Calvin McDonald
lululemon athleticaAbout Calvin McDonald
Calvin McDonald, 53, has served as lululemon’s Chief Executive Officer and director since August 2018; he holds an MBA from the University of Toronto and a B.S. from the University of Western Ontario, and currently serves on The Walt Disney Company’s board of directors . Under his leadership, net revenue grew 19% CAGR from fiscal 2021 to 2024, reaching $10.6B in 2024 (+10% y/y), with operating income at $2.5B (+17% y/y) and gross margin at 59.2% (+90 bps) . In 2023, net revenue rose 19% to $9.6B, operating income increased 61% to $2.1B, and adjusted operating income rose 25% to $2.2B, reflecting strong execution on the “Power of Three ×2” plan .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Sephora Americas (LVMH) | President & CEO | 5 | Led growth and operations of a major luxury beauty retailer across the Americas |
| Sears Canada | President & CEO | 2 | Orchestrated turnaround initiatives in Canadian retail |
| Loblaw Companies Limited | Various leadership roles | 17 | Built deep retail operating experience in grocery/pharmacy scale environments |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| The Walt Disney Company | Director | Current | Cross-industry consumer brand and content expertise; governance exposure at a global scale |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 1,250,000 | 1,292,308 | 1,342,453 |
| Target Bonus (% of Salary) | 200% | 200% | 200% |
| Actual Bonus ($) | 4,375,000 | 5,169,231 | 2,172,089 |
| Perquisites & Other ($) | 39,025 | 33,290 | 37,577 |
| Total Compensation ($) | 15,663,837 | 16,494,777 | 14,551,916 |
Notes:
- 2024 annual bonus payout equaled 80.9% of target across two metrics (operating income and net revenue, weighted 50/50) .
- Perquisite tax gross-ups exist (e.g., $13,975 in 2024) but golden parachute tax gross-ups are prohibited by policy .
Performance Compensation
| Element | Metric | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|---|
| Annual Cash Bonus (2024) | Operating Income | 50% | Company-set thresholds | Met (weighted) | 80.9% of target | N/A (cash) |
| Annual Cash Bonus (2024) | Net Revenue | 50% | Company-set thresholds | Met (weighted) | 80.9% of target | N/A (cash) |
| PSUs (2022 grant, perf. period 2022–2024) | Operating Income CAGR vs FY2021 baseline ($1,374.7M) | 100% | 5% threshold; 10% target; 15% max | 22.2% CAGR | 200% of target | 3-year cliff vest |
2024 CEO equity grant mix and details:
- Stock Options: 41,352 options at $388.90 strike; vest 25% annually over 4 years; 7-year term .
- PSUs: 14,142 target units (0–200% payout); 3-year performance period; vest at end of period .
2025 design update:
- FY2025 CEO equity mix revised to 60% PSUs / 40% options; base salary $1,400,000; target bonus 200%; annual equity $13,000,000 to reinforce pay-for-performance .
Equity Ownership & Alignment
| As of | Shares Owned | Right to Acquire (60 days) | Total Beneficial | Ownership % | Ownership Guideline |
|---|---|---|---|---|---|
| April 1, 2025 | 102,258 | 246,055 | 348,313 | <1% | CEO must hold stock equal to 5x base salary; must retain 75% of net shares until compliant |
- Hedging/pledging prohibited; trades limited to open windows or Rule 10b5-1 plans with preclearance .
- Outstanding options (selected grants): e.g., 03/25/2024 unexercisable 41,352 at $388.90; 03/30/2023 unexercisable 28,849 at $358.09; earlier grants partially/exercisable .
- Unvested PSUs at FY2024 year-end: 13,265 (2022 grant), 13,963 (2023 grant), 14,142 (2024 grant) at target .
Insider selling pressure indicators (vesting/exercises):
| Metric | FY 2023 | FY 2024 |
|---|---|---|
| Options Exercised (#) | 25,000 (two tranches from 2018 grant) | 0 |
| Value Realized on Option Exercise ($) | 4,479,127; 4,541,661 | — |
| Stock Awards Vested (#) | 29,532 | 26,084 |
| Value Realized on Vesting ($) | 9,368,141 | 10,047,557 |
Employment Terms
| Scenario (Illustrative as of FY-end) | Severance ($) | Accelerated Equity Intrinsic Value ($) | Total ($) |
|---|---|---|---|
| Death (FY2025) | — | 21,695,076 | 21,695,076 |
| Disability (FY2025) | — | 22,629,817 | 22,629,817 |
| Change in Control (FY2025) | 2,025,000 | 21,695,076 | 23,720,076 |
| Involuntary w/o Cause (FY2025) | 2,025,000 | 10,988,726 | 13,013,726 |
| Death (FY2024) | — | 34,344,205 | 34,344,205 |
| Change in Control (FY2024) | 1,950,000 | 34,344,205 | 36,294,205 |
Terms summary:
- Employment agreements allow termination with/without cause; severance subject to release and compliance with non-compete/non-solicit/non-disparagement .
- CIC equity: PSUs/RSUs fully vest if not assumed/substituted; double trigger vesting upon termination without cause or for good reason within two years of CIC; options subject to board discretion .
