SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 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.
<PAGE>
[ ] 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.
<PAGE>
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 16, 1998
<PAGE>
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 10, 1998
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 16, 1998, at 9:30 a.m. for the
following purposes:
1. To elect 15 Directors of the Company (five Directors to
represent Class A Stockholders and 10 Directors to represent
Class B Stockholders).
2. To consider and act upon a proposal to adopt a stock
option plan for certain key employees of the Company.
3. To consider and act upon proposals by certain
Stockholders.
4. 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, 1998, 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
<PAGE>
DILLARD'S, INC.
POST OFFICE BOX 486
LITTLE ROCK, ARKANSAS 72203
Telephone (501) 376-5200
April 10, 1998
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 16, 1998, 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 16, 1998, 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, 1998, will be entitled to notice of, and to vote at, the
meeting. At that date, there were 103,630,436 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 proposal to adopt a stock option plan for certain
key employees and the Stockholder proposals require the
affirmative vote of the holders of a majority of the shares of
Common Stock represented at the meeting and entitled to vote.
Under Delaware General Corporate Law, if shares are held by a
broker that has indicated that it does not have discretionary
authority to vote on a particular matter ("broker non-votes"),
those shares will not be considered as present and entitled to
vote with respect to that matter, but such shares will be counted
with respect to determining whether a quorum is present.
Abstentions will not be counted as votes cast for election of
directors and with respect to the proposal to adopt a stock
option plan and the Stockholder proposals, abstentions will have
the effect of a vote against such proposals. Under New York Stock
Exchange Rules, the stock option plan must be approved by a
majority of the votes cast at the meeting on the proposal,
provided the aggregate number of votes cast on the proposal
represents a majority of the Company's outstanding shares.
Abstentions count as votes cast, but have the effect of a vote
against the stock option plan, while broker non-votes do not
count toward the aggregate number of votes cast.
The last date for the acceptance of Proxies by management is
the close of business on May 15, 1998, and no Proxy received
after that date will be voted by management at the meeting.
<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth certain information regarding
persons who beneficially owned five percent (5%) or more of a
class of the Company's outstanding voting securities at the close
of business on January 31, 1998.
No. of Percent
Name and Address Class Shares Owned of Class(1)
Amvescap PLC Class A 5,668,260(2) 5.4%
11 Devonshire Square
London EC2M 4YR England
Ark Asset Management Class A 5,400,560(2) 5.1%
Co., Inc.
One New York Plaza
New York, New York 10004
Dodge & Cox Class A 5,548,711(2) 5.3%
One Sansome St., 35th Floor
San Francisco, CA 94014
The Prudential Insurance Class A 7,004,765(2) 6.7%
Company of America
751 Broad Street
Newark, New Jersey 07102
W.D. Company, Inc.(3) Class A 41,496 *
Little Rock, Arkansas Class B 3,985,776 99.2%
*Denotes less than 0.1%
(1) At January 31, 1998 there were a total of 105,207,134 shares
of the Company's Class A Common Stock and 4,016,929 shares
of the Company's Class B Common Stock outstanding.
(2) Based on information contained in a Schedule 13G filed with
the Securities and Exchange Commission.
(3) William Dillard, Chairman of the Board of Directors of the
Company, William Dillard II, 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.
In anticipation of last year's annual meeting, the Company
received a stockholder proposal asking the Company's Board of
Directors to pass a resolution requiring that all Class A
directors be independent of the Company. The company included
the proposal for consideration at last year's annual meeting and
the proposal did not pass. A similar stockholder proposal was
received for the 1998 meeting of stockholders. The Company has
always been receptive to engaging in dialogue with stockholders
raising issues regarding corporate governance. After productive
discussions between the Company and several stockholders
concerned about the accountability of non-"independent"
directors, the Board of Directors voluntarily passed a resolution
providing for the "independence" of Class A directors.
The resolution amends the Company's 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. This resolution will be effective after the
Company's 1998 annual meeting of stockholders.
All of the nominees to represent Class A Stockholders listed
below qualify as independent persons as defined in the above
resolution. Although there is no requirement that nominees to
represent Class B Stockholders be independent, over half of all
the nominees listed below qualify as independent persons under
the above described resolution.
<PAGE>
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION AS DIRECTORS OF THE 15 PERSONS HEREINAFTER IDENTIFIED.
NOMINEES FOR ELECTION AS DIRECTORS
The following table briefly indicates the principal
occupation of each nominee, the approximate number of shares of
Class A and Class B Common Stock of the Company beneficially
owned by each nominee as of January 31, 1998, and the year each
nominee first was elected as a Director. The table also
indicates the approximate number of shares of Class A and Class B
Common Stock of the Company beneficially owned by the executive
officers named under "Compensation of Directors and Executive
Officers" and the number of shares beneficially owned by the
directors and executive officers, as a group, as of January 31,
1998.
Shares of
Common Stock
Beneficially Percent
Principal Director Owned as of of
Name Age Occupation Since 1/31/98(1) Class
William Dillard 83 Chairman of 1964 Class A 943,110 (3) .9%
(b)(2) the Board and Class B 3,985,776 (3) 99.2%
Chief Executive
Officer of the
Company
Calvin N. Clyde, 77 Chairman of 1985 Class A 9,087 (4) *
Jr. the Board, Class B None
(b) T. B. Butler
Publishing
Co., Inc.,
Tyler, TX
Robert C. Connor 56 Investments 1987 Class A 16,033 (5) *
(a) Class B None
Drue Corbusier 51 Vice Presi- 1994 Class A 290,863 (6) .3%
(b) dent of the Class B None
Company
Will D. Davis 68 Partner, 1972 Class A 14,040 (7) *
(a) Heath, Davis Class B None
& McCalla,
Attorneys,
Austin, TX
Alex Dillard 48 Executive 1975 Class A 984,670 (3) .9%
(b)(2) Vice President Class B 3,985,776 (3) 99.2%
of the Company
Mike Dillard 46 Executive 1976 Class A 885,206 (3) .8%
(b)(2) Vice President Class B 3,985,776 (3) 99.2%
of the Company
William Dillard 53 President and 1967 Class A 1,133,018 (3) 1.1%
II Chief Operating Class B 3,985,776 (3) 99.2%
(b)(2) Officer of the
Company
James I. Freeman 48 Senior Vice 1991 Class A 293,454 (8) .3%
(b) President and Class B None
Chief Financial
Officer of the
Company
John Paul 75 Retired Member 1992 Class A 3,000 (9) *
Hammerschmidt of Congress Class B None
(a)
William B. 54 Vice Chairman, 1985 Class A 9,000 (10) *
Harrison, Jr. Chase Manhattan Class B None
(a) Corporation,
New York, NY
<PAGE>
John H. Johnson 80 President 1986 Class A 6,000 (11) *
(b) and Publisher, Class B None
Johnson
Publishing
Company, Inc.,
Chicago, IL
E. Ray Kemp 73 Former Vice 1970 Class A 80,387 (12) .1%
(b) Chairman of the Class B None
Board and Chief
Administrative
Officer of the
Company. Retired 1992.
Jackson T. 74 Chairman, 1997 Class A 18,000 (13) *
Stephens Stephens Class B None
(a) Group, Inc.
