Dillard's, Inc. Def 14A

DEF 14A 1 def14a_042001.htm Dillard's, Inc. Def 14A

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 toss.240.14a-11(c) orss.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 19, 2001

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 20, 2001

         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 19, 2001, at
9:30 a.m. for the following purposes:

         1.       To elect 12  Directors of the Company  (four  Directors to  represent  Class A  Stockholders  and
eight Directors to represent Class B Stockholders).

         2.       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, 2001, 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 20, 2001

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 19, 2001, 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 19, 2001, 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,  2001,  will be entitled to notice of, and to vote at, the  meeting.  At that date,  there
were  81,011,900  shares  of Class A  Common  Stock  outstanding  and  4,010,929  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.  In order to provide for a more  manageable
Board  size,  12  nominees  have been named  instead of the 15 that are  provided  for by the  Company's  governing
instruments.  Stockholders  will not be allowed to vote for a greater  number of nominees  than those named in this
proxy  statement.  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.  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.

         The last date for the  acceptance of Proxies by  management is the close of business on May 18, 2001,  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 February 3,
2001.

No. of Percent
Name and Address Class Shares Owned Of Class (1)

AXA Financial, Inc. Class A 6,808,485(2) 8.4%
1290 Avenue of the Americas
New York, NY 10104

Capital Research and Class A 8,820,000(2) 10.9%
Management Company
333 South Hope Street
Los Angeles, CA 90071

Dillard's, Inc. Retirement Trust Class A 9,039,825(2) 11.2%
1600 Cantrell Road
Little Rock, AR 72201

Dodge & Cox Class A 6,636,312(2) 8.6%
One Sansome St. 35th Floor
San Francisco, CA 94014

W.D. Company (3) Class A 41,496 *
Little Rock, Arkansas Class B 3,985,776 99.4%

* Denotes less than 0.1%

(1) At February 3, 2001 there were a total of 80,989,071 shares of the Company's Class A Common Stock and
4,010,929 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 24.4%, 25.1%, 23.3% and 22.0%, respectively, of the outstanding voting
stock of W.D. Company, Inc.

ELECTION OF DIRECTORS

         Four Directors  representing  Class A Stockholders and eight 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 12 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

THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION AS DIRECTORS OF THE 12 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 February 3,
2001, 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 February 3, 2001.

Name Age Principal Occupation Director Since Shares of Common Stock Beneficially Percent of
Owned as of 2/03/2001 (1) Class

William Dillard (b)(2) 86 Chairman of the Board 1964 Class A 841,222 (3) 1.0%
of the Company Class B 3,985,776 (3) 99.4%

Calvin N. Clyde Jr. (b) 80 Chairman of the Board, 1985 Class A 25,087 (4) *
T.B. Butler Publishing Class B None
Co., Inc., Tyler, TX

Robert C. Connor (a) 59 Investments 1987 Class A 28,009 (5) *
Class B None

Drue Corbusier (b) 54 Executive Vice 1994 Class A 692,294 (6) .8%
President of the Company Class B None

Will D. Davis (a) 71 Partner, Heath, Davis & 1972 Class A 30,440 (7) *
McCalla, Attorneys, Class B None
Austin, TX

Alex Dillard (b)(2) 51 President of the Company 1975 Class A 1,610,328 (3) 2.0%
Class B 3,985,776 (3) 99.4%
Mike Dillard (b)(2) 49 Executive Vice 1976 Class A 1,222,515 (3) 1.5%
President of the Company Class B 3,985,776 (3) 99.4%

William Dillard II 56 Chief Executive Officer 1967 Class A 1,741,104 (3) 2.1%
(b)(2) of the Company Class B 3,985,776 (3) 99.4%

James I. Freeman (b) 51 Senior Vice President and 1991 Class A 648,954 (8) .8%
Chief Financial Officer Class B None
of the Company

John Paul Hammerschmidt (a) 78 Retired Member of Congress 1992 Class A 20,000 (9) *
Class B None
John H. Johnson (a) 83 Chairman and Chief 1986 Class A 23,000 (10) *
Executive Officer, Class B None
Johnson Publishing
Company, Inc., Chicago, IL

