered to him six months after his departure from our Board, in accordance with their terms. |
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Compensation Discussion and Analysis
The following is a discussion and analysis of our compensation policies and decisions regarding the 20182019 compensation for our executive officers named in the compensation tables in this Proxy Statement.
In 2018,2019, Under Armour continued to execute against its multi-yearfocus on leveraging and optimizing the significant operational and strategic transformation. We continued our business transformation efforts begunundertaken by the company in 2017 and 2018, while returning to modest growth in sales. These efforts resulted in improved profitability in 2019, with a goaloperating income reaching $237 million as compared to an operating loss of further optimizing$25 million in 2018 (or 2018 restructuring adjusted operating income of $179 million). See “Appendix B: Reconciliation ofNon-GAAP Financial Measures.” However, our operating model by enhancingnet revenue for 2019 did not grow in line with our structure and driving greater discipline and improved processes throughoutexpectations at the organization. Westart of the year, growing at 1% for the year (below our expectations of3-4% growth). While we did not achieve our net revenue growth targets, we believe thesethe efforts will ultimately strengthenover the past three years have strengthened our ability to deliver more consistently for our customers and consumers, while ensuring sustainable, long-term return for shareholders. Net revenue in 2018 grew 4% for the year to reach $5.2 billion, including balanced growth from our wholesalestockholders anddirect-to-consumer businesses. While our net revenue declined slightly in North America (our largest segment), this decline wasin-line with our expectations and our international business grew by 23% for the year. In addition, after completing a 2017 restructuring plan, in early 2018 we announced a further restructuring plan designed to optimize our operations. Having successfully executed against our 2018 plan, we made significant operational improvements, including improving ourgo-to-market processes, enhancing our regional structure, realizing significant product cost improvements and significantly reducing our inventory levels. profitability.
Our executive compensation programs in 20182019 were designed to require our executives to deliver results consistent with our annual operating plan andin-line with our external financial guidance, announced in early 2018. Following 2017, where we did not achieve the targets set forth in any ofwith a continued focus on improving efficiency and driving profitability, and advancing our performance-based compensation programs, performance targets for 2018long-term efforts to continue to grow our brand. Our 2019 annual cash incentive awards emphasized adjusted operating income growth, and our long-term equity incentive awards were set at levels that managementdesigned to require both net revenue and the Compensation Committee believed would ensure the awards would be earned only ifadjusted operating income growth consistent with our operational initiatives continued to deliver more consistent profitability.long-term financial plan. Our ability to drive adjusted operating income resultsin-line with our expectations throughout the year resulted in the successful achievement of the targets set forth in our 20182019 annual cash incentive awards, and performance-based equity awards for our named executive officers, with annual cash incentive awards being earned aboveclose to the target level. While the performance period for our 2019 performance based equity awards is ongoing, based primarily on our net revenue results for 2019 and our initial operating plan for 2020, at the end of 2019 these awards were expected to be earned below the target level based on the current performance targets.
The determination of 2019 annual cash incentive award amounts and performance-based equity awards being earnedthe payment thereof was made prior to the global impact of COVID-19 becoming apparent. While the impact of COVID-19 on our business is still evolving, the Compensation Committee will consider the business and financial impact to our company, shareholders and employees, in evaluating 2020 compensation decisions.
Management Changes
In October 2019, we announced that effective January 1, 2020, Kevin Plank would assume the role of Executive Chairman and Brand Chief and Patrik Frisk would assume the role of Chief Executive Officer and President. This Compensation Discussion and Analysis section provides an overview of our executive compensation throughout 2019, at 100%which time Mr. Plank served as Chairman of the Board and Chief Executive Officer, and Mr. Frisk served as President and Chief Operating Officer. In addition, in February 2020, we announced that Mr. Browne (one of our named executive officers) had assumed the role of Chief Operating Officer of the company (formerly Chief Supply Chain Officer). Other than with respect to the disclosures below under “—2020 Compensation Changes,” the section addresses our executive compensation practices through the end of 2019, without giving effect to any of these changes.
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Executive Compensation Equity Program Changes for Fiscal 20182019
FollowingOur executive compensation equity program provides for an executive’s target long-term incentive award to be delivered half in the form of time based equity awards and half in the form of performance based equity awards. Prior to 2018, we maintained a long-standing practice of designing performance based equity awards with atwo-year performance period with threshold, target and stretch levels of performance. In 2018, following a significant strategic realignment and the efforts undertaken to transform the company’s operations, in early 2018 management recommended and the Compensation Committee agreed that 2018 performance based equity awards would utilizewe utilized aone-year performance period with a single performance target.
In 2019, management recommended and include one targetour Compensation Committee approved returning to determine the number of shares ultimately vesting, rather than our past practice of atwo-year performance period with threshold, target and stretchmultiple levels of performance. This target would be based on our achievement of a specificperformance, and including both net revenue and adjusted operating income amount, in line withas the performance metrics. This design returned our external financial guidance, and if earned, would vest over a four-year period. The committee believed that considering these changes,performance based equity awards to the design of performance-based equity awards for 2018 would continue to maintain our strongpay-for-performance culture while aligningutilized by the interests of our executives with our stockholders over the long-term and promoting retention of key leaderscompany in our organization.
For 2019, management recommended and the Compensation Committee agreed to return to atwo-year performance period for equity awards with threshold, target and stretch levels of performance.
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prior years. Key changes implemented in 2019 as compared to 2018 include the following:
What We | Why We Changed It: | |||||||
| Returns to the company’s past practice of establishing atwo-year |
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| Provides differentiation to | ||||||
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| Maintains |
20182019 Performance and Compensation Highlights
For 2018,2019, substantially all 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 tied to the performance of our company, primarily through:
our annual cash incentive plan with awards earned based primarily on our financial performance in 2018;2019;
our annual performance based equity awards for 20182019 with vesting tied to our financial performance in 2018;2019 and 2020; and
with respect to Mr. Plank, both his annual performance based equity award and his time based equity award for 20182019 being in the form of stock options, where he will only realize value if our stock price increases relative to the price on the grant date.
Our adjusted operating income reached $179$239 million (GAAP operating income was($237 million on a loss of $25 million)GAAP basis), aboveslightly below the target level set forth under our 20182019 annual cash incentive plan. As a result, we achieved between the target and stretch financial targets under the plan. The performance targets for the performance based equity awards granted in 20182019 were also based on annet revenue and adjusted operating income targets consistent with our long-term financial plan. As we discussed in more detail
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below, given our results in 2019 and our initial annual operating plan for 2020, at the end of 2019 expected these awards to vest below the target set at a level designed to require the Company to achieve its external financial guidance.of performance. See “—Components of Our 2019 Compensation Program—Equity Awards—Annual Performance Based and Time Based Equity Awards for 2019.”
Adjusted operating income amounts presented in this Proxy Statement generally refer to our GAAP operating income, adjusted to excludefor certain specified items considered when determining executive compensation. For purposes of determining executive compensation our annual cash incentive plan and 2019 performance based equity awards specified certain adjustments that should be considered when evaluating performance against the targets, which would have the effect of further increasing adjusted operating income. These adjustments included items such as the impact of certain goodwill impairment charges, the impact of restructuring and other related charges, litigation related expense, foreign exchange losses and charges related to the write-down of our 2018 restructuring plan and constitutenon-GAAP financial measures.accounts receivable asset due to customer bankruptcies. For a reconciliation of adjusted operating income as set forth in this Proxy Statement to the nearest GAAP measure, see “Appendix B: Reconciliation ofNon-GAAP Financial Measures.” For purposes of determining executive compensation, in addition to the adjustment for our 2018 restructuring plan, our annual cash incentive plan and 2018 performance based equity awards specified certain additional adjustments should be considered when evaluating performance against the targets, which would have the effect of further increasing adjusted operating income. These additional adjustments included items such as the impact of certain goodwill impairment charges, litigation related expense, foreign exchange losses and charges related to the write-down of our accounts receivable asset due to customer bankruptcies.
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Advisory Vote to Approve Executive Compensation
At our 20182019 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 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.
Our stockholders overwhelmingly approved our “say on pay” proposal at our 20182019 Annual Meeting of Stockholders, with more than 95%approximately 84% of the votes cast voting to approve our executive compensation. The Compensation Committee reviewedcompensation, as compared to more than 95% in the voting results and, given the strong levelprior year. As discussed above, certain elements of support, did not make any changes to our executive compensation program or principles in response2018 (particularly the design of our performance based equity awards) were designed to address ongoing disruption in our industry and the vote.significant strategic realignment being undertaken by the company. As discussed above, the performance based equity awards approved by the Compensation Committee in 2019 returned the executive compensation program to be consistent with its practices prior to 2018. In connection with this, the Compensation Committee reviewed and considered the voting results, which were lower than results from the prior year. The Compensation Committee will continue to consider results from the annual “say on pay” advisory vote, including the results from the upcoming 20192020 Annual Meeting of Stockholders, as well as other stockholder input, when reviewing executive compensation programs, principles and policies.
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Executive Compensation Features
We believe our executive compensation programs incorporate best practices that seek to drive business performance and align our executives with stockholder interests:
What We Do
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✓ ✓ Double trigger provisions for all equity awards ✓ ✓ “Clawback” provisions in our annual cash incentive plan and long-term incentive plan ✓ Stock ownership guidelines for executive officers ✓ Hold annual stockholder “say on pay” vote | × No employment contracts (unless required by local law) ×No pension or supplemental retirement plan ×No ×No 2019 contributions to deferred compensation plan for any executive officer ×No inclusion of long-term incentive awards in severance benefit calculations ×No hedging of Under Armour shares permitted (with no director or officer having any shares pledged as security in ×No recycling back into our equity plan of shares used for taxes or option exercises ×No excessive benefits or perquisites |
Objectives and Elements of our Compensation Program
The overall objectives of our compensation program for our executive officers are to:
AttractProvide competitive pay to attract and retain highly qualified executives committed to our brand and our mission,
MotivateReward performance and motivate our executives to build and grow our business profitably, and
Align the interests of our executives with the interests of our stockholders.stockholders, and
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Be competitive with our peer companies.
During 2018,2019, the key elements of our executive compensation program that are designed to help achieve these objectives are as follows:
Compensation Element | Purpose | Key Characteristics | ||||||||||
FIXED | Base Salary | Compensate fairly and competitively to help us attract and retain highly qualified executives | Determined primarily by level of responsibility, while also considering competitive market data | |||||||||
AT RISK | Annual Cash Incentive Plan | Reward executives for annual company, business unit and individual performance | Annual company financial performance criteria based primarily on our adjusted operating income results | |||||||||
Equity Awards | Directly link the interests of executives with stockholders and the creation of long-term stockholder value, promote retention and reward strong financial performance | Reflects a combination of
For our CEO, all awards in the form of stock options, resulting in realized value only if our stock price increases |
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We offer minimal benefits and perquisites to our executives and do not offer pension or other retirement plans, 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 20182019 for any executive officers.
Compensation Decision-Making Process
Compensation Committee review process
In early 2018,2019, 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 WTW competitive market data on compensation for executives to assess generally the competitiveness of our executive compensation. The competitive market data was based on a peer group and published industry survey data from WTW’s General Industry Executive Compensation and Retail/Wholesale Executive Compensation, among other surveys. 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:
Columbia Sportswear Company | Skechers U.S.A., Inc. | |||||
| Nike, Inc. | Tapestry, Inc. | ||||
| PVH Corp. | V.F. Corporation | ||||
L. Brands Inc. | Ralph Lauren Corporation | 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. 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 committee 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, market competitiveness, and company, business unit and individual performance.
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In early 2019,2020, in conjunction with the review of performance against the 20182019 annual cash incentive plan targets and 20192020 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 summary compensation information for 20162017 through 2018,2019, including base salary, annual cash incentive awards and equity awards, and the value of unvested equity awards vesting in 20192020 and future years.
The Compensation Committee reviewed similar tally sheet data in early 20182019 in conjunction with the approval of 20182019 salaries and annual equity awards for executive officers.
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 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 business unit(s) for which the executive officer has responsibility and contributions made to the overall success of our business. Certain executives, including our Chief Human ResourcesPeople and Culture Officer, our Vice President of Total
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Rewards, our President and Chief Operating Officer, 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.Committee from time to time. 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 20182019 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.responsibility and competitive market data.
The following table summarizes the base salaries for our named executive officers approved by the Compensation Committee for 2018:2019:
Named Executive | Title | |||||
Kevin Plank | Chairman of the Board and Chief Executive Officer | $ 26,000 | ||||
David Bergman | Chief Financial Officer | $ | ||||
Chief | $ | |||||
Patrik Frisk | President and Chief Operating Officer | $1,000,000 | ||||
Tchernavia Rocker | Chief People and Culture Officer | $ 585,000 |
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 equity awards as discussed below. In November 2017,With respect to Mr. Bergman, was appointed Chief Financial Officer, having previously served as acting Chief Financial Officer. As previously disclosed, as part of its annual review of executive compensation, in February 20182019 the Compensation Committee approved increasing Mr. Bergman’s 2018his base salary from $600,000 to $600,000 based$650,000. Before approving this increase, the Committee considered competitive market data on his contributionscompensation for chief financial officers from WTW’s survey and significant leadership role within our company.proxy data.
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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. In February 2018,2019, we announced our financial expectations for fiscal year 2018,2019 based on our annual operating plan, noting that we expected our financial performance in 2018approximately three to be similar to our 2017 results, withlow-single digit ratefour percent net revenue growth over 2018, and adjusted operating income in the range of $130$210 to $160$230 million.
The Compensation Committee considered these expectations and the impact of our ongoing restructuring efforts when establishing targets under the annual cash incentive plan. In priorplan, emphasizing the importance of leveraging the significant operational efforts of the company in recent years the baseline performance measure was net revenue, with the Compensation Committee considering ourto drive improved profitability when determining the ultimate award amounts. When establishing financial targets for 2018, the Compensation Committee eliminated the net revenue target and primarily considered profitability, establishing adjusted operating income targets for the year.in 2019.
Below is a summary of the adjusted operating income targets considered in our annual cash incentive plan for 2018:2019:
Threshold | Target | Stretch | ||||||||
Adjusted Operating Income Target* | $ | $ | $ |
* The adjusted operating income targets above must include the funding for the incentive award amounts. As a result, in order to fund higher incentive award amounts above the threshold level, the company must have achieved adjusted operating income levels even higher than those shown above. Our actual 20182019 GAAP reported operating income for 2018, which includes the impact of the 2018 restructuring plan,2019 was a loss of approximately $25$237 million.
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Our annual cash incentive plan for executives for 20182019 was based primarily on the adjusted operating income targets described above. For executives in charge of certain business units, generally 25% of their incentive award was tied to the performance of their respective business units based primarily on the financial performance of the business units.units against specified key performance indicators (“KPIs”) and critical strategic objectives. These measures, when combined with the other business units, align with our financial plans, including the consolidated measures discussed above.above, as well as critical business initiatives of the company. For Mr. Plank and Mr. Frisk, however, 100% of their incentive award was tied to overall company performance because of their oversight of all or a significant portion of our company’s business units.
While the annual cash incentive award amounts are primarily determined based on the company and business unit financial performance measures discussed above, the Compensation Committee also considers the overall performance of our executive officers, and may 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.
Beginning in 2019, the Compensation Committee also began considering the performance of each executive against diversity and inclusion action plans established for each leader (focused on efforts to hire and retain diverse talent) when determining the annual cash incentive award amounts.
Incentive Award Levels and 2019 Results
For 2018,2019, the Compensation Committee set the following award target levels under our annual cash incentive plan for our named executive officers based on achievement of our adjusted operating income targets, and these award levels were the same as the award levels for 2017:targets:
Threshold | Target | Stretch | ||||||
(Pays at 200% of Target) | ||||||||
Chief Executive Officer | $ | $2.0 million | $4.0 million | |||||
President and Chief Operating Officer | 100% of annual salary | 200% of annual salary | ||||||
Other Named Executive Officers | 75% of annual salary | 150% of annual salary |
Between the threshold amount and the target amount of adjusted operating income, and the target amount and stretch amount of adjusted operating income, the company utilizes a sliding scale to determine the payout based on the amount of funding generated by the incremental adjusted operating income dollars.
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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.
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20182019 Annual Cash Incentive Awards
Below is a summary of the adjusted operating income targets considered in our annual cash incentive plan for 2018,2019, as compared to our actual results for 2018:2019:
Threshold | Target | Stretch | ||||||||||
Adjusted Operating Income* | $ | $ | $ | $ |
* Adjusted operating income for 20182019 represents anon-GAAP financial measure. Our actual 2019 GAAP reported operating income for 20182019 was a loss of $25approximately $237 million. See “Appendix B: Reconciliation ofNon-GAAP Financial Measures.”
When determining the adjusted operating income targets for 2018,2019, management and the Compensation Committee believed that the targets were set at levels that required us to achieve our annual operating plan and drive increased profitability throughout the organization, including through our 2018leveraging the significant restructuring plan.efforts undertaken by the company in recent years.
For 2018,2019, we achieved $179$239 million of adjusted operating income. Based on these results, our executives were generally eligible for an annual incentive award amount aboveslightly below the target level. For Messrs. Bergman Eskridge and Fipps,Browne and Ms. Rocker, the committee also considered the performance of their respective business units, primarily considering the financial performance of the particular business unit and the success of the business unit in executing against ourKPIs for their business unit and critical strategic objectives of improving operating performance and efficiencies at the company.objectives. For Mr. Plank and Mr. Frisk, the committee did not consider business unit performance given their oversight of all or a significant portion of our company’s business units.
Based on these performance considerations, the Compensation Committee approved 2018named executive officers were eligible to receive 2019 annual cash incentive awards for the named executive officers at amounts ranging from122-126% ofthat approximated the target level.
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 may adjust up or down the annual incentive amountslevel, subject to adjustments based on individual performance duringand efforts in executing against individual diversity and inclusion initiatives at the year. Performance reviews are generally based on a qualitative assessmentcompany. Mr. Plank’s and Mr. Frisk’s award amounts were not adjusted for these criteria, and were earned at 96% of performance and consider the executive’s performance and the performance of the department or departmentstarget. The award amounts 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 2018, the committee did not make any further adjustments to the annual cash incentive awards for theour other named executive officers were not materially adjusted based on individual performance.this criteria, other than management’s recommendation and the Compensation Committee’s approval of an upward adjustment of Ms. Rocker’s award amount based on her significant leadership efforts across the organization, including executing against our company’s culture action plan and advancing diversity and inclusion efforts.
For the annual cash incentive amounts paid to the named executive officers, see the “2018“2019 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.
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The Compensation Committee approves equity awards under our SecondThird Amended and Restated 2005 Omnibus Long-Term Incentive Plan, as amended.Plan. 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 awards for shares of our Class A Stock, in recent years the Compensation Committee currently intends to utilizehas utilized only our Class C Stock for equity compensation.