Little Rock, AR
William H. 67 Managing 1994 Class A 4,000 *
Sutton Partner, Class B None
(b) Friday, Eldredge
& Clark, Attorneys
Little Rock, AR
All Nominees and Class A 5,413,712(14)(15) 5.0%
Executive Officers Class B 3,985,776(14) 99.2%
as a Group (a total
of 23 persons)
(a) Class A Director
(b) Class B Director
*Denotes less than 0.1%
(1) Based on information furnished by the respective
individuals.
(2) William Dillard is a director and officer of W. D.
Company, Inc. and owns 21.3% of the outstanding voting
stock of such company. William Dillard II, Alex Dillard
and Mike Dillard are sons of William Dillard and are
directors and officers of W. D. Company, Inc. and own
25.1%, 23.3% and 22.0%, respectively, of the
outstanding voting stock of such company.
(3) Includes 41,496 shares of Class A Common Stock and 3,985,776
of Class B Common Stock owned by W. D. Company, Inc., in which
shares William Dillard, William Dillard II, Alex Dillard and Mike
Dillard are each deemed to have a beneficial interest due to
their respective relationships with W. D. Company, Inc. See
"Principal Holders of Voting Securities." William Dillard and
his wife individually own 329,357 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 550,000 shares pursuant
to currently exercisable options granted under Company stock
option plans. William Dillard II individually owns 570,202
shares of Class A Common Stock and has the right to acquire
beneficial ownership of 521,320 shares pursuant to currently
exercisable options granted under Company stock option plans.
Alex Dillard and his wife individually own 375,920 and 36,011
shares, respectively, of Class A Common Stock, and he has the
right to acquire beneficial ownership of 521,243 shares pursuant
to currently exercisable options granted under Company stock
option plans. Mike Dillard individually owns 273,458 shares of
Class A Common Stock, has sole voting power with respect to
25,960 shares held in trust for three minor children and has the
right to acquire beneficial ownership of 544,292 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
3,000 shares pursuant to currently exercisable options
granted under Company stock option plans.
(5) Includes nine shares owned by his wife and 24 shares
owned by his child. Robert C. Connor owns 13,000 shares
of Class A Common Stock and has the right to acquire
beneficial ownership of 3,000 shares pursuant to
currently exercisable options granted under Company stock
option plans.
(6) Drue Corbusier owns 130,863 shares of Class A Common Stock
and has the right to acquire beneficial ownership of 160,000
shares pursuant to currently exercisable options granted under
Company stock option plans.
(7) Will D. Davis owns 11,040 shares of Class A Common Stock and
has the right to acquire beneficial ownership of 3,000 shares
pursuant to currently exercisable options granted under Company
stock option plans.
(8) James I. Freeman individually owns 85,087 shares, has sole
voting power with respect to 4,000 shares held in trust for a
minor child and has the right to acquire beneficial ownership of
204,367 shares pursuant to currently exercisable options granted
under Company stock option plans.
(9) John Paul Hammerschmidt has the right to acquire beneficial
ownership of 3,000 shares pursuant to currently exercisable
options granted under Company stock option plans.
(10) William B. Harrison, Jr. and his wife individually own 2,700
and 3,300 shares, respectively, of Class A Common Stock, and he
has the right to acquire beneficial ownership of 3,000 shares
pursuant to currently exercisable options granted under Company
stock option plans.
(11) Johnson Publishing Company, Inc., of which John H. Johnson
is President and Publisher, owns 3,000 shares of Class A Common
Stock, and he has the right to acquire beneficial ownership of
3,000 shares pursuant to currently exercisable options granted
under Company stock option plans.
<PAGE>
(12) E. Ray Kemp and his wife individually own 27,693 and 37,119
shares, respectively, of Class A Common Stock, he has sole voting
power with respect to 12,575 shares held in trust for two minor
children, and he has the right to acquire beneficial ownership of
3,000 shares pursuant to currently exercisable options granted
under Company stock option plans.
(13) Jackson T. Stephens owns 15,000 shares of Class A Common
Stock and has the right to acquire beneficial ownership of 3,000
shares pursuant to currently exercisable options granted under
Company stock option plans.
(14) 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.
(15) Includes the right to acquire beneficial ownership of
3,113,483 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, Barnes &
Noble, Inc., and Simon Debartolo
Group, Inc.
John Paul Hammerschmidt American Freightways Corporation,
First Federal Bank of Arkanas, and
Southwestern Energy Co.
William B. Harrison, Jr. Chase Manhattan Corporation, Freeport-
McMoran Inc., and Freeport-McMoran
Copper and Gold, Inc.
The business associations of the nominees as shown in the
table under "Nominees for Election as Directors" have been
continued for more than five years, with the exception of Robert
C. Connor, who prior to 1993 was President of a national banking
association located in Arkansas, which, through a series of
transactions, is now controlled by NationsBank. Each nominee for
Director was elected to the Board of Directors at the annual
meeting of stockholders held May 17, 1997.
The Board of Directors met four times during the last 12
months, on May 17, August 16, and November 15, 1997, and March 7,
1998.
Audit Committee members are Calvin N. Clyde, Jr., Chairman;
John H. Johnson; E. Ray Kemp; and William H. Sutton. The Audit
Committee held three meetings during the year.
The Executive Compensation and Stock Option Committee members
are Robert C. Connor; Will D. Davis, Chairman; John Paul
Hammerschmidt; and William B. Harrison. The Executive
Compensation and Stock Option Committee held three meetings
during the year.
All of the nominees for director attended more than 75% of
the aggregate of (1) the total number of meetings of the Board of
Directors and (2) the total number of meetings held by all
committees of the board on which they served.
<PAGE>
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)
Other Annual Securities All Other
Name and Stock Resticted Underlying LTIP Compensa-
Principal Position Year Salary($) Bonus($) Compensation($) Award(s)($) Options/SAR(#) Payouts($) tion($)(1)
<S> <C> <C> <C> <S> <C> <S> <C>
William Dillard 1997 $930,000 $930,000 -- -- 150,000 -- $174,000
Chairman
of the Board 1996 910,000 680,000 -- -- 150,000 -- 170,166
and Chief
Executive
Officer 1995 885,000 660,000 -- -- 150,000 -- 190,245
William Dillard II 1997 630,000 1,150,000 -- -- 150,000 -- 165,200
President and 1996 610,000 900,000 -- -- 150,000 -- 122,630
Chief Operating 1995 585,000 660,000 -- -- 150,000 -- 188,520
Alex Dillard 1997 540,000 1,150,000 -- -- 150,000 -- 152,440
Executive 1996 520,000 900,000 -- -- 150,000 -- 110,420
Vice President 1995 495,000 660,000 -- -- 150,000 -- 176,970
Mike Dillard 1997 480,000 600,000 -- -- 150,000 -- 110,750
Executive 1996 465,000 550,000 -- -- 150,000 -- 83,800
Vice President 1995 445,000 440,000 -- -- 150,000 -- 134,950
James I. Freeman 1997 425,000 400,000 -- -- 70,000 -- 71,700
Senior Vice 1996 410,000 250,000 -- -- 60,000 -- 45,500
President 1995 395,000 135,000 -- -- 60,000 -- 65,650
and Chief
Financial Officer
(1) Amounts represent the Company's defined contributions for the
benefit of the named executive officers pursuant to its Retirement
Plan.
