SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
DILLARD'S, INC.
(Name of Registrant as Specified In Its Charter)
DILLARD'S, INC.
(Name of Person(s) Filing Proxy Statement,if other than
Registrant)
Payment of Filing Fee (Check the appropriate box):
x No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title or each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule
0-11:1
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
1 Set forth the amount on which the filing fee is calculated and state how it was determined.
DILLARD'S, INC.
PROXY STATEMENT
DILLARD'S, INC.
POST OFFICE BOX 486
LITTLE ROCK, ARKANSAS 72203
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 2001
PROXY STATEMENT
DILLARD'S, INC.
POST OFFICE BOX 486
LITTLE ROCK, ARKANSAS 72203
TO THE HOLDERS OF CLASS A AND Little Rock, Arkansas
CLASS B COMMON STOCK: April 20, 2001
Notice is hereby given that the annual meeting of Stockholders of Dillard's, Inc., will be held at the
auditorium of Dillard's Corporate Office, 1600 Cantrell Road, Little Rock, Arkansas on Saturday, May 19, 2001, at
9:30 a.m. for the following purposes:
1. To elect 12 Directors of the Company (four Directors to represent Class A Stockholders and
eight Directors to represent Class B Stockholders).
2. To transact such other business as may properly come before the meeting or any adjournment or
adjournments thereof.
The stock transfer books of the Company will not be closed, but only stockholders of record at the close
of business on March 31, 2001, will be entitled to notice of, and to vote at, the meeting.
Your participation in the meeting is earnestly solicited. If you do not expect to be present in person
at the meeting, please sign, date, and fill in the enclosed Proxy and return it by mail in the enclosed envelope
to which no postage need be affixed if mailed in the United States of America.
By Order of the Board of Directors
JAMES I. FREEMAN
Senior Vice President,
Chief Financial Officer,
Assistant Secretary
DILLARD'S, INC.
POST OFFICE BOX 486
LITTLE ROCK, ARKANSAS 72203
Telephone (501) 376-5200
April 20, 2001
PROXY STATEMENT
The enclosed Proxy is solicited by and on behalf of the management of Dillard's, Inc. (the "Company"), a
Delaware corporation, for use at the annual meeting of stockholders to be held on Saturday, May 19, 2001, at 9:30
a.m. at the auditorium of Dillard's Corporate Office, 1600 Cantrell Road, Little Rock, Arkansas, or at any
adjournment or adjournments thereof.
Any stockholder giving a Proxy has the power to revoke it, at any time before it is voted, by written
revocation delivered to the Secretary of the Company. Proxies solicited herein will be voted in accordance with
any directions contained therein, unless the Proxy is received in such form or at such time as to render it
ineligible to vote, or unless properly revoked. If no choice is specified, the shares will be voted in
accordance with the recommendations of the Board of Directors as described herein.
If matters of business other than those described in the Proxy properly come before the meeting, the
persons named in the Proxy will vote in accordance with their best judgment on such matters. The Proxies
solicited herein shall not confer any authority to vote at any meeting of stockholders other than the meeting to
be held on May 19, 2001, or any adjournment or adjournments thereof.
The cost of soliciting Proxies will be borne by the Company. The Company will reimburse brokers,
custodians, nominees and other fiduciaries for their charges and expenses in forwarding proxy material to
beneficial owners of shares. In addition to solicitation by mail, certain officers and employees of the Company
may solicit Proxies by telephone, telegraph and personally. These persons will receive no compensation other
than their regular salaries. The Company has retained D.F. King & Co., Inc., a professional proxy solicitation
firm, to assist in the solicitation of proxies. The fees of such firm are not expected to exceed $6,500.
OUTSTANDING STOCK; VOTING RIGHTS;
The stock transfer books of the Company will not be closed, but only stockholders of record at the close
of business on March 31, 2001, will be entitled to notice of, and to vote at, the meeting. At that date, there
were 81,011,900 shares of Class A Common Stock outstanding and 4,010,929 shares of Class B Common Stock
outstanding.
Each holder of Class A Common Stock and each holder of Class B Common Stock shall be entitled to one
vote on the matters presented at the meeting for each share standing in his name except that the holders of Class
A Common Stock are empowered as a class to elect one-third of the Directors and the holders of Class B Common
Stock are empowered as a class to elect two-thirds of the Directors. In order to provide for a more manageable
Board size, 12 nominees have been named instead of the 15 that are provided for by the Company's governing
instruments. Stockholders will not be allowed to vote for a greater number of nominees than those named in this
proxy statement. Nominees for director of each class, to be elected, must receive a plurality of the votes cast
within that class. Cumulative voting for Directors is not permitted. Under Delaware General Corporate Law, if
shares are held by a broker that has indicated that it does not have discretionary authority to vote on a
particular matter ("broker non-votes"), those shares will not be considered as present and entitled to vote with
respect to that matter, but such shares will be counted with respect to determining whether a quorum is present.
