Alex Dillard

About Alex Dillard

Alex Dillard, 75, is President of Dillard’s, Inc., has served on the Board since 1975, and sits on the Board’s Executive Committee. He has been involved in virtually every aspect of operations and merchandising for over 50 years, previously serving as Executive Vice President, and is a key operator alongside the CEO in day‑to‑day supervision of the business . Dillard’s executive pay is explicitly tied to Company pre‑tax income; cumulative TSR is disclosed in pay‑versus‑performance (Company TSR index value 965.99 in 2024), while net income and pre‑tax income trends are provided but not directly used for incentive payouts beyond pre‑tax income and its positive change . Dillard’s is a “controlled company” under NYSE rules through W.D. Company, Inc., and does not maintain a lead independent director; Alex is a management director (not independent) and a member of the Board’s Executive Committee that also performs nominating functions .

Past Roles

External Roles

Fixed Compensation

Notes:

• Base salary for FY 2024 and FY 2023 was unchanged at $1.17M; committee rationale includes responsibility and market analysis vs. a retail peer set .
• Dillard’s uses an independent consultant (Aon) for benchmarking; base salaries are generally below peer medians .

Performance Compensation

• Performance metrics: Pre‑tax income and its positive YoY change determine the pool; Compensation Committee may reduce but not increase payouts relative to the formula .
• Option awards: None granted; no options outstanding for NEOs at FY24 year‑end .

Equity Ownership & Alignment

Implications:

• Immediate vesting stock grants are modest vs. cash and pension; no options or impending option expirations reduce forced‑selling pressure from expirations. Large existing ownership and control via W.D. Company align interests but raise governance/entrenchment considerations .

Employment Terms

• Employment agreement: None disclosed; the Company has not entered into executive severance or change‑in‑control severance arrangements (historically does not pay severance) .
• Pension Plan: Non‑qualified defined benefit plan; annual benefit = years of service × 1.5% × average of highest 3 years of “pension earnings” (salary+cash bonus minus Social Security wage base); Alex present value of accumulated benefit = $33,617,704 as of Feb 1, 2025 .
• Change‑in‑Control economics: Pension Plan pays a lump sum equal to the present value within 60 days of a CIC (with reduction to avoid 280G parachute issues and exceptions if acquirer is controlled by the Company or Dillard family); estimated CIC lump sum for Alex = $60,654,793 (assuming CIC on Feb 1, 2025) .
• Clawback: Policy compliant with Exchange Act Section 10D/NYSE; recovers erroneously awarded incentive‑based compensation from current/former Section 16 officers for the three completed fiscal years preceding a required restatement, regardless of fault .
• Insider trading/10b5‑1: Insider trading policies in Code of Conduct; practice to refrain from trading when in possession of MNPI other than pursuant to established Rule 10b5‑1 plans .
• Non‑compete/Non‑solicit/Garden leave/Consulting: Not disclosed.

Board Governance

• Roles: President and Director; member, Executive Committee (which performs nominating functions) .
• Independence: The Company is a “controlled company”; Alex is an executive and family member, and not an independent director .
• Board structure: CEO also serves as Chairman per by‑laws; no Lead Independent Director; non‑management directors hold executive sessions with a rotating presiding independent director .
• Meeting attendance: Board met four times in the last fiscal year; all directors attended at least 75% of Board and committee meetings .
• Director compensation: Employee‑directors (including Alex) are not separately compensated for Board service .

Director Compensation (for non‑management directors, FY 2024 reference)

Note: Employees serving as directors (including Alex) receive no additional director compensation .

