-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C8HIw1UzN8ptwBKeV7a8yhLMg5jWTx4Ae9qhiVijL+rq+fV1FVebb9LDPf3Fkd8C cVV/iw408Csy5GTBZf7vtA== 0000028917-99-000001.txt : 19990504 0000028917-99-000001.hdr.sgml : 19990504 ACCESSION NUMBER: 0000028917-99-000001 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990130 FILED AS OF DATE: 19990421 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DILLARDS INC CENTRAL INDEX KEY: 0000028917 STANDARD INDUSTRIAL CLASSIFICATION: 5311 IRS NUMBER: 710388071 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-06140 FILM NUMBER: 99598250 BUSINESS ADDRESS: STREET 1: 1600 CANTRELL RD CITY: LITTLE ROCK STATE: AR ZIP: 72201 BUSINESS PHONE: 5013765200 FORMER COMPANY: FORMER CONFORMED NAME: DILLARD DEPARTMENT STORES INC DATE OF NAME CHANGE: 19920703 DEF 14A 1 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 240.14a-11(c) or 240.14a-12 DILLARD'S, INC. (Name of Registrant as Specified In Its Charter) DILLARD'S, INC. (Name of Person(s) Filing Proxy Statement,if other than 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 or 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 0-11:1 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: _______________________________ 1 Set forth the amount on which the filing fee is calculated and state how it was determined. DILLARD'S, INC. PROXY STATEMENT DILLARD'S, INC. POST OFFICE BOX 486 LITTLE ROCK, ARKANSAS 72203 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 15, 1999 PROXY STATEMENT DILLARD'S, INC. POST OFFICE BOX 486 LITTLE ROCK, ARKANSAS 72203 TO THE HOLDERS OF CLASS A AND Little Rock, Arkansas CLASS B COMMON STOCK: April 15, 1999 Notice is hereby given that the annual meeting of Stockholders of Dillard's, Inc., will be held at the auditorium of Dillard's Corporate Office, 1600 Cantrell Road, Little Rock, Arkansas on Saturday, May 15, 1999, at 9:30 a.m. for the following purposes: 1. To elect 15 Directors of the Company (five Directors to represent Class A Stockholders and 10 Directors to represent Class B Stockholders). 2. To consider and act upon a proposal by certain Stockholders. 3. To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof. The stock transfer books of the Company will not be closed, but only stockholders of record at the close of business on March 31, 1999, will be entitled to notice of, and to vote at, the meeting. Your participation in the meeting is earnestly solicited. If you do not expect to be present in person at the meeting, please sign, date, and fill in the enclosed Proxy and return it by mail in the enclosed envelope to which no postage need be affixed if mailed in the United States of America. By Order of the Board of Directors JAMES I. FREEMAN Senior Vice President, Chief Financial Officer, Assistant Secretary DILLARD'S, INC. POST OFFICE BOX 486 LITTLE ROCK, ARKANSAS 72203 Telephone (501) 376-5200 April 15, 1999 PROXY STATEMENT The enclosed Proxy is solicited by and on behalf of the management of Dillard's, Inc. (the "Company"), a Delaware corporation, for use at the annual meeting of stockholders to be held on Saturday, May 15, 1999, at 9:30 a.m. at the auditorium of Dillard's Corporate Office, 1600 Cantrell Road, Little Rock, Arkansas, or at any adjournment or adjournments thereof. Any stockholder giving a Proxy has the power to revoke it, at any time before it is voted, by written revocation delivered to the Secretary of the Company. Proxies solicited herein will be voted in accordance with any directions contained therein, unless the Proxy is received in such form or at such time as to render it ineligible to vote, or unless properly revoked. If no choice is specified, the shares will be voted in accordance with the recommendations of the Board of Directors as described herein. If matters of business other than those described in the Proxy properly come before the meeting, the persons named in the Proxy will vote in accordance with their best judgment on such matters. The Proxies solicited herein shall not confer any authority to vote at any meeting of stockholders other than the meeting to be held on May 15, 1999, or any adjournment or adjournments thereof. The cost of soliciting Proxies will be borne by the Company. The Company will reimburse brokers, custodians, nominees and other fiduciaries for their charges and expenses in forwarding proxy material to beneficial owners of shares. In addition to solicitation by mail, certain officers and employees of the Company may solicit Proxies by telephone, telegraph and personally. These persons will receive no compensation other than their regular salaries. The Company has retained D.F. King & Co., Inc., a professional proxy solicitation firm, to assist in the solicitation of proxies. The fees of such firm are not expected to exceed $6,500. OUTSTANDING STOCK; VOTING RIGHTS; VOTE REQUIRED FOR APPROVAL The stock transfer books of the Company will not be closed, but only stockholders of record at the close of business on March 31, 1999, will be entitled to notice of, and to vote at, the meeting. At that date, there were 102,906,719 shares of Class A Common Stock outstanding and 4,016,929 shares of Class B Common Stock outstanding. Each holder of Class A Common Stock and each holder of Class B Common Stock shall be entitled to one vote on the matters presented at the meeting for each share standing in his name except that the holders of Class A Common Stock are empowered as a class to elect one-third of the Directors and the holders of Class B Common Stock are empowered as a class to elect two-thirds of the Directors. Nominees for director of each class, to be