Abstentions will not be counted as votes cast for election of directors.
The last date for the acceptance of Proxies by management is the close of business on May 18, 2001, and
no Proxy received after that date will be voted by management at the meeting.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth certain information regarding persons who beneficially owned five percent
(5%) or more of a class of the Company's outstanding voting securities at the close of business on February 3,
2001.
No. of Percent
Name and Address Class Shares Owned Of Class (1)
AXA Financial, Inc. Class A 6,808,485(2) 8.4%
1290 Avenue of the Americas
New York, NY 10104
Capital Research and Class A 8,820,000(2) 10.9%
Management Company
333 South Hope Street
Los Angeles, CA 90071
Dillard's, Inc. Retirement Trust Class A 9,039,825(2) 11.2%
1600 Cantrell Road
Little Rock, AR 72201
Dodge & Cox Class A 6,636,312(2) 8.6%
One Sansome St. 35th Floor
San Francisco, CA 94014
W.D. Company (3) Class A 41,496 *
Little Rock, Arkansas Class B 3,985,776 99.4%
* Denotes less than 0.1%
(1) At February 3, 2001 there were a total of 80,989,071 shares of the Company's Class A Common Stock and
4,010,929 shares of the Company's Class B Common Stock outstanding.
(2) Based on information contained in a Schedule 13G filed with the Securities and Exchange Commission.
(3) William Dillard, Chairman of the Board of Directors of the Company, William Dillard II, Chief Executive
Officer, Alex Dillard, President, and Mike Dillard, Executive Vice President, are officers and directors
of W.D. Company, Inc. and own 24.4%, 25.1%, 23.3% and 22.0%, respectively, of the outstanding voting
stock of W.D. Company, Inc.
ELECTION OF DIRECTORS
Four Directors representing Class A Stockholders and eight Directors representing Class B Stockholders
are to be elected by the Class A Stockholders and the Class B Stockholders, respectively, at the annual meeting
for a term of one year and until the election and qualification of their successors. The Proxies solicited
hereby will be voted "FOR" the election as Directors of the 12 persons hereinafter identified under "Nominees for
Election as Directors" if not specified otherwise. Management does not know of any nominee who will be unable to
serve, but should any nominee be unable or decline to serve, the discretionary authority provided in the Proxy
will be exercised to vote for a substitute or substitutes. Management has no reason to believe that any
substitute nominee will be required.
In 1998, the Company adopted a resolution amending its by-laws to provide that nominations to represent
Class A stockholders shall be of independent persons only. For these purposes, independent shall mean a person
who: has not been employed by the Company or an affiliate in any executive capacity within the last five years;
was not, and is not a member of a corporation or firm that is one of the Company's paid advisers or consultants;
is not employed by a significant customer, supplier or provider of professional services; has no personal
services contract with the Company; is not employed by a foundation or university that receives significant
grants or endowments from the Company; is not a relative of the management of the Company; is not a shareholder
who has signed shareholder agreements legally binding him to vote with management; and is not the chairman of a
company on which Dillard's, Inc. Chairman or Chief Executive Officer is also a board member.
All of the nominees to represent Class A Stockholders listed below qualify as independent persons as
defined in the above resolution
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION AS DIRECTORS OF THE 12 PERSONS HEREINAFTER IDENTIFIED.
The following table briefly indicates the principal occupation of each nominee, the approximate number
of shares of Class A and Class B Common Stock of the Company beneficially owned by each nominee as of February 3,
2001, and the year each nominee first was elected as a Director. The table also indicates the approximate number
of shares of Class A and Class B Common Stock of the Company beneficially owned by the executive officers named
under "Compensation of Directors and Executive Officers" and the number of shares beneficially owned by the
directors and executive officers, as a group, as of February 3, 2001.
