<PAGE>
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 Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 14a-11(c) or 14a-12
DILLARD DEPARTMENT STORES, INC.
(Name of Registrant as Specified In Its Charter)
DILLARD DEPARTMENT STORES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(l), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
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:
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:
<PAGE>
DILLARD
DEPARTMENT STORES
PROXY STATEMENT
DILLARD DEPARTMENT STORES, INC.
POST OFFICE BOX 486
LITTLE ROCK, ARKANSAS 72203
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD May 18, 1996
<PAGE>
PROXY STATEMENT
DILLARD DEPARTMENT STORES, INC.
POST OFFICE BOX 486
LITTLE ROCK, ARKANSAS 72203
TO THE HOLDERS OF CLASS A AND Little Rock, Arkansas
CLASS B COMMON STOCK: April 18, 1996
Notice is hereby given that the annual meeting of Stockholders of Dillard
Department Stores, Inc., will be held at the Board Room of the First
Commercial Bank Building, Capitol and Broadway, Little Rock, Arkansas on
Saturday, May 18, 1996, 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 Stockholder proposal.
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 29, 1996, 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 E. DARR, JR.
Secretary
<PAGE>
DILLARD DEPARTMENT STORES, INC.
POST OFFICE BOX 486
LITTLE ROCK, ARKANSAS 72203
Telephone (501) 376-5200
April 18, 1996
PROXY STATEMENT
The enclosed Proxy is solicited by and on behalf of the management of
Dillard Department Stores, Inc. (the "Company"), a Delaware corporation, for
use at the annual meeting of stockholders to be held on Saturday, May 18,
1996, at 9:30 a.m. at the Board Room of the First Commercial Bank Building,
Capitol and Broadway, 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 18, 1996, 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 29, 1996, will be
entitled to notice of, and to vote at, the meeting. At that date, there were
109,270,507 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. If shares are held by
a broker that has indicated that it does not have discretionary authority to
vote on a particular matter, 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 and with respect to the Stockholder proposal
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 17, 1996, 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, 1996.
No. of Percent
Name and Address Class Shares Owned of Class(1)
Ark Asset Management Co., Inc. Class A 5,762,060 (2) 5.3%
One New York Plaza
New York, New York 10004
FMR Corp. Class A 7,062,141 (2) 6.5%
82 Devonshire Street
Boston, Massachusetts 02109
The Prudential Insurance Company Class A 5,545,307 (2) 5.1%
of America
Prudential Plaza
Newark, New Jersey 07102
W.D. Company, Inc. (3) Class A 41,496 *
Little Rock, Arkansas 72203 Class B 3,985,776 99.2%
*Denotes less than 0.1%
(1) At February 3, 1996, there were a total of 109,070,691 shares of the
Company's Class A Common Stock and 4,016,929 shares of the Company's Class B
Common Stock outstanding.
<PAGE>
(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, President; Alex Dillard, Executive Vice 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.
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 February 3, 1996, 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, 1996.
<TABLE>
Shares of Common
Stock Beneficially
Principal Director Owned as of Percent
Name Age Occupation Since 2/03/96 (1) of Class
<S> <C> <S> <C> <S> <C> <C> <C>
William Dillard 81 Chairman of the 1964 Class A 777,209 (3) .7%
(b)(2) Board and Chief Class B 3,985,776 (3) 99.2%
Executive Officer
of the Company
Calvin N. Clyde, Jr. 75 Chairman of the 1985 Class A 8,887 *
(b) Board, T. B. Butler Class B None
Publishing Co., Inc.,
Tyler, TX
Robert C. Connor 54 Investments 1987 Class A 13,033 (4) *
(a) Class B None
Drue Corbusier 49 Vice President 1994 Class A 284,258 (5) .3%
(b) of the Company Class B None
Will D. Davis 66 Partner, 1972 Class A 11,040 *
(a) Heath, Davis & McCalla, Class B None
Attorneys, Austin, TX
Alex Dillard 46 Executive 1975 Class A 837,305 (3) .8%
(b)(2) Vice President Class B 3,985,776 (3) 99.2%
of the Company
Mike Dillard 44 Executive 1976 Class A 734,360 (3) .7%
(b)(2) Vice President Class B 3,985,776 (3) 99.2%
of the Company
William Dillard, II 51 President and 1967 Class A 983,436 (3) .9%
