Lululemon founder Chip Wilson announced his picks for three new board directors to lead the charge for a new chief executive at the brand, triggering a proxy battle among the athleisure wear’s largest shareholders.
On Monday, Wilson nominated former On Running co-CEO Marc Maurer, former ESPN chief marketing officer Laura Gentile and former Activision CEO Eric Hirshberg as the search for the next leader of the struggling company intensifies.
“It is clear to the world that Lululemon is special, but in need of change,” Wilson said in a press release. “As I have stated for years, Lululemon needs visionary creative leadership to thrive. 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.”
In early December, current Lululemon chief Calvin McDonald revealed that he would step down on January 31 as the brand’s stock price has fallen nearly half over the year amid slow sales as the company tries to find its footing against rivals in the marketplace.
“The timing is right for a change,” McDonald said about his upcoming departure. “I’ve described being CEO of Lululemon as my dream job. It truly has lived up to every expectation and given me the opportunity of a lifetime.”
McDonald will stay with the company as a senior advisor until March 31.
Last week activist investor Elliott Management took a reported $1 billion stake in the brand, according to published reports, and tapped former Ralph Lauren chief executive Jane Nielsen as its pick to replace McDonald.
Elliot’s move to steer the choice for Lululemon’s next chief is not part of a joint effort with Wilson, a source familiar with the matter said in a Bloomberg report on Monday. But Wilson, who founded the company in 1998, holds over 8 percent stake in the company and continues to be critical about the brand’s direction in recent years.
“The recent CEO change announcement was the third total failure of Board oversight with no clear succession plan in place,” Wilson said in Monday’s statement. “Shareholders have no faith that this Board can select and support the next CEO without input from a Board with stronger product experience. The Board must be refreshed so that creative, brand-first experience is empowered. This is the only way to restore shareholder confidence and set Lululemon back on the path to growth, product innovation and premium quality.”
Sales at the Vancouver-based brand have inched near its lowest point since the company went public in 2007 when it first led the premium-priced athleisure wear charge. But it has faced serious competition from younger risers like Alo and Vuori in a now-crowded segment that also includes cheaper — but stylish — alternatives.
The company fired back at Wilson’s announcement on Monday assured shareholders that no action would be required. Lululemon has not revealed the date for its next shareholder meeting, but the event is usually staged in June.
The Lululemon Board of Directors and leadership team have engaged extensively and in good faith for many years with Mr. Wilson to understand his perspectives and communicate our strategy,” the company said in its own statement. “In our most recent discussions, Mr. Wilson indicated his intent to nominate directors. In the interest of avoiding a costly and distracting proxy fight, the Board requested from Mr. Wilson the names of his director nominees to evaluate their qualifications and backgrounds, but Mr. 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.”
