Lululemon is reportedly closing in on a settlement with founder Chip Wilson that could bring an end to one of the year’s most high-profile retail proxy battles.

The activewear giant is discussing a deal that would give Wilson two board seats in exchange for a pledge not to criticise the business publicly or privately for around two years, Reuters reported.

Under the proposed agreement, Lululemon would expand its board by appointing two of Wilson’s nominees, while also agreeing to find a third mutually approved director at a later date.

The deal would also give Wilson regular access to incoming chief executive Heidi O’Neill, who is set to join the retailer in September after previously leading Nike’s women’s business.

In return, Wilson’s stake in the business would be capped at around 10 per cent. The founder currently owns 8.6 per cent of the company he launched in 1998.

However, sources noted that no agreement has yet been finalised.

The talks come after earlier efforts to settle the dispute broke down last week, with Lululemon accusing Wilson of having “outdated perspectives” on how the brand should be positioned.

Wilson has spent recent months criticising the retailer, arguing that Lululemon has lost its “cool” factor and raising concerns over its leadership and board.

He launched a proxy fight late last year and has been urging shareholders to back three of his director nominees at next month’s annual meeting, rather than the company’s own candidates.

The dispute has intensified as Lululemon faces mounting pressure in its core North American market, where sales have weakened and competition from the likes of Alo and Vuori has increased.

Its share price has fallen more than 60 per cent over the past year, with the stock recently trading at around $127, down from a high of nearly $510 in late 2023.

The retailer has been attempting to reset its leadership team ahead of O’Neill’s arrival. It has appointed former Levi Strauss chief executive Chip Bergh and former Unilever chief growth and marketing officer Esi Eggleston Bracey to its board.

Former Gap chief financial officer Teri List joined the board in 2024, while directors David Mussafer and Shane Grant are set to step down at the upcoming annual meeting.

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