Name Age Principal Occupation Director Since Shares of Common Stock Beneficially Percent of
Owned as of 2/03/2001 (1) Class
William Dillard (b)(2) 86 Chairman of the Board 1964 Class A 841,222 (3) 1.0%
of the Company Class B 3,985,776 (3) 99.4%
Calvin N. Clyde Jr. (b) 80 Chairman of the Board, 1985 Class A 25,087 (4) *
T.B. Butler Publishing Class B None
Co., Inc., Tyler, TX
Robert C. Connor (a) 59 Investments 1987 Class A 28,009 (5) *
Class B None
Drue Corbusier (b) 54 Executive Vice 1994 Class A 692,294 (6) .8%
President of the Company Class B None
Will D. Davis (a) 71 Partner, Heath, Davis & 1972 Class A 30,440 (7) *
McCalla, Attorneys, Class B None
Austin, TX
Alex Dillard (b)(2) 51 President of the Company 1975 Class A 1,610,328 (3) 2.0%
Class B 3,985,776 (3) 99.4%
Mike Dillard (b)(2) 49 Executive Vice 1976 Class A 1,222,515 (3) 1.5%
President of the Company Class B 3,985,776 (3) 99.4%
William Dillard II 56 Chief Executive Officer 1967 Class A 1,741,104 (3) 2.1%
(b)(2) of the Company Class B 3,985,776 (3) 99.4%
James I. Freeman (b) 51 Senior Vice President and 1991 Class A 648,954 (8) .8%
Chief Financial Officer Class B None
of the Company
John Paul Hammerschmidt (a) 78 Retired Member of Congress 1992 Class A 20,000 (9) *
Class B None
John H. Johnson (a) 83 Chairman and Chief 1986 Class A 23,000 (10) *
Executive Officer, Class B None
Johnson Publishing
Company, Inc., Chicago, IL
William H. Sutton (b) 70 Managing Partner, Friday, 1994 Class A 26,000 (11) *
Eldredge & Clark, Class B None
Attorneys, Little Rock, AR
All Nominees and Executive Class A 8,075,337 (12)(13) 9.3%
Officers as a Group (a total Class B 3,985,776 (12) 99.4%
of 21 persons)
(a) Class A Director
(b) Class B Director
*Denotes less than 0.1%
(1) Based on information furnished by the respective individuals.
(2) William Dillard is a director and officer of W. D. Company, Inc. and owns 24.4% of the outstanding voting
stock of such company. William Dillard II, Alex Dillard and Mike Dillard are sons of William
Dillard and are directors and officers of W. D. Company, Inc. and own 25.1%, 23.3% and 22.0%,
respectively, of the outstanding voting stock of such company.
(3) Includes 41,496 shares of Class A Common Stock and 3,985,776 of Class B Common Stock owned by W. D.
Company, Inc., in which shares William Dillard, William Dillard II, Alex Dillard and Mike Dillard
are each deemed to have a beneficial interest due to their respective relationships with W. D.
Company, Inc. See "Principal Holders of Voting Securities." William Dillard and his wife
individually own 311,469 and 2,772 shares, respectively, of Class A Common Stock; he has sole
voting power with respect to 19,485 shares held in trust for three minor children and has the right
to acquire beneficial ownership of 466,000 shares pursuant to currently exercisable options granted
under Company stock option plans. William Dillard II individually owns 589,608 shares of Class A
Common Stock and has the right to acquire beneficial ownership of 1,110,000 shares pursuant to
currently exercisable options granted under Company stock option plans. Alex Dillard and his wife
individually own 410,521 and 48,311 shares, respectively, of Class A Common Stock, and he has the
right to acquire beneficial ownership of 1,110,000 shares pursuant to currently exercisable options
granted under Company stock option plans. Mike Dillard individually owns 310,114 shares of Class A
Common Stock, has sole voting power with respect to 40,905 shares held in trust for three minor
children and has the right to acquire beneficial ownership of 830,000 shares pursuant to currently
exercisable options granted under Company stock option plans.
(4) Calvin N. Clyde owns 6,087 shares of Class A Common Stock and has the right to acquire beneficial ownership
of 19,000 shares pursuant to currently exercisable options granted under Company stock option plans.
(5) Includes nine shares owned by his wife. Robert C. Connor owns 9,000 shares of Class A Common Stock and has
the right to acquire beneficial ownership of 19,000 shares pursuant to currently exercisable
options granted under Company stock option plans.
(6) Drue Corbusier owns 132,294 shares of Class A Common Stock and has the right to acquire beneficial
ownership of 560,000 shares pursuant to currently exercisable options granted under Company stock
option plans.
(7) Will D. Davis owns 11,440 shares of Class A Common Stock and has the right to acquire beneficial
ownership of 19,000 shares pursuant to currently exercisable options granted under Company stock
option plans.
(8) James I. Freeman owns 113,880 shares of Class A Common Stock, has sole voting power with respect to
3,600 shares held in trust for a minor child and has the right to acquire beneficial ownership of
531,474 shares pursuant to currently exercisable options granted under Company stock option plans.
(9) John Paul Hammerschmidt owns 1,000 shares of Class A Common Stock and has the right to acquire
beneficial ownership of 19,000 shares pursuant to currently exercisable options granted under
Company stock option plans.
(10) Johnson Publishing Company, Inc., of which John H. Johnson is Chairman and Chief Executive Officer, owns
3,000 shares of Class A Common Stock. Mr. Johnson individually owns 1,000 shares of Class A Common
Stock and he has the right to acquire beneficial ownership of 19,000 shares pursuant to currently
exercisable options granted under Company stock option plans.
