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“Elevating the world from mediocrity to greatness.”

That’s one of the painted mantras on display in the lobby of Lululemon’s Vancouver headquarters, and one that’s at odds with what current and former employees describe as a toxic work environment at the fitness apparel company. They say misconduct was enabled for years by Lululemon’s human resources department and, until recently, embodied by its ex-CEO.

Last week, the company announced CEO Laurent Potdevin’s resignation from both his position at Lululemon and its board of directors. While Lululemon gave vague reasoning for the exit, merely offering that Potdevin had fallen short of company standards of conduct, sources tell Racked that Potdevin maintained a years-long relationship with an employee (as first reported by CNBC) and thrived off of the company’s unprofessional work setting.

Potdevin, formerly president of Toms and CEO of Burton, had been dating a designer at the company since 2014; the designer resigned that same year, but was subsequently brought on as a contractor for several projects. Before her resignation, Potdevin had divulged the nature of their relationship to the entire company at a corporate all-hands meeting, which was also recorded and emailed out to stores.

The announcement was presented as a “clearing,” Lululemon’s style of confession in which employees are encouraged to share anything that might be holding them back from being present at their jobs; the practice is linked to Landmark Forum, the personal development seminar many Lululemon employees attend. A former executive team member says the entire company was expected to be okay with the relationship because it was shared in a clearing.

“There was literally zero accountability because HR’s attitude was that Lululemon employees should take responsibility, share things in a clearing, and then move on,” says the former executive team member, who requested anonymity.

Not everyone was upset about Potdevin’s relationship. A current member of the Vancouver-based menswear design team felt Potdevin’s announcement squared with the company’s ethos of “transparency and integrity.” He also points out that Potdevin didn’t try to hide the relationship, constantly posting photos of himself and his girlfriend on social media.

“It never felt like a scandal because everyone knew about them and there was no secrecy,” he says. “I understood it to be that they were actually in love and were a legit couple.”

Others were furious that the designer got preferential treatment at the company. Lululemon employees say she was given extended time off at will and enjoyed first-class travel opportunities with Potdevin. Employees say it could often be ambiguous as to what her exact role was. Many felt it was unfair to keep her on the company payroll.

One former designer who worked at Lululemon for more than a decade and frequently visited the Vancouver office recalls how “she was in a lot of business meetings with Laurent and it wasn’t entirely clear why she was there, or why she was privy to all this information.”

“It felt like weird favoritism,” she adds. “Why is this girl flying first class and staying in five-star hotels with Laurent on Lululemon’s dime?”

“It felt like weird favoritism. Why is this girl flying first class and staying in five-star hotels with Laurent on Lululemon’s dime?”

Several former and current Vancouver employees, all of whom requested anonymity because they aren’t authorized to speak about the situation, allege that Potdevin’s girlfriend was given superior assignments and opportunities not commensurate with her role. One employee who had the same amount of work experience says the designer would often assign projects to employees on her same level, “and people felt like they couldn’t say no to her because she was the CEO’s girlfriend.”

On the design team, her increasing leverage left many employees unhappy. The member of the menswear team says at one point, Potdevin’s girlfriend was given extensive decision-making authority on a project that aimed to reposition Lululemon’s website. Teams would present work to her and a few others in a small group; the employee says his coworkers were afraid to disagree with her.

“Her position was just a design position, but over time, she began to get a level of influence over the company that seemed disproportionate to her apparent experience,” he says.

“At a certain point, there was no one who thought it was fair that she was dating the boss and was still allowed to work there,” adds a former employee. “It definitely created a weird power dynamic.”

Lululemon would not comment on these allegations.

Following his resignation, Potdevin is walking away from the company with a $3.35 million cash payout, plus an additional $1.65 million over the next 18 months. The Lululemon staff and alumni that Racked spoke with said they aren’t shocked about the hefty payout, pointing out that “Lululemon takes care of the people on top.” Sources tell Racked that the company’s former executive creative director, Lee Holman, a Potdevin hire, was also dating a designer on staff. Human resources, which Lululemon refers to as people and culture, appointed a mediator so Holman’s girlfriend wouldn’t have to report to him. Several employees tell Racked the designer was “mean-spirited” and known around the office as a “bully.”

The menswear team member says that after an incident in which Holman’s girlfriend engaged in alleged unwanted physical contact in the office, a group of employees campaigned people and culture to fire her. The designer was suspended but then allowed back at the company, leaving employees feeling as though “they were keeping her on because of her personal connections to the company.” (In addition to dating Holman, the designer also used to work with Potdevin at Burton.) After a few months of ongoing complaints, her contract was not renewed, and soon after, Holman “ghosted his job and never came back,” according to a Vancouver product manager. Holman did not respond to interview requests, and Lululemon would not comment, citing privacy issues.

“It was just a web of poor leadership,” says the former designer who worked at Lululemon for more than a decade. “I eventually left because I didn’t want to work in this unhealthy environment where they were making different sets of rules for different people. The company was becoming the exact opposite of what it wanted the world to think we were.”

