Lululemon settles dispute with founder by shaking up board
The company will add a former ESPN executive and sneaker maker On’s previous co-CEO as directors
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LULULEMON Athletica has agreed to resolve a long-simmering dispute with founder Chip Wilson by overhauling its board with three new directors.
The company will name two of Wilson’s nominees to the board in Laura Gentile, a former ESPN chief marketing officer, and Marc Maurer, the previous co-CEO of sneaker maker On.
A third director, who will be mutually selected by both sides and has product and brand expertise, will be appointed by Oct 1, Lululemon said.
The settlement stands to remove a significant distraction ahead of Heidi O’Neill’s arrival as CEO. The former Nike executive is set to take the helm in September when her non-compete agreement with the company ends.
Lululemon is struggling to stem a slowdown in sales due to rising competition and product mishaps such as see-through leggings.
Shares of the company best known for its stretchy yoga pants rose as much as 3.9 per cent in premarket trading on Wednesday. The stock declined 39 per cent in the year to Tuesday’s close.
In a memo sent to employees on Wednesday seen by Bloomberg News, Lululemon’s board chair Marti Morfitt acknowledged a “disruptive” period for the company.
She said that the agreement with Wilson “achieves peace for approximately 18 months, enabling us to direct the company’s full attention to executing our strategies”.
Under the terms of the deal, Wilson – who owns 8.7 per cent of Lululemon – agreed to a standstill clause lasting about 18 months that includes not disparaging the company.
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“The board additions Lululemon announced today and strategic changes already made by the team reflect meaningful progress toward restoring the company’s product-first vision and unlocking tremendous value for shareholders,” Wilson said in a press release.
The two sides also agreed to a novel expense reimbursement, saying that a donation will be made supporting athletics and art, as well as landscaping at Kitsilano Beach in Vancouver, where Lululemon was founded.
Wilson’s relationship with the company he founded had become increasingly contentious as financial results deteriorated and shares lost value.
In addition to taking out an ad in the Wall Street Journal in which he accused the company of “losing its soul”, he created a website to promote his choices for its board of directors, accusing Lululemon of “prioritising short-term goals at the expense of creativity and product innovation”.
Vancouver-based Lululemon has countered with claims that Wilson, 71, has “outdated perspectives” and “troubling conflicts of interest”. BLOOMBERG, REUTERS
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