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Under Armour Inc. faces a pair of shareholder suits over its CEO’s real estate transactions that allegedly benefited him at the company’s expense.
Kevin A. Plank, founder, controlling stockholder, and CEO of Baltimore-based UA, “covertly” bought land in the city then sold it to the company for more than twice the price, according to an April 30 investor complaint in the U.S. District Court for the District of Maryland. Another shareholder made similar allegations related to the company’s purchase of land for its new headquarters in an April 16 complaint in the same court. Both complaints are derivative, meaning they were brought on behalf of the company.
The investors wrote to UA’s board in both cases, demanding it investigate Plank’s alleged breaches of fiduciary duty, according to the complaints. The UA board formed a group to review the allegations and ultimately found no wrongdoing, the complaints said.
While looking to solve UA’s space constraints, Plank and the company publicly implied they’d be staying in the neighborhood of the existing headquarters, the investors said. Instead, Plank allegedly bought land in a different neighborhood, leased it to UA for new headquarters and, a couple years later, sold it to UA for twice his original purchase price. Plank also used UA’s headquarters relocation to further his plans for additional development in the area, the complaints said.
UA also leases industrial space, an airplane, and a helicopter from Plank, according to the complaints. UA’s media relations team didn’t immediately respond to a Bloomberg Law request for comment.
The board-appointed group that investigated the allegations reached findings that were “unreasonable and lacked good faith,” according to the April 30 complaint. The UA board’s response “did not follow the process required by Maryland law,” the April 16 complaint said. The report’s findings contradict the public record surrounding the real estate transactions, according to the investors. In failing to provide a truly independent review of Plank’s alleged breaches, the board breached its fiduciary duties, as well, the investors said.
The cases are King v. Plank , D. Md., No. 1:18-cv-01264, complaint filed 4/30/18 and Mioduszewski v. Plank , D. Md., No. 1:18-cv-01084, complaint filed 4/16/18 .
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