Lululemon and its founder Chip Wilson reached a settlement Wednesday, ending a months-long public feud that had played out in shareholder letters, competing press releases and escalating demands on both sides.
Under the terms of the deal, Lululemon agreed to appoint two of Wilson's nominees to its board: former On co-CEO Marc Maurer and former ESPN Chief Marketing Officer Laura Gentile. The company also agreed to add a third director with product and brand expertise in apparel by October. In exchange, Wilson agreed not to publicly criticize the company for about a year and a half, among other provisions. Shares rose about 4% in premarket trading following the announcement, according to CNBC.
The settlement also resolved a financial dispute. Wilson had previously asked Lululemon to reimburse expenses from his proxy contest, but ultimately agreed instead to a donation the company will make to Kitsilano Beach in Vancouver, where Lululemon was founded, to support athletics, art and landscaping.
The deal came together after weeks of failed negotiations. Wilson and Lululemon were reportedly close to a settlement two weeks ago, but talks collapsed when Wilson raised his demands. After that breakdown, Lululemon went public with a sharply worded letter to shareholders, saying Wilson had "outdated perspectives" and "troubling conflicts of interest" that would derail its turnaround plan.
"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. 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 letter stated.
Wilson responded with his own press release, saying he believed the two sides had already reached an agreement and there was no reason they could not resolve the dispute.
With the settlement now in place, Lululemon's executive chair Marti Morfitt said the company can move forward. "We are pleased to reach this agreement with Chip Wilson, which allows lululemon to focus on continuing to strengthen its performance," Morfitt said. "We look forward to welcoming Laura and Marc, who will bring additional perspective to our existing group of qualified directors. Lululemon now has a clear path forward for our incoming CEO, Heidi O'Neill, and our leadership team, as we continue to advance our strategies to foster strong brand health, reaccelerate growth, and deliver enhanced value for our shareholders."
Wilson, for his part, said the new appointees and strategic changes already made "reflect meaningful progress toward restoring the company's product-first vision and unlocking tremendous value for shareholders."
Incoming CEO Heidi O'Neill now takes over a company that has resolved one of its most visible distractions heading into what the board has described as a pivotal period for the business.
