SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CROWN CRAFTS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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CROWN CRAFTS, INC.
1600 RIVEREDGE PARKWAY, SUITE 200
ATLANTA, GEORGIA 30328
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Crown
Crafts, Inc., a Georgia corporation (the "Company"), will be held on November
27, 2001 at 10:00 a.m. at the Company's headquarters, 1600 RiverEdge Parkway,
Suite 200, Atlanta, Georgia 30328, for the following purposes:
1. To elect all directors to the Board of Directors of the Company:
three Class I directors for a three-year term of office, three Class II
directors for a two-year term of office, and two Class III directors for a
one-year term of office; and
2. To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.
The Proxy Statement dated October 19, 2001 is attached. Shareholders of
record on the books of the Company at the close of business on October 3, 2001
are entitled to notice of and to vote at the meeting.
We hope you will be able to attend the meeting in person, but if you cannot
be present, it is important that you sign, date and promptly return the enclosed
proxy in the enclosed postage-paid envelope in order that your vote may be cast
at the meeting.
By Order of the Board of Directors
Debbie D. Dowdy
Secretary
October 19, 2001
Atlanta, Georgia
CROWN CRAFTS, INC.
1600 RIVEREDGE PARKWAY, SUITE 200
ATLANTA, GEORGIA 30328
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Crown Crafts, Inc. (the "Company") of proxies from the
holders of the Company's outstanding common stock, $1.00 par value per share
(the "Common Stock"), to be voted at the annual meeting of shareholders of the
Company (the "Annual Meeting") to be held on November 27, 2001 at 10:00 a.m. at
the Company's headquarters, 1600 RiverEdge Parkway, Suite 200, Atlanta, Georgia
30328, and at any and all adjournments or postponements of the Annual Meeting.
PROXY SOLICITATION
Any shareholder who executes and delivers a proxy has the right to revoke
the proxy at any time before it is voted. A proxy may be revoked by (i) filing
an instrument revoking the proxy with the Secretary of the Company, (ii)
executing a proxy bearing a later date, or (iii) attending and voting at the
Annual Meeting. Properly executed proxies, timely returned, will be voted in
accordance with the choices made by the shareholder with respect to the
proposals listed thereon.
If a choice is not made with respect to any proposal, the proxy will be
voted "FOR" the election of directors as described under "PROPOSAL 1 -- ELECTION
OF DIRECTORS" below. Directors are elected by a vote of a plurality of the
shares of outstanding Common Stock present in person or by proxy at the Annual
Meeting.
Other than the matters set forth herein, management of the Company is not
aware of any matters that may come before the Annual Meeting. If any other
business should properly come before the Annual Meeting, the persons named in
the enclosed proxy will have the discretionary authority to vote the shares
represented by the effective proxies and intend to vote them in accordance with
their best judgment.
The cost of solicitation of proxies will be borne by the Company. In
addition to the solicitation of proxies by the use of the mails, the directors
and officers of the Company may solicit proxies on behalf of management by
telephone, telegram and personal interview. Such persons will receive no
additional compensation for their solicitation activities and will be reimbursed
only for their actual expenses in connection therewith. The Company will
authorize banks, brokerage houses and other custodians, nominees or fiduciaries
to forward copies of proxy materials to the beneficial owners of shares or to
request authority for the execution of the proxies and will reimburse such
banks, brokerage houses and other custodians, nominees or fiduciaries for their
out-of-pocket expenses incurred in connection therewith. The Notice of the
Annual Meeting, this Proxy Statement and the form of proxy were first mailed to
shareholders on or about October 19, 2001.
VOTING RIGHTS AND PRINCIPAL SHAREHOLDERS
At the close of business on October 3, 2001, the record date for
determining the shareholders entitled to notice of and to vote at the meeting,
there were 9,421,437 shares of Common Stock outstanding. Each share of Common
Stock is entitled to one vote (noncumulative) on all matters presented for
shareholder vote. The presence in person or by proxy of the holders of a
majority of the outstanding Common Stock constitutes a quorum for the
transaction of business.
Abstentions and broker non-votes are counted for purposes of determining
the presence or absence of a quorum for the transaction of business. Abstentions
will be counted towards the tabulation of votes cast on proposals presented to
the shareholders and will have the same effect as negative votes, whereas broker
non-votes will not be counted for any purpose in determining whether a matter
has been approved.
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of October 3, 2001, by (i) each director of the
Company, (ii) the five most highly compensated executive officers of the Company
as set forth in the Summary Compensation Table included elsewhere herein, (iii)
all officers and directors as a group, and (iv) all persons known to the Company
who may be deemed beneficial owners of more than five percent (5%) of such
outstanding shares. Under the rules of the Securities and Exchange Commission, a
person is deemed to be a "beneficial owner" of a security if he or she has or
shares the power to vote or direct the voting of such security or the power to
dispose or to direct the disposition of such security. A person is also deemed
to be a beneficial owner of any securities of which that person has the right to
acquire beneficial ownership within 60 days. An asterisk indicates beneficial
ownership of less than one percent (1%).
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1)(2) SHARES
------------------------------------ ---------------- -------------
Michael H. Bernstein................................................ 782,933(3) 8.3%
1600 RiverEdge Parkway, Suite 200
Atlanta, Georgia 30328
E. Randall Chestnut................................................. 461,104(4) 4.9%
1600 RiverEdge Parkway, Suite 200
Atlanta, Georgia 30328
Carl A. Texter...................................................... 25,000(5) *
1600 RiverEdge Parkway, Suite 200
Atlanta, Georgia 30328
Peter J. Appleyard.................................................. 5,722(6) *
1600 RiverEdge Parkway, Suite 200
Atlanta, Georgia 30328
Paul C. Krum........................................................ 36,338(7) *
1600 RiverEdge Parkway, Suite 200
Atlanta, Georgia 30328
William T. Deyo, Jr. ............................................... 5,000(8) *
3390 Peachtree Road, N.E.
Atlanta, Georgia 30326
Steven E. Fox....................................................... 5,000(9) *
2700 International Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Sidney Kirschner.................................................... 5,000(10) *
1000 Johnson Ferry Road, N.E.
Atlanta, Georgia 30342
Zenon S. Nie........................................................ 5,000(11) *
8490 Sentinae Chase Drive
Roswell, Georgia 30076
William P. Payne.................................................... 5,000(12) *
3455 Peachtree Road, N.E.
Atlanta, Georgia 30326
Dr. Donald Ratajczak................................................ 5,000(13) *
101 Marietta Street
Atlanta, Georgia 30303
2
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1)(2) SHARES
------------------------------------ ---------------- -------------
Dr. James A. Verbrugge.............................................. 5,000(14) *
University of Georgia
Brooks Hall
Department of Banking and Finance
Athens, Georgia 30602
All Officers and Directors of the Company as a group [11 persons]... 631,213(15) 6.6%
Robin M. Robboy, as Trustee for the Crown Crafts, Inc.
