Chip Wilson, the founder of Lululemon Athletica, has initiated a proxy fight by nominating three independent directors to the company’s board, following the recent departure of CEO Calvin McDonald. This move comes amidst significant challenges for the apparel brand, as its stock has plummeted nearly 50% this year. Lululemon is striving to appeal to younger and more affluent consumers while facing fierce competition from emerging rivals like Alo Yoga and Vuori, in addition to pressure from activist investor Elliott Management.
Wilson has put forward the names of former On Running co-CEO Marc Maurer, ex-ESPN Chief Marketing Officer Laura Gentile, and former Activision CEO Eric Hirshberg as his candidates for the board. Meanwhile, the board has appointed Chief Financial Officer Meghan Frank and Chief Commercial Officer André Maestrini as interim co-CEOs during the search for a permanent replacement.
Elliott Management, which recently revealed a $1 billion investment in Lululemon, has been collaborating with former Ralph Lauren executive Jane Nielsen as a potential candidate for the CEO position. However, a source close to Wilson clarified that he is not partnering with Elliott in his efforts to reform the board, although the activist investor’s push for a new CEO is unlikely to obstruct Wilson’s nominations.
Wilson expressed concern over the lack of a succession plan following McDonald’s exit, emphasizing that shareholders doubt the current board’s ability to select a successful CEO without fresh insights from directors with substantial industry experience.
In the wake of this announcement, Lululemon’s share price saw a slight increase of about 1%. Morningstar analyst David Swartz commented on the situation, suggesting that while the nominated individuals seem competent, only Maurer possesses direct experience within Lululemon’s industry. He noted that Wilson likely refrained from seeking a board position for himself due to his significant stake in competitor Amer Sports.
The move highlights both Wilson’s commitment to rebuilding Lululemon’s leadership and the growing scrutiny on the board’s effectiveness amid changing market dynamics.