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 (AMENDMENT NO. )
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.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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 September 1,
1998 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 three Class III directors for a three-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 August 3, 1998 is attached. Shareholders of
record on the books of the Company at the close of business on July 2, 1998 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
/S/ ROGER D. CHITTUM
Roger D. Chittum
Secretary
August 3, 1998
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 to be
voted at the annual meeting of shareholders of the Company (the "Annual
Meeting") to be held September 1, 1998 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 "ELECTION OF DIRECTORS"
below.
Directors are elected by a vote of a plurality of the shares of Common
Stock represented 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 August 2, 1998.
VOTING RIGHTS AND PRINCIPAL SHAREHOLDERS
At the close of business on July 2, 1998, the record date for determining
the shareholders entitled to notice of and to vote at the meeting, there were
8,599,967 shares of common stock, $1.00 par value, of the Company (the "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 June 30, 1998, by (i) each director of the
Company, (ii) the five most highly compensated executive officers, (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........................................ 803,235(3) 9.1%
1600 RiverEdge Parkway
Suite 200
Atlanta, Georgia 30328
Philip Bernstein............................................ 535,460(4) 6.0%
21126 Escondido Way
Boca Raton, Florida 33433
E. Randall Chestnut......................................... 55,454(5) *
1600 RiverEdge Parkway
Suite 200
Atlanta, Georgia 30328
Roger D. Chittum............................................ 85,821(6) 1.0%
1600 RiverEdge Parkway
Suite 200
Atlanta, Georgia 30328
Paul A. Criscillis, Jr...................................... 99,080(7) 1.1%
1600 RiverEdge Parkway
Suite 200
Atlanta, Georgia 30328
Marvin Davis................................................ 666(8) *
4501 Parkway Commerce Boulevard
Orlando, Florida 32808
Rudolph J. Schmatz.......................................... 147,444(9) 1.7%
1600 RiverEdge Parkway
Suite 200
Atlanta, Georgia 30328
Jane E. Shivers............................................. 4,169(10) *
999 Peachtree Street
Suite 1850
Atlanta, Georgia 30309
Alfred M. Swiren............................................ 13,019(11) *
4405 Granada Boulevard
Coral Gables, Florida 33146
Richard N. Toub............................................. 43,984(12) *
8A Motcomb Street
London, England SW1X8JU
All Officers and Directors of the Company as a Group........ 1,894,259(13) 21.3%
(16 persons)
2
NUMBER OF SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1)(2) SHARES
- ------------------------------------ ---------------- -------------
Wachovia Bank, N.A. as Trustee for the Crown Crafts, Inc.... 962,163(14) 10.9%
Employee Stock Ownership Plan
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1757
Brinson Partners............................................ 512,300(15) 5.8%
209 South LaSalle Street
Chicago, Illinois 60604
Dimensional Fund Advisors, Inc.............................. 501,060(16) 5.7%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
- ---------------
(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 June 30, 1998.
(3) Includes 379,733 shares of Common Stock owned individually by Mr. Michael
H. Bernstein. Includes 14,882 shares held by Mr. Bernstein's spouse, 89,490
shares held by his adult daughter and 134,412 shares held by Mr. Bernstein
as custodian or trustee for his minor children, as to all of which he
disclaims beneficial ownership. Includes options for 23,333 shares of
Common Stock. Includes 76,727 shares of Common Stock held by the Crown
Crafts, Inc. Employee Stock Ownership Plan and 84,661 held by the Bernstein
Family Foundation, a charitable foundation for which Messrs. Michael and
Philip Bernstein act as trustees.
(4) Includes 259,809 shares of Common Stock owned individually by Mr. Philip
Bernstein. Includes 185,000 shares owned by Mr. Bernstein's spouse, as to
which he disclaims beneficial ownership. Includes options for 4,167 shares
of Common Stock. Includes 1,826 shares of Common Stock held by the Crown
Crafts, Inc. Employee Stock Ownership Plan and 84,661 held by the Bernstein
Family Foundation, a charitable foundation for which Messrs. Michael and
Philip Bernstein act as trustees. Mr. Philip Bernstein is the father of Mr.