- Clawback: recovery of erroneously awarded incentive-based comp for 3 completed fiscal years prior to restatement; multiple recovery sources permitted .
- Policies: no single-trigger severance; no discounted options; no option repricing; no golden parachute tax gross-ups .
Board Governance
| Attribute | Detail |
|---|---|
| Board role | Director since 2018 (Class II); not independent due to executive role |
| Committees | None (CEO directors do not serve on standing committees) |
| Leadership structure | Independent Chair (Martha Morfitt) and Lead Director (David Mussafer); CEO and Chair roles separated |
| Executive sessions | Non-management directors meet in executive session with each regularly scheduled board meeting |
| Attendance | In 2024, all directors attended ≥75% of board/committee meetings; board held six meetings |
Director Compensation
Non-employee directors only; CEO directors do not receive additional pay for board service.
| FY 2024 Design | Amount ($) |
|---|---|
| Base Annual Cash Retainer (Non-Employee) | 100,000 |
| Chair / Lead Director | 160,000 / 50,000 |
| Committee Chairs (Audit / PCCC / CRSG) | 30,000 / 30,000 / 20,000 |
| Committee Members (Audit / PCCC / CRSG) | 15,000 / 12,500 / 10,000 |
| Annual Equity (Restricted Stock, 1-yr vest) | 160,000 |
| Ownership guideline | 5x base retainer; 5 years to comply |
FY2024 actual director payouts example totals are disclosed for non-employee directors (e.g., Chair $433,587) .
Performance & Track Record
- Strategy execution: Continuation of “Power of Three ×2” plan with 19% CAGR net revenue from FY2021–FY2024 .
- Market expansion: 767 stores across 23 markets by FY2024; China Mainland surpassed $1B sales; acquisition of Mexico operations; 32 net new stores internationally in 2024 .
- Product & innovation: Expanded men’s footwear; first enzymatically recycled nylon 6,6 product with Samsara Eco; multiple product innovations .
- Guest/community: Membership expansion and brand activations across regions .
- Learnings: Non-GAAP adjustments reflect lululemon Studio impairment (used in 2023 adjusted metrics) .
Compensation Committee Analysis
- Independent consultant: Willis Towers Watson (WTW) advises PCCC; independence affirmed; 2023 fees $296,283 comp-related and $199,251 for other services; 2024 management engagements totaled < $120,000 and were separate from PCCC advisor team .
- Peer group (benchmarking inflation risk): Retail and consumer brand mix; updated for FY2025 to include Nike, Starbucks, Ross Stores, Skechers alongside prior peers .
- Say-on-Pay results: 93% approval in 2024; 94% in 2023; frequency of annual vote confirmed .
Equity Program Mechanics (Vesting)
| Instrument | Vesting | Expiry/Period | Notes |
|---|---|---|---|
| Stock Options | 25% annually over 4 years | 7-year term from grant | Strike at closing price; no discount/repricing |
| RSUs | 33% / 33% / 34% over 3 years | 3-year time-based | Settlement in shares; continued employment required |
| PSUs | Cliff at end of 3-year period | 3-year performance | Operating Income CAGR baseline resets each cycle; 0–200% payout |
Active PSU cycles for executives (baselines/payout structure): FY2023–2025 baseline $1,789.1M; FY2024–2026 $2,230.9M; FY2025–2027 $2,505.7M; 0–200% multiplier .
Investment Implications
- Alignment and leverage to performance: CEO pay structure is heavily performance-based (PSUs and options), with updated FY2025 mix increasing PSUs to 60%, tightening linkage to multi-year operating income growth; positive for pay-for-performance signaling .
- Vesting/transaction windows and potential selling pressure: Large annual vest events and prior option exercises (notably FY2023) indicate periodic liquidity that can coincide with 10b5-1 trading plans; blackout windows and insider policy mitigate opportunistic sales risk .
- Retention/contractual risk: Severance economics are moderate in cash terms (e.g., $2.025M illustrative in FY2025), with significant equity acceleration contingent on CIC double trigger or non-assumption; clawback policy and no single-trigger reduce governance risk .
- Ownership alignment: Beneficial ownership is <1% but CEO is subject to strict ownership guidelines (5x salary, 75% net share retention until compliant), and hedging/pledging are prohibited, supporting long-term alignment .
- Execution track record: Strong multi-year revenue and margin expansion alongside global footprint growth bolster confidence, with transparency around studio-related impairments suggesting disciplined capital allocation adjustments .
- Governance checks: Independent Chair and Lead Director structure, annual executive sessions, high say-on-pay support, and use of independent comp consultant reduce dual-role independence concerns for a CEO-director .
Appendix: Selected CEO Equity and Compensation Grants
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Stock Awards ($) | 4,999,844 | 5,000,011 | 5,499,824 |
| Option Awards ($) | 4,999,968 | 4,999,937 | 5,499,973 |
| FY Annual Equity Target ($) | 10,000,000 | 10,000,000 | 11,000,000 |
Notes on Board Service History and Dual-Role Implications
- McDonald is a director since 2018; not independent due to current executive status .
- The board separates CEO and Chair roles; Lead Independent Director in place; non-management executive sessions at each regular meeting provide oversight balance .
- CEO directors do not receive separate director compensation; committees are composed of independent directors, with WTW support to PCCC .