Crown Crafts investor Wynnefield seeks governance changes, greater shareholder value

By Angela McDaniels

Seattle, Oct. 11 - Crown Crafts, Inc. investor Wynnefield Capital, Inc. urged the company to hire an outside firm to explore strategic alternatives and said that analysis should consider a sale or merger if adequate returns on capital for new initiatives cannot be identified.

The investor also requested that Crown Crafts make several changes to its corporate governance, including unstaggering its board, developing a succession plan for senior executives and paying board members with a combination of options grants and restricted stock instead of cash.

The requests were made in a letter that was included in a schedule 13D filing with the Securities and Exchange Commission.

"The things that need to be done should be undertaken in a manner that indicates absolute sincerity and reality of purpose; we are beyond the 'window dressing' phase," Wynnefield general partner and management member Nelson Obus said in the letter to Crown Crafts chairman, president and chief executive officer Randall Chestnut.

Wynnefield launched a proxy contest this summer, saying it doesn't believe the existing board "has the wherewithal" to address the company's problems. The investor said the critical issues facing Crown Crafts are a challenging business environment, stiff competition, lack of a strategic plan and deficient corporate governance policies.

One of Wynnefield's two director nominees, Frederick Wasserman, was elected to the board at the company' annual meeting on Aug. 14. Obus, the other nominee, was not.

With a 14.6% stake, Wynnefield and its affiliates are the company's largest shareholder.

Crown Crafts is a Gonzales, La.-based, distributor of infant and juvenile products.

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