“I eventually left because I didn’t want to work in this unhealthy environment where they were making different sets of rules for different people.”

With Potdevin’s leadership, “weird relationships were allowed at Lululemon with zero consequences,” the product manager says.

“It is a total mess here,” the menswear team member adds, referring to the company’s interoffice relationships.

In addition to his romantic relationship with an employee, Potdevin, who could not be reached for comment, exhibited other troubling behavior. Vancouver employees say the ex-CEO was known for his “wild night life,” as several people put it. Potdevin would often invite employees over to his house or up to his hotel rooms to drink; two employees also allege cocaine use at these gatherings.

Others say that in addition to “conducting himself inappropriately when drinking at work functions,” the ex-CEO promoted a cutthroat, competitive environment in which employees would fight to gain access to his inner circle. On Fridays, for example, Potdevin would choose employees to socialize with in the office, making it clear who was included and who wasn’t.

“Laurent would have Friday ping-pong matches or play pool with beer and wine, and he hand-picked who was invited based off of who he liked,” the former executive team member says. “He thrived off of this exclusive environment.”

“There was a lot of toxicity felt at the head office, and happiness eroded pretty quickly,” says another former employee.

A former employee who worked with Potdevin to open Lululemon Lab in New York City says she believes Potdevin created a “culture of oppression.”

“If you think about it, everyone at the company was an overachieving type-A cheerleader, and he was creating an environment where you are aggressively chasing power,” she says. “There was a lot of crying.”

Employees admit former CEO and Lululemon co-founder Chip Wilson had his own faults when he was the company’s leader. In a 2013 live TV appearance, Wilson said that the company’s leggings weren’t meant for women whose thighs rub together. He once scolded a reporter for being 15 minutes late and another time examined a woman’s butt in front of a reporter who was interviewing him, only to say with a smile, “It’s my job. I have to look.” But they maintain Wilson was invested in fostering female leadership at the company, whereas Potdevin “basically turned Lululemon’s executive team into a boy’s club overnight.”

“We had so many smart, incredibly strong, and capable women at the company, and he brought in a ton of men,” the former designer of more than a decade says. “Of course every new CEO is going to come in and create his own team, but he brought in a lot of people he had personal ties to, and it just felt like total nepotism.”

“I remember thinking at one point that if you wanted to become a VP at Lululemon, you had to be a man.”

Several sources say women at the company were particularly upset when former executive vice president Delaney Shweitzer, who had worked at Lululemon for 13 years and was “being groomed for leadership,” left in 2015. Shweitzer did not respond to interview requests.

“Delaney should have been running the company, and all of a sudden she had to report to a group of men,” the former designer of a more than decade says. “I remember thinking at one point that if you wanted to become a VP at Lululemon, you had to be a man. It became almost ironic that it was just a group of men running a leggings brand for women.”

Regarding Potdevin’s departure, a spokesperson for Lululemon issued the following statement to Racked:

Laurent’s resignation was not about any single action or event. There were a range of instances where he demonstrated a lack of leadership and fell short of our standards of conduct. Out of respect for the privacy of the individuals involved, we are limited in the amount of detail we can provide. Lululemon’s culture is founded on all of us contributing to an environment rooted in our values, which includes a commitment to working with integrity and a collective dedication to creating a respectful workplace. When the company is made aware of misconduct, it takes appropriate action. We regularly review our policies to ensure our employees come to work each day in safe environments where they are empowered to speak up through a range of resources, including trained and dedicated leaders and confidential reporting mechanisms.

As much as employees blame Potdevin and the leadership he appointed for Lululemon’s poisonous work environment, many also say the company’s people and culture team and board of directors allowed such behavior to openly exist for so long. Some say “HR is rigged.”

According to Lululemon, the company has “an open-door, no-retaliation policy, which ensures employees can raise concerns without fear of retribution. Leaders are fully expected to foster this open-door culture, upholding Lululemon’s policies, hearing and responding to concerns, and ensuring the appropriate partners are informed. The company has a confidential ethics and compliance hotline (integrity hotline). The caller has the choice whether to provide their name or not, and we encourage employees to take advantage of this anonymous tool. Integrity line calls and complaints are handled by a people and culture manager, and where appropriate we undertake investigations either internally through a detailed and documented process or through an independent law firm.”

Still, one employee currently based in London says that there was a lot “going on in the company that should have been dealt with, but was overlooked.”

Some say they are confused about the timing of Potdevin’s firing, as well as his girlfriend’s departure in January, since the relationship had been going on for almost four years. Ultimately, employees say people at Lululemon’s headquarters “just feel disappointed in our leadership.”

“The company says it’s really invested in creating a better society and making us stronger leaders, but it was also just a very tense environment. It didn’t feel like [Laurent] ever made any effort to push us to achieve leadership roles,” says a former employee. “It didn’t feel like he had the same interest in leadership. It felt really elitist, and it was clear the power problems were top-down.”

Adds the employee based in London, “Lululemon has a facade professing mindfulness and health, but the reality on the inside is far different. They need to get back to basics and instill respect, morals, and set standards.”