Employee Stock Ownership Plan..................................... 512,389(16) 5.4%
1600 RiverEdge Parkway, Suite 200
Atlanta, Georgia 30328
Phillip Bernstein................................................... 494,782 5.3%
21126 Escondido Way
Boca Raton, Florida 33433
---------------
(1) Unless otherwise specified in the footnotes, the shareholder has sole
voting and dispositive power.
(2) The number of shares beneficially owned and the computation of percentage
of ownership includes options to acquire shares of Common Stock which may
be exercised within 60 days of October 3, 2001.
(3) Includes 441,853 shares of Common Stock owned individually by Mr.
Bernstein. Includes 180,412 shares held by Mr. Bernstein as custodian or
trustee for his minor children, as to all of which he disclaims beneficial
ownership. Includes 63,432 shares of Common Stock held by the Crown Crafts,
Inc. Employee Stock Ownership Plan and 82,236 held by the Bernstein Family
Foundation, a charitable foundation for which Mr. Bernstein acts as
trustee. Includes options for 15,000 shares of Common Stock. Mr. Bernstein
resigned as President and Chief Executive Officer and as a Director of the
Company effective July 24, 2001.
(4) Includes 425,456 shares of Common Stock owned individually by Mr. Chestnut.
Includes options for 35,000 shares of Common Stock. Includes 648 shares of
Common Stock held by the Crown Crafts, Inc. Employee Stock Ownership Plan.
Mr. Chestnut currently serves as Chairman of the Board, President and Chief
Executive Officer of the Company, positions to which he was elected on July
24, 2001. Prior to that he served as Executive Vice President of the
Company. (Additional information about the business experience of Mr.
Chestnut is set forth under "Election of Directors" below.)
(5) Mr. Texter owns no shares of Common Stock. Includes options for 25,000
shares of Common Stock. Mr. Texter currently serves as Vice President and
Treasurer of the Company. He resigned as Chief Financial Officer on July
27, 2001.
(6) Includes 4,335 shares of Common Stock owned individually by Mr. Appleyard.
Includes 200 shares of Common Stock owned individually by Mr. Appleyard's
spouse. Includes 187 shares of Common Stock held by the Crown Crafts, Inc.
Employee Stock Ownership Plan. Includes 1,000 shares in an IRA rollover
account. Mr. Appleyard resigned as Vice President and Chief Information
Officer of the Company effective May 4, 2001.
(7) Includes 2,259 shares of Common Stock owned individually by Mr. Krum.
Includes 11,113 shares of Common Stock held by the Crown Crafts, Inc.
Employee Stock Ownership Plan. Includes options for 22,667 shares of Common
Stock. Includes 299 shares in an IRA rollover account. Mr. Krum resigned as
Vice President, Purchasing of the Company effective July 24, 2001.
(8) Includes 5,000 shares of Common Stock owned individually by Mr. Deyo.
(9) Includes 5,000 shares of Common Stock owned individually by Mr. Fox.
(10) Includes 5,000 shares of Common Stock owned individually by Mr. Kirschner.
(11) Includes 5,000 shares of Common Stock owned individually by Mr. Nie.
(12) Includes 5,000 shares of Common Stock owned individually by Mr. Payne.
(13) Includes 5,000 shares of Common Stock owned individually by Dr. Ratajczak.
(14) Includes 5,000 shares of Common Stock owned individually by Dr. Verbrugge.
(15) Includes all officers and directors of the Company as of October 3, 2001.
3
(16) Ms. Robboy, as trustee, is the owner of record and has indicated that she
has the sole right to dispose of these shares, which are held in accounts
for approximately 1,255 participants in the Crown Crafts, Inc. Employee
Stock Ownership Plan. Plan participants have the right to vote all shares
held in their individual accounts. Shares as to which no voting
instructions are received from participants are voted by the Trustee in
accordance with instructions received from the Administrative Committee of
the Plan. The Committee is comprised of Mr. Carl A. Texter, the Company's
Vice President and Treasurer, Ms. Amy V. Samson, the Company's Vice
President and Chief Financial Officer, both of whom are executive officers
of the Company, and Ms. Sandy Simoneaux, the Company's Human Resources
Manager.
PROPOSAL 1 -- ELECTION OF DIRECTORS
On July 24, 2001 the Company concluded a major corporate restructuring,
including the sale of its adult bedding business and the refinancing of the
Company's debt with its lenders. These transactions are described in detail in
the Company's Form 8-K dated July 23, 2001 filed with the Securities and
Exchange Commission.
At a Board of Directors meeting held on July 22, 2001, each of the
directors other than Mr. Chestnut agreed to resign from the Board effective
immediately upon the consummation of the transactions that were consummated on
July 24, 2001, and the Board elected seven new directors to join Mr. Chestnut on
the Board immediately upon the effectiveness of such resignations.
Thus, the Board of Directors currently consists of eight directors: Mr.
Chestnut, whose term was set to expire on the date of the 2001 Annual Meeting,
and seven other directors who were elected by the prior Board and whose terms
therefore extend only until the date of the 2001 Annual Meeting in accordance
with the Company's Bylaws.
In accordance with the requirements of Georgia corporate law and the
Company's Bylaws, the directors are divided among the three classes of directors
set forth below, and the Board nominates each of the following persons for
election to the Board of Directors for the terms and in the classes set forth
below.
The proxyholders intend to vote "FOR" the election of the individuals named
below unless authority is specifically withheld in the proxy.
While it is not anticipated, in the event any nominee is not a candidate or
is unable to serve as a director at the time of the election, the proxies will
be voted for the nominee designated by the present Board of Directors to fill
such vacancy.
The name and age of each of the nominees, his or her principal occupation
(including positions and offices with the Company) and the period during which
he or she has served as a director are set forth below.