elected, must receive a plurality of the votes cast within that class. Cumulative voting for Directors is not permitted. Approval of the Stockholder proposal requires the affirmative vote of the holders of a majority of the shares of Common Stock represented at the meeting and entitled to vote. Under Delaware General Corporate Law, if shares are held by a broker that has indicated that it does not have discretionary authority to vote on a particular matter ("broker non-votes"), those shares will not be considered as present and entitled to vote with respect to that matter, but such shares will be counted with respect to determining whether a quorum is present. Abstentions will not be counted as votes cast for election of directors and with respect to the Stockholder proposal, abstentions will have the effect of a vote against such proposal. The last date for the acceptance of Proxies by management is the close of business on May 14, 1999, and no Proxy received after that date will be voted by management at the meeting. PRINCIPAL HOLDERS OF VOTING SECURITIES The following table sets forth certain information regarding persons who beneficially owned five percent (5%) or more of a class of the Company's outstanding voting securities at the close of business on January 30, 1999. No. of Percent Name and Address Class Shares Owned of Class(1) Sanford C. Bernstein Class A 8,717,396(2) 8.5% & Co., Inc. 767 Fifth Avenue New York, NY 10153 Dodge & Cox Class A 5,859,661(2) 5.7% One Sansome St., 35th Floor San Francisco, CA 94014 The Prudential Insurance Class A 8,659,628(2) 8.4% Company of America 751 Broad Street Newark, New Jersey 07102 W.D. Company, Inc.(3) Class A 41,496 * Little Rock, Arkansas Class B 3,985,776 99.2% *Denotes less than 0.1% (1) At January 30, 1999 there were a total of 102,906,719 shares of the Company's Class A Common Stock and 4,016,929 shares of the Company's Class B Common Stock outstanding. (2) Based on information contained in a Schedule 13G filed with the Securities and Exchange Commission. (3) William Dillard, Chairman of the Board of Directors of the Company, William Dillard II, Chief Executive Officer, Alex Dillard, President, and Mike Dillard, Executive Vice President, are officers and directors of W.D. Company, Inc. and own 21.3%, 25.1%, 23.3% and 22.0%, respectively, of the outstanding voting stock of W.D. Company, Inc. ELECTION OF DIRECTORS Five Directors representing Class A Stockholders and 10 Directors representing Class B Stockholders are to be elected by the Class A Stockholders and the Class B Stockholders, respectively, at the annual meeting for a term of one year and until the election and qualification of their successors. The Proxies solicited hereby will be voted "FOR" the election as Directors of the 15 persons hereinafter identified under "Nominees for Election as Directors" if not specified otherwise. Management does not know of any nominee who will be unable to serve, but should any nominee be unable or decline to serve, the discretionary authority provided in the Proxy will be exercised to vote for a substitute or substitutes. Management has no reason to believe that any substitute nominee will be required. In 1998, the Company adopted a resolution amending its by- laws to provide that nominations to represent Class A stockholders shall be of independent persons only. For these purposes, independent shall mean a person who: has not been employed by the Company or an affiliate in any executive capacity within the last five years; was not, and is not a member of a corporation or firm that is one of the Company's paid advisers or consultants; is not employed by a significant customer, supplier or provider of professional services; has no personal services contract with the Company; is not employed by a foundation or university that receives significant grants or endowments from the Company; is not a relative of the management of the Company; is not a shareholder who has signed shareholder agreements legally binding him to vote with management; and is not the chairman of a company on which Dillard's, Inc. Chairman or Chief Executive Officer is also a board member. All of the nominees to represent Class A Stockholders listed below qualify as independent persons as defined in the above resolution. Although there is no requirement that nominees to represent Class B Stockholders be independent, over half of all the nominees listed below qualify as independent persons under the above described resolution. THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION AS DIRECTORS OF THE 15 PERSONS HEREINAFTER IDENTIFIED. NOMINEES FOR ELECTION AS DIRECTORS The following table briefly indicates the principal occupation of each nominee, the approximate number of shares of Class A and Class B Common Stock of the Company beneficially owned by each nominee as of January 30, 1999, and the year each nominee first was elected as a Director. The table also indicates the approximate number of shares of Class A and Class B Common Stock of the Company beneficially owned by the executive officers named under "Compensation of Directors and Executive Officers" and the number of shares beneficially owned by the directors and executive officers, as a group, as of January 30, 1999. Shares of Common Stock Beneficially Percent Principal Director Owned as of of Name Age Occupation Since 1/30/99(1) Class William Dillard 84 Chairman of 1964 Class A 1,001,275 (3) 1.0% (b)(2) the Board of Class B 3,985,776 (3) 99.2% the Company Calvin N. Clyde, 78 Chairman of 1985 Class A 11,087 (4) * Jr. the Board, Class B None (b) T. B. Butler Publishing