(b)(2) Chief Operating Class B 3,985,776 (3) 99.2%
Officer of the Company
James I. Freeman 46 Senior Vice 1991 Class A 218,163 (6) .2%
(b) President and Class B None
Chief Financial
Officer of the
Company
John Paul Hammerschmidt 73 Retired Member 1992 Class A None
(a) of Congress Class B None
<PAGE>
William B. Harrison, Jr.52 Vice Chairman, 1985 Class A 6,0000 (7) *
(a) Chemical Banking Class B None
Corporation,
New York, NY
J.M. Hessels 53 Chairman, 1990 Class A None
(a) Executive Board, Class B None
Vendex International
N.V. (Retail) Amsterdam,
The Netherlands
John H. Johnson 78 President 1986 Class A 3,000 (8) *
(b) and Publisher, Class B None
Johnson Publishing
Company, Inc.,
Chicago, IL
E. Ray Kemp 71 Retired Vice 1970 Class A 149,904 (9) .1%
(b) Chairman of the Class B None
Board and Chief
Administrative
Officer of the
Company
William H. Sutton 65 Managing 1994 Class A 1,000 *
(b) Partner, Class B None
Friday, Eldredge
& Clark, Attorneys
Little Rock, AR
All Nominees and Executive Class A 5,252,207 (10)(11) 4.7%
Officers as a Group (a total Class B 3,985,776 (10) 99.2%
of 25 persons)
</TABLE>
(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 shares 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 313,456 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 400,000 shares pursuant to currently exercisable options granted
under Company stock option plans. William Dillard, II individually owns
525,364 shares of Class A Common Stock and has the right to acquire beneficial
ownership of 409,576 shares pursuant to currently exercisable options granted
under Company stock option plans. Alex Dillard and his wife individually own
350,222 and 36,011 shares, respectively, of Class A Common Stock, and he has
the right to acquire beneficial ownership of 409,576 shares pursuant to
currently exercisable options granted under Company stock option plans. Mike
Dillard individually owns 259,738 shares of Class A Common Stock, has sole
voting power with respect to 23,550 shares held in trust for three minor
children and has the right to acquire beneficial ownership of 409,576 shares
pursuant to currently exercisable options granted under Company stock option
plans.
(4) Includes 24 shares held in trust for a minor child, with respect to
which Robert C. Connor has sole voting power, and nine shares owned by his
wife.
(5) Drue Corbusier and her husband individually own 125,839 and 14,400
shares, respectively, of Class A Common Stock, and she has the right to
acquire beneficial ownership of 144,019 shares pursuant to currently
exercisable options granted under Company stock option plans.
(6) James I. Freeman individually owns 46,019 shares, has sole voting power
with respect to 12,000 shares held in trust for three minor children and has
the right to acquire beneficial ownership of 160,144 shares pursuant to
currently exercisable options granted under Company stock option plans.
(7) Includes 3,300 shares owned by his wife.
(8) These shares are held by Johnson Publishing Company, Inc., of which John
H. Johnson is President and Publisher.
(9) E. Ray Kemp and his wife individually own 58,470 and 68,484 shares,
respectively, of Class A Common Stock, and he has sole voting power with
respect to 22,950 shares held in trust for two minor children.
(10) 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.
<PAGE>
(11) Includes the right to acquire beneficial ownership of 2,886,307 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 DeBartolo Realty Group
William Dillard, II Acxiom Corporation, Barnes & Noble, Inc., and Simon
Property Group, Inc.
John Paul Hammerschmidt Southwestern Energy Co.
William B. Harrison, Jr. Chemical Banking Corporation, Freeport-McMoran
Inc., Freeport-McMoran Copper and Gold, Inc., and
McMoran Oil and Gas Co.
J. M. Hessels Barnes & Noble, Inc. and Neostar Retail Group, Inc.
The business association of the nominees as shown in the table under
"Nominees for Election as Directors" has been continued for more than five
years, with the exception of Robert C. Connor, who prior to 1993 was President
of Union National Bank of Arkansas, which was merged with Worthen Banking
Corporation, which subsequently was acquired by Boatmen's Bancshares, Inc. E.
Ray Kemp's retirement was effective in March, 1992. Each nominee for Director
was elected to the Board of Directors at the annual meeting of stockholders
held May 20, 1995.
