Athletic apparel company Lululemon Athletica is close to reaching a settlement agreement with company founder Chip Wilson that would resolve their ongoing proxy battle, according to sources with knowledge of the negotiations.
The proposed agreement under discussion would expand the company’s board of directors by adding two individuals chosen by Wilson, with plans to identify an additional mutually acceptable director at a later time, sources who are not authorized to speak publicly about the private negotiations revealed. The deal would also provide Wilson with regular access to incoming chief executive officer Heidi O’Neill, according to the sources.
Wilson, who established the company in 1998 and currently holds an 8.6% ownership stake, would agree to refrain from publicly or privately criticizing Lululemon for approximately two years under the proposed terms. His ownership percentage would also be limited to roughly 10%, the sources indicated.
However, sources emphasized that reaching a final agreement is not certain.
Neither company representatives nor Wilson were available for immediate comment.
These latest negotiations follow the recent collapse of earlier attempts to resolve what has become one of this year’s most notable proxy battles. After those talks failed, both sides exchanged sharp criticisms. The company stated in a regulatory filing last week that Wilson, who departed Lululemon’s board in 2015, holds “outdated perspectives” regarding the company’s strategic direction and has “troubling conflicts of interest.”
For several months, Wilson has voiced criticism of the company, claiming it has lost its “cool” factor and expressing concerns about current management practices.
Wilson initiated a proxy fight late last year and has spent recent months attempting to convince shareholders to support his three director candidates rather than the company’s three board members up for election at next month’s annual shareholder meeting.
The athletic wear company has experienced declining sales in North America, with its stock price dropping more than 60% over the past year as it faces increased competition from brands like Alo and Vuori.
With a market valuation approaching $15 billion, the company’s stock recently traded around $127, significantly down from its peak near $510 reached in late 2023.
Despite these challenges, the company has been preparing for a new phase by naming O’Neill, who developed Nike’s women’s business division, as its new CEO. The board has also welcomed former Levi Strauss CEO Chip Bergh and former Unilever chief growth and marketing officer Esi Eggleston Bracey as new directors.
Teri List, previously chief financial officer at Gap, joined the board in 2024. Directors David Mussafer and Shane Grant are scheduled to leave the board at the upcoming annual meeting.
O’Neill, who has a noncompete clause with Nike, is set to begin her role in September after being unanimously selected by the board, according to sources familiar with the selection process and investors who requested anonymity.