Co., Inc., Tyler, TX Robert C. Connor 57 Investments 1987 Class A 19,009 (5) * (a) Class B None Drue Corbusier 52 Executive 1994 Class A 426,584 (6) .4% (b) Vice President Class B None of the Company Will D. Davis 69 Partner, 1972 Class A 17,040 (7) * (a) Heath, Davis Class B None & McCalla, Attorneys, Austin, TX Alex Dillard 49 President 1975 Class A 1,197,480 (3) 1.2% (b)(2) of the Company Class B 3,985,776 (3) 99.2% Mike Dillard 47 Executive 1976 Class A 1,053,509 (3) 1.0% (b)(2) Vice President Class B 3,985,776 (3) 99.2% of the Company William Dillard 54 Chief 1967 Class A 1,343,445 (3) 1.3% II Executive Officer Class B 3,985,776 (3) 99.2% (b)(2) of the Company James I. Freeman 49 Senior Vice 1991 Class A 405,658 (8) .4% (b) President and Class B None Chief Financial Officer of the Company John Paul 76 Retired Member 1992 Class A 6,000 (9) * Hammerschmidt of Congress Class B None (a) William B. 55 Vice Chairman, 1985 Class A 12,000 (10) * Harrison, Jr. Chase Manhattan Class B None (a) Corporation New York, NY John H. Johnson 81 President 1986 Class A 9,000 (11) * (a) and Publisher, Class B None Johnson Publishing Company, Inc., Chicago, IL E. Ray Kemp 74 Former Vice 1970 Class A 70,812 (12) .1% (b) Chairman of the Class B None Board and Chief Administrative Officer of the Company. Retired 1992. Jackson T. 75 Chairman, 1997 Class A 21,000 (13) * Stephens Stephens Class B None (b) Group, Inc. Little Rock, AR William H. 68 Managing 1994 Class A 7,000 (14) * Sutton Partner, Class B None (b) Friday, Eldredge & Clark, Attorneys Little Rock, AR All Nominees and Class A 6,506,908(15)(16) 6.1% Executive Officers Class B 3,985,776(15) 99.2% as a Group (a total of 25 persons) (a) Class A Director (b) Class B Director *Denotes less than 0.1% (1) Based on information furnished by the respective individuals. (2) William Dillard is a director and officer of W. D. Company, Inc. and owns 21.3% of the outstanding voting stock of such company. William Dillard II, Alex Dillard and Mike Dillard are sons of William Dillard and are directors and officers of W. D. Company, Inc. and own 25.1%, 23.3% and 22.0%, respectively, of the outstanding voting stock of such company. (3) Includes 41,496 shares of Class A Common Stock and 3,985,776 of Class B Common Stock owned by W. D. Company, Inc., in which shares William Dillard, William Dillard II, Alex Dillard and Mike Dillard are each deemed to have a beneficial interest due to their respective relationships with W. D. Company, Inc. See "Principal Holders of Voting Securities." William Dillard and his wife individually own 334,522 and 2,772 shares, respectively, of Class A Common Stock; he has sole voting power with respect to 19,485 shares held in trust for three minor children and has the right to acquire beneficial ownership of 603,000 shares pursuant to currently exercisable options granted under Company stock option plans. William Dillard II individually owns 574,921 shares of Class A Common Stock and has the right to acquire beneficial ownership of 727,028 shares pursuant to currently exercisable options granted under Company stock option plans. Alex Dillard and his wife individually own 391,072 and 37,961 shares, respectively, of Class A Common Stock, and he has the right to acquire beneficial ownership of 726,951 shares pursuant to currently exercisable options granted under Company stock option plans. Mike Dillard individually owns 280,708 shares of Class A Common Stock, has sole voting power with respect to 31,305 shares held in trust for three minor children and has the right to acquire beneficial ownership of 700,000 shares pursuant to currently exercisable options granted under Company stock option plans. (4) Calvin N. Clyde owns 5,087 shares of Class A Common Stock and has the right to acquire beneficial ownership of 6,000 shares pursuant to currently exercisable options granted under Company stock option plans. (5) Includes nine shares owned by his wife. Robert C. Connor owns 13,000 shares of Class A Common Stock and has the right to acquire beneficial ownership of 6,000 shares pursuant to currently exercisable options granted under Company stock option plans. (6) Drue Corbusier owns 106,584 shares of Class A Common Stock and has the right to acquire beneficial ownership of 320,000 shares pursuant to currently exercisable options granted under Company stock option plans. (7) Will D. Davis owns 11,040 shares of Class A Common Stock and has the right to acquire beneficial ownership of 6,000 shares pursuant to currently exercisable options granted under Company stock option plans. (8) James I. Freeman individually owns 88,398 shares and has the right to acquire beneficial ownership of 317,260 shares pursuant to currently exercisable options granted under Company stock option plans. (9) John Paul Hammerschmidt has the right to acquire beneficial ownership of 6,000 shares pursuant to currently exercisable options granted under Company stock option plans. (10) William B. Harrison, Jr. and his wife individually own 2,700 and 3,300 shares, respectively, of Class A Common Stock, and he has the right to acquire beneficial ownership of 6,000 shares pursuant to currently exercisable options granted under Company stock option plans. (11) Johnson Publishing Company, Inc., of which John H. Johnson is President and Publisher, owns 3,000 shares of Class A Common Stock, and he has the right to acquire beneficial ownership of 6,000 shares pursuant to currently exercisable options granted under Company stock option plans. (12) E. Ray Kemp and his wife individually own 27,693 and 37,119 shares, respectively, of Class A Common