Drue Matheny
DILLARD'SAbout Drue Matheny
Executive Vice President and Director at Dillard’s, Inc. (DDS). Age 78; board member since 1994; joined the Company in 1968 and leads one of the largest merchandising segments from Ft. Worth, TX, with experience across all merchandising functions . DDS uses a pay-for-performance design where NEO bonuses are formulaically tied to company pre-tax income and positive changes in pre-tax income; fiscal 2024 pre-tax income was $729.7M vs $916.6M in 2023, driving lower bonuses year over year . DDS operates as a “controlled company” under NYSE rules; Class B shares (over 99% held by W.D. Company, Inc.) elect two-thirds of directors; Class A nominees are independent, while executive directors (including Matheny) are not classified as independent due to family relationships .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Dillard’s, Inc. | Executive Vice President (merchandising), Director | Since 1968; Board since 1994 | Leads one of the largest merchandising areas; oversight across all merchandising functions, customer insight focus |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| — | — | — | None disclosed in proxy filings |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 800,000 | 830,000 | 830,000 |
| Stock Awards (Stock Bonus Plan) – Grant Date Fair Value ($) | 373,406 | 153,013 | 131,388 |
| All Other Compensation ($) | 328,321 | 142,369 | 127,040 |
| Perquisites detail (2024) | Company retirement/stock plan match $104,985; aircraft personal use $3,956; health insurance premiums $18,099 |
Notes:
- Base salary remained flat at $830,000 for FY 2023–2024; NEO base salaries are below peer median per compensation committee benchmarking .
- Equity grants under the Stock Bonus Plan are formulaic and smaller by design given significant existing stock ownership of NEOs .
Performance Compensation
| Component | Metric | Weighting | Target | Actual | Payout | Vesting/Timing |
|---|---|---|---|---|---|---|
| Annual Cash Bonus (Cash Bonus Plan) | Company Pre-Tax Income and Positive Change vs prior year (formulaic pool) | Formulaic; no individual weighting | Not applicable (pool-based) | FY2024 Pre-Tax Income $729.7M; FY2023 $916.6M (decrease of $186.9M) | $1,094,600 (10% pool allocation) | Paid after fiscal year-end; committee can reduce/eliminate but not increase formula payouts |
| Stock Bonus (Stock Bonus Plan) | 6% of cash comp above $15k divided by market price at grant | Formulaic; no performance weighting | Not applicable (formulaic) | Granted 280 shares on Jan 31, 2025; grant value $131,388 | Shares issued per plan formula; immediate vesting |
Bonus Pool Mechanics:
- Pool = 1.5% of pre-tax income + 3.5% of positive increase vs prior year; FY2024 pool totaled $10,945,500 (only 1.5% of pre-tax income since pre-tax income declined YoY), with Matheny assigned 10% share (committee assigns individual pool percentages annually) .
