ISS backs two candidates on Bergeron slate ahead of Ethan Allen vote on November 4
Key Facts
ISS recommended that Ethan Allen shareholders elect investor Doug Bergeron and Stephen Oblak, the candidate he selected, to the board, and withhold votes from company Chairman Farooq Kathwari and director David Sable, according to a Reuters report carried by Boursorama. The recommendation comes ahead of the shareholder meeting scheduled for November 4, 2026, where directors will be elected amid a dispute over board seats and the company’s leadership direction. DGB Investments, led by Bergeron, holds a 5.2% stake in the company, according to Reuters. ISS’s position does not amount to full support for Bergeron’s slate, however; the firm recommended only two of its five candidates. Its recommendation therefore differs from those of Glass Lewis and Egan-Jones, which backed all five candidates.
ISS said DGB Investments had made “compelling arguments for change,” but added that “the bar is high for a slate of candidates seeking control, and the dissident slate has not cleared it without reservation.” That qualification explains why its recommendation was limited to Bergeron and Oblak, while calling for votes to be withheld from Kathwari and Sable, instead of supporting the entire competing slate. By contrast, Glass Lewis recommended electing Bergeron’s five candidates and withholding votes from all five incumbent directors, including Kathwari. Egan-Jones likewise recommended voting for all five candidates and withholding votes from all five incumbent directors. The three proxy advisers are therefore divided on the scope of change and do not agree on replacing the entire board.
Bergeron’s campaign has focused on criticism of the company’s performance and leadership. Egan-Jones said Ethan Allen’s revenue had “declined for years,” leading to lower earnings and a shrinking cash balance. In September, Bergeron said the company lacked leadership capable of deploying its assets to compete, as he launched his own search for a CEO. The company frames these criticisms differently through performance data in its shareholder report. It said total shareholder return over five years was 49.1% through September 21, 2026, compared with a 42.7% loss for the peer group median over the same period. The figures, according to the report, are based on FactSet data.
The company also provided its average operating margin over the past five years, saying it was 12.8%, more than double the average for the peer group it used for comparison. This comparison, like the five-year return figures, is attributed to the company and comes in response to Bergeron’s effort to change the board and leadership. In September, Ethan Allen announced that it had hired a national executive search firm to consider internal and external candidates for the CEO role. The company says it will announce the next CEO no later than June 30, 2027, when Kathwari’s current contract expires. It also said Kathwari would remain a non-executive board member after that, through the 2027 annual shareholder meeting.
The succession plan sets a timetable for the CEO transition that extends beyond the November vote, while the current ballot focuses on electing board members. The meeting is scheduled for November 4, 2026, at 11 a.m. Eastern time, according to the company’s investor relations statement. ETD shares closed at $20.45 on October 23, compared with a close of $19.77 on October 19, according to EL7 data. The price movement provides context for the days before the vote but does not determine the outcome of the proxy contest. Shareholders will decide at the November meeting how to allocate the seats among the candidates, while the search for Kathwari’s successor continues toward the June 2027 deadline announced by the company.