Chip Wilson, founder of Lululemon Athletica Inc., sis at loggerheads with his former business. Photographer: Taehoon Kim/Bloomberg
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Lululemon Athletica is escalating its fight with founder Chip Wilson, accusing its largest individual shareholder of pushing “outdated perspectives” and pursuing “troubling conflicts of interest” that could jeopardize its turnaround strategy.
In a sharply worded letter sent to shareholders ahead of the company’s annual meeting on June 25, the Vancouver-based athleisure giant defended both its board and incoming chief executive Heidi O’Neill, while warning investors against backing Wilson’s competing slate of board nominees.
The unusually public clash marks the latest chapter in a long-running dispute between Wilson and the company he founded in 1998. It also comes at a delicate moment for Lululemon, whose shares have fallen over 40% this year amid slowing demand in North America, mounting tariff pressures and intensifying competition.
“Wilson, who stopped serving on the Board over a decade ago for well-documented reasons, has been attacking the company and the Board for many years, damaging the brand and hurting shareholders,” the company wrote in a letter seen by broadcaster CNBC. “He has now put forward three opposing nominees in an attempt to regain increased influence over the company that he has coveted since he left.”
The retailer added: “Your Board firmly believes that replacing any of lululemon’s directors with Mr. Wilson’s less qualified nominees would endorse his misguided perspectives, deprive the company of critical skills and expertise, and risk derailing our progress in an especially pivotal time for our business and organization.”
Wilson Largest Lululemon Stakeholder
Wilson, who owns an 8.97% stake in the company, has spent months criticizing Lululemon’s leadership and governance, arguing the brand has lost the creative edge that once made it a dominant force, with increasing competitors and more affordable growth offers like Fabletics.
In a letter to shareholders, Wilson said the company’s decline stemmed from “deprioritizing creative excellence at the altar of efficiency.”
“Our three nominees all 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] have all led organizations that only succeed when they out-create their competitors, and they know what it takes to create an inspired, creative organization and help it thrive.”
At the center of the proxy battle is the future direction of a company that grew from a niche yoga-wear label into an $11 billion global retailer. Shareholders will now choose between two competing visions for Lululemon’s board.
A new incoming CEO and board will set the direction for Lululemon. (Photo by Gary Hershorn/Getty Images)
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The company’s nominees include former Levi Strauss & Co. chief executive Chip Bergh, former Unilever executive Esi Eggleston Bracey and former Gap Inc. finance chief Teri List. Wilson’s competing slate includes former ESPN marketing chief Laura Gentile, former Activision CEO Eric Hirshberg and former On co-CEO Marc Maurer.
Lululemon argued its own candidates are “vastly superior” and warned that electing Wilson’s nominees would weaken corporate governance and financial expertise. The company also highlighted potential conflicts surrounding Maurer, noting he still holds a substantial financial stake in On, a direct competitor.
Dispute Heats Up
The dispute intensified after settlement talks between the two sides collapsed last week. Lululemon had reportedly offered to appoint two of Wilson’s nominees after the annual meeting, along with a third mutually approved director and an advisory product council that would include another of Wilson’s candidates.
Wilson reportedly countered by seeking the right to replace directors if his nominees stepped down and requested reimbursement for his proxy campaign. Lululemon rejected the proposal, ending negotiations.
The battle has also spilled over into the search for Lululemon’s next chief executive. Last month the company named former Nike executive Heidi O’Neill as its incoming CEO, succeeding Calvin McDonald in September.
However, some analysts have questioned whether a nearly 30-year Nike veteran represented the kind of disruptive leadership needed to reignite growth. Others expressed concern about the delayed transition timeline.
“A near 30-year veteran of [Nike] is not the symbol of transformative, creative-first leadership that can instill shareholder confidence in today’s world,” Wilson wrote in an earlier letter dated April 29. “Shareholders are right to question if she has the product skillset or history of value creation that is needed to revitalize Lululemon.”
Lululemon, however, called her “the ideal executive to lead” the company through its next phase. “As the Board initiated the CEO search, we established criteria that encompassed both turnaround and growth experience,” the company wrote. “We recognize there are parts of Lululemon’s business that need a reset, but that should not be the end game.”
The retailer argued that O’Neill combines deep brand expertise with operational discipline and pointed to her role in building Nike’s women’s division into a multibillion-dollar business.