Phillip R. Watts
Senior Vice President, Co-Principal Financial Officer and Principal Accounting Officer at 
DILLARD'S
DILLARD'SExecutive
About Phillip R. Watts
Phillip R. Watts, 62, is Senior Vice President, Co-Principal Financial Officer and Principal Accounting Officer at Dillard’s, Inc., serving as an executive officer since 2015; he co-signs the company’s SOX 302/906 certifications and bears responsibility for disclosure controls, internal controls, and financial reporting integrity . His annual incentive is formulaic and tied to company pre-tax income and positive changes in pre-tax income via a fixed share of a bonus pool; in fiscal 2024, DDS pre-tax income was $729.7 million (down from $916.6 million), which lowered the bonus pool and his payout . For broader performance context, DDS reports a pay-versus-performance table showing a 2024 Total Shareholder Return index value of 965.99 and net income of $593,476 thousand for 2024, while emphasizing pre-tax income/positive change as the primary pay linkage metrics .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Dillard’s, Inc. | Senior Vice President; Co-Principal Financial Officer and Principal Accounting Officer | 2015–present | Co-signs SOX certifications; accountable for disclosure controls, ICFR and fair presentation of financials |
External Roles
- None disclosed in the 10-K or proxy statements reviewed.
Fixed Compensation
| Fiscal Year | Base Salary ($) |
|---|---|
| 2024 | 680,000 |
| 2023 | 665,000 |
Notes:
- 2024 base salary increased 2.3% vs. 2023 for Watts .
Performance Compensation
Annual Cash Performance Bonus (Senior Management Cash Bonus Plan)
- Plan design: Bonus pool = 1.5% of pre-tax income + 3.5% of the increase in pre-tax income; no payouts unless pre-tax income is positive; any individual’s bonus capped at 1% of pre-tax income. The Committee assigns each NEO a fixed percentage of the pool; the year-end amount is mathematically determined (no threshold/target amounts) .
| Fiscal Year | Bonus Pool Metric(s) | Assigned Pool % | Payout ($) | Company Pre-tax Income ($) |
|---|---|---|---|---|
| 2024 | Pre-tax income; positive change in pre-tax income | 6% | 656,700 | 729,701,000 |
| 2023 | Pre-tax income; positive change in pre-tax income | 6% | 825,000 | 916,617,000 |
Stock Bonus Plan (Equity Awards)
- Formula: Annual stock award = 6% of total annual cash compensation above $15,000, divided by FMV on grant date; awards are not subject to vesting and are treated as vested upon grant .
| Fiscal Year (Grant) | Grant Date | Shares Granted (#) | Grant Date Fair Value ($) |
|---|---|---|---|
| 2024 | January 31, 2025 | 190 | 89,296 |
| 2023 | February 2, 2024 | 232 | 90,909 |
Compensation Mix (Committee’s total direct compensation allocation)
- For fiscal 2024, Watts’ mix was: Base Salary 44.4%; Annual Cash Bonus 43.0%; Equity-Based Awards 5.8%; Other Compensation 6.8% .
Multi-Year Summary Compensation (Reported)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | 625,000 | 665,000 | 680,000 |
| Stock Awards ($) | 199,566 | 90,909 | 89,296 |
| Non-Equity Incentive Plan Comp ($) | 869,000 | 825,000 | 656,700 |
| All Other Compensation ($) | 203,042 | 108,370 | 104,857 |
| Total ($) | 5,876,282 | 3,661,073 | 3,166,682 |
Perquisites – All Other Compensation detail
| Fiscal Year | Company Contributions (Retirement & Stock Purchase Plans) ($) | Airplane Use ($) | Insurance Premiums Paid by Company ($) | Total ($) |
|---|---|---|---|---|
| 2024 | 69,925 | — | 34,932 | 104,857 |
| 2023 | 71,558 | — | 36,812 | 108,370 |
Additional plan design details
- Retirement Plan match: First 1% of elective deferrals matched 100%, next 5% matched 50%; contributions used to purchase Class A Common Stock .
- Stock Purchase Plan: Only to the extent prevented from contributing to Retirement Plan by nondiscrimination and IRC limits; first 5% matched 100%; contributions used to purchase Class A Common Stock .
- No option grants; no outstanding stock options or unvested stock awards at fiscal year-end .