NOMINEES FOR DIRECTOR
NOMINEES FOR CLASS I
FOR A THREE-YEAR TERM EXPIRING ON THE DATE OF THE 2004 ANNUAL MEETING
NAME AGE POSITION WITH COMPANY SINCE
---- --- --------------------- -----
E. Randall Chestnut..................... 54 President and Chief Executive Officer 2001
Chairman of the Board 2001
Director 1995
William T. Deyo, Jr..................... 57 Director 2001
Steven E. Fox........................... 55 Director 2001
4
NOMINEES FOR CLASS II
FOR A TWO-YEAR TERM EXPIRING ON THE DATE OF THE 2003 ANNUAL MEETING
NAME AGE POSITION WITH COMPANY SINCE
---- --- --------------------- -----
Sidney Kirschner........................ 66 Director 2001
Zenon S. Nie............................ 50 Director 2001
William P. Payne........................ 53 Director 2001
NOMINEES FOR CLASS III
FOR A ONE-YEAR TERM EXPIRING ON THE DATE OF THE 2002 ANNUAL MEETING
NAME AGE POSITION WITH COMPANY SINCE
---- --- --------------------- -----
Donald Ratajczak........................ 58 Director 2001
James A. Verbrugge...................... 61 Director 2001
NOMINEES
E. Randall Chestnut joined the Company in January 1995 as Vice President,
Corporate Development. He was elected to the Board of Directors in February 1995
and as Executive Vice President of the Company in May 1998. In July 2001 he was
elected President, Chief Executive Officer and Chairman of the Board of the
Company. Prior to joining the Company, Mr. Chestnut was President of Beacon
Manufacturing Company, a producer of adult and infant blankets, from December
1988 to January 1995. He also served as Vice Chairman of Wiscassett Mills
Company, a yarn manufacturer, from 1990 to 1994.
William T. Deyo, Jr. has been a principal of Goddard Investment Group, LLC,
Atlanta, Georgia, a real estate investment firm, since 2000. He was Executive
Vice President of NAI/Brannen Goddard Company, Atlanta, Georgia, a real estate
brokerage firm, from 1999 to 2000. From 1966 to 1999 he held various positions
with Wachovia Bank, Atlanta, Georgia, serving ultimately as Executive Vice
President. Mr. Deyo also serves as Chairman of the Board of the Fulton County
(Georgia) Hospital Authority and as a member of the Board of Directors of the
Center for Visually Impaired Foundation.
Steven E. Fox is a partner in the law firm of Rogers & Hardin LLP, Atlanta,
Georgia, where he has practiced since 1976. Mr. Fox joined the Board of
Directors of the Company in July 2001. He is a member of the Board of Directors
of Athens Olympic Broadcasting S.A.
Sidney Kirschner has been Chairman, President and Chief Executive Officer
of Northside Hospital, Atlanta, Georgia, since 1992. From 1973 to 1992 he held
various positions with National Service Industries, Inc., Atlanta, Georgia, a
diversified company, serving ultimately as Chairman, President and Chief
Executive Officer. Mr. Kirschner joined the Board of Directors of the Company in
July 2001. He is a member of the Board of Directors of Fortune Brands, Inc. and
Superior Uniform, Inc.
Zenon S. Nie is Chairman of the Board, President and Chief Executive
Officer of The C.E.O. Advisory Board, Atlanta, Georgia, a management consulting
firm he founded in 2001. Previously he served as Chairman of the Board,
President, Chief Executive Officer and Chief Operating Officer of Simmons
Company, Atlanta, Georgia, a manufacturer and distributor of mattresses, from
1993 to 2000. From 1991 to 1993 he was President of the Consumer Home Fashions
Division of The Bibb Company, Atlanta, Georgia.
William P. Payne has been a partner of Gleacher & Co., Atlanta, Georgia, an
investment banking firm, since 2000. From 1998 to 2000 he served as a Director
of Healtheon/WebMD Corporation and as Vice Chairman and Director of Premiere
Technologies, Inc., both companies located in Atlanta, Georgia, and involved in
web-based communications businesses. From 1997 to 1998 he served as Vice
Chairman of NationsBank of Georgia, and from 1991 to 1997 he served as President
and Chief Executive Officer of the Atlanta Committee for the Olympic Games and
as an officer of Atlanta Centennial Olympic Properties. He is
5
a member of the Board of Directors of Anheuser-Busch, Inc., Cousins Properties
Incorporated, ILD Telecommunications, Inc., Jefferson Pilot Corporation, The
Commerce Club, the Board of Trustees of the University of Georgia Foundation,
and the Board of Governors of the Georgia World Congress Center Authority.
Dr. Donald Ratajczak is Chairman and Chief Executive Officer of Brainworks
Ventures, Inc., an enterprise development company he founded in 2000. He is also
a Regent's Professor Emeritus and Robinson Fellow of the Robinson College of
Business at Georgia State University and a consulting economist with Morgan
Keegan and Co., Memphis, Tennessee. Previously from 1997 to 2000 Dr. Ratajczak
was a Regent's Professor of Economics at Georgia State University and before
that had held a position as a Professor or Associate Professor in that
department since 1973. He was also the founder and Director of the Economic
Forecasting Center at Georgia State University from 1973 to 2000. He is a member
of the Board of Directors of Ruby Tuesday, Inc., TBC Corporation, and Regan
Holdings and a Trustee of the CIM High Yield Fund.
Dr. James A. Verbrugge is Professor of Finance (since 1976) and Chairman
(since 1977) of the Department of Banking and Finance in the Terry College of
Business at the University of Georgia and holds the Chair of Banking (since
1992). He is a member of the Board of Directors of eResource Capital Group, Inc.
A vote of a plurality of the shares of outstanding Common Stock present in
person or by proxy at the Annual Meeting will be required to elect the nominees
for Directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF THE
EIGHT NOMINEES FOR DIRECTOR NAMED ABOVE.
ADDITIONAL INFORMATION ABOUT THE BOARD OF DIRECTORS
The Company's Board of Directors met eighteen times during the fiscal year
ended April 1, 2001. Each director attended each of the meetings of the Board,
except that Mr. Bernstein did not attend the Board meeting held on May 3, 2000,
Mr. Marvin A. Davis did not attend the Board meetings held on May 16 and July 3,
2000 and February 19, 2001, and Ms. Jane E. Shivers did not attend the Board
meetings held on April 25 and May 2, 2000. Each director attended each meeting
of the committees of which he or she was a member. The Board has an Audit
Committee and a Compensation Committee.
The Audit Committee meets with management and the Company's independent
accountants to consider the adequacy of the Company's internal controls and
other financial reporting matters. The Committee recommends to the Board the
engagement of the Company's independent accountants and reviews their audit
procedures and audit results. The Audit Committee met three times during the
fiscal year ended April 1, 2001. The Committee currently consists of Dr. Donald
Ratajczak (Chairman), Mr. William T. Deyo, Jr., Mr. Sidney Kirschner, and Dr.
James A. Verbrugge.
