Lululemon proxy war with Chip Wilson goes public, sets annual meeting

lululemon He shows his teeth.

The Vancouver-based athletic apparel company is publicly waging its battle with activist founder Chip Wilson, writing in a letter to shareholders Monday that he has “outdated viewpoints” and “problematic conflicts of interest” that would derail his turnaround plan, according to materials reviewed by the CNBC show.

The letter, Lululemon’s first major public response to Wilson since the proxy battle escalated late last year, comes after settlement talks with the retailer’s founder collapsed last week, according to materials reviewed by the CNBC show. The letter lays out why the company’s strategy, new CEO Heidi O’Neill, and board nominees are best for shareholders; encourages them to vote in favor of the company and sets June 25 as the date for the long-awaited annual meeting.

“Wilson, who stopped serving on the Board more than a decade ago for well-documented reasons, has been attacking the company and the Board for many years, damaging the brand and hurting shareholders. He has now put forward three opposing candidates in an attempt to regain the growing influence he has coveted over the company he has coveted since his departure,” the letter, viewed by CNBC, said.

“Your board firmly believes that replacing any of lululemon’s executives with less qualified candidates of Mr. Wilson would support his misguided perspectives, deprive the company of critical skills and expertise, and risk derailing our progress at a particularly important time for our business and organization.”

Wilson did not immediately respond to a request for comment.

Lululemon’s business has been under pressure for nearly two years, especially in America, its biggest market, due to the impact of tariffs, a shaky U.S. consumer and a product assortment that fails to wow shoppers as it once did. It also faces stiff competition from athleisure startups like Vuori and Alo Yoga as the global athleisure market begins to cool.

When Lululemon reported fiscal fourth-quarter earnings in March, it issued a weak forecast for fiscal 2026 and warned that higher tariffs and a proxy war with Wilson would negatively impact profitability. As of Friday’s close, shares are down nearly 43% this year.

Wilson, who founded Lululemon in 1998, stepped down as CEO in 2005 but remained chairman until 2013, blaming customers for the recall of the brand’s black pants. he said Bloomberg at the time“Some women’s bodies do not suit trousers.”

“It’s actually about friction in the thighs, how much pressure is there over a period of time,” he said.

Wilson has frequently criticized the brand since then, but stepped up her attacks late last year as Lululemon’s challenges grew. His biggest problem was the company’s board of directors. takes responsibility for decision to resign He served as chairman in 2013 and has been lobbying both the company and shareholders to get behind the slate.

In response, Lululemon argued that his leadership was the reason the brand was able to grow into an $11 billion retailer, and argued that it was aligned with direct competitors such as Alo Yoga and Vuori, which Wilson admitted to advising, according to security filings.

At Lululemon’s annual meeting next month, shareholders will be presented with a choice of two sets of directors that both parties believe can help the company turn around. Shareholders can vote to elect the retailer’s nominees. Levi Strauss CEO Chip Bergh, former Unilever’s chief growth and marketing officer Esi Eggleston Bracey and series board member and former Openness finance chief Teri List. Or they could opt for Wilson’s candidates, former ESPN marketing executive Laura Gentile, former Activision CEO Eric Hirshberg, and former Activision CEO Eric Hirshberg. Open co-CEO Marc Maurer.

Wilson said the retailer’s decline was a result of “not prioritizing creative excellence at the altar of efficiency.” The solution, he suggested in a letter to shareholders last week, was “more proven, creative leaders” in the boardroom.

“All three of our candidates understand what it takes to foster a creative, focused and successful business that delivers superior returns through creative excellence in design, technology and execution,” Wilson wrote. “[They] “They have all led organizations that are successful only when they outperform their competitors, and they know what it takes to create and help an inspiring, creative organization thrive.”

Last week, Lululemon made a last-ditch effort to resolve its proxy race with Wilson and reach a settlement agreement, according to materials viewed by CNBC. Following the annual meeting, he offered to appoint two of Wilson’s nominees instead of an earlier offer, and agreed to appoint a third new director, subject to his approval and not from his list. The company also said it would create an advisory brand product council that would include Wilson’s third nominee, who was not appointed to the board.

In response, Wilson escalated his demands, demanding a full refund from the company for his campaign, including the right to replace directors if his candidates ceased serving on the board and a full refund from the company for materials viewed on the CNBC show, among other demands. Lululemon rejected the offer and settlement talks failed.

Now Lululemon argues in its letter that its own nominees are “far superior” to Wilson’s and that selecting any of the founder’s picks “will result in a significant deterioration in the experience and expertise of your Board of Directors, including the loss of deep industry and corporate governance experience as well as financial expertise essential to a publicly traded company.”

Gentile criticized Hirshberg and Maurer for having no board experience at a publicly traded company and having little or no time working in the apparel and retail industry.

It was noted that Maurer, who resigned as co-CEO of On, a direct competitor of Lululemon, about a year ago, still owns personal shares worth tens of millions of dollars in his former company, which constitutes a “significant portion of his net worth.”

The company also defended its new CEO, who is scheduled to take the helm in September after nearly 30 years. Nike

When Lululemon announced last month that O’Neill had been named its next CEO, Wall Street sold off its shares over concerns that he was partly responsible for some of the challenges Nike now faces. There are also concerns that Lululemon may not be able to start business for another few months, especially given Lululemon’s long lead times for goods; This is pushing the recovery timeline further than some investors had hoped.

“A veteran of nearly 30 years [Nike] It is not the symbol of transformative, creativity-first leadership that can instill confidence in shareholders in today’s world,” Wilson wrote in a letter to shareholders on April 29. “Shareholders are right to question whether lululemon has the product capabilities or value creation track record needed to revitalize lululemon.”

In response, the retailer said in a letter to shareholders that O’Neill was “the ideal executive to lead” the company and brought “a unique balance of creativity and operational discipline required at this pivotal moment.”

“As the Board of Directors launched the CEO search, we established criteria that encompass both turnaround and growth experience. We recognize that there are parts of Lululemon’s business that need a reset, but that should not be the end game. The Lululemon brand remains fundamentally strong, and there is significant potential to innovate and evolve the product and mobilize our communities to further scale the business across operations and internationally,” Lululemon said. he wrote.

“Throughout the months-long interview process, Ms. O’Neill distinguished herself with a rare combination of deep industry, product and brand experience, as well as a strong track record of both transformation and growth at scale. She demonstrated the ability to clearly articulate the essence and future opportunities of the Lululemon brand while also bringing a pragmatic, execution-focused mindset,” the company said in its letter. added the company.

Lululemon noted O’Neill’s years of experience leading Nike’s apparel business during a period of rapid growth and the time he spent reducing product lead times and resetting the brand before his departure.

“O’Neill founded and built Nike’s Women’s division and turned it into a multibillion-dollar franchise,” Lululemon said. “And at a time when digital commerce sales were rapidly growing by over 65%, he led significant digital transformations as the first digital champion and innovator.”