(11) William H. Sutton owns 10,000 shares of Class A Common Stock and has the right to acquire beneficial
ownership of 16,000 shares pursuant to currently exercisable options granted under Company stock
option plans.
(12) The shares in which William Dillard, William Dillard II, Alex Dillard and Mike Dillard are deemed to
have a beneficial interest due to their respective relationships with W. D. Company, Inc. have been
included in this computation only once and were not aggregated for such purpose.
(13) Includes the right to acquire beneficial ownership of 5,790,224 shares pursuant to currently exercisable
options granted under Company stock option plans.
The following nominees for director also hold directorships in the designated companies:
Name Director of
William Dillard, II Acxiom Corporation and Barnes & Noble, Inc.
John Paul Hammerschmidt American Freightways Corporation, First Federal Bank of Arkansas, and
Southwestern Energy Co.
The business associations of the nominees as shown in the table under "Nominees for Election as Directors"
have been continued for more than five years, except that prior to 1998 William Dillard was Chief Executive
Officer of the Company, Drue Corbusier was Vice President of the Company, Alex Dillard was Executive Vice
President of the Company and William Dillard II was President and Chief Operating Officer of the Company. Each
nominee for Director was elected to the Board of Directors at the annual meeting of stockholders held May 20,
2000.
The Board of Directors met four times during the last 12 months, on May 20, August 12, and November 18, 2000
and March 10, 2001.
Audit Committee members are Calvin N. Clyde, Jr., Robert C. Connor, Chairman; and John H. Johnson. The
Audit Committee held four meetings during the year.
The Executive Compensation Committee members are Robert C. Connor; Will D. Davis, Chairman and John Paul
Hammerschmidt. The Executive Compensation Committee held two meetings during the year.
The Stock Option Committee members are Robert C. Connor; Will D. Davis, Chairman and John Paul
Hammerschmidt. The Stock Option Committee held two meetings during the year.
All of the nominees for director attended at least 75% of the aggregate of (1) the total number of meetings
of the Board of Directors and (2) the total number of meetings held by all committees of the board on which they
served.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, for the fiscal years indicated, the cash and other compensation provided by
the Company and its subsidiaries to the Chief Executive Officer and each of the four most highly compensated
executive officers (the "named executive officers") of the Company in all capacities in which they served.
Summary Compensation Table
Long Term Compensation
---------------------------- ----------
Annual Compensation Awards Payouts
----------- ------------ ---------------- --------------- ------------ ----------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Annual Restricted Securities LTIP All Other
Name and Principal Compensation Stock Underlying Payouts Compensa-
Position Year Salary($) Bonus($) ($) Award(s)($) Options/ ($) tion($)(1)
SARs(#)
- --------------------------- ------- ----------- ------------ ---------------- --------------- ------------ ---------- ---------------
William Dillard II
Chief Executive Officer 2000 $710,000 $ 0 -- -- 160,000 -- $166,150
1999 680,000 1,335,000 -- -- 350,000 -- 139,900
1998 650,000 650,000 -- -- 150,000 -- 244,823
Alex Dillard 2000 620,000 0 -- -- 160,000 -- 155,270
President 1999 590,000 1,335,000 -- -- 350,000 -- 129,120
1998 560,000 650,000 -- -- 150,000 -- 210,080
Mike Dillard 2000 540,000 0 -- -- 80,000 -- 110,900
Executive Vice President 1999 520,000 690,000 -- -- 200,000 -- 79,400
1998 500,000 340,000 -- -- 100,000 -- 155,639
Drue Corbusier 2000 500,000 0 -- -- 80,000 -- 101,110
Executive Vice President 1999 475,000 625,000 -- -- 200,000 -- 83,610
1998 450,000 300,000 -- -- 100,000 -- 92,600
James I. Freeman 2000 500,000 0 -- -- 80,000 -- 79,400
Senior Vice President and 1999 475,000 465,000 -- -- 200,000 -- 60,150
Chief Financial Officer 1998 445,000 250,000 -- -- 100,000 -- 105,758
(1) Amounts represent the Company's defined contributions for the benefit of the named executive officers pursuant to
its Retirement Plans.
Stock Option Grants
The following table sets forth information concerning stock options granted under the Company's 2000 Stock
Option Plan to the named executive officers:
Option/SAR Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term
- --------------------------------- ------------- ---------------- -------------- ------------- ------------ ------------
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities
Underlying % of Total
Options/ Options/SARs
SARs Gran- Granted to Exercise or Expiration
ted (#)(1) Employees in Base Price Date 5% ($) 10% ($)
Name Fiscal Year ($/Sh)
- -------------------------------- --------------- ---------------- -------------- ------------- ------------ ------------
William Dillard II 160,000 7.4% $10.44 12/15/2007 $679,600 $1,584,240
Alex Dillard 160,000 7.4 10.44 12/15/2007 679,600 1,584,240
Mike Dillard 80,000 3.7 10.44 12/15/2007 339,800 792,120
Drue Corbusier 80,000 3.7 10.44 12/15/2007 339,800 792,120
James I. Freeman 80,000 3.7 10.44 12/15/2007 339,800 792,120
(1) If payment for shares upon exercise of any of these options is made with shares of the Company's common stock
owned by the optionee, the optionee shall be granted on that date an option ("Reload Option") to purchase a
number of shares equal to the number of shares tendered to the Company. The exercise price of the Reload
Option shall be the market price of the Company's common stock on the Reload Option grant date, and the
expiration date of the Reload Option shall be the same as that of the original option.
