TLDR
- Lululemon tried to settle with founder Chip Wilson last week but talks broke down over his escalating demands
- Wilson wanted three board seats, including two immediate appointments and quarterly CEO meetings
- The board called Wilson’s views “outdated” and said his nominees would “downgrade” board expertise
- Incoming CEO Heidi O’Neill, former Nike executive, is at the center of the dispute
- Shareholders vote on competing board nominees at the annual meeting on June 25
Lululemon (LULU) stock was trading up about 1.84% at $121.34 on Monday, even as the company disclosed a failed attempt to settle its proxy fight with founder Chip Wilson.
Lululemon Athletica Inc., LULU
In a regulatory filing Monday, Lululemon said it had delayed its definitive proxy statement hoping to reach a deal with Wilson. Those talks fell apart last week.
The company said Wilson’s counterproposal was “a significant departure from what had been discussed.” He wanted three director seats — two appointed immediately from his own nominees, and a third chosen from a pool he selected. He also asked for quarterly meetings with the incoming CEO.
The board didn’t hold back in its response. It called Wilson’s perspectives “outdated” and said he had “troubling conflicts of interest.”
“Electing any of Mr. Wilson’s nominees would endorse his misguided perspectives, significantly downgrade the Board’s skills and expertise, and jeopardize the ability of the leadership team,” the board’s letter read.
Wilson founded Lululemon in 1998 and left the board in 2015. He remains one of the company’s largest shareholders and has been openly critical of the brand’s direction, product strategy, and leadership decisions.
What Wilson Wants
Wilson has said the brand has lost its “cool” factor. He is backing a slate of three board nominees and wants a bigger say in how the company is run going forward.
A representative for Wilson was not immediately available for comment Monday.
The fight has centered heavily on Lululemon’s CEO hire. The company appointed Heidi O’Neill, a former Nike executive, to lead its next phase of growth. Wilson has questioned whether that was the right call.
The board defended O’Neill, arguing she brings the experience needed to strengthen the brand globally.
The Bigger Picture for LULU
Lululemon has also added two new directors to its board in recent months as part of its own refresh.
The stock, however, tells a rougher story. LULU is down more than 40% year to date. It dropped further in April after O’Neill’s appointment was announced.
The company has been working through a difficult period, facing changing consumer tastes and stiff competition in the athleisure space.
Shareholders will vote on the competing board nominees at the annual meeting on June 25.
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