Under Armour annual meeting is different

May 09, 2007|By Andrea K. Walker | Andrea K. Walker,Sun reporter

Sports highlights blared from the big-screen television to the tune of hip-hop beats at the Inner Harbor's ESPN Zone yesterday morning.

But the 100 or so men and women watching from leather lounge chairs, seats at the bar and restaurant tables were there for the annual shareholders' meeting of Under Armour - not to catch up on the night-before scores.

Baltimore-based Under Armour has done what few thought possible, carving a niche in the crowded sportswear market with its gear that wicks sweat from the body to control temperature. And yesterday, the company defied conventional wisdom once again, hosting an annual meeting far different from the run-of-the-mill affairs in hotel conference rooms held by most companies.

The venue wasn't the only major difference for a company that went public two years ago and has watched its stock price fluctuate as it copes with the demands and expectations from Wall Street.

President and Chief Executive Officer Kevin A. Plank and his executive team wore khakis and collared shirts with the Under Armour logo rather than traditional suits.

Many annual meetings have become short, scripted events where shareholders are discouraged from asking questions and debate is discouraged.

Home Depot, for example, was widely criticized last year for an annual meeting with no questions, no vote counts and was attended by no outside directors.

By comparison, Under Armour executives held a lively question-and-answer period with shareholders yesterday.

They followed the crowd last year when Under Armour held its first-ever annual meeting as a public company at a Baltimore hotel.

But Plank said yesterday that holding this year's event at a sports restaurant was a better fit. The meeting and "everything we do should be an impression of the Under Armour brand," Plank said.

He added that it was cheaper to hold it there instead of a hotel.

The meeting started with an introductory video showing clips of sports teams - from college football to middle school lacrosse - wearing Under Armour gear.

"We Must Protect This House!" a loud voice boomed at the end of the video, highlighting one of the company's popular advertising campaigns.

Short voting agenda

Company executives then proceeded to the meeting's voting agenda, which lasted about five minutes. Kevin M. Haley, general counsel, announced that votes showed shareholders approved the board of directors, and that PricewaterhouseCoopers was selected as Under Armour's accounting firm.

Then Plank and Wayne A. Marino, Under Armour's chief financial officer, spelled out the successes for the year and goals for the future. Between talks about gross margins, international expansion and distribution plans, shareholders watched the company's latest commercials, which have been heralded for their entertainment value as well as their advertising.

There was one of Olympic softball pitcher Cat Osterman throwing a ball at wicked speed. Another was the latest in the popular "click clack" campaign, featuring University of South Carolina football coach Steve Spurrier barking into a cell phone about a player.

Later, shareholders peppered Plank and Marino with questions.

Will the weakened dollar raise manufacturing costs, asked one shareholder.

Power of volume

"Our volume has offset any of that," Marino answered.

One shareholder wanted to know if the company was going to develop a line of running shoes. Plank wasn't divulging, although he said the company has announced it would soon introduce noncleated footwear.

Another wanted to know why there was so much focus on athletes and not regular people in the marketing campaigns. Plank said athletes helped authenticate the brand as one of performance for athletes. And that regular people also wear the brand.

"They don't want to look like fans, they want to look like athletes," Plank said. "That's why we see so many people wearing jerseys."

One shareholder inquired about earnings pressure from Wall Street. Under Armour's stock has increased about 77 percent since the company went public Nov. 18, 2005 - it closed that day at $25.30.

But it has fluctuated around earnings time. Most recently it dropped 8.7 percent on May 2, after the company gave second- quarter earnings expectations below what analysts expect. The stock closed yesterday at $45.12. It reached a 52-week high of $54 in December.

Liking ESPN Zone

After the meeting, shareholders said they liked the setting that Under Armour chose.

Denniz Hardy began investing in Under Armour stock for his son Grant, 15, about eight months ago. The teenager heard his friends talking about Under Armour's debut of its football cleat and knew it would be popular.

"ESPN Zone translates to what the company does and is much better than a rented ballroom," Denniz Hardy said.

andrea.walker@baltsun.com

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