A large Crown Crafts Inc. (NDAQ:CRWS) holder requested that the company form an independent committee to evaluate strategic alternatives to maximize shareholder value in a Schedule 13D/A filing made with the SEC. Shareholders are hoping that the activist can work to unlock value in shares that have remained stagnant for almost a year.

Wynnefield Partners, a 14.6% stockholder in the company, disclosed a letter to the company's board of directors outlining how it should proceed and their expectations with regards to governance and the creation and release of shareholder value. The hedge fund first demanded that the company take action to unlock shareholder value through a possible sale or merger.

"Crown Crafts Inc. should take prompt action to form a truly independent SAC and, consistent with this notion, employ a competent outside "arm's length" firm to undertake an analysis of all the options available to the Company," said general partner Nelson Obus. "This analysis must include a sale or merger of the Company to be undertaken in the event that adequate risk adjusted returns on invested capital for new initiatives can not be identified."

Secondly, the hedge fund demanded that the company immediately act to clean up its corporate governance: "We are also concerned about the governance of CRWS and, as Wynnefield articulated in the proxy materials, request that you promptly unstagger the Board, articulate and implement a succession plan for yourself and other senior executives and orient Board compensation away from cash and toward equity participation in the form of a combination of option grants at market and restricted stock."

The hedge fund insisted that if these demands were not met they may be forced into another proxy battle to make the changes themselves. Combined, these factors make CRWS a stock worth watching closely over the next few weeks!

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