Lululemon Athletica said it had attempted to reach a negotiated end to its contentious proxy fight with founder Chip Wilson as recently as last week, but talks collapsed when Wilson presented what the company called escalating demands, according to a regulatory filing on Monday.
The athletic apparel maker said it postponed submitting its definitive proxy statement while it explored a settlement with Wilson. The company said Wilson submitted counter-proposals to a previously discussed term sheet last week, but that the counterproposal represented "a significant departure from what had been discussed."
Among the items Lululemon reported Wilson requested was the placement of three directors selected by him on the board, including the immediate installation of two of his nominees and a third nominee drawn from a pool he would select. In addition, Wilson sought quarterly meetings with the company’s newly appointed chief executive officer.
The regulatory filing noted the company had been attempting to negotiate a resolution before advancing its proxy disclosures, but said the founder’s counterproposal was not aligned with prior discussions and expectations. A representative for Wilson was not immediately available for comment.
Wilson founded Lululemon in 1998 and stepped down from the board in 2015. He has criticized the company in public statements for losing its perceived "cool" factor and is urging shareholders to elect three new directors at the company’s upcoming annual meeting next month.
Meanwhile, Lululemon has added two new directors in recent months and announced the appointment of former Nike executive Heidi O’Neill as its new CEO. The filing implies the company viewed the proposed governance changes and requested cadence of executive meetings as outside the bounds of the settlement framework it had been discussing with Wilson.
The filing provides the company’s account of the negotiation timeline and the specific items that triggered the breakdown, while leaving unresolved whether the parties will return to the table before the annual meeting. The company’s delay in filing the definitive proxy statement reflected its hope for a negotiated settlement that ultimately did not materialize under the terms presented by Wilson.