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Annual Equity Awards for 2018 and Vesting of 2018 Performance Equity Awards2019
As discussed above under “—Executive Summary—Executive Compensation Equity Program Changes for Fiscal 2018,2019,” management recommended and the Compensation Committee approved certain changes to our annual equity award program with respect to our performance-basedperformance based equity awards. The following provides a summary of the 20182019 annual equity award program for our named executive officers:
50% Time Based Awards | Represents 50% of the total grant date fair value of annual equity awards granted to each named executive officer
Vests in four-equal annual installments beginning in February
Promotes long-term retention of executives and alignment with stockholder interests | |||
50% Performance Based Awards | Represents 50% of the total grant date fair value of annual equity awards granted to each named executive officer
Vesting
If performance
Emphasizes and incentivizes financial performance Further promotes long-term retention of executives and alignment with stockholder interests | |||
Up to Additional 50% of “Stretch” Value
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With respect to Mr. Plank’s annual equity award, Mr. Plank recommended and the Compensation Committee approved performance based and time based stock option awards to Mr. Plank. Other executive officers and members of management received annual equity awards in the form of performance based and time based restricted stock unit awards. The committee determined that for Mr. Plank it would further incentivize him to drive long-term shareholderstockholder value if he were awarded stock options, as the options would only have value to the extent our stock price increased over the price on the grant date.
The employees receiving thisthese equity awardawards were chosen based primarily on their position and responsibilities with the company, as well as their past performance. The total amount of equity awards to all employees was generally based on the total compensation expense amount related to equity awards as budgeted by management. The amount of the equity award to each employee was generally tiered based on the employee’s level within the company and competitive market practices, and for executive officers the Compensation Committee considered the mix of equity awards as part of the total compensation for executives.
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The following chart summarizesWhile the performance period for these awards is ongoing, based primarily on our adjusted operating income target, as well as our actualnet revenue results for 2018:
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* Adjusted2019 and our initial operating incomeplan for 2018 represents anon-GAAP financial measure. Our reported operating income for 2018 was a loss2020, at the end of $25 million. See “Appendix B: Reconciliation ofNon-GAAP Financial Measures.”
In February 2019 we announced our 2018 financial results and the Compensation Committee certified that we achieved the adjusted operating income target set forth in the 2018 performance-based equity awards. As a result 100% of the performance shares and optionsthese awards were expected to be earned and will vest in four equal annual installments beginning February 2019.
Forfeiture of 2017 Performance Based Equity Awards
In early 2017, the Compensation Committee approved the grant of a performance based stock option award to Mr. Plank, and performance based restricted stock unit awards to our other executive officers and members of management. Vesting of the 2017 awards was tied to our achievement of combined net revenue and adjusted operating income targets for 2017 and 2018. For the 2017 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 2017 award, the number of potential options and shares eligible to vest ranged from 25% ofbelow the target amount to 200% of the target amount depending on our performance against the net revenue and adjusted operating income targets.
The following chart summarizes our combined net revenue and adjusted operating income targets for the 2017 performance-based equity awards:
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In February 2018, we announced our 2017 financial results and updated our business plans for 2018. Basedlevel based on the changes to our business plans, we previously announced that we no longer expectedcurrent performance targets. Our performance in 2020 will ultimately determine what portion, if any, of the 2017 performance-based equitythese awards to vest and beare ultimately earned. We did not achieve the threshold level of performance for either net revenue or adjusted operating income, achieving results approximately 6% below the combined net revenue requirements and approximately 45% below the adjusted operating income requirements. As a result, all of the performance shares and options were forfeited.
Time Based Equity Awards
From time to time management recommends and the Compensation Committee approves other 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. In determining the amount of these awards, management and
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the committee considered primarily the executive’s position and level of responsibility within our company, as well as the retention and long-term incentive value of the award. Mr. FippsBrowne was granted an additional time-basedtime based restricted stock unit award in early 2018.2019. In approving this award, the committee considered Mr. Fipps played aBrowne’s critical role in overseeingadvancing the successful first phasecompany’s supply chain efficiency initiatives, as well as the value of implementing a new global operating and financial reporting information system at the company, a multi-year initiative critical to Under Armour’s efforts to improve
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its operations. In addition, inmid-2017 Mr. Fipps assumed executive oversight of our company’s Connected Fitness business, a critical strategic business unit at the company. Given his critical role in these initiatives, management recommended and the committee agreed to grant Mr. Fipps aoutstanding unvested equity awards. Ms. Rocker was also granted an additional time based restricted stock unit award vesting in annual installments over a four-year period. Thisearly 2019 upon her joining the company. These equity award isawards are included in the “Grants of Plan-Based Awards for 2018”2019” table below.
2020 COMPENSATION CHANGES
As discussed above, in late 2019 and early 2020 we announced certain management changes impacting our named executive officers, specifically to the roles of Messrs. Plank, Frisk and Browne. See “—Executive Summary—Management Changes.” While these changes did not impact 2019 compensation, certain adjustments were made to Mr. Frisk’s and Mr. Browne’s compensation for 2020 in connection with these changes. Specifically, Mr. Frisk’s annual base salary has been increased from $1.0 million to $1.25 million, his target annual incentive award amount has been increased from 100% to 150% of his annual base salary, and his annual equity award for 2020 will include a $3.5 million time based restricted stock unit award and a $3.5 million target level performance based restricted stock unit award. With respect to Mr. Browne, his annual base salary has been increased from $580,294 to $700,000.
In addition, the company historically establishes both short-term and long-term performance compensation financial targets during the first quarter of each fiscal year. Given the ongoing uncertainty regarding the impact of coronavirus disease 2019(COVID-19) on the global economy and our results of operations, our Compensation Committee has delayed the approval of certain elements of our 2020 compensation program, specifically the financial targets for our annual cash incentive award and the approval of the performance based portion of our annual equity awards. The Compensation Committee currently expects to consider these elements of our compensation program during the second quarter of 2020.
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 20182019 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.
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%50% of their salary; however,salary, with the ability for the employee to elect to pay the premiums for up to an additional 10% of their salary (for 60% in total). 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 theour named executive officers, the supplemental policy provides additional monthly disability benefitscoverage of approximately$20,000-$30,000. To avoid reducing the expected benefitup to the executive officers, we have provided a$20,000 per month. We do not provide any taxgross-up to themour executive officers to cover the income taxes incurred as a result of our paying the premiums on these policies. At Mr. Plank’s request, we have not provided a taxgross-up to him, other than certain de minimis amounts. Beginning in 2018, we no longer provide this taxgross-up to our executive officers.
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Equity Grant Practices
During 2018,2019, equity awards were generally 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 common 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 directorspecified individuals from engaging in certain hedging ownershiptransactions of Under Armour stock by engagingstock. This policy applies to all of our employees, officers and directors, as well as their spouses, minor children, relatives and other persons who live with them, and any trusts, estates or other entities over which they exercise control or in which they have any beneficial interest. Persons subject to the policy are prohibited from effecting short sales of our securities. Our insider trading policy defines a short sale as a sale involving securities the seller does not own at the time of the sale or, purchasing and sellingif owned by the seller, securities that will be delivered on a delayed basis beyond the customary settlement date. Our insider trading policy also prohibits purchases or sales of derivative securities, such as puts and calls, relating to Under Armourour stock. NoWhile our policy does not prohibit pledging our securities, 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.
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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 fixedtwo-year term with no automatic renewal of the term. In late 2018,early 2019, the Compensation Committee and the Board reviewed the agreements, and decided that the agreements were reasonable and should be extended through the end of 2020.
Deductibility of Executive Compensation
Management and the Compensation Committee have, in prior years, reviewed and considered, as appropriate, the effect of limitations on deductibility for federal income tax purposes under Section 162(m) of the Internal Revenue Code of compensation in excess of $1 million that was paid to certain executive officers. The Tax Cuts and Jobs Act of 2017 repealed the exemption from the Section 162(m) deduction limit for performance-basedperformance based compensation, effective for taxable years beginning after December 31, 2017. As a result, we expect that all performance-basedperformance based compensation paid to our named executives will now be included when determining compensation in excess of $1 million that generally will not be deductible.
With respect to our 2018 compensation programs, a significant portion of executive compensation was determined by our performance. In prior years, our annual cash incentive awards were determined considering a minimum net revenue growth requirement, with the Compensation Committee having the ability to exercise its negative discretion to decrease awards amounts based on our profitability. In part due to the changes to Section 162(m), as noted above the 2018 annual cash incentive awards did not include a minimum net revenue requirement, but instead required achievement of certain adjusted operating income amounts.
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The Compensation Committee believes that the lost deduction on compensation payable in excess of the $1 million limitation for the named executive officers is not material relative to the benefit of being able to attract and retain talented management. Accordingly, the Compensation Committee will continue to retain the discretion to pay compensation that is not deductible.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis section of this Proxy Statement with Under Armour’s management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our Proxy Statement and be incorporated by reference into our Annual Report on Form10-K for the year ended December 31, 2018,2019, as filed with the SEC.
Harvey L. Sanders, Chairman
George W. Bodenheimer
Jerri L. DeVard
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20182019 Summary Compensation Table
The following table sets forth information concerning compensation paid or accrued in the applicable years to our Chief Executive Officer, our Chief Financial Officer, and the other three most highly compensated executive officers in 2018. Certain2019. In October 2019 and February 2020 respectively, we announced certain organizational changes, appointing Patrik Frisk as Chief Executive Officer, President and Board Member and Kevin Plank as Executive Chairman and Brand Chief effective January 1, 2020 and appointing Colin Browne as Chief Operating Officer effective February 17, 2020. As noted above, Messrs. Frisk, Plank and Browne’s titles throughout this “Executive Compensation” section refer to their titles as of December 31, 2019. See “—Executive Summary—Management Changes” above. In addition, please note that certain salary and annual incentive plan compensation amounts may be deferred under our deferred compensation plan as discussed under “Nonqualified Deferred Compensation for 2018”2019” below.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(2)(3) | Option Awards ($)(2)(3) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(4) | Total ($) | ||||||||||||||||||||||||
Kevin Plank (1) Chairman of the Board and | | 2018 2017 2016 |
| | 26,000 26,000 26,000 |
| | 0 0 0 |
| | 0 0 0 |
| | 4,000,000 4,000,000 2,000,000 |
| | 2,520,000 0 0 |
| | 10,629 8,341 7,575 |
| | 6,556,629 4,034,341 2,033,575 |
| ||||||||
David Bergman (5) Chief Financial Officer | | 2018 2017 |
| | 552,885 425,000 |
| | 0 75,300 |
| | 1,500,000 1,950,000 |
| | 0 0 |
| | 550,000 0 |
| | 20,936 25,114 |
| | 2,623,821 2,475,414 |
| ||||||||
Kevin Eskridge (6) Chief Product Officer | 2018 | 629,230 | 0 | 1,500,000 | 0 | 586,320 | 18,129 | 2,733,679 | ||||||||||||||||||||||||
Paul Fipps (7) Chief Digital Officer | | 2018 2017 |
| | 650,000 603,846 |
| | 0 125,000 |
| | 3,500,000 3,200,000 |
| | 0 0 |
| | 600,000 0 |
| | 21,816 27,253 |
| | 4,771,816 3,956,099 |
| ||||||||
Patrik Frisk (8) President and Chief Operating Officer | | 2018 2017 |
| | 1,000,000 461,538 | | | 0 100,000 |
| | 4,000,000 15,000,000 |
| | 0 0 |
| | 1,260,000 0 |
| | 25,294 103,824 |
| | 6,285,294 15,665,362 |
|
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(2)(3) | Option Awards ($)(2)(3) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(4) | Total ($) | ||||||||||||||||||||||||
Kevin Plank (1) | 2019 | 26,000 | 0 | 0 | 4,000,000 | 1,920,000 | 8,169 | 5,954,169 | ||||||||||||||||||||||||
Chairman of the Board and | 2018 | 26,000 | 0 | 0 | 4,000,000 | 2,520,000 | 10,629 | 6,556,629 | ||||||||||||||||||||||||
Chief Executive Officer | 2017 | 26,000 | 0 | 0 | 4,000,000 | 0 | 8,341 | 4,034,341 | ||||||||||||||||||||||||
David Bergman | 2019 | 650,000 | 0 | 1,250,000 | 0 | 463,125 | 18,436 | 2,381,561 | ||||||||||||||||||||||||
Chief Financial Officer | 2018 | 552,885 | 0 | 1,500,000 | 0 | 550,000 | 20,936 | 2,623,821 | ||||||||||||||||||||||||
2017 | 425,000 | 75,300 | 1,950,000 | 0 | 0 | 25,114 | 2,475,414 | |||||||||||||||||||||||||
Colin Browne (5) Chief Supply Chain Officer | 2019 | 580,294 | 2,250,000 | 0 | 435,221 | 12,149 | 3,277,664 | |||||||||||||||||||||||||
Patrik Frisk (6) | 2019 | 1,000,000 | 0 | 4,000,000 | 0 | 960,000 | 42,446 | 6,002,446 | ||||||||||||||||||||||||
President and Chief Operating | 2018 | 1,000,000 | 0 | 4,000,000 | 0 | 1,260,000 | 25,294 | 6,285,294 | ||||||||||||||||||||||||
Officer | 2017 | 461,538 | 100,000 | 15,000,000 | 0 | 0 | 103,824 | 15,665,362 | ||||||||||||||||||||||||
Tchernavia Rocker (7) Chief People and Culture Officer | 2019 | 517,500 | 0 | 1,500,000 | 0 | 484,380 | 152,512 | 2,654,392 |
(1) | As discussed in more detail below, Mr. Plank’s total actual realized compensation was |
(2) | Reflects the grant date fair value of all performance and time based restricted stock unit and stock option awards in accordance with SEC disclosure rules. Performance based awards granted in |
Both the 2016
In accordance with SEC disclosure rules, we are required to present the fair values of the 2017, 2018 and
|
Name | 2016 Performance Based Awards ($) | 2017 Performance Based Awards ($) | 2018 Performance Based Awards ($) | 2017 Performance Based Awards ($) | 2018 Performance Based Awards ($) | 2019 Performance Based Awards ($) | ||||||||||||||||||
Kevin Plank | 5,000,000 | 4,000,000 | 2,000,000 | 4,000,000 | 2,000,000 | 4,000,000 | ||||||||||||||||||
David Bergman | 750,000 | 750,000 | 750,000 | 750,000 | 1,250,000 | |||||||||||||||||||
Kevin Eskridge | 750,000 | |||||||||||||||||||||||
Paul Fipps | 2,000,000 | 750,000 | ||||||||||||||||||||||
Colin Browne | 1,250,000 | |||||||||||||||||||||||
Patrik Frisk | 10,000,000 | 2,000,000 | 10,000,000 | 2,000,000 | 4,000,000 | |||||||||||||||||||
Tchernavia Rocker | 1,250,000 |
The 2017 performance based award was based on a combinedtwo-year performance period and was forfeited in full. The 2018 performance based award was based on aone-year performance period and was earned at 100%. This award then vests in four equal annual installments beginning in February 2019. The 2019 performance based award is based on a combinedtwo-year performance period, and if earned, will vest in three equal annual installments beginning in February 2021. However, as disclosed above, we no longer expect the 2019 performance based awards to be earned at the target level (100%). See “—Equity Awards—Annual Equity Awards for 2019”. |
(3) | Equity grants included in this table are further described above under the “Compensation Discussion and Analysis” or below in the “Grants of Plan-Based Awards for |
33
(4) | All Other Compensation for |
Name | Insurance Premiums ($)(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 Plank | 7,129 | 1,000 | 2,500 | 0 | 7,129 | 1,040 | 0 | 0 | ||||||||||||||||||||||||
David Bergman | 7,236 | 11,000 | 2,700 | 0 | 7,236 | 11,200 | 0 | 0 | ||||||||||||||||||||||||
Kevin Eskridge | 7,129 | 11,000 | 0 | 0 | ||||||||||||||||||||||||||||
Paul Fipps | 8,317 | 11,000 | 2,500 | 0 | ||||||||||||||||||||||||||||
Colin Browne | 9,449 | 0 | 2,700 | 0 | ||||||||||||||||||||||||||||
Patrik Frisk | 0 | 11,000 | 9,433 | 4,861 | 2,759 | 11,200 | 15,140 | 13,346 | ||||||||||||||||||||||||
Tchernavia Rocker | 3,835 | 11,200 | 72,573 | 64,905 |
(a) | The insurance premiums are for supplemental disability insurance for the named executive officers. This insurance provides |
(b) | For Mr. Browne, the other compensation includes the cost of an executive health exam. For Mr. Frisk, the other compensation includes the costs of legal services provided to him and his family to obtain their U.S. citizenship and for tax services. For Ms. Rocker, the other compensation includes costs for relocation |
(c) | For Mr. Frisk |
(5) | Since Mr. |
|
32
|
Mr. Frisk joined our company in July 2017. His annual base salary for 2017 was set at $1.0 million, and in 2017 he was granted an equity award with time based vesting with a grant date fair value equal to $10.0 million (in addition to the performance based awards described in Note (2) to the table) vesting in five equal annual installments. |
(7) | Ms. Rocker joined our company in February 2019. Her annual base salary for 2019 was set at $585,000 and she was granted an equity award with time based vesting with a grant date fair value equal to $250,000 (in addition to the performance based awards described in Note (2) to the table) vesting in two equal annual installments. |
CEO Actual Compensation Realized
The supplemental table below sets forth the 2019, 2018 2017 and 20162017 compensation for Mr. Plank, our CEO, and is not a substitute for the Summary Compensation Table above. “Total Actual Compensation Realized” reports the actual value realized during the year on equity compensation, including the vesting of restricted stock units granted in prior years and the exercises of stock options granted in prior years (none were exercised). This differs from “Total” compensation as set forth in the Summary Compensation Table, which as noted above presents the grant date fair value of equity awards granted in that year. We believe this supplemental table more accurately reflects the significant impact the company’s performance has had on Mr. Plank’s compensation in past periods as compared to the Summary Compensation Table presented above. We further believe this table provides important context to our shareholdersstockholders regarding the total value delivered to Mr. Plank each year.
Year | Salary ($) | Bonus ($) | Vesting of Stock Awards ($)(1) | Exercise Of Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total Actual Compensation Realized ($) | |||||||||||||||||||||||
2018 | 26,000 | 0 | 844,984 | 0 | 2,520,000 | 10,629 | 3,401,613 | |||||||||||||||||||||||
2017 | 26,000 | 0 | 2,165,076 | 0 | 0 | 8,341 | 2,199,417 | |||||||||||||||||||||||
2016 | 26,000 | 0 | 8,520,220 | 0 | 0 | 7,575 | 8,553,795 |
Year | Salary ($) | Bonus ($) | Vesting of Stock Awards ($)(1) | Exercise Of Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total Actual Compensation Realized ($) | |||||||||||||||||||||||
2019 | 26,000 | 0 | 0 | 0 | 1,920,000 | 8,169 | 1,954,169 | |||||||||||||||||||||||
2018 | 26,000 | 0 | 844,984 | 0 | 2,520,000 | 10,629 | 3,401,613 | |||||||||||||||||||||||
2017 | 26,000 | 0 | 2,165,076 | 0 | 0 | 8,341 | 2,199,417 |
(1) | Amounts based on the closing price of our common stock on the date of vesting. Mr. Plank’s |
(2) | As of December 31, |
3334
Grants of Plan-Based Awards for 20182019
The following table contains information concerning: (1) possible payments to the named executive officers under our 20182019 annual cash incentive plan approved by the Compensation Committee in 2018;2019; and (2) estimated equity award payouts to the named executive officers in 20182019 under our Third Amended and Restated 2005 Plan.Omnibus Long-Term Incentive Plan (the “2005 Plan”). All equity awards included in the table below were for shares of our Class C common stock.