The Compensation Committee is responsible for establishing annual salary
levels, fringe benefits and any special compensation plans or programs for
executive officers of the Company. The Compensation Committee met once during
the fiscal year ended April 1, 2001. The Compensation Committee changed as of
July 24, 2001 and currently consists of Mr. Zenon S. Nie (Chairman), Mr. Steven
E. Fox, and Mr. William P. Payne.
6
EXECUTIVE OFFICERS
The executive officers of the Company during the fiscal year ended April 1,
2001 are as follows (those who remain with the Company as of the date of this
Proxy Statement are denoted with an asterisk (*)):
NAME AGE POSITION WITH COMPANY
---- --- ---------------------
Peter J. Appleyard(1).................. 54 Vice President and Chief Information
Officer
Michael H. Bernstein(2)................ 58 President and Chief Executive Officer
E. Randall Chestnut*(3)................ 54 Chairman of the Board, President and
Chief Executive Officer
Carl A. Texter*(4)..................... 46 Vice President and Treasurer
B. Dennis Jackson(5)................... 50 Vice President,
Manufacturing -- Quilted Division
Paul C. Krum(6)........................ 61 Vice President, Purchasing
Amy Vidrine Samson* (7)................ 41 Vice President and Chief Financial
Officer
---------------
(1) Mr. Appleyard resigned as Vice President and Chief Information Officer of
the Company effective May 4, 2001.
(2) Mr. Bernstein resigned as President and Chief Executive Officer and as a
Director of the Company effective July 24, 2001.
(3) Mr. Chestnut is currently Chairman of the Board, President and Chief
Executive Officer of the Company, positions to which he was elected on July
24, 2001. Prior to that he served as Executive Vice President of the
Company. (Additional information about the business experience of Mr.
Chestnut is set forth under "Election of Directors" above.)
(4) Mr. Texter joined the Company in May 2000 as Vice President and Chief
Financial Officer. He was elected Treasurer in July 2000 and Secretary in
October 2000. He resigned as Secretary on December 7, 2000 and resigned as
Chief Financial Officer on July 27, 2001. Prior to joining the Company Mr.
Texter held a variety of financial management positions with BP Amoco over
19 years, most recently acting as chief financial officer of Amoco Fabrics
and Fibers, a leading producer of synthetic industrial fabrics.
(5) Mr. Jackson resigned as Vice President, Manufacturing -- Quilted Division of
the Company effective July 24, 2001.
(6) Mr. Krum resigned as Vice President, Purchasing of the Company effective
July 24, 2001.
(7) Ms. Samson joined the Company on July 27, 2001 as Vice President and Chief
Financial Officer. Prior to joining the Company, she served since 1995 as
Vice President of Finance and Operations of Hamco, Inc., a wholly owned
subsidiary of the Company.
The officers of the Company serve at the pleasure of the Board of
Directors.
7
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid
during the fiscal year ended April 1, 2001 and the two (2) prior fiscal years to
the Company's Chief Executive Officer and the Company's four other most highly
compensated executive officers (with annual salary and bonus in excess of
$100,000).
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
AWARDS/
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
FISCAL SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) (#) ($)
--------------------------- ------ -------- -------- ------------ ------------
Michael H. Bernstein(3)......................... 2001 $377,000 $ -0- -0- $ 6,706(2)
President and Chief Executive Officer 2000 $328,000 $ -0- 30,000 $ 9,506(2)
1999 $300,000 $ -0- 20,000 $ 5,484(2)
E. Randall Chestnut(4).......................... 2001 $300,000 $ -0- 35,000 $ 8,673(2)
Chairman of the Board, President and Chief 2000 $300,000 $ -0- 25,000 $10,244(2)
Executive Officer 1999 $277,000 $ -0- 20,000 $ 5,565(2)
Carl A. Texter(5)............................... 2001 $221,000 $ -0- 50,000 $ -0-
Vice President and Treasurer
Peter J. Appleyard(6)........................... 2001 $160,500 $ 30,000 5,000 $ 7,077(2)
Vice President and Chief Information Officer 2000 $161,250 $ -0- 7,500 $ 5,603(2)
1999 $154,500 $ -0- 7,500 $ 3,058(2)
Paul C. Krum(7)................................. 2001 $164,000 $ 16,400 5,000 $ 8,687(2)
Vice President, Purchasing 2000 $160,000 $ -0- 10,000 $ 8,836(2)
1999 $153,000 $ -0- 10,000 $ 5,456(2)
---------------
(1) There were no bonus payments made during fiscal 1999, 2000 or 2001 under the
Company's Executive Incentive Bonus Plan because the Company's earnings in
those years were below the minimum level required for payment of bonuses
under the plan. In 2001 Mr. Appleyard received a $30,000 bonus and Mr. Krum
received a $16,400 bonus, both of which were outside the Company's Executive
Incentive Bonus Plan.
(2) Represents Company contributions to the Crown Crafts, Inc. Employee Stock
Ownership Plan and Company matching contributions to the Crown Crafts, Inc.
401(k) Retirement Savings Plan and includes medical reimbursement and
automobile allowance.
(3) Mr. Bernstein resigned as President and Chief Executive Officer and as a
Director of the Company effective July 24, 2001.
(4) Mr. Chestnut is currently Chairman of the Board, President and Chief
Executive Officer of the Company, positions to which he was elected on July
24, 2001. Prior to that he served as Executive Vice President of the
Company. (Additional information about the business experience of Mr.
Chestnut is set forth under "Election of Directors" above.)
(5) Mr. Texter joined the Company as an officer in May 2000 and thus received no
compensation from the Company during fiscal years 2000 and 1999. Mr. Texter
joined the Company in May 2000 as Vice President and Chief Financial
Officer. He was elected Treasurer in July 2000 and Secretary in October
2000. He resigned as Secretary on December 7, 2000 and as Chief Financial
Officer on July 27, 2001.
(6) Mr. Appleyard resigned as Vice President and Chief Information Officer of
the Company effective May 4, 2000.
(7) Mr. Krum resigned as Vice President, Purchasing of the Company effective
July 24, 2001.
8
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to stock
options granted to the Company's executive officers during the fiscal year ended
April 1, 2001, including the potential realizable value of such options at
assumed annual rates of stock appreciation of 5% and 10% for the term of the
options.
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS(1) AT ASSUMED
------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE OPTION TERM(2)
OPTIONS EMPLOYEES IN PER EXPIRATION ------------------
NAME AND PRINCIPAL POSITION GRANTED FISCAL YEAR SHARE DATE 5% 10%
--------------------------- ---------- ------------ -------- ---------- ------- --------
Michael H. Bernstein(3)............. 0
President and Chief Executive
Officer
E. Randall Chestnut(4).............. 35,000 7.2% $1.1875 9/8/10 $26,138 $ 66,240
Chairman of the Board, President
and Chief Executive Officer
Carl A. Texter(5)................... 50,000 10.3% $2.0000 5/16/10 $62,889 $159,374
Vice President and Treasurer
Peter J. Appleyard(6)............... 5,000 1.0% $1.0625 7/7/10 $ 3,341 $ 8,467
Vice President and Chief
Information Officer
Paul C. Krum(7)..................... 5,000 1.0% $1.0625 7/7/10 $ 3,341 $ 8,467
Vice President, Purchasing
---------------
(1) All options granted to the named executive officers were granted pursuant to
the Company's 1995 Non-Qualified Stock Option Plan. Each such option vests
at a rate of one-half per year commencing on the first anniversary of its
date of grant, and each such option expires on the tenth anniversary of its
date of grant. Each such option includes a "limited stock appreciation
right" ("LSAR") with respect to an equal number of shares. The option and
the LSAR become immediately exercisable upon a change in control of the
Company.