Stock Option Exercises and Holdings
The following table sets forth information concerning stock options exercised during the last fiscal year and
stock options held as of the end of the last fiscal year by the named executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
Number of Securities Underlying
Unexercised Options/ Value of Unexercised
SARs at FY-End (#) In-the-Money Options/
SARs at FY-End ($)(1)
Shares Acquired Exercisable
Name on Exercise (#) Value Realized ($) Unexercisable Exercisable
Unexercisable
- ----------------------------------- ------------------- ------------------- ---------------------------- ----------------------------
William Dillard II 0 $ 0 1,110,000 0 $ 790,000 $ 0
Alex Dillard 0 0 1,110,000 0 790,000 0
Mike Dillard 0 0 830,000 0 395,000 0
Drue Corbusier 0 0 560,000 0 395,000 0
James I. Freeman 0 0 531,474 0 395,000 0
(1) Represents the amount by which the market price at fiscal year end of the shares underlying unexercised
options exceeds the exercise price for such shares.
Pension Plan
The following table shows the estimated annual benefits payable pursuant to the Company's pension plan to
persons in specified compensation and years of service categories upon retirement.
Pension Plan Table
Years of Service
Compensation 15 20 25 30 35
$300,000 $67,500 $92,066 $117,066 $142,066 $167,066
350,000 79,566 108,733 137,900 167,066 196,233
400,000 92,066 125,400 158,733 192,066 225,400
450,000 104,566 142,066 179,566 217,066 254,567
500,000 117,066 158,733 200,400 242,067 283,733
550,000 129,566 175,400 221,233 267,067 312,900
600,000 142,066 192,066 242,067 292,067 342,067
650,000 154,566 208,733 262,900 317,067 371,233
700,000 167,066 225,400 283,733 342,067 400,400
A participant's compensation covered by the Company's pension plan is his average salary (as reported in the
Summary Compensation Table) for the last five years of his employment with the Company. The credited years of
service for each of the named executive officers is as follows: William Dillard II, 32 years; Alex Dillard, 29
years; Mike Dillard, 29 years; Drue Corbusier, 32 years; and James I. Freeman, 12 years. Benefits shown are
computed as a single life annuity with five years term certain beginning at age 65 and are not subject to
deduction for social security or other offset amounts.
Compensation of Directors
Directors who are not officers of the Company each receive an annual retainer of $20,000 as well as 1,000
shares of Class A Common Stock. In addition, committee chairmen receive an annual retainer of $10,000. Directors
who are not officers also receive $1,500 for attendance at each board meeting, $1,000 for each committee meeting,
and actual travel expenses.
Report of Executive Compensation and Stock Option Committees
The following report addressing the Company's compensation policies for executive officers for fiscal 2000 is
submitted by the Executive Compensation and Stock Option Committees (the "Compensation Committee") of the Board of
Directors.
General
The Compensation Committee, which is composed of independent directors who are not employees of the Company,
establishes policies relating to the compensation of employees and oversees the administration of the Company's
employee benefit plans. The compensation program of the Company has been designed (1) to provide compensation
opportunities that are equivalent to those offered by comparable companies, thereby allowing the Company to
compete for and retain talented executives who are critical to the Company's long-term success, (2) to motivate
key senior officers by rewarding them for attainment of profitability of the Company, and (3) to align the
interests of executives with the long-term interests of stockholders by awarding stock options to executives as
part of the compensation provided to them.
In order to develop a competitive compensation package for the executive officers of the Company, the Compensation
Committee compares the Company's compensation package with those of a comparison group. The comparison group is
composed of department stores, specialty stores and other public companies that were family-founded and continue
to be family-managed. Not all of the companies in the comparison group are included in the Standard & Poor's
Department Store Index. The Compensation Committee believes that the companies in the comparison group are
comparable to the Company in management style and management culture. Although the Compensation Committee has
made these comparisons, it also has taken into account that as the Company has grown in size, the number of senior
executives has not grown proportionately, so that the number of senior executives retained by the Company is lower
than the number of senior executives at other companies of similar size.