</TABLE>
<PAGE>
Stock Option Grants
The following table sets forth information concerning stock
options granted under the Company's 1990 Stock Option Plan to the
named executive officers:
<TABLE>
Option/SAR Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price Appreciation
for Option Term
Individual Grants
(a) (b) (c) (d) (e) (f) (g)
% of Total
Number of Options/SARs
Securities Underlying Granted to Exercise or
Options/ Employees in Base Price Expiration
Name SARs Granted(#)(1) Fiscal Year ($/Sh) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
William Dillard 150,000 7.8% $32.25 5/17/2004 $1,969,500 $4,589,550
William Dillard II 150,000 7.8 32.25 5/17/2004 1,969,500 4,589,550
Alex Dillard 150,000 7.8 32.25 5/17/2004 1,969,500 4,589,550
Mike Dillard 150,000 7.8 32.25 5/17/2004 1,969,500 4,589,550
James I. Freeman 70,000 3.6 32.25 5/17/2004 919,100 2,141,790
</TABLE>
(1)If payment for shares upon exercise of any of these options is
made with shares of the Company's common stock owned by the
optionee, the optionee shall be granted on that date an option
("Reload Option") to purchase a number of shares equal to the
number of shares tendered to the Company. The exercise price
of the Reload Option shall be the market price of the Company's
common stock on the Reload Option grant date, and the
expiration date of the Reload Option shall be the same as that
of the original option.
Stock Option Exercises and Holdings
The following table sets forth information concerning stock
options exercised during the last fiscal year and stock options
held as of the end of the last fiscal year by the named executive
officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
<TABLE>
(a) (b) (c) (d) (e)
Number of Securities
Underlying Value of Unexercised
Unexercised Options/ In-the-Money Options/
SARs at FY-End (#) SARs at FY-End ($)(1)
Shares Acquired
Name On Exercise(#) Value Realized($) Exercisable Unexercisable Exerisable Unexerisable Exercisable
<S> <C> <C> <C> <C> <C> <C>
William Dillard 0 $ 0 550,000 150,000 $2,193,750 $0
William Dillard II 250,000 2,446,875 521,320 150,000 1,612,500 0
Alex Dillard 250,000 2,456,250 521,243 150,000 1,612,500 0
Mike Dillard 100,000 487,500 544,292 150,000 2,193,750 0
James I. Freeman 232,538 2,164,186 204,367 60,000 0 0
</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, 28 years; Alex Dillard, 25 years; Mike
Dillard, 25 years; and James I. Freeman, 9 years. Benefits shown
are computed as a single life annuity with five years term
certain beginning at age 65 and are not subject to deduction for
social security or other offset amounts.
Compensation of Directors
Directors who are not officers of the Company each receive an
annual retainer of $30,000, $1,250 for attendance at each board
meeting, $250 for each committee meeting, and actual travel
expenses.
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. Following retirement and in
return for providing consulting services to the Company, Mr.
Dillard will receive annual compensation equal to 1-1/2% of the
average of the five highest amounts of total annual compensation
paid to Mr. Dillard by the Company for his employment during such
fiscal years multiplied by his total years of employment with the
Company. Mr. Dillard's employment with the Company began on
January 1, 1938. 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 and Stock Option Committee
is composed of Robert C. Connor; Will D. Davis; John Paul
Hammerschmidt; and William B. Harrison. Mr. Davis is a partner
of the law firm Heath, Davis & McCalla, which is retained by the
Company for legal services.
Report of Executive Compensation and Stock Option Committee
The following report addressing the Company's compensation
policies for executive officers for fiscal 1997 is submitted by
the Executive Compensation and Stock Option Committee (the
"Compensation Committee") of the Board of Directors.
General
The Compensation Committee, which is composed of independent
directors who are not employees of the Company, establishes
policies relating to the compensation of employees and oversees
the administration of the Company's employee benefit plans. The
compensation program of the Company has been designed (1) to
provide compensation opportunities that are equivalent to those
offered by comparable companies, thereby allowing the Company to
compete for and retain talented executives who are critical to
the Company's long-term success, (2) to motivate key senior
officers by rewarding them for attainment of profitability of the
Company, and (3) to align the interests of executives with the
long-term interests of stockholders by awarding stock options to
executives as part of the compensation provided to them.
In order to develop a competitive compensation package for the
executive officers of the Company, the Compensation Committee
compares the Company's compensation package with those of a
comparison group. The comparison group is composed of department
stores, specialty stores and other public companies that were
family-founded and continue to be family-managed. Not all of the
companies in the comparison group are included in the Standard &
Poor's Department Store Index. The Compensation Committee
believes that the companies in the comparison group are
comparable to the Company in management style and management
culture. Although the Compensation Committee has made these
<PAGE>
comparisons, it also has taken into account that as the Company
has grown in size, the number of senior executives has not grown
proportionately, so that the number of senior executives retained
by the Company is lower than the number of senior executives at
other companies of similar size.
Currently, the Company's compensation program consists of salary,
annual cash performance bonus based on the profitability of the
Company, and long-term incentive opportunities in the form of
stock options. The compensation program is focused both on short-
term and long-term performance of the Company, rewarding
executives for both achievement of profitability and growth in
stockholder value.
Salary -- Each year the Compensation Committee makes a
recommendation to the Board establishing the salary for all
executive officers. Such salary recommendations are made at the
discretion of the Compensation Committee and are not specifically
related to any company performance criteria as are both the cash
performance bonus and stock option portions of the compensation
program, which are discussed below. The Compensation Committee
does, however, base any increase in salary recommendations on
target salaries based on a regression analysis of salaries paid
versus total revenues for the comparison group. For fiscal 1997,
the salary recommendations made by the 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 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
1997, the Company experienced a pre-tax income of $410,035,000
and an increase in pre-tax income of $31,274,000 over the prior
fiscal year.
After analyzing the primary cause for the increase in pre-tax
income, the Compensation Committee made a decision to adjust
downward by approximately $2,800,000 the amount of bonus which
the named executive officers would receive for fiscal 1997
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 1997, the Compensation 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 17, 1997. When making option grants, the
Compensation Committee does not consider the number of options
already held by an executive officer.
As discussed in previous Compensation Committee Reports, the
Omnibus Budget Reconciliation Act of 1993 prevents public
corporations from deducting as a business expense that portion of
compensation exceeding $1 million paid to a named executive
officer in the Summary Compensation Table. This deduction limit
does not apply to "performance-based compensation." The
Compensation Committee believes that the necessary steps have
been taken to qualify as performance-based compensation the
compensation paid under the cash performance bonus and stock
option portions of the Company's compensation program.
Chief Executive Officer
In setting the Chief Executive Officer's compensation, the
Compensation Committee makes the same determination with regard
to salary, cash performance bonus and stock options as discussed
above for the other named executive officers. For fiscal 1997,
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 Compensation
Committee took into account the Chief Executive Officer's
contribution and leadership as well as his vision in founding the
Company.
