Lululemon Athletica Inc. (LULU - Get Report) Laurent Potdevin has resigned as CEO, the company announced Monday, Feb. 5. Potdevin, who has helmed the company since January 2014, will step down from his chief executive role as well as from the company's board of directors, effective immediately.
As the yoga pants-maker searches for a new CEO, the company will be led by Glenn Murphy, the chairman of the board who will now be the executive chairman.
"Lululemon expects all employees to exemplify the highest levels of integrity and respect for one another, and Mr. Potdevin fell short of these standards of conduct," the company said in a statement.
It wasn't one single action or event that prompted his resignation, but a "range of instances in which he demonstrated a lack of leadership," according to a person familiar with the matter.
Potdevin will be paid a total of $5 million in severance according to an SEC filing.
Under the terms of his resignation, Lulu will pay Potdevin "a lump sum cash payment of $3,350,000 as soon as practicable after the effective date of the separation, and a cash payment of $1,650,000 to be paid over a period of 18 months in equal monthly installments beginning 60 days after the separation date," the filing said.
"Culture is at the core of Lululemon, and it is the responsibility of leaders to set the right tone in our organization," Murphy said in the statement. "Protecting the organization's culture is one of the board's most important duties."
In the interim, three of Lululemon's senior leaders will take on expanded responsibilities and report to Murphy, including Americas VP Celeste Burgoyne, who will take on a global role; Chief Operating Officer Stuart Haselden, who will be responsible operations related to finance, supply chain, people and technology; and Sun Choe, SVP of merchandising, who will oversee product development, design, innovation and merchandising.
Potdevin's sudden departure comes as a surprise for shareholders given Lulu's growth in recent years.
"While the reasons for the departure of Laurent Potdevin are unclear, his exit is a blow to Lululemon," Neil Saunders, the head of GlobalData's retail segment, said in a statement Monday. "We also believe that today's announcement is vague and damaging. Lululemon owes it to investors and to customers, to be clear about the reasons Mr. Potdevin was made to depart. As a company that prides itself on transparency and openness, we would expect it to have an honest conversation with stakeholders."
Lululemon has been a standout performer among retailers, even as other sportswear brands have suffered slow sales. In its third-quarter earnings report in December, the company posted comparable sales increase of 7%. Shares grew about 16% the past year.
Under Potdevin, Lulu's menswear business grew substantially, seeing a 21% increase in new male shoppers in the third quarter. Lulu shares are down 3% Monday after-hours, trading at $77.41.
Lululemon could not immediately be reached for comment.