Currently, the Company's compensation program consists of salary, annual cash performance bonus based on the
profitability of the Company, and long-term incentive opportunities in the form of stock options. The
compensation program is focused both on short-term and long-term performance of the Company, rewarding executives
for both achievement of profitability and growth in stockholder value.
Salary -- Each year the Compensation Committee establishes the salary for all executive officers. Such salaries
are set at the discretion of the Compensation Committee and are not specifically related to any company
performance criteria, as are both the cash performance bonus and stock option portions of the compensation
program, which are discussed below. The Compensation Committee does, however, base any increase in salary on
targets based on a regression analysis of salaries paid versus total revenues for the comparison group. For
fiscal 2000, the salaries set by the Compensation Committee were below the target salaries produced by this
analysis.
Cash Performance Bonus -- Cash performance bonuses may be paid annually to senior management. For bonuses to be
paid, however, the Company must have income before federal and state income taxes ("pre-tax income") for the
fiscal year. The Compensation Committee, within ninety (90) days after the start of a fiscal year, designates
those individuals in senior management eligible to receive a cash performance bonus. Bonuses are paid at the
conclusion of a fiscal year from a bonus pool, which is equal to one and one-half percent (1-1/2%) of the
Company's pre-tax income plus three and one-half (3-1/2%) of the increase in pre-tax income over the prior fiscal
year. When the Compensation Committee designates the individuals eligible to participate in the cash performance
bonus program, it also designates the percent of the bonus pool each individual will be entitled to receive. The
Compensation Committee retains at all times the authority to adjust downward the amount of bonus any individual
may receive pursuant to the above-described formula. For fiscal 2000, the Company experienced a pre-tax income of
$140,860,000 and no increase in pre-tax income.
The Compensation Committee decided to eliminate the amount of bonus, which the named executive officers would
receive for fiscal 2000.
Stock Options -- Stock option grants under the Company's 2000 Incentive and Non-Qualified Stock Option Plan are
utilized by the Company for long-term incentive compensation for executive officers. These stock option grants
relate their compensation directly to the performance of the Company's stock. The exercise price for the options
granted is one hundred percent (100%) of the fair market value of the shares underlying such options on the date
of grant and have value to the executive officers only if the Company's stock price increases. The stock options
are exercisable on or after December 15, 2000. When making option grants, the Stock Option Committee and the
Compensation Committee do not consider the number of options already held by an executive officer.
As discussed in previous Compensation Committee Reports, the Omnibus Budget Reconciliation Act of 1993 prevents
public corporations from deducting as a business expense that portion of compensation exceeding $1 million paid to
a named executive officer in the Summary Compensation Table. This deduction limit does not apply to
"performance-based compensation." The Compensation Committee believes that the necessary steps have been taken to
qualify as performance-based compensation the compensation paid under the cash performance bonus and stock option
portions of the Company's compensation program.
Chief Executive OfficerIn setting the Chief Executive Officer's compensation, the Compensation Committee makes the same determination with regard to salary, cash performance bonus and stock options as discussed above for the other named executive officers. For fiscal 2000, the increase in the Chief Executive Officer's salary over the prior fiscal year resulted in a salary lower than the target salary produced by the regression analysis discussed above Robert C. Connor John Paul Hammerschmidt Will D. Davis, ChairmanCompany Performance
The graph below compares for each of the last five fiscal years the cumulative total returns on the Company's
Class A Common Stock, the Standard & Poor's 500 Index and the Standard & Poor's Department Stores Index. The
cumulative total return on the Company's Class A Common Stock assumes $100 invested in such stock on February 4,
1996 and assumes reinvestment of dividends.
1996 1997 1998 1999 2000
Dillard 100 101.27 119.66 84.85 66.23 53.49
S&P 500 100 126.43 160.56 212.89 229.19 224.43
S&P Dpt Strs 100 108.82 143.94 142.7 112.15 145.12
William Dillard II, Drue Corbusier, Alex Dillard and Mike Dillard are children of William Dillard.
Mr. William H. Sutton is Managing Partner of the law firm Friday, Eldredge & Clark, which is retained by the
Company for legal services.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers,
and persons who own more than 10% of the Company's Class A Common Stock, to file with the Securities and Exchange
Commission and the New York Stock Exchange initial reports of ownership and reports of changes in ownership of
stock of the Company.
To the Company's knowledge, based solely on a review of copies of reports provided by such individuals to the
Company and written representations of such individuals that no other reports were required, during the fiscal
year ended February 3, 2001, all Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with.
Management of the Company knows of no other matters that may come before the meeting.
However, if any matters other than those referred to herein should properly come before the meeting, it is
the intention of the persons named in the enclosed Proxy to vote the Proxy in accordance with their judgment.
AUDIT COMMITTEE REPORT
The Audit Committee operates under a written charter adopted by the Board of Directors, a copy of which
is attached as Appendix A. Each of the members of the Audit Committee is independent as defined under the
listing standards of the New York Stock Exchange.