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | All Other Option Awards: Number of Securities Underlying Options (#)(4) | Exercise or Base Price of Option Award ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(5) | |||||||||||||||||||||||||||||||||||
Name and | Grant Date | Target ($) | Maximum ($) | Target (#) | ||||||||||||||||||||||||||||||||||||
Kevin Plank | 2,000,000 | 4,000,000 | ||||||||||||||||||||||||||||||||||||||
Chairman of the | 2/20/2018 | 289,436 | 15.41 | 2,000,000 | ||||||||||||||||||||||||||||||||||||
Chief Executive Officer | 2/20/2018 | 289,436 | 15.41 | 2,000,000 | ||||||||||||||||||||||||||||||||||||
David Bergman | 450,000 | 900,000 | ||||||||||||||||||||||||||||||||||||||
Chief Financial Officer | 2/20/2018 | 48,670 | 750,000 | |||||||||||||||||||||||||||||||||||||
2/20/2018 | 48,670 | 750,000 | ||||||||||||||||||||||||||||||||||||||
Kevin Eskridge | 480,000 | 960,000 | ||||||||||||||||||||||||||||||||||||||
Chief Product Officer | 2/20/2018 | 48,670 | 750,000 | |||||||||||||||||||||||||||||||||||||
2/20/2018 | 48,670 | 750,000 | ||||||||||||||||||||||||||||||||||||||
Paul Fipps | 487,500 | 975,000 | ||||||||||||||||||||||||||||||||||||||
Chief Digital Officer | 2/20/2018 | 48,670 | 750,000 | |||||||||||||||||||||||||||||||||||||
2/20/2018 | 48,670 | 750,000 | ||||||||||||||||||||||||||||||||||||||
2/20/2018 | 129,786 | 2,000,000 | ||||||||||||||||||||||||||||||||||||||
Patrik Frisk | 1,000,000 | 2,000,000 | ||||||||||||||||||||||||||||||||||||||
President and Chief Operating Officer | 2/20/2018 | 129,786 | 2,000,000 | |||||||||||||||||||||||||||||||||||||
2/20/2018 | 129,786 | 2,000,000 |
Name and Principal Position | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | All Other Option Awards: Number of Securities Underlying Options (#)(4) | Exercise or Base Price of Option Award ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(5) | |||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Target (#) | |||||||||||||||||||||||||||||||||
Kevin Plank | 1,000,000 | 2,000,000 | 4,000,000 | |||||||||||||||||||||||||||||||||
Chairman of the Board and Chief Executive Officer | 02/19/19 | 229,886 | 19.39 | 2,000,000 | ||||||||||||||||||||||||||||||||
| 02/19/19
|
| 229,886 | 19.39 | 2,000,000 | |||||||||||||||||||||||||||||||
David Bergman | 243,750 | 487,500 | 975,000 | |||||||||||||||||||||||||||||||||
Chief Financial Officer | 02/19/19 | 32,234 | 625,000 | |||||||||||||||||||||||||||||||||
02/19/19 | 32,234 | 625,000 | ||||||||||||||||||||||||||||||||||
Colin Browne | 217,610 | 435,221 | 870,442 | |||||||||||||||||||||||||||||||||
Chief Supply Chain Officer | 02/19/19 | 32,234 | 625,000 | |||||||||||||||||||||||||||||||||
02/19/19 | 32,234 | 625,000 | ||||||||||||||||||||||||||||||||||
02/19/19 | 51,573 | 1,000,000 | ||||||||||||||||||||||||||||||||||
Patrik Frisk | 500,000 | 1,000,000 | 2,000,000 | |||||||||||||||||||||||||||||||||
President and Chief Operating Officer | 02/19/19 | 103,146 | 2,000,000 | |||||||||||||||||||||||||||||||||
| 02/19/19
|
| 103,146 | 2,000,000 | ||||||||||||||||||||||||||||||||
Tchernavia Rocker | 201,825 | 403,650 | 807,300 | |||||||||||||||||||||||||||||||||
Chief People and Culture Officer | 02/19/19 | 32,234 | 625,000 | |||||||||||||||||||||||||||||||||
02/19/19 | 32,234 | 625,000 | ||||||||||||||||||||||||||||||||||
02/19/19 | 12,894 | 250,000 |
(1) | As more fully described in the “Compensation Discussion and Analysis” above, executives were eligible for a possible cash award for |
(2) | These performance based restricted stock unit and |
(3) | As described above in the “—Equity Awards—Annual Equity Awards for |
(4) | As described above in the “—Equity Awards—Annual Equity Awards for |
(5) | See Note (2) to the |
We have no employment agreements with any of our named executive officers.
3435
Outstanding Equity Awards at 20182019 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, 2018.2019. All awards represent shares of our Class C stock, except as otherwise noted.
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Title of Underlying Security(1) | Number of securities underlying unexercised options exercisable (#)(2) | Number of securities underlying unexercised options unexercisable (#)(2) | Equity incentive plan awards: number of securities underlying unexercised unearned options (#)(3) | Option exercise price ($) | Option expiration date | Title of Underlying Security(1) | Number of shares or units of stock that have not vested (#)(4) | Market value of shares or units of stock that have not vested ($)(5) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)(6) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)(5) | Grant Date | Number of securities underlying unexercised options exercisable (#)(1)(2) | Number of securities underlying unexercised options unexercisable (#)(2) | Equity incentive plan awards: number of securities underlying unexercised unearned options (#)(3) | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#)(4) | Market value of shares or units of stock that have not vested ($)(5) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)(6) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kevin Plank | 2/17/2015 | Class A | 73,748 | 36,873 | �� | 0 | 36.71 | 2/16/2025 | 2/17/2015 | 110,621 | 0 | 0 | 36.71 | 2/16/2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/17/2015 | 111,404 | 0 | 0 | 35.94 | 2/16/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/17/2015 | Class C | 74,270 | 37,134 | 0 | 35.94 | 2/16/2025 | 2/10/2017 | 122,400 | 122,399 | 0 | 19.04 | 2/9/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/10/2017 | Class C | 61,200 | 183,599 | 61,200 | 19.04 | 2/9/2027 | 2/20/2018 | 144,718 | 434,154 | 0 | 15.41 | 2/19/2028 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/20/2018 | Class C | 0 | 578,872 | 0 | 15.41 | 2/19/2028 | 2/19/2019 | 0 | 229,886 | 57,472 | 19.39 | 2/18/2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David Bergman | 2/17/2015 | Class A | 1,372 | 24,243 | 8/2/2016 | 8,723 | 167,307 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/17/2015 | Class C | 1,382 | 22,347 | 2/10/2017 | 9,848 | 188,885 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/2/2016 | Class C | 13,085 | 211,584 | 2/14/2017 | 30,912 | 592,892 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/10/2017 | Class C | 14,772 | 238,863 | 4,924 | 79,621 | 2/20/2018 | 36,503 | 700,128 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/14/2017 | Class C | 46,368 | 749,771 | 2/20/2018 | 36,503 | 700,128 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/20/2018 | Class C | 48,670 | 786,994 | 2/19/2019 | 32,234 | 618,248 | 8,059 | 154,562 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/20/2018 | Class C | 48,670 | 786,994 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kevin Eskridge | 2/17/2015 | Class A | 5,622 | 99,341 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/17/2015 | Class C | 5,663 | 91,571 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/9/2016 | Class A | 1,728 | 30,534 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/9/2016 | Class C | 1,740 | 28,136 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/2/2016 | Class C | 17,447 | 282,118 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/10/2017 | Class C | 29,543 | 477,710 | 9,848 | 159,238 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/14/2017 | Class C | 46,368 | 749,771 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/20/2018 | Class C | 48,670 | 786,994 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/20/2018 | Class C | 48,670 | 786,994 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul Fipps | 2/17/2015 | Class A | 2,194 | 38,768 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Colin Browne | 11/1/2016 | 19,601 | 375,947 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/17/2015 | Class C | 2,210 | 35,736 | 2/10/2017 | 9,848 | 188,885 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8/2/2016 | Class C | 26,170 | 423,169 | 2/14/2017 | 20,608 | 395,261 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/10/2017 | Class C | 39,391 | 636,952 | 13,131 | 212,320 | 2/20/2018 | 36,503 | 700,128 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/14/2017 | Class C | 46,368 | 749,771 | 2/20/2018 | 36,503 | 700,128 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/20/2018 | Class C | 178,456 | 2,885,634 | 2/19/2019 | 32,234 | 618,248 | 8,059 | 154,562 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/20/2018 | Class C | 48,670 | 786,994 | 2/19/2019 | 51,573 | 989,170 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patrik Frisk | 7/10/2017 | Class C | 418,192 | 6,762,165 | 65,343 | 1,056,588 | 7/10/2017 | 313,644 | 6,015,692 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/20/2018 | Class C | 129,786 | 2,098,640 | 2/20/2018 | 97,340 | 1,866,981 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/20/2018 | Class C | 129,786 | 2,098,640 | 2/20/2018 | 97,340 | 1,866,981 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/19/2019 | 103,146 | 1,978,340 | 25,787 | 494,585 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tchernavia Rocker | 2/19/2019 | 32,234 | 618,248 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/19/2019 | 12,894 | 247,307 | 8,059 | 154,562 |
(1) | The stock options granted on February 17, 2015 with the exercise price of $36.71 represent shares of our Class A Stock. Equity awards granted prior to April 2016 were for shares of our Class A stock. In April 2016, in connection with our recapitalization we paid a dividend to |
(2) | Awards in this column include both time based stock options and performance based stock options for which the performance conditions have been satisfied. The |
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(3) | Awards in this column include performance based stock options for which the performance conditions were not yet satisfied as of December 31, |
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(4) | Awards in this column include both time based restricted stock units and performance based restricted stock units for which the performance conditions have been satisfied. |
Grant Date | Vesting Schedule | |
| ||
8/2/2016 | These time based restricted stock units vest in | |
| These time based restricted stock units vest in | |
| These time based restricted stock units vest in three remaining equal annual installments beginning in August 2020. | |
2/10/2017 | These time based restricted stock units vest in two remaining equal annual installments beginning in February | |
2/14/2017 | These time based restricted stock units vest in two remaining equal annual installments beginning in February 2020. | |
2/20/2018 | These time based restricted stock units and performance based restricted stock units (which were earned in full) vest in three remaining equal annual installments beginning in February | |
2/ | These time based restricted stock units vest in four equal annual installments beginning in February | |
|
(5) | Based on |
(6) | Awards in this column include performance based restricted stock units for which the performance conditions have not yet been satisfied as of December 31, |
Option Exercises and Stock Vested in 20182019
The table below sets forth information concerning the exercise of stock options and vesting of restricted stock units for each named executive officer during 2018.2019.
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||||||||||||||||||||||||
Kevin Plank | 0 | 0 | 49,860 | 844,984 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
David Bergman | 0 | 0 | 30,611 | 514,720 | 0 | 0 | 51,830 | 1,015,709 | ||||||||||||||||||||||||
Kevin Eskridge | 0 | 0 | 48,815 | 823,386 | ||||||||||||||||||||||||||||
Paul Fipps | 0 | 0 | 47,323 | 803,718 | ||||||||||||||||||||||||||||
Colin Browne | 0 | 0 | 59,162 | 1,087,512 | ||||||||||||||||||||||||||||
Patrik Frisk | 0 | 0 | 104,548 | 2,069,005 | 0 | 0 | 169,440 | 3,056,698 | ||||||||||||||||||||||||
Tchernavia Rocker | 0 | 0 | 0 | 0 |
(1) | Value realized is calculated by multiplying the number of shares vested by the closing price our stock on the date of vesting. |
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Nonqualified Deferred CompensatonCompensation for 20182019
This table below sets forth information concerning our deferred compensation plan for each named executive officer during 2018.2019.
Name | Executive Contributions in 2018 ($) | Registrant Contributions in 2018 ($) | Aggregate Earnings in 2018 ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at 12/31/2018 ($) | Executive Contributions in 2019 ($) | Registrant Contributions in 2019 ($) | Aggregate Earnings in 2019 ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at 12/31/2019 ($) | ||||||||||||||||||||||||||||||
Kevin Plank | 0 | 0 | (113,642 | ) | 0 | 1,713,897 | 0 | 0 | 421,006 | 0 | 2,134,903 | |||||||||||||||||||||||||||||
David Bergman | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Kevin Eskridge | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||
Paul Fipps | 0 | 0 | (6,263 | ) | 0 | 65,451 | ||||||||||||||||||||||||||||||||||
Colin Browne | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||
Patrik Frisk | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||
Tchernavia Rocker | 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.
Participating employees may elect to defer from 5% to 75% of their annual base salary and 5% 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
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June 30th of the year for which incentive awards are earned. For example, to defer any 20182019 incentive award that might be payable in early 2019,2020, employees must have made an election by June 30, 2018.2019. 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 the 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 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.
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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.date (a“re-election deferral”). Employees may elect to receive a distribution upon retirement 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.employment, or employees can elect annual installments over a period of two to ten years, with the ability to execute are-election deferral. If an employee dies, we pay a distribution 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.
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 calculated assuming the termination of employment or change in control occurred on December 31, 2018.2019. All of our named executive officers, with the exception of Mr. Plank, are subject to a change in control severance agreement.
In February 2020, our Compensation Committee approved a new severance policy for senior management, pursuant to which eligible employees would be entitled to receive certain payments in connection with any termination without cause. These amounts include a lump sum payment ofone-year of annual base salary, apro-rated annual cash incentive award and in certain cases the continuation of certain benefits for aone-year period. Mr. Plank is not subject to this policy, and Mr. Frisk has previously negotiated severance provisions that remain in place and are described below. This policy was not in effect as of December 31, 2019, and therefore the table below does not include any of these amounts for our other named executive officers.
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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. The 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 2018”2019” above.
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Name | Cash Severance ($) | Benefits ($) | Vesting of Equity Awards ($) | Total ($) | Cash Severance ($) | Benefits ($) | Vesting of Equity Awards ($) | Total ($) | ||||||||||||||||||||||||
Kevin Plank | ||||||||||||||||||||||||||||||||
Change In Control Related | ||||||||||||||||||||||||||||||||
• Without Cause or for Good Reason | 439,943 | 439,943 | ||||||||||||||||||||||||||||||
• Without Cause or Good Reason | 1,653,896 | 1,653,896 | ||||||||||||||||||||||||||||||
Non-Change in Control Related | ||||||||||||||||||||||||||||||||
• Death | 439,943 | 439,943 | 1,653,896 | 1,653,896 | ||||||||||||||||||||||||||||
• Disability | 439,943 | 439,943 | 1,653,896 | 1,653,896 | ||||||||||||||||||||||||||||
David Bergman | ||||||||||||||||||||||||||||||||
Change In Control Related | ||||||||||||||||||||||||||||||||
• Without Cause or for Good Reason | 1,500,000 | 24,876 | 3,139,281 | 4,664,157 | ||||||||||||||||||||||||||||
• Without Cause or Good Reason | 1,625,000 | 68,903 | 3,585,835 | 5,279,738 | ||||||||||||||||||||||||||||
• Any Other Reason | 450,000 | 450,000 | 487,500 | 487,500 | ||||||||||||||||||||||||||||
Non-Change in Control Related | ||||||||||||||||||||||||||||||||
• Any Reason with Under Armour Enforcing aNon-Compete | 360,000 | 360,000 | 390,000 | 390,000 | ||||||||||||||||||||||||||||
• Death | 3,139,281 | 3,139,281 | 3,585,835 | 3,585,835 | ||||||||||||||||||||||||||||
• Disability | 3,139,281 | 3,139,281 | 3,585,835 | 3,585,835 | ||||||||||||||||||||||||||||
Kevin Eskridge | ||||||||||||||||||||||||||||||||
Colin Browne | ||||||||||||||||||||||||||||||||
Change In Control Related | ||||||||||||||||||||||||||||||||
• Without Cause or for Good Reason | 1,600,000 | 25,747 | 3,970,120 | 5,595,867 | ||||||||||||||||||||||||||||
• Without Cause or Good Reason | 1,450,735 | 71,147 | 4,586,015 | 6,107,897 | ||||||||||||||||||||||||||||
• Any Other Reason | 480,000 | 480,000 | 435,221 | 435,221 | ||||||||||||||||||||||||||||
Non-Change in Control Related | ||||||||||||||||||||||||||||||||
• Any Reason with Under Armour Enforcing aNon-Compete | 384,000 | 384,000 | 348,176 | 348,176 | ||||||||||||||||||||||||||||
• Death | 3,970,120 | 3,970,120 | 4,586,015 | 4,586,015 | ||||||||||||||||||||||||||||
• Disability | 3,970,120 | 3,970,120 | 4,586,015 | 4,586,015 | ||||||||||||||||||||||||||||
Paul Fipps | ||||||||||||||||||||||||||||||||
Patrik Frisk | ||||||||||||||||||||||||||||||||
Change In Control Related | ||||||||||||||||||||||||||||||||
• Without Cause or for Good Reason | 1,625,000 | 24,821 | 6,406,304 | 8,056,125 | ||||||||||||||||||||||||||||
• Without Cause or Good Reason | 3,000,000 | 65,964 | 13,706,335 | 16,772,299 | ||||||||||||||||||||||||||||
• Any Other Reason | 487,500 | 487,500 | 1,000,000 | 1,000,000 | ||||||||||||||||||||||||||||
Non-Change in Control Related | ||||||||||||||||||||||||||||||||
• Without Cause or for Good Reason | 650,000 | 650,000 | ||||||||||||||||||||||||||||||
• Without Cause or Good Reason | 2,000,000 | 33,851 | 2,033,851 | |||||||||||||||||||||||||||||
• Any Other Reason with Under Armour Enforcing aNon-Compete | 600,000 | 600,000 | ||||||||||||||||||||||||||||||
• Death | 13,706,335 | 13,706,335 | ||||||||||||||||||||||||||||||
• Disability | 13,706,335 | 13,706,335 | ||||||||||||||||||||||||||||||
Tchernavia Rocker | ||||||||||||||||||||||||||||||||
Change In Control Related | ||||||||||||||||||||||||||||||||
• Without Cause or Good Reason | 1,427,400 | 61,479 | 1,483,803 | 2,972,682 | ||||||||||||||||||||||||||||
• Any Other Reason | 403,650 | 403,650 | ||||||||||||||||||||||||||||||
Non-Change in Control Related | ||||||||||||||||||||||||||||||||
• Any Reason with Under Armour Enforcing aNon-Compete | 390,000 | 390,000 | 351,000 | 351,000 | ||||||||||||||||||||||||||||
• Death | 6,406,304 | 6,406,304 | 1,483,803 | 1,483,803 | ||||||||||||||||||||||||||||
• Disability | 6,406,304 | 6,406,304 | 1,483,803 | 1,483,803 | ||||||||||||||||||||||||||||
Patrik Frisk | ||||||||||||||||||||||||||||||||
Change In Control Related | ||||||||||||||||||||||||||||||||
• Without Cause or for Good Reason | 3,000,000 | 11,784 | 15,185,797 | 18,197,581 | ||||||||||||||||||||||||||||
• Any Other Reason | 1,000,000 | 1,000,000 | ||||||||||||||||||||||||||||||
Non-Change in Control Related | ||||||||||||||||||||||||||||||||
• Without Cause or for Good Reason | 2,000,000 | 23,567 | 2,023,567 | |||||||||||||||||||||||||||||
• Any Reason with Under Armour Enforcing aNon-Compete | 600,000 | 600,000 | ||||||||||||||||||||||||||||||
• Death | 15,185,797 | 15,185,797 | ||||||||||||||||||||||||||||||
• Disability | 15,185,797 | 15,185,797 |
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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:
any person or entity becomes the beneficial owner, directly or indirectly, of securities of Under Armour representing 50% or more of the total voting power represented by Under Armour’s then-outstanding voting securities, except for acquisitions by an Under Armour employee benefit plan or by Mr. Plank or his immediate family members;
a change in the composition of our Board occurring within atwo-year period, as a result of which fewer than a majority of the directors are incumbent directors;
the consummation of a merger or consolidation of Under Armour with any other corporation, other than a merger or consolidation where our stockholders continue to have at least 50% of the total voting power in substantially the same proportion as prior to such merger or consolidation or where our directors continue to represent at least 50% of the directors of the surviving entity; or
the consummation of the sale or disposition by us of all or substantially all of our assets.
