Crown Crafts shareholder presents plan to end proxy fight

By Lisa Kerner

Charlotte, N.C., July 31 - Crown Crafts, Inc.'s largest shareholder, the Wynnefield Group, extended an olive branch in the current proxy battle by offering a compromise agreement.

Under the agreement, Wynnefield would drop its opposition to the re-election of William T. Deyo, Jr. and Steven E. Fox as directors of the company.

Crown Crafts would then be asked to agree to the following:

• Immediately increase the size of the current board to nine members, from seven members;

• Elect Nelson Obus and Frederick G. Wasserman as directors to fill the resulting vacancies;

• Form a nominating and governance committee with either Obus or Wasserman as one of the members;

• Form a strategic planning committee with E. Randall Chestnut as one of the members and either Obus or Wasserman as one of the other members;

• Commit to putting to a stockholder vote at the 2008 annual meeting, and supporting, a binding resolution to de-classify the board; and

• Amend the non-employee director fee structure.

In a letter to Crown Crafts' board, the long-term investor reiterated its plan to campaign for election of its two nominees to the board, if the compromise agreement is rejected.

The letter was included as part of a schedule 13D filing with the Securities and Exchange Commission.

As previously reported, Wynnefield took Crown Crafts to task for not addressing its declining sales, flat operating income and deteriorating shareholder value.

In a prior letter to the board, Wynnefield said it believes that "the current board has grown stale and needs an infusion of new blood and fresh thinking."

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

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