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 18, 2002
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 18, 2002
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 18, 2002, 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 29, 2002, 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 18, 2002
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 18, 2002, 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 18, 2002, 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
$7,000.
OUTSTANDING STOCK; VOTING RIGHTS;
VOTE REQUIRED FOR APPROVAL
The stock transfer books of the Company will not be closed, but only stockholders of record at the close of business on
March 29, 2002, will be entitled to notice of, and to vote at, the meeting. At that date, there were 80,199,916 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. 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 17, 2002, 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 2, 2002.
No. of Percent
Name and Address Class Shares Owned Of Class (1)
Dillard's, Inc. Retirement Trust Class A 10,337,250(2) 12.9%
1600 Cantrell Road
Little Rock, AR 72201
Dodge & Cox Class A 6,940,536 (2) 8.7%
One Sansome St. 35th Floor
San Francisco, CA 94014
Flippin, Bruce & Porter, Inc. Class A 4,010,130 (2) 5.0%
800 Main Street, Suite 200
Lynchburg, VA 24505
FMR Corp. Class A 11,323,267 (2) 14.2%
82 Devonshire Street
Boston, MA 02109
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 2, 2002 there were a total of 79,876,747 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 II, Chief Executive Officer of the Company, Alex Dillard, President, and Mike Dillard, Executive Vice
President, are officers and directors of W.D. Company, Inc. and own 26.3%, 27.9% and 26.3%, 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.
Chief Executive Officer is also a board member.
All of the nominees to represent Class A Stockholders listed below qualify as independent persons as defined in the above
resolution
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION AS DIRECTORS OF THE 12 PERSONS HEREINAFTER IDENTIFIED.
NOMINEES FOR ELECTION AS DIRECTORS
The following table briefly indicates the principal occupation of each nominee, the approximate number of shares of Class A
and Class B Common Stock of the Company beneficially owned by each nominee as of February 2, 2002, 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 2, 2002.
Name Age Principal Occupation Director Shares of Common Stock Beneficially Percent of
Since Owned as of 2/02/2002 (1) Class
Calvin N. Clyde Jr. (b) 81 Chairman of the Board, 1985 Class A 26,087 (2) *
T.B. Butler Publishing Class B None
Co., Inc., Tyler, TX
Robert C. Connor (a) 60 Investments 1987 Class A 29,009 (3) *
Class B None
Drue Corbusier (b) 55 Executive Vice 1994 Class A 777,195 (4) 1.0%
President of the Company Class B None
Will D. Davis (a) 72 Partner, Heath, Davis& 1972 Class A 31,440 (5) *
McCalla, Attorneys, Class B None
Austin, TX
Alex Dillard (b)(6) 52 President of the Company 1975 Class A 1,785,082 (7) 2.2%
Class B 3,985,776 (7) 99.4%
Mike Dillard (b)(6) 50 Executive Vice 1976 Class A 1,307,609 (7) 1.6%
President of the Company Class B 3,985,776 (7) 99.4%
William Dillard II 57 Chief Executive Officer 1967 Class A 1,908,915 (7) 2.4%
(b)(6) of the Company Class B 3,985,776 (7) 99.4%
James I. Freeman (b) 52 Senior Vice President 1991 Class A 691,176 (8) .9%
and Chief Financial Class B None
Officer of the Company
John Paul Hammerschmidt (a) 79 Retired Member of 1992 Class A 21,000 (9) *
Congress Class B None
John H. Johnson (a) 84 Chairman and Chief 1986 Class A 24,000 (10) *
Executive Officer, Class B None
Johnson Publishing
Company, Inc., Chicago,
IL
Warren A. Stephens (b) 45 President and Chief - Class A None
Executive Officer, Class B None
Stephens Group and
Stephens, Inc., Little
Rock, AR
William H. Sutton (b) 71 Managing Partner, 1994 Class A 27,000 (11) *
Friday, Eldredge& Class B None
Clark, Attorneys,
Little Rock, AR
All Nominees and Executive Class A 7,943,881 (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) Calvin N. Clyde owns 7,087 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.
(3) Includes nine shares owned by his wife. Robert C. Connor owns 10,000 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.
(4) Drue Corbusier owns 137,195 shares of Class A Common Stock and has the right to acquire beneficial ownership of 640,000
shares pursuant to currently exercisable options granted under Company stock option plans.
(5) Will D. Davis owns 12,440 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.
(6) William Dillard II, Alex Dillard and Mike Dillard are directors and officers of W. D. Company, Inc. and own 26.3%, 27.9% and
26.3%, respectively, of the outstanding voting stock of such company.
(7) 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 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 II
individually owns 592,419 shares of Class A Common Stock and has the right to acquire beneficial ownership of 1,275,000
shares pursuant to currently exercisable options granted under Company stock option plans. Alex Dillard and his wife
individually own 420,275 and 48,311 shares, respectively, of Class A Common Stock, and he has the right to acquire
beneficial ownership of 1,275,000 shares pursuant to currently exercisable options granted under Company stock option
plans. Mike Dillard individually owns 315,208 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 910,000 shares
pursuant to currently exercisable options granted under Company stock option plans.
