Lululemon Founder Chip Wilson Will Not Take on the Company's Board
For a while, it looked like a civil war was brewing over at yoga-retailer Lululemon. In June, just hours before its annual shareholder's meeting, former CEO Chip Wilson -- the company's founder and largest shareholder -- announced he was voting against the re-election of two outside board members, citing concerns that the board was sacrificing long-term corporate goals for short-term results. When they were elected anyway, Wilson turned to Goldman Sachs to weigh his options. It was widely expected he would make a play for more control of the company.
But the waters have since calmed. In lieu of waging a proxy fight for the board, Wilson -- who owns 40 million shares or 27.7 percent of the company – will instead sell half his shares to Advent, a private equity firm, for $845 million. Under the deal, Advent not only gets a 13.9 percent stake in the company, but also scoops up two seats on the board. Wilson, meanwhile, has agreed that he will not pursue a buyout for at least a year, effectively ending the stand-off.
In a complete about-face from the last (very prickly) statement he issued to shareholders about the board, he continued: "Lululemon is well positioned to successfully execute on its strategic goals, and I look forward to working alongside the entire Board and management team as we focus on leveraging our core values of product and innovation to enhance value for all shareholders."
By halving his shares, Wilson further reduces his influence over the company he founded in 1998. While he resigned as chief executive back in 2005, Wilson only recently stepped down as non-executive chairman, following a damaging television interview in which he implied that the company was only forced to recall a line of see-through yoga pants because of overweight customers.