Lululemon Athletica Inc. LULU

Key data

What the plan pays for

Two numbers, weighted equally, with no strategic bucket and no individual rating, so the whole bonus turns on revenue and on a profit figure the committee may redraw after the year closes. The long-term half is measured as a growth rate from a fixed starting year. O'Neill's starting year is fiscal 2025 reported operating income of $2.21B, not the $2.50B the committee used to pay everybody else for the same twelve months.

What it has paid

The bars kept rising while the business slowed. Fiscal 2025 asked for revenue 8.7% above what the company had done and set the profit threshold $25.3M above the prior year's result, so repeating fiscal 2024 would have earned nothing on the profit half. It earned nothing anyway. Revenue paid 71.3%, profit paid zero, and the blended 35.7% went to a chief executive the board had already terminated, alongside $5.15M of severance and a full vesting of his closing performance-share cycle.

The same $2.50B then paid 134.4% on the three-year cycle, because that ladder was built off fiscal 2022 and needed only a 10% growth rate to reach target, and the modified number delivered 11.8%. On reported numbers it would have paid 72.5%. Support for the pay vote fell from roughly 83% to 63.2% in June 2026.

What she does next

The fiscal 2026 to 2028 cycle runs from $2.21B to whatever fiscal 2028 produces, so nothing reported in fiscal 2026 or 2027 can damage it, and O'Neill's cash bonus this year is prorated from a September start. The arithmetic says take the pain now.

The fiscal 2026 bars are not disclosed, but the company guides revenue to $10.35B to $10.50B, below the $10.80B that merely opened the revenue payout last year, and the street models $10.46B of revenue and $1.71B of operating income.

Watch the tariff money. lululemon paid $230M under the law the Supreme Court struck down, has recovered $134.5M, and books the refund inside cost of goods sold, the line both awards measure. The committee pulled $275.0M of those same tariffs out of fiscal 2025 to lift the payout. Next spring's modified operating income either strips the $134.5M back out or it does not.

An acquisition would dilute operating income, and repurchases move neither metric, so the $712.5M left on the authorization defends only the option strike and the return ceiling. Americas comparable sales fell 12% in the second quarter, and selling and administrative expense rose $171.8M in the first half while gross profit fell. Two consumer class actions already allege tariff-related pricing actions, the cost of that lever.

O'Neill has purchased nothing. Her only position is 145,518 options struck at $99.72 on September 9, under water eight days later. Calvin McDonald filed no Form 4 in the twelve months. The heaviest selling was Celeste Burgoyne's $2.8M in mid-December 2025, two weeks before she resigned, while director Chip Bergh put $1.5M of his own money in across March and June.

Closing thoughts

They pay this chief executive to grow revenue and to grow a profit number the committee can rewrite, so watch the definition, not the business. One line settles it next spring: whether the $134.5M already collected comes out of modified operating income the way the $275.0M of tariff cost went in.