Lululemon (LULU.US) reaches agreement with founder Wilson to reorganize the board of directors, resolving the power struggle.

Yoga apparel brand Lululemon Athletica (LULU.US) announced on Thursday that they have reached a cooperation agreement with the company's founder Chip Wilson, who currently holds 8.7% of the company's shares. This also means that the dispute over proxy rights between the two parties has temporarily come to a halt. According to the standstill agreement, former ESPN chief marketing officer Laura Gentile and former ON Running joint CEO Marc Maurer will join the board of directors after the company's annual shareholders meeting in June. To continue optimizing the board structure, Lululemon has also agreed to appoint a director with expertise in clothing products and branding to the board by October 1. Under the terms of the agreement, Wilson has agreed to abide by standard standstill commitments, non-disparagement agreements, and voting arrangements for a period of about 18 months, until 30 days before the nomination deadline for the 2028 annual shareholders meeting. Wilson stated that the addition of new directors and the strategic adjustments made by the Lululemon management team signify substantial progress for the company in returning to its product-focused philosophy and creating significant value for shareholders. He believes that the newly appointed directors will add value to the board. For years, Wilson has been critical of Lululemon. He has publicly stated that Lululemon has lost its uniqueness and has lost its industry-leading position in functional apparel to new competitors. In December of last year, he stepped up his criticism and launched a proxy fight aimed at completely restructuring the company's board of directors. With this agreement in place, Lululemon has gained breathing room to regroup, and the company will also welcome a new CEO this fall. Calvin McDonald, who has been leading Lululemon since 2018, stepped down in January, and former Nike, Inc. Class B executive Heidi O'Neill will take over in September. O'Neill will face many challenges once officially in office. With competition from new brands like Alo Yoga, Beyond Yoga, and Vuori, Lululemon's sales in the US have been declining for several quarters, and some new products have been reported to have quality issues. At the time of writing, Lululemon's stock price has risen over 3% in pre-market trading. The company's stock price has fallen more than 70% from its 52-week high. Short interest accounts for 5.1% of total shares outstanding.