Crown Crafts' Board Rejects Wynnefield's Settlement Proposal
August 01 2007 - 3:56PM
Business Wire
The Wynnefield Group, the largest stockholder in Crown Crafts Inc.
(NASDAQ: CRWS), said today that the Company�s rejection of its
amicable compromise offer demonstrates the entrenchment of Crown
Crafts� current directors and management, which has harmed
shareholder value and put the Company�s prospects at risk.
Wynnefield is Crown Crafts� largest stockholder (holding some 14.6%
of the outstanding shares) and a long-term investor in the Company.
In its place, the Company offered a �fig-leaf� proposal to elect
its two director nominees in exchange for the election of a single
director unaffiliated with the Company�s single largest stockholder
by 2008. �These guys don�t get it; this is too little, too late.
The stockholders are the owners of this company, and outside
stockholders need a voice on the Board now. This isn�t about
expanding the Board for the sake of expanding the Board,� said
Nelson Obus and Frederick Wasserman, Wynnefield�s nominees to the
Crown Crafts Board of Directors, in a statement. �Despite Crown
Crafts� faltering performance and lack of strategic vision, the
entrenched Company directors and management apparently will resist
even amicable compromise efforts to provide outside stockholders
with real Board representation. �For years, we have tried to find a
way to work with the current Board and management to address some
of the stiff challenges facing this company. At this point, the
only alternative left for outside stockholders is to elect two
truly independent directors to the Board � vote for the Wynnefield
nominees on the GOLD card,� Wasserman and Obus concluded.
Wynnefield is conducting a proxy solicitation campaign to elect two
truly independent outside directors to the Board � in opposition to
two Company nominees, William Deyo and Steven Fox � in order to
enhance value for all Crown Crafts stockholders. Wynnefield
undertook the proxy campaign reluctantly as a last resort only
after long concern with Crown Crafts� failure to generate long-term
growth and stockholder value (including its failure to develop a
strategic plan or an announced succession plan), and repeated
refusals to improve its corporate governance (including the
elimination of apparent conflicts-of-interest) or grant Wynnefield
Board representation. Earlier this week, Wynnefield announced an
offer to withdraw its proxy contest to elect its two nominees if
the Company agreed to make a series of important enhancements to
its corporate governance and director compensation. Those proposed
enhancements included: increasing the size of the current Board
from seven to nine members; electing Obus and Wasserman as
directors to fill the vacancies thereby created; form a nominating
and governance committee immediately, with either Obus or Wasserman
as one of the members; form a strategic planning committee
immediately, with current CEO E. Randall Chestnut as one of the
members and either Obus or Wasserman as one of other members, with
the intention of hiring a qualified independent consultant to
assist management and the Board in determining a future strategic
path and aligning future capital allocations to fulfill the
agreed-upon strategic plan; commit to putting to a stockholder vote
at the 2008 Annual Meeting of stockholders, and supporting, a
binding resolution to de-classify the Board; and amend the
non-employee director fee structure to provide that the cash fees
paid to non-employee directors, which currently consist of payments
of $20,000 per year, plus $2,500 for each Board meeting attended,
$2,000 for each committee meeting held not in conjunction with a
Board meeting, plus $2,500 for travel time, be paid 50% in cash and
50% in restricted stock of the Company. Messrs. Wasserman and Obus
would bring to the Board substantial business experience and
capability, as well as a commitment to work to enhance stockholder
value and to work cooperatively with the Board to implement a
strategic plan to achieve those results. Mr. Wasserman previously
served as a non-voting observer to the Crown Crafts� Board. Mr.