Stock and he has the right to acquire beneficial ownership of 6,000 shares pursuant to currently exercisable options granted under Company stock option plans. (13) Jackson T. Stephens owns 15,000 shares of Class A Common Stock and has the right to acquire beneficial ownership of 6,000 shares pursuant to currently exercisable options granted under Company stock option plans. (14) William H. Sutton owns 4,000 shares of Class A Common Stock and has the right to acquire beneficial ownership of 3,000 shares pursuant to currently exercisable options granted under Company stock option plans. (15) The shares in which William Dillard, William Dillard II, Alex Dillard and Mike Dillard are deemed to have a beneficial interest due to their respective relationships with W. D. Company, Inc. have been included in this computation only once and were not aggregated for such purpose. (16) Includes the right to acquire beneficial ownership of 4,166,775 shares pursuant to currently exercisable options granted under Company stock option plans. The following nominees for director also hold directorships in the designated companies: Name Director of William Dillard II Acxiom Corporation and, Barnes & Noble, Inc. John Paul Hammerschmidt American Freightways Corporation, First Federal Bank of Arkansas, and Southwestern Energy Co. William B. Harrison, Jr. Chase Manhattan Corporation, and Freeport-McMoRan Copper and Gold, Inc. The business associations of the nominees as shown in the table under "Nominees for Election as Directors" have been continued for more than five years, except that prior to 1998 William Dillard was Chief Executive Officer of the Company, Drue Corbusier was Vice President of the Company, Alex Dillard was Executive Vice President of the Company and William Dillard II was President and Chief Operating Officer of the Company. Each nominee for Director was elected to the Board of Directors at the annual meeting of stockholders held May 16, 1998. The Board of Directors met six times during the last 12 months, on May 12, May 16, July 16, August 10, and December 11, 1998, and March 20, 1999 Audit Committee members are Calvin N. Clyde, Jr., Chairman; John H. Johnson; E. Ray Kemp; and William H. Sutton. The Audit Committee held three meetings during the year. The Executive Compensation and Stock Option Committee members are Robert C. Connor; Will D. Davis, Chairman; John Paul Hammerschmidt; and William B. Harrison. The Executive Compensation and Stock Option Committee held three meetings during the year. Of the nominees for director Jackson T. Stephens and William H. Sutton attended fewer than 75% of the aggregate of (1) the total number of meetings of the Board of Directors and (2) the total number of meetings held by all committees of the board on which they served. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS Cash and Other Compensation The following table sets forth, for the fiscal years indicated, the cash and other compensation provided by the Company and its subsidiaries to the Chief Executive Officer and each of the four most highly compensated executive officers (the "named executive officers") of the Company in all capacities in which they served. Summary Compensation Table Long Term Compensation Annual Compensation Awards Payouts (a) (b) (c) (d) (e) (f) (g) (h) (i) Other Annual Restricted Securities LTIP All Other Name and Principal Year Salary($) Bonus($) Compensation Stock Underlying Payouts Compensation Position ($) Award(s)($) Options/ ($) ($)(1) SARs(#) Willam Dillard II 1998 $650,000 $ 650,000 -- -- 150,000 -- $244,823 $244,82 Chief 1997 630,000 1,150,000 -- -- 150,000 -- 165,200 Executive 1996 610,000 900,000 -- -- 150,000 -- 122,630 Officer Alex Dillard 1998 560,000 650,000 -- -- 150,000 -- 210,080 President 1997 540,000 1,150,000 -- -- 150,000 -- 152,440 1996 520,000 900,000 -- -- 150,000 -- 110,420 Mike Dillard 1998 500,000 340,000 -- -- 100,000 -- 155,639 Executive Vice 1997 480,000 600,000 -- -- 150,000 -- 110,750 President 1996 465,000 550,000 -- -- 150,000 -- 83,800 Drue Corbusier 1998 450,000 300,000 -- -- 100,000 -- 92,600 Executive Vice 1997 420,000 400,000 -- -- 70,000 -- 72,166 President 1996 400,000 250,000 -- -- 60,000 -- 41,514 James I. Freeman 1998 445,000 250,000 -- -- 100,000 -- 105,758 Senior Vice 1997 425,000 400,000 -- -- 70,000 -- 71,700 President and 1996 410,000 250,000 -- -- 60,000 -- 53,000 Chief Financial Officer
(1) Amounts represent the Company's defined contributions for the benefit of the named executive officers pursuant to its Retirement Plan. Stock Option Grants The following table sets forth information concerning stock options granted under the Company's 1998 Stock Option Plan to the named executive officers: Option/SAR Grants in Last Fiscal Year Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Individual Grants Option Term (a) (b) (c) (d) (e) (f) (g) Number of % of Total Securities Options/SARs Underlying Granted to Option/SARs Employees in Exercise or Expiration Name Granted(#)(1) Fiscal Year Base Price Date 5% ($) 10% ($) $) William Dillard II 150,000 9.2% $40.22 5/16/2005 $2,456,138 $5,723,588 $5,72 Alex Dillard 150,000 9.2 40.22 5/16/2005 2,456,138 5,723,588 Mike Dillard 100,000 6.2 40.22 5/16/2005 1,637,425 3,815,725 Drue Corbusier 100,000 6.2 40.22 5/16/2005 1,637,425 3,815,725 James I. Freeman 100,000 6.2 40.22 5/16/2005 1,637,425 3,815,725
