Lululemon announced on May 27 it has settled a proxy contest with founder Chip Wilson, who holds about 8.7% of the company, ending a dispute that began late last year [1, 2, 3, 4]. Under the deal, the company will add two of Wilson’s board nominees: Laura Gentile, former ESPN chief marketing officer, and Marc Maurer, former co-CEO of athletic brand On [1, 2, 3, 4].
The parties also agreed to appoint a third director with product and brand expertise in apparel by October 1, subject to mutual approval [1, 3, 4]. Wilson has accepted an approximately 18-month standstill clause that bars him from publicly criticizing Lululemon during that period [1, 3, 4].
Instead of reimbursing Wilson’s proxy expenses, Lululemon will make a charitable donation to support athletics, art, and landscaping at Vancouver’s Kitsilano Beach [1, 3, 4]. The announcement sparked about a 4% rise in Lululemon shares in premarket trading [1, 3, 4].
Wilson had accused Lululemon of losing creativity and product innovation, while the board responded that his views were outdated and conflicted with company interests [1, 3, 4]. He stopped serving on the board over a decade ago but had nominated three opposing candidates, two of whom were accepted previously [1, 4].
Marti Morfitt, Lululemon’s executive chair, said, "We are pleased to reach this agreement with Chip Wilson, which allows lululemon to focus on continuing to strengthen its performance" [1]. Wilson stated, "The board additions Lululemon announced today and strategic changes already made reflect meaningful progress toward restoring the company’s product-first vision and unlocking tremendous value for shareholders" [1, 4].
The settlement clears the way for Lululemon to advance its growth plans and supports the incoming CEO Heidi O’Neill, who is expected to start in September after completing her non-compete agreement [1, 3]. Gentile and Maurer will formally join the board after Lululemon’s annual shareholders meeting on June 25 [2, 4]. The third director appointment is due by October 1 [1, 3, 4].