The Audit Committee has reviewed and discussed the audited financial statements for the year ended
February 3, 2001 with management and the independent auditors, Deloitte & Touche LLP. Management represented to
the Audit Committee that the Company's consolidated financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America.
The discussions with Deloitte & Touche LLP included the matters required by Statement on Auditing
Standards No. 61, as amended (Communications with Audit Committees). Deloitte & Touche LLP provided to the Audit
Committee the written disclosures and the letter regarding its independence as required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees). The Audit Committee also considered
whether the provision of non-audit services by Deloitte & Touche LLP is compatible with maintaining the auditor's
independence.
Based upon the reviews and discussions noted above, the Audit Committee recommended to the Board of
Directors that the audited consolidated financial statements be included in the Company's Annual Report on Form
10-K to be filed with the Securities and Exchange Commission for the year ended February 3, 2001.
Robert C. Connor
Calvin N. Clyde
John H. Johnson
INDEPENDENT PUBLIC ACCOUNTANTS
A representative of Deloitte & Touche LLP, the Company's independent public accountants for
fiscal year 2000 and the current year, will be present at the meeting, will have the opportunity to make
a statement, and also will be available to respond to appropriate questions.
Audit Fees
Deloitte & Touche LLP billed the Company a total of $670,000 for professional services
rendered for the audit of the Company's annual financial statements for the year ended February 3, 2001
and for the review of the financial statements included in the Company's quarterly reports on Form 10-Q
for fiscal 2000.
Financial Systems Design and Implementation Fees
No fees were paid to Deloitte & Touche LLP for any information technology services (of the
type described in Rule 2-01(c)(4)(ii)(B) of Regulation S-X) during 2000.
All Other Fees
The Company paid Deloitte & Touche LLP an aggregate of $673,502 for all services rendered by
Deloitte & Touche LLP other than the audit and financial systems design and implementation described
above.
The Audit Committee of the Board of Directors has considered whether the provision of services
described above under "Financial Systems Design and Implementation Fees" and "All Other Fees" is
compatible with maintaining the independence of Deloitte & Touche LLP.
STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's annual meeting of
stockholders in 2002 must be received by the Company at its principal executive offices not later than
December 21, 2001 in order to be included in the Company's Proxy Statement and form of Proxy relating to
that meeting.
ANNUAL REPORTS
The Company's annual report for the fiscal year ended February 3, 2001 is being mailed with
this Proxy Statement but is not to be considered as a part hereof.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED
WITHOUT CHARGE BY ANY STOCKHOLDER WHOSE PROXY IS SOLICITED UPON WRITTEN REQUEST TO:
DILLARD'S, INC.
By Order of the Board of Directors
JAMES I. FREEMAN
Senior Vice President,
Chief Financial Officer,
Assistant Secretary
Appendix A
Dillard's, Inc.
Audit Committee Charter
This Audit Committee Charter ("Charter") has been adopted by the Board of Directors (the "Board") of Dillard's,
Inc. The Audit Committee of the Board (the "Committee") shall review and reassess this charter annually and
recommend any proposed changes to the Board for approval.
Role and Independence: OrganizationThe Committee assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing, internal control and financial reporting practices of the Company. It may also have such other duties as may from time to time be assigned to it by the Board. The membership of the Committee shall consist of at least three directors, who are each free of any relationship that, in the opinion of the Board, may interfere with such member's individual exercise of independent judgment. Each Committee member shall also meet the independence and financial literacy requirements for serving on audit committees, and at least one member shall have accounting or relating financial management expertise, all as set forth in the applicable rules of the New York Stock Exchange. The Committee shall maintain free and open communication with the independent auditors, the internal auditors and Company management. In discharging its oversight role, the Committee is empowered to investigate any matter relating to the Company's accounting, auditing, internal control or financial reporting practices brought to its attention, with full access to all Company books, records, facilities and personnel. The Committee may retain outside counsel, auditors or other advisors. One member of the Committee shall be appointed as chair. The chair shall be responsible for the leadership of the Committee, including scheduling and presiding over meetings, preparing agendas, and making regular reports to the Board. The chair will also maintain regular liaison with the CEO, CFO, the lead independent audit partner and the director of internal audit. The Committee shall meet at least four times a year, or more frequently as the Committee considers necessary. At least once each year, the Committee shall have separate private meetings with the independent auditors, management and the internal auditors.Responsibilities
Although the Committee may wish to consider other duties from time to time, the general recurring activities of
the Committee in carrying out its oversight role are described below. The Committee shall be responsible for:
o Recommending to the Board the independent auditors to be retained (or nominated for shareholder
approval) to audit the financial statements of the Company. Such auditors are ultimately accountable to the
Board and the Committee, as representatives of the shareholders.