Robert C. Connor
John Paul Hammerschmidt
William B. Harrison
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 January 31, 1993 and assumes reinvestment of dividends.
The following table is submitted in lieu of the required graph:
1993 1994 1995 1996 1997
Dillard's, Inc. 73.36 53.81 60.97 61.72 72.92
Standard & Poor's 500 Index 109.76 107.21 144.95 179.17 223.41
Standard & Poor's
Department Stores Index 107.63 96.53 111.88 116.56 149.23
CERTAIN RELATIONSHIPS AND TRANSACTIONS
William Dillard II, Drue Corbusier, Alex Dillard and Mike
Dillard are children of William Dillard.
Mr. William H. Sutton is Managing Partner of the law firm
Friday, Eldredge & Clark, which is retained by the Company for
legal services.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and executive officers, and persons who
own more than 10% of the Company's Class A Common Stock, to file
with the Securities and Exchange Commission and the New York
Stock Exchange initial reports of ownership and reports of
changes in ownership of stock of the Company.
To the Company's knowledge, based solely on a review of copies
of reports provided by such individuals to the Company and
written representations of such individuals that no other reports
were required, during the fiscal year ended January 31, 1998, all
Section 16(a) filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied
with.
APPROVAL OF THE 1998 INCENTIVE AND NONQUALIFIED STOCK OPTION
PLAN
The Company's Board of Directors, on March 7, 1998, approved
the 1998 Incentive and Nonqualified Stock Option Plan (the
"Plan") pursuant to which options may be granted to certain key
employees and outside directors of the Company (the "Optionees")
for the purchase from time to time of shares of the Company's
Class A Common Stock (the "Shares") during the term of the Plan.
The number of Shares available for issuance pursuant to the Plan
is 6,000,000.
The purpose of the Plan is to encourage ownership of stock in
the Company by key employees and outside directors, and thereby
cause such key employees and outside directors to increase their
efforts on behalf of the Company. The Plan will be administered
by the Executive Compensation and Stock Option Committee (the
"Committee") consisting of two or more "outside directors" of the
Board within the meaning of section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") and applicable
Treasury Regulations, or any successor to such provisions, and
who are also "non-employee directors" within the meaning of Rule
16b-3, or any successor to such rule, of the Securities and
Exchange Commission ("Rule 16b-3"), as promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act"). The
Committee will make the determination as to whom options shall be
granted, the terms of such options, and the number of Shares to
be covered by such options. In making these determinations, the
Committee shall take into account the duties and responsibilities
of the proposed Optionees, their present and potential
contribution to the success of the Company, their past record,
and such other factors as the Committee shall deem relevant in
connection with accomplishing the purposes of the Plan.
<PAGE>
Pursuant to the terms of the Plan, the Committee may grant
either incentive stock options ("ISO's") or nonqualified stock
options ("NQSO's"). ISO's are options that meet the requirements
of Section 422A(b) of the Code. NQSO's are options taxed pursuant
to Section 83 of the Code and that do not receive the special tax
treatment received by ISO's.
The exercise price for ISO's or NQSO's granted pursuant to the
Plan shall not be less than 100% of the fair market value of an
equivalent number of Shares on the date the option is granted.
ISO's or NQSO'S granted pursuant to the Plan shall not be
exercisable after the expiration of ten years from the date such
option is granted.
If the Optionee owns 10% or more of the total combined voting
power of all classes of stock of the Company, the exercise price
for an ISO granted under the Plan shall not be less than 110% of
the fair market value of an equivalent number of Shares on the
date the option is granted and the option shall not be
exercisable after the expiration of five years from the date such
option is granted. To the extent that an Optionee has currently
exercisable ISO's at the beginning of a calendar year with an
aggregate fair market value exceeding $100,000, the excess over
$100,000 cannot be treated as ISO's. The aggregate fair market
value is determined by the exercise price of the option at the
time of granting.
Options granted pursuant to the Plan may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent and distribution.
However, the Committee may, in its sole discretion, permit an
Optionee to transfer all or a portion of an Option to the
Optionee's family members, a trust for the benefit of the
Optionee's family members or to a charity. An option may be
exercised, during the lifetime of the Optionee, only by the
Optionee.
Optionees may exercise options granted pursuant to the Plan by
paying to the Company either cash or shares of the Company's
Class A Common Stock held by the Optionee or by causing the
Company to receive from a broker, funds to pay for the option
upon the broker's receipt of stock certificates from the Company.
If payment for exercise of an option is made in the form of
shares of the Company's Class A Common Stock, the Optionee shall
be granted on the date of exercise a reload option to purchase
the number of shares that equals the number of shares tendered to
the Company. The price per share at which each reload option may
be exercised shall be equal to the fair market value of a share
on the date of grant of the reload option. The term of each
reload option shall expire on the same date as that of the
original option.
The Board of Directors may amend, alter or discontinue the
Plan at any time, but no amendment or alteration shall be made
without the approval of the stockholders of the Company if such
approval is necessary to comply with the performance-based
compensation exception under section 162(m) of the Code and
applicable Treasury Regulations. However, no amendment,
alteration or discontinuation of the Plan may adversely affect
any options granted prior to the time of such amendment,
alteration or discontinuation.
The Plan is being submitted for the approval of stockholders
of the Company to satisfy the "performance-based compensation"
criteria set forth in section 162(m) of the Code and applicable
Treasury Regulations. Furthermore, the New York Stock Exchange
requires, as a condition for listing of a company's shares, that
a company obtain shareholder approval when establishing a stock
option plan pursuant to which stock may be acquired by officers
or directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE 1998 INCENTIVE AND NONQUALIFIED STOCK OPTION
PLAN.
Stockholder Proposal Concerning Child/Convict Labor
The Amalgamated Bank of New York LongView Collective Investment
Fund, 11-15 Union Square, New York, NY 10003, owners of 30,600
shares of Class A Common Stock, The Detroit Province of the
Society of Jesus, 7303 West Seven Mile Road, Detroit, MI 48221,
owners of 10,000 shares of Class A Common Stock, and The Missouri
Province of the Society of Jesus, 4511 West Pine Boulevard, St.
Louis, MO 63108, owners of 200 shares of Class A Common Stock
have indicated that they intend to propose the following
resolution for action at the meeting:
"RESOLVED: The shareholders of Dillard's, Inc. request the Board
of Directors to prepare a report at reasonable expense describing
the Company's actions to ensure that it does not and will not do
business with foreign suppliers who manufacture items for sale in
the United States using forced labor, convict labor, or illegal
child labor, or who fail to satisfy all applicable laws and
standards protecting their employees' wages, benefits, working
conditions, freedom of association, and other rights."
SUPPORTING STATEMENT
"As U.S. companies import more goods, concern is growing about
working conditions in many nations that fall far below basic
standards of fair and humane treatment. Several years ago, a
controversy arose after reports that goods made by convicts in
Chinese prisons were being imported into the United States for
sale to consumers. The Tariff Act of 1930 makes it illegal to
import any goods made by forced labor, including convict labor.
China's use of prison labor and its record on human rights
generally are issues in the debate about whether China should
enjoy "most favored nation" trading status with the United
States.
