Under Armour will delay a planned two-for-one stock split, which would create a new class of stock without voting rights, until a shareholder lawsuit objecting to the split is resolved, the company announced Friday.
The class action lawsuit, filed in Baltimore Circuit Court, seeks to block the company's plan, which would perpetuate Under Armour founder and CEO Kevin Plank's personal control of the Baltimore-based athletic apparel-maker.
The split, announced in mid-June, would give owners of each existing share of common stock one new share of the new nonvoting class, effectively diluting the voting power of shareholders.
Critics savaged the split, saying it disempowered shareholders to Plank's advantage. In announcing the split, the company pointed out that Under Armour's stock has appreciated significantly under Plank's leadership and control.
Shareholders still must approve the proposed stock split at a special meeting Aug. 26.
In a filing with the U.S. Securities and Exchange Commission on Friday, Under Armour said it reached an agreement with the plaintiffs to put off the split until 10 business days after a judgment is entered in the case.
Three lawsuits on behalf of stockholders have been consolidated into one on behalf of plaintiff Pedro Ramirez Jr. of Riverside, Conn., who filed the original complaint on June 18. It names the company, Plank and members of Under Armour's board of directors as defendants.
The suit alleges that the Under Armour board breached its fiduciary duty to shareholders by approving the new class of stock.
The dispute has had little effect on the company's stock, which closed over $100 a share at $100.23 each on Friday, up 83 cents for the day.