o Evaluating, together with the Board and management, the performance of the independent auditors and,
where appropriate, replacing such auditors.
o Obtaining annually from the independent auditors a formal written statement describing all relationships
between the auditors and the Company, consistent with Independence Standards Board Standard Number 1. The
Committee shall actively engage in a dialogue with the independent auditors with respect to any
relationships that may impact the objectivity and independence of the auditors and shall take, or recommend
that the Board take, appropriate actions to oversee and satisfy itself as to the auditors' independence.
o Reviewing the audited financial statements and discussing them with management and the independent
auditors. These discussions shall include the matters required to be discussed under Statement of Auditing
Standards No. 61 and consideration of the quality of the Company's accounting principles as applied in its
financial reporting, including a review of particularly sensitive accounting estimates, reserves and
accruals, judgmental areas, audit adjustments (whether or not recorded), and other such inquiries as the
Committee or the independent auditors shall deem appropriate. Based on such review, the Committee shall
make its recommendations to the Board as to the inclusion of the Company's audited financial statements in
the Company's Annual Report on Form 10-K (or the Annual Report to Shareholders, if distributed prior to the
filing of the Form 10-K).
o Issuing annually a report to be included in the Company's proxy statement as required by the rules of
the Securities and Exchange Commission.
o Overseeing the relationship with the independent auditors, including discussing with the auditors the
nature and rigor of the audit process, receiving and reviewing audit reports, and providing the auditors
full access to the Committee (and the Board) to report on any and all appropriate matters.
o Discussing with a representative of management and the independent auditors: (1) the interim financial
information contained in the Company's Quarterly Report on Form 10-Q prior to its filing, (2) the earnings
announcement prior to its release (if practicable), and (3) the results of the review of such information by
the independent auditors. (These discussions may be held with the Committee as a whole or with the
Committee chair in person or by telephone.)
o Overseeing internal audit activities, including discussing with management and the internal auditors the
internal audit function's organization, objectively, responsibilities, plans, results, budget and staffing.
o Discussing with management, the internal auditors and the independent auditors the quality and adequacy
of and compliance with the Company's internal controls.
o Discussing with management and/or the Company's general counsel any legal matters (including the status
of pending litigation) that may have a material impact on the Company's financial statements, and any
material reports or inquiries from regulatory or governmental agencies.
The Committee's job is one of oversight. Management is responsible for the preparation of the Company's
financial statements and the independent auditors are responsible for auditing those financial statements. The
Committee and the Board recognize that management (including the internal audit staff) and the independent
auditors have more resources and time, and more detailed knowledge and information regarding the Company's
accounting, auditing, internal control and financial reporting practices than the Committee does; accordingly,
the Committee's oversight role does not provide any expert or special assurance as to the financial statements or
other financial information provided by the Company to its shareholders and others.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Dillard's, Inc.
Post Office Box 486
Little Rock, Arkansas 72203 PROXY The undersigned hereby appoints
Telephone No.(501)376-5200 William Dillard and James I. Freeman as Proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and
vote, as designated below, all the shares of the Class A
Common Stock of Dillard's, Inc., held of record by the
undersigned on March 31, 2001, at the annual meeting of
stockholders to be held on May 19, 2001, or any adjournment
thereof.
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1. ELECTION OF DIRECTORS. ? FOR all Class A ? WITHHOLD AUTHORITY
nominees listed to vote for all below (except as Class A nominees
marked to the contrary below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME
IN THE LIST BELOW.)
Class A Nominees
Robert C. Connor * Will D. Davis * John Paul Hammerschmidt * John H. Johnson
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Management of the Company supports this proposal
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2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come
before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR PROPOSAL 1.
Please sign exactly as name appears below. When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
DATED: , 2001
Signature
Signature, if jointly held
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Dillard's, Inc.
Post Office Box 486
Little Rock, Arkansas 72203 PROXY The undersigned hereby appoints
Telephone No.(501)376-5200 William Dillard and James I. Freeman as Proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and
vote, as designated below, all the shares of the Class B
Common Stock of Dillard's, Inc., held of record by the
undersigned on March 31, 2001, at the annual meeting of
stockholders to be held on May 19, 2001, or any adjournment
thereof.
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1. ELECTION OF DIRECTORS. ? FOR all Class B ? WITHHOLD AUTHORITY
nominees listed to vote for all below (except as Class B nominees
marked to the contrary below)
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME
IN THE LIST BELOW.)
Class B Nominees
William Dillard * Calvin N. Clyde, Jr. * Drue Corbusier * Alex Dillard * Mike Dillard * William Dillard II *
James I. Freeman * William H. Sutton
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Management of the Company supports this proposal.
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2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come
before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR PROPOSAL 1.
Please sign exactly as name appears below. When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
DATED: , 2001
Signature
Signature, if jointly held
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.