An activist investor seized control of Ethan Allen’s board on Wednesday after alleging that a board director had previously used a biopharmaceutical company she previously headed as her own “personal piggy bank,” according to court filings.
Doug Bergeron launched a proxy battle in August with a 5.2% stake in the struggling upscale furniture company with the goal of taking control of its five board seats and naming a new chief executive.
The former CEO of Verifone won three seats at the company’s shareholder meeting on Wednesday in Danbury, Conn., including the one held by — Cynthia Ekberg Tsai — who faced serious allegations by a past employer that were not disclosed to shareholders, Bergeron alleged based on court filings from 2013.
“The research we dug up played a role,” Bergeron told The Post regarding the shareholder vote. “But the election was driven by lots of bad performance and an entrenched board and management.”
Tsai, a director since 2021, was chairman and CEO of biopharma company Viropro from 2012 to 2014. She was fired and sued by the company 12 years ago, according to a lawsuit filed in New York State Supreme Court.
Viropro claimed that “destroyed records” prevented it from accounting for $491,000 in funds that “it is alleged Tsai spent for her own purposes,” according to court filings. Tsai has previously vigorously denied these allegations.
Among the allegations were that Tsai charged Viropro for “spa visits during which she purchased massage, manicure and pedicure treatments on a weekend,” according to the suit.
She “similarly defrauded Viropro into reimbursing her for a trip to the Vatican she took with her mother in April 2013…while Viropro struggled to pay its most basic bills,” the complaint alleges.
“Tsai has also regularly drained Viropro’s limited resources with unnecessary frequent travel to Malaysia for long periods of time every few months,” the lawsuit claims.
The case was eventually settled but prior to the settlement, the court found that Tsai was in “civil contempt” for destroying “electronic records of her emails,” according to the court.
Tsai, 70, did not immediately respond to a request for comment.
In a 2019 letter to the court, Tsai’s attorney alleged that she joined Viropro when it had “less than $1,000 in its banks accounts” adding that her efforts “brought investment, credibility, customers and management to an otherwise insolvent business enterprise.”
The letter also states that Viropro’s claim about the $491,000 in missing funds “is without foundation” and a “malicious effort to cause harm.”
The letter alleges that Tsai was not paid the $202,000 salary she was owed.
After Bergeron disclosed his findings on Tsai last week, Ethan Allen recommended that shareholders reelect all of its directors.
Bergeron was “recycling allegations from more than a decade ago that were never proven,” the board had said in a Tuesday statement before the shareholder vote, adding, “There was no trial and no finding of fraud or breach of fiduciary duty” and that the case was settled.
“The Board was informed of the matter before Ms. Tsai was appointed to the Board. Cherry-picking select information to serve one’s own goals is not the kind of leadership shareholders need on the Board,” the company said.
Bergeron claims that Tsai concealed her ties to Viropro from shareholders, which he first discovered last week through a Google Gemini AI search. Tsai’s past involvement with the Nevada-based company – which is now defunct – did not appear on her Ethan Allen bio or on her LinkedIn profile this week.
Bergeron also took aim at longtime CEO, Farooq Kathwari, 82, who has led the company since 1988 and is also its chairman.
The company’s revenues have declined over the past several years, hitting $579 million in fiscal 2026 compared to it’s $1.03 billion peak in 2006, largely because it has not kept up with the digital world, Bergeron claims.
“It’s a management team and board that has let modern retailing escape them,” Bergeron told The Post.
Nevertheless, on Tuesday evening at Bergeron’s suggestion, he and Kathwari had an amicable dinner in Larchmont, NY, where the retail executive resides.
Kathwari was voted off of the board today, along with Tsai and another director, David Sable. Kathwari announced in August that he would launch a CEO search after Bergeron’s proxy battle.
“I hope [Kathwari] will be chairman emeritus,” Bergeron told The Post. “He’s a great ambassador for the company.”
The newly elected board will soon vote on a chairman and CEO, Bergeron said. Ethan Allen’s other two new directors are Steve Oblak, a former Wayfair executive and Kristine Miller, a former Ebay executive.
Independent proxy advisory firms, Glass Lewis and Egan-Jones Proxy Services recommended that investors vote for all five of Bergeron’s candidates.
Bergeron’s experience includes the 2001 acquisition of VeriFone from Hewlett-Packard for $50 million. He became the company’s chairman and CEO, stepping down in 2013 after several quarters of weak financial results.
His departure was sudden and the company’s shares rose by 9% after the announcement.
“The board asked if I wanted to resign,” Bergeron told The Post. “My board did the right thing saying after 13 years, maybe it’s time for fresh eyes.”
Source link