(1)If payment for shares upon exercise of any of these options is made with shares of the Company's common stock owned by the optionee, the optionee shall be granted on that date an option ("Reload Option") to purchase a number of shares equal to the number of shares tendered to the Company. The exercise price of the Reload Option shall be the market price of the Company's common stock on the Reload Option grant date, and the expiration date of the Reload Option shall be the same as that of the original option. Stock Option Exercises and Holdings The following table sets forth information concerning stock options exercised during the last fiscal year and stock options held as of the end of the last fiscal year by the named executive officers. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/ SAR VALUES (a) (b) (c) (d) (e) Number of Securites Underlying Value of Unexercised Unexercised Options/ In-the-Money SARs at FY-End (#) Options/ Name Shares Acquired Value SARs at FY-End on Exercise (#) Realized($) ($)(1) Exercisable Exercisable Unexercisable Unexercisable William Dillard II 0 $ 0 727,028 0 $ 0 $ 0 Alex Dillard 0 0 726,951 0 0 0 Mike Dillard 0 0 700,000 0 0 0 Drue Corbusier 0 0 320,000 0 0 0 James I. Freeman 0 0 317,260 0 0 0
(1)Represents the amount by which the market price at fiscal year end of the shares underlying unexercised options exceeds the exercise price for such shares. Pension Plan The following table shows the estimated annual benefits payable pursuant to the Company's pension plan to persons in specified compensation and years of service categories upon retirement. Pension Plan Table Years of Service Remuneration 15 20 25 30 35 300,000 67,500 92,066 117,066 142,066 167,066 350,000 79,566 108,733 137,900 167,066 196,233 400,000 92,066 125,400 158,733 192,066 225,400 450,000 104,566 142,066 179,566 217,066 254,567 500,000 117,066 158,733 200,400 242,067 283,733 550,000 129,566 175,400 221,233 267,067 312,900 600,000 142,066 192,066 242,067 292,067 342,067 650,000 154,566 208,733 262,900 317,067 371,233 700,000 167,066 225,400 283,733 342,067 400,400 A participant's compensation covered by the Company's pension plan is his average salary (as reported in the Summary Compensation Table) for the last five years of his employment with the Company. The credited years of service for each of the named executive officers is as follows: William Dillard II, 30 years; Alex Dillard, 27 years; Mike Dillard, 27 years; Drue Corbusier, 30 years; and James I. Freeman, 10 years. Benefits shown are computed as a single life annuity with five years term certain beginning at age 65 and are not subject to deduction for social security or other offset amounts. Compensation of Directors Directors who are not officers of the Company each receive an annual retainer of $30,000, $1,250 for attendance at each board meeting, $250 for each committee meeting, and actual travel expenses. Compensation Committee Interlocks and Insider Participation The Company's Executive Compensation and Stock Option Committee is composed of Robert C. Connor; Will D. Davis; John Paul Hammerschmidt; and William B. Harrison. Mr. Davis is a partner of the law firm Heath, Davis & McCalla, which is retained by the Company for legal services. Report of Executive Compensation and Stock Option Committee The following report addressing the Company's compensation policies for executive officers for fiscal 1998 is submitted by the Executive Compensation and Stock Option Committee (the "Compensation Committee") of the Board of Directors. General The Compensation Committee, which is composed of independent directors who are not employees of the Company, establishes policies relating to the compensation of employees and oversees the administration of the Company's employee benefit plans. The compensation program of the Company has been designed (1) to provide compensation opportunities that are equivalent to those offered by comparable companies, thereby allowing the Company to compete for and retain talented executives who are critical to the Company's long-term success, (2) to motivate key senior officers by rewarding them for attainment of profitability of the Company, and (3) to align the interests of executives with the long-term interests of stockholders by awarding stock options to executives as part of the compensation provided to them. In order to develop a competitive compensation package for the executive officers of the Company, the Compensation Committee compares the Company's compensation package with those of a comparison group. The comparison group is composed of department stores, specialty stores and other public companies that were family-founded and continue to be family-managed. Not all of the companies in the comparison group are included in the Standard & Poor's Department Store Index. The Compensation Committee believes that the companies in the comparison group are comparable to the Company in management style and management culture. Although the Compensation Committee has made these comparisons, it also has taken into account that as the Company has grown in size, the number of senior executives has not grown proportionately, so that the number of senior executives retained by the Company is lower than the number of senior executives at other companies of similar size. Currently, the Company's compensation program consists of salary, annual cash performance bonus based on the profitability of the Company, and long-term incentive opportunities in the form of stock options. The compensation program is focused both on short- term and long-term performance of the Company, rewarding executives for both achievement of profitability and growth in stockholder value. Salary -- Each year the Compensation Committee makes a recommendation to the Board establishing the salary for all executive officers. Such