By Svea Herbst-Bayliss
NEW YORK, May 26 (Reuters) - Lululemon Athletica is nearing a settlement with Chip Wilson that would give the athletic apparel maker's founder board seats in exchange for a pledge of peace from one of its biggest investors, sources familiar with the matter told Reuters.
The two sides are discussing a deal that would expand the board by appointing two of Wilson's nominees to the board with a promise to find another mutually agreed-on director later, said the sources, who aren't
permitted to discuss the private talks publicly. An agreement would also give Wilson access to Heidi O'Neill, Lululemon's incoming chief executive officer, on a regular basis, the sources said.
In return Wilson, who owns 8.6% of the company he founded in 1998, would promise not to badmouth Lululemon publicly or privately for roughly two years while his ownership stake would be capped at around 10%, the sources said.
But they also cautioned that no deal is guaranteed.
Representatives for the company and Wilson could not be immediately reached for comment.
The current discussions come just days after previous efforts to end one of the year's most prominent proxy fights broke down. A volley of criticisms followed. The company said last week in a regulatory filing that Wilson, who left Lululemon's board in 2015, has "outdated perspectives" about how to position the company as well as "troubling conflicts of interest."
Wilson has criticized the company for months, accusing it of having lost its "cool" factor and raising concerns about management.
Late last year, Wilson launched a proxy fight and has spent this year trying to persuade investors to vote for his slate of three director candidates instead of the company's three board members who will stand for election at next month's annual meeting.
Lululemon sales in North America have fallen and the stock price has tumbled more than 60% in the last 12 months as the company also faces competition from Alo and Vuori.
The company has a market valuation of nearly $15 billion and its stock price last traded around $127, down from its high near $510 hit in late 2023.
But it has also been laying the groundwork for a new chapter by appointing O'Neill, who built Nike's women's business, as its new CEO and adding former Levi Strauss CEO Chip Bergh and former Unilever chief growth and marketing officer Esi Eggleston Bracey to the board.
Teri List, a former chief financial officer at Gap, joined the board in 2024. Directors David Mussafer and Shane Grant will step off the board at the upcoming annual meeting.
O'Neill, who has a noncompete agreement with Nike, will start work in September after having been unanimously chosen by the board, sources familiar with the process and investors who asked not to be identified said.
(Reporting by Svea Herbst-Bayliss, Editing by Nick Zieminski)
