Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of the end of the period covered by this report, or the Evaluation Date. Based upon the evaluation, our principal executive officer and principal financial and accounting officer concluded that our disclosure controls and procedures were effective as of the Evaluation Date. Disclosure controls and procedures are controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include controls and procedures designed to reasonably ensure that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, as appropriate to allow timely decisions regarding required disclosure.
Inherent Limitations over Internal Controls
Our internal control over financial reporting is designed to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our
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assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Management, including our principal executive officer and principal financial and accounting officer, does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource limitations on all control systems; no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies and procedures may deteriorate.
Management's Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. Based on this evaluation, management concluded that we maintained effective internal control over financial reporting as of January 29, 2023.
The effectiveness of our internal control over financial reporting as of January 29, 2023 has been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm, as stated in their report, which appears in Item 8 of Part II of this Form 10-K.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fourth quarter of 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
On March 22, 2023, our board of directors approved and adopted amended and restated bylaws of lululemon athletica inc., effective immediately. The amendments include changes to update and enhance the procedures and disclosure requirements for stockholder nominations for the election of directors and proposals for new business to be taken up at annual meetings of stockholders, including (1) to require certain additional information with respect to stockholders and beneficial holders making a nomination or proposal and their proposed nominees; (2) to address matters relating to the universal proxy rules recently adopted by the Securities and Exchange Commission, including Rule 14a-19 under the Securities Exchange Act of 1934; (3) to require any proposed nominee to provide certain representations regarding intention to serve as a director if elected, the absence of certain voting commitments, disclosure of compensation for service as a director, and compliance with our majority voting provisions; (4) to clarify that a stockholder nomination will be disregarded if the nominating stockholder does not comply with the procedures and requirements stated in the bylaws, does not comply with Rule 14a-19, or does not attend the meeting to present the nomination; and (5) to address the color of proxy cards reserved for use by lululemon.
The amendments also include changes modifying the provisions related to adjournment and postponement procedures for stockholder meetings and the availability of lists of stockholders entitled to vote at stockholder meetings in connection with recent amendments to the Delaware General Corporation Law, as well as other ministerial and conforming changes.
The foregoing summary does not purport to be a complete description of the amended and restated bylaws and is qualified in its entirety by reference to the full text of the amended and restated bylaws, a copy of which is attached as Exhibit 3.5 and incorporated by reference herein.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item concerning our directors, director nominees and Section 16 beneficial ownership reporting compliance is incorporated by reference to our definitive Proxy Statement for our 2023 Annual Meeting of Stockholders under the captions "Election of Directors," "Executive Officers," and "Corporate Governance," and, to the extent necessary, under the caption "Delinquent Section 16(a) Reports."
We have adopted a written code of business conduct and ethics, which applies to all of our directors, officers, and employees, including our principal executive officer and our principal financial and accounting officer. Our Global Code of Business Conduct and Ethics is available on our website, www.lululemon.com, and can be obtained by writing to Investor Relations, lululemon athletica inc., 1818 Cornwall Avenue, Vancouver, British Columbia, Canada V6J 1C7 or by sending an email to investors@lululemon.com. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K. Any amendments, other than technical, administrative, or other non-substantive amendments, to our Global Code of Business Conduct and Ethics or waivers from the provisions of the Global Code of Business Conduct and Ethics for our principal executive officer and our principal financial and accounting officer will be promptly disclosed on our website following the effective date of such amendment or waiver.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to our 2023 Proxy Statement under the captions "Executive Compensation" and "Executive Compensation Tables."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated by reference to our 2023 Proxy Statement under the caption "Principal Shareholders and Share Ownership by Management."
Equity Compensation Plan Information (as of January 29, 2023)
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1)
(A)
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (2)
(B)
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A)) (3)
(C)
Equity compensation plans approved by stockholders 1,253,404 $ 230.78 16,784,492
Equity compensation plans not approved by stockholders — — —
Total 1,253,404 $ 230.78 16,784,492
__________
(1) This amount represents the following: (a) 865,832 shares subject to outstanding options, (b) 166,489 shares subject to outstanding performance-based restricted stock units, and (c) 221,083 shares subject to outstanding restricted stock units. The options, performance-based restricted stock units, and restricted stock units are all under our 2014 Equity Incentive Plan. Restricted shares outstanding under our 2014 Equity Incentive Plan have already been reflected in our total outstanding common stock balance.