salary recommendations are made at the discretion of the Compensation Committee and are not specifically related to any company performance criteria as are both the cash performance bonus and stock option portions of the compensation program, which are discussed below. The Compensation Committee does, however, base any increase in salary recommendations on target salaries based on a regression analysis of salaries paid versus total revenues for the comparison group. For fiscal 1998, the salary recommendations made by the Compensation Committee were below the target salaries produced by this analysis. Cash Performance Bonus -- Cash performance bonuses may be paid annually to senior management. For bonuses to be paid, however, the Company must have income before federal and state income taxes ("pre-tax income") for the fiscal year. The Compensation Committee, within ninety (90) days after the start of a fiscal year, designates those individuals in senior management eligible to receive a cash performance bonus. Bonuses are paid at the conclusion of a fiscal year from a bonus pool which is equal to one and one-half percent (1-1/2%) of the Company's pre-tax income plus three and one-half (3-1/2%) of the increase in pre-tax income over the prior fiscal year. When the Compensation Committee designates the individuals eligible to participate in the cash performance bonus program, it also designates the percent of the bonus pool each individual will be entitled to receive. The Compensation Committee retains at all times the authority to adjust downward the amount of bonus any individual may receive pursuant to the above-described formula. For fiscal 1998, the Company experienced a pre-tax income of $219,084,000 and no increase in pre-tax income over the prior fiscal year. The Compensation Committee made a decision to adjust downward by approximately $1,100,000 the amount of bonus which the named executive officers would receive for fiscal 1998 pursuant to the cash performance bonus program. Stock Options -- Stock option grants under the Company's 1998 Incentive and Non-Qualified Stock Option Plan are utilized by the Company for long-term incentive compensation for executive officers. These stock option grants relate their compensation directly to the performance of the Company's stock. The exercise price for the options granted is one hundred percent (100%) of the fair market value of the shares underlying such options on the date of grant and have value to the executive officers only if the Company's stock price increases. The stock options are exercisable on or after May 16, 1998. When making option grants, the Compensation Committee does not consider the number of options already held by an executive officer. As discussed in previous Compensation Committee Reports, the Omnibus Budget Reconciliation Act of 1993 prevents public corporations from deducting as a business expense that portion of compensation exceeding $1 million paid to a named executive officer in the Summary Compensation Table. This deduction limit does not apply to "performance-based compensation." The Compensation Committee believes that the necessary steps have been taken to qualify as performance-based compensation the compensation paid under the cash performance bonus and stock option portions of the Company's compensation program. Chief Executive Officer In setting the Chief Executive Officer's compensation, the Compensation Committee makes the same determination with regard to salary, cash performance bonus and stock options as discussed above for the other named executive officers. For fiscal 1998, the increase in the Chief Executive Officer's salary over the prior fiscal year resulted in a salary lower than the target salary produced by the regression analysis discussed above Robert C. Connor John Paul Hammerschmidt William B. Harrison Will D. Davis, Chairman Company Performance The graph below compares for each of the last five fiscal years the cumulative total returns on the Company's Class A Common Stock, the Standard & Poor's 500 Index and the Standard & Poor's Department Stores Index. The cumulative total return on the Company's Class A Common Stock assumes $100 invested in such stock on January 31, 1994 and assumes reinvestment of dividends. CERTAIN RELATIONSHIPS AND TRANSACTIONS William Dillard II, Drue Corbusier, Alex Dillard and Mike Dillard are children of William Dillard. Mr. William H. Sutton is Managing Partner of the law firm Friday, Eldredge & Clark, which is retained by the Company for legal services. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than 10% of the Company's Class A Common Stock, to file with the Securities and Exchange Commission and the New York Stock Exchange initial reports of ownership and reports of changes in ownership of stock of the Company. To the Company's knowledge, based solely on a review of copies of reports provided by such individuals to the Company and written representations of such individuals that no other reports were required, during the fiscal year ended January 30, 1999, all Section 16(a) filing requirements applicable to its officers, directors and greater than 10% beneficial owners were complied with. Stockholder Proposal Concerning Child/Convict Labor The Amalgamated Bank of New York LongView Collective Investment Fund, 11-15 Union Square, New York, NY 10003, owner of 31,300 shares of Class A Common Stock, The Sisters of Charity of Saint Vincent de Paul of New York, 6301 Riverdale Avenue, Bronx, NY 10471, owners of 200 shares of Class A Common Stock, and Aaron Merle Epstein, 10850 Riverside Drive, #412, North