(2) The assumed rates of growth are set by the Securities and Exchange
Commission for illustration purposes only and are not intended to forecast
the future stock prices.
(3) Mr. Bernstein resigned as President and Chief Executive Officer and as a
Director of the Company effective July 24, 2001.
(4) Mr. Chestnut is currently Chairman of the Board, President and Chief
Executive Officer of the Company, positions to which he was elected on July
24, 2001. Prior to that he served as Executive Vice President of the
Company. (Additional information about the business experience of Mr.
Chestnut is set forth under "Election of Directors" above.)
(5) Mr. Texter joined the Company in May 2000 as Vice President and Chief
Financial Officer. He was elected Treasurer in July 2000 and Secretary in
October 2000. He resigned as Secretary on December 7, 2000 and as Chief
Financial Officer on July 27, 2001.
(6) Mr. Appleyard resigned as Vice President and Chief Information Officer of
the Company effective May 4, 2001.
(7) Mr. Krum resigned as Vice President, Purchasing of the Company effective
July 24, 2001.
9
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
The following table sets forth certain information with respect to stock
options exercised by the Company's executive officers during the fiscal year
ended April 1, 2001, and options held by such officers, whether exercisable or
unexercisable, at April 1, 2001.
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END($)(2)
SHARES -------------- -------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME AND PRINCIPAL POSITION EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
--------------------------- ----------- -------------- -------------- -------------
Michael H. Bernstein(3).................. 0 $ 0 15,000/15,000 $0/$0
E. Randall Chestnut(4)................... 0 $ 0 108,262/54,166 $0/$0
Carl A. Texter(5)........................ 0 $ 0 0/50,000 $0/$0
Peter J. Appleyard(6).................... 0 $ 0 23,750/11,250 $0/$0
Paul C. Krum(7).......................... 0 $ 0 71,631/13,333 $0/$0
---------------
(1) Realized value is equal to the difference between the market price on the
date of exercise and the exercise price which is equal to the closing price
on the date of grant.
(2) Value is equal to the difference between the April 1, 2001 closing price of
the Common Stock ($.39) and the exercise price, which is equal to the
closing price on the date of grant.
(3) Mr. Bernstein resigned as President and Chief Executive Officer and as a
Director of the Company effective July 24, 2001.
(4) Mr. Chestnut is currently Chairman of the Board, President and Chief
Executive Officer of the Company, positions to which he was elected on July
25, 2001. Prior to that he served as Executive Vice President of the
Company. (Additional information about the business experience of Mr.
Chestnut is set forth under "Election of Directors" above.)
(5) Mr. Texter joined the Company in May 2000 as Vice President and Chief
Financial Officer. He was elected Treasurer in July 2000 and Secretary in
October 2000. He resigned as Secretary on December 7, 2000 and as Chief
Financial Officer on July 27, 2001.
(6) Mr. Appleyard resigned as Vice President and Chief Information Officer of
the Company effective May 4, 2001.
(7) Mr. Krum resigned as Vice President, Purchasing of the Company effective
July 24, 2001.
SEVERANCE PROTECTION AGREEMENTS
The Company entered into a Severance Protection Agreement (the "Initial
Severance Protection Agreements") with each of Messrs. Bernstein, Chestnut,
Appleyard, and Krum dated September 5, 1998 and with Mr. Texter dated May 8,
2000 (each, an "Executive"). The Initial Severance Protection Agreements with
Messrs. Bernstein, Appleyard and Krum were terminated effective July 24, 2001.
Each Initial Severance Agreement was effective for an initial term of two (2)
years and was automatically renewable for additional consecutive one-year terms
unless timely notice of non-renewal was given by either the Company or the
Executive. Generally, each Initial Severance Agreement provided that, if the
Executive's employment were terminated within twelve (12) months after a "change
of control" (as defined in the Initial Severance Agreement) (i) by the Company
other than for "cause" (as defined in the Initial Severance Agreement), or (ii)
by the Executive for "good reason" (as defined in the Initial Severance
Agreement), the Executive would be entitled to a lump sum payment equal to the
sum of (a) accrued and unpaid salary, expenses, vacation pay and bonuses, (b) a
multiple of the Executive's annual base salary and bonus (such multiple being
three (3) times in the case of Messrs. Bernstein and Chestnut and two (2) times
in the case of Messrs. Appleyard, Krum and Texter), and (c) the excess of the
actuarial equivalent of retirement benefits to which the Executive would be
entitled under the Company's supplemental and other retirement plans had the
Executive remained in the employ of the Company for an additional period of
credited service over the actual actuarial
10
equivalent benefits to which the Executive is entitled under such plans (such
period being three (3) years in the case of Messrs. Bernstein and Chestnut and
two (2) years in the case of Messrs. Appleyard, Krum and Texter). In addition,
upon any such termination the Company was obligated (a) to continue, at its
expense, for a period of time the medical, disability, dental, hospitalization
and life insurance benefits enjoyed by the Executive prior to termination (such
period being three (3) years in the case of Messrs. Bernstein and Chestnut and
two (2) years in the case of Messrs. Appleyard, Krum and Texter), (b) to provide
the Executive with outplacement services, reasonable office space and
secretarial assistance, and (c) to reimburse the Executive for reasonable moving
expenses to the extent not paid by a new employer. Also, upon any such
termination, the restriction on outstanding stock options and similar incentive
awards lapse and such options and awards would become immediately vested and
exercisable and the Executive would have the right to require the Company to
purchase for cash any shares of Common Stock purchased by the Executive upon any
exercise of such options at a price per share equal to the fair market value
thereof. Finally, to the extent that payments under the Severance Agreement
would be subject to an excise tax imposed under the Code, the Executive was also
entitled to a "gross-up" payment in the amount equal to any such tax. The
Initial Severance Agreement with Mr. Bernstein also provided that he would be
entitled to the foregoing compensation and benefits if he elected to terminate
his employment for any reason during a 90-day period commencing 180 days after
the occurrence of a "change of control" (as defined in the Initial Severance
Agreement).
In connection with their resignations from the Company effective July 24,
2001, Messrs. Bernstein, Appleyard and Krum relinquished their rights under the
Initial Severance Protection Agreements.
