Lululemon founder Wilson ramps up pressure on board amid proxy fight

Feb 27 (Reuters) – Lululemon Athletica founder Chip Wilson stepped up his campaign for board and governance changes at the struggling athletic apparel maker on Friday, including replacing more than three directors.

The move heightened tensions between the Canadian yoga wear maker and its founder, who has increasingly criticized the board’s strategic direction, its handling of CEO succession and what he describes as a lack of creative and marketing expertise at the top.

Wilson had launched a proxy fight at the end of last year by nominating three independent directors — Marc Maurer, Laura Gentile and Eric Hirshberg — to the company’s board, and called for annual board elections.

“While we have proposed changing three directors, our strong feeling is that more than three directors should be replaced,” Wilson said in a letter to shareholders.

Following director nominations in December, Wilson said the board engaged with them only earlier this week, and that its response was “weak and insufficient.”

Lululemon said in its response that Wilson had refused to make his nominees available unless the board first agreed to a full slate of settlement terms. So far, only Maurer has had preliminary conversations with the board.

“The board remains open to engaging with Mr. Wilson as well as the company’s other shareholders,” it said.

Wilson, one of the biggest independent shareholders of Lululemon with a 4.27% stake, also said the board rejected his proposal to create a committee focused on brand, product and creative oversight.

His campaign comes as the company’s shares have lost nearly half of their value over the past 12 months, with the brand struggling to retain younger and affluent shoppers amid intense competition from fast-growing rivals such as Alo Yoga and Vuori.

Lululemon is also operating without a permanent CEO after Calvin McDonald’s departure in December, and is facing pressure from activist investor Elliott Investment Management, which has built a stake of more than $1  billion in the retailer.

(Reporting by Savyata Mishra in Bengaluru; Editing by Shilpi Majumdar)