Athletica Inc. said its chief executive,
resigned after unspecified behavior that failed to meet the company’s standards, an abrupt exit that surprised investors of the fitness apparel maker.
The company said Monday afternoon that Mr. Potdevin, who had been its top executive since January 2014, had resigned as CEO and a board member, effective immediately. The Vancouver-based company has started a search for a new CEO.
It wasn’t immediately clear how the 50-year-old had fallen short of the company’s standards. There were “a range of instances” where his actions didn’t align with company policy on leadership and conduct, according to a person familiar with the matter. There have been no legal settlements or criminal charges related to the alleged behavior, the person said.
expects all employees to exemplify the highest levels of integrity and respect for one another, and Mr. Potdevin fell short,” the company said in a statement, without providing additional details.
Mr. Potdevin didn’t respond to a request for comment. Before joining
he served as president of Toms Shoes and as chief executive of Burton Snowboards, where he spent 15 years. After growing up in Geneva and studying engineering, he went to business school in Paris and moved into the fashion business.
sales have remained strong during a difficult period for many retailers and its shares, which rallied nearly 20% in price over the past year, were trading near all-time highs. Shares fell 3% to $75 in after-hours trading after The Wall Street Journal reported the CEO’s exit. The company has a market value of about $10 billion.
“It is the responsibility of leaders to set the right tone in our organization,” said
chairman, in a statement. “Protecting the organization’s culture is one of the Board’s most important duties.”
Mr. Murphy, a former CEO at Gap Inc., will take over additional duties in the interim while the company starts searching for a new CEO. Lululemon’s senior executives will report directly to Mr. Murphy.
Since joining the company four years ago, Mr. Potdevin guided Lululemon through supply-chain issues and revamped its assortment of colorful athletic gear. He took over at a rocky time for the company when it had to recall some of its yoga pants because the material was too sheer.
In a regulatory filing Monday, Lululemon said it would pay Mr. Potdevin an upfront cash payment of $3.35 million as well as $1.65 million over 18 months as part of his separation agreement. He won’t receive any continued or accelerated vesting of equity awards.
Under an employment agreement disclosed in December 2013, Mr. Potdevin was eligible for severance equal to 18 months of his base salary and accelerated vesting of “certain outstanding equity awards” if fellow directors terminated him without cause or he quit for good reason.
The value of the CEO’s unvested equity was $9 million based on the company’s Monday share price, according to
managing director at Overture Group, a human-resources consulting firm not involved in the matter. Mr. Potdevin’s salary was set at $1.1 million for fiscal 2017, according to Lululemon’s latest proxy.
While the business has been strong, it faces increased competition from
and others pushing into the market for athletic apparel. Also, Lululemon has been caught up in public board disputes in previous years.
The retailer’s founder and former CEO, Dennis “Chip” Wilson, had publicly criticized Mr. Potdevin’s leadership of the brand.
Mr. Wilson resigned as chairman in 2014, selling a 14% stake to private-equity firm Advent International, which has two board seats. Mr. Wilson remains the largest individual shareholder with about 7% of shares outstanding, according to S&P Global Market Intelligence.