Chip Wilson’s public campaign to get Lululemon Athletica Inc. back on track has taken the loud and proud approach.
Wilson, the disgruntled billionaire founder of Lululemon, has had trucks displaying advertisements for his effort to remake the business outside the brand’s Vancouver headquarters and its Fifth Avenue store in New York. There have also been newspaper ads, open letters and a flurry of regulatory filings tied to his official proxy campaign to shake up the boardroom.
And that’s just the public part of Wilson’s push.
Behind the scenes, he’s had a steady back-and-forth with Marti Morfitt, who’s been a director at the company since 2008 and executive chair since December.
Lululemon included an outline of the sometimes contentious negotiations with its proxy statement, filed with regulators on Tuesday.
The recent talks began when Morfitt along with other directors met with Wilson, the firm’s largest shareholder, in June to discuss his “various concerns.”
But he was not soothed.
In October, Wilson took out a paid newspaper ad to criticize the company’s strategy and governance.
That led to another meeting in November — and to wrangling over the agenda for that meeting.
When the two sides did finally get together, with Wilson and associates meeting a group of directors, Lululemon said: “Mr. Wilson opened the meeting by stating that he had reviewed the biographies of the directors in attendance and that, accordingly, introductions were unnecessary.
“During the meeting, Mr. Wilson contrasted the appearance of the company’s store employees unfavorably with those of Alo and stated that, in his view, the company had become overly influenced by inclusion initiatives. In response to a question from the directors, Mr. Wilson stated, ‘How can you be on the board if you haven’t read my book?’”
Meanwhile, big change was coming to Lululemon, which had fallen off its game, suffering from product issues and weakness in the U.S.
Calvin McDonald, who had been chief executive officer since 2018, said in December that he was stepping down.
Wilson, who himself had been CEO from 1998 through 2005, had some ideas.
Morfitt met with him on Dec. 15, when the founder “presented his proposal, which demanded significant and immediate changes to the composition of the board and the company’s governance. Mr. Wilson also demanded that the parties negotiate over the following three-day period and reach agreement by Friday of that week,” according to Lululemon’s timeline.
The proposal included three new independent directors selected by Wilson, the departure of four existing directors and the formation of committees on innovation and strategy as well as product.
Later that month, Wilson launched his proxy battle to replace some existing board members and was advocating for resetting the board and then having those directors pick a new CEO.
In a January meeting, “Mr. Wilson reiterated his view that the company should appoint all three of his candidates and insisted that any other new directors ‘must have read my book,’” according to Lululemon. “Mr. Wilson then stated that ‘[t]he whole board can step down, and that would be best for the shareholders . . . [a] massive disruption is what the company needs.’”
Still, talks for some kind of a settlement proceeded.
At the end of March, the company offered a plan to swap out one director for one of Wilson’s chosen replacements while declassifying the board and agreeing to a standstill for a year.
Wilson rejected that offer and one of his team suggested the founder be appointed to the board.
“Ms. Morfitt reminded Mr. Wilson and his team that Mr. Wilson held significant interests in a competitor of the company. Mr. Wilson reiterated his previous comment that he had advised the company’s competitors, Alo and Vuori,” Lululemon said.
The two sides then seemed to move further apart.
Wilson launched a new venture to invest in athletic brands in April and the company named Nike veteran Heidi O’Neill its next CEO.
With the fight over the boardroom still looming, Lululemon revealed another change.
Esi Eggleston Bracey, former chief growth and marketing officer of Unilever, was named to the board and will stand for election at the next annual meeting in lieu of Shane Grant, who is stepping down. She joins former Levi Strauss & Co. Chip Bergh, who joined the board in March.
Morfitt said in a statement that: “The board continuously evaluates its composition to ensure we have the right mix of skills and experience for the future of the company. With the strength and expertise of our refreshed board, Heidi O’Neill chosen as Lululemon’s next CEO, and the outstanding team we have in place executing with focus and discipline, we are confident in the company’s ability to continue its forward motion and deliver value to our shareholders.”
Wilson has not said just how confident he’s feeling these days. A spokesperson for the founder did not return a WWD request for comment.
But the company did make something of a bid for peace in its proxy statement.
The board recommended shareholders vote for Wilson’s proposal to declassify the board so directors would be elected for only one-year terms.
The date for the meeting — and the final showdown if the proxy fight is not settled — has still not been set.
