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Hedge Funds Looking to Revamp Dillard’s Management

New York (HedgeCo.Net) – Two hedge funds are looking to oust William Dillard II, CEO of Dillard’s Inc., after poor performance and lagging stock prices. 

Barington Capital Group LP and Clinton Group Inc sent a letter to the SEC that was released yesterday, which asked the company to start to an immediate search for a new CEO.

"In our opinion, a management team with a comparable record of poor performance at any other company would have been fired long ago," the hedge funds said in the letter. 

In addition to sales declining over the course of the year, Moody’s Investors Service warned last week that it may cut Dillard’s credit ratings to junk status.

The hedge funds are also looking to replace some of the other family members who work for the company, saying they are "overpaid and under-qualified for the positions they hold and can be readily replaced with more talented retailers."

The hedge funds claim that William Dillard II makes far more than other CEOs at similar companies.  According to a report they cite from advisory firm Proxy Governance, William makes 54 percent above the average, while other executives at Dillard’s make 185 percent above the median. 

Dillard’s, in an attempt to avoid a proxy battle with the aggressive hedge funds, agreed to place four candidates from the fund onto the Board of Directors in April. 

The hedge funds own almost 6 percent of Dillard’s class A stock.  Dillard’s stock is divided into two shares, a move that William made almost four decades ago to guard against takeovers.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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