William H. Sutton (b) 70 Managing Partner, Friday, 1994 Class A 26,000 (11) *
Eldredge & Clark, Class B None
Attorneys, Little Rock, AR
All Nominees and Executive Class A 8,075,337 (12)(13) 9.3%
Officers as a Group (a total Class B 3,985,776 (12) 99.4%
of 21 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 24.4% 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 311,469 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 466,000 shares pursuant to currently exercisable options granted
under Company stock option plans. William Dillard II individually owns 589,608 shares of Class A
Common Stock and has the right to acquire beneficial ownership of 1,110,000 shares pursuant to
currently exercisable options granted under Company stock option plans. Alex Dillard and his wife
individually own 410,521 and 48,311 shares, respectively, of Class A Common Stock, and he has the
right to acquire beneficial ownership of 1,110,000 shares pursuant to currently exercisable options
granted under Company stock option plans. Mike Dillard individually owns 310,114 shares of Class A
Common Stock, has sole voting power with respect to 40,905 shares held in trust for three minor
children and has the right to acquire beneficial ownership of 830,000 shares pursuant to currently
exercisable options granted under Company stock option plans.

(4) Calvin N. Clyde owns 6,087 shares of Class A Common Stock and has the right to acquire beneficial ownership
of 19,000 shares pursuant to currently exercisable options granted under Company stock option plans.

(5) Includes nine shares owned by his wife. Robert C. Connor owns 9,000 shares of Class A Common Stock and has
the right to acquire beneficial ownership of 19,000 shares pursuant to currently exercisable
options granted under Company stock option plans.

(6) Drue Corbusier owns 132,294 shares of Class A Common Stock and has the right to acquire beneficial
ownership of 560,000 shares pursuant to currently exercisable options granted under Company stock
option plans.

(7) Will D. Davis owns 11,440 shares of Class A Common Stock and has the right to acquire beneficial
ownership of 19,000 shares pursuant to currently exercisable options granted under Company stock
option plans.

(8) James I. Freeman owns 113,880 shares of Class A Common Stock, has sole voting power with respect to
3,600 shares held in trust for a minor child and has the right to acquire beneficial ownership of
531,474 shares pursuant to currently exercisable options granted under Company stock option plans.

(9) John Paul Hammerschmidt owns 1,000 shares of Class A Common Stock and has the right to acquire
beneficial ownership of 19,000 shares pursuant to currently exercisable options granted under
Company stock option plans.

(10) Johnson Publishing Company, Inc., of which John H. Johnson is Chairman and Chief Executive Officer, owns
3,000 shares of Class A Common Stock. Mr. Johnson individually owns 1,000 shares of Class A Common
Stock and he has the right to acquire beneficial ownership of 19,000 shares pursuant to currently
exercisable options granted under Company stock option plans.

(11) William H. Sutton owns 10,000 shares of Class A Common Stock and has the right to acquire beneficial
ownership of 16,000 shares pursuant to currently exercisable options granted under Company stock
option plans.

(12) 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.

(13) Includes the right to acquire beneficial ownership of 5,790,224 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.

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 20,
2000.

The Board of Directors met four times during the last 12 months, on May 20, August 12, and November 18, 2000
and March 10, 2001.

Audit Committee members are Calvin N. Clyde, Jr., Robert C. Connor, Chairman; and John H. Johnson. The
Audit Committee held four meetings during the year.

The Executive Compensation Committee members are Robert C. Connor; Will D. Davis, Chairman and John Paul
Hammerschmidt. The Executive Compensation Committee held two meetings during the year.

The Stock Option Committee members are Robert C. Connor; Will D. Davis, Chairman and John Paul
Hammerschmidt. The Stock Option Committee held two meetings during the year.

All of the nominees for director attended at least 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                                            Compensation         Stock      Underlying     Payouts     Compensa-
Position                    Year     Salary($)    Bonus($)         ($)          Award(s)($)     Options/       ($)      tion($)(1)
                                                                                              SARs(#)
--------------------------- ------- ----------- ------------ ---------------- --------------- ------------ ---------- ---------------

William Dillard II
Chief Executive Officer      2000     $710,000      $     0        --               --            160,000      --           $166,150
                             1999      680,000    1,335,000        --               --            350,000      --            139,900
                             1998      650,000      650,000        --               --            150,000      --            244,823



