Lululemon Founder Chip Wilson Launches Proxy Battle

A Lululemon store in Miami Beach, Fla. (Joe Raedle/Getty Images)

Key Points

• Lululemon founder Chip Wilson is initiating a proxy fight, nominating three candidates to the board to address what he calls a lack of visionary leadership.
• Wilson, who owns about 9% of the stock, believes the current board has harmed the brand by focusing on financial projections over product and innovation.
• Lululemon’s stock is down 45% this year due to sluggish North American sales. The CEO is stepping down.

Lululemon Athletica’s founder Chip Wilson is launching a proxy fight at the activewear retailer in a bid to remake the company’s board of directors.

The stock was up 1.4%, to $211.92, in afternoon trading on Monday.

Wilson has nominated three candidates to Lululemon’s board: Marc Maurer, former co-CEO of On Running; Laura Gentile, former chief marketing officer at ESPN; and Eric Hirshberg, former CEO of Activision. The Wall Street Journal reported the fight earlier.

“As I have stated for years, Lululemon needs visionary creative leadership to thrive,” Wilson said on Monday. “The simple truth is that the current Board lacks these skills and, as a result, Lululemon is unable to win back the confidence of its critical stakeholders and regain commercial momentum. The nominees I put forward today are the change that is needed to redefine Lululemon and begin this company’s next chapter of success.”

Wilson also submitted a nonbinding proposal that calls for a change to the board’s election structure. Now, directors are elected in groups that come up for election at different times, sometimes requiring years to fully replace the board. Wilson wants the board to declassify so all directors are elected annually.

Lululemon said Monday that its board and leadership team had engaged “extensively and in good faith” with Wilson to understand his perspectives. In recent conversations in which Wilson indicated his intent to nominate directors, the board requested the names of his nominees, the company said, adding that Wilson “declined to engage further.”

“Now that the names have been submitted, the Board will evaluate Mr. Wilson’s director nominees in due course in accordance with the Board’s governance process,” the company said. The board will present a formal recommendation regarding his nominations in the company’s definitive proxy statement ahead of its 2026 shareholder meeting.

Wilson stepped down from the board over a decade ago but still owns about 9% of the stock. He said in October he was considering an activist campaign against the company to potentially replace board members.

At the time, he said the board had “systematically dismantled the business model,” and that directors’ focus on Wall Street’s financial projections rather than on product, design, and innovation had hurt the brand. In his words, he wants the board “to put product and brand back at the center” and “to “stop chasing Wall Street at the expense of customers.”

On Monday, Lululemon said it had a “highly engaged and experienced Board” that had overseen a significant period of growth for the company and was well equipped to provide guidance on future direction.

The stock is down 45% this year, reflecting Wall Street’s ’ disappointment at sluggish sales growth in North America. Earlier this month, the company said CEO Calvin McDonald would step down on Jan. 31. A search for his successor is under way.

The turmoil at Lululemon has attracted more than one activist. Elliott Investment Management took a $1 billion stake and is pushing for Jane Nielsen, Ralph Lauren’s former chief financial officer, to be the next chief executive.

The CEO shuffle inspired Wilson to act. He believes Lululemon shareholders won’t trust any CEO picked by the current board, so he wants to change the board before someone is chosen.

“The recent CEO change announcement was the third total failure of Board oversight with no clear succession plan in place,” Wilson said on Monday. “Shareholders have no faith that this Board can select and support the next CEO without input from a Board with stronger product experience.”

Lululemon emphasized on Monday that the board had initiated a “comprehensive search” for the next CEO. It said the board focused on finding a chief executive with a record of guiding companies through periods of transformation and growth.

Write to Sabrina Escobar at sabrina.escobar@barrons.com