(8) James I. Freeman owns 116,467 shares of Class A Common Stock, has sole voting power with respect to 10,100 shares held in
trust for a minor child and has the right to acquire beneficial ownership of 564,609 shares pursuant to currently
exercisable options granted under Company stock option plans.
(9) John Paul Hammerschmidt owns 2,000 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 2,000 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 11,000 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 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 5,926,535 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.
Warren A. Stephens Alltel Corporation, American Capital Access Holdings, Inc., Stephens
Group, Inc., Stephens Holding Company and Stephens, Inc.
The business associations of the nominees as shown in the table under "Nominees for Election as Directors" have been continued
for more than five years, except that prior to 1998 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 19, 2001, except for Warren A. Stephens.
The Board of Directors met four times during the last 12 months, on May 19, September 7, and November 20, 2001 and March 2, 2002.
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 one meeting 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 one meeting during the year.
All of the nominees for director attended at least 75% of the aggregate of (1) the total number of meetings of the Board of
Directors and (2) the total number of meetings held by all committees of the board on which they served.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Cash and Other Compensation
The following table sets forth, for the fiscal years indicated, the cash and other compensation provided by the Company and its
subsidiaries to the Chief Executive Officer and each of the four most highly compensated executive officers (the "named executive
officers") of the Company in all capacities in which they served.
SUMMARY COMPENSATION TABLE
Long Term Compensation
---------------------------- ----------
Annual Compensation Awards Payouts
----------- ------------ ---------------- --------------- ------------ ----------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Annual Restricted Securities LTIP All Other
Name and Principal Compensation Stock Underlying Payouts Compensa-
Position Year Salary($) Bonus($) ($) Award(s)($) Options/ ($) tion($)(1)
SARs(#)
--------------------------- ------- ----------- ------------ ---------------- --------------- ------------ ---------- ---------------
William Dillard II
Chief Executive Officer 2001 $710,000 $ 0 -- -- 165,000 -- $157,400
2000 710,000 0 -- -- 160,000 -- 166,150
1999 680,000 1,335,000 -- -- 350,000 -- 139,900
0
Alex Dillard 2001 620,000 0 -- -- 165,000 -- 142,400
President 2000 620,000 1,335,000 -- -- 160,000 -- 155,270
1999 590,000 -- -- 350,000 -- 129,120
Mike Dillard 2001 540,000 0 -- -- 80,000 -- 97,450
Executive Vice President 2000 540,000 0 -- -- 80,000 -- 110,900
1999 520,000 690,000 -- -- 200,000 -- 79,400
Drue Corbusier 2001 500,000 0 -- -- 80,000 -- 91,196
Executive Vice President 2000 500,000 0 -- -- 80,000 -- 101,110
1999 475,000 625,000 -- -- 200,000 -- 83,610
James I. Freeman 2001 500,000 0 -- -- 60,000 -- 80,500
Senior Vice President and 2000 500,000 0 -- -- 80,000 -- 79,400
Chief Financial Officer 1999 475,000 465,000 -- -- 200,000 -- 60,150
(1) Amounts represent the Company's defined contributions for the benefit of the named executive officers pursuant to its Retirement Plans.
Stock Option Grants
The following table sets forth information concerning stock options granted under the Company's 2000 Stock Option Plan to the
named executive officers:
Option/SAR Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term
--------------------------------- ------------- ---------------- -------------- ------------- ------------ ------------
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities % of Total
Underlying Options/SARs
Options/ Granted to Exercise or Expiration
SAR's Employees in Base Price Date 5% ($) 10% ($)
Name Granted(#)(1) Fiscal Year ($/Sh)
-------------------------------- --------------- -------------- ------------- ------------ ------------ -------------
William Dillard II 165,000 25.2% $15.74 4/24/2011 $1,633,335 $4,139,355
Alex Dillard 165,000 25.2 15.74 4/24/2011 1,633,335 4,139,355
Mike Dillard 80,000 12.2 15.74 4/24/2011 791,920 2,006,960
Drue Corbusier 80,000 12.2 15.74 4/24/2011 791,920 2,006,960
James I. Freeman 60,000 9.2 15.74 4/24/2011 593,940 1,505,220
(1) If payment for shares upon exercise of any of these options is made with shares of the Company's common stock owned by the
optionee, the optionee shall be granted on that date an option ("Reload Option") to purchase a number of shares equal to the
number of shares tendered to the Company. The exercise price of the Reload Option shall be the market price of the Company's
common stock on the Reload Option grant date, and the expiration date of the Reload Option shall be the same as that of the
original option.
