NEW YORK, Oct 25 (Reuters) – Proxy advisory firm Glass Lewis backed investor Doug Bergeron’s campaign to replace all five directors at Ethan Allen, including its octogenarian CEO who has run the iconic U.S. home furnishing company for nearly four decades.
Doug Bergeron and DGB Investments own 5.2% of the nearly 100-year old company, best known for popularizing colonial wood revival furniture and outfitting the homes of U.S. diplomats, and is pressing to overhaul the company valued at $515 million.
Glass Lewis, one of the two leading U.S. firms that guide investor voting on hot-button issues like board elections and corporate merges, threw its weight behind all of the activist investor’s director candidates, including Bergeron himself.
DGB Investments “appears to have offered investors a credible and reasonably robust strategic and financial agenda alongside an alternate slate more evidently prepared to address muted accountability, operational backsliding and sputtering shareholder value,” Glass Lewis wrote in a report seen by Reuters.
Investors will vote for directors on November 4.
Glass Lewis is the second firm to recommend investors vote for all five of Bergeron’s candidates after Egan-Jones Proxy Services last week issued its report. Institutional Investor Services, the biggest and most powerful U.S. proxy firm, has not yet published its report.
The campaign at Ethan Allen is one of corporate America’s biggest fights as the new proxy season kicks off. Bergeron has argued that he and his director candidates can restore profitable growth and potentially triple shareholder value over three years.
Ethan Allen’s stock price hast lost more than a quarter of its value over the last 12 months and closed trading at $20.45 on Friday. Bergeron’s slate includes executives with experience in the home furnishings businesses, turnarounds, luxury retail and digital strategy.
“Ethan Allen is, by most relevant standards, a short-, mid- and long-term underperformer, with incumbent management and the board overseeing near-continuous structural regression and what appears to be an increasingly risky capital program,” the Glass Lewis report said.
The company has said it will name a successor to CEO Farooq Kathwari, 82, who has led the company for 38 years, no later than June 30, 2027. But Kathwari will lead the company during the search and remain on the board until the 2027 annual meeting. Bergeron called Ethan Allen’s proposed succession plan “too little, too late.”
Ethan Allen did not immediately respond to a request for comment.
(Reporting by Svea Herbst-BaylissEditing by Nick Zieminski)
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