Lululemon Athletica has ended its boardroom battle with founder Chip Wilson, agreeing to give him two board picks in exchange for his pledge to stay quiet for 18 months as a new CEO prepares to steer the athleisure brand.
The company said on Wednesday that Marc Maurer, a former co-CEO of sneaker maker On Holding, and Laura Gentile, a former chief marketing officer of ESPN – both executives suggested by Wilson – will join the board after the annual meeting scheduled for June 25. A third director, who will be mutually selected by both sides and has product and brand expertise, will be appointed by October 1, the company said.
In return Wilson, who owns 8.7 per cent of the company best known for its stretchy yoga pants, agreed to a contractual clause that caps his stake while he also agreed to stop disparaging the company for about 18 months, Lululemon said.
The two sides also agreed to a novel expense reimbursement, saying that a donation will be made supporting athletics, art, and landscaping at Kitsilano Beach in Vancouver, where Lululemon was founded.
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“We are pleased to reach this agreement with Chip Wilson, which allows Lululemon to focus on continuing to strengthen its performance,” said Marti Morfitt, Lululemon’s executive board chair.
'OUTDATED PERSPECTIVES'
The deal ends one of the year’s most prominent proxy fights that took shape late last year when Wilson nominated three directors. For months, Wilson – who founded Lululemon in 1998 – criticized the company, accusing it of having lost its “cool” factor and raising concerns about management.
The company in turn said Wilson, who left Lululemon’s board in 2015, had “outdated perspectives” about how to position the company at a time its North American sales had fallen and the stock price has tumbled more than 60 per cent in the last 12 months amid competition from rivals Alo and Vuori.
But it has also been laying the groundwork for a new chapter by appointing Heidi O’Neill, a former Nike executive, as CEO and two new directors this year. O’Neill begins work in September when her non-compete agreement with Nike ends.
The company said Alfredo Porretti & Co and JPMorgan Chase provided financial advice while Sidley Austin provided legal advice and Joele Frank served as strategic communications adviser.
Suck my lemon