The Board of Directors met four times during the last 12 months, on May
20, August 12, and November 11, 1995, and March 2, 1996.
Audit Committee members are John Paul Hammerschmidt, Chairman; E. Ray
Kemp; and William H. Sutton. The Audit Committee held three meetings during
the year.
Executive Compensation Committee members are Calvin N. Clyde, Jr.; Robert
C. Connor; and Will D. Davis, Chairman. The Executive Compensation Committee
held two meetings during the year.
Stock Option Committee members are Calvin N. Clyde, Jr., Chairman; William
B. Harrison, Jr.; and John H. Johnson. The Stock Option Committee held two
meetings during the year.
Each of the following nominees for Director 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
he served: William B. Harrison, Jr. and J.M. Hessels.
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.
<TABLE>
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Principal Other Annual Restricted Securities LTIP All Other
Position Year Salary($) Bonus($) Compensation($) Stock Award(s)($) Underlying Payouts ($) Compensation
Options/SARs(#) ($)(1)
<S> <C> <C> <C> <S> <S> <C> <S> <S>
William Dillard 1995 $885,000 $ 660,000 - - 150,000 - $190,245
Chairman of the Board 1994 860,000 1,040,000 - - 150,000 - 173,313
and Chief Executive 1993 835,000 1,135,000 - - 100,000 - 114,013
Officer
William Dillard, II 1995 585,000 660,000 - - 150,000 - 188,520
President and Chief 1994 560,000 1,040,000 - - 150,000 - 152,305
Operating Officer 1993 535,000 1,135,000 - - 100,000 - 80,500
Alex Dillard 1995 495,000 660,000 - - 150,000 - 176,970
Executive Vice 1994 470,000 1,040,000 - - 150,000 - 164,187
President 1993 445,000 1,135,000 - - 100,000 - 70,600
Mike Dillard 1995 445,000 440,000 - - 150,000 - 134,950
Executive Vice 1994 425,000 695,000 - - 150,000 - 106,132
President 1993 405,000 755,000 - - 100,000 - 61,250
James I. Freeman 1995 395,000 135,000 - - 60,000 - 65,650
Senior Vice President 1994 380,000 205,000 - - 60,000 - 53,640
and Chief Financial 1993 365,000 220,000 - - 50,000 - 46,125
Officer
</TABLE>
(1) Amounts represent the Company's defined contributions for the benefit of
the named executive officers pursuant to its Retirement Plan.
<PAGE>
Stock Option Grants
The following table sets forth information concerning stock options
granted under the Company's 1990 Stock Option Plan to the named executive
officers:
<TABLE>
Option/SAR Grants in Last Fiscal Year
Individual Grants Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Option Term
(a) (b) (c) (d) (e) (f) (g)
Name Number of % of Total Exercise or Expiration 5%($) 10% ($)
Securities Underlying Options/SARs Base Price Date
Options/SARs Granted to ($/Sh)
Granted (#) (1) Employees in
Fiscal Year
<S> <C> <C> <C> <C> <C> <C>
William Dillard 150,000 7.5% $27.25 5/20/2002 $2,238,300 $5,360,550
William Dillard, II 150,000 7.5% $27.25 5/20/2002 2,238,300 5,360,550
Alex Dillard 150,000 7.5% $27.25 5/20/2002 2,238,300 5,360,550
Mike Dillard 150,000 7.5% $27.25 5/20/2002 2,238,300 5,360,550
James I. Freeman 60,000 3.0% $27.25 5/20/2002 895,320 2,144,220
</TABLE>
(1) These options are exercisable on or after May 20, 1997. If payment for
shares upon exercise of any of these options is made with shares of the
Company's common stock owned by the optionee, the optionee shall be granted on
that date an option ("Reload Option") to purchase a number of shares equal to
the number of shares tendered to the Company. The exercise price of the
Reload Option shall be the fair market price of the Company's common stock on
the Reload Option grant date, and the expiration date of the Reload Option
shall be the same as that of the original option.
Stock Option Exercises and Holdings
The following table sets forth information concerning stock options
exercised during the last fiscal year and stock options held as of the end of
the last fiscal year by the named executive officers.
