New York (HedgeCo.Net) – Three Dillard’s Inc board members rejected a plea from hedge funds to have the company’s CEO, William Dillard II, booted from the chair. 

Barington Capital Group LP and Clinton Group Inc. had been calling for the board to start an immediate search for a new CEO in addition to ousting other family members due to the company’s poor performance and lagging stock prices. 

However, in a letter obtained by Reuters yesterday, directors Peter Johnson, Warren Stephens and Robert Connor said the current management team “has an appropriate strategy for dealing with the new environment.” 

The board members also failed to side with the hedge funds on their claim that William Dillard II along with other family members make far more than the same executives at similar firms.  Going a step further, they cited reports from the Institutional Shareholder Services and stated that the CEO’s salary is “far below the median in its peer group in 2007.”

The hedge funds original complaint mentioned a report by advisory Proxy Governance while claiming William Dillard II makes 54 percent above the median.  The board fired back, pointing out that the peer group selected by the hedge funds “included companies in totally dissimilar industries to Dillard’s.”

Together, the hedge funds own nearly 6% of Dillard’s class A stock.  The Dillard family owns nearly all of the class B stock, a move originally designed by the current CEO in order to make ceding control virtually impossible.

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

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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

HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com

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New York (HedgeCo.Net) – Activist hedge fund Harbinger Capital might be looking to make some strategic changes to another management team.  They are expected to hold talks with Leap Wireless International, in which they hold a substantial 14.8 percent stake or just over 10 million shares.  The hedge fund is looking to discuss both short-term and long-term management solutions while figuring out the best way to maximize shareholder returns.

“We respect and welcome the views and opinions of all Leap stockholders, said Leap spokesman Greg Lund while avoiding any specifics.  “We look forward to continuing the open and productive dialogue we’ve had and expect to have with all of our stockholders.”

Harbinger is no stranger for pushing for internal change within companies in which they invest.  By acquiring board seats, the hedge fund gets a say in major decisions while giving them more control over the company.  Harbinger won three seats on the board of Media General and two seats on the board of the New York Times after a nasty near proxy battle. 

Shares of Leap closed at $27.90 yesterday and have fallen over 60 percent in the course of a year.

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

HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com

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