Multi-Year Cash Bonus Trend:
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Cash Bonus ($) | 1,738,100 | 1,374,800 | 1,094,600 |
| Company Pre-Tax Income ($000s) | 1,109,467 | 916,617 | 729,701 |
Equity Ownership & Alignment
| Ownership Snapshot | As of Mar 20, 2025 | As of Jul 25, 2025 |
|---|---|---|
| Class A Shares Beneficially Owned | 449,970 (incl. 440,149 direct; 7,300 trust; 2,521 spouse) | 450,373 (incl. 440,552 direct; 7,300 trust; 2,521 spouse) |
| % of Class A Outstanding | 3.8% | 3.9% |
| Class B Shares Beneficially Owned | — | — |
| Ownership in W.D. Company voting stock | 7.3% (disclaims beneficial ownership of DDS shares held by WDC) | 7.3% (disclaims) |
| Vested vs Unvested | Stock Bonus grants vest immediately | Stock Bonus grants vest immediately |
| Options (exercisable/unexercisable) | None outstanding; DDS did not grant options in FY2024 | None outstanding |
| Shares pledged as collateral | No pledging disclosed for Matheny; company disclosed 500 pledged shares for J.C. Watts Jr. (director) | No pledging disclosed for Matheny |
| Hedging | Company prohibits director/associate hedging of DDS equity | |
| Ownership guidelines | Not disclosed for executives in proxy |
Employment Terms
| Term | Provision |
|---|---|
| Employment agreement | Not disclosed |
| Severance | DDS has no severance or change-in-control agreements for executives (other than Pension Plan provisions) |
| Pension Plan (non-qualified DB) | Annual benefit = years of service × 1.5% × average of highest three years of “pension earnings” (salary + cash bonus − Social Security wage base) |
| Present value of accumulated pension (as of Feb 1, 2025) | $22,671,176 |
| Change-in-Control | Lump-sum payout of present value within 60 days upon CIC; Matheny estimated $26,937,377 if CIC occurred on Feb 1, 2025; subject to reductions to avoid 280G parachute payments |
| Clawback | Mandatory recovery of erroneously awarded incentive compensation for current/former Section 16 officers if financial restatement; three-year lookback; misconduct not required |
| Anti-hedging | Prohibits hedging DDS equity by directors/associates |
| Insider trading & 10b5-1 | Company practice to refrain from trading while in possession of MNPI other than under 10b5-1 plans |
Board Service, Governance, and Director Pay
- Board service: Director since 1994; Executive Vice President; Class B nominee slate includes Matheny .
- Committee roles: Not listed as a member of the Audit Committee (Rutledge, Watts, White) or Compensation Committee (Connor, Freeman, Hastings); Executive Committee consists of Alex Dillard and William Dillard II .
- Independence: Class A nominees are independent; Matheny is a sibling of the CEO (William Dillard II), President (Alex Dillard), and EVP (Mike Dillard), and thus not independent; DDS is a “controlled company” exempt from certain NYSE independence requirements .
- Board structure: CEO is also Chairman; non-management directors hold executive sessions with a presiding independent director chosen each session .
- Attendance: All directors met at least 75% attendance for board/committee meetings in FY2024; all attended the 2024 annual meeting except Warren Stephens .
- Director compensation: Management directors (including Matheny) are not separately compensated for board service; non-management directors received $100,000 cash retainers (plus $30,000 for committee chairs) and 400 restricted shares (vested within six months) in FY2024 .
Compensation Structure Analysis
- Pay mix: Matheny’s FY2024 total compensation was $3.27M, with 50% at-risk cash bonus and 6% equity; equity-based compensation is structurally smaller due to significant existing executive ownership .
- Metrics: Bonuses are formulaically tied to absolute pre-tax income and positive year-over-year change; FY2024 pre-tax income fell to $729.7M, reducing bonuses vs prior years (FY2023: $916.6M; FY2022: $1,109.5M) .
- Options: DDS did not grant options in FY2024; no outstanding options or unvested stock awards for NEOs, limiting future selling pressure from option exercises; stock bonus shares vest immediately .
- Peer benchmarking: Compensation committee uses a retail peer set including Macy’s, Nordstrom, TJX, Ulta, Williams-Sonoma, etc.; base salaries are below peer medians; Aon plc serves as independent consultant; committee assessed consultant independence .
- Say-on-Pay: 98% support at 2023 annual meeting; next advisory vote in 2026; frequency voted triennial (89% support) .
Related Party Transactions and Conflicts
- Family relationships: Matheny is sibling of William Dillard II (CEO), Alex Dillard (President), Mike Dillard (EVP), and Denise Mahaffy (SVP, Director) .
- Controlled company: W.D. Company, Inc. holds approx. 99.99% of Class B, electing two-thirds of directors; key officers are WDC officers/directors; DDS discloses and reviews related-party transactions via disinterested director processes .
- No Matheny-specific RPTs disclosed beyond family relationships .
Risk Indicators & Red Flags
- Governance concentration: Controlled-company structure and executive family board representation reduce independence; mitigated by independent committees and special committee usage (e.g., 2025 reincorporation analysis) .
