Lululemon Adds Two Wilson Nominees, Ends Proxy Fight
Lululemon settled its boardroom dispute with founder Chip Wilson, appointing two of his nominees to the board in exchange for his silence.
Atlas Newsdesk ·
Lululemon Athletica has reached a settlement with founder Chip Wilson to end a high-profile boardroom dispute, agreeing to appoint two of his nominees to the company’s board. The agreement was announced May 27 and is set to take effect after the annual meeting on June 25. As part of the deal, Wilson agreed to stop publicly criticizing the company for about 18 months.
Wilson, who owns an 8.7% stake, had publicly questioned the company’s direction and performance while pressing for board changes. Lululemon said the settlement allows it to focus on business execution as it prepares for a leadership transition later this year.
Lululemon shares rose 3.5% in premarket trading after the announcement.
Board appointments and remaining vacancy
Lululemon said Marc Maurer, a former co-CEO of On Holding, and Laura Gentile, a former chief marketing officer of ESPN, will join the board following the June 25 annual meeting. Both executives were nominated by Wilson.
The company said a third director will be selected jointly by Lululemon and Wilson and is expected to bring product and brand expertise. That appointment is scheduled to be made by Oct. 1.
In exchange for the appointments, Wilson agreed to a contractual clause that caps his stake while the agreement is in effect, and he also agreed not to disparage the company for roughly 18 months.
Leadership transition and terms of the settlement
The settlement comes as Lululemon prepares for CEO Heidi O’Neill, a former Nike executive, to start in September. Lululemon has framed the board changes as part of efforts to strengthen performance and positioning during the transition.
The company said the agreement also includes an expense reimbursement arrangement in the form of a donation that will support athletics, art, and landscaping at Kitsilano Beach in Vancouver, where Lululemon was founded.
Investors will be watching whether the new directors and the planned third appointment translate into changes in strategy or oversight as the company enters the next phase under its incoming CEO.