8/20/2026
Ethan Allen, Bergeron Dig in for Proxy Fight
Furniture Today (08/20/26) Lester, Thomas
Top 100 retailer Ethan Allen (NYSE: ETD) declared a $3 per share dividend and described the move as a reaffirmation of its financial position, capital allocation strategy and focus on creating sustainable value for its shareholders. The Aug. 19 announcement came on the heels of a letter penned by shareholder Doug Bergeron, which challenged the Danbury, Conn.-based company’s leadership and growth strategy and offered a slate of six alternate members of its board of directors. In the announcement, Ethan Allen confirmed it intends to file a proxy statement and blue proxy card with the U.S. Securities and Exchange Commission (SEC) in connection with its solicitation of proxies for its 2026 annual meeting. It listed Chairman, President and CEO Farooq Kathwari, along with four incumbent directors, Maria Eugenia Casar; David M. Sable; Tara I. Stacom; and Cynthia Ekberg Tsai as participants in the solicitation of proxies. Kathwari said the declaration of the dividend, which is payable to shareholders of record as of Sept. 3, to be paid on Sept. 17, and totals approximately $76 million in aggregate, speaks to Ethan Allen’s financial strength. “Our board’s decision to declare this special dividend reflects Ethan Allen’s strong cash generation, debt-free balance sheet, sustained levels of profitability and confidence in our long-term strategy,” said Kathwari. “We are focused on returning meaningful capital to shareholders while continuing to invest in our design centers, technology, marketing and manufacturing, and in the talent that differentiates Ethan Allen.” The announcement noted that the board believes that the company’s long-term profitability track record, current financial strength and disciplined plan for growth provide the right path forward, and that the board remains committed to acting in the best interests of all shareholders and will continue to engage constructively with the company’s shareholders. The company went on to note that the dividend is part of a consistent annual program that has returned more than $402 million to shareholders over the past decade, including more than $46 million in FY2026 and $50 million in FY2025. It said Ethan Allen’s total shareholder return has outperformed the Dow Jones U.S. Furnishings Index by 38% over the past five years. Additionally, the company pointed to its manufacturing, with some 75% of its products made in North America; its 171 retail design centers, including 141 company-owned showrooms; a consolidated gross margin of 61.2% and an operating margin of 7.8% in a challenging FY2026; an investment of more than $59 million back into its business in the form of capital expenditures, including $11 million during fiscal 2026; and an increase of marketing spend by 13% over the past two years, including a continued focus on enhancing the digital footprint, strengthening brand awareness and positioning, and creating a more seamless connection between online engagement and in-design-center client experiences. Bergeron responded on Aug. 20 and said the dividend did nothing to address the arguments he made earlier this month. “Ethan Allen’s Aug. 19 announcement should be seen for what it is: a transparent attempt to deflect attention from mounting calls for change ahead of a contested election,” Bergeron wrote in a statement. “It is an all too familiar tactic used by struggling boards facing a credible alternative slate. To be clear, a rash and reactive special dividend does not reflect a ‘disciplined approach to capital allocation.’ In Ethan Allen’s case, it reflects a rudderless company seeking to distract shareholders from the substantive issues at hand.” Bergeron, who owns approximately 5% of the company’s stock, argued that Kathwari, who he noted owns approximately 8.4% of the company’s stock, stands to gain some $6 million himself from the dividend. He also argued that Ethan Allen’s reported advertising spend remains below every year from 2006 through 2021 and is roughly half the level of premium furniture peers as a percentage of sales. Bergeron and his slate of candidates – Anna Brockway; Kristine E. Miller; Stephen Oblak; Lindsay C. O’Reilly; and Stefanie Tsen Ward – intend to file a proxy statement and white proxy card with the SEC in connection with its solicitation of proxies for its 2026 annual meeting. Regulatory disclosures in the release indicated that none of Brockway, Miller, Oblak, O'Reilly or Ward owned any Ethan Allen stock as of its release. Bergeron noted that two weeks after he issued his open letter, he was privately told by company counsel, that the company had trimmed its board from six to five members in January 2026. “The decision to shrink the board to just four independent directors is particularly difficult to reconcile with the need for greater accountability and fresh operating expertise,” he said. “None of the remaining independent directors have meaningful experience in retail, furniture, luxury goods or e-commerce – capabilities we believe are critical to reinvigorating Ethan Allen. At a moment when improved governance and relevant operating expertise are desperately needed, the Board has chosen to become smaller rather than stronger.”
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