Also effective July 24, 2001 the Company entered into an Employment
Agreement with each of Mr. Chestnut and Ms. Amy V. Samson (each a "New
Executive"), each agreement including certain provisions regarding severance
(the "New Severance Protection Agreements"). Each New Severance Protection
Agreement is effective for an initial term ending March 31, 2005 and, unless
either party notifies the other to the contrary, will subsequently be renewed
for a one-year term. Generally, each New Severance Protection Agreement provides
that, if the New Executive's employment is terminated (i) by the Company at the
time of a "Change in Control" (as defined in the New Severance Protection
Agreement), (ii) by the Company without "Cause" (as defined in the New Severance
Protection Agreement), or (iii) by the New Executive for "Good Reason" (as
defined in the New Severance Protection Agreement), then the New Executive shall
be entitled (a) in the case of Mr. Chestnut, to the benefits provided in his
Initial Severance Protection Agreement, and (b) in the case of Ms. Samson, a
lump sum cash payment in an amount equal to her then current compensation and
benefits, including salary, bonuses, all perquisites, and all other forms of
compensation under her New Severance Protection Agreement for the greater of the
remaining term of such agreement or one year.
On July 2, 2001 the Company entered into an amendment to Mr. Texter's
Initial Severance Protection Agreement (the "Amended Severance Protection
Agreement") providing that Mr. Texter would receive in addition to his
pre-existing salary and other benefits (a) a $50,000 bonus on the earlier of (i)
the closing of the transactions reorganizing the Company and refinancing its
loans (which transactions closed effective July 24, 2001), or (ii) August 31,
2001, (b) a severance payment equal to $5,000 per week for each week of his
employment following the Company's reorganization until the termination of his
employment, payable upon such termination of his employment, and (c)
reimbursement of the cost of maintaining his medical coverage under COBRA for a
period ending upon the earliest of (i) the date six months following the
termination of his employment or (ii) the effective date of the commencement of
new medical coverage through a new employer or otherwise.
11
PERFORMANCE GRAPH
Set forth below is a graph which compares the value of $100 invested at the
close of trading on the last trading day preceding the first day of the
preceding fiscal year, in each of the three investment alternatives:
- The Company's Common Stock;
- The S&P 500; and
- A specially constructed peer group consisting of publicly-traded
corporations (including the Company) that are or have been engaged
principally in the manufacture and sale of home furnishing textile
products.
The peer group includes the Company, Burlington Industries, Inc., Pillowtex
Corporation, Springs Industries, Inc., Thomaston Mills, Inc. and West Point
Stevens, Inc. The graph assumes all dividends were reinvested.
CROWN CRAFTS INC S&P 500 INDEX PEER GROUP
---------------- ------------- ----------
Mar96 100.00 100.00 100.00
Mar97 122.51 119.82 122.79
Mar98 224.90 177.34 184.15
Mar99 54.60 210.08 122.93
Mar00 14.73 247.77 83.45
Mar01 4.38 194.06 58.22
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
This report of the Compensation Committee of the Board of Directors of the
Company sets forth the Committee's compensation policies applicable to the Chief
Executive Officer and the other four most highly compensated executive officers
as well as other executive officers of the Company, including the specific
relationship of corporate performance to executive compensation, with respect to
compensation reported in this proxy statement for fiscal year 2001.
The Compensation Committee changed as of July 24, 2001 and is currently
comprised of three nonemployee directors of the Company, Mr. Zenon S. Nie, Mr.
Steven E. Fox, and Mr. William P. Payne. No member of the Compensation Committee
has ever been an employee of the Company or any of its subsidiaries, and they
are not eligible to participate in any of the compensation plans that the
Committee administers. The Compensation Committee has overall responsibility to
review, monitor and recommend compensation plans to the Board of Directors for
approval. In reviewing and approving executive compensation for key executives
other than the Company's Chief Executive Officer, the Committee reviews
recommendations from the Company's Chief Executive Officer.
12
POLICY AND OBJECTIVES
The fundamental philosophy of the compensation program of the Company is to
motivate executive officers to achieve short-term and long-term goals through
incentive-based compensation and to provide competitive levels of compensation
that will enable the Company to attract and retain qualified executives.
The Company's executive compensation program consists primarily of three
components. Of the three, only base salary is fixed. The other two components
are incentive-based. The Executive Incentive Bonus Plan ("EIBP") provides
short-term incentives based upon the Company's annual operating results while
the Company's 1995 Stock Option Plan provides long-term incentives. Since the
structure of the Company's executive officers' compensation is weighted more
heavily toward incentive-based compensation, total compensation will usually be
above average with higher operating results and below average when operating
results are poorer.
A key objective of the Compensation Committee is to assure that the
Company's executives' total compensation is competitive. To this end, the
Company receives and reviews executive compensation surveys and provides this
information to the Committee. These surveys confirm that, while the total
compensation of the Company's executives in fiscal year 2001 was below average,
historically total compensation has been about average when compared with
equivalent jobs with industrial employers of comparable size.
SHORT-TERM COMPENSATION
Base Salary
The Committee sets the base salary for each executive officer, including
the President and Chief Executive Officer, at amounts below the average base
salary for equivalent jobs with other industrial employers. Although base salary
is reviewed annually by the Committee, adjustments are infrequent. The Committee
believes this policy is consistent with the overall Company philosophy as set
forth above.
Short-Term Incentives
The Company's EIBP provides the Company's executive officers with an
opportunity for significant short-term incentive compensation based upon the
Company's operating results for the fiscal year. The maximum amounts potentially
realizable by the eligible executive officers are well above median bonuses
applicable to equivalent jobs with other industrial employers. This is intended
to offset the fact that executive officers' base salaries are below average,
thereby providing significant incentive with respect to short-term operating
results.
Under the EIBP, the Committee meets annually to set goals and establish
formulae, based upon numerous factors, including the Company's projected
operating results. The formulae are generally progressive, meaning that lower
levels of profitability by the Company result in a lower proportion of incentive
compensation to pretax income than do higher levels of profitability. The
Committee has reserved the right to alter the formulae at any time to reflect
changing conditions.
The total short-term compensation, which includes base salary and bonuses
under the EIBP, provides the executive officers of the Company the opportunity
to be compensated at levels similar to, or as operating results are more
positive, in excess of, equivalent jobs with other industrial employers at
moderate levels of corporate financial performance. The Company's earnings in
fiscal year 2001 were below the minimum level required to earn incentive
compensation, and, therefore, bonuses were not earned under the EIBP.