Michael H. Bernstein.
(5) Includes 9,895 shares of Common Stock owned individually by Mr. Chestnut.
Includes 1,000 shares owned by Mr. Chestnut's spouse, as to which he
disclaims beneficial ownership. Includes options for 44,092 shares of
Common Stock. Includes 467 shares of Common Stock held by the Crown Crafts,
Inc. Employee Stock Ownership Plan.
(6) Includes 500 shares of Common Stock owned individually by Mr. Chittum.
Includes options for 84,663 shares of Common Stock. Includes 658 shares of
Common Stock held by the Crown Crafts, Inc. Employee Stock Ownership Plan.
(7) Includes 73,745 shares of Common Stock owned individually by Mr.
Criscillis. Includes options for 11,666 shares of Common Stock. Includes
13,669 shares of Common Stock held by the Crown Crafts, Inc. Employee Stock
Ownership Plan. Mr. Criscillis has resigned as an officer and director of
the Company effective August 14, 1998.
(8) Mr. Davis owns no shares of Common Stock. Includes options for 666 shares
of Common Stock.
(9) Includes 85,129 shares of Common Stock owned by Mr. Schmatz individually,
5,600 held by Mr. Schmatz as trustee for his minor children and options for
11,666 shares of Common Stock. Also includes 45,049 shares of Common Stock
held by the Crown Crafts, Inc. Employee Stock Ownership Plan.
(10) Includes 170 shares of Common Stock owned by Ms. Shivers individually and
also includes options for 3,999 shares of Common Stock.
(11) Includes 5,500 shares of Common Stock owned by Mr. Swiren individually and
3,520 shares held by his spouse for which he disclaims beneficial
ownership. Also includes options for 3,999 shares of Common Stock.
(12) Includes 37,585 shares of Common Stock owned by Mr. Toub individually and
4,400 shares held by Mr. Toub as custodian for his minor children for which
he disclaims beneficial ownership. Also includes options for 1,999 shares
of Common Stock.
(13) See footnotes 3, 4, 5, 6, 7, 8, 9, 10, 11, and 12 above.
3
(14) Wachovia Bank, N.A. is the owner of record as trustee and has indicated
that it has the sole right to dispose of these shares, which are held in
accounts for approximately 1,925 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 Messrs. Michael H. Bernstein and
Paul A. Criscillis, Jr., both of whom are executive officers of the
Company, and Mr. Robert E. Schnelle, the Company's Treasurer.
(15) Brinson Partners, Inc. ("Brinson Partners"), a registered investment
advisor, is deemed to have beneficial ownership of 512,300 shares of Common
Stock, all of which shares are held in accounts managed on a discretionary
basis by Brinson Partners. No single account holds more than five percent
of the outstanding Common Stock. Brinson Holdings, Inc. ("BHI"), SBC
Holdings (USA), Inc. ("SBCUSA") and Swiss Bank Corporation ("SBC") are
affiliates of Brinson Partners, and each of them is a "Parent Holding
Company" under the Securities Exchange Act of 1934. Each of Brinson
Partners, BHI, SBCUSA and SBC disclaims beneficial ownership of all such
shares.
(16) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 501,060 shares of Common
Stock, all of which shares are held in portfolios of DFA Investment
Dimensions Group Inc., a registered open-end investment company, or in
series of the DFA Investment Trust Company, a Delaware business trust, or
the DFA Group Trust and DFA Participation Group Trust, investment vehicles
for qualified employee benefit plans, all of which Dimensional Fund
Advisors Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
ITEM 1. ELECTION OF DIRECTORS
The Board of Directors currently consists of ten directors divided into
three classes: three in Class I (whose terms expire on the date of the 1999
Annual Meeting), four in Class II (whose terms expire on the date of the 2000
Annual Meeting), and three in Class III (whose terms expire on the date of the
1998 Annual Meeting). Paul A. Criscillis, Jr., who has served as a director and
as Vice President and Chief Financial Officer of the Company since 1985, has
resigned as a director and officer of the Company effective August 14, 1998 to
become the chief financial officer of a company in a different industry.