Hollywood, CA 91602, owner of 150 shares of Class A Common Stock have indicated that they intend to propose the following resolution for action at the meeting: "RESOLVED: The shareholders of Dillard's, Inc. request the Board of Directors to prepare a report at reasonable expense describing Dillard's actions to ensure that it does not and will not do business with foreign suppliers who manufacture items for sale in the United States using forced labor, convict labor, or illegal child labor, or who fail to satisfy all applicable laws and standards protecting their employees' wages, benefits, working conditions, freedom of association, and other rights." SUPPORTING STATEMENT "As U.S. companies import more goods, concern is growing about working conditions in many nations that fall far below basic standards of fair and humane treatment. Several years ago, a controversy arose after reports that goods made by convicts in Chinese prisons were being imported into the United States for sale to consumers. The Tariff Act of 1930 makes it illegal to import any goods made by forced labor, including convict labor. China's use of prison labor and its record on human rights generally are issues in the debate about whether China should enjoy "most favored nation" trading status with the United States. Public concern has also been voiced in the wake of reports that retail items were manufactured using illegal child labor, unsafe or unhealthy working conditions, and similar conditions. In April 1997, the White House Apparel Industry Partnership, which was appointed by President Clinton to make recommendations in this area, presented a report to the President setting out a Workplace Code of Conduct and Principles of Monitoring for the apparel and footwear industry. The standards in that report, if implemented comprehensively and diligently, are intended to eliminate poor working conditions for workers in the U.S. and abroad. We are resubmitting this proposal because Dillard's imports many goods into the United States, and thus we as shareholders have a strong interest in learning what steps Dillard's is taking to monitor and control the conditions under which the goods it sells are produced. Reports that overseas suppliers are exploiting workers may damage a company's reputation and generate a consumer backlash. In our view too, it makes good business sense to enforce strict sourcing standards. For example, there are subterfuges that suppliers can use to import goods made by forced labor into the United States. Also, when the federal government enforces applicable laws, it may hold companies liable for actions of their suppliers. Strict standards and an active enforcement policy are thus vital for a company such as Dillard's. We therefore ask the Board to prepare a report giving investors data about Dillard's efforts to assure that it is not doing business with overseas suppliers that exploit workers. WE URGE YOU TO VOTE FOR THIS RESOLUTION!" THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL FOR THE FOLLOWING REASONS: The Company recognizes the importance, as both an ethical and a business responsibility, of obtaining assurances that the products it sells are manufactured in accordance with all applicable laws and that the rights and welfare of workers around the world are respected. The Company has always been committed to the highest ethical conduct and strict compliance with the law in all its business dealings, including its relationships with its many suppliers. The Company is deeply concerned about the issues raised in the Proposal and believes it has already adequately addressed such issues as described below. Products sold at the Company's stores are supplied by independent suppliers who also supply other retail stores and chains. To a much lesser degree, the Company is also supplied by sources contracted by buying agents for the Company. The Company does not engage directly in manufacturing. The Company has previously addressed the concerns raised in the Proposal by implementation of the following policies and procedures: The Company has developed a formal business policy (the "Policy") which focuses on the workplace conditions of, and legal compliance by, foreign vendors and suppliers. The Policy was distributed to all of the Company's foreign vendors and suppliers to restate and reemphasize the Company's longstanding philosophy that no merchandise purchased by the Company will be manufactured with the use of illegal labor conditions. In furtherance of the Policy, the Company has renegotiated its agreements with foreign buying agents (including a buying office). These new buying agency agreements include prohibitions against illegal child labor and other forms of illegal employment, manufacturing, shipping, customs and environmental practices. Under the contract, a buying agent must use its best efforts to ensure that each vendor is in full compliance with any current, or later adopted, law of either the country of manufacture or the United States governing the use of child labor, prison labor, and/or governing the importation into the United States of merchandise produced with child labor as well as any other similar human rights statute, regulation or law. Buying agents must also follow policies and procedures which the Company implements to ensure that all such statutes, laws or regulations are followed. If a buying agent discovers a violation of such prohibitions, the buying agent must immediately notify the Company of such violation(s) or evidence of violation(s), so that appropriate action can be taken to rectify such violation(s). Under