Dillard's Shuffles Board Under Pressure

LITTLE ROCK (AP) -- Dillard's Inc. agreed to nominate four new directors to avoid a proxy fight with an activist shareholder group.

Hedge fund Barington Capital Group LP and its affiliate, Clinton Group Inc., which own 5.4 percent of Dillard's shares, demanded a review of Dillard's books and nominated four people to the Department-store operator's board, including Barington chief James Mitarotonda.

On Tuesday after the bell, Dillard's issued a statement saying it will nominate one director favored by Barington and that the sides reached an agreement on the three other seats. The release said the agreement was reached in conjunction with Southeastern Asset Management.

Former Wal-Mart Stores Inc. executive Nick White was among Dillard's original nominees. The other nominees are James A. Haslam III, chief executive of Pilot Travel Centers LLC; R. Brad Martin, former chairman and chief executive of Saks Inc.; and Frank R. Mori, co-chief executive and President of Takihyo Inc.

The release said Barington and Clinton would vote for the company's nominees.

"We are pleased to have reached an agreement with Barington and Clinton. Both the board and management welcome the perspectives and insights of our proposed new directors," said William Dillard II, the retailer's chairman, president and chief executive officer.

The four seats on the 12-member board were the only ones that Barington or other outside investors could influence. Members of the Dillard family control the majority of the company's Class B stock, which gives them two-thirds voting power for seats on the 12-member board.

"The Class B board members are committed to working with the new Class A board members to ensure that the best operating plan and management team possible are in place," William Dillard said.

The company said it is reviewing its use of real estate and other assets. The company reiterated plans to close underperforming stores and said it would cut costs and set strict standards for new store performance.

Dillard's shares rose $2.67, or 14.5 percent, to close at $21.08 Wednesday, far below the 52-week high of $40.56.

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