Public concern has also been voiced in the wake of reports that
retail items were manufactured using illegal child labor, unsafe
or unhealthy working conditions, and similar conditions. In April
1997, the White House Apparel Industry Partnership, which was
appointed by President Clinton to make recommendations in this
area, presented a report to the President setting out a Workplace
Code of Conduct and Principles of Monitoring for the apparel and
footwear industry. The standards in that report, if implemented
comprehensively and diligently, are intended to eliminate poor
working conditions for workers in the U.S. and abroad.
We are resubmitting this proposal because Dillard imports many
goods into the United States, and thus we as shareholders have a
strong interest in learning what steps Dillard's is taking to
monitor and control the conditions under which the goods it sells
are produced. Reports that overseas suppliers are exploiting
workers may damage a company's reputation and generate a consumer
backlash.
<PAGE>
In our view too, it makes good business sense to enforce strict
sourcing standards. For example, there are subterfuges that
suppliers can use to import goods made by forced labor into the
United States. Also, when the federal government enforces
applicable laws, it may hold companies liable for actions of
their suppliers.
Strict standards and an active enforcement policy are thus vital
for a company such as Dillard's. We therefore ask the Board to
prepare a report giving investors data about Dillard's efforts to
assure that it is not doing business with overseas suppliers that
exploit workers. WE URGE YOU TO VOTE FOR THIS RESOLUTION!"
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS
PROPOSAL FOR THE FOLLOWING REASONS:
The Company recognizes the importance, as both an
ethical and a business responsibility, of obtaining assurances
that the products it sells are manufactured in accordance with
all applicable laws and that the rights and welfare of workers
around the world are respected.
The Company has always been committed to the highest
ethical conduct and strict compliance with the law in all its
business dealings, including its relationships with its many
suppliers. The Company is deeply concerned about the issues
raised in the Proposal and believes it has already adequately
addressed such issues as described below.
Products sold at the Company's stores are supplied by
independent suppliers who also supply other retail stores and
chains. To a much lesser degree, the Company is also supplied by
sources contracted by buying agents for the Company. The Company
does not engage directly in manufacturing.
The Company has previously addressed the concerns raised
in the Proposal by implementation of the following policies and
procedures:
The Company has developed a formal business policy (the
"Policy") which focuses on the workplace conditions of, and legal
compliance by, foreign vendors and suppliers. The Policy was
distributed to all of the Company's foreign vendors and suppliers
to restate and reemphasize the Company's longstanding philosophy
that no merchandise purchased by the Company will be manufactured
with the use of illegal labor conditions.
In furtherance of the Policy, the Company has renegotiated
its agreements with foreign buying agents (including a buying
office). These new buying agency agreements include prohibitions
against illegal child labor and other forms of illegal
employment, manufacturing, shipping, customs and environmental
practices. Under the contract, a buying agent must use its best
efforts to ensure that each vendor is in full compliance with any
current, or later adopted, law of either the country of
manufacture or the United States governing the use of child
labor, prison labor, and/or governing the importation into the
United States of merchandise produced with child labor as well as
any other similar human rights statute, regulation or law. Buying
agents must also follow policies and procedures which the Company
implements to ensure that all such statutes, laws or regulations
are followed. If a buying agent discovers a violation of such
prohibitions, the buying agent must immediately notify the
Company of such violation(s) or evidence of violation(s), so that
appropriate action can be taken to rectify such violation(s).
Under these agreements, among other measures, buying agents are
required to periodically inspect factories to ensure compliance
with these standards. Additionally, company employees personally
inspect selected factories to verify compliance.
The Company's philosophy also appears in the Company's
Purchase Order Terms, Conditions & Instructions, which is the
Company's standard form of purchase order and which is applicable
to all transactions between the Company and all of its suppliers.
The document explicitly requires each supplier to warrant and
represent that its merchandise is manufactured in compliance with
laws governing illegal working conditions.
The Company has previously issued a press release announcing
its business policy, which policy contains prohibitions against
workplace abuse and also contains the steps taken by the Company
to implement the policy. Futhermore, the Company has furnished a
copy of that policy to interested shareholders, and will continue
to so provide copies of that policy.
The Company believes that it has already addressed the
concerns raised in the Proposal without further expenditure of
valuable time and funds. As the above reflects, the Company is
committed to assuring that its suppliers treat their employees
properly.
FOR THE ABOVE REASONS, THE BOARD RECOMMENDS VOTING
AGAINST THE PROPOSAL.
<PAGE>
STOCKHOLDER PROPOSAL FOR FINANCIAL AND SOCIAL ACCOUNTABILITY IN
EXECUTIVE COMPENSATION
The School Sisters of St. Francis, 1515 S. Layton Boulevard,
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:
"We believe both social and financial criteria should be
factors in fixing compensation packages for top corporate
officers. Public scrutiny on compensation is reaching a new
intensity - not just for the Chief Executive Officer, but for all
executives. Too often top executives receive considerable
increases in compensation packages, even when corporate financial
performance is mediocre or poor and stockholders watch dividends
slip and stock prices drop.
In 1995 Pearl Meyer and Partners Incorporated reported that
CEO compensation at large corporations leaped 23 percent - to an
average $4.37 million. That is $2,100 an hour, or 183 times the
average workers 1995 hourly earnings of $11.46. In 1992 CEOs
averaged 157 times as much compensation as the average worker.
This ratio has more than quadrupled since the mid 1980s when it
was only 42 times that of the average worker.
Japanese corporations pay gaps between executives and workers
are eight times smaller than the U.S. gap. The widening pay gap
may make U.S. business less competitive if it breeds cynicism and
resentment and subverts the creativity and cooperation necessary
to build effective cooperation between executive and employees.
Shareholders need to be vigilant in challenging executive pay
packages that reward bad social or financial corporate
performance. Should top officers pay for a given year be reduced
if the company suffers from poor corporate citizenship that harms
our corporate image, costly fines, protracted litigations, loss
of government contracts, or significant loss of market share on
their watch? Should CEO compensation be affected if there are
consumer boycotts or public relations problems like the company's
association with what American Indian people and minority groups
call racially offensive images? Should a pattern of
discrimination or sexual harassment be grounds for a decreased
compensation package? Conversely should excellence on the social
issues which benefit society be a positive factor?
We believe these questions deserve the careful scrutiny of out
Board of Directors and Compensation Committee. Companies
including Bristol-Myers, Eastman Kodak, IBM, Procter and Gamble,
and Westinghouse have reported to shareholders on how they
integrate these factors into their compensation packages."
"Therefore it be resolved: Shareholders request the board
institute a special Executive Compensation Review, and prepare a
report available to shareholders four months after our annual
shareholder meeting with the results of the Review and
recommended changes in practice. The review shall cover pay,
benefits, perks, stock options and special arrangements in the
compensation packages for all the company's top officers. We
recommend that the committee study and report on the following in
its review:
1. Ways to link executive compensation more closely to financial
performance with proposed criteria and formulae.
2. Ways to link compensation to social corporate performance
(e.g. incentives given for meeting or surpassing certain social
and performance standards).