In the change in control severance agreements and for the equity awards, the term “cause” is generally defined as:
material misconduct or neglect in the performance of duties;
any felony, an offense punishable by imprisonment, any offense involving material dishonesty, fraud, moral turpitude or immoral conduct, or any crime of sufficient importance to potentially discredit or adversely affect our ability to conduct our business;
material breach of our code of conduct;
any act that results in severe harm to us, excluding any act in good faith reasonably believed to be in our best interests; or
material breach of the agreement and the related confidentiality,non-competition andnon-solicitation agreement.
In the change in control severance agreements and for the equity awards, the term “good reason” is generally defined as:
a diminishment in the scope of duties or responsibilities;
a reduction in base salary, bonus opportunity or a material reduction in the aggregate benefits or perquisites;
relocation more than 50 miles from the executive’s primary place of business, or a significant increase in required travel;
a failure by any successor to Under Armour to assume the change in control severance agreement; or
a material breach by us of any of the terms of the change in control severance agreement.
Benefits and Payments
Upon a Change in Control
All restricted stock units and 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
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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.
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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:
accrued but unpaid salary and vacation pay (no amounts assumed based on termination date of December 31, 2018)2019);
apro-rata bonus for the year in which the change in control occurs at the higher of the average bonus paid in the two years prior to termination of employment or the target bonus for the year of such termination of employment (assumed in this case to be target bonus);
a lump sum payment equal to the sum of (1) the annual base salary of the executive at the highest rate in effect during the twelve month period following the change in control and (2) the higher of the average bonus paid in the two years prior to termination of employment or the target bonus for the year of such termination of employment (assumed in this case to be target bonus); and
for a period of up to one year after the date of termination, continuation of certain medical, life insurance and other welfare benefits unless the executive becomes eligible for another employer’s benefits that are substantially similar.
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 aone-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:
accrued but unpaid salary and vacation pay (no amounts assumed based on termination date of December 31, 2018)2019); and
apro-rata bonus for the year in which the change in control occurs (assumed in this case to be the target bonus).
Termination of employment without cause
In February 2018, Mr. Fipps executed a new confidentiality,non-competition andnon-solicitation agreement, which provided for certain payments upon the termination of his employment without cause. In the event the company terminated his employment without cause on December 31, 2018, pursuant to the terms of this agreement, Mr. Fipps would receive12-months of his annual base salary. The definition of “cause” in this agreement is materially consistent with the definition of that term in our change in control severance agreement, as described above.
Termination of employment without cause or for good reason
Upon joining our company in July 2017, Mr. Frisk’s confidentiality,non-competition andnon-solicitation agreement provided for certain payments upon the termination of his employment without cause or his resignation for good reason. In the event the company terminated his employment without cause or he resigned for good reason on December 31, 2018,2019, pursuant to the terms of this agreement, Mr. Frisk would receive24-months of his annual base salary, plus the continuation of medical benefits during the severance period. The definitions of “cause” and “good reason” in this agreement are materially consistent with the definition of those terms in our change in control severance agreements, as described above.
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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.
Disability
All restricted stock units, performance based restricted stock units (except as described below) and stock options vest upon the executive’s disability. For performance based awards that are still subject to performance conditions, the target amount of the award is earned and immediately vests on date of termination.
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. Monthly disability payments are not included in the above table because they are paid under a disability insurance policy and not by us.
Death
All restricted stock units, performance based restricted stock units (except as described below) and stock options vest upon the executive’s death. For performance based awards that are still subject to performance conditions, the target amount of the award is earned and immediately vests on date of termination.
Pursuant to SEC disclosure requirements, we are presenting the ratio of the annual total compensation for fiscal year 20182019 of Mr. Plank, our Chief Executive Officer, to that of the median of the annual total compensation for all of our employees.
We first identified our median employee by examining the total cash compensation paid during our 2017 fiscal year to employees who were employed by us on October 1, 2017 (excluding Mr. Plank). This included our full-time, part-time and seasonal employees, subject to certain exceptions for employees in foreign jurisdictions as described below. We believe that total cash compensation reasonably reflects the annual compensation of our employee population, given the limited number of our employees that receive other forms of compensation (such as equity awards). We examined our internal payroll and similar records in order to determine total cash compensation paid to our employees included in our calculations. For employees in foreign jurisdictions, we converted amounts paid in foreign currencies to U.S. dollars using the exchange rates we utilized in connection with the preparation of our 2017 annual financial statements.
As of October 1, 2017, we had approximately 14,106 employees globally, with approximately 11,350 employees located in the United States and approximately 2,756 located outside the United States. The majority of our employees are comprised of retail salespersons and distribution facility employees. As previously disclosed, for purposes of determining our median employee, we excluded employees located in certain foreign jurisdictions representing approximately 4% of our total employee population, as permitted by the SEC’s disclosure rules.
Under the SEC’s rules regarding this disclosure, a company is required to identify its median employee only once every three years so long as during the last prior fiscal year there has been no change to its employee population or employee compensation arrangements that it reasonably believes would result in a significant change in its pay ratio disclosure. In 2018, we didWe have not experienceexperienced any
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any such changes.changes since identifying our median employee. However, the employee we identified as our median employee in 2017 did not serve as an employee in 2018.2018 or 2019. In accordance with the SEC’s rules, in 2018 we have identified another employee whose compensation is substantially similar to our original median employee based on total cash compensation. This individual continued as an employee through 2019.
For calculating the ratio in 2018,2019, we determined the following:
• | Part-Time U.S. Retail Employee: The total annual compensation for our estimated median employee, who worked on average |
• | Chief Executive Officer of Under Armour: The total annual compensation for Mr. Plank was |
Based on this information, for 20182019 the ratio of the total annual compensation for Mr. Plank to our estimated median employee was approximately 605491 to 1. We believe this ratio represents a reasonable estimate calculated in a manner consistent with the SEC’s disclosure requirements under Item 402(u) of RegulationS-K, which permit the use of estimates, assumptions and adjustments in connection with the identification of our median employee. Please note that due to the flexibility permitted by these rules in calculating this ratio, our ratio may not be comparable to CEO pay ratios presented by other companies.
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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 For a discussion of the results of our 2018“say on pay” proposal from our 2019 Annual Meeting of Stockholders, 95% 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 2018 “say on pay” vote demonstrated that stockholders generally agreed with our compensation program and policies and the compensation of our named executive officers.please see “Executive Compensation—Executive Summary—Advisory Vote to Approve Executive Compensation.”
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.
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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANSPLAN INFORMATION
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, 2018:2019:
Plan Category | 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) | 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 | Class A | 2,219,460 | 8.35 | 11,731,415 | Class A | 1,647,644 | 14.85 | 11,732,941 | ||||||||||||||||||||||||||
Equity compensation plans approved by security holders | Class C | 12,462,944 | 14.82 | 16,238,658 | Class C | 10,450,611 | 16.96 | 29,864,112 | ||||||||||||||||||||||||||
Equity compensation plans not approved by security holders | Class A | 135,405 | — | — | Class A | 111,427 | — | — | ||||||||||||||||||||||||||
Equity compensation plans not approved by security holders | Class C | 136,362 | — | — | Class C | 112,215 | — | — |
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 1,396,0111,240,650 Class A and 10,489,8499,814,414 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, 20182019 includes 9,036,0869,037,612 shares of our Class A Stock and 13,455,07727,409,626 shares of our Class C Stock under our 2005 Plan and 2,695,329 shares of our Class A Stock and 2,783,5812,454,486 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 and Class C Stock and other equity awards. Refer to Note 1213 to the Consolidated Financial Statements included in our Annual Report on Form10-K for the year-ended December 31, 20182019 (our “2018“201910-K”) for a description of the material features of these plans. Please note that the amounts reflected in the table above vary from those reflected in our 201810-K due to an immaterial error included in the 201810-K, which did not properly capture the forfeiture of certain performance based equity awards issued under our 2005 Plan.
The number of securities issued upon exercise of outstanding options, warrants and rights issued under equity compensation plans not approved by security holders includes 135,405111,427 shares of our Class A Common Stock and 136,362112,215 shares of our Class C Common Stock 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.
The deferred stock units are issued to certain of our marketing 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
In accordance with SEC disclosure requirements, we have presented below transactions in which we are a party that exceeded $120,000 in 2018,2019, and in which any of our related persons had or will have a direct or indirect material interest.
Under Armour Corporate Offices
In 2015 we entered into a lease with an entity controlled by Mr. Plank to lease industrial space located near our corporate headquarters in Baltimore, which we 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 that began in April 2016. The annual lease rate was initially approximately $0.5 million, with the annual lease rate escalating 2.5% each year. For 2018,2019, our total lease payments remainedwere approximately $0.5$0.6 million. Following an independent market rent appraisal, we determined that the lease payments were 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 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.
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, with total payments of $2.0 million in 2018.2019. We determined that the lease payment rate is at the fair market value lease rate for this aircraft based on a third partythird-party appraisal. The Audit Committee determined the lease terms were reasonable and that we would benefit by the use of the aircraft for company business.
Hotel
Entities controlled by Mr. Plank and his brother Scott Plank own a hotel located in Baltimore, Maryland. The hotel is operated by a third-party management company, and Mr. Plank and his brother are entitled to receive a certain amount of any profits generated by the hotel. We utilize this hotel from time to time for Under Armour business purposes. We have negotiated corporate rate discounts for ordinary business use of the hotel with the management company, as well as market rates for event space and food and beverage for business purposes from time to time, consistent with rates otherwise available for comparable hotels in the area. Our total payments to the hotel in 2019 were approximately $130,000.
The Audit Committee approved the terms of each of the 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
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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:
whether the terms of the transaction are reasonable and fair to Under Armour and on the same basis as would apply if the transaction did not involve a related person;
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whether the transaction would impair the independence of anon-management director; and
whether the transaction would present an improper conflict of interest, taking into account the size of the transaction, the materiality of a related person’s direct or indirect interest in the transaction, and any other factors the committee deems relevant.
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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APPROVALAMENDMENT TO CHARTER PERMITTING BOARD OF THIRD AMENDED AND RESTATED 2005 OMNIBUS LONG-TERM INCENTIVE PLANDIRECTORS TO PROVIDE STOCKHOLDERS WITH THE RIGHT TO AMEND THE BYLAWS TO THE EXTENT PERMITTED IN THE BYLAWS
(PROPOSAL 3)
At a Special MeetingCurrently, each of Stockholders held on August 26, 2015, our stockholders approvedCharter and Bylaws specifically provide that our existing Second Amended and Restated 2005 Omnibus Long-Term Incentive Plan, as amended, which we refer to as our 2005 Plan. The Board of Directors believes that it is advisablehas the exclusive power to alter, amend our 2005 Plan in order to increase the sharesor repeal any provision of our Class C Stock available for issuance by an additional 15 million shares, to extend the term of the 2005 Plan, to provide for certain minimum vesting requirementsBylaws and to make certain additional technical amendmentsnew Bylaws. Our Board of Directors has declared advisable, and recommends for your approval, an amendment to reflect recent changesour Charter to Section 162(m)remove this provision, thereby allowing both directors and stockholders to amend the Bylaws in accordance with the provisions of the Internal Revenue Code, which we refer to as Section 162(m). These changes will be incorporated in the Third Amended and Restated 2005 Omnibus Long-Term Incentive PlanBylaws (the “Amended 2005 Plan”“Proposed Charter Amendment”).” The Board recommends that stockholders approve the Amended 2005 Plan.
In accordance with SEC disclosure requirements, the following is aThe description of the material featuresProposed Charter Amendment set forth above is qualified in its entirety by reference to the text of the Amended 2005 Plan. The Amended 2005 PlanProposed Charter Amendment, which is set forth in its entiretyattached as Appendix A to this Proxy Statement. The following descriptionproxy statement and summary are qualified in their entiretyis incorporated by reference herein.
Subject to Appendix A.stockholder approval of the Proposed Charter Amendment, our Board has approved an amendment to our Bylaws (the “Bylaws Amendment”), which will allow for the Bylaws to be adopted, altered or repealed by either (i) our Board or (ii) the stockholders, by the affirmative vote of a majority of the votes entitled to be cast on the matter. Approval of the Bylaws Amendment does not require stockholder action. The adoption of the Bylaws Amendment is conditioned upon the approval of the Proposed Charter Amendment at the 2020 Annual Meeting, and the Bylaws Amendment will become effective upon effectiveness of the Proposed Charter Amendment.
If this proposal is approved by the stockholders, we will cause the Articles of Amendment to be promptly filed with the State Department of Assessments and Taxation in Maryland (the “SDAT”) and the Bylaws Amendment will be concurrently effective. If the Proposed Charter Amendment is not approved by the stockholders, then Articles of Amendment will not be filed with the SDAT, the Bylaws Amendment will not become effective and our Board will continue to have the exclusive power to adopt, alter or repeal any provision of the Bylaws.
Approval of Proposal 3 requires the affirmative “FOR” vote of the holders of a majoritynot less thantwo-thirds of the votes cast on the proposal at the Annual Meeting.
Material Changes to the 2005 Plan
In connection with this approval, the Board has recommended that the 2005 Plan be amended in the following respects, and to reflect such amendments in the new Amended 2005 Plan document:
Increase the number of shares of Class C Stock reserved for issuance under the 2005 Plan by 15,000,000 shares (from 30,000,000 shares to 45,000,000 shares);
To provide that the expiration datevoting power of the Amended 2005 Plan shall be the tenth anniversary of the date such plan was approved by the Board;
To provide that awards under the Amended 2005 Plan may not vest prior to theone-year anniversary of the date of grant, subject to certain exceptions described below; and
To make certain additional technical amendments to reflect recent changes to Section 162(m).
As of March 1, 2019, 9,036,229 shares of Class A Stock and 10,867,239 shares of our Class C Stock remained available for issuance of future awards under the 2005 Plan. As discussed under the “Compensation Discussion and Analysis” section of this Proxy Statement above, 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 2005 Plan to issue awards for shares of our Class A Stock, the Compensation Committee currently intends to utilize only our Class C Stock for equity compensation going forward. Based on past trends and current expectations for possible future awards, we are recommending that an additional 15 million shares of Class C Stock be made available for issuance under the Amended 2005 Plan, sufficient to cover equity awards for the next several years. On March 1, 2019, the closing price of our Class A Stock and Class CB Stock was $22.86 and $20.41, respectively.
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Common measures for the use of stock incentive plans include the run rate and the overhang rate. The run rate measures the annual dilution from equity awards granted during a particular year. We calculate this based on all awards granted under the 2005 Plan in a given year as a percent of the number of our Class A, Class B, and Class C common shares outstanding in that year. Our run rates for 2016, 2017 and 2018 were approximately 0.99%, 1.85% and 1.28%, respectively. In February 2019, the Compensation Committee approved time-based and performance-based equity compensation awards in the form of restricted stock units and stock options for approximately 4.3 million shares of Class C Stock. We believe these are reasonable levels. The run rate may increase in future years as the number of people in our company who are eligible to receive equity awards grows, and if we continue to have equity awards as an important component of compensation for our executives and other key employees to better align their interests with the interests of our stockholders. The overhang rate is a measure of potential dilution to stockholders. We calculate this based on all unissued shares under the 2005 Plan plus outstanding stock options and stock units as a percent of the total number of shares of our Class A, Class B, and Class C Common Stock outstanding. At the end of 2018 (not including grants made in February 2019), our overhang rate was approximately 8.3%. With the increase in the number of shares reserved for issuance under the Amended 2005 Plan, our overhang rate at the end of 2018 would have been 11.7%. We believe these are reasonable levels and provide us with the appropriate flexibility to ensure meaningful equity awards in future years to our executives and other key employees to better align their interests with the interests of our stockholders.
In addition, the 2005 Plan is being amended to extend the expiration date of the plan and to include a minimum vesting period requirement ofone-year for any awards granted, subject to certain exceptions described in more detail below. The 2005 Plan is also being amended to reflect certain technical amendments designed to address changes to the Internal Revenue Code due to the enactment of the 2017 Tax Cuts and Jobs Act (the “Tax Act”) and its elimination of the tax deduction for certain qualified performance-based compensation under Section 162(m). These proposed amendments will not eliminate performance criteria for equity awards under the Amended 2005 Plan or materially impact the performance criteria that the Compensation Committee may consider when establishing performance awards under the Amended 2005 Plan.
Summary of the Amended 2005 Plan
Purpose of Amended 2005 Plan. The purpose of the Amended 2005 Plan is to enhance our ability to attract and retain highly qualified officers, directors, key employees, and other persons, and to motivate such persons to serve our company and to use maximum effort to improve the business results and earnings of our company, by providing to such persons an opportunity to acquire or increase a direct proprietary interest in the operations and future success of our company.
Administration of the Amended 2005 Plan. Our Compensation Committee has such powers and authorities related to the administration of the Amended 2005 Plan as are consistent with our corporate governance documents and applicable law. Each Compensation Committee member will be a“non-employee director” within the meaning of the exemption under Rule16b-3 of the Securities Exchange Act of 1934. Currently, our Compensation Committee is comprised of three directors who meet these independence requirements and who also qualify as independent directors under the corporate governance listing standards of the New York Stock Exchange, as well as the New York Stock Exchange’s additional independence requirements for compensation committee members. The Compensation Committee has the authority to determine, among other things, who receives awards, what type of awards are granted, the number of shares of our stock subject to an award, the terms and conditions of each award and the form of each award agreement. The Compensation Committee has the authority to amend, modify or supplement the terms of any outstanding award, to interpret and administer the Amended 2005 Plan and any award agreement and to establish rules and regulations for the administration of the Amended 2005 Plan.