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values
(a) (b) (c) (d) (e)
Name Shares Acquired Value Realized ($) Number of Securities Value of Unexercised
on Exercise (#) Underlying In-the-Money Options/
Unexercised Options/ SARs at FY-End ($)(1)
SARs at FY-End (#)
<S> <C> <C> <C> <C> <C> <C>
Exercisable Unexercisable Exercisable Unexercisable
William Dillard 0 $0 400,000 150,000 $0 $356,250
William Dillard, II 0 0 409,576 150,000 0 356,250
Alex Dillard 0 0 409,576 150,000 0 356,250
Mike Dillard 0 0 409,576 150,000 0 356,200
James I. Freeman 0 0 160,144 60,000 0 142,500
</TABLE>
(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.
<PAGE>
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
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, 0
years; William Dillard, II, 26 years; Alex Dillard, 23 years; Mike Dillard, 23
years; and James I. Freeman, 7 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 $27,500, $1,250 for attendance at each board meeting, $250 for
each committee meeting, and actual travel expenses.
Retirement Contract
The Company has entered into a retirement contract with William Dillard,
Chairman of the Board, providing for voluntary retirement upon 90 days notice.
Mr. Dillard will receive annual retirement compensation equal to 50% of the
average of his last five years total annual compensation from the Company.
Such retirement compensation shall be adjusted every three years based on the
Consumer Price Index. The payments will be continued in the event of
disability, and will be paid to Mr. Dillard's wife for life upon his death.
Compensation Committee Interlocks and Insider Participation
The Company's Executive Compensation Committee is composed of Calvin N.
Clyde, Jr.; Robert C. Connor; and Will D. Davis. 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 Committee
The following report addressing the Company's compensation policies for
executive officers for fiscal 1995 is submitted by the Executive Compensation
Committee of the Board of Directors.
General
The Executive 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 Executive 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 Executive Compensation Committee
believes that the companies in the comparison group are comparable to Dillard
in management style and management culture. Although the Executive
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.
<PAGE>
Salary
Each year the Executive 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 Executive 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 Executive 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 1995, the salary recommendations made by
the Executive Compensation Committee were slightly 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 Executive
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 Executive 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 Executive 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 1995, the Company experienced a pre-tax income of $269,653,000 and no
increase in pre-tax income over the prior fiscal year.
The Executive Compensation Committee made a decision to adjust downward by
approximately $1,300,000 the amount of bonus which the named executive
officers would receive for fiscal 1995 pursuant to the cash performance bonus
program.
Stock Options
Stock option grants under the Company's 1990 incentive and Non-Qualified
Stock Option Plan are utilized by the Company for long-term incentive
compensation for executive officers. For fiscal 1995, the Stock Option
Committee utilized a formula for determining the number of stock options
granted to executive officers. Under such formula, each named executive
officer in the Summary Compensation Table received a grant covering a number
of shares approximately equal to ten percent (10%) of the officer's total
compensation for the previous fiscal year. Because the cash bonus portion of
an individual's total compensation is tied directly to the Company's pre-tax
income for the fiscal year plus the increase in pre-tax income over the prior
fiscal year, the stock option portion of the Company's compensation program is
partially tied to Company performance. 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. The stock options are
exercisable on or after May 20, 1997. When making option grants, the Stock
Option Committee does not consider the number of options already held by an
executive officer.
As discussed in previous Executive Compensation Committee Reports, the
Omnibus Budget Reconciliation Act of 1993 prevents public corporations from
deducting as a business expense that portion of the compensation paid to the
five named executive officers in the Summary Compensation Table that exceeds
$1 million. This deduction limit does not apply to "performance-based
compensation." The Executive 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 Executive
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 1995, the increase in the Chief
Executive Officer's salary over the prior fiscal year resulted in a salary
slightly lower than the target salary produced by the regression analysis
discussed above. When targeting the Chief Executive Officer's salary, and
when establishing the portion of the bonus pool to which the Chief Executive
Officer would be entitled, the Executive Compensation Committee took into
account the Chief Executive Officer's contribution and leadership as well as
his vision in founding the Company.
Calvin N. Clyde, Jr.
Robert C. Connor
Will D. Davis, Chairman
<PAGE>
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 1, 1991 and assumes reinvestment of
dividends.
The following table is submitted in lieu of the required graph.
<TABLE>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Dillard Department Stores, Inc. $137.48 $163.96 $120.29 $ 88.32 $ 97.13
Standard & Poor's 500 Index 122.69 135.67 153.14 153.96 213.48
Standard & Poor's Department Stores Index 119.92 133.88 153.50 136.07 162.51
</TABLE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
William Dillard, II, Drue Corbusier, Alex Dillard and Mike Dillard are
children of William Dillard.
