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Activist investor Doug Bergeron’s slate won three of five Ethan Allen board seats in preliminary voting Wednesday, putting a new majority in position to shape CEO succession and the furniture retailer’s next business plan.
The preliminary count identifies Bergeron, Kristine Miller and Stephen Oblak as the winning DGB nominees, alongside company nominees Maria Eugenia Casar and Tara I. Stacom. The result remains subject to certification by the independent inspector of elections, as the company’s voting announcement makes clear.
For employees, suppliers and shareholders, the immediate change is control of the board, not a completed sale of the business or an announced store-closing plan. The next test is who leads the company and how the new directors plan to improve performance.
A new majority, with leadership decisions ahead
Longtime chairman and CEO Farooq Kathwari, lead independent director David Sable and Cynthia Ekberg Tsai were not among the five preliminary winners. Kathwari’s board result is separate from the timing and terms of any executive transition.
Bergeron and his associates own approximately 5.2% of the company. His statement Wednesday put CEO succession, governance and a plan to restore profitable growth among the incoming majority’s priorities.
“Our focus now shifts from making the case for change to delivering it,” Bergeron said. He said the new directors would work with Kathwari on an orderly transition for employees, customers and partners.
Performance and governance drove the contest
Bergeron launched the proxy campaign in August. He argued that Ethan Allen’s management had not kept up with changes in retailing, an assessment disputed during a contested board election rather than an independently established cause of the company’s performance.
He also raised allegations from litigation involving Tsai’s former employer, Viropro. The New York Post’s account describes claims about use of company funds that Tsai vigorously denied. The case was settled. Ethan Allen said the allegations were never proven, that there was no trial or finding of fraud or breach of fiduciary duty, and that its board had known of the matter before her appointment.
Those disputed allegations are not a finding of wrongdoing. The business result Wednesday is the preliminary election of a new board majority.
Final vote totals will be disclosed in a Securities and Exchange Commission Form 8-K after certification. Until then, the composition announced Wednesday remains preliminary, even as both sides prepare for the transition.
JBizNews Desk | Danbury
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