Obus has more than thirty-five years of experience in the
investment community, including his role as President of Wynnefield
Capital, Inc. since 1992, Director of Research at Schafer Capital
Management for two years and eight years at Lazard Freres & co.
as an analyst, account executive and research director in its
institutional sales department. Previously, Mr. Obus worked as an
educator and land manager in the environmental field. He currently
serves on the board of directors of Layne Christensen Company and
is also a member of its Compensation Committee and Audit Committee
of the board of directors. Mr. Obus has been nominated to serve as
a member of the board of directors of Gilman + Ciocia, Inc., a
regional tax preparation and investment advisory company subject to
approval by that company�s stockholders of a pending financing
transaction. He previously served as a director of Sylvan Food
Holdings, Inc. Mr. Wasserman, currently a financial management
consultant, was the Chief Operating/Financial Officer for Mitchell
& Ness Nostalgia Co., a privately-held manufacturer and
distributor of licensed sportswear and authentic team apparel. He
has also served as the President of Goebel of North America, a U.S.
subsidiary of the German specialty gift maker, from 2001 to 2005;
several positions, including Chief Financial Officer and President
with Goebel of North America in 2001; and several other positions,
including Interim President and full-time Chief Financial Officer
with Papel Giftware from 1995 to 2001. He has also served in senior
executive and managerial roles at both Chelsea Marketing and Sales
and The Score Board, Inc. Mr. Wasserman spent the first 13 years of
his career in the public accounting profession, serving at Most,
Horowitz & Company; Coopers & Lybrand; and Richard A.
Eisner & Company. He also serves as a director of Acme
Communications, Inc., Allied Defense Group, Inc., and Teamstaff,
Inc. and has been nominated to serve as a member of the board of
directors of Gilman + Ciocia, Inc., a regional tax preparation and
investment advisory company subject to approval by that company�s
stockholders of a pending financing transaction. The Annual Meeting
of Crown Crafts Stockholders will be held on August 14, 2007 at
10:00 a.m. Central Daylight Time at the Company�s executive
offices, located at 916 South Burnside Avenue, Third Floor,
Gonzales, Louisiana 70737 offices. The Wynnefield Group urges
stockholders to sign, date and return the GOLD proxy card voting
FOR the election of Frederick Wasserman and Nelson Obus as
directors. If you have already voted a white proxy card and wish to
change your vote, you have every legal right to do so. Simply vote
the GOLD proxy promptly by telephone, internet or mail. Only the
last dated vote will count. For more information, stockholders can
call MacKenzie Partners at (800) 322-2885. ADDITIONAL INFORMATION:
Shareholders are advised to read the Wynnefield Group's definitive
proxy statement, which contains important information. Shareholders
may obtain a free copy of the proxy statement and other documents
filed by the Wynnefield Group with the SEC at the SEC�s Internet
website at www.sec.gov. The proxy statement, a proxy card, and
other documents may also be obtained free of charge from the
Wynnefield Group's proxy solicitor or from the Wynnefield Group by
request to: Lawrence E. DennedyDaniel M. SullivanMacKenzie
Partners, Inc.105 Madison AvenueNew York, NY 10016Phone: (800)
322-2885 or Nelson ObusThe Wynnefield Group450 Seventh Avenue,
Suite 509Phone: (212) 760-0134 If you have lost your proxy card
from the Wynnefield Group, or did not receive one, you may obtain
another proxy statement and card by contacting MacKenzie Partners,
Inc. or The Wynnefield Group at the phone numbers listed above.
ABOUT THE WYNNEFIELD GROUP: The Wynnefield Group is Crown Crafts�
largest shareholder, holding 14.6% of the company�s outstanding
common stock. Wynnefield is a long-term investor in Crown Crafts,
having first invested in the company about eight years ago. The
Wynnefield Group includes several affiliates of Wynnefield Capital,
Inc. (WCI), a value investor specializing in U.S. small cap
situations that have company- or industry-specific catalysts. WCI
was established in 1992. Its founding partners, Nelson Obus and
Joshua Landes, held senior research and institutional equity
positions at Lazard Freres & Co. during the 1980s, and the
initial Wynnefield investors included many of their colleagues at
Lazard. The fund has grown to approximately $450 million under
management. Nelson Obus currently serves on the board of directors
of Layne Christensen Company (NASDAQ: LAYN), serving on its audit
committee and compensation committee.
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