CEO Profile: Ethan Allen's Kathwari was always a leader

NEW ROCHELLE, N.Y. -- "Pashmina! Pashmina!"

The CEO of one of the largest U.S. furniture chains, determined to introduce a visitor to his beloved cat, is calling in vain out the doors of his stone-and-stucco mansion on the water here. He quizzes his driver and the landscaper on whether they've seen the Egyptian Mau.

Farooq Kathwari, who has run Ethan Allen Interiors for the past 20 years, is a hands-on CEO and Muslim peace activist with a soft spot for people -- and cats.

Interviewed at his fashionably furnished, nearly 150-year-old home and at the company's Danbury, Conn., headquarters, Kathwari moves seamlessly between talk of strife in his native Kashmir, the new look of American furniture, and the challenges of managing change.

Kathwari, 62, has been juggling business and his own brand of diplomacy since he came to the USA in 1965. He chairs both the National Retail Federation and Refugees International, which provides humanitarian assistance to displaced people.

His awards include as many for global relations as for business.

"He's so intellectually curious and has more interests outside his work than any CEO I've even known," says Tracy Mullin, CEO of the retail federation. "He's a true internationalist."

Kathwari grew up in Kashmir, located between India and Pakistan, the son of a politician/lawyer and grandson of an antiques dealer.

When he was 4, his father traveled from their home in the Indian-controlled part of the Kashmir Valley to the portion controlled by Pakistan and was not allowed to return for 18 years. After a year, his wife and younger children joined him, while two older children stayed behind.

After his father died eight years ago, Kathwari brought his mother, now 85, to the USA to live with him. He takes a visitor to meet her in a wing of the house where she has live-in care. She mumbles a greeting, then, in her native Kashmiri, asks Kathwari when she's going back to Kashmir, a question he says she poses every morning.

"At the end of the day, these are the things that matter," Kathwari says after releasing his mother's hand.

In a bright sunroom overlooking a pool at the edge of Long Island Sound, Kathwari traces his trip from Kashmir to New York, where he and his wife, Farida, have recreated much of the beauty for which their homeland is famous. Farida co-founded Funkar International, which promotes Kashmiri classical music.

The home has photographs of family and pets, framed botanicals, overstuffed chairs of leather, plaid and floral prints, and mementoes of travels. About 90% of the $5 million home's furniture came from Ethan Allen; the rest are antiques bought at flea markets and shops in Asia and Europe.

While working at the1965 World's Fair in New York, Kathwari's father began a campaign to bring his son overseas for graduate school. They picked New York University's MBA program because classes were offered at night so he could work during the day.

Business was a likely choice for a man who had long been in charge. When he played cricket and soccer as a youth, he was invariably captain of the team. When he joined a securities firm after graduate school, he quickly rose to vice president.

"It didn't matter what I was doing, I looked to it as a team that had to be led," says Kathwari.

From supplier to CEO

He joined Ethan Allen in 1980 after supplying the company with lighting and other home accessories from his import business for years. He became president in 1985 and chairman and CEO in 1987. In 1989, Kathwari formed a group to buy Ethan Allen and took the company public in 1993.

One of Kathwari's first challenges was getting all dealers to pay the same price for Ethan Allen furniture, no matter how near or far a store was to the manufacturing plants in Vermont and North Carolina. At the time, West Coast dealers were paying up to 10% more. When some East Coast independent dealers, concerned about the loss of a price advantage, called a meeting to confront him, he says, he listened to them, then said: "I'm going to run this company, not you."

Other big changes followed, including persuading longtime dealers to sell only Ethan Allen furniture, that it was time to expand beyond colonial/Early American styles, and that the twice-yearly sales at which 70% of business was done had to go.

Between 1986 and 1989, 90% of senior management left the company. "I needed to change the culture," says Kathwari.

At company offices, Kathwari greets most employees by name. He has a spirited chat with 92-year-old customer service representative Ruth Ashby, for whom he recently threw a birthday party.

Kathwari's hard-nosed but collaborative style was apparent when former Vermont governor Howard Dean met him in the mid-1990s to discuss Ethan Allen's plans to close its oldest and biggest plant, located in Beecher Falls, Vt. The plant provided the only manufacturing work in an economically needy area, so the state offered Ethan Allen tax and electrical rate relief to stay. He was "surprised and pleased" that Kathwari wasn't like a lot of executives, who would have just "closed it and moved on."

"He was tough, fair and very decent in the negotiations," says Dean, now head of the Democratic National Committee. "He clearly has a bottom line but is easy to talk with, a person who just puts it all on the table."

Working for Kashmir

When he's not at his house here, Kathwari is often at his 200-acre apple farm in Livingston, N.Y. It was there that the Kashmir Study Group he formed in 1996 hammered out what's known as the "Livingston Proposal."

Signed in 1998 by a group of former diplomats, academics and U.S. politicians, it is a framework for discussions between Indian and Pakistani negotiators sparring about control of the region.

Kathwari says the work helped him recover after his oldest son, a college student raised in the USA, was killed in 1992 in a mortar attack in Afghanistan.

Evidence of Kathwari's leadership emerged early, says Howard Schaffer, a former ambassador to Bangladesh who was working in the U.S. Embassy in New Delhi when he met Kathwari. Huge protests broke out in the Indian-held portion of Kashmir after a sacred relic was stolen in the winter of 1963, Schaffer says, and law and order broke down. When a reporter for the Washington Star and Schaffer showed up separately, Kathwari -- then "known for his prowess on the cricket field more than for anything else," Schaffer says -- introduced them to leaders involved in the uprising against the Indian authority so they could get their side. Schaffer says Kathwari emerged as a leader in the call for reforms in Kashmir, a mantle he still wears today.

"It was hard for me to believe that such a young man could act as effectively as he did," says Schaffer. "It was obvious to me that he enjoyed widespread respect from his fellow Kashmiris, including many much older and more experienced than he."

By showing Americans what was really going on in Kashmir, Kathwari angered Indians in control of the region. At about the time the government made it clear he was no longer welcome, Kathwari's father was urging him to move to New York, which Schaffer helped him do.

Adds Schaffer: "The rest, as they say, is history."