Alex Dillard                 2000      620,000            0        --               --            160,000      --            155,270
President                    1999      590,000    1,335,000        --               --            350,000      --            129,120
                             1998      560,000      650,000        --               --            150,000      --            210,080



Mike Dillard                 2000      540,000            0        --               --             80,000      --            110,900
Executive Vice President     1999      520,000      690,000        --               --            200,000      --             79,400
                             1998      500,000      340,000        --               --            100,000      --            155,639



Drue Corbusier               2000      500,000            0        --               --             80,000      --            101,110
Executive Vice President     1999      475,000      625,000        --               --            200,000      --             83,610
                             1998      450,000      300,000        --               --            100,000      --             92,600



James I. Freeman             2000      500,000            0        --               --             80,000      --             79,400
Senior Vice President and    1999      475,000      465,000        --               --            200,000      --             60,150
Chief Financial Officer      1998      445,000      250,000        --               --            100,000      --            105,758




(1)   Amounts  represent the Company's defined  contributions  for the benefit of the named executive  officers pursuant to
its Retirement Plans.

Stock Option Grants

      The following  table sets forth  information  concerning  stock options granted under the Company's 2000 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
                                  Securities
                                   Underlying     % of Total
                                    Options/      Options/SARs
                                  SARs Gran-       Granted to      Exercise or   Expiration
                                   ted (#)(1)     Employees in     Base Price       Date        5% ($)        10% ($)
             Name                                  Fiscal Year       ($/Sh)
-------------------------------- --------------- ---------------- -------------- ------------- ------------ ------------

William Dillard II                     160,000             7.4%      $10.44       12/15/2007     $679,600   $1,584,240


Alex Dillard                           160,000              7.4       10.44       12/15/2007      679,600    1,584,240


Mike Dillard                            80,000              3.7       10.44       12/15/2007      339,800      792,120


Drue Corbusier                          80,000              3.7       10.44       12/15/2007      339,800      792,120


James I.  Freeman                       80,000              3.7       10.44       12/15/2007      339,800      792,120

(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 Securities Underlying
                                                                               Unexercised Options/         Value of Unexercised
                                                                                SARs at FY-End (#)          In-the-Money Options/
                                                                                                            SARs at FY-End ($)(1)
                                    Shares Acquired                         Exercisable
              Name                    on Exercise (#)   Value Realized ($)         Unexercisable         Exercisable
                                                                                                                Unexercisable
----------------------------------- ------------------- ------------------- ---------------------------- ----------------------------

William Dillard II                                   0               $   0  1,110,000       0            $   790,000     $      0



Alex Dillard                                         0                   0  1,110,000       0                 790,000             0



Mike Dillard                                         0                   0  830,000         0                  395,000           0



Drue Corbusier                                       0                   0  560,000         0                  395,000           0


James I. Freeman                                     0                   0  531,474         0                  395,000          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
Compensation                     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, 32 years;  Alex Dillard,  29
years;  Mike Dillard,  29 years;  Drue  Corbusier,  32 years;  and James I. Freeman,  12 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 $20,000 as well as 1,000
shares of Class A Common Stock. In addition,  committee  chairmen  receive an annual retainer of $10,000.  Directors
who are not officers also receive $1,500 for attendance at each board  meeting,  $1,000 for each committee  meeting,
and actual travel expenses.

Report of Executive Compensation and Stock Option Committees

      The following report addressing the Company's  compensation policies for executive officers for fiscal 2000 is
submitted by the Executive  Compensation and Stock Option Committees (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  establishes the salary for all executive  officers.  Such salaries
are  set  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 on
targets  based on a  regression  analysis of salaries  paid versus  total  revenues for the  comparison  group.  For
fiscal  2000,  the  salaries  set 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 2000, the Company experienced a pre-tax income of
$140,860,000 and no increase in pre-tax income.

The  Compensation  Committee  decided to eliminate the amount of bonus,  which the named  executive  officers  would
receive for fiscal 2000.

Stock Options -- Stock option  grants under the Company's  2000  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  December 15, 2000.  When making  option  grants,  the Stock Option  Committee and the
Compensation Committee do 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  2000,  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
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 February 4,
1996 and assumes reinvestment of dividends.