Accordingly, Mr. Criscillis will not stand for re-election as a Class III
director at the 1998 Annual Meeting. Rudolph J. Schmatz, who has served as a
director of the Company since 1976 and as Vice President, Sales and Marketing
since 1985, has resigned as a director and officer of the Company effective
August 31, 1998. Mr. Schmatz currently serves as a Class I director. Mr. Schmatz
will be on a leave of absence until January 1, 1999 and then is expected to
return to the Company in a senior management position.
The resignations of Messrs. Criscillis and Schmatz will leave vacancies on
the Board of Directors among the Class III and Class I directors, and the Board
of Directors has decided, therefore, to reduce the number of directors from ten
to nine following Mr. Criscillis' resignation, and from nine to eight following
Mr. Schmatz' resignation. In accordance with the requirements of Georgia
corporate law and the Company's Bylaws, the Board of Directors has determined to
divide these eight directors equally, or as nearly equally as possible, among
the three classes of directors. In order that there will be three directors in
each of Class III and Class II, the Board of Directors has proposed that E.
Randall Chestnut (who is currently a Class II director, in which class there are
currently four directors), stand for election at the 1998 Annual Meeting to
become a Class III director (in which class, after Mr. Criscillis' resignation,
there would otherwise be only two directors). Provisions of Georgia corporate
law provide that a decrease in the size of the Board of Directors shall not
shorten an incumbent director's term. Accordingly, should Mr. Chestnut not be
elected a Class III director at the 1998 Annual Meeting, an event not now
anticipated by the Board of Directors, he would continue as a Class II director
of the Company until the 2000 Annual Meeting.
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.
4
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 III
FOR A THREE-YEAR TERM EXPIRING ON THE DATE OF THE 2001 ANNUAL MEETING
NAME AGE POSITION WITH COMPANY SINCE
- ---- --- --------------------- -----
Michael H. Bernstein.................... 55 President and Chief Executive Officer 1976
Director 1976
E. Randall Chestnut..................... 50 Executive Vice President 1998
Director 1995
Richard N. Toub......................... 55 Director 1986
CONTINUING DIRECTORS
CLASS II
TERM EXPIRING ON THE DATE OF THE 2000 ANNUAL MEETING
NAME AGE POSITION WITH COMPANY SINCE
- ---- --- --------------------- -----
Roger D. Chittum........................ 59 Vice President, Law and Administration
and Secretary 1993
Director 1992
Marvin A. Davis......................... 60 Director 1997
Alfred M. Swiren........................ 81 Director 1977
CLASS I
TERM EXPIRING ON THE DATE OF THE 1999 ANNUAL MEETING
NAME AGE POSITION WITH COMPANY SINCE
- ---- --- --------------------- -----
Philip Bernstein........................ 91 Chairman of the Board of Directors 1968
Jane E. Shivers......................... 55 Director 1994
NOMINEES
Michael H. Bernstein joined the Company in 1972 in an executive capacity.
He has served on the Board of Directors and as President and Chief Executive
Officer since 1976.
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. 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.
Richard N. Toub is a United States attorney practicing in London, England,
as an international lawyer and business advisor. He was elected to the Board of
Directors in 1986.
A vote of a plurality of the shares of Common Stock represented at the
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
THREE NOMINEES FOR DIRECTOR NAMED ABOVE.
5
CONTINUING DIRECTORS
Philip Bernstein has been employed by the Company since 1961. Mr. Bernstein
currently serves as Chairman of the Board and has held that position since 1968.