3. Comparison of compensation packages for company officers with
lowest paid in employees in the U.S. and around the world.
4. Whether there should be a ceiling on top executives' salaries
to prevent our company from paying excessive compensation."
THE BOARD OF DIRECTORS FAVORS A VOTE AGAINST THE ADOPTION OF THIS
PROPOSAL FOR THE FOLLOWING REASONS:
The Company's Board of Directors believes that the
adoption of the Proposal is unnecessary since much of the
information sought is already available to stockholders annually
by virtue of the Securities and Exchange Commission's rules on
executive compensation disclosure. These rules require that the
Company's proxy statement specifically address each of the items
in the Proposal (i.e., "pay, benefits, perks, stock options and
special arrangements"). The Proposal calling for an additional
review would, therefore, in large part duplicate the ongoing
efforts of the Company.
The Company's executive compensation policies and levels
are established and reviewed by the Executive Compensation
Committee which is composed entirely of directors who are not
employees of the Company. Compensation for executives is based on
the principles that compensation must (a) be equivalent to that
offered by comparable companies, thereby allowing the Company to
compete for and retain talented executives who are critical to
the Company's long-tern success, (b) motivate key senior officers
by rewarding them for attainment of profitability of the Company,
and (c) align the interests of executives with long-term
interests of stockholders by awarding stock options to executives
as part of the compensation provided to them.
The proponent seeks to link executive compensation more
closely to financial performance; however, the Company's
executive compensation is already directly linked to financial
performance. A significant portion of annual compensation
consists of incentive compensation which is variable and
increases or decreases based on the business performance of the
Company.
<PAGE>
Further, the proponent requests linking executive
compensation more closely to social corporate performance. The
Board of Directors is sensitive to social concerns, and believes
the executive officers and the Company are addressing these
concerns appropriately.
The Board of Directors believes that the basis under
which the Company's executives are compensated and the manner in
which it is reported are appropriate and does not recommend
changes in its executive compensation practice.
FOR THE ABOVE REASONS, THE BOARD RECOMMENDS VOTING AGAINST
THE PROPOSAL.
OTHER MATTERS
Management of the Company knows of no other matters that
may come before the meeting. However, if any matters other
than those referred to herein should properly come before
the meeting, it is the intention of the persons named in the
enclosed Proxy to vote the Proxy in accordance with their
judgment.
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Proposals of stockholders intended to be presented at
the Company's annual meeting of stockholders in 1999 must be
received by the Company at its principal executive offices
not later than December 11, 1998 in order to be included in
the Company's Proxy Statement and form of Proxy relating to
that meeting.
ANNUAL REPORTS
The Company's annual report for the fiscal year ended
January 31, 1998 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 1997 and the
current year, will be present at the meeting, will have the
opportunity to make a statement, and also will be available
to respond to appropriate questions.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K,
INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO,
REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, MAY BE OBTAINED WITHOUT CHARGE BY ANY
STOCKHOLDER WHOSE PROXY IS SOLICITED UPON WRITTEN REQUEST
TO:
DILLARD'S, INC.
Post Office Box 486
Little Rock, Arkansas 72203
Attention: James I. Freeman, Senior Vice President,
Chief Financial Officer
By Order of the Board of Directors
JAMES I. FREEMAN
Senior Vice President, Chief Financial
Officer, Assistant Secretary
<PAGE>
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, 1998, at the annual
meeting of stockholders to be held on
May 16, 1998, or any adjournment thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all Class A [ ] WITHHOLD AUTHORITY
nominees listed below (except as to vote for all Class A nominees
marked to the contrary below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Class A Nominees
Robert C. Connor * Will D. Davis * John Paul Hammerschmidt * William B.
Harrison, Jr. * Jackson T. Stephens
2. PROPOSAL TO ADOPT A STOCK OPTION PLAN FOR CERTAIN KEY EMPLOYEES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Management of the Company supports proposals 1 and 2.
3. STOCKHOLDER PROPOSAL CONCERNING CHILD/CONVICT LABOR.
(Management of the Company opposes this proposal.)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. STOCKHOLDER PROPOSAL CONCERNING EXECUTIVE COMPENSATION.
(Management of the Company opposes this proposal.)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. 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 PROPOSALS 1 AND 2 AND AGAINST PROPOSALS 3 AND 4.
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: , 1998
Signature
Signature, if jointly held
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
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, 1998, at the annual
meeting of stockholders to be held on
May 16, 1998, or any adjournment thereof.
1. ELECTION OF DIRECTORS.
[ ] FOR all Class B [ ] WITHHOLD AUTHORITY
nominees listed below (except as to vote for all 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 * John H. Johnson * E.
Ray Kemp * William H. Sutton
2. PROPOSAL TO ADOPT A STOCK OPTION PLAN FOR CERTAIN KEY EMPLOYEES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Management of the Company supports proposals 1 and 2
3. STOCKHOLDER PROPOSAL CONCERNING CHILD/CONVICT LABOR.
(Management of the Company opposes this proposal.)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. STOCKHOLDER PROPOSAL CONCERNING EXECUTIVE COMPENSATION.
(Management of the Company opposes this proposal.)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. 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 PROPOSALS 1 AND 2 AND AGAINST PROPOSALS 3 AND 4.
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: , 1998
Signature
Signature, if jointly held
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
DILLARD'S, INC.
1998 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
_______________________________
WHEREAS, the Board of Directors of the Company deems it in
the best interest of the Company that Key Employees and Outside
Directors of the Company be given an opportunity to acquire a
stake in the growth of the Company as a means of assuring their
maximum effort and continued association and employment with the
Company; and
WHEREAS, the Board of Directors believes that the Company
can best obtain these and other benefits by granting stock
options to such Key Employees and Outside Directors;
NOW, THEREFORE, BE IT RESOLVED:
That the Dillard's, Inc.1998 Incentive and Nonqualified
Stock Option Plan be adopted, and that it be effective commencing
May 16, 1998.
1. Purpose. The purpose of the Dillard's, Inc. 1998
Incentive and Nonqualified Stock Option Plan is to encourage
ownership of stock in the Company by Key Employees and Outside
Directors, and thereby cause such Key Employees and Outside
Directors to increase their efforts on behalf of the Company, to
effect savings, and to otherwise promote the best interests of
the Company. It is intended that options granted under this Plan
to Key Employees will qualify as Incentive Stock Options,
provided, however, that Nonqualified Stock Options may also be
granted to Key Employees and Outside Directors which do not
qualify as Incentive Stock Options.
2. Definitions. As used herein, the following definitions
shall apply.
a. "Board" shall mean the Board of Directors of the
Company.
b. "Common Stock" shall mean Common Stock, Class A,
$.01 par value per share, of the Company.