                                   1996       1997         1998        1999       2000
Dillard                 100      101.27     119.66        84.85       66.23      53.49
S&P 500                 100      126.43     160.56       212.89      229.19     224.43
S&P Dpt Strs            100      108.82     143.94        142.7      112.15     145.12

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  February 3, 2001,  all Section  16(a) filing  requirements  applicable  to its  officers,  directors and
greater than 10% beneficial owners were complied with.


              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.

AUDIT COMMITTEE REPORT

The Audit Committee operates under a written charter adopted by the Board of Directors, a copy of which
is attached as Appendix A. Each of the members of the Audit Committee is independent as defined under the
listing standards of the New York Stock Exchange.

The Audit Committee has reviewed and discussed the audited financial statements for the year ended
February 3, 2001 with management and the independent auditors, Deloitte & Touche LLP. Management represented to
the Audit Committee that the Company's consolidated financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America.

The discussions with Deloitte & Touche LLP included the matters required by Statement on Auditing
Standards No. 61, as amended (Communications with Audit Committees). Deloitte & Touche LLP provided to the Audit
Committee the written disclosures and the letter regarding its independence as required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees). The Audit Committee also considered
whether the provision of non-audit services by Deloitte & Touche LLP is compatible with maintaining the auditor's
independence.

Based upon the reviews and discussions noted above, the Audit Committee recommended to the Board of
Directors that the audited consolidated financial statements be included in the Company's Annual Report on Form
10-K to be filed with the Securities and Exchange Commission for the year ended February 3, 2001.

Robert C. Connor
Calvin N. Clyde
John H. Johnson

INDEPENDENT PUBLIC ACCOUNTANTS

              A  representative  of Deloitte & Touche LLP, the Company's  independent  public  accountants for
     fiscal year 2000 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.

Audit Fees

              Deloitte  & Touche  LLP  billed  the  Company  a total of  $670,000  for  professional  services
     rendered for the audit of the Company's annual  financial  statements for the year ended February 3, 2001
     and for the review of the financial  statements  included in the Company's quarterly reports on Form 10-Q
     for fiscal 2000.

Financial Systems Design and Implementation Fees

              No fees were paid to  Deloitte & Touche LLP for any  information  technology  services  (of the
     type described in Rule 2-01(c)(4)(ii)(B) of Regulation S-X) during 2000.

All Other Fees

              The Company paid  Deloitte & Touche LLP an  aggregate  of $673,502 for all services  rendered by
     Deloitte & Touche LLP other than the audit and  financial  systems  design and  implementation  described
     above.

              The Audit  Committee of the Board of Directors has considered  whether the provision of services
     described  above  under  "Financial  Systems  Design and  Implementation  Fees" and "All  Other  Fees" is
     compatible with maintaining the independence of Deloitte & Touche LLP.

STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING

              Proposals  of  stockholders  intended  to be  presented  at  the  Company's  annual  meeting  of
     stockholders  in 2002 must be received by the Company at its principal  executive  offices not later than
     December 21, 2001 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 February 3, 2001 is being mailed with
     this Proxy Statement but is not to be considered as a part hereof.


              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

Appendix A
Dillard's, Inc.
Audit Committee Charter

This Audit Committee Charter ("Charter") has been adopted by the Board of Directors (the "Board") of Dillard's,
Inc.  The Audit Committee of the Board (the "Committee") shall review and reassess this charter annually and
recommend any proposed changes to the Board for approval.

Role and Independence: Organization

The Committee assists the Board in fulfilling its responsibility for oversight of the quality and integrity of
the accounting, auditing, internal control and financial reporting practices of the Company. It may also have
such other duties as may from time to time be assigned to it by the Board. The membership of the Committee shall
consist of at least three directors, who are each free of any relationship that, in the opinion of the Board, may
interfere with such member's individual exercise of independent judgment. Each Committee member shall also meet
the independence and financial literacy requirements for serving on audit committees, and at least one member
shall have accounting or relating financial management expertise, all as set forth in the applicable rules of the
New York Stock Exchange. The Committee shall maintain free and open communication with the independent auditors,
the internal auditors and Company management. In discharging its oversight role, the Committee is empowered to
investigate any matter relating to the Company's accounting, auditing, internal control or financial reporting
practices brought to its attention, with full access to all Company books, records, facilities and personnel.
The Committee may retain outside counsel, auditors or other advisors.