Jane E. Shivers was elected to the Board of Directors in November 1994.
Since 1985, Ms. Shivers has served as Executive Vice President of Ketchum Public
Relations and Director of its Atlanta office.
Roger D. Chittum has served as a director of the Company since 1992. He
joined the Company as Vice President, Law and Administration and Secretary in
October 1993. From 1973 to 1983, Mr. Chittum was an officer of Tosco Corporation
and was a principal in the law firm of Rosenberg, Chittum, Mendlin & Hecht and
predecessor law firms in Los Angeles, California, from 1984 to 1993.
Marvin A. Davis has served as a director of the Company since 1997. He has
been the Chief Executive Officer of Datamax Corporation, a multinational
corporation which manufactures thermal bar code label printers, since February
1997 and its Chairman of the Board since April 1997. Prior to joining Datamax,
Mr. Davis was associated with the management consulting firm of Grisanti, Galef,
and Goldress from 1983 to 1997, the last five of those years as President. Mr.
Davis is also a member of the Board of Directors of Z-Axis Corporation.
Alfred M. Swiren has served as a director of the Company since 1977. He is
a practicing attorney and a member of the Florida and Massachusetts bars. Mr.
Swiren formerly served as Senior Vice President of Jefferson Stores, Inc.,
Miami, Florida.
ADDITIONAL INFORMATION ABOUT THE BOARD OF DIRECTORS
The Company's Board of Directors met four times during the fiscal year
ended March 29, 1998. Each director attended each of the meetings of the Board,
and 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
Board has no standing Nominating 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 Committee currently consists of Marvin A.
Davis, Jane E. Shivers, Alfred M. Swiren and Richard N. Toub. Mr. Davis joined
the Committee at the August 12, 1997 meeting of the Board of Directors upon his
election to the Board of Directors. The Audit Committee met once during fiscal
1998.
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 Committee currently consists of Marvin A.
Davis, Alfred M. Swiren and Richard N. Toub. Mr. Davis joined the Committee at
the August 12, 1997 meeting of the Board of Directors upon his election to the
Board of Directors. Ms. Shivers resigned from the Committee at the May 9, 1998
meeting of the Board of Directors. The Compensation Committee met two times
during fiscal 1998 and also took action by unanimous written consent 26 times
during that same time period.
6
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
NAME AGE POSITION WITH COMPANY
---- --- ---------------------
Michael H. Bernstein.......... 55 President and Chief Executive Officer
Philip Bernstein.............. 91 Chairman of the Board of Directors
E. Randall Chestnut........... 50 Executive Vice President
Roger D. Chittum.............. 59 Vice President, Law and Administration and
Secretary
Paul A. Criscillis, Jr.(1).... 49 Vice President and Chief Financial Officer
Rudolph J. Schmatz(2)......... 60 Vice President, Sales and Marketing
- ---------------
(1) Mr. Criscillis has resigned as an officer and director of the Company
effective August 14, 1998. The Board of Directors has appointed Mr. David S.
Fraser as Chief Financial Officer effective August 17, 1998. Mr. Fraser was
Chief Financial Officer and Treasurer of Graphic Industries, Inc., a
publicly traded commercial printing company, from 1994 to 1997. Prior to
joining Graphic Industries, from 1981 to 1994 Mr. Fraser was President of
L.S. Brown Co., an Atlanta-based manufacturer of marine parts & accessories.
(2) Mr. Schmatz has resigned as an officer and director of the Company effective
August 31, 1998 to take a leave of absence.
The officers of the Company serve at the pleasure of the Board of
Directors.
Certain information about the business experience of each of the Company's
executive officers is set forth under "Election of Directors" above.
7
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the Compensation paid
during the fiscal year ended March 29, 1998 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
$100,000).
