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Lululemon Athletica (LULU.O) founder Chip Wilson raised concerns about the struggling athletic-wear maker's appointment of ex-Nike executive Heidi O'Neill as CEO as he continues to push for new directors to revive the aging brand.
Wilson, who has criticized the stretchy yoga pants maker for having lost its "cool" factor, launched a proxy battle earlier this year to install three directors on Lululemon's board. He has said for months that any CEO appointed without a board overhaul would not have his support.
"Now more than ever, the next CEO needs brand and product support on the board to help attract leading talent and deliver a turnaround," Wilson wrote to other shareholders on Wednesday. "Unfortunately for Heidi and shareholders, this support is clearly not currently represented on the Board."
Wilson is speaking out fully for the first time since the company on Tuesday appointed a new director and last week named O'Neill as its CEO.
"The existing Board does not have the skillset to hire a world-class brand/product person who can deliver on the newest zeitgeist or style of the moment."
Wilson, who owns 8.6% of the company but has held no position there since he exited the board in 2015, also blames the board for failing to settle his proxy fight.
He wrote that the board asked him to put millions of dollars into an escrow account to cover "hypothetical, potential future breach of the non-disparagement" clause. "The Board's self-interest and personal history have prevented any actual productive talks," the letter said.
Lululemon shares have sunk 47% in the last 12 months, leaving the company with a market value of $16.5 billion. The stock price fell 15% over the last five days as investors reacted to news of O'Neill's appointment.
Elliott Investment Management, one of the world's most prominent activist investors, also holds a big stake in Lululemon and had suggested former Ralph Lauren executive Jane Nielsen as CEO.
Elliott has not spoken publicly about the CEO selection.
But some investors also praised new CEO O'Neill's background, noting she combined product leadership with managing a large organization and said they were willing to give the company some time to fix its problems.
Lululemon did not immediately respond to a Reuters request for comment on Wilson's letter. Lululemon published a regulatory filing on Tuesday, which showed that discussions were ongoing between the company and Wilson, but no settlement had been reached.
The Financial Times first reported on Wilson's letter on the new CEO appointment to Lululemon's board.
