By Jordan Valinsky, CNN
New York (CNN) — Lululemon has settled its high-profile feud with founder Chip Wilson, and the deal includes a clause preventing him from badmouthing the company for a year and a half.
On Wednesday the struggling athleisure brand announced it had reached a “cooperation agreement” with Wilson, the company’s second largest shareholder. The agreement will add two of Wilson’s previously announced nominees to its board next month, and an additional “director with product and brand expertise in apparel” will join by October.
The agreement also includes a non-disparagement clause, in which Wilson must stop publicly bashing Lululemon for 18 months.
Wilson has been outspoken about his largely negative views regarding the company he founded in 1998. He said the brand has lost its “cool” factor, and he has criticized its diversity and inclusion efforts.
The announcement ends a five-month proxy fight that Wilson launched because, he said, Lululemon’s board had lacked the “visionary creative leadership to thrive.” In his view, new leaders were “needed to redefine Lululemon and begin this company’s next chapter of success.”
Wilson’s board picks, who include an ex-ESPN marketing executive and the former leader of rival athletic wear brand On, “reflect meaningful progress toward restoring the company’s product-first vision and unlocking tremendous value for shareholders,” he said.
Wednesday’s agreement clears a major obstacle for incoming CEO Heidi O’Neill, who begins at Lululemon (LULU) in September.
O’Neill is a former Nike executive, and she faces the Herculean task of turning around the Lululemon. Shares have dived more than 30% since the beginning of the year as the company struggles with tariffs, consumer pullback from discretionary spending and mounting competition.
Lululemon’s executive chair Marti Morfitt said in a statement the company is “pleased to reach this agreement” with Wilson, which “allows Lululemon to focus on continuing to strengthen its performance.”
The-CNN-Wire
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