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
------------------- AWARDS/ ALL OTHER
FISCAL SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) (#)(2) ($)
- --------------------------- ------ -------- -------- ------------ ------------
M. H. Bernstein............................ 1998 $300,000 $300,000 20,000 $6,859(3)
President and Chief Executive Officer 1997 $235,000 $ -0- 260,000 $5,156(3)
1996 $235,000 $ -0- 50,000 $2,366(4)
E. R. Chestnut............................. 1998 $200,000 $ 68,510 20,000 $5,105(3)
Executive Vice President 1997 $148,000 $ 93,333 75,000 $4,625(3)
1996 $148,000 $112,000 25,000 $2,834(3)
R. D. Chittum.............................. 1998 $200,000 $ 68,510 10,000 $5,126(3)
Vice President, Law and Administration 1997 $148,000 $ -0- 122,000 $4,579(3)
1996 $148,000 $ -0- 25,000 $2,863(3)
P. A. Criscillis, Jr.(5)................... 1998 $200,000 $ 68,510 10,000 $5,208(3)
Vice President and Chief Financial
Officer 1997 $148,000 $ -0- 117,500 $4,753(3)
1996 $148,000 $ -0- 25,000 $2,983(3)
R. J. Schmatz(6)........................... 1998 $200,000 $ 68,510 10,000 $5,300(3)
Vice President, Sales and Marketing 1997 $148,000 $ -0- 130,000 $4,814(3)
1996 $148,000 $ -0- 25,000 $3,118(3)
- ---------------
(1) Except for the payment of guaranteed minimum bonuses to Mr. Chestnut, there
were no bonus payments made during fiscal 1996 and 1997 because the
Company's earnings were below the minimum level required for payment of
bonuses under the Company's Executive Incentive Bonus Plan.
(2) The Long-Term Compensation for fiscal year 1997 includes repriced stock
options issued to the named executives as follows:
M. H. Bernstein............................................. 210,000
E. R. Chestnut.............................................. 50,000
R. D. Chittum............................................... 97,000
P. A. Criscillis, Jr........................................ 92,500
R. J. Schmatz............................................... 105,000
(3) 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.
(4) Represents Company contributions to the Crown Crafts, Inc. Employee Stock
Ownership Plan.
(5) Mr. Criscillis has resigned as an officer and director of the Company
effective August 14, 1998.
(6) Mr. Schmatz has resigned as an officer and director of the Company effective
August 31, 1998 to take a leave of absence.
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
March 29, 1998, 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
% OF TOTAL STOCK PRICE
STOCK OPTIONS EXERCISE APPRECIATION FOR
NUMBER OF GRANTED TO PRICE OPTION TERM(2)
OPTIONS EMPLOYEES IN PER EXPIRATION ------------------
NAME AND PRINCIPAL POSITION GRANTED FISCAL YEAR SHARE DATE 5% 10%
- --------------------------- --------- ------------- -------- ---------- ------- --------
M. H. Bernstein.................... 20,000 4.1% $11.75 8-12-02 $64,926 $143,470
President and Chief Executive
Officer
E. R. Chestnut..................... 20,000 4.1% $11.75 8-12-02 $64,926 $143,470
Executive Vice President
R. D. Chittum...................... 10,000 2.1% $11.75 8-12-02 $32,463 $ 71,735
Vice President, Law and
Administration
P. A. Criscillis, Jr.(3)........... 10,000 2.1% $11.75 8-12-02 $32,463 $ 71,735
Vice President and Chief
Financial Officer
R. J. Schmatz(4)................... 10,000 2.1% $11.75 8-12-02 $32,463 $ 71,735
Vice President, Sales and
Marketing
- ---------------
(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-third per year commencing on the first anniversary of its
date of grant and expires on the fifth 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. Criscillis has resigned as an officer and director of the Company
effective August 14, 1998.
(4) Mr. Schmatz has resigned as an officer and director of the Company effective
August 31, 1998 to take a leave of absence.
