Lululemon Athletica, Inc., was founded by Chip Wilson in 1998 to sell yoga-inspired athletic clothing. The company’s target market was women who wanted stylish exercise apparel. In 2012, the Vancouver based company, whose shares traded on both the Toronto Stock Exchange in Canada and NASDAQ in the United States, had sales of $1.4 billion and a net income of $270 million. Its 211 stores were located in Canada, the United States, Australia, and New Zealand. Chip Wilson, who served as chair of the board of directors and CEO, was known to make controversial statements. For example, he said that birth control pills contributed to high divorce rates and that the pill was linked to breast cancer. In 2005, he told the Calgary Herald that his company did not make plus-sized clothing because it cost 30% more to manufacture.

Questions

1. Do you think that the executives at Lululemon demonstrated ethical leadership? Could it have been improved?

2. Does a CEO have an ethical responsibility to step down as CEO when there is a production and marketing disaster that requires a product recall?

3. Does the chair of the board of directors have an ethical responsibility to step down as chair of the board when there is a production and marketing disaster that requires a product recall? 

4. Does the board of directors have an ethical responsibility to reprimand the chair of the board if the chair makes controversial statements and comments to the press?