<PAGE>
c. "Code" shall mean the Internal Revenue Code of
1986, as amended.
d. "Committee" shall mean the Committee appointed by
the Board in accordance with paragraph 4(a) of the Plan.
e. "Company" shall mean Dillard's, Inc.
f. "Continuous Employment" or "Continuous Status as
an Employee" shall mean the absence of any interruption or
termination of employment by the Company. Employment shall not
be considered interrupted in the case of sick leave, military
leave, or any other leave of absence approved by the Company.
g. "Effective Date" shall mean May 16, 1998.
h. "Employee" shall mean any person employed on a
full-time basis by the Company or of any subsidiaries of the
Company (as defined in Section 425(f) of the Code).
i. "Incentive Stock Option" shall mean an Option
which meets the requirements of Section 422(b) of the Code.
j. "Key Employee" shall mean an Employee who, in the
opinion of the Committee, can contribute significantly to the
growth and profitability of, or perform services of major
importance to, the Company or any subsidiaries of the Company.
k. "Nonqualified Stock Option" means an Option which
does not receive the special tax treatment received by an
Incentive Stock Option.
l. "Option" shall mean a right to acquire Common
Stock which is granted pursuant to this Plan.
m. "Option Agreement" shall mean a written agreement
which sets forth the terms of each Option and is signed by an
authorized officer of the Company.
<PAGE>
n. "Optioned Stock" shall mean Common Stock subject
to an Option granted pursuant to this Plan.
o. "Optionee" shall mean an Employee or Outside
Director who receives an Option.
p. "Outside Director" shall mean a member of the
Board who is not also an Employee.
q. "Plan" shall mean the Dillard's, Inc.1998
Incentive and Nonqualified Stock Option Plan.
r. "Share" shall mean one share of the Common Stock.
3. Shares Subject to the Plan. Except as otherwise
required by the provisions of paragraph 13 hereof, the aggregate
number of Shares of Common Stock deliverable upon the exercise of
Options pursuant to the Plan shall not exceed six million
(6,000,000) Shares. Such Shares may either be authorized but
unissued or treasury shares. If an Option should expire or
become unexercisable for any reason without having been exercised
in full, the unpurchased Shares which were subject thereto shall,
unless the Plan shall have been terminated, be available for the
grant of other Options under the Plan. No Optionee may receive
options covering more than one million (1,000,000) shares in any
single fiscal year of the Company under the Plan.
4. Administration of the Plan.
a. Composition of Committee. The Plan shall be
administered by the Executive Compensation and Stock Option
Committee or any successor thereto of the Board or such other
committee as determined by the Board (the "Committee"). The
Committee shall solely be composed of two (2) or more "outside
directors" of the Board within the meaning of Section 162(m) of the Code
<PAGE>
and applicable Treasury Regulations, or any successor to such
provisions, and who are also "non-employee directors" within the
meaning of Rule 16b-3, or any successor to such Rule, of the
Securities Exchange Commission.
b. Powers of the Committee. The Committee is
authorized (but only to the extent not contrary to the express
provisions of the Plan or to resolutions adopted by the Board) to
interpret the Plan, to prescribe, amend, and rescind rules and
regulations relating to the Plan, to determine the terms and
conditions upon which Options may be exercised, to determine the
form and content of Option Agreements, to construe and interpret
the Plan and Option Agreements, to accelerate the exercisability
of any Option, to make such other determinations necessary or
advisable for the administration of the Plan and shall have and
may exercise such other power and authority as may be delegated
to it by the Board from time to time. A majority of the entire
Committee shall constitute a quorum, and the action of a majority
of the members present at any meeting at which a quorum is
present shall be deemed the action of the Committee. The
Committee shall, from time to time, have the power to designate
from among the Key Employees and Outside Directors the persons to
whom Options will be granted. Such designation shall be in the
absolute discretion of the Committee, and shall be final without
approval of the Board or the stockholders. On the occasion of
the designation of the Optionees, the Committee may grant
additional Options to Optionees then holding Options, to some of
them, or may grant Options solely or partially to new Optionees.
As of the date of grant, the Committee shall fix the number of
Shares to be optioned and whether the Option shall be treated as
an Incentive Stock Option or as a Nonqualified Stock Option;
however, no Option shall be treated as an Incentive Stock Option
ten (10) years from the date this Plan is adopted by the Board or
the date the Plan is approved by the stockholders of the Company,
<PAGE>
whichever is earlier. In addition, to the extent the aggregate
fair market value (determined at the time the Option is granted)
of Shares treated as acquired pursuant to Incentive Stock Options
which are exercisable by the Optionee for the first time during
any calendar year (under all incentive stock option plans of the
Company or subsidiaries thereof (as defined in Section 425(f) of the
Code)) exceeds $100,000, such Options (taking them into account
in the order in which they were granted) shall not be treated as
Incentive Stock Options. In making the determination as to whom
Options shall be granted, and as to the number of Shares to be
covered by such Options, the Committee shall take into account
the duties and responsibilities of the proposed Optionees, their
present and potential contribution to the success of the Company,
their past record, and such other factors as the Committee shall
deem relevant in connection with accomplishing the purposes of
this Plan. Certain officers of the Company as designated by the
Committee are hereby authorized to execute Option Agreements on
behalf of the Company and to cause them to be delivered to the
Optionees or other participants.
c. Effect of Committee's Decision. All decisions,
determinations, and interpretations of the Committee shall be
final and conclusive on all persons affected thereby.
5. Option Price. The exercise price of Incentive Stock
Options granted under the Plan shall not be less than one hundred
percent (100%) of the fair market value of a Share on the date
the Option is granted, or, if the Optionee owns (within the
meaning of Section 425(d) of the Code) ten percent (10%)or more of the
total combined voting power of all classes of stock of the
Company, one hundred ten percent (110%) of the fair market value
of a Share on the date the Option is granted. The exercise price
of Nonqualified Stock Options granted under the Plan shall be
determined by the Committee in its complete discretion, but in no
<PAGE>
event shall the exercise price of Nonqualified Stock Options be
less than one hundred percent (100%) of the fair market value of
a Share on the date the Option is granted. The fair market value
of a Share on a particular date shall be deemed to be the mean
between the highest and lowest sales prices per share of the
Common Stock on the principal national securities exchange on
which the Common Stock may be listed from time to time on that
date or, in either case, if there shall have been no sale on that
date on the last preceding date on which such sale or sales were
effected on such exchange. In the event that the method just
described for determining the fair market value of the Shares
shall not remain consistent with the provisions of the Code and
applicable Treasury Regulations, then the fair market value per
Share shall be determined by such other method consistent with
the Code or Treasury Regulations as the Committee shall in its
discretion elect and apply at the time of grant of the Options
concerned.
6. Term of Option and Limitations on Exercise. Subject to
the terms of the Plan, the Committee shall, in its discretion,
establish the term of each Option granted pursuant to the Plan.
Notwithstanding the foregoing, (a) an Incentive Stock Option
granted under the Plan by its terms shall not be exercisable
after the expiration of ten (10) years from the date such Option
is granted, or, five (5) years if the Optionee owns (within the
meaning of Section 425(d) of the Code) ten percent (10%) or more of the
total combined voting power of all classes of stock of the
Company, and (b) a Nonqualified Stock Option granted under the
Plan by its terms shall not be exercisable after the expiration
of ten (l0) years from the date such option is granted. The
Committee may also, in its discretion, establish a period or
periods during which an Option may not be exercised in whole or
in part or any other limitation or restriction, subject to the
terms of the Plan, which the Committee may determine as a
condition precedent to exercising an Option, including such
provisions as deemed advisable to permit qualification of Options
as Incentive Stock Options.
