Lululemon's founder feud escalates to proxy fight

Founder Chip Wilson seeks three board seats to change the brand positioning and restore "cool factor."

Canadian-American athletic apparel maker Lululemon Athletica is set to face its founder Chip Wilson in a proxy battle this June over disagreements about the company's direction.

In a Monday proxy statement, Lululemon said it had delayed the filing in the hopes of reaching an agreement with Wilson, who founded the company in 1998 and remains an 8.6% shareholder.

Wilson has argued that the brand has ultimately lost its "premium" positioning and "cool factor" in recent years by chasing broader lifestyle and fashion trends, and failing to protect merchandising quality, in-store experience, marketing focus, and innovation.

As such, he has nominated three candidates for election to the Lululemon's board at the upcoming June 25 annual meeting, including Marc Maurer, Laura Gentile, and Eric Hirshberg. Wilson also wants to be included in quarterly strategy and product briefings with management, and to declassify the board.

However, the company has argued that Wilson, who left the board in 2015, has "outdated perspectives" about how to position Lululemon as well as "troubling conflicts of interest" relating to a separate apparel startup, Kit and Ace, launched by his wife and son.

Following the release of Lululemon's proxy statement, Wilson released a statement that he remains "undeterred and willing to be constructive."

“I am confident in the skillsets of our highly qualified independent nominees that bring unmatched brand and marketing expertise," he added. "My focus remains on making sure lululemon has the right skills on the board, that brand/product expertise is prioritized and that lululemon returns to form. The notion I want to dictate strategy to lululemon is just wrong.”

The $14 billion company recently hired former Nike executive Heidi O'Neill as CEO in April to revive its growth after shares slid 62% in the past 12 months, however they continued to fall on the news of her appointment. Wilson also criticized O'Neill's appointment, saying it reflected "broken governance" and a misunderstanding of the brand.

Shares traded nearly ⁠flat at $119.74 ​shortly before the close on Monday.

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