LONG-TERM COMPENSATION
The Company's compensation program includes long-term compensation in the
form of periodic grants of stock options. The granting of stock options is
designed to link the interests of the executives with those of the shareholders
as well as to retain key executives. Stock option grants provide an incentive
that focuses the executives' attention on managing the Company from the
perspective of an owner with an equity stake in the business. Stock options are
tied to the future performance of the Company's stock and will provide value
only if the price of the Company's stock increases after the stock option
becomes exercisable and before the stock option expires.
13
Long-term compensation is offered only to those key employees who can make
an impact on the Company's long-term performance.
COMPENSATION PAID TO THE CHIEF EXECUTIVE OFFICER
The Compensation Committee meets annually to evaluate the performance of
the Chief Executive Officer. The compensation paid in fiscal year 2001 to Mr.
Michael H. Bernstein, the Company's Chief Executive Officer, was based on the
factors generally applicable to compensation paid to executives of the Company
as described in this Report.
In reviewing Mr. Bernstein's short-term incentive compensation, the
Committee reviewed and considered Mr. Bernstein's recent performance, his
achievements in prior years, his achievement of specific short-term goals and
the Company's performance in that fiscal year. Mr. Bernstein's base salary and
bonus formula for fiscal year 2001 were approved based on this review process.
Mr. Bernstein's bonus formula, which was based on the Company's operating
results for fiscal year 2001, resulted in no bonus earned for fiscal year 2001.
Additionally, Mr. Bernstein's long-term compensation was determined by
considering such factors as the overall long-term goals of the Company,
performance trends, potential stock appreciation and actual performance, taking
into consideration factors and conditions which affected that performance, both
positively and negatively.
TAX COMPLIANCE POLICY
Certain provisions of the federal tax laws enacted in 1993 limit the
deductibility of certain compensation for the Chief Executive Officer and the
additional four executive officers who are highest paid and employed at year end
to $1 million per year each. This provision has had no effect on the Company
since its enactment because no officer of the Company received as much as $1
million in applicable remuneration in any year. Nonetheless, the presence of
non-qualified stock options makes it theoretically possible that the threshold
may be exceeded at some time in the future. In such a case, the Company intends
to take the necessary steps to conform its compensation to qualify for
deductibility. Further, the Committee intends to give strong consideration to
the deductibility of compensation in making its compensation decisions for
executive officers in the future, balancing the goal of maintaining a
compensation program which will enable the Company to attract and retain
qualified executives while maximizing the creation of long-term shareholder
value.
Respectfully submitted:
Zenon S. Nie, Chairman
Steven E. Fox
William P. Payne
CASH COMPENSATION OF DIRECTORS
For the fiscal year ending April 1, 2001, no employee director of the
Company was paid additional compensation as a member of the Board of Directors.
From March 27, 2000 until July 24, 2001, each nonemployee director of the
Company was paid based on an hourly rate of $400 for each Board meeting or
Committee meeting attended whether in person or by telephone (with minimum
compensation for each such meeting being $400). After they resigned from the
Board on July 24, 2001, Ms. Jane E. Shivers, Mr. Marvin A. Davis, Mr. Alfred M.
Swiren, and Mr. Richard N. Toub were each paid $10,000 in recognition of the
extraordinary demands placed on them during the last months of their service on
the Board. Each nonemployee director was reimbursed for all expenses incurred in
connection with service on the Board of Directors.
Beginning July 24, 2001 each nonemployee director of the Company is
compensated as follows: (a) an initial grant of 5,000 shares of the Company's
common stock, (b) an annual retainer of $20,000 (paid in equal monthly
installments), (c) for the chairman of each committee of the Board, an
additional annual retainer of
14
$2,000 (paid in equal monthly installments), (d) for each Board meeting (and
each committee meeting held other than in conjunction with a Board meeting),
$2,000 if attendance is in person and $1,000 if attendance is by telephone, and
(e) for each committee meeting held in conjunction with a Board meeting, $500 if
attendance is in person and $250 if attendance is by telephone. Each nonemployee
director will be reimbursed for all expenses incurred in connection with service
on the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Mr. Zenon S. Nie (Chairman), Mr.
Steven E. Fox, and Mr. William P. Payne. There were no Compensation Committee
interlocks.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon a review of Forms 3 and 4 and amendments thereto furnished to
the Company during fiscal year 2000 and Forms 5 and amendments thereto with
respect to fiscal year 2000, to the best of the Company's knowledge, no other
reports were required during the fiscal year ended April 1, 2001 and all filing
requirements applicable to directors, officers or greater than ten percent (10%)
shareholders of the Company required by Section 16(a) of the Securities Exchange
Act of 1934 (the "Exchange Act") were filed on a timely basis, other than a Form
4 filing by Mr. Chestnut with respect to stock options that he received in
September, 2000 that was overlooked and was filed on August 8, 2001 (174 days
late).
REPORT OF AUDIT COMMITTEE
The Company's Audit Committee is comprised of four independent members,
each of whom is able to read and understand fundamental financial statements and
at least one of whom has past employment experience in finance or accounting or
other comparable experience. The main function of the Audit Committee is to
ensure that effective accounting policies are implemented and that internal
controls are in place to deter fraud, anticipate financial risks and promote
accurate and timely disclosure of financial and other material information to
the public markets, the Board of Directors and the shareholders. The Audit
Committee also reviews and recommends to the Board of Directors the approval of
the annual financial statements and provides a forum, independent of management,
where the Company's auditors can communicate any issues of concern.
The independent members of the Audit Committee believe that the present
composition of the Committee accomplishes all of the necessary goals and
functions of an audit committee as recommended by the Blue Ribbon Committee on
Improving the Effectiveness of Corporate Audit Committees and adopted by the
United States stock exchanges and the Securities & Exchange Commission. In
accordance with the promulgated new rules regarding audit committees, the Audit
Committee has adopted a formal, written charter approved by the full Board of
Directors of the Company. The Charter specifies the scope of the Audit
Committee's responsibilities and how it should carry out those responsibilities.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the fiscal year ended April 1, 2001, with the
Company's management. The Audit Committee has discussed with Deloitte & Touche
LLP, the Company's independent public accountants, the matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees). The Audit Committee has also received the written disclosures and
the letter from Deloitte & Touche LLP required by Independence Standards Board
Standard No. 1 (Independence Discussion with Audit Committees) and the Audit
Committee has discussed the independence of Deloitte & Touche LLP with that
firm.
Based on the review and discussions with the Company's auditors for the
fiscal year ended April 1, 2001, the Audit Committee recommended to the Board of
Directors that the financial statements be included in the Company's Annual
Report on Form 10-K.
15
This Report has been provided by the Audit Committee:
Dr. Donald Ratajczak, Chairman
William T. Deyo, Jr.