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Term of the Amended 2005 Plan. Subject to shareholder approval, the Amended 2005 Plan will become effective on March 22, 2019 (the date of our Board’s approval of the Amended 2005 Plan), and will terminate on March 22, 2029 (theten-year anniversary of the effective date of the Amended 2005 Plan). Our 2005 Plan currently expires on February 17, 2025.
Amendment and Termination. Our Board of Directors may at any time amend, suspend, or terminate the Amended 2005 Plan as to any awards which have not been made. An amendment will be contingent on approval of our stockholders to the extent stated by our Board, required by applicable law or required by applicable stock exchange listing requirements. No awards will be made after termination of the Amended 2005 Plan. No amendment, suspension, or termination of the Amended 2005 Plan will, without the consent of the holder of the award, impair rights or obligations under an outstanding award.
No Repricing of Stock Options or Stock Appreciation Rights. The Amended 2005 Plan prohibits, without the approval of our stockholders, any amendment or modification of an outstanding stock option or stock appreciation right that reduces the exercise price of the award, either by lowering the exercise price or by canceling the outstanding award and granting a replacement award with a lower exercise price, or that otherwise would be treated as a repricing under the rules of the New York Stock Exchange or cause the award to be treated as deferred compensation subject to the limitations of Internal Revenue Code Section 409A. The Amended 2005 Plan further prohibits, without the approval of our stockholders, the cash repurchase of an outstanding stock option or stock appreciation right when the fair market value of a share is lower than the exercise price of such stock option or stock appreciation right.
Shares Available for Plan Awards. As noted above, the maximum number of shares of our Class A Stock authorized for issuance under the 2005 Plan was 30,000,000, with 9,036,229 shares as of March 1, 2019 remaining available for issuance of future awards, and the maximum number of shares of our Class C Stock currently authorized for issuance under the 2005 Plan was 30,000,000, with 10,867,239 shares as of March 1, 2019 remaining available for issuance of future awards. If the Amended 2005 Plan is approved, then the number of shares of Class C Stock authorized to be issued pursuant to awards under the Amended 2005 Plan will be increased to 45,000,000, resulting in 25,867,239 shares remaining available for future awards. The number of shares of our Class A Stock available for issuance under the Amended 2005 Plan will not change from the number currently available under the 2005 Plan (9,036,229 shares).
Any of the available shares may be issued pursuant to incentive stock options. The maximum number of shares of stock with respect to which stock options or stock appreciation rights may be granted in any calendar year to any one person is 2,000,000. Shares that are withheld from an award or surrendered in payment of any exercise price or taxes relating to the award will be treated as delivered and will reduce the shares available under the Amended 2005 Plan. Any shares covered by an award that are not purchased or are forfeited, settled in cash or otherwise terminated without delivery of shares to the award holder will be available for future grants under the Amended 2005 Plan. The number and class of shares available under the Amended 2005 Plan and/or subject to outstanding awards, as well as the maximum number of shares with respect to which stock options or stock appreciation rights may be granted in any calendar year to any one person, will be equitably adjusted in the event of various changes in the capitalization of our Company. See “—Performance Awards” below for the maximum number of shares of stock that may be granted under a performance based equity award, other than an option or stock appreciation right, to any one person in any calendar year.
Type of Awards. The Amended 2005 Plan authorizes awards of stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock and unrestricted stock units and dividend equivalent rights, as well as performance-based equity awards that are made subject to the
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attainment of performance goals over a performance period established by the Compensation Committee in its discretion.
Eligibility and Participation. Awards may be made to an employee, officer or director of our company or an affiliate of our company, or a consultant or adviser providing services to our company or an affiliate of our company, or any other individual whose participation is determined by the Compensation Committee to be in the best interests of our company. At December 31, 2018, we had approximately 15,000 employees.
Minimum Vesting. As noted above, the Amended 2005 Plan would provide that with respect to any future awards granted on or after the effective date, those awards may not vest, in whole or in part, prior to theone-year anniversary of the date of grant, except that the Compensation Committee may provide in the award agreement that awards vest prior to such date in the event of the grantee’s death or disability, or in connection with certain change in control transactions. Notwithstanding the foregoing, up to 5% of the shares of Class A and Class C Stock remaining available for issuance as of the effective date may be issued pursuantRecord Date and entitled to awards subject to any, or no, vesting conditions, as the Compensation Committee determines appropriate. In addition, annual awards granted to ournon-employee directors at any annual stockholders meeting may provide for vesting at the next annual stockholders meeting.
Stock Options and Stock Appreciation Rights. The Compensation Committee may award stock options, including incentive stock options andnon-qualified stock options, and stock appreciation rights to eligible persons. The committee may award stock appreciation rights in tandem with orvote thereon, voting together as a component of other awards or as stand-alone awards.single class.
Exercise Price of Stock Options and Stock Appreciation Rights. The exercise price per share of a stock option or stock appreciation right will in no event be less than 100% (or 110% in the case of an incentive stock option issued to a person who owns more than ten percent of the total combined voting power of all classes of our outstanding stock) of the fair market value per share of our Class A Stock or Class C Stock underlying the award on the grant date; provided that with respect to awards made in substitution for or in exchange for awards made by an entity we acquire, the exercise price does not need to be at least the fair market value on the date of the substitution or exchange. A stock appreciation right confers a right to receive, upon exercise, the excess of the fair market value of one share of our Class A Stock or Class C Stock, as applicable, on the date of exercise over the grant price of the stock appreciation right. The grant price may be fixed at the fair market value of a share of our Class A Stock or Class C Stock, as applicable, on the date of grant or may vary in accordance with a predetermined formula while the stock appreciation right is outstanding; provided that the grant price may not be less than the fair market value of a share of our Class A Stock or Class C Stock, as applicable, on the grant date. A stock appreciation right granted in tandem with an outstanding stock option following the grant date of such stock option may have a grant price that is equal to the stock option’s exercise price; provided, however, that the stock appreciation right’s grant price may not be less than the fair market value of a share of our Class A Stock or Class C Stock, as applicable, on the grant date of the stock appreciation right.
Vesting of Stock Options and Stock Appreciation Rights. The Compensation Committee will determine when a stock option or stock appreciation right will become exercisable and the effect of termination of service on such award, and include such information in the award agreement.
Special Limitations on Incentive Stock Options. The Compensation Committee may award incentive stock options only to an employee of our company or a subsidiary corporation of our company and only to the extent that the aggregate fair market value (determined at the time the option is granted) of the shares of our Class A Stock or Class C Stock, as applicable, with respect
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to which all incentive stock options held by the employee become exercisable for the first time during any calendar year does not exceed $100,000.
Exercise of Stock Options and Stock Appreciation Rights. A stock option may be exercised by the delivery to us of written notice of exercise and payment in full of the exercise price (plus the amount of any taxes which we may be required to withhold). To the extent permitted under the award agreement, the payment may be made through cash, delivery of shares, broker assisted cashless exercises, net exercise or in any other form consistent with applicable law. The Compensation Committee has the discretion to determine the method or methods by which a stock appreciation right may be exercised.
Expiration of Stock Options and Stock Appreciation Rights. Stock options and stock appreciation rights will expire at such time as the Compensation Committee determines; provided, however that no stock option may be exercised more than ten years from the date of grant, or in the case of an incentive stock option held by a person that owns more than ten percent of the total combined voting power of all classes of our outstanding stock, not more than five years from the date of grant.
Restricted Stock and Restricted Stock Units. At the time a grant of restricted stock or restricted stock units is made, the Compensation Committee establishes the applicable “restricted period” and any restrictions in addition to or other than the expiration of such restricted period, including the satisfaction of any performance objectives. Unless the Compensation Committee otherwise stipulates in an award agreement, holders of restricted stock will have the right to vote such stock and the right to receive any dividends declared or paid with respect to such stock. The Compensation Committee may provide that any such dividends paid must be reinvested in shares of stock, which may or may not be subject to the same restrictions applicable to such restricted stock. All distributions, if any, received by a holder of restricted stock as a result of any stock split, stock dividend, combination of shares, or other similar transaction will be subject to the restrictions applicable to the original grant. Holders of restricted stock units will have no rights as stockholders of our company. The Compensation Committee may provide that the holder of restricted stock units will be entitled to receive dividend equivalent rights, which may be deemed reinvested in additional restricted stock units.
Unless the Compensation Committee otherwise provides, upon the termination of a person’s service, any restricted stock or restricted stock units held by the person that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, will immediately be deemed forfeited.
The Compensation Committee may grant restricted stock or restricted stock units to a person in respect of services rendered and other valid consideration, or in lieu of or in addition to any cash compensation due the person.
Upon the expiration or termination of any restricted period and the satisfaction of any other conditions prescribed by the Compensation Committee, the restrictions applicable to shares of restricted stock or restricted stock units will lapse. Restricted stock units may be settled in cash or stock as determined by the committee and set forth in the award agreement.
Unrestricted Stock Awards. The Compensation Committee may grant or sell an unrestricted stock or unrestricted stock unit award to an eligible person in respect of services rendered and other valid consideration, or in lieu of or in addition to any cash compensation due the person.
Dividend Equivalent Rights. A dividend equivalent right is an award entitling a person to receive credits based on cash or stock distributions that would have been paid on the shares of our Class A Stock or Class C Stock, as applicable, if such shares had been issued to and held by the person. A dividend equivalent right may be granted as a component of another award or as a freestanding award. The terms and conditions of dividend equivalent rights will be specified in the award agreement.
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Performance Awards. Under the Amended 2005 Plan, our Compensation Committee may approve an equity award that is subject to the attainment of one or more performance goals. If an award is designated as a performance based award, the Amended 2005 Plan requires that the award be contingent upon the achievement ofpre-established, objective performance goals over a performance period established by the Compensation Committee. In establishing the performance goals, the committee must use one or more of the several business criteria listed in the Amended 2005 Plan, which include the following, and which may be applied to our company as a whole, and/or to specified subsidiaries or business units of our company: (1) total stockholder return; (2) such total stockholder return as compared to total return (on a comparable basis) of a publicly available index such as, but not limited to, a Standard & Poor’s stock index; (3) net revenues; (4) net income; (5) earnings per share; (6) income from operations; (7) operating margin; (8) gross profit; (9) gross margin; (10) pretax earnings; (11) earnings before interest expense, taxes, depreciation and amortization; (12) return on equity; (13) return on capital; (14) return on investment; (15) return on assets; (16) working capital; (17) free cash flow; and (18) ratio of debt to stockholders’ equity. Performance goals must be established in writing no later than 90 days after the commencement of the period of service to which the performance goal relates, provided that the outcome is substantially uncertain. The Compensation Committee may reduce, but not increase, the amount of the award that is earned based upon achievement of the performance goals. The Compensation Committee must certify in writing prior to grant, exercise or settlement of the award that the performance goals were in fact satisfied.
The measurement of any performance goal may include or exclude any of the following events that occur during or otherwise impact a performance period: (a) asset write-downs, (b) litigation, claims, judgments or settlements, (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) any reorganization and restructuring programs, (e) extraordinary and/or nonrecurring items as described in our financial statements or notes thereto and/or in management’s discussion and analysis of financial condition and results of operations, and in any case appearing in our annual report to stockholders for the applicable year, (f) acquisitions or divestitures, and (g) foreign exchange gains and losses.
The maximum number of shares of stock that may be granted under a performance based equity award to any one person in any calendar year is 1,000,000, other than an option or stock appreciation right (which are subject to a 2,000,000 maximum). These limitations on the maximum number of shares of stock that may be granted under various awards will be equitably adjusted in the event of various changes in the capitalization of our company.
Adjustment for Corporate Changes. The Amended 2005 Plan provides that the Compensation Committee will specify the effect of a Change in Control in the award agreement for any award. The Compensation Committee has generally provided that all restricted stock and restricted stock units and other equity awards will vest upon a change in control only if an employee is terminated without cause or for good reason (generally referred to as a “double trigger”). In the event of a recapitalization, reclassification, stock split, or other similar change affecting our stock, we will adjust proportionately and accordingly the number, class and kinds of shares for which awards may be made under the Amended 2005 Plan, including the maximum number of shares of Class A Stock or Class C Stock under a performance-based equity award or with respect to which stock options or stock appreciation rights may be granted pursuant to the Amended 2005 Plan in any calendar year to any one person, and the number, class and kind of shares for which awards are outstanding so that the proportionate interest of the person holding the award immediately following such event will, to the extent practicable, be the same as immediately before such event.
If we undergo any reorganization, merger, or consolidation with one or more other entities and there is a continuation, assumption or substitution of stock options and stock appreciation rights in connection with the transaction, any stock option or stock appreciation right previously granted will
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apply to the securities to which a holder of the number of shares of stock subject to such award would have been entitled immediately following such transaction, with a corresponding proportionate adjustment of the exercise price per share. If we undergo any such transaction and there is not a continuation, assumption or substitution of stock options and stock appreciation rights in connection with the transaction, then in the Compensation Committee’s discretion, each stock option and stock appreciation right may be canceled in exchange for the same consideration that the person otherwise would receive as a stockholder in connection with the transaction (or cash equal to such consideration) if the person held the number of shares of stock generally obtained by dividing (i) the excess of the fair market value of the number of shares of stock that remain subject to the exercise of the vested portion of such award immediately before such transaction over the total exercise price for such vested portion, by (ii) the fair market value of a share of stock on such date.
Clawback Events. The Amended 2005 Plan provides that any award subject to recovery under any law, government regulation or stock exchange listing requirement will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy we adopt pursuant to any such law, government regulation or stock exchange listing requirement) and the Compensation Committee, in its sole and exclusive discretion, may require that any award recipient reimburse us for all or part of the amount of any payment in settlement of any award.
Nontransferability of Awards. Generally, only the person who received a stock option or stock appreciation right may exercise the award and no such award will be assignable or transferable other than by will or laws of descent and distribution. However, the Amended 2005 Plan permits the Compensation Committee to adopt procedures to allow an award recipient to designate a beneficiary to exercise the rights of the recipient and receive any distribution with respect to the awards upon the recipient’s death. In addition, if authorized in the award agreement, the person may transfer, not for value, all or part of the award (other than an incentive stock option) to certain family members. Neither restricted stock nor restricted stock units may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the restricted period or prior to the satisfaction of any other restrictions prescribed by the Compensation Committee.
Tax Withholding and Tax Offset Payments. We will have the right to deduct from payments of any kind otherwise due to a person any federal, state, or local taxes of any kind required by law to be withheld with respect to the vesting of or other lapse of restrictions applicable to an award to such person, upon the issuance of any shares of stock upon the exercise of a stock option or stock appreciation right or pursuant to an award.
Registration. We intend to amend our existing registration statement on FormS-8 filed with the SEC with respect to the Amended 2005 Plan to cover shares issuable under the Amended 2005 Plan.
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Plan Benefits. The following reflects grants made during 2018 and in February 2019 under the 2005 Plan. All future awards to directors, executive officers, and employees will be made at the discretion of the Compensation Committee. Therefore, we cannot determine future benefits for any other awards under the Amended 2005 Plan at this time.
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Federal Income Tax Consequences. The following is a summary of the general federal income tax consequences to our company and to U.S. taxpayers of awards granted under the Amended 2005 Plan. Tax consequences for any particular individual or under state ornon-U.S. tax laws may be different.
Non-Qualified Stock Options and Stock Appreciation Rights. No taxable income is reportable when anon-qualified stock option or stock appreciation right is granted to a person. Upon exercise, generally, the person will have ordinary income equal to the fair market value of the underlying shares of our Class A or Class C Stock, as applicable, on the exercise date minus the exercise price. Any gain or loss upon the disposition of the stock received upon exercise will be a capital gain or loss to the person.
Incentive Stock Options. No taxable income is reportable when an incentive stock option is granted or exercised (except for persons who are subject to the alternative minimum tax, who may be required to recognize income in the year in which the incentive stock option is exercised). If the person exercises the incentive stock option and then sells the underlying shares of our Class A Stock or Class C Stock, as applicable, more than two years after the grant date and more than one year after the exercise date, the sale price minus the exercise price will be taxed as capital gain or loss. If the person exercises the incentive stock option and sells the shares before the end of thetwo- orone-year holding periods, then the person generally will have ordinary income at the time of the sale equal to the fair market value of the shares of our Class A Stock or Class C Stock, as applicable, on the exercise date (or the sale price, if less) minus the exercise price of the incentive stock option, and any additional gain on the sale will be treated as capital gain.
Restricted Stock and Restricted Stock Units. A person receiving restricted stock or restricted stock units will not have taxable income upon the grant unless, in the case of restricted stock, the person timely elects under Internal Revenue Code Section 83(b) to be taxed at that time. Instead, the person will have ordinary income at the time of vesting equal to the fair market value on the vesting date of the shares of our Class A Stock or Class C Stock, as applicable, (or cash) received.
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Unrestricted Stock and Unrestricted Stock Units. A person receiving an unrestricted stock or unrestricted stock unit award will have taxable income when the shares underlying the award are delivered equal to the fair market value of the shares on the delivery date.
Tax Effect for Our Company. We generally will receive a tax deduction for any ordinary income recognized by a person with respect to an award under the Amended 2005 Plan (for example, upon the exercise of anon-qualified stock option). In the case of incentive stock options that meet the holding period requirements described above, the person will not recognize ordinary income; therefore, we will not receive a deduction. Our deduction may also be limited by Internal Revenue Code Section 280G or Section 162(m).
Section 162(m) generally provides that a publicly traded corporation may not deduct compensation in excess of $1.0 million per year paid to the company’s “covered employees.” “Covered employee” includes (a) any individual who at any time during the taxable year is either our principal executive officer or principal financial officer, or an employee whose total compensation for the tax year is required to be reported to our shareholders because he or she is among the three highest compensated officers for the tax year (other than the principal executive officer or principal financial officer), and (b) any person who was a covered employee at any time after December 31, 2016. However, certain awards that qualified as “performance-based compensation” under Section 162(m) were not subject to such $1.0 million limitation. The performance-based compensation exception was eliminated by the Tax Act with respect to tax years beginning January 1, 2018; however, under a transition rule, compensation payable pursuant to a written binding contract that was in effect on November 2, 2017 and which is not materially modified after such date may still qualify for the performance-based compensation exception. To the extent applicable to our existing contracts and awards, the Compensation Committee may avail itself of this transition rule. However, because of uncertainties as to the application and interpretation of the transition rule, no assurances can be given at this time that our existing contracts and awards, even if in place on November 2, 2017, will meet the requirements of the transition rule. While the Compensation Committee is mindful of the benefit to our performance of full deductibility of compensation, the Compensation Committee believes that it should not be constrained by the requirements of Section 162(m) of the Code where those requirements would impair flexibility in compensating our executive officers in a manner that can best promote our corporate objectives and support our compensation philosophy. The Compensation Committee intends to continue to compensate our executive officers in a manner consistent with the best interests of the Company and our shareholders.
Approval of Proposal 3 requires the affirmative “FOR” vote of the holders of a majority of the votes cast on the proposal at the Annual Meeting.