Mr. William B. Harrison, Jr. is Vice Chairman of Chemical Banking
Corporation, New York, New York. Chemical Bank, a subsidiary of Chemical
Banking Corporation, acts as Agent under two Credit Agreements which make
funds available to the Company and the Company's wholly-owned subsidiary,
Dillard Investment Co., Inc. ("DIC"), in the aggregate amount of $500,000,000.
Twenty-eight other banks participate under the Credit Agreements, with such
participation's totaling 90%. Neither the Company nor DIC made any borrowings
under the Credit Agreements during the past fiscal year.
Mr. William H. Sutton is Managing Partner of the law firm Friday, Eldredge
& Clark, which is retained by the Company for legal services.
In the transactions disclosed above, the terms were arranged in the
ordinary course of business, on substantially the same terms as those
prevailing generally in comparable transactions with unrelated persons, and
involved no special benefit to the related persons or unfavorable features to
the Company.
SECTION 16(a) REPORTING DELINQUENCIES
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, 1996, all Section 16(a) filing requirements applicable to
its officers, directors and greater than 10% beneficial owners were complied
with except as follows: one report, covering one transaction, was filed late
by Roy J. Grimes.
STOCKHOLDER PROPOSAL
The School Sisters of St. Francis - U.S. Province, 1515 S. Layton Blvd.,
Milwaukee, WI 53251, owners of 50 shares of Class A Common Stock, have
indicated that they intend to propose the following resolution for action at
the meeting:
"Be it resolved: A report shall be prepared at reasonable cost, by
September, 1996, excluding confidential information and shall focus on the
following areas:
1. A copy of the consolidated EEO-1 report for 1993, 1994, 1995
available to shareholders upon request.
2. Report the number of discrimination complaints and lawsuits
concerning race, gender and the physically challenged. The cost to the
Company and shareholders from discrimination lawsuits and alternatives to
resolve the issue.
3. Report any federal audit, corporate management review, and letter of
compliance with corrective measures enacted to protect the
Company's government contracts and legal penalties.
4. Report to shareholders on the race, ethnicity and gender among top
management.
5. A description of any policies and programs utilizing the purchase of
goods and services from minority- and/or female-owned business enterprises."
The following statement was submitted in support of such resolution:
<PAGE>
Supporting Statement
"In 1994 corporations spent more than $2.2 billion on legal fees and
related discrimination settlements. The Equal Employment Opportunity
Commission (EEOC) reported that over 155,000 discrimination complaints were
filed in 1994. The high cost of legal expenses, the potential loss of
government contracts and the financial consequences of a damaged corporate
image from discrimination allegations is placing this issue high upon a
priority list for shareholders. Companies must better reflect the
market-place, the customer, trading partners, and the diverse workforce
through all levels of its organization.
CEOs from 28 major companies have cited changing demographics of the labor
force, the diverse national consumer market, and rapid globalization of the
marketplace as reasons for expanding diversity. Over 100 major employers
publicly report on work diversity and EEO-1 information. Corporate
publications available to their shareholders such as: Capital Cities/ABC's
Commitment Report for shareholders, Kmart Corporation's Reflections of
America, U.S. Air's Affirming Workplace Diversity, Amoco's Diverse Work Force
and Sears' Corporate Responsibility Report, just to name a few, are disclosing
EEO statistics for public review.
Many California corporations provide this data voluntarily, including all
of the regulated utilities and most of the major banks. Southern California
Edison, for example, has informed the Glass Ceiling Commission that it
supports public reporting of this kind.
The bi-partisan Glass Ceiling Committee was established to study and make
recommendations on the Glass Ceiling by 1995. Concerned investors have
closely watched the development of this study. Secretary of Labor, Robert
Reich and a 21 member Glass Ceiling Commission released a report called "Good
for Business: Making Full Use of The Nation's Human Capital." This report is
an important analysis for shareholders because it shows that in the U.S. we
select from less than 1/2 the total talent in our workforce. For example
women and minorities who represent over 57% of the workforce represent only 3%
of the executive management positions. This is a serious deficiency in our
ability to select the most talented people for our top management positions.
It affects our competitive position if we stifle this gifted portion of our
workforce.
