Remember that butt-crack-joke-filled week back in March, when Lululemon issued a recall of 17% of their black Luon pants because of an unacceptable level of sheerness, resulting in a predicated $67 million loss in sales? Well, it turns out that Lululemon gave their executives a fat new bonus incentive plan mere days before the recall was announced. Convenient, right?
One of Lululemon’s shareholders, a Florida-based pension fund, thinks so anyway. According to Reuters, the Hallandale Beach Police Officers and Firefighters’ Personnel Retirement Fund is suing the maker of pricey yoga pants because they believe the company knew the recall was happening, and still gave its execs a 33% increase in maximum bonus payout, according to the New York Post. (To clarify, execs would need to meet certain goals to get the payouts, but once they meet those goals, they’re eligible for more cash than they had been in the past.)
The pension fund is alleging that Lululemon “violated its fiduciary obligations and damaged the company and its shareholders” by voting for an executive bonus increase in the face of a potentially costly product recall. According to the New York Post, the fund had written to Lululemon for a copy of board meeting minutes to determine the timing of the recall vs. the bonus increase, but Lululemon never responded, so the fund slapped them with the lawsuit.
Lululemon’s stock price is now trading above where it was before the recall, so it remains to be seen if the lawsuit will go anywhere. Neither parties involved responded to newspapers’ requests for comment.