DEC. 15, 2000--SHAREHOLDERS OF Crown Central Petroleum Corp. voted yesterday to replace four longtime outside directors with people who have close ties to the company, sparking protests from critics who see the move as a power grab by the family that controls the Baltimore-based refinery.

The election, which took place during the company's annual meeting, comes as the board of directors is in the midst of negotiations to sell the company to one of two rival suitors.

The corporation, which has been in Baltimore for 70 years, said this month that it is discussing "strategic alternatives" with Apex Oil Co. of St. Louis and with Rosemore Inc., the holding company controlled by Crown Chairman Henry A. Rosenberg Jr. and his family.

Newly elected board members include Rosenberg's brother-in-law, Stanley A. Hoffberger; Rosenberg's son, Frank B. Rosenberg, a vice president at Crown; Barry L. Miller, chief financial officer at Rosemore; and John E. Wheeler Jr., Crown's chief financial officer.

Three outside directors remain on the board. They are Michael F. Dacey, a private investor; the Rev. Harold Ridley, president of Loyola College; and Jack Africk, retired vice chairman of UST Inc., the holding company for United States Tobacco.

Apex owner Paul Anthony Novelly and the Rosenberg family have been locked in a bitter battle for control of the company. Novelly, who was not present at yesterday's meeting, led an effort to block a previous plan to sell the company to Rosemore, which offered to pay $9.50 per share and take the company private. Novelly countered with an offer of $10.50 per share that was initially rejected.

Shareholders rejected the sale to Rosemore during the summer, prompting the board to invite Apex to submit an all-cash offer of $10.50 per share this fall. However, Apex has since missed two deadlines to submit an acceptable offer. In response to a shareholder question yesterday, Rosenberg said the company was still considering its options with both Apex and Rosemore.

In February, Crown's board adopted a poison pill which precludes any potential buyer from acquiring the refinery without board approval. An eight-member board with four newly elected insiders may treat an offer from Apex less favorably, said an analyst who asked not to be identified.

That view was shared in part by Institutional Shareholder Services, an independent proxy advisory firm based in Rockville. In a report issued before the meeting, the firm said that "adding more insiders on the board will severely reduce board independence and cause potential conflicts of interest."

A number of union representatives and shareholders voiced similar concerns at yesterday's meeting.

Crown has been involved in a protracted contract dispute with members of the Paper, Allied-Industrial, Chemical & Energy Workers International (PACE). About 250 PACE workers have been locked out of the company's Pasadena, Texas, refinery since February 1996.

"I ask you, Mr. Rosenberg, are you doing anything other than trying to sell your company to yourself?" said Hiba Abdallah of the AFL-CIO's office of investment, which represents union pension funds. "What will you do to enable the board to better monitor your actions?"

Rosenberg, who declined to respond to most shareholder comments yesterday, said he would take Abdallah's question "under advisement."

The union and a few locked out workers accused the company of stacking the board for the benefit of the Rosenberg family, a charge the company denies.

"We believe the board reflects the ownership of the company," said a Crown spokesman.

Crown has lost money in eight of the past 11 years, with an average loss of more than $10 million a year. Its more widely traded B shares fell 19 cents yesterday to $7.

© 2000 Baltimore Sun