Through this resolution we are asking the Company to report to
shareholders the progress we have made and the obstacles we still have to
overcome."
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL FOR
THE FOLLOWING REASONS:
The Company firmly supports and believes it is in full compliance with
federal and state employment opportunity laws. Your Board of Directors
supports management's policy of recruiting, hiring, training and promoting the
most qualified individuals available at each job level without regard to race,
color, religion, sex, national origin, age, handicap or veteran status. The
Company's employment statistics as well as its record of vindication in the
defense of employment litigation provide clear evidence of management's
commitment to this policy.
Your Board of Directors further supports the Company's policy of selecting
vendors and suppliers based on the quality and value of their products to our
customers, as well as their reliability in past dealings with the Company.
Your Board feels this policy is in the best interest of the shareholders and
that a further statement to shareholders of this policy is unnecessary.
The Board of Directors does not believe that the public dissemination of
reports that contain sensitive information protected from public disclosure by
federal law promotes the ends of social equality and equal opportunity in any
meaningful way. The Company compiles and files federally mandated statistical
reports regarding employment practices at significant time and expense to the
Company. While the information in these reports in fact illustrates the
Company's commitment to equal opportunity, the compilation and dissemination
of these reports, of themselves, would do nothing to promote this commitment.
Additional reports, as requested by the proponents, would increase the
Company's expenditures, and will not assist management in providing a
workplace where each individual is judged fairly according to his or her
efforts and abilities.
The information that the proponents seek is sensitive and potentially
susceptible to misinterpretation by persons who may, for whatever reason, be
interested in distracting management or initiating unfounded legal action. In
fact, the requested reporting could provide unsophisticated activist groups
with the false impression of statistical underutilization and encourage them
to harass management or to initiate baseless legal actions. The results may
prove costly to the Company and distracting to management.
The Company strives to respond meaningfully to all legitimate shareholder
concerns. To this end, management has continued a dialogue with respect to
this shareholder proposal. The open communication of information about
relevant Company policies and procedures between senior executives and
concerned shareholders has been and will continue to be fruitful and
enlightening. Although the Company may be in agreement and compliance with
the ultimate objectives of the shareholder proponents in many respects, the
Directors of the Company do not believe it is in the shareholders' best
interest to increase the burdens already placed on management or expose the
Company to potentially costly litigation by requiring the preparation and
dissemination of the requested reports.
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THIS STOCKHOLDER PROPOSAL.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
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 1997 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's annual
meeting of stockholders in 1997 must be received by the Company at its
principal executive offices not later than December 19, 1996 in order to be
included in the Company's Proxy Statement and form of Proxy relating to that
meeting.
<PAGE>
ANNUAL REPORTS
The Company's annual report for the fiscal year ended February 3, 1996 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 1995 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 DEPARTMENT STORES, INC.
Post Office Box 486
Little Rock, Arkansas 72203
Attention: James E. Darr, Jr., Secretary
By Order of the Board of Directors
JAMES E. DARR, JR.
Secretary
<PAGE>
Dillard Department Stores, Inc.
Post Office Box 486
Little Rock, Arkansas 72203
Telephone No. (501) 376-5200
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William Dillard and James E.
Darr, Jr. 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 Department Stores, Inc., held of record by the
undersigned on March 29, 1996, at the annual meeting of
stockholders to be held on May 18, 1996, or any adjournment
thereof.
1. ELECTION OF DIRECTORS.
FOR all Class A nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) [ ] to vote for all Class A
nominees [ ]
(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. * J. M. Hessels
2. Stockholder proposal requesting preparation of employment
practices report. (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: , 1996
Signature
Signature, if jointly held
<PAGE>
Dillard Department Stores, Inc.
Post Office Box 486
Little Rock, Arkansas 72203
Telephone No. (501) 376-5200
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William Dillard and James E.
Darr, Jr. 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 Department Stores, Inc., held of record by the
undersigned on March 29, 1996, at the annual meeting of
stockholders to be held on May 18, 1996, or any adjournment
thereof.
1. ELECTION OF DIRECTORS.
FOR all Class B nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) [ ] to vote for all Class B
nominees [ ]
(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
John H. Johnson * E. Ray Kemp * William H. Sutton
2. Stockholder proposal requesting preparation of employment
practices report. (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: , 1996
Signature
Signature, if jointly held
<PAGE>
