Mike Blake/Reuters
Lululemon Athletica LULU-Q tried unsuccessfully to settle its bitter proxy fight with Chip Wilson last week and said the athletic apparel maker’s founder has “outdated perspectives,” according to a regulatory filing made on Monday.
The company said it delayed filing its definitive proxy statement in hopes of reaching an agreement with Wilson, who founded the maker of stretchy yoga pants in 1998 and has recently criticized management for having lost the company’s “cool” factor. Wilson, who owns 8.6 per cent of the company, responded hours later saying the fight could be settled quickly and that he is undeterred and willing to be constructive.
Shares are down 62 per cent in the last 12 months as design missteps and fading brand appeal eroded its edge. The company recently hired a new CEO to turn the brand around.
In its first detailed public rebuttal since the battle began late last year, Lululemon said Wilson, who left the board in 2015, has “outdated perspectives” about how to position Lululemon as well as “troubling conflicts of interest.”
“His actions have been damaging to the brand and harming the very stakeholders he claims to represent: shareholders, guests, and employees. Electing any of Mr. Wilson’s nominees would endorse his misguided perspectives,” the company said in a letter to shareholders.
Lululemon, founder Chip Wilson at odds over board nominees
The company and Wilson have tried for some time to reach an agreement to end Wilson’s effort to seat three directors on the company’s board.
Last week, the company said Wilson countered its term sheet with proposals Lululemon described as “a significant departure” from earlier discussions.
Under the counterproposal, Wilson sought to install three directors of his choosing, including the immediate appointment of two of his nominees and a third drawn from a pool he selected. He also asked for quarterly meetings with the company’s incoming CEO, and several directors, the filing showed.
Wilson said he thought the two sides were on course to settle and said directors have not told him where “disagreements lie right now.”
He said he stands by his nominees who bring brand and marketing expertise. “The notion that I want to dictate strategy to Lululemon is just wrong,” Wilson said, adding he feels his experience can be helpful to the businesses he invests in.
The retailer, which has a market value of US$14-billion, urged shareholders on Monday to back its three directors up for election, including former Levi Strauss CEO Chip Bergh, calling them “vastly superior” to Wilson’s picks. Investors will vote next month unless the two sides settle before. Lululemon, meanwhile, has added two new directors in recent months and named former Nike executive Heidi O’Neill as CEO last month as it tries to revive its growth and stanch the losses in market share.
While some investors have praised incoming O’Neill’s background, shares of the company fell on the news of her appointment.
The company has lost ground to rivals such as Alo Yoga and Vuori, and its challenges culminated in CEO Calvin McDonald’s exit earlier this year.
Shares traded nearly flat at US$120.26 at Monday’s close.
In addition to Wilson, activist investor Elliott Investment Management, which built a stake exceeding US$1-billion last year, also had ideas of how to take the company forward, urging that former Ralph Lauren executive Jane Nielsen be appointed CEO.
Elliott has not spoken publicly about the CEO selection.