Lululemon Founder Initiates Board Shake-Up Amid CEO Transition

The founder of Lululemon Athletica has initiated a proxy fight aimed at restructuring the board of the beleaguered yoga apparel company as it seeks a new CEO.

Chip Wilson, who holds a 9% stake and ranks as Lululemon’s second-largest shareholder, has openly criticized the company’s leadership. He refers to the existing board as “complacent,” particularly given the recent decline in sales in the crucial North American market.

On Monday, Wilson announced plans to propose three new board members to guide the selection process for a new CEO. This follows Calvin McDonald’s announcement of his intention to step down from the position in January. The proposed directors include former On Running co-CEO Mark Maurer, ex-ESPN chief marketing officer Laura Gentile, and former Activision CEO Eric Hirshberg.

Wilson stated, “The recent announcement of a CEO change is the third complete failure of board oversight without a clear succession plan in place. Shareholders do not believe this board will be able to select and support the next CEO without input from a board with stronger product experience.”

Meanwhile, activist investor Elliott Investment Management is also advocating for a change in leadership, having recently acquired a $1 billion stake in the company. They have recommended Jane Nielson, a former Ralph Lauren executive, as the ideal candidate for CEO.

Wilson, who previously served as Lululemon’s CEO, mentioned that the brand has seemingly lost its “cool” factor. The company has faced several missteps this year, particularly in fashion—introducing vibrant colors that have led to markdowns and enabling competitors like Alo Yoga and Vuori to gain ground.

Notably, Lululemon, recognized for its high-priced leggings priced over $100, has offered more discounts this year than at any point in its 27-year history. Analyst Randall Connick from Jefferies commented that the bold color palette introduced this year resembles “Sesame Street” and detracts from the brand’s traditional soft, pastel tones.

Following the news of Wilson’s proxy fight, Lululemon shares rose by approximately 1% on Monday, while they had jumped 10% earlier this month when McDonald announced his resignation after seven years.

Wilson insists he is not campaigning to rejoin the board himself. “I know this campaign for change is not about me,” he clarified. “It’s about recommitting Lululemon to true creative leadership and reestablishing the brand of enduring strength.”

Wilson’s connection to Lululemon ended in 2015 when he resigned from the board following a series of public controversies, including a notable incident during a 2013 yoga pants recall, where he attributed some of the issue to the body types of certain customers.