Lululemon reaches agreement with founder to appoint some of his board nominees

Lululemon founder Chip Wilson speaks in Vancouver, B.C., Thursday, Sept. 15, 2022. THE CANADIAN PRESS/Darryl Dyck

Lululemon Athletica Inc. has headed off a showdown at its upcoming meeting by signing an agreement with its estranged founder who was hell-bent on spurring change at the retailer.

The agreement announced Wednesday puts two of Chip Wilson’s three nominees on the board of the Vancouver-based company in exchange for the entrepreneur quelling his attacks on the brand.

The nominees due to take a seat, pending shareholder approval, are former ESPN chief marketing officer Laura Gentile and former On co-CEO Marc Maurer.

Wilson’s other nominee ex-Activision CEO Eric Hirshberg was not part of the deal, but Lululemon has agreed to appoint an additional director with product and brand expertise in apparel by Oct. 1.

Lululemon’s executive chair Marti Morfitt hailed the arrangement as way to keep Lululemon’s “focus on continuing to strengthen its performance,” while Wilson said it signals “meaningful progress toward restoring the company’s product-first vision and unlocking tremendous value for shareholders.”

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Wilson, who left Lululemon’s board in 2015 but still holds almost nine per cent of its common shares, started his crusade against the company last year, when CEO Calvin McDonald announced his departure amid a sagging market performance and increased competition.

Wilson used it try to elicit change, predominately at the board level. He took out advertisements in the Wall Street Journal, where he likened the company to a “plane crash” and “sinking ship.” He also paid for trucks displaying advertisements that “denigrated the brand” to sit outside its Vancouver headquarters this past March and by one of its New York stores in April.

Lululemon, which recently named ex-Nike exec Heidi O’Neill as incoming CEO, was open to considering Wilson’s board nominees, but accused him of blocking the company from interviewing the people and demanding other concessions.

Their board slates were due to square off at the company’s June annual meeting.

Under the deal, Wilson has agreed to standstill, non-disparagement, voting and related conditions for about 18 months until 30 days prior to the nomination deadline for Lululemon’s 2028 annual meeting.

In lieu of expense reimbursement, Lululemon and Wilson have agreed a donation will be made supporting athletics, art, and landscaping at Kitsilano Beach in Vancouver, where the company was founded.

Tara Deschamps, The Canadian Press