Lululemon Athletica Inc (NASDAQ:LULU) said its chief executive has resigned effective immediately because he fell short of the yogawear maker’s standards of conduct.
Laurent Potdevin, who took the helm of the Vancouver-based company in early 2014, also stepped down from the board.
READ: Lululemon shares tick higher premarket after upping fourth quarter profit and revenue guidance ranges
The group did not explain the nature of the conduct that led to Potdevin’s departure but suggested it had something to do with the way he treated staff.
Potdevin failed to “exemplify the highest levels of integrity and respect for one another”, the company said.
Leaders need to set the right tone, says chairman
“While this was a difficult and considered decision, the board thanks Laurent for his work in strengthening the company and positioning it for the future,” Glenn Murphy, chairman of the board, said.
“Culture is at the core of Lululemon, and it is the responsibility of leaders to set the right tone in our organisation.
“Protecting the organisation’s culture is one of the board's most important duties.”
Shares fell 1.5% to US$77.41 each in US pre-market trade.
Lululemon has promoted three existing members of the team to step in while it searches for a replacement.
In a separation agreement filed with the Securities and Exchange Commission, the company said it will pay Potdevin an upfront cash payment of US$3.35mln followed by another US$1.65mln over 18 months.
Prior to joining Lululemon, Potdevin was president of Toms Shoes and chief executive of Burton Snowboards.
'Sheergate' and other controversies
The news comes just as Lululemon started to spring back from a series of problems in recent years. In 2013, the company recalled a line of yoga pants after customers complained they were see-through in what became known as the “sheergate” controversy.
Less than nine months later, founder Chris Wilson blamed women’s bodies for their concerns over the quality of Lululemon leggings.
“Frankly, some women’s bodies just don’t actually work,” Wilson said in an interview with Bloomberg.
“It’s more really about the rubbing through the thighs, how much pressure is there over a period of time, how much they use it.”
Shares added 0.61% to US$77.88 each.