lululemon Founder Chip Wilson Critical of Board’s Adoption of “Virtual” Annual Meeting in Op-Ed Published by Globe And Mail

Says Connectivity and Alignment with Shareholders Should Be Valued

VANCOUVER, British Columbia--()--The following op-ed written by Chip Wilson, founder and largest shareholder of lululemon athletica inc. (NASDAQ:LULU) criticizing lululemon’s “virtual” annual meeting, was published today by the Globe And Mail:

“a completely virtual annual general meeting of stockholders”


By Chip Wilson

The contrast is startling. Two great businesses. Two corporate leaders in their respective markets; each operating in a competitive and disrupted environment. Two companies brought to life by entrepreneurial founders whose families each remain the largest shareholders of their now public companies. Yet that is where the similarities end as it relates to respect and desired connectivity to their respective shareholders.

This week, Wal-Mart Stores Inc. hosted its annual shareholder meeting in its home state of Arkansas. It was a full-day affair. The CEO discussed strategy, the CFO reviewed financials, progress and issues that the retailer sought to address. They even had a comedian! lululemon athletica inc., the company I founded and where I remain the largest shareholder, also held its annual meeting Thursday. You would be forgiven if you didn’t know about it. Like other companies facing tough questions from shareholders, lululemon chose to conduct “a completely virtual annual general meeting of stockholders”, via a voice-only webcast.

The misnamed “meeting” lasted all of 20 minutes and lacked any transparency. Shareholders couldn’t personally ask questions. Questions had to be previously submitted by email. They were then vetted and read or recast by the board. Only four “softball” questions acceptable to the board were selected and addressed. It was a perfect example of how unresponsive lululemon has become to its shareholders. An annual meeting is the one opportunity shareholders have to look management in the eye, to interact with them and lululemon took that away.

Not even a shareholder who owns 14.2% of the shares has a voice in lululemon. I asked for 10 minutes to address shareholders at the annual meeting; that request was denied. I submitted just a few questions; they paraphrased and responded to only one. I was forced to outline my thoughts and concerns in an open letter to shareholders. The response from the company, via press release, was in essence look at our “operational performance”; you just wait for us to beat the street’s earnings estimates next week (that were once again managed down from what the street was expecting, 37 cents, to new guidance of 28-30 cents).

I control shares worth $1.35 billion and care very much about the company, its employees and shareholders. I would be remiss if I didn’t do everything I can to ensure our investment yields its full potential for myself and the larger community of fellow shareholders.

To be clear, it is not my desire to go back inside lululemon and run the company. Rather, I want to see the right team with the best capabilities in place to execute a strategy that will return vision, innovation and value creation to lululemon, traits that have been noticeably absent under this current board and management.

In the meantime, I – along with all shareholders – am left to judge management and the board on what they have articulated as their strategy and how they have performed against that strategy. It is not encouraging. On my website,, I provide some analysis showing that if management had just executed marginally on their stated initiatives, the stock would be 150% higher, with around $500 million of additional low-hanging fruit EBITDA.

This is not lost on the stock market: Since the lululemon’s current CEO has been in place, the value of Under Armour has increased 79%, Nike is up 45% and the general stock market, as measured by the S&P 500, is up 16%. Yet lululemon stock has dropped 8%. This appears to indicate that investors do not believe lululemon can grow and earn like its competitors.

What is the right “lens” of opportunity for this great company? I feel like I am listening to a replay of the Kodak board who could not get off the drug of milking the brand for cash and refused to take the risks necessary to perpetuate their position in the market they created. Our board needs to be thinking like Tesla and how we can create a brand, product, market and connectivity with our customer that is unique in a sea of apparel alternatives. The bar is how lululemon owns the next decade in the biggest change in the way people will dress in the history of the world. If this board views a quarterly beat of “managed” analyst expectations off of a low base as success, I am that much more convinced that change is needed.

I hope the company’s board will be more transparent, responsive and not combative with me in making this happen. This board should be aligned with the creation of shareholder value, not at odds with it.

I have been vocal about the need for the company to declassify the board so that directors are elected annually, rather than staggered in threes. Approximately 90% of the companies in the S&P 500 have de-staggered boards. If this is not the right board and team, shareholders should not be required to wait years to course correct, if that is what they want to do.

So why is all this “governance” important? I am an owner of lululemon for the long-term. My view on performance will be measured over decades not quarters. I am focused on a productive, but urgent pace of change. lululemon is treading water and is going to get lapped. So I ask, once again, does the current lululemon board and management team plan to get back to our original leadership position compared to our competitors, in a market we invented and built? If yes, by when, and what are the exact signs, metrics and signals we should be looking for to indicate your plan is working?

Chip Wilson is the founder, former chairman and largest shareholder of lululemon

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