Ethan Allen CEO loses his board seat as an outside investor's slate wins three of five

Ethan Allen shareholders gave three of the five board seats on the ballot to nominees of an outside investor on Nov. 4, and M. Farooq Kathwari, the Danbury furniture maker's chairman, president and chief executive, lost his seat. The final count, filed with the SEC on Nov. 6, matches the preliminary result the company announced on Nov. 4 and leaves open who will lead the new board and whether the company still plans to name a new CEO by June 30, 2027.

The contest was a proxy fight, in which an outside investor asks shareholders to vote for its own candidates for the board instead of the company's. The investor is Douglas Bergeron's DGB Investment, Inc., which says in its proxy statement that it and affiliated holders own about 5.2 percent of the stock. Ten candidates, five from each side, ran for five seats, and the five with the most "for" votes won, according to the Form 8-K. Each serves until the 2027 annual meeting.

A split result

DGB's slate supplied three winners: Stephen Oblak, Douglas Bergeron and Kristine Miller. The company's slate supplied two: Maria Eugenia Casar and Tara Stacom. DGB's proxy statement said that three winners from its slate would make a majority of the board. Votes crossed slates. Oblak led with 13,534,684 "for" votes, and Casar, a company nominee, was second with 13,032,452.

Kathwari received 7,379,087 votes, ninth among the ten candidates. David Sable, the other company nominee the company says ISS recommended replacing, was eighth with 8,936,751. ISS advises investors on how to vote. According to the company's Oct. 27 filing, ISS recommended three company nominees and two from DGB, and the company disagreed with ISS on replacing Kathwari and Sable. Shareholders removed both men, as ISS advised, but elected three DGB nominees rather than the two ISS recommended. The filing does not say which two DGB nominees ISS backed.

DGB argued before the vote that Ethan Allen's revenue has fallen about 46 percent from its 2006 peak to $579 million and that the company underinvests in digital marketing. The company said replacing the whole board and installing an interim CEO would add transition risk, and that keeping its slate would leave the CEO search with directors already leading it. Two of its five nominees won.

Shareholders also approved, in a nonbinding vote, executive pay for fiscal 2026, 16,724,997 to 1,769,488 with 2,153,122 abstentions, and ratified CohnReznick LLP as auditor.

What happens to the CEO succession

Kathwari's CEO job was not on the ballot. In a Sept. 21 filing, the company said its board had committed to announce his successor no later than June 30, 2027, when his employment agreement is scheduled to end, and that he had agreed to remain a non-executive director until the 2027 annual meeting. Because he was not re-elected, he is not among the directors chosen to serve until that meeting.

The Nov. 6 filing does not say how the lost seat affects his roles as chairman and CEO, who will chair the new board, or whether the new directors will keep the June 30, 2027 deadline. The company said on Oct. 27 that its independent directors were running the CEO search; the filings do not say whether that search continues under the new board. The company's Nov. 4 release named the same five winners as the final count.