Corporate Law News

Lululemon Investor Sues Board, Top Execs Over Ex-CEO’s Ouster

Nov. 21, 2018, 4:24 PM

Lululemon Athletica Inc.'s directors and officers face a stockholder-driven lawsuit for their handling of ex-CEO Laurent Potdevin’s departure from the leggings and yoga pants retailer.

Potdevin resigned in February, which the Vancouver-based company attributed to his failure “to exemplify the highest levels of integrity and respect for one another.” The company didn’t reveal details, but several media reports at the time suggested the move was linked to Potdevin’s relationship with a former employee, and to the culture he created at the office.

The new complaint, filed Nov. 20 under seal in Delaware Chancery Court, accuses Lululemon board members and executives of breaching their fiduciary duties, wasting corporate assets and unjust enrichment. Potdevin is also named as a defendant.

According to a demand for access to Lululemon’s books and records sent in April by the suing investor’s lawyers, the board gave Potdevin “an extremely lucrative” separation agreement “despite the seriousness of the wrongdoing and the harm” to the company.

The case is Shabbouei v. Potdevin, et al., Del. Ch., No. 2018-0847, complaint filed 11/20/18.

To contact the reporter on this story: Jacob Rund in Washington at jrund@bloomberglaw.com

To contact the editor responsible for this story: Roger Yu at ryu@bloomberglaw.com