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Activist shareholder group demands Dillard's books, records Wednesday, Mar 26, 2008 By Jason Wiest Arkansas News Bureau LITTLE ROCK - The activist shareholder group that has nominated four to Dillard's Inc. board of directors has requested copies of the company's books and records. Barington Capital Group, which represents a group of investors including the Clinton Group Inc., collectively represents about 5.6 of Dillard's outstanding Class A common stock. In a March 20 letter made public in a Securities and Exchange Commission filing by Dillard's on Tuesday, the group demands information it said will enable it to "investigate and communicate" with company stockholders about matters that concern stockholders. Those matters include "the use of corporate assets, the levels and types of compensation, perquisites and benefits provided to directors and executive officers of the company or related parties, the nature of any family, business or personal relationships between the company's executive officers and directors, board oversight and certain decisions by the board or its committees regarding the foregoing matters or otherwise affecting the board, the management or corporate governance of the company or other interests of stockholders," the group said. The demand was made under Section 220 of the General Corporation Law of the State of Delaware, which provides shareholders the right to demand to inspect the books and records of a corporation if the stockholder has a proper purpose for the inspection, including to investigate possible mismanagement to determine whether to bring derivative litigation or to commence a proxy contest. Dillard's was incorporated in Delaware in 1964. Barington previously requested a detailed list of Dillard's shareholders, including their mailing addresses, so that it could communicate with them regarding the election of directors at the company's annual meeting May 17. Records specifically mentioned in the letter include records pertaining to family and business relationships; records of actual or proposed transactions between Dillard's and its executive officers or directors for travel services, among other perks; and copies of board minutes for the past 10 years regarding services performed or proposed by CDI Contractors, among other things. Barington has accused CEO William Dillard II of ruining the business since taking over from his father in 1998. Since then, the company's market capitalization has fallen from $3.8 billion to $1.9 billion in August 2007, according to a letter from Barington last August. Barington said it wants to review board decisions to "employ, or continue to employ, William Dillard II, Alex Dillard, Mike Dillard and Drue Corbusier as the top executives of the company." More effective management would substantially improve shareholder value, Barington has said previously. Dillard's did not immediately respond to the letter Tuesday. Dillard's, which owns 50 percent of CDI, has been under scrutiny since the January disappearance of CDI's chief financial officer, John Glasgow. Dillard's was reviewing CDI's books when Glasgow disappeared, and the company announced last week it had restated some of its earnings because it "discovered that CDI had recorded profit on the company's construction projects in excess of what CDI had previously reported to the company." Shares of Dillard's (NYSE: DDS) closed Tuesday at $18.59, unchanged from a day earlier. The company's 52-week high is $40.56. |