Equity Ownership & Alignment
| As-Of Date | Class A Shares Beneficially Owned (#) | % of Class |
|---|---|---|
| March 21, 2024 | 19,134 | <1% |
| March 20, 2025 | 19,429 | <1% |
| 2025 Proxy Update | 19,686 | <1% |
- Hedging: Company prohibits directors and associates from hedging DDS equity (e.g., collars, swaps, prepaid forwards, exchange funds) .
- Pledging: Filings disclose pledged shares only for director J.C. Watts, Jr. (500–1,000 pledged shares in footnotes across years), with no pledges disclosed for Phillip R. Watts .
- Options: No stock options outstanding; equity awards are immediate-vest RS directly under the Stock Bonus Plan .
Employment Terms
- Role and tenure: Senior Vice President; Co-Principal Financial Officer and Principal Accounting Officer; executive officer since 2015 .
- Severance/CIC agreements: The company states it has not entered into severance or change-in-control agreements with executives beyond the Pension Plan provisions; past practice has not included severance payments .
- Pension Plan: Non-qualified defined benefit plan; annual benefit = Years of service × 1.5% × average of highest three years’ pension earnings (salary + cash bonus − Social Security wage base). Early Retirement eligibility at 55 with service; 2.5% reduction per year before 65; Watts was the only NEO eligible for Early Retirement but not Normal Retirement in fiscal 2023 and fiscal 2024 .
Pension values and potential CIC payout
| Measure | 2023 (as of 2/3/2024) | 2024 (as of 2/1/2025) |
|---|---|---|
| Present Value of Accumulated Benefit ($) | 9,463,229 | 11,099,058 |
| CIC Lump Sum (assuming CIC on FY-end) ($) | 10,658,327 | 12,518,581 |
Other benefits
- Enhanced health insurance provided to NEOs .
- Company aircraft: personal use disclosed for certain NEOs; none reported for Watts in the “All Other Compensation” detail for 2023–2024 .
- Clawback: Company adopted a compensation recovery policy compliant with SEC Rule 10D and NYSE listing standards, applying to current/former Section 16 officers for restatements (3-year lookback) .
Governance, Say-on-Pay, and Related Parties
- Say-on-Pay: ~98% approval at the 2023 Annual Meeting; frequency set to triennial; next Say-on-Pay vote in 2026 .
- Related party: Matthew Banks, Head of State Tax, is the son-in-law of Phillip Watts; 2023 compensation disclosed under related-party transactions .
- Communications/governance policies (anti-hedging, executive sessions, governance docs) summarized in proxy governance section .
Performance & Pay Linkage (Context)
| Year | Total Shareholder Return Index (Value of $100) | Net Income ($000s) | Pre-tax Income ($000s) | Change in Pre-tax Income ($000s) |
|---|---|---|---|---|
| 2024 | 965.99 | 593,476 | 729,701 | (186,916) |
| 2023 | 761.22 | 738,847 | 916,617 | (192,850) |
Note: DDS emphasizes pre-tax income and positive changes in pre-tax income as the most important pay linkage metrics; the company does not use TSR as a program metric, and equity grants are formula-based off cash compensation .
Investment Implications
- Pay-for-performance alignment is formulaic and transparent: Watts’ cash bonus is a fixed share of a pre-tax income-derived pool (6% in 2024/2023), creating direct sensitivity to profitability and limiting discretion; equity grants are modest and immediate-vest RS tied to cash compensation rather than forward performance conditions .
- Limited future selling pressure from vesting: No options outstanding and stock awards vest on grant; there are no multi-year RSU/PSU overhangs that can trigger bulk vesting events .
- Retention risk is non-trivial: Watts is Early Retirement–eligible and holds a sizeable non-qualified pension with a disclosed CIC lump-sum value; the absence of severance/CIC agreements beyond the pension could increase retirement optionality if volatility rises or strategic shifts occur .
- Alignment and risk controls: Direct ownership is modest (<1% of Class A); hedging is prohibited; no pledges disclosed for Watts, though a director’s pledged shares suggest no company-wide pledge ban—worth monitoring for any changes to pledging policy or new Form 4 activity .
- Shareholder support backdrop is strong (98% Say-on-Pay in 2023), and a Dodd-Frank/NYSE-compliant clawback is in place, supporting governance quality around incentive recoupment .