The Board of Directors recommends that you vote “FOR” approvalthe Amendment to our Charter that would permit our Board of Directors to provide stockholders with the Amended 2005 Plan.right to amend our Bylaws to the extent permitted in the Bylaws.
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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, 2019.2020. Representatives of PwC are expected to virtually 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 20182019 and 20172018 for services rendered to Under Armour were as follows:
2018 | 2017 | 2019 | 2018 | |||||||||||||
Audit Fees | $ | 2,656,275 | $ | 3,236,797 | $ | 3,055,458 | $ | 2,656,275 | ||||||||
Audit-Related Fees | 54,400 | 78,900 | 7,360 | 54,400 | ||||||||||||
Tax Fees | 1,777,800 | 480,855 | 1,003,843 | 1,777,800 | ||||||||||||
All Other Fees | 5,040 | 4,140 | 5,040 | 5,040 |
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 fees for 2017 included additional fees associated with the implementation of a new global operating and financial reporting technology system.
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 2018,2019, audit-related fees consisted primarily of assistance with financial statement preparations, and for 2018, primarily assistance with preparations for compliance with updated lease accounting standards, and for 2017, preparations for compliance with updated revenue recognition standards.
Tax Fees
When paid, tax fees generally are for tax planning and tax advice. For 2019 and 2018, $600,000 and $1.5 million of the tax fees presented above, respectively, included professional services related to legal entity restructuring and international and domestic tax planning as a result of our business operating model changes. For 2017, tax fees primarily included assistance with tax credit reviews and consulting services in connection with our corporate structure.
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
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in sufficient detail as to the scope of services, fee and fee structure, and the impact on auditor
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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 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 20182019 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 the applicable auditing guidance.requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC.
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 BoardPCAOB 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 20182019 audited consolidated financial statements be included in our Annual Report on Form10-K for the year ended December 31, 20182019 to be filed with the SEC. The Board of Directors approved this recommendation.
A.B. Krongard, Chairman
Douglas E. Coltharp
Mohamed A.El-Erian
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RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(PROPOSAL 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, 2019.2020. PwC has served as our independent auditors since 2003. The services provided to us by PwC, along with the corresponding fees for 20182019 and 2017,2018, 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 2019.2020.
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DELINQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
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 2018. With respect to required2019, except for the filings in 2019, oneidentified below.
One statement of changes in beneficial ownership of securities on Form 4 was not made timely. On February 19, 2019, the Compensation Committeefor Karen Katz, a member of our Board, was inadvertently not filed on a timely basis. Ms. Katz received deferred stock units on January 2, 2020, as part of Directors granted two separate time based restricted stock unit awards forour regular quarterly deferral of director fees. Upon discovery of the late filing, a Form 4 was filed on March 6, 2020.
In addition, Kevin Plank filed a Form 4 after the end of the fiscal year to report that, over a period frommid-2014 through late 2016, an independent investment adviser, without Mr. Plank’s knowledge, acquired and disposed of fewer than 1,000 shares of our Class C Stockstock in a managed account. The investment advisor sold the shares of our stock at an aggregated loss. Mr. Plank reported the transactions, which involved 21 trades reportable on 17 Forms 4, when they came to Tchernavia Rocker, our Chief People and Culture Officer. One of these awards (for 12,894 shares) was inadvertently omitted from Ms. Rocker’s Form 4 filed on February 20, 2019. The award was promptly reported after the mistake was discovered on March 25, 2019.his attention.
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Stockholder proposalsOur Bylaws currently provide that in order for a stockholder to be included in our Proxy Statement pursuant to SEC rule14a-8 for our 2020 Annual Meeting of Stockholders must be received by the Secretary of Under Armour on or before November 27, 2019.
Stockholders wishing to submitnominate a proposal (including a nominationcandidate for election as a director)director at our 2021 Annual Meeting or for a stockholder to propose business for consideration at the 2020 Annual Meeting of Stockholders, but which will not be included in the Proxy Statement for suchthat meeting, must do so in accordancewritten notice complying with the termsrequirements of the advance notice provisions in our bylaws. These advance notice provisions require that, among other things, the stockholder give timely written noticeBylaws generally must be delivered to the Secretary of Under Armour, Inc., at the company’s principal executive office, not less than 90120 days norand no more than 150 days prior to the first anniversary of the date of the mailing of the notice offor the previouspreceding year’s annual meeting. Therefore, a stockholder nomination or proposal intended to be considered at the 2021 Annual Meeting of Stockholders. Forbust be received by the Secretary after November 17, 2020, Annual Meeting of Stockholders, a stockholder’s notice of a proposal will be considered timely if received no earlier than October 29, 2019 and no later than December 28, 2019.17, 2020. If a stockholder wishes to have their proposal considered for inclusion in the 2021 Proxy Statement, the Secretary must receive it no later than December 17, 2020. However, if we delay or advance mailing notice of the 20202021 Annual Meeting of Stockholders by more than 30 days from the date of the first anniversary of the 20192020 notice mailing, then such stockholder notice of proposal must be delivered to the Secretary of Under Armour not less than 90120 days nor more than 150 days prior to the date of mailing of the notice for the 20202021 Annual Meeting (or by the tenth day following the day on which we disclose the mailing date of notice for the 20202021 Annual Meeting, if that date is later).
Stockholder proposals and director nominations to be included in our Proxy Statement must comply with our Bylaws, as well as applicable SEC rules (including SEC Rule14a-8; see also Staff Legal Bulletin 14, which may be found at www.sec.gov).
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UNDER ARMOUR, INC.
THIRDSECOND AMENDED AND RESTATED
2005 OMNIBUS LONG-TERM INCENTIVE PLANARTICLES OF AMENDMENT, AS AMENDED
Under Armour, Inc., a Maryland corporation (the “Company”“Corporation”), sets forth hereinhereby certifies to the termsState Department of itsThirdSecond AmendedAssessments and Restated 2005 Omnibus Long-Term Incentive PlanTaxation of Maryland (the “Plan”“Department”).Subject to shareholder approval, tThe Plan, asherein amendedand restated, will become effective as ofMarch 22, 2019 (the“Effective Date”).the date upon which the Company first issues any shares that:
FIRST: Section (h) of Class C Shares (as defined in the Plan).
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The Plan is intended to enhance the Company’s and its Affiliates’ (as defined herein) ability to attract and retain highly qualified officers, directors, key employees, and other persons, and to motivate such officers, directors, key employees, and other persons to serve the Company and its Affiliates and to expend maximum effort to improve the business results and earningsArticle SEVENTH of the Company, by providing to such persons an opportunity to acquire or increase a direct proprietary interest in the operations and future successcharter of the Company. To this end, the Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stockCorporation (the “Charter”) is hereby deleted in its entirety and dividend equivalent rights. Any of these awards may, but need not, be made as performance incentives to reward attainment of annual or long-term performance goals in accordance with the terms hereof. Stock options granted under the Plan may benon-qualified stock options or incentive stock options, as provided herein.
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For purposes of interpreting the Plan and related documents (including Award Agreements), the following definitions shall apply:is inserted in lieu thereof:
2.1 “(h) [RESERVED]”
AffiliateSECOND” means any company or other trade or business that “controls,” is “controlled by” or is “under common control” with: The foregoing amendment to the Company within the meaning of Rule 405 of Regulation C under the Securities Act, including, without limitation, any Subsidiary.
2.2 “Award” means a grant of an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Unrestricted Stock, or Dividend Equivalent Rightsunder the Plan.
2.3 “Award Agreement” means the written agreement between the Company and a Grantee that evidences and sets out the terms and conditions of an Award.
2.4 “Board” meansCharter has been declared advisable by the Board of Directors of the Company.
2.5 “Change in Control”shall have the meaning set forth inSection 15.2.
2.6“Class A Shares” means the class A common stock, par value $.0003 1/3 per share, of the Company.
2.7“Class C Shares” means the class C common stock, par value $.0003 1/3 per share, of the Company.
2.8 “Code” means the Internal Revenue Code of 1986, as now in effect or as hereafter amended.
2.9 “Committee” means a committee of the Board comprised of at least two (2) members appointedCorporation and approved by the Board. Each Committee member shall be a“non-employee director” within the
meaning of the exemption under Rule16b-3 of the Exchange Act; provided that with respect to any Award intended to qualify as“performance-based compensation” within the meaning of Section 162(m) of the Code, as amended by the Tax Cuts and Jobs Act, that is provided pursuant to a written binding contract which was in effect on November 2, 2017, and which was not modified in any material respect on or after such date, then each Committee member shall also be an“outside director” within the meaning of Section 162(m) of the Codeand an “outside director” within the meaning of Section 162(m) of the Code.
2.10 “Company” means Under Armour, Inc., a Maryland corporation, or any successor corporation.
2.11 “Disability” means, unless otherwise stated in the applicable Award Agreement, a physical or mental condition of the Grantee with respect to which the Grantee is eligible for benefits under a long-term disability plan sponsored by the Company or an Affiliate or would be eligible if the Grantee had purchased coverage under such long-term disability plan;provided,however, that, with respect to rules regarding expiration of an Incentive Stock Option following termination of the Grantee’s Service, Disability shall mean the Grantee is unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.
2.12 “Dividend Equivalent Right” means a right, granted to a Grantee underSection 13 hereof, to receive cash, Stock, other Awards or other property equal in value to dividends paid with respect to a specified number of shares of Stock, or other periodic payments.
2.13[RESERVED]“Effective Date” This Second Amended and Restated 2005 Omnibus Long-Term Incentive Plan is effective February 17, 2015.
2.14 “Exchange Act” means the Securities Exchange Act of 1934, as now in effect or as hereafter amended.
2.15 “Fair Market Value” means the value of a share of Stock, determined as follows: if on the grant date the Stock is listed on an established national or regional stock exchange, is admitted to quotation on The Nasdaq Stock Market, Inc. or is publicly traded on an established securities market, the Fair Market Value of a share of Stock shall be the closing price of the Stock on such exchange or in such market (if there is more than one such exchange or market, the Committee shall determine the appropriate exchange or market) on the grant date (or if there is no such reported closing price, the Fair Market Value shall be the mean between the highest bid and lowest asked prices or between the high and low sale prices on such trading day) or, if no sale of Stock is reported for such trading day, on the next preceding day on which any sale shall have been reported. If the Stock is not listed on such an exchange, quoted on such system or traded on such a market, Fair Market Value shall be the value of the Stock as determined by the Committee in good faith using a reasonable valuation method in accordance with Section 409A of the Code.
2.16 “Family Member” means a person who is a spouse, former spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece, nephew,mother-in-law,father-in-law,son-in-law,daughter-in-law, brother, sister,brother-in-law, orsister-in-law, including adoptive relationships, of the applicable individual, any person sharing the applicable individual’s household (other than a tenant or employee), a trust in which any one or more of these persons have more than fifty percent(50%) of the beneficial interest, a foundation in which any one or more of these persons (or the applicable individual) control the management of assets, and any other entity in which one or more of these persons (or the applicable individual) own more than fifty percent(50%) of the voting interests.
2.17 “Grantee” means a person who receives or holds an Award under the Plan.
2.18 “Incentive Stock Option” means an “incentive stock option” within the meaning of Section 422 of the Code, or the corresponding provision of any subsequently enacted tax statute, as amended from time to time.
2.19 “Non-qualified Stock Option” means an Option that is not an Incentive Stock Option.
2.20 “Option” means an option to purchase one or more shares of Stock pursuant to the Plan.
2.21 “Option Price” means the exercise price for each share of Stock subject to an Option.
2.22 “Plan” means thisThirdSecond Amended and Restated Under Armour, Inc. 2005 Omnibus Long-Term Incentive Plan, as may be amended from time to time.
2.23 “Purchase Price” means the purchase price for each share of Stock pursuant to a grant of Restricted Stock or Unrestricted Stock.
2.24 “Restricted Stock” means shares of Stock, awarded to a Grantee pursuant toSection 10 hereof.
2.25“Restricted Stock Unit”means a bookkeeping entry representing the equivalent of shares of Stock, awarded to a Grantee pursuant toSection 10 hereof.
2.26 “SAR Exercise Price” means the per share exercise price of an SAR granted to a Grantee underSection 9 hereof.
2.27 “Section 409A” shall mean Section 409A of the Code and the regulations and other binding guidance promulgated thereunder.
2.28 “Securities Act” means the Securities Act of 1933, as now in effect or as hereafter amended.
2.29“Service” means service as a Service Provider to the Company or an Affiliate. Unless otherwise stated in the applicable Award Agreement, a Grantee’s change in position or duties shall not result in interrupted or terminated Service, so long as such Grantee continues to be a Service Provider to the Company or an Affiliate;provided,however, if any Award governed by Section 409A is to be distributed on a termination of Service, then Service shall be terminated when the Grantee has a “separation from service” within the meaning of Section 409A. Subject to the preceding sentence, whether a termination of Service shall have occurred for purposes of the Plan shall be determined by the Committee, which determination shall be final, binding and conclusive.
2.30 “Service Provider” means an employee, officer or director of the Company or an Affiliate, or a consultant or adviser currently providing services to the Company or an Affiliate.
2.31 “Stock” means, as applicable with respect to any Award, either Class A Shares or Class C Shares as designated in the applicable Award Agreement.
2.32 “Stock Appreciation Right” or “SAR” means a right granted to a Grantee underSection 9 hereof.
2.33 “Subsidiary” means any “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code.
2.34 “Termination Date” means the date upon which an Option shall terminate or expire, as set forth inSection 8.3 hereof.
2.35 “Ten Percent Stockholder” means an individual who owns more than ten percent (10%) of the total combined voting power of all classes of outstanding stock of the Company, its parent or any of its Subsidiaries. In determining stock ownership, the attribution rules of Section 424(d) of the Code shall be applied.
2.36“Unrestricted Stock”means an Award pursuant toSection 11 hereof.
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The Committee shall have such powers and authorities related to the administration of the Plan as are consistent with the Company’s certificate of incorporation and bylaws and applicable law. The Committee shall have full power and authority to take all actions and to make all determinations required or provided for under the Plan, any Award or any Award Agreement, and shall have full power and authority to take all such other actions and make all such other determinations not inconsistent with the specific terms and provisions of the Plan that the Committee deems to be necessary or appropriate to the administration of the Plan. The interpretation and construction by the Committee of any provision of the Plan, any Award or any Award Agreement shall be final, binding and conclusive. Without limitation, the Committee shall have full and final authority, subject to the other terms and conditions of the Plan, to:
(i) designate Grantees,
(ii) determine the type or types of Awards to be made to a Grantee,
(iii) determine the number of shares of Stock and class of Stock to be subject to an Award,
(iv) establish the terms and conditions of each Award (including, but not limited to, the Option Price of any Option, the nature and duration of any restriction or condition (or provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award or the shares of Stock subject thereto, and any terms or conditions that may be necessary to qualify Options as Incentive Stock Options),
(v) prescribe the form of each Award Agreement, and
(vi) amend, modify, or supplement the terms of any outstanding Award, including the authority, in order to effectuate the purposes of the Plan, to modify Awards to foreign nationals or individuals who are employed outside the United States to recognize differences in local law, tax policy, or custom.
Notwithstanding the foregoing, no amendment or modification may be made to an outstanding Option or SAR that (i) causes the Option or SAR to become subject to Section 409A, or (ii) without the approval of the stockholders of the Company, (a) reduces the Option Price or SAR Exercise Price, either by lowering the Option Price or SAR Exercise Price or by canceling the outstanding Option or SAR and granting a replacement Option or SAR with a lower Option Price or SAR Exercise Price, (b) would be treatedCorporation as are-pricingrequired under the rules of The New York Stock Exchange or the otherwise applicable stock exchange, or (c) provides for the cash repurchase of Options or SARs when the Fair Market Value of a share of Stock is lower than the Option Price of such Option or the SAR Exercise Price of such SAR; provided, that, appropriate adjustments may be made to outstanding Options and SARs pursuant toSection 15.
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No member of the Board or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan, any Award or Award Agreement.
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Notwithstanding any other provision of this Plan to the contrary, the Company may elect to satisfy any requirement under this Plan for the delivery of stock certificates through the use of book-entry.
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Subject to adjustment as provided inSection 15,from and after the Effective Date (a) the maximum number of shares of Class A Sharesauthorized under the Plan shall be 30,000,000, with 9,036,229available for issuance under the Planshall be 30.0 million, and (b) the maximum number of shares of Class C Sharesauthorized under the Plan shall be 45,000,000, with 25,867,239 available for issuance under the Planshall be 30.0 million. All such shares of Stock available for issuance under the Plan shall be available for issuance pursuant to Incentive Stock Options. Subject to adjustment as provided inSection 15 hereof, the maximum number of shares of Stock with respect to which Options or Stock Appreciation Rights may be granted pursuant to the Plan in any calendar year to any one Service Provider or other participant in the Plan shall be 2.0 million. Stock issued or to be issued under the Plan shall be authorized but unissued shares; or, to the extent permitted by applicable law, issued shares that have been reacquired by the Company.
The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments in accordance with thisSection 4. Subject to any limitations of the Code, the following shares of Stock subject to an Award shall not reduce the number of shares of Stock available for delivery in connection with future Awards under the Plan: (a) any shares of Stock that are subject to any Award which for any reason expires or is terminated, forfeited or canceled without having been fully exercised or satisfied, (b) any Award based on shares of Stock that is settled for cash, expires or otherwise terminates without the issuance of such Stock, and (c) Stock delivered under the Plan in connection with the continuation, assumption or substitution of Options and SARs pursuant toSection 15.4. To the extent that the Option Price of any Option granted under the Plan, or if pursuant toSection 16.3the withholding obligation of any Grantee with respect to an Option or other Award, is satisfied by tendering shares of Stock to the Company (by either actual delivery or by attestation) or by withholding shares of Stock, such shares of Stock shall be deemed to have been delivered for purposes of the limits set forth in thisSection 4. Upon the exercise of a SAR, the total number of Shares subject to such exercise shall reduce the number of Shares available for delivery under the Plan.
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The Plan shall be effective as of the Effective Date. No further Awards may be made under the Plan on or after the ten (10) year anniversary of the Effective Date.
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The Board may, at any time and from time to time, amend, suspend, or terminate the Plan as to any Awards which have not been made. An amendment shall be contingent on approval of the Company’s stockholders to the extent stated by the Board, required by applicable law or required by applicable stock exchange listing requirements. No Awards shall be made after termination of the Plan. No amendment, suspension, or termination of the Plan shall, without the consent of the Grantee, materially impair rights or obligations under any Award theretofore awarded;provided,however, that the Board may amend the PlanMaryland General Corporation Law (the “MGCL”) and the Committee may amend any Award or Award Agreement, either retroactively or prospectively, without the consent of the Grantee, (x) so as to preserve or come within any exemptions from liability under Section 16(b) of the Exchange Act, and/or so that any Award that is intended to qualify as performance-based compensation qualifies for such exception under Code Section 162(m), or (y) if the Board or the Committee determines in its discretion that such amendment either (I) is required or advisable for the Company, the Plan or the Award to satisfy, comply with or meet the requirements of any law, regulation, rule or accounting standard or (II) is not reasonably likely to significantly diminish the benefits provided under such Award, or that such diminishment has been or will be adequately compensated.