(2) The weighted-average exercise price is calculated solely on the exercise prices of the outstanding options and does not reflect the shares that will be issued upon the vesting of outstanding awards of performance-based restricted stock units and restricted stock units, which have no exercise price.
(3) This includes (a) 12,284,713 shares of our common stock available for future issuance under our 2014 Equity Incentive Plan and (b) 4,499,779 shares of our common stock available for future issuance under our Employee Share Purchase Plan. The number of shares remaining available for future issuance under our 2014 Equity Incentive Plan is reduced by 1.7 shares for each award other than stock options granted and by one share for each stock option award granted. Outstanding awards that expire or are canceled without having been exercised or settled in full are available for issuance again under our 2014 Equity Incentive Plan and shares that are withheld in satisfaction of tax withholding obligations for full value awards are also again available for issuance. No further awards may be issued under the predecessor plan, our 2007 Equity Incentive Plan.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated by reference to our 2023 Proxy Statement under the captions "Certain Relationships and Related Party Transactions" and "Corporate Governance."
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this item is incorporated by reference to our 2023 Proxy Statement under the caption "Fees for Professional Services."
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
(a) Documents filed as part of this report:
1. Financial Statements. The financial statements as set forth under Item 8 of this Annual Report on Form 10-K are incorporated herein.
2. Financial Statement Schedule. Separate financial statement schedules have been omitted either because they are not applicable or because the required information is included in the consolidated financial statements or notes described in Item 15(a)(1) above.
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3. Exhibits
Exhibit Index
Incorporated by Reference
Exhibit
No. Exhibit Title Filed
Herewith Form Exhibit No. File No. Filing Date
3.1 Amended and Restated Certificate of Incorporation of lululemon athletica inc.
8-K 3.1 001-33608 8/8/2007
3.2 Certificate of Amendment to Amended and Restated Certificate of Incorporation of lululemon athletica inc.
8-K 3.1 001-33608 7/1/2011
3.3 Certificate of Amendment to Certificate of Incorporation filed July 20, 2017
10-Q 3.1 001-33608 8/30/2018
3.4 Certificate of Amendment to Certificate of Incorporation filed June 12, 2018
10-Q 3.1 001-33608 8/30/2018
3.5 Bylaws of lululemon athletica inc.
X
4.1 Form of Specimen Stock Certificate of lululemon athletica inc.
S-3 4.1 333-185899 1/7/2013
4.2 Description of Securities Registered Under Section 12 of the Securities Exchange Act of 1934
10-K 4.2 001-33608 3/26/2020
10.1* lululemon athletica inc. 2014 Equity Incentive Plan
8-K 10.1 001-33608 6/13/2014
10.2* Form of Non-Qualified Stock Option Agreement (for outside directors)
10-Q 10.2 001-33608 12/6/2012
10.3* Form of Non-Qualified Stock Option Agreement (with clawback provision)
10-Q 10.1 001-33608 6/1/2017
10.4* Form of Notice of Grant of Performance Shares and Performance Shares Agreement (with clawback provision)
10-Q 10.2 001-33608 6/1/2017
10.5* Form of Notice of Grant of Restricted Stock Units and Restricted Stock Units Agreement (with clawback provision)
10-Q
10.1
001-33608
12/8/2022
10.6* Form of Restricted Stock Award Agreement
10-Q
10.12
001-33608
12/11/2014
10.7* Amended and Restated LIPO Investments (USA), Inc. Option Plan and form of Award Agreement
S-1
10.3
333-142477
5/1/2007
10.8 Exchange Trust Agreement dated July 26, 2007 between lululemon athletica inc., Lulu Canadian Holding, Inc. and Computershare Trust Company of Canada
10-Q
10.5
001-33608
9/10/2007
10.9 Exchangeable Share Support Agreement dated July 26, 2007 between lululemon athletica inc., Lululemon Callco ULC and Lulu Canadian Holding, Inc.