Compensation Structure Analysis

• Cash vs. equity mix: For Alex, FY24 total direct compensation tilts heavily to performance cash (62.8% cash bonus; 23.9% base; 5.8% equity; 7.5% other), reflecting strong linkage to profitability .
• Metrics: Bonuses are formulaic and solely tied to pre‑tax income and its positive YoY change; Committee may reduce payouts but not increase beyond the formula—no discretion to add new metrics mid‑year .
• Equity design: Stock Bonus Plan grants are formulaic and immediately vested; the Company does not currently grant options/SARs; NEOs had no outstanding options at FY24 year‑end .
• Tax and deductibility: Committee may approve non‑deductible pay under 162(m) if in stockholders’ best interests .
• Say‑on‑Pay: 98% approval in 2023; next vote in 2026; shareholders preferred triennial frequency (89% support) .
• Peer group: Focused on department and specialty retailers; Chico’s removed after going private; Committee uses peer data for context but does not strictly benchmark to a target percentile .

Related Party Transactions and Conflicts

• Family employment: Alex’s daughters were Company officers in FY2024—Alexandra Lucie (VP; total salary+bonus $930,673; $155,489 benefits), Annemarie Jazic (VP; $910,673; $153,408 benefits), and Michelle Hobbs (Director of Exclusive Brand Shoes; $512,404; $50,558 benefits) .
• Control structure: W.D. Company, Inc. (controlled by the Dillard family) holds nearly all Class B shares; Alex owns 27.9% of W.D. Company voting stock and, with William II and Mike Dillard, acts by majority for voting/dispositive power over W.D. Company’s shares; each disclaims beneficial ownership of W.D. Company’s Company shares .
• Other related parties (Board): Payments to The Connor Group ($3,120,702 agent/design fees; $5,000 merchandise) and fees to Stephens Insurance ($70,430; insurance commissions to third parties ~$1,031,633 tied to associate voluntary benefits) reflect relationships of directors William E. (Chip) Connor and Warren Stephens, respectively .
• Review process: Related party transactions reviewed/approved by disinterested directors under a written Board policy .

Multi‑Year Summary (Alex Dillard)

Ownership Snapshot (as of Mar 20, 2025)

Employment & Retention Risk Indicators

• Severance/COC: No employment or severance agreements; retention economics concentrated in pension (large present value; CIC lump‑sum feature) which can be a meaningful financial anchor to retention .
• Hedging/Pledging: Hedging prohibited; no pledging disclosed for Alex (one other director disclosed pledging) .
• Clawback: Three‑year, no‑fault restatement recovery framework in place .
• Family concentration and control: Extensive family roles and controlled‑company status may raise governance concerns but also imply strong long‑term alignment and continuity .

Compensation Committee and Process

• Committee composition: All independent directors (Chair: Robert C. Connor; members: James I. Freeman, H. Lee Hastings, III); three meetings in FY2024 .
• Consultant: Aon plc is independent consultant to Committee; independence assessed; also advised disinterested directors on certain related‑party analyses .
• Risk oversight: Committee evaluates comp‑related risk; Company believes comp practices are not reasonably likely to have material adverse effect .

Say‑on‑Pay & Shareholder Feedback

• 2023 Say‑on‑Pay approval: ~98% .
• Frequency: Triennial preferred by ~89%; next Say‑on‑Pay in 2026 .

Investment Implications

• Pay‑for‑profitability: Alex’s incentive pay is highly sensitive to pre‑tax income via a mechanical formula, with a sizable 28% pool share—expect annual bonuses to track operating profit cycles closely; equity is small and immediately vested, so alignment relies more on large legacy ownership and pension than on new, long‑vesting equity .
• Selling pressure: No options outstanding and immediate‑vest stock bonuses of modest size reduce mechanical selling pressure from vesting/expirations; no pledging disclosed for Alex; anti‑hedging lowers misalignment risk .
• Retention/COC: The non‑qualified pension is significant (PV ~$33.6M; CIC lump‑sum ~$60.7M), creating strong retention economics but potentially large one‑time cash outflow risk under a CIC scenario .
• Governance: Controlled‑company exemptions, family employment, the CEO‑Chairman structure with no lead independent director, and Executive Committee control over nominations are governance red flags that can limit minority shareholder influence; Compensation Committee independence and strong Say‑on‑Pay support are positives .
• Related‑party exposures: Vendor and insurance relationships with directors’ firms and family member employment merit ongoing monitoring for fairness; the Board uses disinterested director review for such transactions .