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 March 29, 1998, and options held by such officers, whether exercisable or
unexercisable, at March 29, 1998.
VALUE OF
UNEXERCISED
NUMBER OF 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
- --------------------------- ------------ -------------- --------------------- -------------------
M.H. Bernstein................ 86,663 $995,842 0/193,337 $0/$2,079,207
E.R. Chestnut................. 12,572 $164,369 12,427/70,001 $130,484/$744,595
R.D. Chittum.................. 0 $ 0 40,665/91,335 $446,773/$983,602
P.A. Criscillis, Jr.(3)....... 39,164 $453,043 0/88,336 $0/$952,112
R.J. Schmatz(4)............... 43,331 $499,140 0/96,669 $0/$1,039,609
- ---------------
(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 March 27, 1998, closing price
of the Company's common stock ($20.75) and the exercise price, which is
equal to the closing price on the date of grant.
(3) Mr. Criscillis has resigned as an officer and director of the Company
effective August 14, 1998.
(4) Mr. Schmatz has resigned as an officer and director of the Company effective
August 31, 1998 to take a leave of absence.
10
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 fifth
preceding fiscal year, in each of three investment alternatives: (a) the
Company's Common Stock, (b) the S&P 500, and (c) a Peer Group consisting of five
publicly-traded corporations (including the Company) that are engaged
principally in the manufacture and sale of home furnishing textile products. The
graph assumes all dividends were re-invested. The corporations included in the
Peer Group are Crown Crafts, Inc., Fieldcrest Cannon, Inc., Springs Industries,
Inc., Thomaston Mills, Inc. and Frenchtex, Inc. Frenchtex, Inc., excluded from
the Peer Group for fiscal 1994, 1995, 1996 and 1998 because no performance
information was available due to non-trading of stock, was included in the Peer
Group in fiscal 1993, 1997 and 1998. Fieldcrest Cannon, Inc. merged with
Pillowtex Corporation effective December 19, 1997 and was, therefore, excluded
from the Peer Group for fiscal 1998 because performance information in respect
of Fieldcrest Cannon, Inc. was no longer available.
TOTAL SHAREHOLDER RETURNS
(DIVIDENDS REINVESTED)
CROWN
MEASUREMENT PERIOD CRAFTS, S&P 500 PEER
(FISCAL YEAR COVERED) INC. INDEX GROUP*
MARCH 93 100.00 100.00 100.00
MARCH 94 114.48 101.48 93.61
MARCH 95 104.55 117.25 91.00
MARCH 96 58.99 154.77 97.43
MARCH 97 72.27 185.40 95.46
MARCH 98 132.68 274.38 122.17
- ---------------
* Frenchtex, Inc. was included for fiscal 1993, 1997 and 1998 returns
(Frenchtex, Inc. was excluded from fiscal 1994, 1995 and 1996 returns due to
non-trading of stock). Fieldcrest Cannon, Inc. was included for fiscal 1993,
1994, 1995, 1996 and 1997 returns (Fieldcrest Cannon, Inc. was excluded from
fiscal 1998 returns because performance information was no longer available).
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
11
relationship of corporate performance to executive compensation, with respect to
compensation reported in this proxy statement for fiscal 1998.
The Compensation Committee is currently composed of three nonemployee
directors of the Company, Mr. Marvin A. Davis, Mr. Alfred M. Swiren and Mr.
Richard N. Toub. No member of the Compensation Committee has ever been an
employee of the Company or any of its subsidiaries. They are not eligible to
participate in any of the compensation plans that the Committee administers
except they are eligible to receive automatic, non-discretionary annual awards
of stock options under the Company's 1995 Stock Option Plan. 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 Mr. Michael H.
Bernstein, the Committee reviews recommendations from Mr. Bernstein. Mr.
Bernstein's compensation is determined by the Committee.
