Successful founders are inspirational leaders who come up with breakthrough business ideas which they are able to operationalize successfully in the market. We often see founder-led companies go through a maturity cycle as they keep their incredible hyper growth and execution culture while adding enough process, procedure and infrastructure to support and sustain the accelerated growth.
Part of the maturation process is bringing in seasoned board members. Sometimes there can be a gap between what professional and experienced board members assume and expect to be in place in terms of internal controls and what is actually in place. This appears to be what happened at Under Armour.
Certainly, a professional board like Under Armour’s would naturally expect there would be a clear policy in place for what constitutes as a CEO professional business expense and what should be considered a personal expense.
When companies go through hyper-growth entrepreneurs who have not been part of public companies before can struggle to understand that what may be acceptable for a private company may not be permissible at a public company. CEO’s have to grapple with the fact that although they may still feel a strong sense of ownership of the company, once they go public and take the investors’ money they cross the chasm and they need to embrace a new level of accountability. This accountability includes having a clear policy of what constitutes a legitimate use of a company resource versus a private use.
The allegations raised about Under Armour’s CEO, Kevin Plank using the company plane for private business and having a questionable relationship with an outsider that could be influencing company decisions are the type of “low hanging fruit” that anyone who scrutinizes the company will zero in on first.
It is embarrassing and hurts the CEO and the company’s reputation and calls into question the overall internal controls.
It is always unfortunate to have to learn a lesson again that so many others have stumbled over. My purpose in sharing this is that it would be valuable for board members on these fabulous founder led companies to have their audit committees pull expenses and create clarity and a bright line on use of company assets once a company goes public.
This latest misstep comes just a few months after Under Armour made headlines when the company’s employees were told that the longstanding practice of paying for senior executive’s visits to strip clubs would no longer be tolerated.
In a world of #MeToo where there is zero tolerance, companies need to re-enforce in their code of conduct and tone at the top that there is entirely too much downside risk for the brand and the shareholders for any activity that you wouldn’t want your mother to read about on the front page of the Wall Street Journal.
It is unfortunate that as the CEO and leader of the company, Mr. Plank, is presented in the press as not setting the right tone and behavioral standard. The board at Under Armour should review the media blunders the company has suffered over the last year and take it as a “learnable moment” and seize the opportunity to reassess the company’s policies, update the code of conduct, and reinforce at every level of the organization the importance of having a clear line between professional and private matters to avoid any potential conflict.