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Subject to thisSectionTHIRD 6, Awards may be made to: (i) any Service Provider, including any Service Provider who is an officer or director of the Company or of any Affiliate, as the Committee shall determine and designate from time to time, and (ii) any other individual whose participation in the Plan is determined to be in the best interests of the Company by the Committee.
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An eligible person may receive more than one Award, subject to such restrictions as are provided herein.
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Awards may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any award granted under another plan of the Company, any Affiliate, or any business entity acquired by the Company or an Affiliate, or any other right of a Grantee to receive payment from the Company or any Affiliate. Such additional, tandem, and substitute or exchange Awards may be granted at any time. If an Award is granted in substitution or exchange for another Award, the Committee shall have the right to require the surrender of such other Award in consideration for the grant of the new Award.
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Any Award granted after the Effective Date shall be subject to a minimum vesting period of not less than one year from the date such award is granted; provided, however, that the foregoing minimum vesting period shall not apply in connection with (a) a Change in Control, (b) termination of the Grantee’s service due to death or Disability, (c) Awards granted in substitution or exchange for an Award pursuant toSection6.3 hereof, so long as such substitute or exchange does not reduce the vesting period of the Award being replaced, (d) Awards granted tonon-employee directors of the Company at any annual shareholder meeting which provide that such Awards will vest on the date of the next annual shareholder meeting, or (e) Awards which in the aggregate cover a number of shares of Stock not to exceed five percent (5%) of the: The total number of shares of Stock available for issuancestock that the Corporation has the authority to issue is not changed by the foregoing amendment to the Charter.
FOURTH: The undersigned acknowledges these Articles of Amendment to be the corporate act of the Corporation and as to all matters or facts required to be verified under oath, the undersigned acknowledges that to the best of such officer’s knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the Planpenalties for perjury.
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IN WITNESS WHEREOF, Under Armour, Inc. has caused these Articles of Amendment to be signed and acknowledged in its name and on its behalf by itsand attested by its, as of the Effective Date, as described inSection4 hereof.day of, 2020.
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Each Award shall be evidenced by an Award Agreement, in such form or forms as the Committee shall from time to time determine. Award Agreements granted from time to time or at the same time need not contain similar provisions but shall be consistent with the terms of the Plan. Each Award Agreement evidencing an Award of Options shall specify whether such Options are intended to beNon-qualified Stock Options or Incentive Stock Options, and in the absence of such specification such options shall be deemedNon-qualified Stock Options.
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The Option Price of each Option shall be fixed by the Committee and stated in the related Award Agreement. The Option Price of each Option shall be at least the Fair Market Value on the grant date of a share of Stock;provided,however, that (a) in the event that a Grantee is a Ten Percent Stockholder as of the grant date, the Option Price of an Option granted to such Grantee that is intended to be an Incentive Stock Option shall be not less thanone hundred and ten110 percent(110%) of the Fair Market Value of a share of Stock on the grant date, and (b) with respect to Awards made in substitution for or in exchange for awards made by an entity acquired by the Company or an Affiliate, the Option Price does not need to be at least the Fair Market Value on the grant date.A-2
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Subject toSection 8.3hereof, each Option shall become exercisable at such times and under such conditions as shall be determined by the Committee and stated in the Award Agreement. For purposes of thisSection 8.2, fractional numbers of shares of Stock subject to an Option shall be rounded down to the next nearest whole number.
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Each Option shall terminate, and all rights to purchase shares of Stock thereunder shall cease, upon the expiration of ten years from the grant date, or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Committee and stated in the related Award Agreement (the “Termination Date”);provided,however, that in the event that the Grantee is a Ten Percent Stockholder, an Option granted to such Grantee that is intended to be an Incentive Stock Option at the grant date shall not be exercisable after the expiration of five years from its grant date. An Award Agreement may provide that the period of time over which an Option (other than an Incentive Stock Option) may be exercised shall be automatically extended if on the scheduled expiration date of such Option the Grantee’s exercise of such Option would violate an applicable law or the Grantee is subject to a“black-out” period; provided, however, that during such extended exercise period the Option may only be exercised to the extent the Option was exercisable in accordance with its terms immediately prior to such scheduled expiration date; provided further, however, that such extended exercise period shall end not later than thirty (30) days after the exercise of such Option first would no longer violate such law or be subject to such“black-out” period.
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Each Award Agreement at the grant date shall set forth the extent to which the Grantee shall have the right to exercise the Option following termination of the Grantee’s Service. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued, and may reflect distinctions based on the reasons for termination of Service.
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An Option that is exercisable may be exercised by the Grantee’s delivery to the Company of written notice of exercise on any business day, at the Company’s principal office, on the form specified by the Company. Such notice shall specify the number of shares of Stock with respect to which the Option is being exercised and shall be accompanied by payment in full of the Option Price of the shares for which the Option is being exercised plus the amount (if any) of federal and/or other taxes which the Company may, in its judgment, be required to withhold with respect to an Award.
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Unless otherwise stated in the related Award Agreement, an individual holding or exercising an Option shall have none of the rights of a stockholder (for example, the right to receive cash or dividend payments or distributions attributable to the subject shares of Stock or to direct the voting of the subject shares of Stock ) until the shares of Stock covered thereby are fully paid and issued to him. Except as provided inSection 15 hereof, no adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date of such issuance.
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Promptly after the exercise of an Option by a Grantee and the payment in full of the Option Price, such Grantee shall be entitled, subject toSection 3.3 hereof, to the issuance of a stock certificate or certificates evidencing his or her ownership of the shares of Stock subject to the Option.
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Except as provided inSection 8.9, during the lifetime of a Grantee, only the Grantee (or, in the event of legal incapacity or incompetence, the Grantee’s guardian or legal representative) may exercise an Option. Except as provided inSection 8.9, no Option shall be assignable or transferable by the Grantee to whom it is granted, other than by will or the laws of descent and distribution.
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If authorized in the applicable Award Agreement, a Grantee may transfer, not for value, all or part of an Option which is not an Incentive Stock Option to any Family Member. For the purpose of thisSection 8.9, a “not for value” transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic relations order in settlement of marital property rights, or (iii) a transfer to an entity in which more than fifty percent(50%) of the voting interests are owned by Family Members (or the Grantee) in exchange for an interest in that entity. Following a transfer under thisSection 8.9, any such Option shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer. Subsequent transfers of transferred Options are prohibited except to Family Members of the original Grantee in accordance with thisSection 8.9 or by will or the laws of descent and distribution. Notwithstanding the foregoing, the Committee may also provide that Options may be transferred to persons other than Family Members. The events of termination of Service ofSection 8.4 hereof shall continue to be applied with respect to the original Grantee, following which the Option shall be exercisable by the transferee only to the extent, and for the periods specified, inSection 8.4.
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An Option shall constitute an Incentive Stock Option only (i) if the Grantee of such Option is an employee of the Company or any Subsidiary of the Company; (ii) to the extent specifically provided in the related Award Agreement; and (iii) to the extent that the aggregate Fair Market Value (determined at the time the Option is granted) of the shares of Stock with respect to which all Incentive Stock Options held by such Grantee become exercisable for the first time during any calendar year (under the Plan and all other plans of the Grantee’s employer and its Affiliates) does not exceed $100,000. This limitation shall be applied by taking Options into account in the order in which they were granted.
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An SAR shall confer on the Grantee a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one share of Stock on the date of exercise over (B) the SAR Exercise Price, as determined by the Committee. The Award Agreement for an SAR shall specify the SAR Exercise Price, which may be fixed at the Fair Market Value of a share of Stock on the grant date or may vary in accordance with a predetermined formula while the SAR is outstanding; provided that the SAR Exercise Price may not be less than the Fair Market Value of a share of Stock on the grant date, except with respect to Awards made in substitution for or in exchange for awards made by an entity acquired by the Company or an Affiliate, in which case the SAR Exercise Price does not need to be at least the Fair Market Value on the grant date. SARs may be granted alone or in conjunction with all or part of an Option or at any subsequent time during the term of such Option or in conjunction with all or part of any other Award. An SAR granted in tandem with an outstanding Option following the grant date of such Option may have a SAR Exercise Price that is equal to the Option Price;provided,however, that the SAR Exercise Price may not be less than the Fair Market Value of a share of Stock on the grant date of the SAR.
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The Committee shall determine at the grant date or thereafter, the time or times at which and the circumstances under which an SAR may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the time or times at which
SARs shall cease to be or become exercisable following termination of Service or upon other conditions, the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which Stock will be delivered or deemed to be delivered to Grantees, whether or not an SAR shall be in tandem or in combination with any other Award, and any other terms and conditions of any SAR.
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At the time of grant, the Committee may, in its sole discretion, establish a period of time (a “restricted period”) and any additional restrictions including the satisfaction of corporate or individual performance objectives applicable to an Award of Restricted Stock or Restricted Stock Units. Each Award of Restricted Stock or Restricted Stock Units may be subject to a different restricted period and additional restrictions. Neither Restricted Stock nor Restricted Stock Units may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the restricted period or prior to the satisfaction of any other applicable restrictions.
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The Company shall issue, in the name of each Grantee to whom Restricted Stock has been granted, stock certificates or other evidence of ownership, subject toSection 3.3 hereof, representing the total number of shares of Restricted Stock granted to the Grantee, as soon as reasonably practicable after the grant date. The Committee may provide in an Award Agreement that either (i) the Secretary of the Company shall hold such certificates for the Grantee’s benefit until such time as the Restricted Stock is forfeited to the Company or the restrictions lapse, or (ii) such certificates shall be delivered to the Grantee,provided,however, that such certificates shall bear a legend or legends that comply with the applicable securities laws and regulations and makes appropriate reference to the restrictions imposed under the Plan and the Award Agreement.
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Unless the Committee otherwise provides in an Award Agreement, holders of Restricted Stock shall have the right to vote such Stock and the right to receive any dividends declared or paid with respect to such Stock. The Committee may provide that any dividends paid on Restricted Stock must be reinvested in shares of Stock, which may or may not be subject to the same restrictions applicable to such Restricted Stock. All distributions, if any, received by a Grantee with respect to Restricted Stock as a result of any stock split, stock dividend, combination of shares, or other similar transaction shall be subject to the restrictions applicable to the original Award.
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Restricted Stock Units may be settled in cash or Stock, as determined by the Committee and set forth in the Award Agreement.
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Holders of Restricted Stock Units shall have no rights as stockholders of the Company. The Committee may provide in an Award Agreement that the holder of such Restricted Stock Units shall be entitled to receive, upon the Company’s payment of a cash dividend on its outstanding Stock, a cash payment for each Restricted Stock Unit held equal to theper-share dividend paid on the Stock, which may be deemed reinvested in additional Restricted Stock Units at a price per unit equal to the Fair Market Value of a share of Stock on the date that such dividend is paid to shareholders.
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A holder of Restricted Stock Units shall have no rights other than those of a general creditor of the Company. Restricted Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Award Agreement.
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Unless the Committee otherwise provides in an Award Agreement or in writing after the Award Agreement is issued, upon the termination of a Grantee’s Service, any Restricted Stock or Restricted Stock Units held by such Grantee that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed forfeited, and the Grantee shall have no further rights with respect to such Award.
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The Committee may grant Restricted Stock or Restricted Stock Units to a Grantee in respect of Services rendered and other valid consideration, or in lieu of, or in addition to, any cash compensation due to such Grantee.
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Upon the expiration or termination of any restricted period and the satisfaction of any other conditions prescribed by the Committee, the restrictions applicable to shares of Restricted Stock or Restricted Stock Units settled in Stock shall lapse, and, unless otherwise provided in the Award Agreement, subject toSection 3.3 hereof, a stock certificate for such shares shall be delivered, free of all such restrictions, to the Grantee or the Grantee’s beneficiary or estate, as the case may be.
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The Committee may, in its sole discretion, grant (or sell at a Purchase Price determined by the Committee) an Award of unrestricted stock or unrestricted stock units to any Grantee pursuant to which such Grantee may receive shares of Stock free of any restrictions (“Unrestricted Stock”) under the Plan. Awards of Unrestricted Stock may be granted or sold as described in the preceding sentence in respect of Services rendered and other valid consideration, or in lieu of, or in addition to, any cash compensation due to such Grantee. The provisions ofSection 10.4 shall apply to any awards of unrestricted stock units.
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Payment of the Option Price for the shares purchased pursuant to the exercise of an Option or the Purchase Price, if any, for Restricted Stock, Restricted Stock Units or Unrestricted Stock, shall be made in cash or in cash equivalents acceptable to the Company, except as provided in thisSection 12.
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To the extent the Award Agreement so provides, payment of the Option Price for shares purchased pursuant to the exercise of an Option or the Purchase Price, if any, for Restricted Stock, Restricted Stock Units or Unrestricted Stock may be made all or in part through the tender to the Company of shares of Stock, which shall be valued, for purposes of determining the extent to which the Option Price or Purchase Price has been paid thereby, at their Fair Market Value on the date of exercise or surrender.
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To the extent permitted by law and to the extent the Award Agreement so provides, payment of the Option Price may be made all or in part by delivery (on a form acceptable to the Committee) of an irrevocable direction to a licensed securities broker acceptable to the Company to sell shares of Stock and to deliver all or part of the sales proceeds to the Company in payment of the Option Price, and any withholding taxes described inSection 16.3,on the date of exercise.
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To the extent permitted by law and to the extent the Award Agreement so provides, payment of the Option Price may be made by instructing the Committee to withhold a number of shares of Stock otherwise deliverable to the Grantee pursuant to exercise of the Option having an aggregate Fair Market Value on the date of exercise equal to the aggregate Option Price.
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To the extent the Award Agreement so provides, payment of the Option Price or the Purchase Price may be made in any other form that is consistent with applicable laws, regulations and rules.
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A Dividend Equivalent Right is an Award entitling the Grantee to receive credits based on cash or stock distributions that would have been paid on the shares of Stock specified in the Dividend Equivalent Right (or other award to which it relates) if such shares had been issued to and held by the Grantee. A Dividend Equivalent Right may be granted hereunder to any Grantee as a component of another award or as a freestanding Award. The terms and conditions of Dividend Equivalent Rights shall be specified in the Award Agreement. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of Stock, which may thereafter accrue additional equivalents. Any such reinvestment shall be at Fair Market Value on the date of reinvestment. Dividend Equivalent Rights may be settled in cash or Stock or a combination thereof, in a single installment or installments, all determined in the sole discretion of the Committee. A Dividend Equivalent Right granted as a component of another award may provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other award. A Dividend Equivalent Right granted as a component of another Award may also contain terms and conditions different from such other award. Notwithstanding any provision of thisSection 13.1 to the contrary, no Dividend Equivalent Right may provide for settlement directly or indirectly contingent upon the exercise of an Option or Stock Appreciation Right.
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Except as may otherwise be provided by the Committee either in the Award Agreement or in writing after the Award Agreement is issued, a Grantee’s rights in all Dividend Equivalent Rights shall automatically terminate upon the Grantee’s termination of Service for any reason.
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The Company shall not be required to sell or issue any shares of Stock under any Award if the sale or issuance of such shares would constitute a violation by the Grantee, any other individual exercising an Option, or the Company of any provision of any law or regulation of any governmental authority, including without limitation any federal or state securities laws or regulations. If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of any shares
subject to an Award upon any securities exchange or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance or purchase of shares hereunder, no shares of Stock may be issued or sold to the Grantee or any other individual exercising an Option pursuant to such Award unless such listing, registration or qualification shall have been effected or obtained free of any conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the date of termination of the Award. Specifically, in connection with the Securities Act, upon the exercise of any Option or the delivery of any shares of Stock underlying an Award, unless a registration statement under such Act is in effect with respect to the shares of Stock covered by such Award, the Company shall not be required to sell or issue such shares unless the Committee has received evidence satisfactory to it that the Grantee or any other individual exercising an Option may acquire such shares pursuant to an exemption from registration under the Securities Act. Any determination in this connection by the Committee shall be final, binding, and conclusive. The Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the Securities Act. The Company shall not be obligated to take any affirmative action in order to cause the exercise of an Option or the issuance of shares of Stock pursuant to the Plan to comply with any law or regulation of any governmental authority. As to any jurisdiction that expressly imposes the requirement that an Option shall not be exercisable until the shares of Stock covered by such Option are registered or are exempt from registration, the exercise of such Option (under circumstances in which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness of such registration or the availability of such an exemption.
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During any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, it is the intent of the Company that Awards and the exercise of Options granted hereunder will qualify for the exemption provided by Rule16b-3 under the Exchange Act.
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If the number of outstanding shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for a different number, class or kind of shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Effective Date, the number, class and kinds of shares for which grants of Options and other Awards may be made under the Plan, including the maximum number of shares of Stock with respect to which Options or Stock Appreciation Rights may be granted pursuant to the Plan in any calendar year to any one Service Provider or other participant in the Plan, shall be adjusted proportionately and accordingly by the Company; provided that any such adjustment shall comply with Section 409A. In addition, the number, class and kind of shares for which Awards are outstanding shall be adjusted proportionately and accordingly so that the proportionate interest of the Grantee immediately following such event shall, to the extent practicable, be the same as immediately before such event. Any such adjustment in outstanding Options or SARs shall not change the aggregate Option Price or SAR Exercise Price payable with respect to shares that are subject to the unexercised portion of an outstanding Option or SAR, as applicable, but shall include a corresponding proportionate adjustment in the Option Price or SAR Exercise Price per share. The conversion of any convertible securities of the Company shall not be treated as an increase in shares effected without receipt of consideration. Notwithstanding the foregoing, in the event of any distribution to the Company’s stockholders of securities of any other entity or other assets (including an extraordinary cash dividend but excluding anon-extraordinary dividend payable in cash or in stock of the Company) without receipt of consideration by the Company, the Company may, in such manner as the Company deems
appropriate, adjust (i) the number, class and kind of shares subject to outstanding Awards and/or (ii) the exercise price of outstanding Options and Stock Appreciation Rights to reflect such distribution.
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“Change in Control” shall mean the occurrence of any of the following:
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The Committee shall determine the effect of a Change in Control upon Awards, and such effect shall be set forth in the appropriate Award Agreement.Unless otherwise determined by the Committee, Awards that would become vested within the twelve months following the effective date of such Change in Control shall be immediately vested on such Change in Control.The Committee may provide in the Award Agreements at the time of grant, or any time thereafter with the consent of the Grantee, the actions that will be taken upon the occurrence of a Change in Control, including, but not limited to, accelerated vesting, termination or assumption. The Committee may also provide in the Award Agreements at the time of grant, or any time thereafter with the consent of the Grantee, for different provisions to apply to an Award in place of those described inSections 15.1and 15.2. Notwithstanding any other provision of thisSection 15.3, (i) no Change in Control shall trigger payment of an Award subject to the requirements of Section 409A unless such Change in Control qualifies as a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, as described in Section 409A, and (ii) any Award that
otherwise is intended to satisfy the requirements of Section 409A shall not be amended or modified (directly or indirectly, in form or operation) to the extent such amendment or modification would cause compensation deferred under the applicable Award (and applicable earnings) to be included in income under Section 409A.
