What are they shopping for at Dillard’s?

December 10, 2008

Earlier this week, Barrington Capital and Newcastle Partners sent this letter to Dillard’s (DDS) asking to inspect the company’s records and books, including board minutes, corporate jet records and records related to transactions with various members of the Dillard family. The letter was virtually identical to this one sent back in March.

While the story was widely reported (the most detailed version is here), it was this paragraph in Monday’s letter that prompted us to dig a bit deeper:

All books and records of the Company pertaining to any perquisites or non-cash compensation provided or made available to any executive officer or director of the Company or the acquisition by the Company of assets intended to be available for use (whether for business or personal reasons) by any executive officer or director of the Company over the past five (5) years, including: real property (including private residences and vacation property); aircraft (including fractional participations in aircraft); watercraft; tickets for sporting, performing arts or other events; country club or golf club memberships; recreational, vacation or other properties; or other similar assets or benefits.

That’s because a quick skim of Dillard’s proxies dating back to 2003 turns up nothing along these lines, other than some very limited personal use of the corporate jet — just $24,000 last year for CEO William Dillard II — which, depending on the type of plane used, works out to a few hours of travel. That hardly seems like the type of thing most hedge funds would get worked up over.

What we’re guessing is that there’s something and quite possibly lots of somethings that haven’t made it into the proxy based on some investigative work. After all, the letter very specifically asks for information about country club and golf club memberships, an expense that’s routinely disclosed in all sorts of proxies, but never mentioned in any of Dillard’s filings.

There’s one other interesting thing about Dillard’s. Like many other retailers, they filed their 10Q yesterday. But unlike most of the other Qs that we read for various retailers, Dillard’s didn’t update its risk factors to talk about the serious economic situation. Compare that to Nordstrom (JWN), whose 10Q yesterday contained new warnings on both the economy and the lack of credit and its likely impact on the retailer, and, presumably other retailers.

As footnoted regulars know, reading SEC filings is all about detecting patterns and there seems to be a pattern of practiced silence at Dillard’s.

Image source: Lake Havasu Chamber of Commerce

Leave a Reply

You must be logged in to post a comment.