In a letter released to shareholders, Wilson called for immediate reforms, including updating the boardroom and creating a brand product committee.
Wilson said private discussions with the board in recent months have not yielded results and accused the board of failing to act on issues he flagged.
“The heart of the matter is the relationship between the company’s creative engine and the board’s strategic oversight of how the intangible strengths of the brand and product translate into brand strength, margin sustainability, and long-term shareholder value,” Wilson wrote. “Brand, creative and marketing skills are missing from the boardroom,” he added.
According to Wilson, Lululemon’s stock price has nearly halved over the past five years, costing shareholders an estimated $20 billion in value.
Wilson noted that several directors had lost more than 20% of shareholder support, citing what he described as “clear, palpable and persistent frustration” with current leadership.
He also referred to the crisis in appointing a new permanent CEO which he said was caused by the third failed succession planning process.
“It should be abundantly clear that shareholders expect this board to fulfill its fiduciary duty and act with urgency, clarity and humility. Unfortunately, we have seen none of that in our engagement.” Weldon said.
Efforts to resolve the differences began on December 15 when Wilson presented the board with a framework for change. After receiving no response before the nomination deadline, he nominated three independent director candidates, Mark Maurer, Laura Gentile and Eric Hirschberg, and proposed to the board on December 29.
A candidate later met with some directors, but Wilson criticized the speed of engagement, saying “the board only engaged with our framework for the first time on February 24, 70 days later.” He described their response as “weak and inadequate”.
In appointing the three directors, Lululemon emphasized that it has a “very engaged and experienced board, well equipped to guide the future direction of the company”.
Wilson also reported that his proposal for a brand product committee was rejected by the board, despite his proven success at other companies such as Amir Sports, where he explained a similar concept that allows brands like Wilson and Architrix to deliver sustainable performance.
In response to Chip Wilson’s letter, Lululemon said it continued to engage with him in “good faith,” but disputed the nature of his interactions with the board.
