Lululemon must find a director with apparel product and brand expertise whom founder Chip Wilson will approve, while a new CEO settles in. The extension leaves open the one appointment that needs both sides to agree on a person.
Lululemon and its founder Chip Wilson have agreed to extend the Oct. 1 deadline for naming a new director. A company spokesperson told Bloomberg the company looks forward to sharing an update soon, but gave no detail on the reason or the length of the extension. The commitment was the final board-related item in the cooperation agreement that ended Wilson’s proxy fight in May.
What the deal required
The agreement was announced May 27 and carries an effective date of May 26. Lululemon agreed to take all necessary steps to add an independent director with apparel product and brand expertise by Oct. 1, subject to Wilson’s approval, which cannot be unreasonably withheld, conditioned or delayed. Wilson’s approval right is the reason this is a two-party extension, not a unilateral corporate delay.
The other pieces of the deal were delivered on schedule. Laura Gentile, a former ESPN chief marketing officer, and Marc Maurer, a former co-CEO of On, joined after the June annual meeting, expanding the board from nine to 11 seats. In return, Wilson accepted standstill, non-disparagement and voting provisions for about 18 months, running until 30 days before the 2028 nomination deadline. He holds about 8.7 percent of the stock.
What is not known
The reason for the delay is not public. That leaves two plausible explanations, and neither is confirmed. The search could be taking longer than planned. Or the company and Wilson may not yet agree on a candidate.
The timing also matters since new CEO Heidi O’Neill, a Nike veteran, started Sept. 8, and the board is still adjusting around her. Executive Chair Marti Morfitt said in May that the deal would let the company concentrate on performance. A board seat that stays vacant past its deadline works against that message.
The performance picture
Demand fell in Lululemon’s top markets in the latest quarter, and a misstep at a China event added to the damage. First-quarter revenue grew 4 percent while profit fell 37 percent. In August, Lululemon’s AI chief, strategy chief and communications chief all left within weeks of one another. A further delay on the board adds one more open question to that list. Market value gives a rough scale. Estimates went from $11.1 billion in May to about $10.65 billion on Sept. 30.