these agreements, among other measures, buying agents are required to periodically inspect factories to ensure compliance with these standards. Additionally, company employees personally inspect selected factories to verify compliance. The Company's philosophy also appears in the Company's Purchase Order Terms, Conditions & Instructions, which is the Company's standard form of purchase order and which is applicable to all transactions between the Company and all of its suppliers. The document explicitly requires each supplier to warrant and represent that its merchandise is manufactured in compliance with laws governing illegal working conditions. The Company has previously issued a press release announcing its business policy, which policy contains prohibitions against workplace abuse and also contains the steps taken by the Company to implement the policy. Futhermore, the Company has furnished a copy of that policy to interested shareholders, and will continue to so provide copies of that policy. Company believes that it has already addressed the concerns raised in the Proposal without further expenditure of valuable time and The funds. As the above reflects, the Company is committed to assuring that its suppliers treat their employees properly. FOR THE ABOVE REASONS, THE BOARD RECOMMENDS VOTING AGAINST THE PROPOSAL. OTHER MATTERS Management of the Company knows of no other matters that may come before the meeting. However, if any matters other than those referred to herein should properly come before the meeting, it is the intention of the persons named in the enclosed Proxy to vote the Proxy in accordance with their judgment. STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING Proposals of stockholders intended to be presented at the Company's annual meeting of stockholders in 1999 must be received by the Company at its principal executive offices not later than December 17, 1999 in order to be included in the Company's Proxy Statement and form of Proxy relating to that meeting. ANNUAL REPORTS The Company's annual report for the fiscal year ended January 30, 1999 is being mailed with this Proxy Statement but is not to be considered as a part hereof. INDEPENDENT PUBLIC ACCOUNTANTS A representative of Deloitte & Touche LLP, the Company's independent public accountants for fiscal year 1998 and the current year, will be present at the meeting, will have the opportunity to make a statement, and also will be available to respond to appropriate questions. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED WITHOUT CHARGE BY ANY STOCKHOLDER WHOSE PROXY IS SOLICITED UPON WRITTEN REQUEST TO: DILLARD'S, INC. Post Office Box 486 Little Rock, Arkansas 72203 Attention: James I. Freeman, Senior Vice President, Chief Financial Officer By Order of the Board of Directors JAMES I. FREEMAN Senior Vice President, Chief Financial Officer, Assistant Secretary THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS Dillard's, Inc. Post Office Box 486 Little Rock, Arkansas 72203 PROXY The undersigned hereby appoints Telephone No.(501)376-5200 William Dillard and James I. Freeman as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and vote, as designated below, all the shares of the Class A Common Stock of Dillard's, Inc., held of record by the undersigned on March 31, 1999, at the annual meeting of stockholders to be held on May 15, 1999, or any adjournment thereof. 1. ELECTION OF DIRECTORS. / / FOR all Class A / / WITHHOLD AUTHORITY nominees listed to vote for all below (except as Class A nominees marked to the contrary below) (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.) Class A Nominees Robert C. Connor * Will D. Davis * John Paul Hammerschmidt * William B. Harrison, Jr. * John H. Johnson Management of the Company supports proposal 1. 2. STOCKHOLDER PROPOSAL CONCERNING CHILD/CONVICT LABOR. (Management of the Company opposes this proposal.) / / FOR / / AGAINST / / ABSTAIN 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR PROPOSAL 1 AND AGAINST PROPOSAL 2. Please sign exactly as name appears below. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. DATED: , 1999 Signature Signature, if jointly held PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS Dillard's, Inc. Post Office Box 486 Little Rock, Arkansas 72203 PROXY The undersigned hereby appoints Telephone No.(501)376-5200 William Dillard and James I. Freeman as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and vote, as designated below, all the shares of the Class B Common Stock of Dillard's, Inc., held of record by the undersigned on March 31, 1999, at the annual meeting of stockholders to be held on May 15, 1999, or any adjournment thereof. 1. ELECTION OF DIRECTORS. / / FOR all Class B / / WITHHOLD AUTHORITY nominees listed to vote for all below (except as Class B nominees marked to the contrary below) (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.) Class B Nominees William Dillard * Calvin N. Clyde, Jr. * Drue Corbusier * Alex Dillard * Mike Dillard * William Dillard II * James I. Freeman * E. Ray Kemp * Jackson T. Stephens * William H. Sutton Management of the Company supports proposal 1. 2. STOCKHOLDER PROPOSAL CONCERNING CHILD/CONVICT LABOR. (Management of the Company opposes this proposal.) / / FOR / / AGAINST / / ABSTAIN 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR PROPOSAL 1 AND AGAINST PROPOSAL 2. Please sign exactly as name appears below. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. DATED: , 1999 Signature Signature, if jointly held PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. -----END PRIVACY-ENHANCED MESSAGE-----