Sidney Kirschner
Dr. James A. Verbrugge
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company has not yet selected its independent public accountants for its
fiscal year ending March 31, 2002. This selection will be made later in the year
by the Company's Board of Directors, based upon the recommendations of the Audit
Committee. The current members of the Audit Committee are Dr. Ratajczak, Mr.
Deyo, Mr. Kirschner, and Dr. Verbrugge.
Deloitte & Touche LLP has served as the Company's auditors since 1983.
Services provided to the Company and its subsidiaries by Deloitte & Touche LLP
in the fiscal year ended April 1, 2001 included the examination of the Company's
consolidated financial statements, services related to filings with the
Securities and Exchange Commission and consultation with respect to various tax
matters. Representatives of Deloitte & Touche LLP are expected to be present at
the Annual Meeting and will have an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
AUDIT FEES
For the audit of the Company's fiscal year 2001 financial statements,
including the review of the quarterly financial statements included in the
Company's Quarterly Reports on Form 10-Q filed during fiscal year 2001, the
Company agreed to pay Deloitte & Touche LLP $205,800. As of September 30, 2001,
$165,800 of these fees had been billed.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
For the fiscal year ended April 1, 2001, Deloitte & Touche LLP was not
engaged to and did not provide any of the professional services described in
Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X.
ALL OTHER FEES
For the fiscal year ended April 1, 2001, Deloitte & Touche LLP billed
$132,830 to the Company for services other than those described above. These
fees primarily relate to tax consultation.
COMPATIBILITY OF AUDIT FEES
The Company's Audit Committee has considered the provision of non-audit
services by Deloitte & Touche LLP and the fees paid to them for such services,
and believes that the provision of such services and their fees are compatible
with Deloitte & Touche LLP's maintaining independence (See "Report of the Audit
Committee" above).
SHAREHOLDER PROPOSALS
Shareholders interested in presenting a proposal for consideration at the
Company's Annual Meeting of Shareholders in the year 2002 (the "2002 Annual
Meeting"), currently intended to be held in August 2002, may do so by following
the procedures prescribed in the Company's Restated Articles of Incorporation
(the "Articles") and in Rule 14a-8 under the Exchange Act. To be eligible for
inclusion in the Company's 2002 proxy statement, shareholder proposals must be
received at the Company's principal executive offices at 1600 RiverEdge Parkway,
Suite 200, Atlanta, Georgia 30328 no later than April 1, 2002. The Company's
Articles provide that shareholders desiring to nominate persons for election to
the Board of Directors or bring any other business before the shareholders at an
annual meeting must notify the Secretary of the Company thereof in writing and
such notice must be delivered to or received by the Secretary no later than 90
days nor less than 60
16
days prior to such meeting. Such notice must include: (a) the name and address
of the shareholder who intends to make the nominations or propose the business
and, as the case may be, of the person or persons to be nominated or a
description of the business to be proposed; (b) the class and number of shares
of the Company's capital stock that are owned beneficially by such shareholder;
(c) if applicable, a description of all arrangements or understandings between
the shareholder and each nominee and any other person or persons pursuant to
which the nomination or nominations are to be made by the shareholder; and (d)
such other information regarding each nominee or each matter of business to be
proposed by such shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the SEC had the nominee been
nominated, or intended to be nominated, or the matter been proposed, or intended
to be proposed by the Board of Directors. While the Board of Directors will
consider shareholder proposals, the Company reserves the right to omit from the
Company's 2002 proxy statement shareholder proposals that it is not required to
include under the Exchange Act, including Rule 14a-8 thereunder.
MISCELLANEOUS
Management does not know of any other matters to come before the meeting.
If any other matters properly come before the Annual Meeting, however, it is the
intention of the persons designated as Proxies to vote in accordance with their
best judgment on such matters.
ANNUAL REPORT
The Company's Annual Report on Form 10-K for the fiscal year ended April 1,
2001, as filed with the Securities and Exchange Commission (exclusive of
documents incorporated by reference) (the "2001 Annual Report on Form 10-K") is
enclosed with this Proxy Statement. The 2001 Annual Report on Form 10-K is not a
part of the proxy soliciting material. Additional copies of the 2001 Annual
Report on Form 10-K are available without charge to shareholders upon written
request to Investor Relations, Crown Crafts, Inc., 1600 RiverEdge Parkway, Suite
200, Atlanta, Georgia 30328.
17
(CROWN CRAFTS, INC. LOGO)
CROWN CRAFTS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CROWN CRAFTS, INC. FOR THE ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 27, 2001
The undersigned shareholder hereby constitutes and appoints each of E.
Randall Chestnut and Amy Vidrine Samson, with full power of substitution, to act
as proxy for and to vote all shares of Common Stock which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of Crown Crafts, Inc.
(the "Annual Meeting") to be held on November 27, 2001 at 10:00 A.M., at the
Company's headquarters, 1600 RiverEdge Parkway, Suite 200, Atlanta, Georgia, or
at any adjournment(s) or postponements thereof, on all matters coming before the
Annual Meeting.
The undersigned instructs said proxies to:
1. Elect the following nominees to the Board of Directors:
[ ] FOR the nominees listed below (except as marked to the [ ] WITHHOLD AUTHORITY to vote for the nominees listed below
contrary below)
CLASS I (THREE-YEAR TERM):
E. Randall Chestnut William T. Deyo, Jr. Steven E. Fox
CLASS II (TWO-YEAR TERM):
Sidney Kirschner Zenon S. Nie William P. Payne
CLASS III (ONE-YEAR TERM):
Donald Ratajczak James A. Verbrugge
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S), WRITE
THE NAME(S) OF SUCH NOMINEE(S) IN THE SPACE PROVIDED BELOW.
--------------------------------------------------------------------------------
IF THIS PROXY IS EXECUTED BY THE UNDERSIGNED IN SUCH MANNER AS NOT TO
WITHHOLD AUTHORITY TO VOTE FOR THE ELECTION OF ANY NOMINEE, THIS PROXY SHALL BE
DEEMED TO GRANT SUCH AUTHORITY.
(Continued on other side)
(Continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF EACH NOMINEE AND IN THE DISCRETION OF THE PROXY
HOLDERS AS TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
IN THEIR DISCRETION, THE PROXY HOLDERS ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
The undersigned acknowledges the receipt of Notice of the Annual Meeting and
Proxy Statement, each dated October 19, 2001 and the 2001 Annual Report on Form
10-K, and hereby revokes any proxy or proxies heretofore given by the
undersigned relating to the Annual Meeting.
Print Name(s)
-----------------------------------
Signature:
-----------------------------------
Signature if Held Jointly:
-----------------------------------
Dated: , 2001
----------------------------
Please date and sign in the same
manner in which your shares are
registered. When signing as
executor, administrator, trustee,
guardian, attorney or corporate
officer, please give full title as
such. Joint owners should each
sign.