Stock Option Exercises and Holdings
The following table sets forth information concerning stock options exercised during the last fiscal year and stock options held
as of the end of the last fiscal year by the named executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
Number of Securities Underlying
Unexercised Options/ Value of Unexercised
SARs at FY-End (#) In-the-Money Options/
SARs at FY-End ($)(1)
Shares Acquired Exercisable
Name on Exercise (#) Value Realized ($) Unexercisable Exercisable
Unexercisable
----------------------------------- ------------------- ------------------- ---------------------------- ----------------------------
William Dillard II 0 $ 0 1,275,000 0 $ 639,600 $ 0
Alex Dillard 0 0 1,275,000 0 639,600 0
Mike Dillard 0 0 910,000 0 319,800 0
Drue Corbusier 0 0 640,000 0 319,800 0
James I. Freeman 180,000 1,007,700 564,609 0 0 0
(1) Represents the amount by which the market price at fiscal year end of the shares underlying unexercised options exceeds the
exercise price for such shares.
Pension Plan
The following table shows the estimated annual benefits payable pursuant to the Company's pension plan to persons in specified
compensation and years of service categories upon retirement.
Pension Plan Table
Years of Service
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
750,000 179,566 242,067 304,567 367,067 429,567
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, 33 years; Alex Dillard, 30 years; Mike Dillard, 30 years; Drue Corbusier, 33 years; and
James I. Freeman, 13 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 2001 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 Supercomposite Department Stores 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 2001, 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 2001, the Company experienced a pre-tax income of $111,571,000 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 2001.
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 April 24, 2001. When making option grants, the Stock Option Committee and
the Compensation Committee do not consider the number of options already held by an executive officer.
As discussed in previous Compensation Committee Reports, the Omnibus Budget Reconciliation Act of 1993 prevents public corporations
from deducting as a business expense that portion of compensation exceeding $1 million paid to a named executive officer in the Summary
Compensation Table. This deduction limit does not apply to "performance-based compensation." The Compensation Committee believes
that the necessary steps have been taken to qualify as performance-based compensation the compensation paid under the cash performance
bonus and stock option portions of the Company's compensation program.
Chief Executive Officer
In setting the Chief Executive Officer's compensation, the Compensation Committee makes the same determination with regard to salary, cash performance bonus and stock options as discussed above for the other named executive officers. For fiscal 2001, the increase in the Chief Executive Officer's salary over the prior fiscal year resulted in a salary lower than the target salary produced by the regression analysis discussed above Robert C. Connor John Paul Hammerschmidt Will D. Davis, Chairman
Company Performance
The graph below compares for each of the last five fiscal years the cumulative total returns on the Company's Class A Common
Stock, the Standard & Poor's 500 Index and the Standard & Poor's Supercomposite Department Stores Index. The cumulative total return
on the Company's Class A Common Stock assumes $100 invested in such stock on February 2, 1997 and assumes reinvestment of dividends.
1997 1998 1999 2000 2001
Dillard's, Inc. 100 118.16 83.79 65.4 52.82 42.28
S&P 500 100 126.99 168.38 181.27 177.51 148.77
S&P Supercomposite Dept. Strs 100 133.15 135.63 99.79 125.93 134.71
CERTAIN RELATIONSHIPS AND TRANSACTIONS
William Dillard II, Drue Corbusier, Alex Dillard and Mike Dillard are siblings.
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 2, 2002, 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. 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 2, 2002 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 2, 2002.
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 2001 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 $732,538 for professional services rendered for the audit of
the Company's annual financial statements for the year ended February 2, 2002 and for the review of the financial statements
included in the Company's quarterly reports on Form 10-Q for fiscal 2001.
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 2001.
All Other Fees
The Company paid Deloitte & Touche LLP an aggregate of $3,121,891 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 2003 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Company's annual meeting of stockholders in 2003 must be
received by the Company at its principal executive offices not later than December 19, 2002 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 2, 2002 is being mailed with this Proxy Statement
but is not to be considered as a part hereof.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO,
REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED WITHOUT CHARGE BY ANY STOCKHOLDER WHOSE
PROXY IS SOLICITED UPON WRITTEN REQUEST TO:
DILLARD'S, INC.
Post Office Box 486
Little Rock, Arkansas 72203
Attention: James I. Freeman,
Senior Vice President,
Chief Financial Officer
By Order of the Board Of Directors
JAMES I. FREEMAN
Senior Vice President,
Chief Financial Officer,
Assistant Secretary
REVOCABLE PROXY
DILLARD'S, INC.
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 II 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 29, 2002, at the annual meeting of
stockholders to be held on May 18, 2002, 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: , 2002
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Signature
Signature, if jointly held
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
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REVOCABLE PROXY
DILLARD'S, INC.
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 II 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 29, 2002, at the annual meeting of stockholders to be
held on May 18, 2002, 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
Calvin N. Clyde, Jr. * Drue Corbusier * Alex Dillard * Mike Dillard * William Dillard II * James I. Freeman * Warren A. Stephens *
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: , 2002
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Signature
Signature, if jointly held
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
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