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 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 1998 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
12
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 1998 were above the minimum level required to earn incentive
compensation, and therefore bonuses were 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.
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 1998 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 reviews and considers 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 1998 were approved based on this review process. Mr.
Bernstein's bonus formula, which was based on the Company's operating results
for fiscal 1998, resulted in a bonus of $300,000 earned for fiscal 1998.
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 since 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 make 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:
Marvin A. Davis
Alfred M. Swiren
Richard N. Toub
13
CASH COMPENSATION OF DIRECTORS
For the fiscal year ending March 29, 1998, no employee director of the
Company was paid additional compensation as a member of the Board of Directors.
Each nonemployee director of the Company is paid $1,000 for each Board meeting
attended and $1,000 for each Committee meeting attended which is held on a date
other than the date of a Board meeting. Each nonemployee director is 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 Messrs. Davis, Swiren and Toub. Mr.
Davis joined the Committee at the August 12, 1997 meeting of the Board of
Directors upon his election to the Board of Directors. Ms. Shivers served on the
Committee during fiscal 1998 and resigned from the Committee at the May 9, 1998
meeting of the Board of Directors. Ms. Shivers is Executive Vice President of
Ketchum Public Relations which was paid $109,662.25 for services provided to the
Company during fiscal 1998 beginning in November 1997.
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 1998 and Forms 5 and amendments thereto with respect
to fiscal 1998, to the best of the Company's knowledge, no other reports were
required during the fiscal year ended March 29, 1998 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
were filed on a timely basis, except for the filing of a Form 3 for Mr. Dennis
Jackson, a Vice President of the Company, which form was filed 44 days following
his election as an officer of the Company (and 34 days after it was due), and
the filing of one Form 4 for Mr. Richard Toub, a director of the Company, which
reported the purchase of 400 shares of the Company's Common Stock (and was filed
5 days after it was due).
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company has not yet selected its independent public accountants for its
fiscal year ending March 29, 1999. 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 Ms. Shivers and
Messrs. Davis, Swiren and Toub.
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 March 29, 1998 included the examination of the
Company's consolidated financial statements, services related to filings with
the Securities and Exchange Commission (the "SEC") 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.
SHAREHOLDER PROPOSALS
Appropriate proposals of shareholders intended to be presented at the
Company's next annual meeting of shareholders (which the Company currently
intends to hold in August of 1999) must be received by the Company by March 24,
1999 for inclusion in its proxy statement and form of proxy relating to that
meeting. If the date of the next annual meeting is changed by more than 30
calendar days from such anticipated time frame, the Company shall, in a timely
manner, inform its shareholders of the change and the date by which proposals of
shareholders must be received.
14
MISCELLANEOUS
Management does not know of any other matters to come before the meeting.
If any other matters properly come before the 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 1998 Annual Report to Shareholders is enclosed with this
Proxy Statement. The Annual Report is not a part of the proxy soliciting
material. Additional copies of such Annual Report along with copies of the
Company's Annual Report on Form 10-K for the fiscal year ended March 29, 1998,
as filed with the Securities and Exchange Commission (exclusive of documents
incorporated by reference), are available without charge to shareholders upon
written request to Investor Relations, Crown Crafts, Inc., 1600 RiverEdge
Parkway, Suite 200, Atlanta, Georgia 30328.
15
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(CROWN CRAFTS, INC. LOGO)
APPENDIX
CROWN CRAFTS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CROWN CRAFTS, INC. FOR THE ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 1, 1998
The undersigned shareholder hereby constitutes and appoints each of Michael
H. Bernstein and Roger D. Chittum, 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 September 1, 1998 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 in Class III for
three-year terms of office:
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to vote for the
(except as marked to the contrary below) nominees listed below
CLASS III
Michael H. Bernstein E. Randall Chestnut Richard N. Toub
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 PROXIES 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 August 3, 1998 and the Annual Report to
Shareholders, 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: , 1998
-------------------
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.