One member of the Committee shall be appointed as chair. The chair shall be responsible for the leadership of
the Committee, including scheduling and presiding over meetings, preparing agendas, and making regular reports to
the Board. The chair will also maintain regular liaison with the CEO, CFO, the lead independent audit partner
and the director of internal audit.

The Committee shall meet at least four times a year, or more frequently as the Committee considers necessary. At
least once each year, the Committee shall have separate private meetings with the independent auditors,
management and the internal auditors.

Responsibilities

Although the Committee may wish to consider other duties from time to time, the general recurring activities of
the Committee in carrying out its oversight role are described below.  The Committee shall be responsible for:

o        Recommending to the Board the independent auditors to be retained (or nominated for shareholder
     approval) to audit the financial statements of the Company.  Such auditors are ultimately accountable to the
     Board and the Committee, as representatives of the shareholders.

o        Evaluating, together with the Board and management, the performance of the independent auditors and,
     where appropriate, replacing such auditors.

o        Obtaining annually from the independent auditors a formal written statement describing all relationships
     between the auditors and the Company, consistent with Independence Standards Board Standard Number 1.  The
     Committee shall actively engage in a dialogue with the independent auditors with respect to any
     relationships that may impact the objectivity and independence of the auditors and shall take, or recommend
     that the Board take, appropriate actions to oversee and satisfy itself as to the auditors' independence.

o        Reviewing the audited financial statements and discussing them with management and the independent
     auditors.  These discussions shall include the matters required to be discussed under Statement of Auditing
     Standards No. 61 and consideration of the quality of the Company's accounting principles as applied in its
     financial reporting, including a review of particularly sensitive accounting estimates, reserves and
     accruals, judgmental areas, audit adjustments (whether or not recorded), and other such inquiries as the
     Committee or the independent auditors shall deem appropriate.  Based on such review, the Committee shall
     make its recommendations to the Board as to the inclusion of the Company's audited financial statements in
     the Company's Annual Report on Form 10-K (or the Annual Report to Shareholders, if distributed prior to the
     filing of the Form 10-K).

o        Issuing annually a report to be included in the Company's proxy statement as required by the rules of
     the Securities and Exchange Commission.

o        Overseeing the relationship with the independent auditors, including discussing with the auditors the
     nature and rigor of the audit process, receiving and reviewing audit reports, and providing the auditors
     full access to the Committee (and the Board) to report on any and all appropriate matters.

o        Discussing with a representative of management and the independent auditors: (1) the interim financial
     information contained in the Company's Quarterly Report on Form 10-Q prior to its filing, (2) the earnings
     announcement prior to its release (if practicable), and (3) the results of the review of such information by
     the independent auditors.  (These discussions may be held with the Committee as a whole or with the
     Committee chair in person or by telephone.)

o        Overseeing internal audit activities, including discussing with management and the internal auditors the
     internal audit function's organization, objectively, responsibilities, plans, results, budget and staffing.

o        Discussing with management, the internal auditors and the independent auditors the quality and adequacy
     of and compliance with the Company's internal controls.

o        Discussing with management and/or the Company's general counsel any legal matters (including the status
     of pending litigation) that may have a material impact on the Company's financial statements, and any
     material reports or inquiries from regulatory or governmental agencies.

The Committee's job is one of oversight.  Management is responsible for the preparation of the Company's
financial statements and the independent auditors are responsible for auditing those financial statements.  The
Committee and the Board recognize that management (including the internal audit staff) and the independent
auditors have more resources and time, and more detailed knowledge and information regarding the Company's
accounting, auditing, internal control and financial reporting practices than the Committee does; accordingly,
the Committee's oversight role does not provide any expert or special assurance as to the financial statements or
other financial information provided by the Company to its shareholders and others.






                                            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,  2001,  at the  annual  meeting  of
                                                     stockholders  to be held on May 19, 2001,  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 * John H. Johnson
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
        Management of the Company supports this proposal
-------------------------------------------------------------------------------------------------------------------

2.       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.

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: , 2001
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, 2001, at the annual meeting of
stockholders to be held on May 19, 2001, 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 * William H. Sutton
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Management of the Company supports this proposal.
-------------------------------------------------------------------------------------------------------------------

2. 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.

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:                , 2001
                                  Signature



                                  Signature, if jointly held


PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.