Lululemon Athletica Inc. has been sued by Hallandale Beach Police Officers and Firefighters’ Personnel Retirement Fund in Florida, the Associated Press reported. Great, what did lulu do now, try to get retired first responders to put out their PR fires? Not exactly. The suing party are Lululemon shareholders and they are not cool with the board of directors approving increases in executive bonuses right before the recall of 17-20% of their yoga pants, which will likely affect the company’s bottom line somewhere in the $40-60 million range.
The timeline goes something like this:
March 11: Lululemon is made aware of the extent of the pants problem after their regular weekly phone calls with store managers, as far as we know, and as much as we’re told so on their website later on.
March 13: Lululemon’s “compensation committee” approved an amendment to the company’s executive bonus plan that “increased executives’ maximum performance benchmarks by one third,” according to the lawsuit.
March 16-17: Recall is announced, shit hits the fan, stock prices plummet, rioting in the streets, etc. You remember, you were there.
March 19: Lululemon announced the amendment to the executive bonus plan in a regulatory filing.
Not too long after: Hallandale Beach Police Officers and Firefighters’ Personnel Retirement Fund: oh no you didn’t!
The fund is saying the amendment to increase executive cha-ching is not only a big f-u, but is in breach of the board’s obligations to the company employees and shareholders because they knew about the impending recall.
By doing this, the board of directors appears “to have violated its fiduciary obligations and damaged the company and its shareholders,” the plaintiffs contend in the lawsuit.
The fund said it wrote Lululemon seeking permission to inspect minutes of the company’s board of directors’ meetings, among other documents, but its request went unanswered.
The lawsuit was filed in the Court of Chancery in Delaware, where Lululemon, and every other corporation that’s not incorporated in Texas, is incorporated. No further details on whether the plaintiffs are seeking reparations more for financial loss or emotional anguish from shady under(pants)dealings.
And so the see-through pantscapade saga continues. When they will give in and make it a 3-part Lifetime mini series, only time will tell.
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