- Hedging: Prohibited; no Matheny pledging disclosed (pledging noted only for a different director) .
- Clawback: Implemented per SEC/NYSE rules; reduces risk of unrecovered incentive pay upon restatements .
- Options repricing: Not applicable; no options granted or repriced .
- Say-on-Pay: Strong support historically (98%), lowering immediate shareholder pay risk .
Equity Award Detail (FY2024)
| Grant Date | Instrument | Shares/Units | Grant Value ($) | Vesting | Notes |
|---|---|---|---|---|---|
| Jan 31, 2025 | Stock Bonus Plan Shares | 280 | 131,388 | Immediate | Formulaic 6% of cash comp above $15k / market price |
Ownership Trend
| Date | Class A Shares | % of Class A |
|---|---|---|
| Mar 20, 2025 | 449,970 | 3.8% |
| Jul 25, 2025 | 450,373 | 3.9% |
Pension Exposure and Change-in-Control Economics
| Measure | Value |
|---|---|
| Present Value of Accumulated Pension (Feb 1, 2025) | $22,671,176 |
| CIC Lump-Sum (if CIC on Feb 1, 2025) | $26,937,377 |
| CIC Triggers | >50% Class B acquired; Board majority turnover; >80% asset sale (with carve-outs for Dillard family-controlled entities) |
| Reduction to avoid 280G | Yes; lump-sum reduced if needed to avoid “parachute payment” |
Say-on-Pay & Shareholder Feedback
- 2023 Say-on-Pay approval: ~98% .
- Frequency: Triennial (next vote at 2026 annual meeting) .
- Committee oversight: Compensation Committee reviews compensation-related risk and uses Aon as independent advisor; independence assessed .
Performance & Track Record
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Net Income ($000s) | 891,637 | 738,847 | 593,476 |
| Pre-Tax Income ($000s) | 1,109,467 | 916,617 | 729,701 |
Matheny’s bonus outcomes moved in line with the company’s pre-tax income trend under DDS’s formula, signaling direct linkage of pay to profitability versus stock-based measures like TSR, which DDS does not use in incentive design .
Compensation Committee Analysis
- Members: Robert C. Connor (Chair), James I. Freeman, H. Lee Hastings III; all independent under NYSE rules .
- Consultant: Aon plc; scope includes NEO and director benchmarking; independence confirmed by committee .
- Peer Group (2024): Abercrombie & Fitch; American Eagle Outfitters; The Children’s Place; Dick’s Sporting Goods; Gap; Macy’s; Nordstrom; Shoe Carnival; Starbucks; TJX; Ulta Beauty; Urban Outfitters; Williams-Sonoma (Chico’s removed after going private) .
Investment Implications
- Alignment: Matheny’s sizeable direct shareholding (~3.9% of Class A as of July 2025) and formula-driven bonus tied to absolute profitability create strong alignment with sustained earnings, but lack of PSU metrics (e.g., TSR/ROIC) reduces linkage to market outcomes .
- Selling pressure: No option overhang; Stock Bonus Plan shares vest immediately, but grant size is modest versus ownership, limiting forced selling from exercises; monitor annual share issuance and any Form 4 activity for net settlements (not disclosed in proxy) .
- Retention risk: No severance agreements; meaningful pension benefits with CIC lump-sum could influence stay vs leave dynamics around corporate control events; controlled-company structure and family leadership reduce near-term transition risk .
- Governance: Executive/director dual roles and family ties diminish board independence; however, DDS uses independent committees and a presiding director for executive sessions; investors may discount governance yet note strong say-on-pay support and clear clawback/anti-hedging policies .
- Pay-for-performance: Pure profitability-based cash bonus (no revenue/EBITDA/ESG weightings) simplifies predictability; lower FY2024 bonuses reflect earnings compression, consistent with incentive design .
Data derived from Dillard’s 2025 DEF 14A (Annual Meeting) and July 2025 Special Meeting proxy statements as cited above.