<PAGE>
7. Procedures for Exercise. Any Option granted hereunder
shall be exercisable at such times and under such conditions as
shall be permissible under the terms of the Plan and of the
Option granted to an Optionee. An Option may not be exercised
for a fractional Share. An Option granted pursuant to the Plan
may be exercised, subject to provisions relating to its
termination and limitations on its exercise, only by (a) written
notice to exercise the Option with respect to a specified number
of Shares, and (b)(i) payment to the Company (contemporaneously
with delivery of each such notice), in cash or Common Stock, of
the amount of the Option price of the number of Shares with
respect to which the Option is then being exercised, or (ii)
causing the Company to receive from a broker funds to pay for the
option upon the broker's receipt of stock certificates from the
Company. Each such notice and payment shall be delivered, or
mailed by prepaid registered or certified mail, addressed to the
Treasurer of the Company at the Company's executive offices.
8. Reload Options. If payment for Shares upon the
exercise of an Option ("Original Option") is made in the form of
Common Stock, the Optionee shall be granted on the date of
exercise an Option ("Reload Option") to purchase the number of
Shares that equals the number of Shares tendered to the Company.
The number of Shares tendered shall include Common Stock which is
tendered in order to satisfy applicable tax withholding
obligations. The price per Share at which each Reload Option may
be exercised shall be equal to the fair market value of the
Shares on the date of grant of the Reload Option. The term of
each Reload Option shall expire on the same date as that of the
Original Option. Reload Options shall not be granted to (a) an
Optionee who was formerly an Employee and is no longer employed
by the Company, (b) an Optionee who was formerly an Outside
Director and is no longer a member of the Board, or (c) any other
person other than the Optionee.
<PAGE>
9. Exercise During Employment or Following Death. Unless
otherwise provided in the Option Agreement, an Option may be
exercised by an Optionee who is an Employee only while the
Optionee is an Employee and has maintained Continuous Status as
an Employee since the date of the grant of the Option, or after
the termination of the Optionee's status as an Employee within
one (1) year after such termination (but not later than the date
on which the Option would otherwise expire) if the Optionee
becomes Disabled, as determined by the Committee, or for any
other termination within three (3) months after such termination
(but not later than the date on which the Option would otherwise
expire), except if the Optionee would have been entitled to
exercise the Option immediately prior to death, such Option of
the deceased Optionee may be exercised within twelve (12) months
(but not later than the date on which the Option would otherwise
expire) from the date of death by the personal representatives of
the Optionee's estate, or person or persons to whom the
Optionee's rights under such Option shall have passed by will or
by laws of descent and distribution. The Committee's
determination whether an Optionee's employment has ceased, and
the effective date thereof, shall be final and conclusive on all
persons affected thereby.
10. Form of Stock Certificates. Stock certificates to be
issued or transferred pursuant to Options granted under this Plan
shall be made in favor of the Optionee, or the Optionee and
Optionee's spouse as joint tenants.
<PAGE>
11. Optionee's Certification. If the underlying Shares are
not registered under the Securities Act of 1933 and applicable
state securities laws at the time of exercise of an Option, then
the Optionee shall agree that the Optionee will purchase the
Shares under such Option for investment and not with any present
intention to re-sell the same, and shall agree to sign a
certificate to such effect at the time of exercising the Option.
12. Non-Transferability of Options. Options granted under
the Plan may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or
by the laws of descent and distribution. Notwithstanding the
foregoing sentence to the contrary, the Committee may, in its
sole discretion, permit an Optionee to transfer all or a portion
of an Option to the Optionee's family members, a trust or
partnership for the benefit of the Optionee's family members or
to a charity. An Option may be exercised, during the lifetime of
the Optionee, only by the Optionee.
13. Effect of Change in Stock Subject to the Plan. In the
event that each of the outstanding Shares of Common Stock (other
than Shares held by dissenting shareholders) shall be changed
into or exchanged for a different number or kind of Shares of
stock of the Company or another corporation (whether by reason of
merger, consolidation, recapitalization, reclassification, stock
dividend, split-up, combination of Shares, or otherwise), then,
in the sole discretion of the Committee, there shall be
substituted for each Share of Common Stock then under Option or
available for Option the number and kind of Shares of stock into
which each outstanding Share of Common Stock (other than Shares
held by dissenting shareholders) shall be so changed or for which
each such Share shall be so exchanged, together with an
appropriate adjustment of the Option Price. In the event there
shall be any other change in the number of, or kind of, issued
<PAGE>
Shares of Common Stock, or of any stock or other securities into
which such Common Stock shall have been changed, or for which it
shall have been exchanged, then if the Committee shall, in its
sole discretion, determine that such change equitably requires an
adjustment in the number, or kind, or Option price of Shares then
subject to an Option or available for Option, such adjustment
shall be made by the Board and shall be effective and binding for
all purposes of this Plan.
14. Time of Granting Options. The date of grant of an
Option under the Plan shall, for all purposes, be the date
reflected on the written grant of the Option to the Optionee. An
Option Agreement shall be given to each Employee or Outside
Director to whom an Option is so granted within a reasonable time
after the date of such grant.
15. Modification of Options. At any time and from time to
time the Committee may modify any outstanding Option, provided no
such modification shall impair the Option without the consent of
the holder of the Option. Any Incentive Stock Options
outstanding under the Plan may be amended, if necessary, in order
to retain such qualification.
16. Tax Withholding. The Company shall have the right to
deduct or withhold any taxes required by law to be withheld upon
the exercise of an Option. The Committee may require the Optionee
(or, in the event of the death of the Optionee, the personal
representatives of the Optionee's estate, or person or persons to
whom the Optionee's rights under such Option shall have passed by
will or by laws of descent and distribution) to remit to the
Company the amount of any taxes required to be withheld, or, in
lieu thereof, the Company may withhold (or the Optionee may be
provided the opportunity to elect to tender) the number of shares
of Common Stock equal in fair market value to the amount required
to be withheld.
<PAGE>
17. Amendment and Termination of the Plan. The Committee
or Board of Directors may amend, alter or discontinue the Plan,
but no amendment or alteration shall be made without the approval
of the stockholders of the Company if such approval is necessary
to comply with the performance-based compensation exception under
Section 162(m) of the Code and applicable Treasury Regulations. No
amendment, alteration or discontinuation of the Plan shall
adversely affect any Options granted prior to the time of such
amendment, alteration or discontinuation.
18. Conditions Upon Issuance of Shares. Shares must not be
issued with respect to any Option granted under the Plan unless
the issuance and delivery of such Shares shall comply with all
relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities law, and
the requirements of any stock exchange upon which the Shares may
then be listed. Inability of the Company to obtain from any
regulatory body or authority deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares
hereunder shall relieve the Company of any liability in respect
of the non-issuance or sale of such Shares. As a condition to
the exercise of an Option, the Company may require the person
exercising an Option to make such representations or warranties
as may be necessary to assure the availability of an exemption
from the registration requirements of federal or state securities
law.
19. Reservation of Shares. The Company, during the term of
this Plan, will reserve and keep available a number of Shares
sufficient to satisfy the requirements of the Plan.