10-Q
10.6
001-33608
9/10/2007
10.10 Amended and Restated Declaration of Trust for Forfeitable Exchangeable Shares dated July 26, 2007, by and among the parties named therein
10-Q
10.7
001-33608
9/10/2007
10.11 Amended and Restated Arrangement Agreement dated as of June 18, 2007, by and among the parties named therein (including Plan of Arrangement and Exchangeable Share Provisions)
S-1/A
10.14
333-142477
7/9/2007
10.12 Form of Indemnification Agreement between lululemon athletica inc. and its directors and certain officers
S-1/A
10.16
333-142477
7/9/2007
10.13* Outside Director Compensation Plan
X
10.14* Executive Bonus Plan
8-K
10.1
001-33608
3/29/2022
10.15* lululemon athletica inc. Employee Share Purchase Plan
10-Q
10.3
001-33608
11/29/2007
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Incorporated by Reference
Exhibit
No. Exhibit Title Filed
Herewith Form Exhibit No. File No. Filing Date
10.16* Executive Employment Agreement, effective as of December 5, 2016, between lululemon athletica canada inc. and Celeste Burgoyne
10-K 10.23 001-33608 3/29/2017
10.17* Amendment to Executive Employment Agreement, effective October 27, 2020, between lululemon athletica canada inc. and Celeste Burgoyne
10-Q 10.1 001-33608 12/10/2020
10.18* Executive Employment Agreement, effective as of August 20, 2018, between lululemon athletica canada inc. and Calvin McDonald
8-K 10.1 001-33608 7/24/2018
10.19* Executive Employment Agreement, effective as of November 23, 2020, between lululemon athletica inc. and Meghan Frank
10-Q 10.2 001-33608 12/10/2020
10.20* Executive Employment Agreement, effective as of September 20, 2018, between lululemon athletica inc. and Michelle Choe
10-Q 10.1 001-33608 12/06/2018
10.21* Executive Employment Agreement, effective September 20, 2021, between lululemon athletica inc. and Nicole Neuburger
10-Q 10.1 001-33608 12/09/2021
10.22* Executive Employment Agreement, effective as of January 4, 2021, between lululemon athletica UK ltd. and Andre Maestrini
10-K 10.22 001-33608 3/30/2021
10.23 Credit Agreement, dated December 14, 2021, among lululemon athletica inc., lululemon athletica canada inc., Lulu Canadian Holding, Inc. and lululemon usa inc., as borrowers, Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer, HSBC Bank Canada, as syndication agent and letter of credit issuer, BOFA Securities, Inc., as sustainability coordinator, and the other lenders party thereto.
8-K 10.1 001-33608 12/17/2021
21.1 Significant subsidiaries of lululemon athletica inc.
X
23.1 Consent of PricewaterhouseCoopers LLP
X
31.1 Certification of principal executive officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
31.2 Certification of principal financial and accounting officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
32.1** Certification of principal executive officer and principal financial and accounting officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
101 The following financial statements from the Company's 10-K for the fiscal year ended January 29, 2023, formatted in iXBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Stockholders' Equity, (iv) Consolidated Statements of Cash Flows (v) Notes to the Consolidated Financial Statements X
104 Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101) X
* Denotes a compensatory plan, contract or arrangement, in which our directors or executive officers may participate.
** Furnished herewith.
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ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
LULULEMON ATHLETICA INC.
By: /s/ CALVIN MCDONALD
Calvin McDonald
Chief Executive Officer
(principal executive officer)
Date: March 28, 2023
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Calvin McDonald and Meghan Frank and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file, any and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their and his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof.
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Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ CALVIN MCDONALD Chief Executive Officer and Director March 28, 2023
Calvin McDonald (principal executive officer)
/s/ MEGHAN FRANK Chief Financial Officer March 28, 2023
Meghan Frank (principal financial and accounting officer)
/s/ MARTHA A.M. MORFITT Director, Board Chair March 28, 2023
Martha A.M. Morfitt
/s/ MICHAEL CASEY Director March 28, 2023
Michael Casey
/s/ ISABEL MAHE Director March 28, 2023
Isabel Mahe
/s/ KOURTNEY GIBSON Director March 28, 2023
Kourtney Gibson
/s/ KATHRYN HENRY Director March 28, 2023
Kathryn Henry
/s/ ALISON LOEHNIS Director March 28, 2023
Alison Loehnis
/s/ JON MCNEILL Director March 28, 2023
Jon McNeill
/s/ GLENN MURPHY Director March 28, 2023
Glenn Murphy
/s/ DAVID M. MUSSAFER Director March 28, 2023
David M. Mussafer
/s/ EMILY WHITE Director March 28, 2023
Emily White
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