In search of "coolness": Lululemon founder begins proxy battle with board of directors

Lululemon founder Chip Wilson has launched a proxy battle at the sportswear manufacturer, hoping to change the composition of the company's board of directors. He has nominated three candidates with strong product and brand experience, saying that the current board is unable to ensure continuity and restore shareholder confidence. The company's shares have fallen nearly 45% in 2025.

On Monday, December 29, Wilson announced the nomination of three candidates to the board of directors of the yoga clothing brand, Bloomberg reports . The nominees included former co-CEO of sports brand On Running Mark Maurer, former marketing director of sports media holding ESPN Laura Gentile, and former head of video game developer Activision Eric Hirschberg.

Maurer, who left his position as co-CEO of On Running at the end of June, was directly involved in shaping the brand, according to The Wall Street Journal. Gentile founded ESPNW, ESPN's division focused on female audiences. During his time at Activision, Hirschberg oversaw key franchises, including Call of Duty.

The WSJ notes that activist investors often bring in former executives of the companies they are seeking to change, but it is extremely rare for the founder of a business to resort to a proxy campaign. At the same time, Wilson himself is not seeking to return to the board of directors. He remains Lululemon's second-largest shareholder with a stake of about 9%, according to FactSet data.

"I understand that this campaign for change cannot be centered around me," Wilson said in the WSJ article. "It's about returning Lululemon to true creative leadership that can restore the brand's sustainable strength."

Lululemon is experiencing an identity crisis, notes the WSJ. In mid-December, the brand announced that CEO Calvin McDonald would step down in January after more than a year of weak results in the athleisure segment. McDonald was under intense pressure, including from Wilson, who publicly accused management of stifling innovation and "losing its cool," the WSJ recalls .

It was precisely these personnel changes that prompted the founder of Lululemon to take action, Barron's explains. He believes that the company's shareholders will not trust the new CEO chosen by the current board of directors, so he insists on renewing the board before appointing a new head of the company.

"The recent announcement of the CEO change marks the third failure of the board of directors in terms of oversight, given that the company lacks a clear succession plan. Shareholders have no confidence that this board is capable of selecting and supporting the next CEO without the involvement of a board with stronger product expertise," Wilson said in a statement.

The change in Lululemon's leadership came amid the company's difficulties in restoring demand in its largest market, the US. Although, according to the company's latest report, comparable sales overall grew by 1% year-on-year, which is in line with analysts' expectations, they fell by 5% in the US market.

In addition, Lululemon's business has been under pressure over the past year, partly due to a product line that no longer inspires shoppers as it once did, CNBC previously reported. The company faces stiff competition from new sportswear manufacturers such as Vuori and Alo Yoga, as well as changing consumer preferences: instead of yoga pants, many women are increasingly choosing jeans.

Lululemon shares have fallen 45% since the beginning of the year, while the broader market has shown growth. Trading on December 29 opened with a 0.1% decline, but subsequently shifted to a 1.3% increase.

Overall, Wall Street analysts are cautious about Lululemon shares: according to MarketWatch, only five analysts recommend buying the stock, while 25 suggest holding it and one recommends selling it.

Wilson is not the only one pushing for change at Lululemon. On December 18, the WSJ and Reuters reported, citing sources, that activist fund Elliott Investment Management had built a stake in Lululemon worth more than $1 billion and was pushing for the appointment of former Ralph Lauren top executive Jane Nielsen as CEO.

This is not the first time Wilson has pushed for changes to Lululemon's board of directors. He founded the company in 1998, stepped down from operational management in 2012, and left his position as chairman of the board at the end of 2013. This happened after the recall of a batch of see-through yoga pants, which drew criticism of the brand: the incident led to the departure of a number of top managers, according to Reuters.

In 2015, Wilson also resigned from the board of directors after disagreements with him over development strategy. However, a proxy battle was avoided at that time: Wilson agreed to sell about half of his stake — approximately 27% — to private equity firm Advent International for $845 million in exchange for two additional seats on the board of directors.

This article was AI-translated and verified by a human editor