Embattled Ted Baker Plc Chief Executive Officer Ray Kelvin will take a leave of absence following complaints about his habit of giving hugs to employees of the U.K. apparel chain.
Kelvin will take a voluntary leave as Herbert Smith Freehills LLP conducts its independent investigation, the company said in a statement. Chief Operating Officer Lindsay Page will serve as acting CEO with immediate effect, the company said.
The decisions were made “for the benefit of the business and the people who work in it,” the company said.
Kelvin, Ted Baker’s founder, has been under a microscope following reports that he gave staff members unwanted hugs and asked female employees to sit on his knee. The CEO also pushed an employee against a wall in a glass meeting room in 2016 while dozens of staffers looked on, according to three people who witnessed the incident and asked not to be named.
The uproar prompted a plunge in the company’s shares this week that wiped away almost one-fifth of its value. That’s prompted speculation among analysts that one of the U.K.’s rare retail success stories of recent years could become vulnerable to a takeover, even though Kelvin owns about 35 percent.
“It’s not unreasonable to think that Ted Baker could be in play after the magnitude of the share price fall and the fact that it is a single proprietary brand,” says Clive Black, the head of research at Shore Capital.