Bergeron rejects Ethan Allen succession plan as 5.2% holder demands new CEO
Doug Bergeron, who holds 5.2% of Ethan Allen Interiors Inc. with affiliates, called the company's Sept. 21 CEO succession process "too little, too late" and said shareholders should replace the board that designed it.
"Ethan Allen's September 21, 2026 recognition that the Company needs new leadership is too little, too late," Bergeron said in a statement. "Questions about CEO succession have hung over Ethan Allen for more than a decade."
The Park City, Utah-based investor is running a proxy contest against the NYSE-listed home furnishings maker (NYSE: ETD), whose board said it will name a successor to Chairman and CEO Farooq Kathwari no later than June 30, 2027, when his current contract ends. Kathwari, who has led the company for more than two decades, may remain in both roles throughout the transition, according to the board's timeline.
Bergeron's campaign filed a definitive proxy statement with the SEC carrying an alternative slate of six director nominees, first put forward on Aug. 5. On Sept. 10, that slate launched its own independent CEO search. Ethan Allen filed a preliminary proxy statement the following day without disclosing a formal CEO search or a specific transition timeline.
The chronology is central to Bergeron's argument. Kathwari said publicly on Aug. 7 that succession was an issue the board had "never raised," according to Bergeron's statement. The board declared a $3-a-share special dividend on Aug. 19, payable Sept. 17 to holders of record Sept. 3 — a move Bergeron characterized as part of a pattern of reactive decisions made under campaign pressure.
Shares of Ethan Allen traded at $21.28 at 2:27 p.m. EDT on Sept. 21, down 0.63% on the day, down 4.14% over five sessions and down 6.83% year to date, according to Cboe BZX data. The stock carries a 5.3% dividend yield, and revenue contracted 8.2%, per StreetInsider. Two analysts covering the company carry a consensus rating of hold with an average price target of $22.00, implying 2.76% upside from the last close of $21.41.
Bergeron's case rests on operating performance. He cited "two decades of deteriorating operating performance, culminating in the Company's disappointing fourth quarter and full year fiscal 2026 results," and argued that a board of Kathwari loyalists that "repeatedly extended his tenure and increased his compensation" is unqualified to pick his successor. Ethan Allen operates about 142 company-run design centers and employs 3,062 people, according to company filings.
The board's stated rationale for the search — accelerating digital, omnichannel and supply-chain execution — overlaps with the shortcomings Bergeron's campaign has highlighted, a point he used to argue the incumbent directors cannot credibly oversee the fix. He also warned that a transition stretching to mid-2027 means "nine more months of the same leadership."
The contest now turns on a single question Bergeron framed directly for shareholders: which slate should be trusted to select and oversee the next CEO. DGB Investment Inc. and Bergeron have retained Okapi Partners LLC as proxy solicitor and direct investors to EthanAllenGrowth.com for nominee biographies.
For holders, the vote is a binary governance event rather than an earnings story. A Bergeron win would likely accelerate Kathwari's exit and hand the CEO search to the activist's nominees; a board win preserves the June 30, 2027 timeline and leaves Kathwari in both roles through the transition. The next marker is the 2026 annual meeting, where the competing slates and the company's succession disclosures will be tested against each other.
This article is for informational purposes only and does not constitute investment advice.
