One of my favorite companies is often neglected by other investors because of certain valuation metrics. It looks expensive, always seems to have too much inventory, and doesn't wow with a lot of sales per square foot. While these things are important when fully evaluating a company, I still like it when I look beyond the numbers. I like its creative partnership with its flagship university. I like its growth potential overseas. And I really like the way Under Armour (NYSE: UA) compensates CEO Kevin Plank.

From humble beginnings
Started when Plank was tired of being drenched in sweat after football practices at the University of Maryland, Under Armour has grown into an athletic apparel company that last year exceeded $1 billion in revenue for the first time. Helping it reach that milestone were Plank's dynamic leadership and his desire to be compensated based on the company's growth. In 2008, Plank reduced his annual salary from $500,000 to $26,000, believing that he should be compensated based on the company's performance according to certain metrics. As the company's largest individual shareholder, he truly benefits with the performance of the company.

A comparison
Under Armour is not alone in compensating CEOs using incentives, but is alone in compensating its CEO based almost entirely on performance:


Base Salary

and Other Compensation

Stock and Option 

Total Compen-

% of Compen-
sation Incentive-

Under Armour $26,000 $1,293,009 N/A $1,319,009 98.0%
lululemon athletica (Nasdaq: LULU) $575,035 $679,176 $2,218,678 $3,472,889 19.6%
Nike (NYSE: NKE) $1,475,000 $4,633,561 $7,010,273 $13,118,834 35.3%
Columbia Sportswear (Nasdaq: COLM) $830,192 $1,455,174 N/A $2,285,366 63.7%
Gap (NYSE: GPS) $1,500,000 $2,635,077 $1,810,833 $5,945,910 44.3%

Source: Company proxy statements. All figures from 2010 for comparison.

The CEO is only one executive, and many of the other executives at Under Armour are paid similarly to the other CEOs on this list. That being said, Plank truly does have incentive for the company to meet its stated goals every year, otherwise he's not making much more than a full-time employee at an Under Armour outlet store.

These incentives appear to be working
Since Kevin Plank reduced his base salary to $26,000, Under Armour has performed well. Its revenues increased more than 75%, from just over $606 million in 2007 to $1.064 billion in 2010. Its share price has increased more than 70% across the same time frame, pushing Plank's net worth over $1 billion in the process.

The company expanded beyond performance apparel into athletic shoes, and signed athletes like quarterback Tom Brady and basketball star Kemba Walker. It scores a six out of 10 in one hunt for the perfect stock and may be poised to pop. And Plank will continue to be incentivized to continue along this growth path.

After another quarter of 40% revenue growth, Under Armour truly is a company to keep an eye on. Should it continue to beat expectations, Plank and investors alike will continue to make money. If you want to keep an eye on this company, be sure to add Under Armour to your free Fool watchlist today.