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If the Company undergoes any reorganization, merger, or consolidation of the Company with one or more other entities and there is a continuation, assumption or substitution of Options and SARs in connection with such transaction, any Option or SAR theretofore granted pursuant to the Plan shall pertain to and apply to the securities to which a holder of the number of shares of Stock subject to such Option or SAR would have been entitled immediately following such reorganization, merger, or consolidation, with a corresponding proportionate adjustment of the Option Price or SAR Exercise Price per share so that the aggregate Option Price or SAR Exercise Price thereafter shall be the same as the aggregate Option Price or SAR Exercise Price of the shares remaining subject to the Option or SAR immediately prior to such reorganization, merger, or consolidation. Subject to any contrary language in an Award Agreement, any restrictions applicable to such Award shall apply as well to any replacement shares received by the Grantee as a result of the reorganization, merger or consolidation.
If the Company undergoes any reorganization, merger, or consolidation of the Company with one or more other entities and there is not a continuation, assumption or substitution of Options and SARs in connection with such transaction, then in the discretion and at the direction of the Committee, each Option and SAR may be canceled unilaterally in exchange for the same consideration that the Grantee otherwise would receive as a shareholder of the Company in connection with such transaction (or cash equal to such consideration) if the Grantee held the number of shares of Stock obtained by dividing (i) the excess of the Fair Market Value of the number of such shares which remain subject to the exercise of the vested portion of such Option or SAR immediately before such Change in Control over the total Option Price or SAR Exercise Price for such vested portion, as the case may be, by (ii) the Fair Market Value of a share of Stock on such date, which number shall be rounded down to the nearest whole number. An Option or SAR may be cancelled without consideration and without the Grantee’s consent if such Award has no value, as determined by the Committee, in its sole discretion.
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Adjustments under thisSection 15 related to shares of Stock or securities of the Company shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share.
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The making of Awards pursuant to the Plan shall not affect or limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all or any part of its business or assets.
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No provision in the Plan or in any Award Agreement shall be construed to confer upon any individual the right to remain in the employ or service of the Company or any Affiliate, or to interfere in any way with any contractual or other right or authority of the Company either to increase or decrease the compensation or other payments to any individual at any time, or to terminate any employment or
other relationship between any individual and the Company. In addition, notwithstanding anything contained in the Plan to the contrary, unless otherwise stated in the applicable Award Agreement, no Award granted under the Plan shall be affected by any change of duties or position of the Grantee, so long as such Grantee continues to be a Service Provider, if applicable. The obligation of the Company to pay any benefits pursuant to this Plan shall be interpreted as a contractual obligation to pay only those amounts described herein, in the manner and under the conditions prescribed herein. The Plan shall in no way be interpreted to require the Company to transfer any amounts to a third party trustee or otherwise hold any amounts in trust or escrow for payment to any Grantee or beneficiary under the terms of the Plan.
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Neither the adoption of the Plan nor the submission of the Plan to the stockholders of the Company for approval shall be construed as creating any limitations upon the right and authority of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or specifically to a particular individual or particular individuals), including, without limitation, the granting of stock options as the Board in its discretion determines desirable.
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The Company or an Affiliate, as the case may be, shall have the right to deduct from payments of any kind otherwise due to a Grantee any federal, state, or local taxes of any kind required by law to be withheld (i) with respect to the vesting of or other lapse of restrictions applicable to an Award, (ii) upon the issuance of any shares of Stock upon the exercise of an Option, or (iii) pursuant to an Award. At the time of such vesting, lapse, or exercise, the Grantee shall pay to the Company or the Affiliate, as the case may be, any amount that the Company or the Affiliate may reasonably determine to be necessary to satisfy such withholding obligation. Subject to the prior approval of the Company or the Affiliate, which may be withheld by the Company or the Affiliate, as the case may be, in its sole discretion, the Grantee may elect to satisfy such obligations, in whole or in part, (i) by causing the Company or the Affiliate to withhold shares of Stock otherwise issuable to the Grantee or (ii) by delivering to the Company or the Affiliate shares of Stock already owned by the Grantee. The shares of Stock so delivered or withheld shall have an aggregate Fair Market Value equal to such withholding obligations,or such greater amount up to the maximum statutory withholding rate under applicable law as applicable to such Grantee, if such other greater amount would not result in adverse financial accounting treatment as determined by the Committee. A Grantee who has made an election pursuant to thisSection 16.3 may satisfy his or her withholding obligation only with shares of Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements.
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The use of captions in this Plan or any Award Agreement is for the convenience of reference only and shall not affect the meaning of any provision of the Plan or any Award Agreement.
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Each Award Agreement may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion.
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With respect to words used in this Plan, the singular form shall include the plural form, the masculine gender shall include the feminine gender, etc., as the context requires.
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If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction.
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The validity and construction of this Plan and the instruments evidencing the Award hereunder shall be governed by the laws of the State of Maryland, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Plan and the instruments evidencing the Awards granted hereunder to the substantive laws of any other jurisdiction.
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Notwithstanding any other provisions in this Plan, any Award which is subject to recovery under any law, government regulation or stock exchange listing requirement will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Companyfrom time to time, pursuant to any such law, government regulationor, stock exchange listing requirementor otherwise), and the Committee, in its sole and exclusive discretion, may require that any Grantee reimburse the Company all or part ofthe amount of any payment in settlement of any Award granted hereunder.
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In accordance with procedures adopted by the Committee from time to time, a Grantee may designate a beneficiary to exercise the rights of the Grantee and to receive any distribution with respect to any Award upon the Grantee’s death. Each such designation shall revoke all prior designations by the same Grantee, shall be in a form prescribed by the Committee, and will be effective only when filed by the Grantee in writing with the Committee during the Grantee’s lifetime. A beneficiary, legal representative, or other person claiming any rights under the Plan shall be subject to all terms and conditions of the Plan, any applicable Award Agreement, and to any other conditions deemed appropriate by the Committee. In the absence of any such beneficiary designation, a Grantee’s unexercised Awards, or amounts due but remaining unpaid to such Grantee, at the Grantee’s death, shall be exercised or paid as designated by the Grantee by will or by the laws of descent and distribution.
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It is intended that each Award either be exempt from the requirements of Section 409A or will comply (in form and operation) with Section 409A so that compensation deferred under an applicable Award (and any applicable earnings) will not be included in income under Section 409A. Any ambiguities in this Plan will be construed to affect the intent as described in thisSection 16.11.Unless the Committee provides otherwise in an Award Agreement, each Award shall be paid in full to theGrantee no later than the fifteenth (15th) day of the third month after the end of the first calendar year in which such Award is no longer subject to a“substantial risk of forfeiture” within the meaning of Section 409A of the Code. If an Award is subject to Section 409A, the Award Agreement will satisfy the written documentation requirement of Section 409A either directly or by incorporation by reference to other documents.Notwithstanding any contrary provision in the Plan or Award Agreement, each Award that is subject to Section 409A and that is payable under the Plan to a“specified employee” (as defined under Section 409A) as a result of such employee’s separation from service shall be delayed for the first six (6) months following such specified employee’s separation from service (or, if earlier, the date of death of the specified employee) and shall instead commence (in a manner set forth in the Award Agreement) upon expiration of such delay period.The Company shall have no liability to a Grantee or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A is not
so exempt or compliant or for any action taken by the Committee or the Company and, in the event that any amount or benefit under the Plan becomes subject to interest or penalties with respect to Section 409A, responsibility for payment of such penalties shall rest solely with the Grantee and not with the Company. The Company does not make any representation to any Grantee as to the tax consequences of any Awards made pursuant to this Plan, and the Company shall have no liability or other obligation to indemnify or hold harmless the Grantee or any beneficiary for any tax, additional tax, interest or penalties that the Grantee or any beneficiary may incur as a result of the grant, vesting, exercise or settlement of an Award under this Plan.
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“Performance Award” means an Award made subject to the attainment of performance goals (as described inSection 17.3) over a performance period established by the Committee in its discretion.
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The right of a Grantee to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such performance conditions as may be specified by the Committee. The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to adjust the amounts payable under any Award subject to performance conditions, except as limited underSections 17.3hereof in the case of a Performance Award intended to qualify under Code Section 162(m).
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If and to the extent that the Committeegrants a Performance Awarddetermines that an Award to be grantedto a Granteeshould qualify as“performance-based compensation” for purposes of Code Section 162(m), the grant, exercise and/or settlement of such Performance Award shall be contingent upon achievement ofpre-established, objective performance goals and other terms set forth in thisSection 17.3.
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The performance goals for such Performance Awards shall consist of one or more business criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with thisSection 17.3. Performance goals shall be objectiveand shall otherwise meet the requirements of Code Section 162(m) and regulations thereunder. A performance goal is objective if a third party having knowledge of the relevant facts could determine whether the goal is met. The Committee may determine that such Performance Awards shall be granted, exercised and/or settled upon achievement of any one performance goal or that two or more of the performance goals must be achieved as a condition to grant, exercise and/or settlement of such Performance Awards. Performance goals may differ for Performance Awards granted to any one Grantee or to different Grantees.
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One or more of the following business criteria for the Company, on a consolidated basis, and/or specified subsidiaries or business units of the Company (except with respect to the total stockholder return and earnings per share criteria), shall be used exclusively by the Committee in establishing performance goals for such Performance Awards: (1) total stockholder return; (2) such total stockholder return as compared to total return (on a comparable basis) of a publicly available index such as, but not limited to, a Standard & Poor’s stock index; (3) net revenues; (4) net income;
(5) earnings per share; (6) income from operations; (7) operating margin; (8) gross profit; (9) gross margin; (10) pretax earnings; (11) earnings before interest expense, taxes, depreciation and amortization; (12) return on equity; (13) return on capital; (14) return on investment; (15) return on assets; (16) working capital; (17) free cash flow; and (18) ratio of debt to stockholders’ equity.
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Performance goals shall be established in writing by the Committee not later thanninety (90) days after the beginning of any performance period applicable to such Performance Awards, provided that the outcome is substantially uncertain at the time the Committee actually establishes the goal and provided that it is established at or beforetwenty-five25 percent(25%) of the performance period has elapsed, or at such other date as may be required or permitted for“performance-based compensation” under Code Section 162(m).
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The Committee may provide in any Award that any evaluation of achievement of performance goals may, among other things, include or exclude any of the following events that occur during or otherwise impact a performance period: (a) asset write-downs, (b) litigation, claims, judgments or settlements, (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (d) any reorganization and restructuring programs, (e) extraordinary and/or nonrecurring items as described in the Company’s financial statements or notes thereto and/or in management’s discussion and analysis of financial condition and results of operations, and in any case appearing in the Company’s annual report to shareholders for the applicable year, (f) acquisitions or divestitures, and (g) foreign exchange gains and losses.To the extent such inclusions or exclusions affect Awards to a Grantee, they shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility. Awards that are intended to qualify as performance-based compensation may not be adjusted upward; however, the Committee shall retain the discretion to adjust such Awards downward, either on a formula or discretionary basis, or any combination, as the Committee determines.
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Settlement of such Performance Awards shall be in cash, Stock, other Awards or other property, in the discretion of the Committee. The Committee may, in its discretion, reduce (but not increase) the amount of a settlement otherwise to be made in connection with such Performance Awards. The Committee shall specify the circumstances in which such Performance Awards shall be paid or forfeited in the event of termination of Service by the Grantee prior to the end of a performance period or settlement of Performance Awards.
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The Committee must certify in writing prior to payment of, or other event that results in the inclusion of income (for example, the vesting of Restricted Stock) from, the related compensation that the performance goals and any other material terms were in fact satisfied. Approved minutes of the Committee meeting in which the certification is made shall be treated as a written certification.
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Section 4 sets forth the maximum number of shares of Stock with respect to which Options or Stock Appreciation Rights may be granted pursuant to the Plan in any calendar year to any one Service Provider. Subject to adjustment as provided inSection 15 hereof, the maximum number of shares of Stock that may be granted to any one Service Provider under a Performance Award, other than an Option or Stock Appreciation Right, in any calendar year shall be 1.0 million.
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All determinations by the Committee as to the establishment of performance goals, the amount of any Performance Award pool or potential individual Performance Awards, and the achievement of performance goals relating to Performance Awards shall be made in writingin the case of any Award intended to qualify under Code Section 162(m).To the extent permitted by Code Section 162(m),tThe Committee may delegate any responsibility relating to such Performance Awardsto the extent permitted by the Company’s certificate of incorporation and bylaws and applicable law.
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Notwithstanding anything in the Plan to the contrary, the Committee shall administer any Awards in effect on November 2, 2017 which qualify as“performance-based compensation” under Section 162(m) of the Code, as amended the by Tax Cuts and Jobs Act (the“TCJA”), in accordance with the“grandfathering” transition rules applicable to written binding contracts in effect on November 2, 2017 and shall have the discretion to amend the Plan to conform to the TCJA, all without obtaining further approval from the Company’s shareholders (unless otherwise required by applicable law). Further, this amended and restated Plan is not intended, and shall not be deemed as amending, any such Awards to the extent it would result in the loss of deductibility under the TCJA’s“grandfathering” rules under Section 162(m) of the Code.It is the intent of the Company that Performance Awards underSection 17.3 hereof shall constitute “qualified performance-based compensation” within the meaning of Code Section 162(m) and regulations thereunder. Accordingly, the terms ofSection 17.3 and other terms used therein, shall be interpreted in a manner consistent with Code Section 162(m) and regulations thereunder. If any provision of the Plan or any agreement relating to such Performance Awards does not comply or is inconsistent with the requirements of Code Section 162(m) or regulations thereunder, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements. In addition, in the event that changes are made to Code Section 162(m) to permit greater flexibility with respect to any Performance Awards, the Committee may make any adjustments to the process described inSection 17.3 it deems appropriate.
RECONCILIATION OFNON-GAAP FINANCIAL MEASURES
This Proxy Statement refers to “adjusted operating income” and “2018 restructuring adjusted operating income,” which isare considered anon-GAAP financial measure,measures, as defined by SEC Regulation G. We have provided below a reconciliation of this measurethese measures to the most directly comparable financial measure calculated in accordance with GAAP. We believe thisthesenon-GAAP financial measuremeasures may be useful in evaluating our financial information and comparing year-over-year performance, and we have incorporated this measurecertain of these measures into certain of our executive compensation programs. However, this measurethese measures 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, operating income, adjusted to exclude the impact of certain specified items for purposes of evaluating performance against compensation targets, including the impact of certain goodwill impairment charges, the impact of restructuring and other related charges, litigation related expenses, foreign exchange losses and charges related to the write-down of our 2018 restructuring plan.
accounts receivable asset due to customer bankruptcies, collectively the “2019 Adjustments”. The following table provides a numerical reconciliation of adjusted operating income to income from operations (in millions):
Year Ended December 31, 2019 | ||||
Income from operations (GAAP) | $ | 237 | ||
Add: 2019 Adjustments | $ | 2 | ||
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Adjusted operating income(Non-GAAP) | $ | 239 |
For purposes of this Proxy Statement, we define 2018 restructuring adjusted operating income as our reported income from operations, adjusted to exclude the impact of our 2018 restructuring plan. The following table provides a numerical reconciliation of 2018 restructuring adjusted operating income to loss from operations (in millions):
Year Ended December 31, 2018 | Year Ended December 31, 2018 | |||||||
Loss from operations (GAAP) | $ | (25) | $ | (25 | ) | |||
Add: Impact of 2018 restructuring plan | $ | 204 | $ | 204 | ||||
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Adjusted operating income(Non-GAAP) | $ | 179 | ||||||
2018 restructuring adjusted operating income(Non-GAAP) | $ | 179 |
B-1
UNDER ARMOUR, INC. ATTN: CORPORATE SECRETARY
| VOTE BY INTERNET Before The Meeting- Go towww.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 | |||
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You may attend the | ||||
VOTE BY PHONE - 1-800-690-6903 | ||||
Use any touch-tone telephone to transmit your voting instructions up until 11:59 | ||||
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: | D05954-P36856 KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
UNDER ARMOUR, INC. |
For All |
Withhold All |
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 | |||||||||||||||||||||||||||||||||
Kevin A. Plank | ||||||||||||||||||||||||||||||||||
Patrik Frisk 07) Karen W. Katz | ||||||||||||||||||||||||||||||||||
The Board of Directors recommends you vote FOR proposals | For | Against | Abstain | |||||||||||||||||||||||||||||||
2. | To approve, by a non-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. | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||
3. | To approve the Amendment to our | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||
4. | Ratification of appointment of independent registered public accounting firm. | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||
NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | ||||||||||||||||||||||||||||||||||
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Form 10-K, Notice & Proxy Statement is available atwww.proxyvote.com
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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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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Signature [PLEASE SIGN WITHIN BOX]
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Form 10-K Notice & Proxy Statement isare available atwww.proxyvote.com.
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D05955-P36856 | ||||||||||||||
UNDER ARMOUR, INC. Annual Meeting of Stockholders May This proxy is solicited by the Board of Directors
CLASS
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
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, “FOR” Proposal 3 and “FOR” Proposal 4.
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 1020 HULL STREET BALTIMORE, MARYLAND 21230 | VOTE BY INTERNET Before The Meeting- Go towww.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 cut-off date or 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. | |||
During The Meeting -Go towww.virtualshareholdermeeting.com/UAA2020 | ||||
You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. | ||||
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 cut-off date or 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: | D05956-P36856 KEEP THIS PORTION FOR YOUR RECORDS |
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
UNDER ARMOUR, INC. | For All | Withhold All | 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: | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||
1. | Election of Directors | |||||||||||||||||||||||||||||||||
Nominees: | ||||||||||||||||||||||||||||||||||
01) | Kevin A. Plank 02) George W. Bodenheimer 03) Douglas E. Coltharp 04) Jerri L. DeVard 05) Mohamed A. El-Erian | |||||||||||||||||||||||||||||||||
06) | Patrik Frisk 07) Karen W. Katz 08) Eric T. Olson 09) Harvey L. Sanders | |||||||||||||||||||||||||||||||||
The Board of Directors recommends you vote FOR proposals 2, 3 and 4: | For | Against | Abstain | |||||||||||||||||||||||||||||||
2. | To approve, by a non-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. | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||
3. | To approve the Amendment to our Charter that would permit our Board of Directors to provide stockholders with the right to amend our Bylaws to the extent permitted in the Bylaws. | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||
4. | Ratification of appointment of independent registered public accounting firm. | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||
NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | ||||||||||||||||||||||||||||||||||
Yes | No | |||||||||||||||||||||||||||||||||
Please indicate if you plan to virtually 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. | ||||||||||||||||||||||||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Form 10-K are available atwww.proxyvote.com.
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D05957-P36856 | ||||||||||
UNDER ARMOUR, INC. Annual Meeting of Stockholders May 27, 2020 10:00 AM 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, Inc. to be held on May 27, 2020, and at any adjournment or postponement thereof. The undersigned acknowledges receipt of notice of the meeting and the proxy statement. 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, “FOR” Proposal 3 and “FOR” Proposal 4. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. | ||||||||||
Continued and to be signed on reverse side |